Wednesday, September 23, 2009

Capitalism vs Corporatism

I'm not sure about Michael Moore still. I think that he is a left-wing carictature - he's what the left craves in a prophet but he's not really it. A bit like our own chaser boys he's made fun of security guards at front counters, or store clerks - or even the frail and bewilldered Charlton Heston. At least that was the case in Bowling for Columbine which was otherwise a great movie.

I gave his 9/11 movie a big miss because the blurb suggested it was one of those "the US had it coming" types. I inhabit a strange world in which I can accept that revolution and terorism may be justified political expressions (though I'm reading Blood & Rage now which might change my mind), but even in that mode I can't figure out the 9/11 attack as any kind of justifiable attack.

Adrianna Huffington tells us that Obama and You must see Moore's new film Capitalism: A Love Story.

Having told us to see the film, and that in it Moore is replaying all the stories in Huffington's own head, she tells us though she doesn't agree with the film;

In the film, Michael describes capitalism as evil. I disagree. I don't think capitalism is evil. I think what we have right now is not capitalism.

In capitalism as envisioned by its leading lights, including Adam Smith and Alfred Marshall, you need a moral foundation in order for free markets to work. And when a company fails, it fails. It doesn't get bailed out using trillions of dollars of taxpayer money. What we have right now is Corporatism. It's welfare for the rich. It's the government picking winners and losers. It's Wall Street having their taxpayer-funded cake and eating it too. It's socialized losses and privatized gains.

There is a lot to unpack in that - not least of which is that neither Smith nor Marshall were necessarily "envisioning" anything as opposed to merely describing how markets in fact work.

This raises an interesting definitional exercise - what is "capitalism". Some would say a market economy as opposed to a command economy. However, as anyone who has read about command economies knows markets still exist - often "black" but nonetheless real, and occupying as many areas of exchange as they can.

The Marxist definition of capitalism rests on the concept of the "private ownership of the means of production, distribution and exchange". In their "communal" idyll this ownership is vested in the workers - though possibly expressed in the form of their ciollective ownership throgh Government. (The battle of control between the local collective and the central authority was an interesting part of the Russian power struggles of the twenties).

The more economic version is recognising that an essential feature of capitalism is the accumulation of capital, that is the retention of surplus for reinvestment. This feature necessitates the existence ultimately of the common stock firm, including the conversion of partnerships to listed firms (part of what brought the investment banks undone). That is, absent some other rule - and ethics is not enough - corporatism is the natural extension of capitalism.


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