Why “free market” capitalism cannot last long.

Here are a series of illustrations I have made to demonstrate why capitalist economies that are supposed to be free markets inevitably degenerate into fascist-corporatist tyrannies that deprive the people of freedom of choice in the end.

Stage one: Here is a free market economy represented by dozens of small circles, each circle representing a small business. Of course, some of them are more successful than others, but no single business dominates the industry and there is plenty of competition. Note that three such businesses have been singled out and designated “A”, “B”, and “C”.

Stage two: After a period of time, many of the small businesses have collapsed and the remaining ones have tended to grow larger and more powerful. Companies “A” and “B” have merged and this soon enables the new company “AB” to becomes more powerful still, and it begins to crush its competitors.

Stage three: Another generation or so has passed. Now companies “AB” and “C” have merged together, forming an even more powerful union. Meanwhile, the forces of competition have served to eliminate most of the smaller companies we saw earlier. However, a new company, named “D” has been established, showing that at this time there is still room for innovation and diversity, which is the essence of freedom.

Stage four:  Sadly, company “D” isn’t able to last long, and it is soon bought out and taken over, resulting in company “ABCD”, so powerful that it eventually forms a virtual monopoly, and other companies are at a total disadvantage and will never have a chance to rival what ABCD has gained.

There are four lies that “free market” advocates tell that need to be slammed down.

First, they claim that in a free market it would be a simple matter for people dissatisfied with a company to start and run one of their own. But in the present American system, the vast majority of new businesses that are established fail within a few years. The reason is simple: the already established and larger companies are always able to take advantage of their larger capital and the fact that people are already familiar with them to crush their new and smaller competition.

Second, it is not government action that creates corporatism out of free market economies. Rather, it is the already formed corporatism that prompts government to prop up failing giant corporations due to a recession. Why? Because if those corporations go out of business, millions of people would be thrown out of work, reducing economic activity further. That’s exactly why both Presidents Bush Jr and Obama chose to endorse corporate bailouts; if they had not, we would most likely be in a Second Great Depression now with even less competition than before as bankrupt companies are bought and taken over by bigger ones.  A better policy would have been for government to prevent those corporations from growing so big in the first place……but then we wouldn’t have a free market.

Third, socialism or communism as envisioned by Karl Marx was not supposed to be a one-man dictatorship. Stalin and many of those who came after him were responsible for that perversion, not Marx himself. In reality, Marx wanted a collective rule that would actually be more like a democracy, with the workers (which he assumed would be the vast majority in any industrial economy) ruling through elections in both the government and the corporations. This was what would later make possible the gradual dissolving of the state leaving only the worker run companies. The reason “Communism” failed was because after the death of Lenin in 1924, real Communism was never tried. No one-man totalitarian state can be rightfully called Communist or Socialist. It’s Fascism instead!

Fourth, the whole point of democratic socialist, liberal, or progressive politics in industrialized countries is to prevent a disruptive revolution by the workers against the capitalists by gradually making reforms to keep the workers happy. By opposing them, Conservatives like Presidents Reagan and both Bushes, along with their Republican allies in Congress, were setting the stage for the actual long-term downfall of America through their idiotic short sighted policies to disempower labor unions and deregulate Big Business.  This in turn, will actually INCREASE the likelihood of a real Communist revolution later! The repeated cycles of economic surges (which enrich those who are already wealthy) followed by recessions (which hurt the middle and working classes the most) can only weaken capitalism until it falls. The outsourcing of manufacturing by American companies to other countries like China for their cheap labor only delays this gradual breakdown, while threatening the independence of America. China’s lax labor, safety and trade policies have resulted in a great many inferior products being shipped over here. Meanwhile, millions of Americans can no longer get manufacturing jobs and end up with lower paying ones, locking them into dependence on Chinese goods. Thus American consumers are forced to keep buying the Chinese made products when they wear out.

Wake up, Americans! We need liberalism, socialism, and progressivism NOW. Free markets in a  strict sense are a dream, never a reality that we can have forever.

I want MORE economic freedom, not less!

One of the most laughable misconceptions people have about economics is that laissez-faire capitalism is somehow an example of economic freedom, while socialism is a form of economic tyranny. Certainly the type of socialism that Communism was came across as tyrannical and deserved to be abolished. But not socialism itself. Socialism coupled with a democratic government that has a written constitution that guarantees civil rights for all citizens actually promotes the most economic freedom, while laissez-faire capitalism is economic ANARCHY that eventually results in both chaos and tyranny, like political anarchy does. With no restraints by government, corporations will only get larger and more powerful by merging with smaller and weaker corporations and will so dominate the market that small businesses started by individual owners seldom have a chance to even get off the ground. That is NOT a free market! Such a concept doesn’t really exist, except in the deluded minds of many Conservatives and Libertarians. You either have a market in which government occationally intervenes to break up giant corporations (trust-busting)  to allow small businesses to thrive and maintain their independence, or you have a market in which individual efforts at owning one’s own means of production and income are destroyed by the giant corporations themselves. The Founding Fathers of the United States understood that unrestrained government destroys individual liberty, so they made a system of checks and balances in the Constitution to restrain government. They should have done the same with the American economic system. If a democratic government can have its own method of checks and balances against corporations, and thus prevent corporations from ever merging and even buy out and sell off the properties of failing corporations to individuals who wish to start their own small businesses, then we will have more economic freedom. Corporations themselves are more like governments in their makeup and operations than like individuals. They should never be “free” to exploit resources and people as they please. Only INDIVIDUALS should be free for freedom to have any real meaning! We see imperialism, which was the norm 150 years ago, as evil today, because it involved governments conquering and ruling other peoples for the gain of the conquerers. Why should laissez-faire captalism be seen any differently? Can we not abolish that as well and promote real economic freedom instead?