The Public Eye: Why Did Capitalism Fail?

[DanielMuffinburg]

My reaction to The Public Eye: Why Did Capitalism Fail? , by Bob Burnett

US voters hate all politicians and there’s political unrest throughout the world.

This is already indicative of the over-generalization and collectivism we’ll read in the remainder of the article.

*Corporations seek to maximize return on capital by leveraging productivity and paying the least possible amount for taxes and labor.

They also pay the least possible amount for raw materials and capital. Of course, if the author had mentioned that, then the reader my have began thinking about business-to-business transactions; if the capitalists are out to screw everyone else, then how is that they transact with each other since their interests conflict.

Corporate executives pledge allegiance to their directors and shareholders.

Of course. They’re employees.

The dominant corporate perspective is short term, the current financial quarter,

Proof?

First, global corporations are too big. We’re living in the age of corporate dinosaurs. (The largest multinational is JP Morgan Chase with assets of $2 Trillion, 240,000 employees, and offices in 100 countries.)

Misleading. Look at the liabilties too.

The original dinosaurs perished because their huge bodies possessed tiny brains. Modern dinosaurs are failing because their massive bureaucracies possess miniscule hearts.

Of course, this will never happen to the anti-capitalistic government. rolls eyes

Since the Reagan era global corporations have followed the path of least resistance to profit; they’ve swallowed up their competitors and created monopolies,

???/ BUt but but btu Standard Oil did it the 19th century, so it would be more accurate to say “Since the era of Lincoln.”

Okay. So the D-pad doesn’t work (don’t remember the last time it) in this RTE, which is making writing this post more frustrating than reading the article, so I’m giving up on this. I’ll let you guys take a stab at it.

which have produced humongous bureaucracies. In the short-term, scale helps corporations grow profitable, but in the long-term it makes them inflexible and difficult to manage. Gigantism creates a culture where workers are encouraged to take enormous risks in order to create greater profits; it’s based upon the notion that the corporation is “too big to fail.”

Second, global corporations disdain civil society. They’ve created a culture of organizational narcissism, where workers pledge allegiance to the enterprise. Corporate employees live in a bubble, where they log obscene hours and then vacation with their co-workers. Multinationals develop their own code of ethics and worldview separate from that of any national state. Corporate executives don’t care about the success or failure of any particular country, only the growth and profitability of their global corporation. (Many large corporations pay no US income tax; in 2009 Exxon Mobil actually got a $156 M rebate.)

Third, global corporations are modern outlaws, living outside the law. There is no invisible hand that regulates multinationals. In 1759 Philosopher Adam Smith argued that while wealthy individuals and corporations were motivated by self interest, an “invisible hand” was operating in the background ensuring that capitalist activities ultimately benefited society. In modern times this concept became the basis for the pronouncements of the Chicago School of Economics that markets were inherently self regulating. However, the last five years have demonstrated that there is no “invisible hand” – unregulated markets have spelled disaster for the average person. The “recovery” of 2009-10 ensured that “too big to fail” institutions would survive and the rich would continue to be rich. Meanwhile millions of good jobs were either eliminated or replaced by low-wage jobs with poor or no benefits.

Fourth, global corporations are ruining our natural capital. Four of the top 10 multinational corporations are energy companies, with Exxon Mobil leading the list. But there are many indications that our oil reserves are gone. Meanwhile, other forms of natural capital have been depleted – arable land, water, minerals, forests, fish, and so forth. Multinational corporations have treated the environment as a free resource. When the timberlands of North America began to be depleted, lumber corporations moved to South America and then Asia. Now, the “easy pickings” are gone. Global corporations have ravished the world and citizens of every nation live with the consequences: dirty air, foul water, and pollution of every sort.

Fifth, global corporations have angered the world community. The world GDP is $63 Trillion but multinational corporations garner a disproportionate share – with banks accounting for an estimated $4 trillion (bank assets are $100 trillion). Global black markets make $2 trillion – illegal drugs account for at least $300 billion. In many parts of the world, a worker is not able to earn a living wage, have a bank account or drive a car, but can always obtain drugs, sex, and weapons. And while the world may not be one big village in terms of lifestyle, it shares an image of “the good life” that’s proffered in movies, TV, and the Internet. That’s what teenagers in Afghanistan have in common with teenagers in England; they’ve been fed the same image of success in the global community and they know it’s inaccessible. They are angry and, ultimately, their anger has the same target – multinational corporations (and the governments that support them).

We live in interesting times. The good news is we’re witnessing the failure of global corporate capitalism. The bad news is we don’t know what will replace it.