ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Politics and Social Issues»
  • Economy & Government

Mish, Marx and the Future of Capitalism

Updated on February 10, 2014
bgamall profile image

Gary opposes Libertarianism and has published the ebook, Libertarianism, the UK Big Bang and How They Ruined America, found on Amazon

Marx Identified the Economic Problem

While Marx did not have the correct solution, he did identify the problem, ie that the small businessman will cry for the reestablishment of credit in times of financial turbulence, even though credit strengthens the monopolies and creates a financial aristocracy, that acts as a blood sucking parasite of speculation upon the wealth of the society.

So while I agree with Mish about deflationary pressures, and about the need for frugal living and correction of personal balance sheets, I think Mish and Marx (and myself) have a lot in common in their disdain for the credit cabal that rules the world.Except that recently Mish has come out and said that borrowers were more at fault for the housing crisis than the lenders. That is a boldfaced lie.

Creditors set up the system of easy money, and warned people that if they did not buy they would be forever left out of the housing market. They are at fault for the housing bubble.

Marx's solution was the dictator of the proletariat. Mish's solution as I understand it is the dictatorship of free market capitalism, sans the Federal Reserve and any market manipulation. It would seem that both solutions will never arrive at success.

But a compromise of the two could effect success. Strong small business and strong unions seem to be a buffer against the large fascistic capitalist and financial power, which uses government and market manipulation to succeed. If we destroy either of these pillars of the average Joe, we will not prosper as a nation.

I disagree with Mish that pure capitalism sans unions and labor will work. Greed has to be distributed, not concentrated. I don't for a minute trust totally free market capitalism to give a bone to the proletariat. Mish and Marx both wanted concentrated power to offset the concentrated power of the large capitalist. Mish wanted the power in the hands of small capitalists and ethical large capitalists. Marx wanted power in the hands of the non capitalist, ie the proletartiat. I say that neither position is necessary and indeed work against capitalism. I would rather see power in the hands of many groups and players.

I am reminded of the James Hoffa letter to Lloyd Blankfein which encouraged Mr. Blankfein to not drive YRC stock into the ground. I remember joking that Mr. Hoffa could scare Lloyd into compliance. While I don't know if that happened, Mr. Hoffa got his way. This is interest group dynamic and power at work. I wonder if Mish would be proud. Well, if he had any respect for unions he could be, but I doubt it.

I have argued for free markets, for allowing the TBTF banks to actually fail. I have argued for less manipulation of markets. All these need to happen within the framework of a fair wage to workers although, at times, these goals seem to be mutually exclusive. If workers lose so much leverage that they have to work for substandard wages, this becomes a threat to real capitalism (not Wall Street corporatism or mercantilism).

Marx had a solution to capitalism, the state central bank, with profits going to the party to be dispersed. However, that would likely not work, and yet what we have is quite different though based upon the model. We have a central bank, private in the US and now public in England, that privatizes profits, and socializes losses. Taxpayers pay for failures in the bets the private banks make, and the central banks allow the bets!

Marx Was Right About a Few Things

The Future of Capitalism and the Distribution of Wealth

First I would say that one can learn a lot from Mike Shedlock (Mish). I enjoy reading his blog and commenting on it. Mish may be be wrong, however, about the uselessness of pouring money into black holes like Freddie and Fannie.

We may be facing the demise of the 30 year mortgage and maybe that is what we need, but the demise of the GSE's and possibly the 30 year mortage will be accompanied by severe economic cost.

Even Republicans who want to destroy the GSE's want guarantees for loans. Without the guarantees, the investors will not invest in the mortgages or will drive interest rates sky high. I do not pretend to know the answers, because without tight underwriting, the 30 year mortgage actually drives prices for houses artificially high.

I have been watching carefully the behavior of the Fed and the big banks in Foreclosuregate, and have determined that securitization is a very dangerous thing when it comes to mortgages. Yes, without it the economy is facing bleak prospects, but securitization is predatory madness.


