The Evidence Keeps Pouring In: Capitalism Just Isn’t Working

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Photo: Capitalism Isn’t Working Another World is Possible

To followers of Ayn Rand and Ronald Reagan, and to all the business people who despise government, ‘community’ is a form of ‘communism.’ Even taking the train is too communal for them. Americans have been led to believe that only individuals matter, that every person should fend for him/herself, that “winner-take-all” is the ultimate goal, and that the winners have no responsibility to others.

To the capitalist, everything is a potential market. Education, health care, even the right to water. But with every market failure it becomes more clear that basic human rights can’t be bought and sold like cars and cell phones. The pursuit of profit, when essential needs are part of the product, means that not everyone will be able to pay the price. Some will be denied those essential needs.

Global Failures

Capitalism hasn’t been able to control runaway global inequality. For every $1.00 owned by the world’s richest 1% in 2011, they now own $1.27. They own almost half the world’s wealth. Just 70 of them own as much as 3.5 billion people.

Capitalism has not been able — or willing — to control the “race to the bottom” caused by “free trade,” as mid-level jobs continue to be transferred to low-wage countries.

Nor has capitalism been able to control global environmental degradation, with trillions in subsidies going to polluters that don’t even pay their taxes, and with corporations ignoring any semblance of social responsibility as they seek ways to profit from global warming.

Job Creation Failures I

With or without globalization, middle-class jobs are disappearing, evenhigher-end positions in financial analysis, medical diagnosis, legal assistance, and journalism. Artificial intelligence is making this happen. Millions of Americans have had a role in the great American productivity behind this technological takeover, but capitalism allows only an elite few of us to reap the disproportional profits.

Reports of job recovery are based on low-income jobs, many of them part-time. Layoffs are cutting into the military and technology. Gallup discountedWall Street’s job-creating ability. As noted by former Wall Street Journal Associate Editor Paul Craig Roberts, the US rate of unemployment is 23 percent when long-term discouraged job-seekers are included. That’s close to the unemployment rate of the Great Depression.

Job Creation Failures II

Closely related to employment woes is the collapse of corporate investment in new product R&D, from 40 cents per dollar in the 1970s to 10 cents now. CEOs are choosing instead to spend almost all of their profits on buybacks and dividends to enrich investors.

Health Care Failures

The capitalist profit motive allows the cost of a hepatitis pill that costs $10 in Egypt to sell for $1,000 in the United States, and the cost of a blood testto range from $10 to $10,000 in two California hospitals (a 100,000% markup at the second hospital).

Patent abuse is one of the factors making this possible. Pharmaceutical companies can tweak a drug with a minor change to create a “brand new” drug with a new patent.

Another health-related scam that affects most of us is bottled water. According to Food & Water Watch, about half of it is filtered tap water with fancy names, as evidenced in one case by an actual “tap water” label on a company’s product. Yet with the demise of community water fountains, and the barrage of advertising for “safe and pure” drinking water, unsuspecting Americans pay dearly: for the price we pay for a bottle of water we would be able to fill up that bottle a thousand times with tap water.

Housing Failures

Because of the “invisible hand” of the free market, in just 35 years the investment wealth of the super-rich has gone from 15% of middle-class housing to almost 200% of middle-class housing.

Education Failures

A remarkable story of privatization failure is told in the story of charter schools in Florida, where Jeb Bush still holds dear to his delusions of free-market educational success.

That’s just one example. In general, charters are riddled with fraud and identified with a lack of transparency that leads to even more fraud. Since 2001 nearly 2,500 charter schools have been forced to close their doors, leaving over a quarter-million schoolchildren between one bad business decision and the next. A report from PR Watch summarizes the billions of dollars spent on charters without accountability to the public.

Disposable Americans

Chris Hedges wrote: “Human life is of no concern to corporate capitalists. The suffering of the Greeks, like the suffering of ordinary Americans, is very good for the profit margins of financial institutions such as Goldman Sachs.”

People become meaningless in a successful capitalist system.

  • knockinheads

    What gibberish! Americans are the most generous people in the world! They willingly step up and donate to relief more than any other nation. Furthermore, conservatives give more freely in donations than liberals. In fact, when it comes to politicians, Biden is one of the stingiest and the despised Cheney is one of the most generous. Educate yourself before making asinine statements!

