Capitalism Doesn’t Work. Period

The failure of the auto industry which went from king-of-the-hill in 1959 to bankruptcy in 2009 can be laid at one doorstep — auto industry management.

(CALGARY, Alberta) - Capitalism as a group of people working face to face to meet economic and material goals works. It’s part of human nature.

But Capitalism as a cultural phenomenon can’t work because people become “assets” and profit becomes the overriding goal—overcoming the standard virtues like honesty, integrity, morality and so forth.

We knew this more than 200 years ago in the words of the old sage Benjamin Franklin. Time is money. Credit is money. Present to others the appearances of honesty and frugality. But it was not because it was a good thing to be honest, but that such an appearance made it possible for you to borrow more money. It was not the virtues that were important, but the appearance of having those virtues.

The demise of the North American auto industry began over fifty years ago. Some observers watched the seeds being sowed in the 1950s, but were ignored. Growth was the magic word for the economy and industry adapted to that need by inventing planned obsolescence and styling changes.

In 1959 Raymond J. Saulnier, chairman of the President’s Council or Economic advisers said: “As I understand the economy, its ultimate purpose is to produce more consumer goods. This is the object of everything we are working at: to produce things for consumers.”

In 1960 sociologist Vance Packard concluded that “one major challenge is to do something dramatic about the growing sleaziness, dirtiness, and chaos of the nation’s great exploding metropolitan areas.”

A few years ago Canadian philosopher Joseph Heath wrote: “Despite being the most outrageously wealthy society in the history of the world, the more populated regions of the United States are also relentlessly, preposterously, brutally, ugly. American cities often seem to consist of nothing more than mile after mile after mile of aesthetically punishing tract housing, strip malls, and freeway overpasses. It’s hard to think of any great civilization in the history of the world that has so systematically failed to invest its wealth in beauty. This is not just an outsider’s prejudice either. Americans complain about it just as much.”

In a cross country trip by rail last year, writer Andy Isaacson noted that “as early as New Jersey, I realized something that would only feel remarkable a few days later, in the Nevada desert: it’s still possible to travel 3,585 miles across the United States without being the target of billboards, golden arches or absurdly large twine balls. The rails offer a view onto Unbranded America — the land as it was.”

A half century ago theologian Reinhold Niebuhr predicted that “the productive power of our industry threatens to make our culture subordinate to our economy.” This, in fact, is what has happened.

In the 1950s, the auto industry began with the power of advertising to sell to consumers what, in a rational world, they would never buy. An automobile was to be primarily used as transportation of people—a very utilitarian purpose. But, in the 1950s President Eisenhower inaugurated the national interstate highway system with billions of taxpayer dollars. Who benefited? First was the construction industry, although that was primarily a one shot deal. The real beneficiaries were the auto and oil industries and the wealthy families like the Fords, Du Ponts and Rockefellers who held the dominant shares in these and related industries.

Things went swimmingly through the 1960s for the auto industry. Then came OPEC and the oil shock of 1973. The Arab and middle eastern countries who exported most of the world’s oil actually worked in unison and, in response to the American support of Israel in the Yom Kippur war of October, 1973, refused to export oil to the U.S. and much of Europe.

Gasoline rationing and higher prices put pressure on the American auto industry whose main product was the behemoth gas guzzler. They made smaller cars in response for a few years but never learned the lesson. Through the 1970s companies like Toyota, Datsun (now Nissan) and Mazda made serious gains in auto market share which they have not only never lost, but have since increased.

The failure of the auto industry which went from king-of-the-hill in 1959 to bankruptcy in 2009 can be laid at one doorstep—auto industry management. It’s a cliché to say that they were greedy and short sighted. The result of their attitudes, however, is desolation and destitution in the lives of tens of millions of workers. They did their job and even those who probably knew about the Kamikaze direction of the auto industry had no say in the operation.

As of today, the American public will own about 70% of General Motors. Many are already saying that this ownership role should be temporary. I disagree. Private enterprise has shown that it cannot successfully run an auto company which puts the lie to all those who say government can never succeed at running a business. This may be the golden opportunity for a democratic government to demonstrate its chops. One thing for sure—the private sector, which has completely failed, will do everything it can to make sure the government fails. What a strange situation.

Daniel Johnson was born near the midpoint of the twentieth century in Calgary, Alberta. In his teens he knew he was going to be a writer, which is why he was one of only a handful of boys in his high school typing class—a skill he knew was going to be necessary. He defines himself as a social reformer, not a left winger, the latter being an ideological label which, he says, is why he is not an ideologue. From 1975 to 1981 he was reporter, photographer, then editor of the weekly Airdrie Echo. For more than ten years after that he worked with Peter C. Newman, Canada’s top business writer (notably a series of books, The Canadian Establishment). Through this period Daniel also did some national radio and TV broadcasting. He gave up journalism in the early 1980s because he had no interest in being a hack writer for the mainstream media and became a software developer and programmer. He retired from computers last year and is now back to doing what he loves—writing and trying to make the world a better place

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Brutal Truth July 24, 2011 2:07 pm (Pacific time)

Capitalism doesn't work for a reason some have noted elsewhere, essentially that it doesn't monetize certain forms of work well. This could also include road repair, as there is no profit in it but it desperately needs to be done. So instead all we have are underfunded highway repair organs at the local level which are far from being up to the task.

