Inequality and the unfree market

[TexasTowelie]

While the public discussion about inequality continues to gather momentum, a trio of books exploring the issue from different angles is getting a lot of attention. The most widely known is Thomas Piketty's Capital in the 21st Century--the two others are Matt Taibbi's The Divide: American Injustice in the Age of the Wealth Gap and David Cay Johnston's Divided: The Perils of Our Growing Inequality.

Looming behind both the specific cases made in each of these books and the more general discussions about inequality are questions that socialists have been focused on for many years.

Capitalism has undoubtedly produced wealth, technological innovation and consumer goods on a historically unprecedented scale, but it is also associated with exploitation, inequality and economic crisis. Are these defects the result of attempts to meddle with capitalism's free market, as the system's defenders claim? Or are exploitation and inequality an inescapable and, in fact, necessary component of actually existing capitalism, as its critics contend?

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FOR THE economists who defend capitalism, the free market itself is a realm of freedom and equality, evaluating and rewarding--or not rewarding--individuals' economic contributions on the basis of their worth. If some people can't make ends meet, that can be explained as the product of individual failings. Attempts to address social problems, if they impede the functioning of free markets, can only make the situation worse.

The complete article is at http://socialistworker.org/2014/05/29/inequality-and-unfree-market .

[socialist_n_TN]

1. Well, I know which side of this question I come down on........

What a lot of people don't realize or don't even think about is that most Marxists, including Marx and Engels themselves, did not claim capitalism was all bad. From an historical perspective, capitalism was a step up from feudalism because it DID more effectively harness the productive power of society into making "things", including, most especially, the things that people need to live, the necessities. Capitalism had it's place in history, but the problem comes when capitalism outlives it's place. That's when the exploitation inherent in the system becomes an hindrance to the advance of society rather than a help.

That's actually been the case for a long time, but because the system is so insidious and now has it's tentacles into every corner of society, it's now hard to get rid of even though it HAS outlived it's usefulness for most of us. Most people don't necessarily want to be wealthy beyond belief, they just want to be comfortable and not have to worry about the necessities. The "wealthy beyond belief" part is a fantasy. Capitalism encourages this fantasy of course, because otherwise, the famous "99%" would realize that the current inequality inherent in the system would not have to be. It's a punishment/reward mechanism. And the more the capitalist model cleaves to it's original "winner take all and to hell with the rest" basis, the more the punishment part of the equation tears society apart. IOW, now days you HAVE to try to gain that fantasy just to prevent yourself from starving. It's true social Darwinism.

Even if everything WAS equal under capitalism and there were no social restrictions on super oppressed minorities and unrestricted class mobility, most people under capitalism would fail in the fantasy. Socialism is the better way to take care of most of the people, the failures under capitalism. Under a socialist system, you'd still have the inequality, that's inevitable until you have true communism, but at least EVERYBODY could be taken care of as far as basic needs go.

[yallerdawg]

2. What a clear and concise synopsis of where we are today!

I believe we are moving forward, and can do it peacefully in our democracy as we become more tolerant and inclusive, inevitably moving towards economic justice and fairness as a society (with some continued resistance from the elites -- but we have the numbers). Peaceful transition may be the most unique feature of our great American democratic experiment.

[malokvale77]

3. When the deck...

is stacked against you from birth, that is not individual failing.

Just as inherited wealth is not individual success.

We really need to bring back the inheritance tax.

[socialist_n_TN]

4. Success under capitalism today during it's end stages is LARGELY......

a matter of luck. Either lucky sperm or, in rare cases, luck in the anarchy of the market. It's actually always been so, but it's even more acute now.

[malokvale77]

5. Yes (nt)

[starroute]

6. There's a good David Graber piece on why capitalism can't self-regulate

This just up at the Guardian yesterday.

http://www.theguardian.com/commentisfree/2014/may/30/savage-capitalism-back-radical-challenge

The real importance of Thomas Piketty's blockbuster, Capital in the 21st Century, is that it demonstrates, in excruciating detail (and this remains true despite some predictable petty squabbling) that, in the case of at least one core equation, the numbers simply don't add up. Capitalism does not contain an inherent tendency to civilise itself. Left to its own devices, it can be expected to create rates of return on investment so much higher than overall rates of economic growth that the only possible result will be to transfer more and more wealth into the hands of a hereditary elite of investors, to the comparative impoverishment of everybody else.

In other words, what happened in western Europe and North America between roughly 1917 and 1975 – when capitalism did indeed create high growth and lower inequality – was something of a historical anomaly. There is a growing realisation among economic historians that this was indeed the case. There are many theories as to why. Adair Turner, former chairman of the Financial Services Authority, suggests it was the particular nature of mid-century industrial technology that allowed both high growth rates and a mass trade union movement. Piketty himself points to the destruction of capital during the world wars, and the high rates of taxation and regulation that war mobilisation allowed. Others have different explanations.

No doubt many factors were involved, but almost everyone seems to be ignoring the most obvious. The period when capitalism seemed capable of providing broad and spreading prosperity was also, precisely, the period when capitalists felt they were not the only game in town: when they faced a global rival in the Soviet bloc, revolutionary anti-capitalist movements from Uruguay to China, and at least the possibility of workers' uprisings at home. In other words, rather than high rates of growth allowing greater wealth for capitalists to spread around, the fact that capitalists felt the need to buy off at least some portion of the working classes placed more money in ordinary people's hands, creating increasing consumer demand that was itself largely responsible for the remarkable rates of economic growth that marked capitalism's "golden age".

[socialist_n_TN]

7. I've said that last part for years........

Capitalism HAD to show a more humanistic face when it was confronted by an alternative system or it would lose the propaganda war. And even though that propaganda war was against a system that merely "talked the talk", that was enough to get a few more crumbs.

That's why even reformists should support and strong anti-capitalist movement if they truly want reforms. Without the anti-capitalists, there no sense of fear for the entire capitalist system and ergo, no reform.

BTW, ALL of those factors stated in the article were factors in the "historical anomaly" of '17 thru '75. They all played a part.