American Dream: The Two Faces of Capitalism [258*3]

THIS HUB IS ANOTHER LOOK AT CAPITALISM, one of many I have published. There are many facets to capitalism which provides a plethora of ways to describe its several good and bad points. Writing, especially to convince, is a bit like composing music or painting; an idea hits you (a motif in music, a sketch in art) and you write it down, then expand on it to see if it goes anywhere.

That is what we have here, you see, and what I hope is a novel way of explaining the good and the bad about capitalism. Why is it important for people to understand this? Because what you believe to be true about capitalism will determine who you send to Congress and the Executive office as well as ultimately the course the Supreme Court will take. And, if the wrong economic philosophy becomes dominant, then the American economy can slip back into the boom-bust instability seen prior to WW II and of which we had a taste the beginning of 2008. If the right one is chosen, on the other hand, the relative economic stability seen between WW II and 2001 can be experienced.

The discussions surrounding capitalism revolve around two different axis; 1) laissez-faire vs government involvement and 2) capitalism vs socialism. Each position has adherents to varying degrees which means there is a continuum of possible beliefs about capitalism. It is this "continuum" aspect that causes many of problems with understanding capitalism, or socialism for that matter.

It is understandable that people want simple, black and white explanations of complex issues. But when talking about economics, such explanations are very hard to come by. So, when a thought hits, another Hub gets published.

Circular Flow of Capitalism

CHART 1
CHART 1 | Source

Philosophical Ideas

I'm listening to a lecture series on capitalism and the subject at the moment was conservative economists Joseph Schumpeter (1883 - 1950) and his defense of capitalism during the Great Depression of 1929. Something was said that brought this to mind -

  1. It is human nature for some people to innovate when there is money to be made from it
  2. It is human nature for some people to cheat your neighbor when there is money to be made from it.
  3. Capitalism allows the same person to be both, which, therein, lies the seed of destruction of capitalism.

Schumpeter's three points illustrate the good, bad, and ugly of capitalism. What makes his observations so pertinent is the fact that capitalism has no brakes. It's this lack of natural brakes which can bring on the demise of capitalism; without brakes there will almost certainly be a crash. And in American capitalism, the economy has crashed in a major way more than 19 times between 1792 - 1938; and that is counting some closely spaced recessions and depressions as one downturn.

A Brief Look at Life Before Capitalism

PRIOR TO THE MID-1800s, CAPITALISM DIDN'T EXIST; IN FACT, it couldn't exist because the essential elements for it to take hold were absent. Throughout Europe, and most everywhere else, the process was as follows:

  • The serfs worked the land of their Lords to provide food to the landowners and, if the noble was benevolent, to themselves.
  • Towns primarily contained government personnel, their support, and artisans who produced the luxury items the nobles desired. They did not, however, have merchants to sell their wares to the general public because, except for the great cities, there was no public; virtually all of them were toiling away as serfs.
  • Even if the serfs had any money, getting to the market was problematic in those days. Instead, the market, such as it was, had to come to them to sell or barter for the very basic necessities of life.
  • Because there was only an artisan class, production was small and very expensive which means their products were out of reach for all but the very wealthy.
  • There was, at that time, no way to produce mass quantities of things at low prices.

And that was the way it stayed until technology advanced enough to overcome that last hurdle. Once surmounted, the rest began to crumble.

The Basics of Capitalism

BEFORE GOING MUCH FURTHER INTO TALKING about the "Two Faces of Capitalism", one must first know what capitalism is. When you distill all of the rhetoric, definitions, and explanations, the bottom line is that capitalism is nothing more than two or more parties freely and fairly negotiating for the exchange of one or more things or services for another set of things or services. For this to happen, however, the ability for people to own private property must be protected by the government; without it, there can be no "free" exchange, can there. If you don't own it, how can you exchange it for something else? This, of course, implies someone else doesn't own what is being traded, generally meaning the State, or in the very old days prior to Adam Smith, a Lord or similar nobility. To me, that is the fundamental definition of capitalism and it isn't one you will find in textbooks or Wikipedia.

