Will Free-market Capitalism Survive our Abuse of It?
There’s some discussion these days about the survival of free-market capitalism. Conservatives believe it suffers from too much regulation and taxation, while liberals believe it needs more of both.
Conservatives argue that free-market capitalism, left to its own devices will strike a balance between the interests of workers of all socio-economic classes wanting to earn a living and amass wealth, and the general economic health of the nation, which they seem to view separately.
Liberals tell us that today’s capitalism primarily serves the needs of the richest while our fastest growing socio-economic sector today is the working poor.
The small scale free-market capitalism that many of us ageing boomers grew up with worked well. After World War II, my hometown was a bustling community of about 3500, filled with small shops and shoppers. Locals understood scarcity yet felt security. Their complaints about taxes and regulation were mostly philosophical.
Purchased goods had a different value-assignment than consumer goods today. One saved up to buy them, scarcity prevailed, and one rarely bought on impulse or on credit. Dry goods and tools were expected to endure and be passed on.
Something changed in the 70s. The small-scale capitalism that had provided a secure living and valued goods disappeared. Today, we discard functioning laptops and cellphones costing several hundred dollars. Today, local commerce mainly serves immediate consumption – grocery, pharmacy, restaurant, fuel.
Businesses aggregated in scale and ownership. Regional malls dotted the landscape and are now fast becoming mere showrooms for e-commerce. Value-creation jobs were exported, resulting in lowered cost-of-goods but leaving only service jobs that couldn’t be exported, with a few exceptions like e-commerce call centers. Free-market capitalism abandoned labor and now rewards only ownership and equity.
All this and Kansas call into question the conservative axiom that free-market capitalism with its relentless demands for de-regulation and lower taxes for job creators will float all boats. Many boats sank.
If there ever was such a thing as American exceptionalism, a grandiose term once applied to the war and post-war period from Roosevelt to Kennedy, it’s diminished today. Our rankings in key international benchmarks for access to health care, food security, education, affordable housing, livable-wage employment, and a shared potential to amass wealth have declined steeply, while the stock market and the few it serves have prospered. The great free-market experiment has not served us well.
We have much to be grateful for and much to celebrate in America today but there’s danger ahead. If the current political impasse persists and we fail to participate deeply and meaningfully in the democratic process by researching and electing leaders who disdain ideological jousting and are willing to find a center and lead us forward, our children will witness further decline in their lifetimes.
We need laws, equitable taxation, and regulation. We need transparency to deter corruption. Capitalism can indeed serve all Americans well but it needs rules and watchful eyes.