Nick Beams' article titled, The Failure of Capitalism by Nick Beams on this site, OpEdNews.com May 3rd, 2013 did an excellent job of describing the state of capitalism worldwide, and in particular its trajectory toward failure. I quote, "While the ideologists of the ruling class seized upon the collapse of the USSR to proclaim the end of socialism, the economists and media pundits say nothing about the failure of capitalism."
We're seeing evidence for that failure in the growing gap in the distribution of income and wealth here in the United States.
How can our economy sustain itself, when 88 percent of our national income growth goes to corporate profits, while 1 percent goes to wages, as it did between 2009 and 2011?
Adam Smith himself, father of free market economics, wrote, "No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable." Yet we are hesitant to open our eyes to the damage done by unfettered capitalism.
From Mr. Beams again, "Recently a major article in Time magazine noted that Marx had theorized that "the capitalist system would inevitably impoverish the world's masses as the world's wealth became concentrated in the hands of a greedy few causing economic crises " A growing dossier of evidence suggests that he may have been right."
In other words, Marx believed capitalism's normal trajectory would lead us to a time like this when individuals would have little in a time of plenty.
Today, we can find examples everywhere: Our stubborn unemployment and jobless recovering economy while corporate profits soar. Or gasoline prices at the pump going up while we're awash in oil and the industry makes historical profits. Or drug companies pocketing enormous profits while more and more people can't afford their meds. In each of these cases, it's a time of plenty for corporations and time of scarcity for too many individuals.
Businesses have three stakeholders: The owners provide the capital and have a right to a fair return on their investment. The employees provide the labor and have a right to a fair wage for their efforts. The customers have a right to expect the quality they pay for.
Today, the owners' interests far outweigh those of the other two. With the exception of the top executives, (CEO Pay Increased 127 Times Faster Than Worker Pay Over Last 30 Years), the employees share of the pie has remained the same for the past three decades. In the two decades ending 2010, wages stayed the same when adjusted for inflation and corporate profits climbed by 93 percent.
So why this disturbance in the balance of these interests?
From Wikipedia, Karl Marx wrote, "Because commercial transactions imply no particular morality beyond that required to settle transactions, the economic sphere and the moral-legal sphere have become separated in society: subjective moral value becomes separated from objective economic value".
Think of the game of Monopoly. It's a wonderful analog for capitalism. The only moral is to own all the wealth in the game. And the game is over when one player owns it all. That's the trajectory we're on. In America, the top 1 percent own 40 percent of the wealth and the bottom 80 percent own 7 percent and that gap is growing faster than any other country.
I worry more about how many people own the 7 percent than how few own the 40. I don't know how low the percentage ownership for the bottom 80 percent will go, but to be completely honest, I don't think it makes any difference anymore. I can't see anything on the horizon that will change our current trajectory except a rebalance in the interests of the stakeholders or a complete economic collapse. Heaven help us if the latter comes true. Capitalism will have succeeded in destroying itself and the economy in the process.
Here's the ironic part: The most outspoken defenders of capitalism will blame the collapse on creeping socialism and point to Europe as their proof, failing to acknowledge the government austerity programs hastening its demise.