From the concept of private property and the freedom to exchange it for something else, you derive all of the other properties of what we generally think about capitalism; the ones you do find in textbooks. (By the way, it wasn't called capitalism in Adam Smith's day, you can thank Karl Marx for the term, instead it was called mercantilism.) For example, when you Google Capitalism one of the first things you find in its description is "allocation of resources". I haven't included this as being fundamental because "allocation of resources" follows from the free exchange of products and services. For the same reason I don't start with "profit" either; just free trade.

Most importantly, one of the requirements for capitalism to work, in the long run, is that the negotiations between parties be "fair", meaning neither has, on average, an advantage over the other. Absent that, capitalism devolves into some version of economic, and most likely political, dictatorship The reason for this is that once an advantage is established, barring outside intervention, the advantage will, in many circumstances, build upon itself (called positive feedback) until it becomes absolute where one party simply dominates the other. At this point, capitalism no longer exists. And, peeling the onion back a little bit more, one of the principal reasons this is so is that the person or group with the advantage can raise the barriers to entry such that it becomes more and more difficult for new players to enter the market.

What's needed for capitalism to be "free and fair"? Two things, 1) equal access to information and 2) trust. Without both, capitalism necessarily fails. To take a recent example, you buy (invest in) from an investment banker a "tranche" of mortgages (meaning a slice of a package of mortgages which have been sold as a lot) where the components aren't well known, or known at all. but nevertheless has attractive rate of returns (or at least having been promised such) . If neither party has access to information about the fundamental "riskiness" of this package, then the transaction is both free and fair. If, however, the seller knows that the pool of mortgages the tranche was from created from had a high proportion of "toxic" mortgages in its mix and doesn't disclose it, then the transaction is no longer fair. In other words the seller is taking advantage of the buyer's lack of knowledge turning a transaction where caveat emptor applies to that can be properly called fraud; this is exactly what happened leading up to and was one of the major contributors to the Great Recession of 2008,

On the other hand, if you send off money to a mail order house for a purchase, you expect ... you trust that the seller will send you back your merchandise. Without that trust, capitalism must crumble; imagine Ebay working without that trust mechanism being operable. But with adequate information and trust intact, the kind of capitalism the Right think actually exist, could exist.

WHAT AN UNSTABLE AND STABLE ECONOMY LOOKS LIKE

CHART 2 - COMPARE THE FREQUENCY AND MAGNITUDE OF ECONOMIC TURBULENCE PRIOR TO AND AFTER WW II - PRIOR TO WW II CAPITALISM WAS JUST A DREAM
CHART 2 - COMPARE THE FREQUENCY AND MAGNITUDE OF ECONOMIC TURBULENCE PRIOR TO AND AFTER WW II - PRIOR TO WW II CAPITALISM WAS JUST A DREAM | Source

The Bad Face of Capitalism

I WANT TO START WITH THE NEGATIVE SIDE OF CAPITALISM (seen as the boom-bust cycles prior to WW II in the Chart above) because it seemed like a good idea to end on a positive note. Why? Since, on the whole, capitalism is the best thing going it only makes sense to emphasize it. But, if it can't overcome the negatives, capitalism disappears and some sort of dictatorship will take its place.

I guess you can say what is behind all of capitalism's negative attributes is the idea of "fragility". What I mean by that is that the structure of capitalism is very weak and depends entirely on human altruism and minimizing greed. Let me explain.

As I mentioned above, in so many words, for capitalism to survive, what Adam Smith called a "Free Market" must exist in almost all circumstances. As soon as the market becomes "less free", either through government or private interference, capitalism quickly fades away. It may seem like capitalism because you still have a market where people are consumers and people are sellers who appear to negotiate on equal footing, but, it isn't. It isn't because the market forces of supply and demand are interrupted and some other outcome results rather than the one a free market would have produced.

