Is US capitalism now mired in a moral cesspool? Consider the following:
Richard Eskow, senior fellow at the Campaign for America’s Future, comments: “Jamie [Dimon] did know that the London Whale scheme had cost his bank billions, even as he told investors on a phone call that it was just a 'tempest in a teapot.' If that’s not prima facie evidence of criminal stock fraud, conducted by The Man himself, it’s hard to know what is.”
While we may think banks are uniquely evil that appears to be hardly the case. Washington Post blogger Ezra Klein, quoting an international health insurance trade group spokesperson: "In my view, health is a business in the United States in quite a different way than it is elsewhere. It's very much something people make money out of. There isn't too much embarrassment about that compared to Europe and elsewhere."
Klein argues: “Unlike in other countries, sellers of health-care services in America have considerable power to set prices, and so they set them quite high. Two of the five most profitable industries in the United States - the pharmaceuticals industry and the medical device industry - sell health care. With margins of almost 20 percent, they beat out even the financial sector for sheer profitability.”
And then there is food. Michael Mudd, former vice president of Kraft Food in the New York Times (March 17), said: “I still struggle with the paradox that defined the business. In so many other ways, these are good people. But, little by little, they strayed from the honorable business of feeding people appropriately to the deplorable mission of “increasing shareholder value” by enticing people to consume more and more high-margin, low-nutrition branded products.”
Our largest investment banks engage in accounting and control fraud. Food processors are virtually drug pushers, knowingly striving to hook us on dangerous combinations of fat and sugar. Drug companies withhold information about the toxic risks of medications to which they hold patents and then continue to expend more to market those drugs than to discover new medications. Add to these atrocities a chemical industry that sues the state of California to prevent the inclusion of BPA on its list of dangerous chemicals. To cap it all, fossil fuel producers fund efforts to sew doubt about the scientifically well- established climate science.
Are these just occasional bad apples in a barrel of quality fruit? No. These are not merely individual companies but practices of many of the companies in major sectors of the US economy. When you say banks, drugs, chemicals, agribusiness, and fossil fuels you are talking about the guts of the entire US economy.
US capitalism is not merely a set of institutions that include large corporate ownership of the means of production, concentrated product markets, unregulated finance, and “flexible” labor markets, and corporate-advertiser-financed media. It is also an ethic, a set of moral sensibilities regarding profits and wealth. Whereas both were once regarded as signs of one’s social contributions, they have become ends in themselves.
Anything that maximizes profits—and often even for the CEO alone—is regarded as fair game. And except in cases where the wealthy have swindled other wealthy citizens, the megarich are treated with deference or at least kid gloves. Thus Bernie Madoff does go to jail, but authors and abettors of other ponzi schemes like Jamie Dimon remain honored guests on CNBC.
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This by itself is no argument for state socialism. The history of state owned nuclear power in the old Soviet Union is a story of dangerous evasions of basic safety precautions and continual withholding of information. State bureaucracies can have aims and agendas that do not include ordinary citizens. Just like corporate CEOs, state bureaucrats can often insulate themselves from the worst consequences of their own decisions.
But just as this is no argument for state socialism it is no brief on behalf of some idealized small scale enterprise where market competition purportedly exposes and checks avarice. Nineteenth century capitalism had its share of dangerous patent medicines, toxic food products, and financial swindles, not to mention bank runs that destabilized the entire economy.
There do appear to have been brief periods in US history and some foreign examples as well when a tamed capitalism effected by regulators, unions, a corporate culture, and an ethic of social responsibility did limit the worst impulses. Nonetheless, after a time the excesses and risks of the past were forgotten. The very gains in product safety and financial stability occasioned impulses to challenge and evade erstwhile limits. Regulators became captured or enticed by the industries for which they were responsible.
As our very planetary health and basic financial stability become increasingly insecure, can we challenge the current corporate culture of devil take the hindmost and the institutional matrix in which we seem trapped? We cannot sit back and cast bets on this. We must proceed in the expectation that alternatives both to laissez faire and state socialism can be fostered.
An important part of the equation must be new forms of ownership that might exist within a market environment. Small is not always beautiful or just. I don’t want auto factories or steel mills scattered all over the country. Nonetheless, in both large and small scale enterprise where workers own a share of the company, choose its officers, set pay standards, productivity is enhanced. But more than that, the inclination to produce and market dangerous products at the expense of the general population is diminished though not eliminated. Dangerous products are often the fruit of dangerous technologies. In addition, frontline workers have fewer financial resources to escape the consequences of dangerous technologies and will more likely speak up when they have power to make changes.
On the level of the economy as a whole, full employment policies and whistle blower protection statutes would give concerned workers more freedom to publicize concerns about products or production technologies. An ample regulatory regime also requires rethinking regulation itself. Today both occupational safety and environmental regulation are duties of special federal inspectors. The number of such inspectors is miniscule as compared to the number of workplaces. Regulation can be far more effective, less costly, and more widely valued if it is an activity of both front line employees and empowered and trained grass roots citizens.
Transparency is a key door to such initiatives. Notions of trade secrets cannot be used to block citizen and worker access to vital health information about the product and technologies. Workers in even the best-run cooperative enterprises could become locked into products to which they had devoted their whole professional lives. They must be open to challenge from those outside and if so are less likely to become locked into noxious procedures.
An ethic of social responsibility coupled with a commitment to transparency and receptivity to challenges from interested citizens may seem a long way off today. Nonetheless, US capitalism is widely and correctly regarded as in crisis. It is a time to expand our aspirations.