Goals and Solutions for a Capitalist System

Mikie

I'd like to discuss solutions to the problems identified here. I assume two things in beginning this topic:

1) One of the main forces moving humanity towards annihilation is the socioeconomic system of capitalism.

2) "Capitalism" is distinguished from other systems by the relationship of employer and employee.

Given these two assumptions, I think it's important to analyze modern business and economics as a main source of destruction.

Big business has organized in the form of the multinational corporation for roughly the last century. A corporation is a legal entity, a fiction created by law -- a product (gift) of governments. Private wealth has now come to dominate the public domain by financing and lobbying government officials and representatives. They only get to where they are if they (a) are already wealthy or (b) have the support of wealth, making the internalization of a certain set of class values nearly inevitable.

If the above is not obvious to you, then there's little reason to continue reading.

Given this analysis, the only question left is: what exactly do we do about it? In other words, what about solutions? What goals are we working towards?

If we want to treat the underlying disease, and not simply the symptoms -- or, to shift the simile, to go to the roots of the trees rather than swing at its leaves and branches -- I think one solution is dissolving, or finding alternative forms of, corporate governance. Change how business is organized and conducted. This will take a shift in ideology, and above all else a collective effort from millions of people. Before elaborating further, I want to clarify a few things.

There have been businesses and markets for centuries, of course --- in many different countries, and with various outcomes. This is true whether that political/economic system is labeled "capitalist" or "socialist" and "communist." They succeed in some ways and fail in others. It's important to realize that the United States in the 1950s and 60s had high economic growth which was much more egalitarian than today, and equally important to look outside the United States to other countries.

As an example, China has made enormous strides in common economic measures, yet they're a "communist" country

Reveal

(and since "communism = evil" has been drilled into Americans heads for decades, especially during the Cold War, many simply cannot see this)

. Germany, Denmark, and Sweden have succeeded and failed in various ways as well.

These countries are neither completely socialist nor completely capitalist. To the extent to which a country's economic system's main form of organization is structured as an undemocratic hierarchy (the corporation), where a few private owners control the distribution of profits, where there are owners/employers and employees/wage laborers, there is capitalism. That is nearly every country, from China to Venezuela. To the degree to which the government regulates/interferes with markets and provides its citizens social programs, there is socialism. That is nearly every country, from China to Venezuela.

If we compare the United States to other countries, by what metrics are we succeeding? How do we compare to these countries using these metrics?

You would think that, given our military and economic power in the world, not to mention what we profess to be our ideals, that we would have some of the best outcomes in a number of fields -- like healthcare, quality of life, longevity, wages, time off, low infant mortality, low levels of homelessness, strong social safety net, etc. It turns out none of this is the case.

Given these lousy results, what do we have to lose by changing things?

By changing corporate governance there are three interrelated possibilities, as I see it:

1) Putting workers on the boards of directors.
2) The co-op model.
3) Stronger unions.

Michael Alpert has some interesting ideas as well. I see all of this as part of a labor movement -- a movement which should have a party representing it, as other countries do.

If we take intentions, beliefs, and feelings out of the equation and look simply at how corporations are currently run, we can see clearly where the problem arises: a small handful of people make all the decisions, especially about where the profits go. The majority of any corporation are its workers, who are shut out of decision-making. They are thanked by management for a great quarter or great year, and that's the extent of it.

What happens to all the profit? Where does this money go? This should be the question for anyone working for a major corporation.

According to William Lazonick, over the last 20 years (but ultimately starting in the 1980s) the answer has been stock buybacks:

The allocation of corporate profits to stock buybacks deserves much of the blame. Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.

What is the reason for this? (I think it has something to do with shareholder primacy theory.) And what can be done about it? How can we begin to organize? What organizations have you found to be working on these issues?

Mikie

People who take 18th century values seriously are against concentration of power. After all the doctrines of the enlightenment held that individuals should be free from the coercion of concentrated power. The kind of concentrated power that they were thinking about was the church, and the state, and the feudal system, and so on, and you could kind of imagine a population of relatively equal people who would not be controlled by those private powers. But in the subsequent era, a new form of power developed — namely, corporations — with highly concentrated power over decision making in economic life, i.e., what’s produced, what’s distributed, what’s invested, and so forth, is narrowly concentrated.