Extreme examples of government interference are things like various forms of price fixing, such as rent controls, or forms of protection, e.g., minimum wage and tariffs. In each case, price is not allowed to move to its "natural level" because both the supply and demand curves are perturbed and nature is not allowed to take its course, as it were. Likewise, if labor is not allowed, for whatever reason, to organize in order to challenge management, then management is able to simply set the price they are willing to pay for labor (which has been the case for all of the 21st century so far). It matters not, except in rare, overy-full employment circumstances, do individual laborers have the ability to "negotiate" freely and fairly with the employer. Consequently, the labor supply and demand curves end up being all out of kilter which most often leaving the cost of labor well below its natural level. The same thing would be true if the labor union(s) became too powerful (like the guilds did in the 18th and 19th centuries) and/or corrupt; the playing field becomes tilted in labor's direction.

One of the principal attributes of capitalism which works to upset the free-market as well as being responsible for most of the "bad" about capitalism is ... the profit motive. (In the next section, I will replace "bad" with "good" and develop those ideas as well.) Common sense, observation, and empirical evidence all point to the profit motive driving bad behaviour. It leads to employers using their clout to pay only subsistence wages, a practice which was common until after the depression, as well as powerful unions striking at the drop of a hat. It also leads to oligopolies, monopolies, monopsonies, and other "ies" which diminish the egalitarianism that is the basis of a truly free market. Lastly, in my list, is that the profit motive is also behind all sorts of economic fraud at all levels, from the mom-and-pop stores to AGI and Citibank as well as at all levels of government.

Another fundamental feature of capitalism which drives the "free" out of the free-market as well is the lack of natural negative feedback loops to counteract the impact of bad behaviour. Even worse, capitalism as a built-in positive feedback loop that makes things worse with each iteration when things get badly out of whack Take note that I am not talking about simple supply and demand which, in a true or nearly free-market, does have mechanisms to drive prices back to the "natural" price of an item. Instead, I am referring to a market badly twisted out of shape, such as was the case in 2006 before housing prices topped out. When the economy is in this precarious position, even a small action (like the Fed not bailing out Lehman Bros.) will upset the applecart and, over time, will send the cart on a steep downhill path; a path which ultimately must lead to self-destruction without any more help from anybody. It is this facet of capitalism with the Right denies happening.

So, with that pretty picture in mind, let me sum up this section. At the end of the day, it is the profit motive leads to bad behavior which, in turn, interferes with the free-market operations. And, because capitalism has no natural way of righting these wrongs, they just keep compounding until capitalism will cease to exist.

WHAT CAPITALISM CAN PROVIDE

CHART 3 - REAL US GROSS NATIONAL PRODUCT,  1869 - 1913 in 2009$ (the gray areas are recessions and depressions
CHART 3 - REAL US GROSS NATIONAL PRODUCT, 1869 - 1913 in 2009$ (the gray areas are recessions and depressions | Source

The Good Face of Capitalism

ON THE OTHER HAND, THE PROFIT MOTIVE is also the source for much good as well. While the profit motive may motivate people, and therefore organizations, to do bad things, it also motivates people to improve existing capabilities in addition to inventing new ones. The reason pure socialism fails in the long-run is that human beings, as a rule, will not go above and beyond what is minimally necessary without material incentive. Socialism relies on human altruism and, as Adam Smith clearly shows in a couple of his works, altruism is, for the most part, absent from the business world. Instead, self-love, or what we call self-interest today, is what drives people to do bigger and better things.

As Smith puts it, the baker, the butcher, and the candlestick maker (the latter is my choice, not his) do not make those products simply to have them available for you to purchase out of the goodness of their heart. Instead, it is self-interest, the desire to improves one's lot in life, that drives them to such labors. And, it is the competition between makers of like products to continue to improve in order to get a competitive advantage over another.

