Problems with Capitalism

It is driving us towards disaster

27 September 2021 (Wall Street International)* — Adam Smith (1723-1790) maintained that individual self-interest can and should be the principle guiding our economic behavior.

He told the readers of his book The Wealth of Nations, that, as if guided by an invisible hand, individual self-interest leads to the general good. To put is in fewer words, Smith maintained that greed is good.

However, during England’s industrial revolution the contrast between the lives of factory owners and those of slave-like workers, who had been driven off the land by the Enclosure Acts. Grees was good for the few factory owners, but bad for the large majority of England’s citizens. Today, the defects in Smith’s assertion that greed is good are numerous and glaring¹.

In Oliver Stone’s film Wall Street, Michael Douglas makes a speech in which he says: “Greed is good!”. The film was meant to be a satire, criticizing Wall Street and greed, but many viewers took the film as a demonstration that greed really is good.

Oligarchy, loss of democracy, and militarism

In the Bible the Parable of the Talents ends with the words “To him who hath, it shall be given, but from him who hath not, even that which he hath shall be taken away”, a strikingly realistic but immoral conclusion. One of the defects of capitalism is that it leads to excessive inequality. The rich get richer, and the poor get poorer.

There is ample evidence that in countries with little economic inequality, all social indices are better: crime rates are lower; there is less drug abuse; people are happier; average educational levels are higher, and so on.

Examples of countries with little contrast between rich and poor are the Scandinavian nations, Denmark, Norway, Sweden, Finland and Iceland. Examples of countries with excessive inequality are the United States and Brazil.

In the United States especially, excessive economic inequality has led to oligarchy, loss of democracy, and militarism. Wealthy corporations control politicians through their donations to political campaigns as well as outright bribery.

Thus, the few individuals who control these corporations form an oligarchy that has replaced democracy. Among the most wealthy corporations are those associated with the military-industrial complex, against which President Eisenhower warned in his Farewell Address.

Money from these corporations controls politicians, who then vote for obscenely enormous “defence” budgets, further enriching the corporate oligarchs. This diabolical circular flow of money has been called “The Devil’s Dynamo”².