The public mind might have funny ideas about democracy, which says that we should not be forced to simply rent ourselves to the people who own the country and own its institutions, rather that we should play a role in determining what those institutions do — that’s democracy. If we were to move towards democracy (and I think “democracy” even in the 18th century sense) we would say that there should be no maldistribution of power in determining what’s produced and distributed, etc. — rather that’s a problem for the entire community.

And in my own personal view, unless we move in that direction, human society probably isn’t going to survive.

I mean, the idea of care for others, and concern for other people’s needs, and concern for a fragile environment that must sustain future generations — all of these things are part of human nature. These are elements of human nature that are suppressed in a social and cultural system which is designed to maximize personal gain, and I think we must try to overcome that suppression, and that’s in fact what democracy could bring about — it could lead to the expression of other human needs and values that tend to be suppressed under the institutional structure of private power and private profit.

Noam Chomsky

Figured I'd throw this here.

John McMannis

What happens to all the profit? Where does this money go? This should be the question for anyone working for a major corporation. — Xtrix

It's a really good question. My wife works for a big corporation, and they made billions last quarter. Meanwhile her and other workers constantly get nickeled and dimed, with just slight increases in their compensation. They're always told the same thing "we don't have the money" or "it would not be cost effective" and things like that.....but she doesn't really ask that question much. i think a lot of people are just afraid to be fired and don't want to rock the boat. They aren't given all the information and so it's just assumed that the higher ups "know what they're doing"
If most of the money is going to stock buybacks and dividends, my question is why do they do that? who decides, the CEO? You mentioned that it hasn't always been that way....how and why was it different?

Mikie

If most of the money is going to stock buybacks and dividends, my question is why do they do that? who decides, the CEO? You mentioned that it hasn't always been that way....how and why was it different? — John McMannis

All good questions. The people who decided are generally the board of directors and the CEO. Sometimes the CEO is also the board chairman.

Why do they decide to give so much back to shareholders -- in the form of dividends and boosting the stock prices by buying them back? It's because of a way of thinking that's started to grip academia and corporate America in the 1970s and 80s: the shareholder doctrine, also know as the "Friedman Doctrine." This states that the shareholders are the true owners, and that a company's sole responsibility is to make a profit for its owners. This is what's believed. The policies that followed, starting with compensating CEOs with stocks and allowing buybacks again (rule 10b-18) are both justified by this way of thinking.

That's beginning to change now, as the Business Roundtable and other major business lobby groups have started talking about the "stakeholder doctrine" instead. So far just words.

It indeed hasn't always been that way. I mentioned the 50s and 60s -- there corporate governance was different, and with much better economic results.

https://www.reuters.com/article/us-otc-bizroundtable/if-corporations-dont-put-shareholders-first-what-happens-to-business-judgment-rule-idUSKCN1VC2FS

Streetlight

Stock buybacks are happening because the ROI in them is higher than the ROI in non-financials. No need to look to ideological factors. Follow the money. It's as simple as that.

In turn, btw, because capitalism is a failing system in which profitability is at record lows so financial markets are one of the last remaining pressure relief valves before the real economy has to actually explode.

An explosion in speculative activity is what always follows the decay and failure of the real economy. Capital follows the path of least resistance. And the resistance in the real economy is at record levels. The whole thing is being held together by the duct-tape of QE and PPP and record low interest rates. It's bleeding to death. Who in their right mind would park their money there? No sensible capitalist.

ChatteringMonkey

Given this analysis, the only question left is: what exactly do we do about it? In other words, what about solutions? What goals are we working towards? — Xtrix

I think the only "solution" is to let the whole system collapse, probably better sooner than later... and see what can grow after that.

The "system" is predicated on the idea that "we" can secure a future for ourselves apart and above of the rest of the world. This has turned out to be a mistake... no matter the disavowment of this mistake, at some time we will have to recon with it. If we wait longer, it'll probably be that much harder.

ChatteringMonkey

I think the only "solution" is to let the whole system collapse, probably better sooner than later... and see what can grow after that.

The "system" is predicated on the idea that "we" can secure a future for ourselves apart and above of the rest of the world. This has turned out to be a mistake... no matter the disavowment of this mistake, at some time we will have to recon with it. If we wait longer, it'll probably be that much harder. — ChatteringMonkey

This all probably has a very "Hari Seldon"- vibe to it... but I think it true for the most part. It's just basic (energy) physiques unfortunately.

