Capitalism vs Corporatism

Dow Jones is at record high; corporate profits are too. The real estate crisis is over, but most people in the united states still seem to be in financial difficulties.

Household incomes in absolute dollar amounts are at a decade-low despite an inflationary market; the poverty bracket consumes an ever larger proportion of american citizens annually; 47 million people on food stamps; 110 million without health insurance. America’s once burgeoning middle class is being squeezed into poverty. The owners of the fortune 500 are doing well, while american families are having a harder time.  Isn’t wealth supposed to “trickle down” as the theory goes? Where are the corporate profits trickling down now?

To maximize profit margins corporate business models lay off workers locally and transplant manufacturing to China and or other economies that do not protect their laborers. Accepted culture of economic responsibility to one’s shareholders maintains that ethics has no place counteracting the profits of exploiting under-payed workers. Board members, shareholders, owners of the fortune 500 are an elite minority comprising <1% of the population who control an estimate 40% of the treasure and wealth of the United States. 50% of stocks are owned by 1% of the population. Justice, the responsibility of the federal government, would be to intervene legally and reverse the imbalance of the ownership-labor profit benefits which currently give 99.7% of profits to owners, and divide up 0.3% to workers, teachers, doctors, farmers — the educated and laborers who make the products and services needed by society. The US Congress has legislated, as a result of its private relationships with lobbyists, financial benefits should go almost entirely to the owners not the laborers, and has written capital gains taxes in the order of 12-15% and other loop holes for wealthy owners to exploit. Corporations purchase this legal power to write laws from senators and members of the house of representatives by donating to their campaigns and offering them financial and employment compensation after their terms are completed. This is corporatism, not capitalism.

Capitalism rewards anyone who is intelligent and works hard. Reward right now is entirely controlled by certain owners of corporations who do not compensate those who are creative or hard working. The Federal government who is charged with safe-guarding the proper functioning of the capitalist economic system is defunct and failing to perform its duties. The economy is dominated by corporate boards who have successfully co-opted the legislative branch of government, and to a lesser extent, the executive and judicial branches as well. The educated and the laborers are caught in a cycle of consumption of commodities and taxation of their wealth that leaves them squeezed between the greed of corporations on one hand, and the corruption of government on the other.

The average CEO ‘earns’ 360 times as much as his average employee. The size of personal incomes should be curbed by progressive tax reform, and the proceeds used to supplement the wages of the educated and the laborers. Lobbying and financial influence on congress’ legislation should be illegal. Campaigning, being itself self-aggrandizing and immoral, in time will be outlawed — until then, financial donations to campaigns should be taxed at 100%. The personal incomes of congressional representatives and senators should be capped at 200k from all sources — including salary, business, and personal investments, as well as lobbying and corporate royalties. Civil service should be a self-sacrifice, not a winning lottery ticket. Craving leadership itself is a sign of moral unsoundness; whereas selflessness, humility and service are the touchstones of civil qualifications. Corporations and their financial influence should be ousted from government. The marriage of politics with the finance sector must end in a divorce.

Capitalism in its true sense leads to a growing middle class. The rules of the economic system should be protected by the government of the people. One of the most important duties of the government is to safe-guard the integrity of functioning and rules governing the free flow of capital, services, and labor on the free market. This is true capitalism. The system has been corrupted. People who labor do not receive their fair proportion of profits made in compensation. People who receive stressful education and contribute creativity and valuable services do not receive the bulk of the profits accrued as a result of their efforts. The owners of the respective systems within which they operate, be it a farm, a school, or a hospital, receive the true meat of that profit generated. This is not capitalism; this is corporatism.

Corporatism mirrors the structure of communism, in the sense that totalitarian regimes concentrate the nations wealth in the hands of a powerful minority at the top. Popular discourse makes it seem like the debate is between capitalism and communism, however the real discussion revolves around the relative merits of totalitarianism versus capitalism. The discussion framed in this way, makes it much less easy to conjure up the irrational fear which wins votes in presidential and congressional elections, however. Corporatism is a form of totalitarianism, like communism and fascism. Evidence for this can be found in transformation of China from a formerly communist state to a largely corporate state.  Justice, not socialism, is needed to return corporatism to its original state of capitalism. True capitalism would mean a more just distribution of economic rewards for the educated and laborers — those upon whom the prosperity of our country depends; they deserve to enjoy the majority of that prosperity.

