Even a Time Finance Columnist Is Now Questioning American Capitalism

[eridani]

http://inthesetimes.com/article/19017/in-the-grip-of-greed

Indeed, citing a 2015 report from the Office of Financial Research, Foroohar notes that since the great crucible of the 2008 meltdown, corporate earnings “are rising” even as “sales growth for most public U.S. companies is not.” Astonishingly, as Democrats and Republicans alike have nonsensically preached austerity to the nation at large, the investor class—the real layabout “takers”—has sunk into an ocean of red ink, with corporate debt ballooning from $5.7 trillion in 2006 to $7.4 trillion today. Most of this dosh is repackaged into exotic new financial instruments designed to maximize short-term shareholder returns. In the 1970s, American companies invested more than 15 times what they paid out to shareholders; now that ratio is below 2 to 1.

Behind these dismal trends, Foroohar observes, is a whole complex of perverse incentives that have worked since the deregulating heyday of Ronald Reagan to stoke greater returns for Wall Street at the expense of the broader economy regardless of which party happens to be in power. The landmark repeal of the 1933 Glass-Steagall Act and the passage of the disastrous Orwellian Commodity Future Modernization Act were the handiwork of New Democrat Bill Clinton, whose economic legacy was well to the right of Richard Nixon. Meanwhile, the anemic phalanx of federal regulators charged with policing Wall Street have turned law enforcement into little more than a kabuki ceremony.

Foroohar characterizes Washington as being in a state of “cognitive capture,” such that the overall mindset of the regulatory state is a wholly owned subsidiary of the financial sector. To her credit, she traces this development not to some heavy-breathing cabal in the Senate cloakroom, but to broader forces. Business school curricula, to take one powerful example, have long been in thrall to econometric models aiming to maximize short-term investor returns at the expense of all else. And corporate raiders and arbitrageurs—who had formerly (and justly) been derided as destroyers of economic value for the sake of paper returns—are now regarded as “shareholder activists,” prodding corporate boards to continually bid up quarterly returns via stock buybacks, mergers and other shortsighted manipulations.

[zentrum]

1. Kick

[99th_Monkey]

2. It's about Time. n/t

[ReRe]

3. More questioning of Capitalism

K&R

[rhett o rick]

13. Any good books or essays on the final days of capitalism? nm

[ReRe]

14. Actually...

...the articles that surfaced here on DU this week were the first I had heard of "the end of capitalism." This one and another one that you can probably find on DU search. I will try to find the other article on DU and come back and link you to it (unless someone else beats me to it.) I think it was the one that mentioned that "62 individuals own as much as half the human race."

[ReRe]

15. Here's the other article...

http://www.democraticunderground.com/10027814282

[rhett o rick]

18. Thanks. Below is an article I found.

http://www.earthintransition.org/2015/07/the-end-of-capitalism/

[ReRe]

19. Earth in Transition:The death of Capitalism

Yeah. It's becoming clearer and clearer. I've noticed in the economic news spots on MSM, the demise of companies, or mergers. Two + two is beginning to add up.
I marked this subject like I did the other so I can come back to it again...

[rhett o rick]

20. Capitalism is not sustainable. It needs "growth" to continue, in fact it needs accelerating

"growth". It's a giant Ponzi scheme that relies on none replenishable energy from our environment. Even if we harnessed solar polar the capitalists would just use it to exploit the earth faster.

[ReRe]

21. It's a crock, that's all I know.

A total lie. A slight of hand shell game. It's legal theft.

[bbgrunt]

4. kick

"The landmark repeal of the 1933 Glass-Steagall Act and the passage of the disastrous Orwellian Commodity Future Modernization Act were the handiwork of New Democrat Bill Clinton, whose economic legacy was well to the right of Richard Nixon."

[whereisjustice]

5. The demise of middle class begins with onset of the MBA fucks

Who have been taught never to consider the social costs as they work night and day to screw you out of every nickel and dime.

[Sherman A1]

6. K&R!

Thanks for posting this piece.

[islandmkl]

7. K&R...once again we are getting lined up to absorb the failures of the risks allowed...

"the profits shall be privatized...the public shall insure the losses"...

how many times can the greater economy be looted?...these bastards never ever back off...

as in everything, there will one day be that 'one time too many'...and it appears the 1% have already gotten things in place to ensure their survival should things disintegrate...

i don't think the rest of us will even have 'crumbs' to eat...let alone cake

[bhikkhu]

8. "American capitalism" is more a predicament of political ideology

applied to economics, where the modern application of "neoliberalism" bends to the idea of free, self-regulating markets (the transition of regulatory power from government authority to corporate authority as the WTO, TPP and TTIP provide for), a low-tax government austerity condition, and deregulation. The general idea being the markets should be left alone, and government should be small and uninvolved, and then things will be fine.

