HOW TO DESTROY FREE-MARKET CAPITALISM

Sometimes you can have too much of a good thing.  In my case its' Doritos.   Doritos are tasty and crunchy, but too many of them are bad for my health, so I have simply stopped buying them because I know I can't eat "just one".  All of us have addictions, big and little, that control our lives: food, alcohol, illegal drugs, legal drugs, etc. etc.  But, when our desire for acquiring money and wealth begins to control us, the social status, power, influence and elite lifestyle it creates becomes just another addiction that will have very negative effects on us as individuals, families and our society.

 We are justifiably proud of our system of free-market capitalism that has produced the highest standard of living the world has ever seen. I lived and worked in West Europe for five years, opening and managing subsidiaries for an American firm.  I founded my own firm in 1990 without a dollar of borrowed money and grew it into a business with sales of several million dollars employing thirty production workers, so I know a little about capitalism.  I believe in capitalism, but not unethical, unprincipled, uncaring or dishonest capitalism. 

  Scottish economist Adam Smith, in his seminal work, An Inquiry into the Nature and Causes of the Wealth of Nations, published in 1776, (an interesting coincidence for America) first explored the connections between free markets and wealth. In 1859 Charles Darwin published his Origin of the Species outlining the theory of evolution including the basic concepts of common descent and modification with descent that the Victorian capitalists quickly morphed into their cherished "survival of the fittest" doctrine.

 This doctrine, combined with the Biblical passage from Matthew 26:11 "the poor will always be with us" gave them both Divine and scientific approval to pursue the accumulation of great wealth. If the Bible says that there always be poor people and the natural world is designed to weed out the weakest of the species, who are we to interfere with the process? They forgot or ignored the warning of 1 Timothy 6:10:  For the love of money is the root of all evil.

 The Victorian social and economic world was free-market capitalism at it best. A period of great wealth held by a small percentage of the population and grinding poverty for the vast majority with no interference from the government.  Little or no public or private social safety nets, poor houses, debtor's prisons, dangerous child labor and capital punishment for hundreds of crimes.  Prostitution, both adult and child, thrived and malnutrition, alcohol and drug addiction and early death were all common.  Poor children received little or no education and were put to work earning money as soon as possible. Charles Dickens, a child laborer himself, documents the excesses of the Victorian era in his many novels.  Dickens summed up the prevailing attitude of the Victorian wealthy toward the poor in the words of Scrooge, the main character in his A Christmas Carol, "If they would die, they had better do it and decrease the excess population".

 There are a number of excellent social histories of the Victorian era, but I think one of the best is a work of fiction, The Great Train Robbery by Michael Crichton. Crichton combines an excellent story about the first moving train to be robbed with extensive, and sometimes disturbing, detail about the excesses of wealth and the depth of poverty during the height of the Victorian period and how the lower classes coped, frequently by criminal means, to survive.

 The extremes to which some political or economic purists will go to defend the purity of their belief in the free market capitalism system can best be historically demonstrated by a close examination of their response to the Irish Potato Famine. This collapse of the main staple of the Irish diet, the potato, occurred between 1845 to 1851 and resulted in the deaths of over one million Irish from starvation and disease and the essentially forced emigration of another million or so during the same period. During the famine Ireland continued to export food to England where there were no food shortages, and the entire focus of the British government, which controlled Ireland like any other colony, was to make sure that any and all relief efforts would not interfere with the free-market system.  There were enough alternative food stocks, like oats, wheat and barley, that would have prevented the famine, but the government refused to participate in the distribution fearing that giving away food would interfere with the free-market prices.  The government even refused to accept foreign aid from other nations. The Wikipedia has an excellent article on the Irish Potato Famine that covers with all aspects of this disaster.

 The quote from a British Government official below is from the Wikipedia article and shows how focused the government was on not interfering with the free-market system, regardless of the consequences.

 "The government hoped that they( donations of cheap or free food) would not "stifle private enterprise" or that their actions act as a disincentive to local relief efforts."

 The Irish Potato famine, and the lack of government action to prevent the starvation and death, shows the result of slavish devotion to any political or economic philosophy regardless of the consequences.  Trinity, a novel by Leon Uris, tells the story of the Irish Potato Famine from the Irish point of view and documents the terrible living conditions of the typical Irish family and the economic poverty imposed  on them by their British masters.  

 Excess leads to excess.  I believe that the excesses of the free-market system during the Victorian period was the root of the excesses of socialism in the first half of the twentieth century in Britain, resulting in the nationalizing of virtually every key industry. While early in the 19^th century voting in England was limited to males that possessed a certain amount of wealth, much like the United States did in our national infancy, by 1884 the right to vote had expanded to virtually every male over the age of twenty-one. Both the US and the UK had extended the right to vote to women by about 1920, greatly expanding the voting population.

 This expansion of the right to vote produced a progression of British governments that overturned the old, corrupt political system, and the political will of the majority gradually prevailed. In the US, unlike the UK, the vast land areas and untapped resources developed a much different, individualistic attitude. The UK, where all the land and resources were already owned and a historic hierarchical class system tended to limit social mobility, the political emphasis developed into one that favored the creation of a broad range of social programs for the benefit of the entire population.  The development of socialistic UK government in the early part of the twentieth century certainly was, in some degree, a reaction to the great disparity in income and wealth in the Victorian era.

 If free-market capitalism is to survive and prosper in a democratic nation it must have the active support of a majority of the population. They must believe the system can work for them if they play by the rules.  If it does not have the active support of the voters because they perceive that the economic system is unfair and does not offer real opportunity for social and economic advancement, they will eventually change the system at the ballot box. This is what happened in the England when the voters elected governments that over compensated and moved them from the excesses of the Victorian free market period to the excesses of rigid socialism before moving back to a more balanced economy in recent decades that included free-market aspects while preserving the social services network.

 The income and wealth inequality in the US is now at the highest level since 1929. In 2006 the top ten percent of Federal Income tax returns had an adjusted gross income (AGI) of $283,169 while the remaining ninety percent of returns had an AGI of  $35,031. In 1980 the top ten percent of Federal Income tax returns earned 32% of all personal incomes while the remaining ninety percent earned the 68%.  By 2006 the top ten percent's share of all personal incomes has increased 47% while the remaining ninety percent's share had declined to 53%.

 The proponents of unfettered free-market capitalism have to answer this question:  Does free-market capitalism expect and demand the availability of a work force that is willing to survive at the lowest market price for labor in a economically globalized world with radically different histories, cultures and cost of living?  If the answer to this question is yes, all of us are facing a troubled future. 

 If our democratic, capitalistic nation does not find a way to reconcile free-market capitalism with our proclaimed political and social values and continue to allow the real incomes of the majority of individuals and families to shrink, we can look forward to an eventual backlash at the ballot box that take us in a direction that no one wants, especially the advocates of free-market capitalism.