A New Capitalism?
After writing the post on “The Nationalization of Big Business,” I received a number of emails and comments that made me take a closer look at this issue. Since I’m not a futurist, economist, nor academic, I rely on the following definition of capitalism, which pretty well spells it out for me.
Capitalism is an economic and political system characterized by a free market for goods and services and private control of production and consumption.
Princeton University’s Wordnet defines capitalism as an economic system based on private ownership of capital…antonym of socialism.
To me, capitalism means that if the market (we consumers) likes what a business has to offer, we buy from that business and it becomes successful and continues to grow and prosper. If the market does not like what the business has to offer, we don’t buy from that business and it fails. That is the simplest form of capitalism. Capitalism is totally market driven, and it has worked well for American companies for a very long time–until now.
Now, although we have over 30 million American businesses that fit the basic definition of capitalism…Robert Reich, former Secretary of Labor, has pointed out in a recent article, that we also have companies which operate outside our capitalistic system, because they are no longer accountable to the market. If they were accountable to the market they would close–with mass loses of jobs, which would heavily impact our entire economy. Therefore, they cannot be allowed to fail, because they are too big to fail.
So, if we have companies that are not accountable to the market, and operate outside our capitalistic system, who should they be accountable to? If some of these companies can only survive by living on taxpayer’s money, shouldn’t the taxpayers hold them accountable? Unfortunately, that would mean the government would become involved in the operation of these companies, and does anyone think the largest bureaucracy in America can better manage them?
There are no simple answers, but lots of questions-for instance:
- When is a company, no longer accountable to the market, and becomes too big to fail?
- Should large, unaccountable, businesses be forced to break up into smaller, more manageable (and accountable) units…similar to the former Bell system breakup?
- Should the government take control of these large “too big” companies and dictate who should manage them, and how they should be run?
- Or, should these large unaccountable companies simply be allowed to fail–putting 10’s (maybe 100’s) of thousands of people out of work?
These are pretty heady questions for just a street guy, but I would really like to hear the opinions of anyone out there who wonders what is happening to our capitalistic system–and should it be happening? Better yet, how can it be made more successful in our global economy?
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