A natural consequence of this is rising standards of living for the society as a whole as the profit motive and competition drive people to excel. It does this by being the most efficient AND effective method for buyers to communicate with sellers, writ large as well as economically allocate resources. Through an actually "free" marketplace, as Smith points out, prices of things assume what he calls a "natural" price that balances the willingness of the public to buy a thing or a service and the seller's willingness to make or provide it, rather than something else. This, of course, is the classical Supply and Demand theory.

One of the consequences of this process is the efficient allocation of resources, including labor, materials, and money. And, so long as the population and/or technology keeps growing, so will the economy, in the long run. If the economy grows then, in theory, societies standard of living will increase as well..

This, I believe, cannot be said of any other economic system, be it a barter economy or a socialist one. There are, of course, many other benefits from capitalism but the above discussion constitutes a very good face indeed and is well worth preserving.

Keeping Capitalism Alive

ALMOST ALL ECONOMISTS, FROM ADAM SMITH FORWARD, understood that left to its own devices, capitalism will transition to some sort controlled economy; and history bears this out. So, what must be done to keep capitalism alive? Why, regulating it, of course.

And I think I felt a shudder go through the Conservatives and Minimal-State Liberals! But what choice is there? Regulate it or Lose it, to coin a phrase. This isn't much different than a train going through lightly rolling hills and then rolling hills. Discounting the effects of friction for the moment, once a train gets going, due to momentum it will keep going with no more power being applied to the engine; in theory, you could turn the engine off and it would keep going at the same velocity.

Assume the train enters those lightly rolling hills. So long as the average gain in altitudes equal the average loss in altitudes, the train will keep on going on its own accord. It will lose velocity going uphill but gain it back going downhill; much like the economy does when trouble isn't brewing.

But, what happens if the train enters steeper, uneven terrain? Well, its momentum isn't large enough to overcome climbing long steep hills, and without additional power, the train will come to a stop and start rolling backwards, won't it? Likewise, if it goes down a steep slope, it will gather speed until such time as it jumps the track; unless, of course, you apply the brakes to slow it down. Again, the economy is no different. If it becomes superheated, which generally give rise to some sort of asset bubble, then at some point, the economy will derail like it did in Dec 2007. I hope this all made sense.

So, enter the Fed (which certain aspects of it has been operating off and on since 1785) to save the day .. sometimes. The purpose of the Federal Reserve is to apply more throttle or brakes when it is needed, and only when it is warranted. Unfortunately, the Fed is run by humans, and humans have this habit of being biased in one direction or another; it is a rare individual who can govern appropriately in spite of their bias. Historically, the Fed got off to a rough start and was responsible for a few economic downturns becoming worse, sometimes much worse than they should have been; examples are 1920, 1929, and 2008.

In the first case, Federal Reserve actions was part of the reason their was a recession in the first place. In the Great Depression, it was Fed inaction that exacerbated the problems. In the latter case, it was Alan Greenspan's philosophy which allowed the problems to persist and grow until it was too late to do anything, even though he finally saw the error of his ways. But, throughout the 1950s through 2000, the Fed did its job pretty well, as you can see from Chart 2 above.

Obviously this is not the place to get into the details on how the Fed, through monetary policy, and Congress, through fiscal policy. can regulate the economy (something those on the Right don't think it can do or should happen), so I think I will close this way. Like the train analogy, the capitalist economy is an engine which can often operate successfully on autopilot; no other economic system can make this claim. And, like a train, which is most effective in moving material around the country, capitalism is most effective at moving a large economy forward ... so long as it is treated with some TLC.

WHAT DO YOU THINK?

Which Face do you think is winning today?

  • Capitalism in America is working just fine, thank you; it GOOD Face is showing
  • Capitalism in America is, sadly, in trouble because its BAD Face is starting to show
  • Capitalism in America is, sadly, failing because its BAD Face is in full view
  • Capitalism in America is, happily, failing because something better will take its place.
  • Not sure.
See results without voting

DEMOGRAPHIC SURVEY #1

Politically, do you find yourself agreeing most often with ...

