Can Capitalism Save Itself?
Today's pop quiz involves oxymorons, those often amusing contradictory two-word expressions like jumbo shrimp, amicable divorce and Fox News. Okay, which of the following oxymorons have gained favor within the higher ranks of finance and politics: a.) Moderated democracy b.) Humanitarian intervention c.) Benevolent despot d.) Inclusive capitalism e.) Compassionate conservatism. If you guessed d.) Inclusive capitalism, you're correct.
Sadly, the laugh out loud, beyond satire nature of this new buzz phrase is totally lost on those disseminating it with a straight face. This was the case last May when 250 of the world's titans of finance and business attended a by-invitation-only summit on "Inclusive Capitalism," held appropriately at an 800 year-old castle in London, England. The attendees represented $30 trillion in assets, fully one-third of the world's total investable assets.
Hosted by Rothschild banking dynasty heiress, Lady Lynn Foester de Rothschild, the movers and shakers heard keynotes from International Monetary Fund Chief Christine Legard, former U.S. President Bill Clinton, former Harvard President and U.S. Treasury Secretary Larry Summers and His Royal Highness Prince Charles.
Lady Rothschild voiced the gathering's purpose by stating that "…it is really dangerous for business when business is viewed as one society's problems. And that is where we are today." Paul Polman, Univeler's CEO, worried about "the capitalist threat to capitalism," while conference Alan Mendoza openly fretted that "…we felt such was public disgust with the system, there was a very real danger that politicians could seek to remedy the situation by legislating capitalism out of business."
The participants were spooked by a thoroughly disillusioned public that has lost confidence in capitalism. When combined with people's rampant distrust of government – seen the coddler of corrupt bankers – elite squirming is well-founded. Further, many people believe that because government only responds to lobbyists from the financial sector, it's now an open question whether capitalism and democracy are compatible. Dr. Nafeez Ahmed, writing in Britain's Guardian newspaper, detected "an undercurrent of elite fear" about how several decades of capitalist indifference towards most of the world population might play out.
For well documented reasons, ordinary working people have lost faith in capitalism's implicit promise of upward mobility and sharing in the prosperity and benefits of society's advance. By contrast, we learn from Oxfam's recent report that the 80 richest people (85 last year) on the planet -- 0.000001 percent of the global population -- now have a collective net worth of $1.9 trillion. Their wealth, which doubled between 2009 and 2014, is equal to that shared by 3.5 billion people at the bottom of the world's income scale. For perspective, the average wealth per head among the 80 individuals is $23.7 billion compared to $540 for the bottom 3.5 billion people. (Parenthetically, 571 of the world's 1,645 billionaires are citizens of the United States).
How will this play out? According to Ahmed, the London Summit "represented less a meaningful shift of direction than a barely transparent effort to rehabilitate a parasitic economic system on the brink of facing a global disaster." For the most part Inclusive Capitalism is a carefully calibrated PR gambit in the service of self-preservation. The ruling groups must convey the image of a chastened system now intent on "including" those previously left out. We'll be hearing more about financial regulation, profit-sharing, curbing CEO pay, helping the "middle class" and various Neo-New Deal (minus the Deal) bromides.
The challenge for panicky plutocrats and their wholly-owned politicians is to convince the 99.0% that capitalism is the answer, not the problem. And they must accomplish this cosmetic fine-tuning without endangering profits and wealth accumulation. To expect the uber-rich to voluntarily alter the system’s fundamentals is to entertain a perilous naiveté.
My take is that barring significant public agitation from below, a system in which government is merely an appendage of our corporate overloads is not outside the realm of capitalist responses. Calling that system neofascism will offend some readers so for now let's label it a hybrid American totalitarianism. Hopefully that's another oxymoron.