  • kevinzeese

    What individuals give is dwarfed by what countries give in foreign aid. The US does not do well in this listing. Only five countries met the longstanding UN target for an ODA/GNI ratio of 0.7%, the US is not one of them. And, when the US gives foreign aid it is often with strings attached requiring countries to purchase from US corporations, it is really a form of corporate welfare:

    Norway – 1.07%

    Sweden – 1.02%

    Luxembourg – 1.00%

    Denmark – 0.85%

    United Kingdom – 0.72%

    Netherlands – 0.67%

    Finland – 0.55%

    Switzerland – 0.47%

    Belgium – 0.45%

    Ireland – 0.45%

    France – 0.41%

    Germany – 0.38%

    Australia – 0.34%

    Austria – 0.28%

    Canada – 0.27%

    New Zealand – 0.26%

    Iceland – 0.26%

    Japan – 0.23%

    Portugal – 0.23%

    United States – 0.19%

    Spain – 0.16%

    Italy – 0.16%

    South Korea – 0.13%

    Slovenia – 0.13%

    Greece – 0.13%

    Czech Republic – 0.11%

    Poland – 0.10%

    Slovak Republic – 0.09%

  • AlanMacDonald

    The supposed ‘invisible hand’ of capitalism is really an ‘invisible claw’ of looting false profits made by externalising negative costs on other people, society, the environment, and government by the Disguised Global Crony-Capitalist Empire and its very very few elitist HFWs (Hedge Fund Whores), PEPs (Private Equity Pirates), AICs (Activist Investor Crooks), and the remaining TNCs that these pure financial swindlers have not yet taken over, hollowed out, and loaded with debt.

  • What complete and utter rubbish.

    Your hypocrisy is setting new records.

  • Kevin777

    This article is true but until American wake up to the realities around them they deserve nothing better.

  • davidrubinon

    Capitalism IS working. It is working perfectly- for the capitalists. All of the “faults” that the author cites are not negatives, but clear evidence of its efficacy. Capitalism is designed to create precisely the effects cited in this article: the vast usurpation of wealth, health, clean air water and food, the destruction of any and all support systems for any but the elite, including access to health care, healthy food, mobility, and most profound of all- access to self-improvement, self-realization, and self-expression concomitant with the destruction of public education. What the writer says is 100% true, but it is also 100% by design, and it is working just fine.

  • Mari McAvenia

    “People become meaningless in a successful capitalist system.”

    People invented this predatory system of capitalism which disposes of people deemed “unsuccessful”. I’d say that any human created system which disposes of its enablers – the hosts to its parasitic functions – is a deeply flawed, unsuccessful system in itself. The only thing that’s still keeping masses of “true believers” religiously feeding this beast and kneeling at its altar is mass propaganda.

  • “People become meaningless in a successful capitalist system.”

    People become inhuman commodities in a successful capitalist system. Ironically, people cease to be individuals.

  • Mari McAvenia

    Yup. The system that claims to empower individuals actually does the opposite 99.9% of the time. We know this but it’s awfully hard to be heard above the braying din of the mindless herd, who, ironically, see themselves as expressing individuality by living as conformist consumers. What a racket!

  • Well said. A racket it is! Americans are the most propagandized people in the world. Did you read, “The Fake US Democracy Exposed Again” here on PR yesterday as well?

  • Mari McAvenia

    Thanks and yes. I am very grateful for the variety of articles that Popular Resistance makes available. Independent research material is getting harder to find. PR helps out a LOT! ( No pun, etc….)

  • Stone Bear Man

    Needed: A commonteer to resist the privateers

  • AlanMacDonald

    Yes, David, it is working as applied, if not as designed by Adam Smith (who envisioned small and social groups of people working in concert to moderately improve their societal well being).

    But “empire-thinking”, and the inexoxorable history of all Empire advances, is to turn socially uplifting ideas, concepts, etc. into ‘big tools’ of Empire.

    In this sense, the building of so-called “business empires” is just the building of an empire through use of new tools. While the underlying goal of empire-thinkers and all forms of Empire is still just Empire behind different masks (and more acceptable sounding rational).

    Empire is the perverse structure of any system through any tools and deceits that gathers in wealth and resources to the metropole and the minute powerful / exclusive elite to the harm and exclusion of the vast majority — always was and always will be, until and unless the majority of society recognizes and expunges Empire and “empire-thinking” in any and all forms of disguise.

  • Mary McGuirk

    We have permitted the elite to hide the TRUE COST of things through subsidies and tax loopholes and avoiding cleaning up the pollution they cause and permitting them to use common resources for their private profit. In the past, corporations were required to serve a COMMON GOOD in order to maintain their PRIVILEGES of limited liability. Time to reconsider CORPORATE PERSONHOOD.

  • Neil

    The question is; whether there is a good alternative that anyone can come up with history would show us the communist extreme doesn’t work well either but leads to amazing inefficiency and corruption with no food on the sheleves

  • kevinzeese

    Of course there is. There are many models all over the world where people have better health, healthier food, greater financial security-even for the poor, better education, less suicides, less imprisonment and do better in many measurements.