  • the Left?
  • the Right?
  • One or the other, depending on the issue?
  • Something else?
  • Not sure?
See results without voting

DEMOGRAPHIC #2

Are You

  • Male?
  • Female?
See results without voting

© 2015 My Esoteric

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21 comments

Larry Rankin profile image

Larry Rankin 18 months ago from Oklahoma

As always, well done and thorough.

Interesting read.


HSchneider 18 months ago from Parsippany, New Jersey

Very well said, My Esoteric. Pure capitalism will always go off the rails because of the inherent greed in man. Controls are necessary to keep it on course and fair. It is not perfect, by far, but the best we can do to ensure everyone's prosperity and avert disasters.


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My Esoteric 18 months ago from Keystone Heights, FL Author

Thanks HS


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My Esoteric 18 months ago from Keystone Heights, FL Author

Thanks you also Larry.


Sanxuary 18 months ago

Capitalism can only work with sound economic principals, the current model allows for fraud to always prevail.


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My Esoteric 18 months ago from Keystone Heights, FL Author

Thanks for reading and commenting Sanxuary. Unless by "principals" you mean ethics and morality, I am afraid capitalism is doomed to fail without the federal gov't putting the brakes on bad behavior by people and organizations. The conservative laissez-faire theory lacks those safeguards, 2008 is a perfect example.


UltimateDude 18 months ago from Kansas City, MO

Capitalism breeds inequality and self righteousness. In theory, it is the fairest economic practice the world has seen, but when put to the test (a short lived 220 years or so, if even that long) it not only has failed but will continue to fail.

The hypocrisy from the Right regarding responcibilities for ones actions and ones financial obligations doesn't hold water in capitalism (like many of their viewpoints). They preach financial responsibility, yet champion an economic system that allows businesses as well as individuals to pass along taxes, wages, marketing and advertising costs all on to the consumer. Businesses have no financial obligations except to cover all their expenses in their quest to become rich. In essence the middle, struggling class, foots the bill for everyone, while business owners decide the worth and type of lifestyle (or non-existent lifestyle) their workers will be given. This is another of the many Right-Wing hypocrisies. They don't like to be told that they make too much money or that they have enough things in life, yet they decide the livelihood of everyone that works for them. A workers production makes his boss wealthy, yet the worker has to live paycheck to paycheck, picking and choosing which bills will get paid that month and which will have to wait until the next paycheck.

The cost of living is rising at a much faster rate than wages are. Corporations and big businesses such as Wal-Mart who refuse to give their employees benefits or a decent wage, claiming it helps to keep their prices low, when in reality it brings about more people (their workforce) being dependant on welfare and other government subsidies just to survive because their employers refuse to help. Capitalism grows the welfare state and the government intervention that people on the right and pro-capitalists claim to hate so much. They can't see the forest through the trees. Change will eventually come, not in my lifetime and maybe not for another 220 years, but everything comes to an end eventually. The problem is not enough people are experiencing hard times. Many, many people have good paying jobs that allow them their pretty tame lifestyles (compared to the very wealthy) so that they become happy and complacent and forget about everyone that is struggling beneath them. There's just enough people making 6 figures in this country, that have a great life, that it over shadows the lower middle class and poor. Oppression will be capitalisms downfall, but it will take a long while to take hold.


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My Esoteric 18 months ago from Keystone Heights, FL Author

Thanks for reading and commenting, UltimateDude. I do agree with the essence of what you say, but "free market" capitalism isn't the boogie man; its just a name for one way people can interact on an economic level. It is people who take the "free market" out of capitalism; people are who "breeds inequality and self righteousness".

A socialist economy has the same problem, the ultimate bad example is Communism. In theory, communism sounds great, that is why it caught on with the masses. In practice, the same thing that leaves such a sour taste in your mouth about capitalism also destroyed pure socialism. To wit; As a rule, human beings are not built to act in an altruistic manner most of the time. Worse still, there are very few internal breaks that will stop harmful acts when they provide an advantage to yourself or ones you love. In short, pure socialism requires something of human nature that simply does not exist.

