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How Capitalism Works

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There is a lot of misinformation and there are even outright lies being perpetuated by the media about the economy. Similar observations even show up in the liberal blogosphere. In this article I will offer a different, uncomplicated perspective. My purpose is to make a deliberately abstruse topic more easily understandable. I will try to avoid value judgments, and simply report on the way I have observed the economy to behave. It is not meant to be an economic treatise, nor to advance any particular school of thought, such as Neoclassicism, Keynesianism, the Chicago School, the Austrian School or Marxism. I hope my observations will be of use to some, though I am sure many will take exception to my comments.

Because of capitalist hegemony, I will restrict my comments to capitalism; specifically laissez-faire capitalism since the U.S. economy is headed in that direction.

There are really only two things that most people need to know about laissez-faire capitalism (in the future, when I mention capitalism, I will mean laissez-faire capitalism.)


First, under capitalism, only money has value.

  1. Other items have value only to the extent they can be converted to money or can generate money. This includes things such as labor, commodities and property.
  2. What cannot be converted to money has no value and is often eliminated. This can include people.
  3. Profits are more valuable than the ecosystem or worker safety.

Second, the purpose of capitalism is to move as much money to the top 0.1% of society, from those who are not (and will never be) at or near the top.

  1. Wealthy individuals, with few exceptions, do not come by their fortune by their own productive labor. Instead, they appropriate as much as possible from other people's productive labor. Capitalists themselves believe that they are entitled to this wealth; even if they did little to earn it.
  2. Illegality for the elites is inconsequential. Even if something is technically illegal, if it is not prosecuted it becomes de facto legal.
  3. Governments work either for their people or for the rich, they cannot work for both. In virtually all western societies, the ultra rich (individuals and corporations) have captured their governments, to a greater or lesser degree. For the U.S. federal government, this capture is virtually complete. Once the privileged class has control of the government, they can have whatever laws passed that they want, including those that make their crimes retroactively legal.

There, in 241 words (Principles and Corollaries,) is the essence of capitalism as actually practiced. Once these points are understood, the machinations behind current events in the areas of economics, politics and foreign affairs become evident.

This article was deliberately presented in black and white. Those who want grey can get it from the main stream media.


Bruce is a retired university professor who has been actively supporting populist progressive positions for the past ten years. Besides teaching, he has spent almost ten years in the Marine Corps, including more than two years in combat, and has (more...)

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The first step in solving a problem is to define t... by Bruce Morgan on Wednesday, Aug 31, 2011 at 9:17:28 AM
We are the enemy.  We have power - we just do... by Kevin Tully on Wednesday, Aug 31, 2011 at 9:58:38 AM
"Laissez-faire" is bad Capitalism has to be cons... by BFalcon on Thursday, Sep 1, 2011 at 2:02:42 AM
What to do? Others have given it thought and come ... by Frances Thomas on Thursday, Sep 1, 2011 at 8:16:32 PM
That old saw, that Churchill put out, " It ha... by Rob Kall on Wednesday, Aug 31, 2011 at 9:24:11 AM
" ... democracy is the worst form of government ex... by BFalcon on Thursday, Sep 1, 2011 at 2:05:12 AM
click hereThe solution is some form of socialism o... by Daniel Geery on Wednesday, Aug 31, 2011 at 9:42:35 AM
is to offer Charles Lindblom's book "The Market Sy... by JimZ on Wednesday, Aug 31, 2011 at 12:41:33 PM
You have very succinctly defined what Capitalism i... by James Hadstate on Wednesday, Aug 31, 2011 at 1:25:05 PM
It may not be possible but it is the solution: HR... by Thomas Brown on Wednesday, Aug 31, 2011 at 2:09:56 PM
And thank you thank you thank you. Truly, I could ... by Robert Tracey on Thursday, Sep 1, 2011 at 9:24:29 PM
because they were standing in the way of the railr... by nativenezperce on Wednesday, Aug 31, 2011 at 3:11:21 PM
With due respect to the author, I must say I find ... by Paul Sedkowski on Wednesday, Aug 31, 2011 at 4:35:57 PM
Let me pick just one that I think is at the heart ... by Daniel Geery on Wednesday, Aug 31, 2011 at 6:09:00 PM
Your analysis depends on the selective use of anec... by Gary Williams on Wednesday, Aug 31, 2011 at 10:10:15 PM
definitions. I have to think you are a troll shill... by bogi666 on Thursday, Sep 1, 2011 at 3:37:54 AM
Need to go to the next logical explanation: the fo... by John Peebles on Wednesday, Aug 31, 2011 at 7:06:01 PM
I wish I'd written it myself.... by GLloyd Rowsey on Wednesday, Aug 31, 2011 at 9:07:16 PM
And beat a horse that should be dead by now. ... by GLloyd Rowsey on Wednesday, Aug 31, 2011 at 9:29:02 PM
Well written Bruce and I agree with most of it. I ... by Sassanka Samarakkody on Thursday, Sep 1, 2011 at 2:28:58 AM
for oil, primarily to provide enough oil to the Pe... by bogi666 on Thursday, Sep 1, 2011 at 3:53:58 AM
The US has what is called "Representative Democrac... by Warren Currier on Thursday, Sep 1, 2011 at 10:02:21 PM
First, I am not from India and am not an 'illegal ... by Sassanka Samarakkody on Friday, Sep 2, 2011 at 2:14:34 AM
and when applied exclusively in their pure forms o... by John Sanchez Jr. on Thursday, Sep 1, 2011 at 7:40:03 AM
It is largely realities derived from our distilled... by GLloyd Rowsey on Thursday, Sep 1, 2011 at 9:34:24 AM
Well said.... by Kevin Tully on Thursday, Sep 1, 2011 at 10:29:28 AM
You cannot explain it properly, Capitalism is not ... by David Chester on Thursday, Sep 1, 2011 at 9:42:53 AM
Capitalism is based on selfishness and greed. ... by Philip Pease on Thursday, Sep 1, 2011 at 3:45:34 PM