America’s Brutish Self-Interest Version of Capitalism is Unsustainable

To the editor:

By any rational analysis, the version of a market-centered, capitalistic system which has devolved in this country is simply unsustainable. 

By definition, a market-based system depends upon a broadly based level of sustained consumption.  To be sustainable, a market for goods and services has to be supported by a wide segment of a population in the role of consumers.

The Chicago-based school of economics, which for so long held sway, felt that the invisible hand of the interplay of market dynamics would be self-regulating and self-correcting of excess. Externally imposed regulation and restraint was thought not only unnecessary but destructive to the economy. But the theorists appear to have not adequately anticipated the effect of automation and globalization on compensation.

Richard Wolfe, the distinguished professor of economics at the University of Massachusetts, Amherst, has laid out a compelling case for the roots of our present economic disaster. 

Professor Wolfe points out that over the past 30 years there has been a deliberate movement to hold down wages in proportion to growth in productivity.  It has been pointed out by Wolfe, Reich and others that significant increases in productivity have been achieved by automation.

Added has been the downward pressure on wages through the exporting of manufacturing jobs to low-cost labor markets.  In the past, unions had a viable bargaining chip to play when there was not a surplus of labor as is now the case for the reasons cited above.  There is simply more labor available to work than there is demand for the labor.

What about the increases in productivity that have occurred in the same period as the stagnation of wages?

Wolfe points out the increases in productivity result from not only through automation but the labor pool has been required to work longer and harder while not receiving commensurate increases in compensation. 

The gap between the costs of labor and increased productivity has generated unprecedented corporate profits magnified by consolidations. The market-based economic dynamic has radically changed from one influenced by the market (the consumer) to one manipulated by the small minority of those who “own” the economy.

And what has been the result of the accumulation of a pool of profits?

There has been a significant growth in the financial services sector to find a way to make the profit-generated cash more productive.  A significant segment of the financial services sector provides consumer credit—often at usurious rates in excess of 20 percent per annum.

In a nutshell, wages paid are not commensurate with productivity gains but the profits generated are used to lend money back to the labor force so they can be consumers. We have before us a veritable house of cards.

Levels of personal debt are close to becoming paralyzing.  What income many families have is increasingly burdened by debt service leaving too little to participate in the market economy as consumers.

The retail community competes for business by lowering prices on largely imported goods realizing that they will make up the diminished profit by making easy credit available.  Case in point: General Motors made far higher profits through its GMAC financial arm than it did in manufacturing vehicles.  In fact, the head of GMAC became the head of GM and then we wonder what happened to the reputation of American manufactured goods.

It appears we are devolved into an economic system that generates an increasingly narrow concentration of capital wealth.  The narrow concentration of wealth has literally bought our structure of governance. 

Having achieved the means of manipulating public awareness through a near Kafkaesque domination of the media and having made vassals of elected politicians, the nearly complete control of the country has been subversively achieved by a plutocracy. 

No, this is not a cry for class warfare.  It’s too late—most of us have already lost that battle.

The social evolution of our species is believed to have taken literally eons to havepromoted working systems of community collaboration.  It takes insight and a deeper awareness to realize that in surrendering some modicum of brutish self-interest—through collaboration and cooperating in longer term, collective, community interests—a greater good is served. 

But the power and spontaneity of a populous wanting change has clearly threatened the status quo preference for the power enjoyed by a privileged few. 

The devolution can be seen in the reflexive response in the Ayn Rand-style of brutish self-interest which marshaled itself to overthrow the spontaneous voice of the larger community, which wants a more egalitarian and collaborative world in which to live.

I think few of us had any awareness of the degree of ruthlessness to which the forces of brutish self-interest would resort.  All the stops have been pulled out and an outright declaration of war against the stated will of the majority of voters was initiated. 

The pandering, purchased media has used all the skills developed in making us obedient consumers to mislead the gullible and the frightened through misinformation.

Partisan propaganda has largely replaced unbiased real news in the diet of those exposed to much of the media. I suggest it is not an overreaction to state that the spirit of a truly democratic political environment has been dealt a very serious blow. 

From time-to-time, history shows the frightened and disillusioned willing to surrender to oligarchy in the name of having order and the ever elusive sense of security.  By the time the population realizes they have been reduced to serfdom, it is too late.  History also demonstrates the means of ultimately correcting these situations has proven very costly and painful.

In an even more pessimistic assessment, I’m not sure whether what goes on in Congress is closer to bribery or extortion.  One thing is certain—the voice of the majority of citizens is being drowned out by the din of coinage changing hands.  The system has become so corrupted by big money that neither major party can claim righteousness.

The balance tipped away from a true citizen-based democracy some time back.  Most of us didn’t recognize it when the imbalance was smaller and possibly easier to correct. 

The question is whether we have gone so far past the tipping point as to be beyond the collective will of average citizens to turn things around.  I want to hope some avenue of true correction can still be found. 

But as long as manipulated, partisan politics has us yelling at each other over hyped emotional issues rather than a reasoned discussion of the real big questions, we are probably in more of a downhill slide than we want to contemplate. 

A major shift needs to take place from trying to insult each other on assumptions of where we disagree to searching for the areas in which we are probably closer than we might suspect.

The question of the immediate moment is: Just how mortally wounded is a true, broadly based democracy in this country? Or have we already descended too far into a third world-style oligarchy to be salvageable? 

The answer probably lies in whether we can stop yelling at each other, take a breath and start having constructive conversations about things that really matter.

Larry Howe
Mount Helix

Editor's note: Howe is a former CIA intelligence officer and corporate executive.