Questions to be answered

I think that the United States and other Western countries are in a political and economic crisis.

I think that political leaders in the Western world must answer these questions.

Does the economic and political crisis mean that the system has failed?

If the system has failed, is this a failure of capitalism, a failure of democracy or both?

If the failure is a failure of capitalism, can the capitalistic system be fixed, or must it be replaced?

If the failure is a failure of democracy, can the democratic system be fixed, or is it doomed?

I don’t expect these questions to be addressed this year or the next, but I don’t think they can be evaded indefinitely.  I think there will be some sort of resolution, for good or for ill, within the next 10 years.

Capitalism, socialism and democracy

Karl Marx predicted that under capitalism, wealth would become more and more concentrated, that the concentration of wealth would lead to concentration of political power, and that workers would become more and more powerless.

In my younger days, I thought Marx was outdated, but his predictions seem to be validated by what has been happening in the United States in the past 30 or so year.  Steven Greenhouse’s The Big Squeeze: Tough Times for the American Worker and Jacob Hacker’s and Paul Pierson’s Winner-Take-All Politics: How Washington Made the Rich Richer—and Turned Its Back on the Middle Class tell the story very well.

In spite of this, neither Greenhouse, Hacker nor Pierson are socialists.  What they advocate is a return to the rough balance of forces between labor, business and government as existed in the United States from the late 1940s through the early 1970s.  That is pretty much my own position.  I would like to preserve and restore the New Deal social safety nets and economic firewalls and the 1960s civil rights laws, update to meet current conditions, and I would like to see the United States adopt a universal health care system, based on best practices in other countries, but that is as far as I go.

The core value of socialism is egalitarianism.  I am not an egalitarian.  If I have enough for my own needs, I am not bothered by other people having more.  What I am against is exploitation.  By exploitation, I mean profiting at someone else’s expense, other than in a free and fair competition.

I am glad to see people whose achievements are valuable contributions to society be richly rewarded for those achievements.  I don’t mind that J.K. Rowling, the author of the Harry Potter books, has a net worth of $1 billion.  I am fine with the fact that Larry Page and Sergey Brin, the creators of Google, have a net worth of $14 billion each.

H. Ross Perot began his career as an IBM salesman.  IBM Corp. capped the commissions salesmen could receive because Perot was earning too much relative to the other salesmen. Perot’s response was to earn the maximum annual commission in a few weeks, quit IBM and founded Electronic Data Systems.  My sympathies are with Perot.

I reluctantly accept the necessity for differences in income based on differences in rank.  I have misgivings about economic privilege based on inheritance.  I am morally outraged by executives of organizations leveraging their authority to reward themselves at the expense of people below them in the hierarchy. And I am outraged at financiers who enrich themselves by manipulating prices and selling worthless securities.

The first form of exploitation is found in any society based on hierarchical organizations.  It existed in the old Soviet Union, and it exists in the so-called non-profit sector of the United States today.  The second is a form of exploitation specific to capitalist society.  Capitalism requires honest financial markets to function well, but does not automatically generate them.  When market abuses are unchecked, the result is what you see in the United States today.