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Other Voices: Adam Smith’s capitalism and today’s reality

I was struck by local Other Voices columnist Tom DeChaine’s July 25 argument linking capitalism with our Constitution and his attempts to argue for one form of capitalism (Adam Smith’s laissez-faire or unregulated version) as our savior for modern ills.

Unfortunately, his form of capitalism is severely out of date and does not recognize the realities of modern times.

Smith, capitalism’s godfather and apparently DeChaine’s hero, argued that self-interest, private property, and competition among sellers would lead to society’s well-being. Smith’s model argues that consumers will act as the control against capitalism’s self-interest. Unfortunately, this model predates the rise of the modern corporate state and the rules have changed.



The reality is that in too many cases, there is very little true competition and what choices there are reflect the lowest common denominator. Niche markets of a few million people are typically under-served, if at all, because “it’s not cost effective.” Too often, the only competition is among large corporations for shelf and media space, and the product is style, not substance.

Now, we are finding the true costs of the underpinnings of modern capitalism and its essential component, consumerism. Capitalism’s roots grew out of the idea that typically small or regional merchants could compete among themselves to offer what was usually some form of necessity, with the occasional luxury goods thrown in.




Author Ken Follet’s fictional works of life in the middle ages offer a fascinating look at the evolution of capitalism ” and has uncomfortable similarities to modern times.

Today, our survival as a nation is built on consumerism, much of which consists of “big boy” toys ” large TV’s, gas-guzzling monster trucks, speedboats, gigantic houses, etc. Don’t get me wrong, I have enjoyed some of these indulgences myself, but over time I have begun to see just how much these things truly cost.

To support our lifestyle, our nation, backed by an obscenely huge military and its private sector companions, has shaped national and world affairs strictly to funnel the world’s wealth into our homes and lifestyles. While it’s hard to fault a high standard of living, there is a growing awareness that there are huge economic, political, national security, social and environmental costs attached to our playthings, costs that are becoming more apparent as time goes by.

For instance, in a just world, business would negotiate fair contracts with other nations so that, when we extract their resources, the supplying nation’s people would share the wealth ” we get what we want and they learn about the positive aspects of capitalism, i.e. a higher standard of living. The reality is that such fairness is usually a myth and the result, according to author Chalmers Johnson in his book “Blowback,” is an increasing threat to U.S. and world security. The end result of our policy of, as Pulitzer Prize-winner John Dower puts it, “shortsightedness, hubris, corruption, and instability of our country’s overreach,” is “blowback” from those exploited nations, i.e. “terrorism.”

DeChaine argues for a corrupted form of capitalism that does not serve us and that we can no longer afford. Ray Anderson, founder and owner of Interface, the world’s largest carpet manufacturer, believes in capitalism but not the exploitative forms we see today. He has successfully redirected his company toward socially and environmentally sustainable policies while increasing profits by emphasizing efficiency and value, or, as he puts it, “doing well by doing good.”

It is tempting to argue (but overly simplistic) when looking around at the world today that capitalism in its current form, and as argued by DeChaine, is a massive failure. It is, however, a considerably different beast than that envisioned by early proponents and it would be hard to fathom that the undemocratic form we have today is what our country’s founders had in mind when creating our nation.

Terry Lamphier lives in Grass Valley.


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