Personal income fell 4% in January 2013 (corrected for taxes and inflation). Median household income in 2011 ($50,054) has declined for 4 consecutive years, now 8% less than its 2007 peak ($54,489), which is lower than it was in 2001. Are america’s laborers getting lazier? Are the educated forgetting their creativity? Economic data shows the US is more creative and more prosperous now than ever before. So how does the current discourse’s focus on ‘self-reliance’ and ‘incentivizing’ growth’ justified? A corporate power who wishes to distract the masses from the obvious swindling of their hard-earned products and wealth would re-direct the conversation towards further self-reliance, and increased workers diligence. Or otherwise, to conceal a theory that emphasizes the value of ownership (ie: investment, risk taking, venture capitalism, capital gains, etc) over hard earned work, like the educated services and laborers.

Post the real-estate bubble, the economic recovery has mainly benefited corporations. The US labor market is still in recession. Multi-national corporations recovered faster because they employ emerging labor forces in unprotected markets like China and India, without minimum wage or insurance benefit regulations, and without functioning unions to protect against worker mistreatment. In 2013 corporate profits as a percentage of U.S. GDP are at an an all-time high, yet educated and laborer wages are nearing an all-time low.

Figure 1. Chart of corporate profits.

Corporate Profits After Tax

Figure 2. Graph of workers wages as percentage of GDP in the same time period.

Wages And Salaries As A Percentage Of GDP

Corporatism funnels all of the economic rewards in the system to the top. Leftward motion, towards socialism, however is not advisable, as totalitarianism of all kinds produces the same structure that funnels reward centrally towards an elite minority. The solution rests with justice enacted in the political and economic arenas.

When a minority concentrates all the wealth of the nation in their own hand, they can make small portions of it available to the public, but this done in the form of loans and credit, to control the masses with the burden of debt and compounding interest. Debt, has grown in prevalence, scope and magnitude at unprecedented rates in proportion to the centralization of capital in the hands of a minority at the top. Increasing frequency and size of mortgages is limited only by consumer’s inability to funnel to the banks the monthly premium that is due. Automobile loans show record breaking size ($26,691) and duration (65 months) quarter after quarter. Longer, larger, and more frequent loans, for an expanding spectrum of goods is evidence that we are being owned by others. We borrow our existence from those who own all the wealth of the nation. If all the wealth is theirs, they enslave us through debt. The educated and the laborers work the remainder of their lives to redeem that debt and make the wealthy wealthier.

32 trillion dollars have been funnelled from american corporations to off-shore accounts to avoid US taxes. How does this money trickle down to the american people? Discourse on these matters can assist us to recognize the injustice, elect government officials with integrity, legislate the removal of finances and corporate influence from congress, develop a progressive tax pattern, and rectify the ownership-labor imbalance of reward distribution toward the educated and laborers .

Passivity is bred by the forces of consumerism. A desire to be entertained is nurtured in popular culture, from school age children to young professionals. Social causes often devolve into superficial fads, rarely challenging the fundamentals of our economic and political systems. Education fails to go beyond the memorizing of information, failing to cultivate curious minds that will question and reform the structures of our society for the future. Society must learn it is treading a common path of service, in which communities should support each other and advance together, unitedly. Prosperity follows unity.

Funneling of financial reward to the elite minority at the top disempowers the masses of people at the bottom. Eventually, the squeezing of the middle class will completely obliterate the power and rights of the majority. People are concerned about hostile occupation under a tyrannical government, saying that the individuals right to bear arms is the only defense against domination — how can fire arms help us now? An elite government plutocracy controls 40% of the nations wealth, and all of congress, and has rigged the system such that the law — which is supposed to stand up for american justice — is written against the people. The debate over fire arms is misplaced — we are under an oppressive government rule now, and there’s nothing that the right bear arms is doing about it. Military violence is not so oppressive as economic domination.

Noam Chomsky once wrote, “jingoism, racism, fear, religious fundamentalism: these are the ways of appealing to people if you’re trying to organize a mass base of support for policies that are really intended to crush them.” Trickle down economics, the ideology in favor of the wealthy elite, was  popularized by a confabulated myth of self-reliance (fundementalism), demonizing critics of wealth inequality (fear), and a sharp racial divide along party lines (racism), by people with pretense to a monopoly on patriotism (jingoism), which accumulated a mass of political support for policies designed to squeeze the middle class of its hard-earned labor and education reward.