Is it capitalism or is it ‘crony capitalism?’
August 31, 2013
Linda Campbell’s Other Voices column titled “Capitalism is not an ideology” tries to prove that the capitalism we have today is a corrupted version of what Adam Smith wrote about in his book, “Wealth of Nations.”
She is right but not for the reasons she gives. It appears as though Linda has never read “Wealth of Nations.” If she had, she would have noticed that Adam Smith was finding fault with the exact economic problems back in the 1700s that we have today, with our own government’s economic policies!
In Adam Smith’s time, the economic belief was that there was a fixed amount of wealth in the world; that to be successful each nation had to arrange its import and export policies in such a way as to draw the wealth of its neighboring countries to itself.
This system was called mercantilism.
The ruling class is made up of large corporations and the men and women in Congress who support them; and Barack Obama is presently at the head of that ruling class!
At that time, merchants thought that to be successful, they had to convince the government to give them special privileges (sound familiar?). Linda was right when she said that one of Adam Smith’s stated principles was that resources were scarce, but Adam Smith was only referring to material resources.
When Linda says “the biggest business expense was labor,” she shows her ignorance of the subject. In Adam Smith’s time, labor was usually the least expensive cost and almost always available. Transportation, on the other hand, was a huge expense! Remember, transportation was by sailing ship or by horse-drawn wagons.
I have no idea where she found her “facts” about what Adam Smith said, but I know that she did not find them in the 1,200 pages of the “Wealth of Nations” that I read.
Linda would have you believe that starting with the Industrial Revolution, men “established an ideology: capitalism.” She said that men “changed the objective language of Mr. Smith into dogma (religious language).”
If you read “Wealth of Nations,” you will find that Adam Smith railed against the politically well connected in his own time. It seems that people have always taken advantage of politics to advance their own business causes.
For example, Adam Smith pointed out that the English Parliament passed a law that said manufacturers could not sell their own goods because that would be unfair to merchants. At the same time, it passed another law, forbidding farmers from selling to merchants because that would be unfair to the consumers!
Now, how does that make any sense?
Adam Smith wrote the “Wealth of Nations” to promote a free market economy. He said that in a free market economy, wealth can accumulate, and unless it is consumed, that wealth will produce more wealth. We call this capitalism.
I believe it should be called “consumerism” because, in reality (unless the government interferes), the consumer is always in charge of what he or she buys, therefore, determining which companies survive and which companies fail.
It seems to me that Linda Campbell’s “dogma (religious language)” comes right out of Saul Alinsky’s book, “Rules for Radicals.” She tries hard to convince you that capitalism is an evil blight on society brought about by “the old-school capitalists, the current high priests of capitalism,” who need your votes “so they can install (buy) politicians …”
Well, what Linda calls “the current high priests of capitalism” I call “the ruling class,” and they are on both sides of the political aisle! I agree with Linda that they “are fighting for their ideological lives,” but not due to the election of Barack Obama. The ruling class is made up of large corporations and the men and women in Congress who support them; and Barack Obama is presently at the head of that ruling class!
We do not have a free market! What we have is crony capitalism.
When any business, usually a large corporation, successfully gets the government (in our case Congress) to create new laws effectively reducing competition from other businesses, we have crony capitalism.
The problem with crony capitalism is that when large corporations or any financial entity gets special treatment, we, as consumers, lose.
There is a much better answer to this destructive problem.
To address this problem, we need to look at the IRS and the way we raise revenue.
Because the Income Tax Code is the main engine that drives the corruption of “crony capitalism” (think lobbyists and money they give to our representatives for their re-election funds), we need to repeal the 16th amendment to our Constitution and replace that amendment with a consumption tax amendment.
A consumption tax would ensure that the poor would be taxed at a low rate, while the rich would be taxed at a higher rate; that is why it is called the “Fair Tax Initiative.”
A fair tax amendment would eliminate all payroll, Social Security and corporate taxes but would generate the same revenue that is currently taken in by the income tax and Social Security taxes imposed on your labor and the profit from corporations and business.
We need to end the corruption and fiscal madness in Washington!
Jim Driver lives in Rough and Ready.