Capitalism is also subject to the same foibles, just to a slightly lesser degree. For capitalism to work, it requires a government dedicated to enacting those laws needed mitigate bad human economic behavior to the largest extent possible.

I am hardly Right-wing, but I have no problem with people EARNING as much as they possibly can. There is nothing wrong with a business owner trying to pay as little as possible to earn as much as possible PROVIDED there is a free-market for labor. If labor has the same ability to earn as much as possible for their efforts and have the equivalent tools for demanding it, then it is simply a tug-of-war between two competitors. The problem throughout much of history, however, is the game has been rigged against the laborer because governments, like they are doing again today, are lining up against the worker in favor of the business owner.

Your last line is certainly true, but I fear what will take its place.


Luke 18 months ago

Thank you for clarifying and improving my understanding. I think a lot of working people realize the gap is widening. The middle class is not stupid. We are very aware of the ever widening gap between the owner and worker. I remember when I was growing up in the 80's my parents were allowed as much overtime as they wanted. My dad would wake up Christmas day, open gifts with us and then head to work for "double pay" holidays. He could pick up the shift after his and work a 16 hour day to make some extra money if needed, and management/ownership actually encouraged it. That is no longer the case. Cutting overtime, thereby reducing the expense of pay, while continuing to raise prices has allowed business to become more profitable than ever. Warren Buffett, a man who controls a lot of capital in this country, has himself pleaded with the government, and Obama specifically, to step in and do something about the wage gap. He knows that those which own the means of production will not do anything themselves unless government takes action. The gap will widen and widen to a point where a few handful of people will have their own tyranny over this country, dictating life to everyone. Sadly it has already begun with lobbyists purchasing legislation and having their self interest made law by those in congress that they already control.

It almost seems that we'd be better off as a country, electing people that do not have experience. Experienced legislators allows for more opportunities to get corruption correct. To be able to hide kickbacks, better. Unfortunately; morals, common sense and a good head on ones shoulders do not meet the requirements of elected leadership in this country, although I would argue those 3 things should be all that does matter.

The question becomes, how to make the masses aware enough to bring about these types of changes in a money and material obsessed country. Like I said above, it will not be in our lifetime. Maybe the best I can do is educate my children of "the real "real" world" and how they need to realize how (human-controlled) economics works and ways to stay ahead of the curve. Or I could move to Denmark (or one of those Norwegian countries). I've heard they cap annual salaries at $10 million a year per person. Now that's spreading some wealth! Who am I kidding, I can't afford to move to Denmark. Not living in this country!


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My Esoteric 18 months ago from Keystone Heights, FL Author

I understand where you are coming from, Luke. The following is a recent post in answer to another comment on the Hub: http://hubpages.com/politics/The-American-Dream-Wh...

It reads in part " ...So, using this as a reason to refute Piketty doesn't really work. Worse, if you start counting at 1988; the inequality continues to grow.

Bottom 5th- fell from 3.8% of total income in 1988 to 3.2% in 2013

Next 5th - fell from 9.6% to 8.4%

Next 5th - fell from 16% to 14.4%

Next 5th - fell from 24.2% to 23%

Top 5th - increased from 46.3% to 51%

Top 5% - increased from 18.3% to 22.2% in 2013.

During that same period, the economy grew 85% over the 25 year period or 2.5% per year. Now, if there was no income inequality, what other explanation do you have 4/5ths of the working population declining in their share of total income while 1/5 sees a substantial increase. How is that not income inequality?

If income were distributed absolutely evenly, then the shares would remain roughly the same; clearly they are not.

If, as many in your camp say, the lower 1/5 are lazy bums with no incentive and contribute nothing to economic growth and should lose a share, then why is the same thing true for the next three-fifths. I have a hard time believing they didn't contribute to growth either.