Historically, I don't know how any economist avoids seeing how previous examples of this led to regular booms and crashes, and miserable working conditions. We have always lived in some form of economic capitalism, it can't really be replaced as it is a part of human nature, but the basic effect of capitalism is to concentrate wealth. The basic role of government is to balance that concentration, through tax policies and social programs.

Governments that regulate capitalism effectively lead to prosperous and reasonably equal societies. The republicans are so far on the wrong side of the equation its absurd, but the "cognitive capture" noted in the OP seems to lead to a whole generation of ordinary people, voters and economists and Democratic leaders, bending toward the wrong side, unable to effectively comprehend the basic role of government in this problem...which is about what most people have been saying here for years.

[PETRUS]

9. Question for you.

You write: "We have always lived in some form of economic capitalism, it can't really be replaced as it is a part of human nature..."

Taken at face value, I think that statement is false on a couple of levels. But perhaps you mean something other than what I'm inferring. Would you be willing to clarify?

[bhikkhu]

11. Capitalism is most often defined...

"Capitalism is most often defined as an economic system where individuals own economic resources and make decisions relating to their own self interest." Personal possessions are one aspect, possession of one's living area is another. I don't think its too much of a stretch to say that territoriality is a part of human nature, as it is a common trait in any social animal, and I don't think its a stretch to say that the neural correlate of "personal possession" is the same as territoriality. Absolute individuality isn't a requirement of any definition; the range goes from an individual, to a family, to a community, to a state, a nation, a race, etc. Some people might exhibit territoriality on every level.

So capitalism relies on individual ownership and decision making, and inherently leads to competition and wealth concentration. On the other side there is government, which should be socialist, as government is basically a socialist enterprise; public ownership of properties and agencies for the common good and common use, general taxation to support the common good and so forth.

Not that I'm an expert - I'm happy to learn a thing or two if I'm off base here.

[PETRUS]

12. Thanks for the reply.

I'll elaborate on my thoughts a little, and try not to be too boring.

I agree that people are territorial. (Mostly, anyway. There's a rich history of nomadic cultures, too. Which might make this a good time to say that while I think it can be useful to try to understand human nature in order to generalize, one has to be careful. Whatever human nature is, it produces a broad range of distinct and sometimes contradictory behaviors both across and within groups and individuals.) I also think it's probably fair to say that there's some kind of innate idea about possession. It's also clear that humans often contest (with violence and/or negotiation) and regulate (with law and/or custom) access to resources. But how that's done and what the ideas about property are - what can and can't be owned individually and collectively, and what sort of privileges and responsibilities are implied by ownership - has varied quite a bit from time to place. According to JK Galbraith's History of Economics, the capitalist idea of private property has only one close antecedent in Western history (during the Roman Empire).

There does seem to me to be a consistent pattern of people forming groups (clans, tribes, nations) that could be more or less described as some kind of kleptocracy. As societies get bigger and more complex, greater disparities of wealth and power are possible - but not a given. Whether there's more or less egalitarianism has to do with other specifics. If your main point is that this larger pattern (kleptocracy) is something we've seen before repeatedly and can continue to expect, then I agree. If you look at history and see parallels to capitalism, I'm not surprised. There's an element of truth to the saying that there's nothing new under the sun. I came across an idea once (in David Graeber's book "Debt," I think) that all economic activity is governed by three principles - communism, hierarchy, and exchange - and that while one or more of them may be dominant in any given transaction, they tend to co-exist in most societies to varying degrees.

But while we've had numerous iterations of kleptocracy, it hasn't always been capitalism, and capitalism doesn't represent a natural state. For most of human history, markets played a small role (if any) in most lives. There's scholarship (the books "The Great Transformation," by Polanyi, "The Many Headed Hydra," by Linebaugh and Rediker, and "Empire of Cotton," by Beckert come to mind) about the transition to capitalism that make it clear that it didn't just happen, it had to be imposed on resisting populations. A left-leaning person needs to deal with the apparent tendency towards extractive hierarchies and consolidation of power, but it's just as important to understand that our current conventions aren't universal or eternal and that capitalism doesn't represent a way of living uniquely consonant with human nature.

[rhett o rick]

17. I am new to this discussion so forgive me stumbling over things that might be obvious.

I think the basics of capitalism is human nature. There will always be some group that takes more. It's probably a basic instinct for survival. IMHO this is the basis for capitalism. I need more therefore I will do something to achieve that. And someone will dominate in all cases. That someone might be altruistic or recognize the good for all, but most likely that person will be seeking more and more power. That power comes at the expense of others.

I see capitalism as a ponzi scheme that won't stop until we become extinct. Attempts to control it are futile as most people want more than their neighbor. And attempts to share will be inherently unfair to some or at least perceived unfair.

[TBF]

10. You do realize you're in the socialist group correct?

nt