ChatteringMonkey

I don't really expect an answer to this... seriously, what do we expect people to say? That almost everything we do is a ruse, propped up by inequality or fossil fuels, both highly toxic in their own ways. Most people can't live in that space.

[silence]

ChatteringMonkey

↪Xtrix

Okay to attempt to give a more constructive response to your question ;-).

The whole system is the problem right?

You can't change the whole system is my answer (and not only mine). It just doesn't work because the system works around little fissures and the like... commercializing ('colonizing') anything and everything that attempts to change it from "within". Politics is futile for much of the same reason... because by the time you get to anything worthwhile, it has to be watered down that much that it isn't worth it anymore anyway.

The way it will/has to go, is breakdown. Parts of the system will breakdown, cease to function and other things will take its place out of necessity. That's the charm of alternative ways of living, things like perma-culture, that they create alternative means of subsistence not directly tied to the mainstream economy... without trying to be overtly political.

Mikie

Stock buybacks are happening because the ROI in them is higher than the ROI in non-financials. No need to look to ideological factors. Follow the money. It's as simple as that. — StreetlightX

Short-term return on investment, yes. The stock price goes up. But this isn't the entire story, as you know. Stock buybacks were nearly non-existent for 30+ years until after 1982. That's why I mentioned rule 10b-18 of the SEC, under Reagan-appointed John Shad. The floodgates opened after both this action and increasing stocks as a portion of CEO compensation. Whether these moves were "ideologically" driven or not is arguable, although it does appear that way to me. I think the appropriation of Friedman's doctrine (and others) served as a nice cover.

https://hbr.org/2014/09/profits-without-prosperity

https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

Both from Lazonick, who's done good research into this. Also a decent interview here, if you're interested:

And the resistance in the real economy is at record levels. The whole thing is being held together by the duct-tape of QE and PPP and record low interest rates. It's bleeding to death. Who in their right mind would park their money there? No sensible capitalist. — StreetlightX

Right -- it's bleeding to death yet being propped up, over and over, by the Fed. The question is what happens this year when they start tapering their buying of corporate debt to fight "inflation"? Whether the financial sector bleeds out slowly or hemorrhages seems the only two options. Unless they find Jesus, of course.

Mikie

I think the only "solution" is to let the whole system collapse, probably better sooner than later... and see what can grow after that. — ChatteringMonkey

Maybe...but that means enormous suffering that will be felt mostly -- as always -- by the poor and working classes. It means worldwide depression. They've gotten themselves into a game where they're now "too big to fail," and so the government serves as a backstop for them, preventing them from failing. On and on we go.

I'd much prefer massive legal and regulatory reforms, but that's not going to happen either. What's more is that we're really out of time. So if the entire system collapses, perhaps that's the last best hope we have?

There's always the people, of course. That's my real hope. Unfortunately millions of people are far too divided by our media bubbles, too tired from work, too sick from our lifestyles, too medicated, too drugged out, or too "amused" to know or care about the imminent catastrophe already unfolding.

ChatteringMonkey

Maybe...but that means enormous suffering that will be felt mostly -- as always -- by the poor and working classes. It means worldwide depression. They've gotten themselves into a game where they're now "too big to fail," and so the government serves as a backstop for them, preventing them from failing. On and on we go.

I'd much prefer massive legal and regulatory reforms, but that's not going to happen either. What's more is that we're really out of time. So if the entire system collapses, perhaps that's the last best hope we have?

There's always the people, of course. That's my real hope. Unfortunately millions of people are far too divided by our media bubbles, too tired from work, too sick from our lifestyles, too medicated, too drugged out, or too "amused" to know or care about the imminent catastrophe already unfolding. — Xtrix

My hope is people too in some way, but not in a typical direct political way, like people voting for reforms to the cosmopolitan global capitalist system that we have. I can't see that happening.

I think solutions will be local, smaller scale, communal etc... just people looking to pick up where the system breaks down, out of necessity or just because it makes more sense. There are already constant efforts at these more grassroots local initiatives, but they are not easy or all that successful because you still have that mainstream monolith they have to compete with that provides 'easy answers' for most people. The hope is that as it breaks down, these initiatives will get more traction as more people are forced-out/realize the terminal state of the system.

I guess my original point was that legal reforms and the like are only of consequence if one believes that the system can be saved. If one doesn't, then they don't really matter. That's the awkward political position I find myself in as of late, I think all traditional political answers are inconsequential because they seem to assume a future that I don't think is even possible.

