Week of 11/14/2011

Capitalism, You Say? The Hell It Is, I Say!
– by David Matthews 2

In his documentary “Capitalism: A Love Story”, Michael Moore starts off by explaining the myth of “capitalism” and how in the 1950’s it was touted as the end-all-be-all for America. It’s supposedly why the United States is so great in the world. It’s why we won World War II and why we would supposedly win the Cold War against the “evil communist threat”.

Of course in the 1940’s and 50’s we were busy giving George Orwell real-life material for his cautionary tales of creeping despotism, so it should be to no surprise that we would start to spin a yarn of mythic propaganda about what who we are and what we do. We did it with the myth of “democracy”, and we did it with the myth about “capitalism”.

But just like it was easier to tell impressionable youths and ignorant foreigners that America is a “democracy” instead of a representative republic with a democratic framework, so too was it easier to spin the tale that our economic system is “free-market capitalism” than what it really was, never mind what it has become today. And make no mistake; to call what we are in right now “capitalism” does the very idea a phenomenal disservice.

America has never really supported a true “free market” system. There has always been some measure of control put in to restrict the marketplace. Sometimes those restrictions are done for some social protection, but other times those restrictions are imposed to preserve the dominance of other businesses. If America was truly in a “free market capitalistic” system, for instance, then one could go to any of the various empty stores in town and turn it into a strip club, or a bordello, or just turn it into apartments for people to live in. But one can point to any number of zoning laws or building restrictions to show how such ideas are just not possible in the current “not-so-free market” system.

At best we’ve existed in a state-controlled system, or even a “crony capitalistic” system. One where rules are put in place to protect certain businesses both from competition and from their own failures. The very idea that any business, banking or otherwise, could be deemed “too big to fail” is proof that there is nothing “free” about this “market”.

At the heart of capitalism is a simple idea of supply-and-demand and the balance that is reached between them. Currency is exchanged for goods and services based on a price determined by the cost to make or provide said goods and services and the demand of the marketplace on the current supply. In order to make a profit under this premise, you simply had to have revenue from said sales outweigh costs, and that came from increasing demand, often by improving quality, and/or cutting costs of production. It’s a relatively simple definition, right?

So where is it in the definition of capitalism that says that prices for goods and/or services can be determined separate from either supply or demand?

For instance, the price of gasoline traditionally was determined by the costs of extracting the oil, refining it, transporting it, and then storing it, plus some added taxes thrown in. Today, that price is supposedly determined not on the actual costs involved in turning oil into gasoline, or in the current demand for that gasoline, but on some hypothetical “future expectation” of both supply and demand. In other words, the price you are paying for the gasoline today is based on some future expectations of costs. It’s like famed Popeye character Wimpy paying for a hamburger today using Tuesday’s prices of next year. That flies in the face of the whole idea of supply-and-demand since you can make up any number you wish and claim that it’s the “expected future costs” of production and demand. And given how those “expected” prices fluctuate not only on a day-to-day basis, but even on an hour-to-hour basis, you have to seriously question the sanity of those “futurists”.

That is, of course, presuming that this is the real explanation for the costs and not just there to falsely justify self-serving greed.

They’re not the only ones doing it, though. Insurance providers do the same thing. They supposedly set the policy rates for their customers based on expected costs of coverage. In theory, if you don’t need their services frequently, then you should be able to keep coverage costs low. So how is it that people who are otherwise healthy be forced to pay more in coverage over some future expectation of health costs? That is precisely what providers are doing in advance of expected federal laws and regulations designed to curb their more abusive practices. We’re talking legislation that could very easily be rendered unconstitutional by the court system before the brunt of it can take effect, but the insurance companies are already forcing customers to pay now for some perceived future shortfall in their revenue.

Again, where is the balance between “supply and demand” here? Both factors are now fictional, but the applications have real-world and real-time consequences.

But this is only the tip of the proverbial iceberg.

Thanks to companies such as Enron, at least until their collapse, a “new” business model began to take shape. A business model that says that a company doesn’t need to adhere to the rules of “supply and demand” in order to make a profit. A business model that says that a company can still make a profit with a generally stagnant customer base through a little “creative accounting”. Money can be shuffled around, with “interest charged” no less, to give the illusion of profit.

And if all else fails, the “new” business model says that companies are perfectly fine to start fleecing their own customers. So what was once provided as a “convenience” is now a fee that is automatically charged whether you wanted it or not.

