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Is capitalism evil? Is it bound to pass from the scene? I thought such questions were forever relegated to occasional seminars in a few cloistered left academies. Now, compliments of Michael Moore and the Great Recession, such questions are part of our national discourse. Yet, as even many on the left would caution, shorting capitalism is a dangerous strategy that has burned many over the last two centuries.
Perhaps a more fruitful line of inquiry is the form in which it will survive. The capitalism of the robber barons differed in many ways from that of Andrew Jackson's era. Mid-1950s capitalism is distinctive from today's insider capitalism.
U.S. capitalism in its 2009 incarnation is neither just nor efficient. One need only look at a number of widely accepted measures of economic health. While nearly one of six American workers is unemployed or underemployed, almost a third of our productive facilities stand idle. While homelessness continues to grow, nearly one in seven rental properties stands vacant and foreclosure rates rise.
Put aside Economics 101 and ask a simple question. Isn't there something wrong with an economy that fails to steer unemployed workers into the unused plants? And if some policy achieved this purpose, wouldn't more workers earn enough to rent those vacant homes and apartments?
Americans often pride themselves on looking at facts on the ground. I find it hard to deny that as an economy we have already produced enough homes and factories that everyone could live comfortably.
Conservatives argue that government programs that pay the unemployed to work in those vacant factories would be "inefficient" or would burden our grandchildren with huge obligations. Yet what could be more inefficient than allowing nearly a sixth of our workers and a third of our factories to sit idle? And as for future generations, their ability to pay debts will depend on the strength of the underlying economy, which is being eroded day by day.
After the Great Depression, Europe and the U.S. crafted policies that corrected the crude market imbalances that allowed humans and their tools to sit idly. Athens University economist Euclid Tsakalotos points out that Keynesianism in the postwar model was also more than a tool to deal with recession and aggregate demand. "It represented a broad, and relatively coherent, patchwork of political, social, and economic elements. It included social norms about the level of acceptable inequality (the level of wages at both ends of the income distribution, care for those unable to work).
The compromises of post-World War II capitalism broke down in the '70s. The years since this breakdown have not been kind, either in long- term growth or economic justice. GNP and productivity increases both in the
U.S. and in a liberalizing Europe slowed even as inequality grew. (By the same token, the refusal of several European states to follow as fully the U.S. deregulatory labor market model has eased their decline.)
Our experience over the last 50 years suggests that capitalism works best when the dynamism of markets is harnessed to and limited by social and moral concerns. That experience, however, raises two other concerns that the left must take seriously.
Even the most harmonious system (social democracy, socialism, farmers market capitalism) may hide old wrongs or even encourage new evils. Just as capitalism changes in shape, the social norms in which it is embedded can themselves become agents of oppression if not subject to sensitive scrutiny. Post-World War II capitalism was sustained by lonely and uncompensated women's work, by African-Americans in ill-compensated work and by endless exploitation of natural and human capital.
Corporate capitalism can grow and adapt. Social and economic relations within individual firms acting in a market environment need not be confined to the strict hierarchies prevalent today. Not only Europe but also the U.S. provide instances of worker-controlled enterprise in which a one-person, one-vote principle prevails, corporate assets are jointly owned, and workers determine wage structures and product priorities.
Contrary to the business press, such firms have impressive track records. In Europe, workers have directly occupied some of the factories being closed amid the recession. Some have seen the social insanity of idle minds and plants and have acted directly where politicians even on the left have stood by.