Abstract
In socializing, via bailouts, downside costs and allowing the privatization of upside profits, not only does government underwrite capitalist’s risking of their capital, but militates against the optimal deployment of resources to the most efficient, who would otherwise be victors of the neo-Darwinian struggle for survival. Furthermore, it is labor, whether intellectual (i.e. managerial, executive, design, creative, etc.) or/and physical, which turns resources into valuable goods and services. All of which raises the question as to why capitalism per se, should derive profit (at the expense of wages) from wealth production at all? While government complicity in this, and in entering into delayed or non-prosecution agreements even when the financial elite engage in the most egregious criminal behavior, raises questions of democratic accountability.
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Notes
- 1.
While in any event, as all competent economists know, capital, whether liquid capital in the form of financial assets, or fixed capital investment, in, for instance, machinery, or software programs for example, is, of course, ultimately only stored labor (in the sense that it was the product of labor, whether physical or intellectual) anyway, just as the rendering—by harvesting or extraction and/or refinement and so on—of “god given” natural resources as usable economic resources, is also dependent on labor as is their transformation into consumer goods and services. This being, of course, the Labor Theory of Value.
- 2.
Nor, of course, can it be argued that the capitalist derives a right to private profits due to management skills or design of production and/or marketing systems and so on. For, although such functions may be taken on by small entrepreneurs, they are not, in fact, functions of capital per se, but of intellectual labor (which capital can, and does, hire in) as is particularly obvious vis-à-vis finance capital, which, in its purest form, does not provide any comparable services to any external party, and is, concomitantly, clearly entirely parasitic!
- 3.
See Schumpeter, J. 1942. Capitalism, Socialism and Democracy, London: Routledge.
- 4.
Indeed, even if financial institutions per se could not rely on such government or taxpayer bailouts, their executives, who are often rewarded year to year by bonuses based on the annual or short-term performance of the stocks of the institutions they supposedly serve, would nevertheless still have every reason to embrace the very risk taking that is likely to produce long-term instability. For after all, having been handsomely rewarded when their bets pay off, if and when their institutions collapse they can always look elsewhere for future employment in the unlikely event, given their likely previous bonuses, that they continue to feel the need for any employment whatsoever!
- 5.
Thus, it has come to pass that the top 1% of individuals in the US population owns more wealth than the bottom 90% of the US population combined. A financial elite whose interests are often entirely at odds with the average member of the middle classes who may, after a lifetime of work, have a few hundred thousand, or perhaps even a couple of a million, dollars of savings tucked away in a 401(k) or 403(b) retirement account; an elite who, due to their far greater resources, are clearly able, as we can see, to influence the political system and market regulation in their favor, at the expense of the middle classes.
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Glynn, S. (2020). Capitalism’s Two Major Justifications Dismissed, and the Incentivized Complicity of the Bought and Paid for Politicians to Ignore, and Even Encourage, the Risky/Costly Behavior of the Economic Oligarchs. In: The Economic Logic of Late Capitalism and the Inevitable Triumph of Socialism. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-52667-2_4
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DOI: https://doi.org/10.1007/978-3-030-52667-2_4
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