Caldwell

It's important to realize that the United States in the 1950s and 60s had high economic growth which was much more egalitarian than today, — Xtrix

Which, perhaps, had also the highest register of happiness in the history of the US.

Agent Smith

Any economic system that encourages or provides a favorable environment for greed (insatiable want) is doomed from the get go. We're part of nature and nature always has upper and lower bounds to what it can sustain; it definitely can't support the runaway train of avarita.

:grin:

Mikie

↪Agent Smith

It does seem like that’s what the system is based on, ultimately: the accumulation of wealth. More and more profits, more and more money. And why? What’s the point in spending your time collecting coins and paper?

Because it can buy you control and influence, not to mention lots of material goods. It can buy food, women, houses, cars, clothes, jewelry, TVs, etc. All the things we’re supposed to covet.

A certain amount of material goods, and of wealth, is fine. I agree with Aristotle in that case. But when it’s the central need on which you base your sociocultural system, you’re heading for disaster.

Mikie

Not sure if anyone saw this, but worth a read, and interested in reactions:

https://www.theglobeandmail.com/opinion/article-the-american-polity-is-cracked-and-might-collapse-canada-must-prepare/

Mikie

I realized I never really offered any practical solutions. But there's one I come back to over and over again in my reading, which is obvious and simple: get together. Get together with others. Solidarity. Teaming up with other people, and working towards achieving a set of goals.

The analogy to war and revolution is perhaps too extreme, but if we scale it down we can see that, historically, the changes that benefit the vast majority of humanity (who are not born into the ruling class) all come from groups of people (usually large groups) feeling similar things, expressing that to one another, and putting their asses on the line to change things.

So perhaps it's a topic for a new thread, but why is this so damn hard? It certainly has been hard for me, but perhaps others have different experiences. There are many barriers that prevent not just mass movements/revolution, but even something like forming a small union or local advocacy group, and these barriers are not always bureaucratic.

Deleted User

The answer is Epuicurean communes and small businesses, wrenching the hand of the state out of the labor market, and allowing productivity and the commons to flourish side by side. Side by side as friends and allies, mutually beneficial, and respectful of the human consciousness.

Mikie

↪Garrett Travers

Whatever goals we have, I’m thinking more and more there’s only one way to get there: through collective effort. That’s not to say we lose our individual identities— but that one person, isolated, simply can’t take on an entire system.

So then isn’t another way of looking at things to say: the “real” problem to overcome is our own unwillingness to get together?

Average

So then isn’t another way of looking at things to say: the “real” problem to overcome is our own unwillingness to get together? — Xtrix

I think that division is part of the whole divide and conquer strategy. Blaming the victims doesn’t seem like the right decision.

Deleted User

Whatever goals we have, I’m thinking more and more there’s only one way to get there: through collective effort. That’s not to say we lose our individual identities— but that one person, isolated, simply can’t take on an entire system.

So then isn’t another way of looking at things to say: the “real” problem to overcome is our own unwillingness to get together? — Xtrix

Aye, comrade. That's exactly what I would say. Even if I can be insulting, that doesn't mean I can't respect what makes you human, and love that humanity.

Agent Smith

Capitalism is just evolution, possibly gone wrong for the way it rewards (fierce) competition. It's aut cum scuto aut in scuto (Spartan women :roll: ) or, in more familiar terms, the law of the jungle. I want to go to Egypt! :chin:

javi2541997

↪Agent Smith

Like it or not I guess it is the system which fits our necessities the most. I don't say we have to live in an economical jungle but in a world where the free market is respected as much as the public administration.
I guess that could be the perfect equilibrium

Agent Smith

Like it or not I guess it is the system which fits our necessities the most. I don't say we have to live in an economical jungle but in a world where the free market is respected as much as the public administration.
I guess that could be the perfect equilibrium — javi2541997

Yup it fits and fits well, like an iron maiden. The maiden embraces and kills us in the process. Love! :roll:

universeness

What organizations have you found to be working on these issues? — Xtrix

A great thread!
In the UK, there are two groups I know of called 'momentum' and 'compass,' who are trying to create a new progressive politics which tries to address many of the issues you raise. They both support Universal Basic Income (UBI) for example.

universeness

I forgot to include couple of links:

https://www.compassonline.org.uk/
https://peoplesmomentum.com/

I am not a member of either of these groups, yet, but I have been keeping up, particularly with the 'compass' group and I like the majority of what they are doing so far. I like the momentum political movement as well but they are strongly connected to the UK Labour party (of which I used to be a member). I left the Labour party when they dropped clause 4.
Tony Blair set the labour party back 100 years in my opinion. I was very disheartened when the vile Maggie Thatcher called Tony Blair her greatest achievement. That was a very bitter truth for me.

