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Four Ways to Evolve Beyond Capitalism

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From http://www.flickr.com/photos/113899433@N04/11853243323/: Disaster Capitalism
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In my previous article, I explained how all of the economic problems we currently face are natural results of capitalism. From rising poverty in the midst of record-high corporate profits, polluted air and dwindling water, private prison systems that rely on mass incarceration, students going deep into debt while the government books student loan profits, foreclosures, stagnant wages, all of these economic problems can be addressed once we acknowledge our seriously flawed economic system and vow to fix it.

Now that we're having a serious conversation about capitalism, we can also have a conversation about solutions. Along with calling out flaws of capitalism, I'm proposing four solutions that would fix the most glaring problems in capitalism and blaze a new path forward for the next generation.

1. Break Corporate Monopolies and "Free Trade" Agreements

There's nothing wrong with starting a business to make and sell goods that people want to buy. But the problem begins when large corporate giants force local small businesses to shutter their operations. This peer-reviewed study looked at data from 3,000 counties and found that, on average, each new Walmart that opens kills approximately 150 retail jobs in the county. This means that for every job created by a new Walmart, 1.4 jobs on average are lost.

The explosion of corporate giants swallowing up small business competition and killing jobs is a consequence of "free trade" entities like the North Atlantic Free Trade Agreement (NAFTA), the World Trade Organization (WTO) and the Trans-Pacific Partnership (TPP), which is currently being negotiated behind closed doors.

At the time NAFTA was signed, there was no trade deficit between the United States and Mexico. As of 2012, that trade deficit has ballooned to $276 billion in lost jobs and wages as a result of skyrocketing imports and stagnant exports. While the Clinton administration promised 1,000,000 new jobs because of NAFTA, over 1,000,000 jobs had been lost by 2004.

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The trade deficit between the US and China reached a record $30.1 billion as of July 2013. In the ten years that passed between China joining the WTO in 2001 and 2011, the US lost $37 billion in wages, mostly in the manufacturing sector. As manufacturing workers who lost jobs were re-employed in other sectors, an average of $13,504 in wages was lost for each displaced worker.

One main argument used by defenders of capitalism is that consumer spending dictates the market, so bad corporate actors will be punished by more consumers buying from their competitors. Advocates of capitalism also argue that if pay or work conditions are insufficient, workers will logically quit their jobs and seek employment elsewhere.

But when the new Walmart shuts down the local grocery, hardware, and auto parts stores, workers who are upset with being paid poverty wages have nowhere else to work if they want to quit. When the local auto manufacturing plant gets outsourced to Mexico, those auto workers have no other choice than to work at a place like Walmart. And when consumers have nowhere else to spend their money but at places like Walmart, then Walmart gets all the business.

2. Guarantee Full Employment

While defenders of capitalism oppose almost any regulation of business, such regulations were largely responsible for the long period of economic prosperity that followed World War II. During FDR's administration, there was full employment in the United States, and everyone had an income.

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Increased public investment meant Americans all had jobs that provided them with steady income. As a result of direct government involvement in the economy, FDR inadvertently created the middle class just a decade after the Great Depression robbed most Americans of their jobs, homes, and savings. When more people had more money to spend, local businesses thrived on the extra demand, and more jobs were created to meet the increased demand.

Jobs that were created as a result of public investment, like FDR's New Deal, injected new money into the economy as programs like the Works Progress Administration put 3 million people to work rebuilding critical infrastructure. Congressional obstruction of New Deal programs and neoliberal economic advisers convinced FDR to scale back government spending, sending the country into recession in 1937-38. The US only bounced back from that recession due to tight economic controls in place during the war effort.

The government became the prime buyer of half the goods manufactured in the US. When ALCOA's monopoly on the aluminum market became a threat, the government subsidized Reynolds aluminum to force ALCOA to compete fairly, and also got into the aluminum manufacturing business to make sure raw materials were in steady supply. When Ford refused to abide by the National Labor Relations Act that gave private sector workers the right to organize unions, FDR cancelled a top-dollar contract. A wartime tax on windfall profits prevented corporations from becoming large enough to absorb competitors.

While President Eisenhower didn't regulate business as tightly as FDR did during World War II, he did make huge investments in public infrastructure. In building the 46,000-mile interstate highway system, creating NASA, and expanding national parks, the government put 3.5 million people to work during the Eisenhower years. The interstate highway system alone cost $114 billion then, which would be roughly $450 billion in new government spending today. Such projects were made possible by keeping the top tax rate on the richest households and corporations at a 90 percent rate - the interstate highway was made possible by drivers paying an extra penny per gallon in gas taxes. The tax code was also much simpler in the Eisenhower years, without any of the special exemptions, loopholes, credits, subsidies, and other giveaways that corporate lobbyists have inserted in the tax code today.

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Carl Gibson, 26, is co-founder of US Uncut, a nationwide creative direct-action movement that mobilized tens of thousands of activists against corporate tax avoidance and budget cuts in the months leading up to the Occupy Wall Street movement. Carl and other US Uncut activists are featured in (more...)
 

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