Why did the top 1/5 grow at 1%/yr while the next 1/5 down grew at .4%, and the next two levels didn't really grow at all in 25 years while the lowest 1/5th actually lost ground!! Oh yes, the top 5% grew at 1.4%/yr.

Based on 1966 - 1986, this the way it should have looked given the 3.6% annual growth in GDP:

Top 5% -- 1.8%

Top 1/5 -- 1.8%

4/5th -- 1.6%

3/5th -- 1.2%

2/5th -- 0.8%

bottom 1/5th -- 0.6%

The difference between those two time periods is mind-boggling."


Akriti Mattu profile image

Akriti Mattu 17 months ago from Shimla, India

I was wanting to read something like this a few days earlier. I appreciate you writing this post. Well written.


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My Esoteric 17 months ago from Keystone Heights, FL Author

Thank you, Akriti, I appreciate you reading it.


jackclee lm profile image

jackclee lm 14 months ago from Yorktown NY

Your analysis is very good. Fair and balanced. Where do you see the alternative "improvement" over capitalism? Among all the current economic systems, with all their faults and all, the bottom line, which is the best? I think the answer is obvious but I could be wrong.


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My Esoteric 14 months ago from Keystone Heights, FL Author

I don't see an alternative "to" capitalism, I see an improvement "of" the capitalist system, mainly strong regulations on two economic fronts.

1. Keep tight control over the financial industry, that is the nexus of the 20 + financially-based recessions and depressions in our history; in virtually every case one of the main factors of these major events has been an unregulated or insufficiently regulated financial systems

2. Laws and regulations to a damper on the powerful's ability to take an UNFAIR advantage of those with less power. This DOESN'T mean to tear down hugely successful companies or individuals (they deserve everything they JUSTLY and HONESTLY earned); but it DOES mean not allowing them to prevent others from challenging them or succeeding.


jackclee lm profile image

jackclee lm 14 months ago from Yorktown NY

My esoteric - I agree with those proposals. I guess we can find common grounds. I also believe that limited government includes a strong regulatory element that make sure of fairness and also to prevent criminal activities. I also think crony capitalism is what give's capitalism a bad name in some circles. Keeping money out of politics is almost impossible.


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My Esoteric 14 months ago from Keystone Heights, FL Author

That view sets you apart from most of your conservative brethren, glad to see it.

Yes, crony capitalism does exactly that and is the poster child of what we need regulations for.

Let me take on the word "limited", when a applied to the size of government for a moment. First, from day 1, this term has been bandied about by people on both sides of the aisle, in fact this country almost went to war over it. As you can guess, I am not talking about today but 1791 with the establishment of the First National Bank of the United States.

How the term "limited" is interpreted is at the heart of the debate on its establishment. There were three major combatants, one, Hamilton, who thought "limited" included the federal gov'ts ability to create such an institution. One the other hand, Madison, with some help from Jefferson , said it wasn't because it wasn't "expressly" written into the Constitution.

(Now take note of two things, 1) that Madison successfully blocked the inclusion of that word in the 10th Amendment which had major ramifications in later Supreme Court rulings and 2) Madison, during his term established the Second National Bank of the United States after having overcome his original objections because of a previous Court ruling which established the theory of "implied" powers.)

Now, both Hamilton and Madison were deeply involved in the creation of the Constitution (Jefferson was carousing around in France with Adams at the time) and both, I am sure, argued profoundly about what "limited" meant.

In the end, the measure passed the House and ended in a tie in the Senate. The tie was broken by Vice President George Clinton broke the tie in favor of Hamilton. After much thought, Washington agreed if fell within the purview of the Constitution and signed the bill. The Supreme Court later agreed, with their decision partially based on the lack of the word "explicit" in the 10th Amendment.

The whole argument today still revolves around the missing word "explicit" in the 10th Amendment. It is ironic, isn't it, that the man responsible for that word's fate was ultimately undone by its absence.

From that point on, each State's Right issue that has reached the Supreme Court ended up with whether they agreed or disagreed that issue at hand fell within the "implied" powers resulting from the word "explicit" being taken out of the Bill of Rights.


