Capitalism and Government Regulation
We’re all capitalists! Capitalism, while imperfect, is the best wealth-producing mechanism we know of, and we all benefit from it, at least to some extent. At its best, capitalism can promote freedom for innovation and service to humanity by providing needed goods and services – and having the ability to scale-up capacity to perform very large tasks cost effectively and operate internationally. It’s the basis of our modern economy.
But it’s also amoral (but not necessarily immoral), in the sense that its only true duty is to the shareholders and it has only a secondary duty to its workers and their wages and the communities in which it operates.
Corporations try to “externalize” costs as best they can (like for waste disposal such as carbon emissions or foreign wars for resource access, or liability for nuclear power plant disasters). And, because they are punished by the stock market if they fail to produce exponentially increasing profits, corporate activities have a strong focus on profits in the current fiscal quarter (as was described by the Academy Award-winning documentary “Inside Job” about the short-sighted actions leading up to the 2008 financial crisis and the current Great Recession).
Perhaps most relevant today is the way that corporations can generate wealth with fewer and fewer U.S. workers. Automation has made great strides in reducing repetitive labor, and globalization has moved many blue-collar and white-collar jobs overseas. And, even though productivity is increasing, the remaining jobs are paying less and less, as competition and lack of union bargaining strength leave U.S. workers with less and less power. In essence, the basic bargain of connecting productivity with wages has been broken.
Protecting the Community
So, while corporations are good at producing wealth (at least in the short term), they are not responsible for protecting the community or for distributing wealth widely. Ideally, markets must respect human dignity and human rights and serve the common good while pursuing profit. Here’s where the central role of government as a copartner in our economy comes in. Can govenment solve all problems. No, not by a long shot. But it can make major improvements in our lives and restore some measure of economic justice.
Here are a couple of articles that provide important background for the debate on the proper role of government in our lives. Our Founders actually
Robert Parry writes about how Washington, Hamilton, and Madison wanted a strong federal government as essential to a strong nation, but were opposed by slave-holders.
Michael Lind describes how Washington, and others believed that the U.S. Constitution as originally adopted provided adequate individual protections, and opposed the Bill of Rights. But, again, slave-holders wanted protection against abolition. The Second Amendment is not about the need for a federal militia, but about the need for state militias to hunt down runaway slaves.
Please see our lengthy discussion of economic justice, fair taxation, and affordable health care in our three precepts. Yes, we are seeing that re-distribution of wealth is a subject that deserves our close attention and our best, creative thinking.
Government regulation protects the public from harmful products and fraud by unscrupulous or irresponsible businesses. Regulation is essential to promote positive outcomes for the environment and the economic system.
For example, as reported here: In March, 2011, the E.P.A. issued new rules that reduce emissions of mercury and other airborne toxics by 91 percent within the next five years. The E.P.A. estimates the annual cost of compliance at $10 billion a year, compared with health benefits from reduced hospital visits and lost time on the job at $100 billion a year. Mercury and other airborne toxics like lead, arsenic and chromium can adversely affect the nervous system in children and fetuses and worsen respiratory ailments. (We have a large cement plant in Baker County, Oregon, that is affected by this ruling, and we hope the E.P.A. will adapt its rules to recognize the efforts already being made at the plant to reduce mercury emissions.)
Other Mechanisms for Wealth Creation
A version of capitalism – worker-owned and cooperative businesses – offers a departure from destructive short-term profit focus. Worker/owners and co-op members may have a longer-term emphasis on sustainability by heeding and meeting real customer needs. A video segment from Democracy Now! offers some insight and examples of this trend.
Interestingly, a new class of corporation, a “benefit corporation,” may now be chartered in seven states. Such corporations are shielded from stockholder lawsuits which might otherwise attack diversion of profits for social purposes. Information is available here and here.
Not all wealth is created by businesses or corporations nor is it registered in the calculation of Gross Domestic Product (GDP). Rebecca Solnit has written a wonderful essay that promotes the concepts of sharing, mutual support, and inclusivity. It’s on Iceberg Economies: the unseen, but vast amount of time, effort, creativity, and compassion we devote to volunteer and other off-the-books activities — like tutoring, Wikipedia authoring, child rearing, self-help groups, Little League coaching, disaster recovery volunteering, and environmental and political activism. This has a close parallel to the work of New Zealander Marilyn Waring and her book, If Women Counted, and her documentary film, Who’s Counting?. And this essay by John Robbins, titled “What is Real Wealth?”