Capitalism As An Economic System: Fatally Flawed?

Question

I am (tentatively) saying YES, capitalism has proven itself not to work, at least as practiced in the USA. The problem seems to be represented by a few hundred people, the top 1/10 of one percent financial wealthy. There is not much productivity nor innovation here, rather you find manipulation of tax codes and other business interference in government to corner ever more capital - until collapse.

I read that Warren Buffet for example has asked his comrades, “Don’t kill the (capitalist) goose that lays our golden egg!”... However, the super rich seem unable to restrain themselves; once they have begun to game the system they cannot stop, repeatedly draining the US economy into collapse.

The situation as of 2013 was that the top 1% controls 43% of USA financial wealth, and the bottom 80% (comprising the most productive, the hardest workers) only 5%. 

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

Here is what I see as the goal: How do we create a system (capitalist or other) that allows each individual to work toward their own full potential, rather than merely to enrich someone else? 

Answer 1

I am afraid that from a superficial perspective, it seems to base on principles like hard work, saving, smart initiatives, investing in profitable business, in combining skills, efforts and experience with the talents of a successful poker player and also in having a certain dosis of luck or lucky opportunities. But there are only few winners - at the loss of millions of other "players". Many winners do not realise that their success, their wealth and their luck - even in a fair game - are also built on the misfortune of other people.

Most societal systems base on economies with infinite grows, unlimited resources and wasting, and , and there is the recurrent problem with property rights and ownership, privileges, ruling and dominance, survival and ambitions, success and performance, wants and needs, etc.

And relations, mentors, sponsors, mediators and other useful contacts, or more or less questionable means to improve the chances to succeed are rarely mentioned. It is the same system as a lottery: to allow a few to win the great price, there are millions of losers.

The famous 1 % are in control of commercial and industrial "world empires", corporations and cartels, and, with them, can influence political, social, religious, welfare, ecological, legal and other decisions or agreements on an international level.

Comments

Thank you Marianne, you bring up some other concerns I have thought about...for example, Ponzi schemes and pyramid schemes are illegal - but what about infinite economic growth, what is the difference? Certainly not sustainable, either. 

And economic growth requires everyone to throw stuff away and buy more...wasting limited resources...now the USA has a national debt that is - what was it...$14 trillion or so? Some say that debt means bankruptcy, and threatens to crash our economy again.

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You are touching on why I am concerned capitalism may be defunct, on its way out...no system can survive forever with such huge debt, enriching a few somewhat in lottery fashion, but ultimately built on the misfortune of others.

Interesting discussion, thank you.

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You are very welcome, Virginia; the more I looked into news, history, cultures, religious, social, psychological and economic patterns or survival strategies, the more I stumbled over similarities and the too human extravagant ambitions and flaws of dominating, resp. predator groups to control, change and adapt everything - or to destroy whatever seems (seemed) useless or what cannot (could not) be "mastered".

They keep telling us that history repeats itself, but everybody forgets too easily, as soon as another scandal about some glamourous celebrity is analysed in the news, while certain tragedies are hardly noticed.

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Marianne, it is interesting you noted the similar patterns across so much of our society...I have also been understanding the patterns more and more, quite recently and now that I am older, with more life experience.

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Yes, Virginia, our own experience helps a lot.

It might be because former suspicions and "inner warning lights", which we could not explain sufficiently in the past, kept hidden from the public or shown from a wrong perspective, seem to be confirmed by more recent revelations.

Answer 2

"...work toward their own full potential, rather than merely to enrich someone else? "

I think that may be a bit too harsh. There are plenty of opportunities to work toward one's full potential, despite having a portion of one's labors going to enrich the fat cats in corporations and in government. I agree that a CEO should not be paid many hundreds of times what a worker earns, and have often wondered why capitalism seems not to be working efficiently in that regard... can't the board of directors find an equally talented candidate for CEO who will do the job for less money?  Or why do star athletes have to be paid so many tens of millions of dollars? Babe Ruth at his peak was paid only a little more than Herbert Hoover ("I deserve it; I had a better year."). By that standard, a star athlete should be paid less than half a million today.  Part of the answer is, I think, that society in general is better off financially than it was 80 or 100 years ago.

But I think actually, we are moving towards a new slave society, only this time, the slaves will be robots. I can foresee a time when every human will be issued one or more robots at birth, to do all the work necessary to maintain that human in a comfortable, or perhaps even lavish, lifestyle.

As I have pointed out before on this site, that should work for a while, until the robots become sentient, that is...

Comments

Thank you O'Tink, very thoughtful observations coming in from both you and Marianne...it is on this site, in fact, that I first took seriously that AI might not always be benign...the algorithms, that lead to unexpected artificial conclusions and no one really understands how...

Also, last night preparing for this Q I read something about the boards of directors and CEO salaries...apparently, the CEO's tend to serve on each others' boards, and in good-old-boy reciprocation they simply vote each other whatever salaries they want. Again, bleeding the golden goose dry and unable to restrain themselves...

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As you know, my concern grew out of seeing predatory entrepreneurial plunder of low-income elderly, lifelong hard workers who are now unable to defend themselves... sometimes even dying as a result of the legal but unethical maneuvers.    

But I think we humankind are evolving, and it is good for us to ponder these questions. And I do hope my evaluation does indeed prove to be too harsh; however, even online I meet so many talented folk stuck in mindless, frustrating jobs because of the pay...and I think of all their untapped potential society is losing.