UltimateDude 14 months ago from Kansas City, MO

In my opinion, beginning with the industrial revolution, which was the beginnings of big business and corporate America, we went from a democracy governed by the people, for the people to being governed by big business, for big business. Both Teddy Roosevelt and FDR placed regulations on businesses to keep their money out of politics. Then came Ronald Reagan and every congress and president since 1980 has been on the side of big business. Once money infiltrates and takes over politics, you no longer have a democracy in the true sense of the word. This country needs to get back to being governed for the people, by the people; but too many on both sides of politics have already been corrupted, in a short span of 35 years. I have fears about what the next 35 years will bring as this country is further ruled by the interest of business and corporations. People don't understand that we have given up a lot as a nation in the interest of big business.


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My Esoteric 14 months ago from Keystone Heights, FL Author

UltimateDude, have you considered that without big business, America would still be using outhouses and the horse and carriage. That without the Industrial Revolution America would be a third world agricultural based economy.

By and large, they are not the real enemy; even though I personally rail at very large corporations, but they fall in a special category. Their special because of their enormous size combined with the foibles of the human character when greed is not controlled by external means.

The real enemy is the minimal-state liberal economic philosophy and the conservative's social and economic beliefs. They believe, wrongly, that people or businesses, as a whole, can self-regulate themselves in a way that is beneficial to society. It is simply impossible for that kind of dynamic to happen; and we have 150 continuous years of failed economic policy to prove it. That America did as well as it did between 1800 and 1933 (once you remove the growth inherent in an expanding nation), is impressive; but, it pales when compared with growth from 1950 - 2000.


UltimateDude 14 months ago from Kansas City, MO

My problem isn't so much with business or growing the economy through progression and technology, it's what business has evolved into such as taking over politics and setting the policies by which the people of this country are forced to live by. Our country is supposed to work the other way around. But as you say above, humans are not altruistic. We all agree that profits and costs of living are at an all time high, while wages have decreased. This is not by accident. It is a calculated move by the few extremely wealthy individuals pulling the strings. That in itself is the basis for a corrupt government once these massive profits reach the political realm. FDR knew that. His policies sparked the growth of the country and the economy, and made Americans more financially equal. The last 35 years has all but eroded that away because of the special interest, and I hate to see it continue.


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My Esoteric 14 months ago from Keystone Heights, FL Author

I am not sure that "evolved" is quite correct, its my opinion from my research it has been this way from even before our nation became a nation. It has your attention because it is happening today; but it caught the attention of people like you and I in centuries past as well.

It was probably even more prevalent then than now because income and wealth inequality was much, much worse than it is today; remember, there was basically no middle class in America until the 1950s; just poor, merchant, and wealthy classes.

One big incident I remember reading about happened during the civil war, it was the bribery that led to a sole source contract for the production of boots for the soldiers ... very shoddy boots as it turns out. It is just one example of the old maxim that if you have politics, you have graft and influence buying. I think that instead of trying to stop it, you never will, instead you control and minimize it to the maximum degree possible.

That means there has to be an organized public swell to force change, it has happened before, and it will happen again. Until then, such as an Amendment to reverse Citizens United, people need to stop beating their chests about it and accept it as a reality. Once that happens, then people and organizations can concentrate on how to defeat it, including maybe something akin to a backfire ... beat them at their own game.


UltimateDude 14 months ago from Kansas City, MO

I agree with all that. With history being the great equalizer in proving humans wrong over time. From slavery to civil and women's rights etc... I can only imagine what people 150 years from now will think of us as a society. I guess all I can do is to make the best of my time on this earth. As a letter carrier (mailman) and as the guy that trained me told me on my first day, "you'll see quickly just how dumb humans are", and there's never been a more truer statement made. We're not as intelligent as we give ourselves credit for and definitely lack common sense. Hopefully we can continue to progress as a human race.

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