I agree with Mish that the rating agencies furthered a bank scam with their unreal rosy ratings of very bad bonds and loans. It is because of this behavior all around that I advocate walking away from mortgages, guilt free. (Check with the state laws where you reside before doing it!) We agree that lack of regulation of shadow banking was a huge reason for the ponzi banking scheme.

But I have come across a few things other concepts where I disagree with Mish. I have seen him make a relentless attack on state and local government. While I agree that, for example, police officers are paid too much, causing too few to be hired when more are needed, I disagree that we need to bust unions, kill wages for state governments, etc. Perhaps it is one of degree, but I fail to see how a major attack on wages of union and state workers would help the middle class survive. Seems to me this is just another way for the wealthy to pay fewer taxes.

With regard to Marx and his views on the middle class, Mish is the defender of the lower middle class business person while Marx thought this business person was used and controlled by big business. Mish is the defender of the small businessman and the shopkeeper. He even encourages the shopkeeper to toot the horn of capitalist goodness at the big business level.

Don't get me wrong, I do not support a dictatorship of the proletariat. But I do support some inroads by the proletariat as a means of fostering a lasting capitalism, albeit a modified one. I support a more improved face of capitalism, one in which union members make a decent wage, where the guy without the small business can prosper and where all work is dignified. I don't think that proletariat prosperity has any place in Mish's philosophy.

Mish wants a capitalism where the proletariat is at the mercy of capital. Sorry, Mish. It won't work. It would seem that the lower middle class (which has begun to move up the ranks since Marx wrote a long time ago), ie the shopkeeper and small businessman, has been really hurt by the big capitalist, the real villain and enemy of Marx.

We need to find a middle ground between Mish's view that labor should be at the mercy of capital, and Marx's view that capital must be at the mercy of labor.

Please read on below.

Disaster Capitalism

Ron Paul on the Subversion of Capitalism by Corporatism

Comments

    0 of 8192 characters used
    Post Comment

    • bgamall profile image
      Author

      Gary Anderson 6 years ago from Las Vegas, Nevada

      Thanks Niall. Appreciate your vote of support.

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      Well, manipulation still reigns in many markets. It makes it very difficult to invest.

    • eovery profile image

      eovery 8 years ago from MIddle of the Boondocks of Iowa

      They can only manipulate the market so much, because someone can always open up a business and compete with them. Some of the liberist/democrat own corporations are the worse. Microsoft has not real competition, and the government is not doing anything about it. Why? Could it be the liberal Bill Gates is in bed with the government. I have never trusted Bill Gates, when he takes a friends program and sells it to the computer industry and calls it DOS. And he left his friend out in the cold. This so you how much scrubbles Bill Gates had/has.

      Keep on hubbing!

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      Of course, the incentive should be in the form of easy access to higher eduction. I think that is very important for an economy. But then it probably is overpriced because of that ease of funds. Price controls would be helpful there.

      And I am for the wealthy paying more taxes as they profited the most since wages for the middle and lower classes stagnated.

    • loua profile image

      loua 8 years ago from Elsewhere, visiting Earth ~ the segregated community planet

      Would it not be prudent to provide the incentive to everyone to create??? Smaller piles of wealth are harder to pilfer as we are witnessing at the moment; that is why one is not willing to jeopardize the position one holds; but a distribution of potential provides the will to create gaining the capacity requires the ability... This is what is lacking in profit based capitalism...

      Service based capitalism would serve the world in a better fashion by providing the potential for developing ability and capacity of worth wealth and value in all walks of life...

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      Well, while I believe that some redistribution of wealth or at least a forgiveness of debt is sometimes needed in crisis, I am not for a complete redistribution because I am concerned about the incentive to create.

    • loua profile image

      loua 8 years ago from Elsewhere, visiting Earth ~ the segregated community planet

      I do not believe any amount of manipulating of the current economic model will produce any significant or adequate result, simply because the model does not hold water as a sustainable gaming theory; it has been an utter failure, it has needed intervention since its inception and it still is an addictive vise of greed; it is not a civil model for distribution of wealth...

      The only way to have parity is a full distribution of wealth that stays in play without opportunity for hoarding and manipulation; that would be worker owned and operated industry, commerce, and business using the Nash Equilibrium Model... With the implementation of the Constitution as it was intended- self-ruling democracy, this strategy would more than correct, it would solve economic chaos for ever.

