Recently, the well-known liberal filmmaker Michael Moore released his new movie, Capitalism: A Love Story. As the sarcastic title suggests, this movie was produced in an effort to portray the American capitalist system as an illogical system that is based on an emotional attachment rather than reasoning. It blames capitalism for the recent economic collapse, skyrocketing unemployment, and widespread suffering in general. As a solution, Moore advocates socialism. No surprises there.
In order to prevent confusion in this article, I am going to begin with a description of what variants of each economic system entail.
The three main components of capitalism are private ownership, competition, and the profit motive. Pure capitalism, called “laissez-faire” (hands off) capitalism, is the type of economic system that existed when Rockefeller’s Standard Oil and Carnegie’s railroad monopoly came to power, earning them tens of millions while the employees were paid barely enough to survive.
State capitalism allows for the components of capitalism but regulates the markets in an attempt to protect the population as a whole. Socialism does not allow for private ownership, has prices set by the government, and lacks a profit motive.
A tethered form of socialism is called democratic socialism, where private citizens own retail, service industries, etc. while the government handles energy, means of transportation (airlines), and other widely-used “products.”
In his movie, Moore adopts a Marxist philosophy, stating more than once that he believes that there will be a revolution of the “have-nots” against the “haves” for a similar reason that Marx did. In America today, 1 percent of the population controls 95 percent of the wealth, which doesn’t leave a whole lot for you and me.
Moore’s movie is extremely well-done, presenting a well-documented account (from his perspective, of course) of why and how the financial sector melted down. He goes back all the way to Reagan, blaming him for beginning to lift restrictions on banks and big businesses. From there, he examines how the Treasury Department is run by countless employees of Goldman Sachs who spend their time trying to deregulate the banks. These are not no-namers either; their CEO was former Treasury Secretary Hank Paulson. Then he shows how predatory lending created toxic assets that tore the lives of families apart.
Soon after, the banks collapsed and requested their $700 billion for such critical things as vacations to resorts and spas, along with bonuses for the CEO’s who just ran their companies into the ground. In what I considered one of the stronger moments in the movie, Moore asks Elizabeth Warren, Congressional Oversight Officer where the bailout money is. After a brief pause, she responds, “I don’t know.” That would be because the Treasury Department didn’t require the banks to reveal what they were doing with it. Who was Treasury Secretary at the time? Oh, right, Hank Paulson, former CEO of Goldman Sachs. Between his explanation of the financial mess and firsthand interviews with struggling families, Moore argues that capitalism is just not worth it. Socialism must be the answer.
If only it were so simple.
Quite frankly, Moore’s argument defeats itself. He argues against all capitalism by citing these last few years of deregulation as a reliable example of what capitalism in America is supposed to be. Like Moore, I believe that pure capitalism is extremely immoral and harmful to society as a whole; essentially, it is a fancy term for “greed” and “thrive at the expense of everybody else.” But America has had a system of state capitalism. Only in the last few years has it been corrupted by an unholy alliance of banking executives and greedy, selfish politicians. Thus, America began a shift towards the evils of pure capitalism.
But if you have a few weeds in your garden, do you burn your entire garden to cinders? The answer to that is supposed to be no. Maybe you built the garden for the sole purpose of burning it, being a pyromaniac. But that’s a rare case. I hope. The solution to a shift towards corruption is not to leap to the other end of the spectrum and endorse socialism. The solution is to impose new regulations on the financial sector.
Stop credit card companies from devouring their clients with rates higher than my pile of homework, stop banks from telling people that it’s perfectly logical to buy a $750,000 home when they’re making a few bucks an hour, and it might be a good idea for presidents to appoint people who aren’t going to work against the interests of the American people in favor of Goldman Sachs. Just saying.
But there’s one more thing that all you voters out there can do, and if you’re reading this, you can probably vote. After all, I doubt that many 6-year-olds would open up a newspaper to read “A Defense of State Capitalism.” So if you’re not a child prodigy, kindly stop voting in politicians who take bribes from special interests who manipulate Congress as their plaything. It makes me sick to see politicians pretend to argue for regulations and fair policies among the financial sector when they’re on a special VIP list (“Friends of Angelo”) from Countrywide to receive special deals with waived fees. I was under the impression that this kind of thing was called “bribing” and was illegal. Maybe I’m just naïve, but if this kind of thing is not illegal, it should be.
At this point, it should be easy to see that state capitalism was not responsible for the financial collapse. But why choose state capitalism over socialism? There is no competition, prices are set to what the government thinks is low, and all the hard-working people in America give up their private entrepreneurial enterprises to the hard-working government that has run so many programs so efficiently. Feel free to laugh at this point. Loudly. You might get a few strange looks, but really. This is funny stuff.
A lack of competition and granting the government the ability to set prices means that prices are unlikely to go down any further. Especially since our government is currently spending money — our money — like I eat M&M’s. Not healthy (either one). In a competitive market environment, supply and demand, quality of products, and, most of all, competition among companies marketing similar products will drive down prices. This also allows for companies that are irrelevant or marketing bad products to fail. Oh wait, sorry — this allows them to fail unless their CEO is running the Treasury Dept., they are deemed “too big and important to fail,” and are given money in the modest amount of $700 billion as a reward for their failure. After my last 18.022 test, I’m still waiting for my bailout. Should be in the trillions I think.
If the companies really were “too big to fail,” then there should have been regulations that broke these companies up before they got to that size. We have anti-monopoly laws for a reason, and I’m not talking about the very capitalist board game.
A socialist system of economics would destroy the rights that every American is guaranteed: freedom of opportunity for example. While capitalism promises a rough equality of opportunity, socialism promises a rough equality of result. People who do not try to succeed do not deserve the same result as those who struggle each day to get by.
Now I’m not going to pretend that capitalism allows for complete equality of opportunity; some people are obviously in better situations than others. But that’s the benefit of state capitalism: the government has programs such as food stamps, unemployment, and welfare that are available for those who truly need them. Capitalism may have a few very correctable flaws, but socialism is nothing but one big flaw.