    State based soclialism and the US form of capitalism failed most people. The wealth divide in the US is at the root of the problem. Sharing wealth in more equitable ways is one key to confronting many issues. We like “economic democracy” where people have greater control over their economic lives and a say in the direction of the economy. It includes business like worker-directed enterprises or worker-owned co-operatives. These are successful in many parts of the US and around the world and could be scaled up so people build wealth from their work.

    The expansion of credit unions where depositers on a share of the bank and can participate in decision making.

    These are just two examples of many. One of our projects, It’s Our Economy, focuses on this issue. This was written a few years ago so it is a little dated, but it will give you an understanding of economic democracy

  • Margaret Flowers

    You may be interested in Gar Alperovitz’ book “America Beyond Capitalism.” He is working tirelessly to design the next system that is neither capitalism nor state socialism.

  • bobmac

    The question is: “Should the state decide how people spend their money, or should the people themselves decide how they spend their money?” While of course rich people should give some of their wealth to charity (as many of them do) it should remain their choice, rather than the choice of the state.

    Of course, inequality is very extreme. Yet the vast majority of the 1% have only managed to become one of the 1% because they have bettered society. For example, Apple and Microsoft provide to the 99% cheaper phones and computers, oil companies more oil and competition that leads to lower prices, etc.

  • bobmac

    Interesting how many overlook anti-capitalist countries such as Russia, North Korea, and China when they say such things.

  • If I lived in the USSR, Cuba or North Korea, I would be a staunch capitalist – I did go to business school after all. But I live in the United States which has become a plutocracy/oligarchy in which a rent economy/monopoly capitalism prevails. So yeah, I’m a anti-capitalist. The pendulum needs to swing back the other way. Democracy, the will of the people, needs to be restored. Something has to be done about economic inequality where the rich keep getting richer and the poor keep getting poorer. The current trend is unsustainable. Not only that, Mother Earth is starting to chime in on the issue. It’s not going to end well for the poor or the rich.

  • kevinzeese

    We need something new that recognizes the failure of state socialism and finance capitalism. We try to bring that to the fore on our economic website: http://www.ItsOurEconomy.US — we call it economic democracy.

  • Hey Kevin (and Margaret) – At you service, as always. I can hold up banners, march in rallies or even get arrested. 😉 You have my contact information…

  • bobmac

    However, people should be able to CHOOSE where their money is spent. If I, through hard work and perseverance, become successful in life, should I have the right to at least choose where my money is spent? A large number of the “1%” and the owners of the corporations, such as Steve Jobs and Bill Gates have ascended from humble backgrounds but through their industriousness have helped the world greatly? Why shouldn’t they choose where they can spend their money?

  • Adrian Dore

    Why do we blame capitalism for our problems? Clearly, something is going wrong, but is capitalism to blame, or are we barking up the wrong tree?

    Furthermore, we call ourselves capitalists, but are we?

    Capitalism is a philosophy which supports free enterprise and the creation of profit. However, its objective is its longevity and growth. This is unattainable if the profit objective is achieved at the expense of other business constituents (or stakeholders.) Capitalism favours a balanced approach. It is not obsessed with the generation of short-term profit at the expense of other constituents. Consequently, capitalism is not exclusive (serving only shareholder interests) nor is it unaware of the importance of serving all constituent needs, to achieve its objective of longevity and growth.

    Therefore, clearly, the problems we face lie elsewhere. They lie in the rigorous, systematic, and relentless, day-to-day pursuit of short-term profit, for the exclusive benefit of shareholders and executive, driven and supported by our measurement standard. Measures have the greatest impact on outcomes, not philosophies. So, even if capitalism were the source of our problem (which it’s not,) it would have limited impact on outcomes versus the impact our measurement standard has. So look to our inadequate and inappropriate measurement standard as the root cause of our most serious social, environmental, economic and business problems – not capitalism.

    We call ourselves capitalists because we share free enterprise and the profit objective with capitalism, but that’s where the similarities end. The achieving of profit is nothing to frown upon, in fact, it is essential to sustain and grow business. Profit should only be frowned upon when we make it our sole objective, at the expense of all others. Capitalism rejects this, favouring a balanced approach instead. So, clearly, we aren’t capitalists, by a long shot. We are nothing quite as noble. We have unjustly sullied the name of capitalism. We are nothing more than profiteers. A profiteer is defined as an entity which uses unfair means (in whatever shape or form this may manifest itself) to generate a profit. We use our measurement standard, which is focused on short-term profit generation, for the exclusive benefit of shareholders, at the expense of all others. This, by even the strictest interpretation, qualifies our measurement standard as “unfair means.” So let us no longer bluff ourselves, and label ourselves incorrectly as capitalists, when we are nothing more than grubby, dirty, profiteers using an unfair advantage to enrich the few at the expense of the many.

    Our measurement standard makes us profiteers, not capitalists. We will go down in history as “generation profiteers.” It’s time we implement a new measurement standard, one which will serve the needs of all.