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      Yes, only if capitalism pares back the greed will the extension last. But when absolute Greed, ie. Goldman Sachs, deludes itself into thinking it is doing God's work as it rapes the landscape, then we may be near the end of our economic system. I hope that is not the case.

    • profile image

      Hxprof 8 years ago from Clearwater, Florida

      What a dilemma you've presented. Pure capitalism doesn't work because of greed.

      Capitalism that is, as you put it, "in the hands of many players" including unions, suffers from greed as well. Perhaps this second form of capitalism survives longer, but eventually those who can acquire the most money will do it, forcing the other 'players' out of the picture bit by bit.

      You remarked that ideally consumers need to live within their means (perhaps below their means). You're correct again; however, human nature trumps our desire to live within our means-greed wins again.

      Greed is a destroyer, and we humans have never managed to tame it. IMO the best we could hope for under the most desirable capitalist system is an extension. Eventually human nature will have its way.

      Good presentation.

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      I am flattered Micky.

      Mr. Abrin, good insight. With regard to communism in the Soviet Union it was the inability to make things that people wanted that caused the failure.

      With regard to consumption versus production in the US, the US consumer had been the golden goose of world prosperity. Of course much of it was accomplished by taking on too much credit. Yet the rally in the stock market has an almost "communistic" ring to it, as it is based upon production increases that have not translated into increased consumption. It will be interesting to see where that goes when they have to compare year to year against the last year's comps. I don't think it will look as good as comparing the last year to the meltdown year.

      As far as non production, financial services appear to have taken a greater share of US economic activity than before the meltdown. What a sorry state of affairs that is!

    • Shlomo SL Abrin profile image

      Shlomo SL Abrin 8 years ago from Redford, MI

      The failure of the 'communistic' approach came about because it sought to compete with capitalism (propaganda-wise. The Soviets were very efficient at churning out massive amounts of goods. Unfortunately, they were always three decades behind fashions/trends and ended up with tons of shit nobody, even behind the Iron Curtain, ever wanted. (That productivity sure came in handy, however, right after Stalingrad.)

      More isn't always better. Number don't lie, but they don't tell the whole truth either. The issue isn't so much production as consumption and to produce useless goods and base an economic system upon them is a recipe for disaster. 'Financial' products represent the apex of non-productive production.

    • Micky Dee profile image

      Micky Dee 8 years ago

      You certainly seem close to correct on all fronts. I do love your hubs. You continue to be one of the best "read" anywhere. Thanks

    • bgamall profile image
      Author

      Gary Anderson 8 years ago from Las Vegas, Nevada

      Thanks for all your comments so far. Certainly we have seen failure in a communistic approach, but capitalism has to make compromises. Unfortunately the compromises have all been to allow market manipulation by the capitalist leaders, and the attack on the middle class continues. Of course unions can be greedy too, and that is something to watch out for.

    • eovery profile image

      eovery 8 years ago from MIddle of the Boondocks of Iowa

      Bgamail. I had to get out the dictionary to read this hub and I learned somethings here. Thanks for the hub.

      I align more with the capitalistic side, because it is only thing that really makes money and get things done. Even China is using capitalistic corporation to come in and build in China to get the work done, because they cannot get it done. A lot of the largest corporations are from socialistic countries.

      The is a place for unions, but a lot of the unions are lost and have too much corruption in them.

      Thanks

      Keep on hubbing!

    • blue dog profile image

      blue dog 8 years ago from texas hill country

      bgamall,

      well done hub. klein's take on a new economy based on never-ending war is spot on, as is the d'amato link you provided.

      thanks for this well-researched info.

    • Hello, hello, profile image

      Hello, hello, 8 years ago from London, UK

      Where is the right answer? Humans will not allow the middle of the road. They either go either one extreme or the other. Thank you for interesting read.

    • Sandyspider profile image

      Sandy Mertens 8 years ago from Wisconsin, USA

      Alway good to read you views.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://hubpages.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)