Average

I was very disheartened when the vile Maggie Thatcher called Tony Blair her greatest achievement. That was a very bitter truth for me. — universeness

The truth is never bitter my friend. It is the sweetest thing there is.

baker

Whatever goals we have, I’m thinking more and more there’s only one way to get there: through collective effort. That’s not to say we lose our individual identities— but that one person, isolated, simply can’t take on an entire system. — Xtrix

No, but the system has to be taken on an individual level. It's what "consumers" -- every individual person can do.

In order to bring down capitalism (more like: render it economically unviable), one would need to do things that are counterproductive to capitalism, and those things are sometimes counterintuitive and come with a cost to the "consumer". Don't buy stuff at sales and at discount prices, don't buy fast fashion, buy less, buy relatively good quality, treat your things well so that they last. Don't buy junkfood. Don't buy pseudoluxuries (like storebrand versions of luxury items, like storebrand champagne). Buy as few imported goods as possible.

Capitalism understands only profit. If nobody buys stuff that is on sale, they'll stop putting it on sale. Note that when things are on sale, this means that somebody isn't getting paid properly in the process. This is usually the people who actually manufactured the items on sale. It's impossible to tell whether they'll be paid less unfairly if people buy things at the full price, but the important thing is to fight the idea of "getting something for very little or nothing".

It seems inevitable, though, that there will be suffering in the process. Many people who are involved in the production of relatively cheap and relatively low-quality items will lose their jobs. The fact is that it was ethically wrong to produce and to buy such items to begin with. Everyone involved will need to pay the price for this eventually.

Mikie

I think that division is part of the whole divide and conquer strategy. Blaming the victims doesn’t seem like the right decision. — Average

True. But who's blaming the victims?

Even if I can be insulting, that doesn't mean I can't respect what makes you human, and love that humanity. — Garrett Travers

And more of this is needed.

Capitalism is just evolution, possibly gone wrong for the way it rewards (fierce) competition. — Agent Smith

I'm leery about attributing to the current socioeconomic system any idea of natural law, evolution, human nature, etc. Capitalism could very easily be described as regression, from a certain point of view.

I don't say we have to live in an economical jungle but in a world where the free market is respected as much as the public administration. — javi2541997

What free markets? Seems to me more a myth than a reality.

In the UK, there are two groups I know of called 'momentum' and 'compass,' who are trying to create a new progressive politics which tries to address many of the issues you raise. They both support Universal Basic Income (UBI) for example. — universeness

Excellent! Glad to hear.

↪universeness

Agreed re: Thatcher and Blair.

No, but the system has to be taken on an individual level. It's what "consumers" -- every individual person can do. — baker

I'm skeptical about claims like this. First, I don't like labeling human beings as primarily "consumers." Secondly, as we've seen with environmental issues, businesses love to make things about individual choices ("decrease your carbon footprint," etc). While there's clearly some truth to this (groups are composed of individuals), the emphasis is deliberate -- and what it ultimately does, in my view, is encourages isolated action and discourages collective action. So don't bother joining any groups to fight climate change -- just buy better light bulbs. Don't join a labor union -- just talk to your boss.

Even if you yourself aren't meaning this, I think it's worth pointing out.

Don't buy stuff at sales and at discount prices, don't buy fast fashion, buy less, buy relatively good quality, treat your things well so that they last. Don't buy junkfood. Don't buy pseudoluxuries (like storebrand versions of luxury items, like storebrand champagne). Buy as few imported goods as possible. — baker

All good ideas that I support wholeheartedly, with the above qualification.

Tom Storm

↪baker

:up:

Average

True. But who's blaming the victims? — Xtrix

I’m apologize if I misinterpreted your words. It just seems like the problem is that people are being divided and not that they are divided. When you emphasize that fact that they are divided instead of the fact that they are being divided it seems like you’re criticizing the victims for their inability to unite.

Goals and Solutions for a Capitalist System

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