Airlines do it. Banks do it. Phone and cable companies do it. Auto dealers do it. Major stores do it. It’s a little here and a little there. It’s a “convenience charge”. It’s a “public service charge”.

Worse yet is when those same banks then get into sweetheart deals with local governments to administer social programs like support payments. The people are forced to use the bank-issued card, and with those cards come draconian rules, such as only using that bank’s ATM a certain number of times before being hit with fees. Use a teller to speak with a human being? That’s another fee. Bear in mind that this is happening to people who have absolutely no say whatsoever on the matter. If you’re on disability, if you’re getting unemployment payments or support payments through this service, you are literally enslaved to the bank and to their rules.

Then, of course, we have the “mistakes”, as in the water or electric meter that got “read wrong”, or the surprise “roaming charge” on the cellphone. “Mistakes” that are painfully easy to make but are almost impossible to correct. The victims are expected to simply pay for these “mistakes”.

The personal information and spending habits of a company’s clients are sold to “preferred partners”, who then pepper them with telephone calls. Buy a hammer at a hardware store and five different companies from across the country will later call you at home trying to sell you a new water heater. How did they get your phone number? You gave it to the hardware store as part of their “preferred customer” program. Or the bank holding the credit card you used sold it to them.

Now we have the ultimate of insults… wholesale fraud and theft-by-taking. First it was the banks with the Russian Roulette mortgage changes, now it’s out-and-out theft by the “buy here pay here” car leases. Financial institutions that initially got bailed out by the federal government are now engaging in programs that facilitate fraud and theft. Out-and-out crimes that are allowed to happen by our own government.

Meanwhile, at the places of manufacturing these goods and services, executives are using liberalized trading practices to outsource their workforce, often overseas to societies with infinitely cheaper costs of living, or else to bring in thousands of people from those other nations through work visas, which they hoarded like Beanie Babies. Those without work have to compete for the miniscule jobs that remain. And while this is going on, corporations are enjoying record profits, again divorced from the realities of the current economy. Corporate executives are enjoying benefits and bonuses higher than before, and they are arrogantly flaunting this fact to those that have been suffering for it.

Alone, each of these actions seem almost negligible in society. Minor “blemishes” to be “corrected” at the leisure of the marketplace. But when seen as a part of the larger picture, they expose this “new” business mindset, and it is not “new”. The mindset actually pre-dates capitalism itself.

Because let’s get brutally honest here… the predatory business mindset being imposed on America today is one of a “Plunder Economy”.

A plunder economy, or Raubwirtschaft, is based on the ancient days when kingdoms and empires were measured not just in their culture, but in their conquests of other lands. They would conquer a land, defeat their armies, steal anything of wealth or value, and then enslave their people. Even centuries later, the mindset never really went away. The late Saddam Hussein did this in 1990 when his forces in Iraq invaded Kuwait. He conquered the land, pilfered anything of value, and claimed the land as his own using ancient documents from the Ottoman Empire for justification.

Today this same mindset is being imposed on the American people, dressed up and paraded about by talk radio and cable news personalities under the skin of “capitalism”. It is tolerated and ignored by our governments, especially on the national level, because the perpetrators of this crime against civilization are simply “too big for jail”. They would rather strike deals and partnerships with the perpetrators, hoping that what it going on is just a temporary phase in troubled economic times.

They forget their own history.

When the American colonists were told that their sole purpose of existence was to support and sustain the British Empire, they rebelled. When French citizens were told that the sole purpose of their own existence was to sustain the nobles, they revolted and executed the nobles. When Russian citizens were told both in 1917 and in 1991 that their sole purpose of existence was to sustain the ruling government, they revolted and the government collapsed.

Today the American people are being told that their sole purpose of existence is to sustain the institutions that have a chokehold on our economy. This is being sold to them as a “convenience”, wrapped up in the dead skin that they call “capitalism”, and informed in no uncertain terms that there is nothing at all that they can do about it other than to just lay back and try to enjoy the experience.

Maybe there is little that can be done about it right now. Maybe the political and social will is simply not there. But at the very least these perpetrators and their myrmidons in the media should be honest about what they are doing and stop pretending that this is “capitalism”, never mind a “free market” one. This is plunder, plain and simple. They would have a lot to answer for should we end up in a future environment where real capitalism thrives.