There are other reasons why capitalism doesn't work. Here's my favorite: Because it doesn't work for the AVERAGE PERSON. Remember, the vast majority of Americans aren't billionaires or investment bankers or even small business owners. The vast majority of Americans sell their labor piecemeal and are paid a fraction of its actual value. In other words, we're exploited, just in varying degrees from the overworked white collar worker to the underpaid migrant worker planting shrubbery. You see, you can't have capitalism WITHOUT exploitation of the many by the privileged few. You can't have capitalism without the greed of those privileged few and without their heartlessness and willingness to take advantage of their fellow man and woman. A system that revolves around greed and the ripping off of the average worker for the benefit of the wealthy few is certainly not the pinnacle of human development, not even close. Capitalism is wage slavery. Humanity can and will do far better.

Some say socialism offers no incentive to work harder. I say what could offer the worker less of an incentive than a system like capitalism where the average worker sees no difference in his paycheck if the store where he works does 2% or 20% more in sales this quarter? This and the insultingly low pay rate that is the norm under the capitalist economic model are more than reason enough to abolish it and transition toward worker ownership of the means of production. Think about it. This is the only way that workers will be paid what their labor is worth and the only way that workers will have some kind of a stake in the success of their business because they would be a part-owner.

Others have pointed out that capitalism is not democracy because it is of course an economic model rather than a political system. This is correct. What they neglect to point out is that capitalism is inherently INCOMPATIBLE with genuine democracy. A great case in point is the U.S. government which, let's be honest, from any objective estimation is just a big sock puppet of the billionaire ruling elite. Senators, Reps and the president himself may as well have their corporate sponsors' logos on their suit jackets like race car drivers. Anyone we are allowed to vote for is guaranteed to be someone who will maintain the status quo and won't make any meaningful changes. Because that is simply all that the wealthy will finance. They aren't going to cut their own throats and force themselves to flee to the Caymans with a steamer trunk full of money to start a new life. Instead they buy out any candidate that has a shot at winning and let the puppets fight it out among themselves to see which will be the best puppet of the elite. Look at Obama if you don't believe me. Campaigned as Mr. Hope and Change, Mr. New Way of Doing Things and what do we get? Someone who governs from a place that is shoved so far up the rear end of Wall Street that Obama poops out stock ticker tape. And gives us a health care "reform" package that is the dream of the private insurance companies and Big Pharma but still makes people's grandmas choose between food and medicine and makes poor people who can't afford insurance buy it from private insurers. If all we could choose between was John McCain and the Wall Street whore Obama, that's not democracy or even close to it. It's a pseudo-democracy where people go through the motions and carry out the rituals of democracy to keep them complacent and feeling like they have a voice in the process. That's it. Why is it this way? Because the uber-wealthy capitalist bourgeois elite controls the whole process by controlling all its players. Period. Capitalism is a poison for democracy.

Capitalism essentially puts the profit motive above all else including fairness, people's health and safety and the environment. All that is a distant second to the bottom line.

Capitalism should be seen for what it is, an INTERMEDIATE stage in human development between ancient feudal absolutism and the future, worker state democratic proletarian socialism. People from the future will look back and wonder whatever took us so long to get there when it couldn't be more obvious that capitalism is soul-crushing and so self-evidently destructive to the average person. The future looks bright and beautiful. It just doesn't in any way involve capitalism.

I like your suggestion that politicians should have corporate logos on their suit jackets.

Have you read my current piece: From I to We where I go into a deeper analysis?

Capital Guy November 6, 2009 11:49 am (Pacific time)

This article fails to take an objective approach to things. One of its reasons for Capitalism being a "failure" is that cities aren't more beautiful...what?! That's a point of view at best. Also, it was the free market that lead to the auto companies failing, thus punishing poor performance. The only reason they are still around is because of the very anti-free-market bailouts that revived them. Another point this article makes is that the interstate highway offers no benefit to the average worker. If that were so, than no one would be using it. As well, this article seems to scapegoat oil and auto industries and hit home the belief that anything the oil or auto industries benefit from directly harms the average citizen (far from measurable and objective). To sum up what I got out of this article, it is basically the author talking about his subjective gripes and making no objective connections between events that take place in a capitalistic society and what ever problem he thinks it has.

Well, Capital Guy, I suggest you reread the article, in particular the Joseph Heath quote. You complain about "anti-free market bailouts" revived the auto companies. True. Would you have preferred that the government have done nothing? Millions of people are dependent on the auto industry both directly and indirectly through thousands of supplier companies. If the auto companies had been allowed to fail, there would be national economic devastation on a scale never seen before. No democratically elected government could stand by and let that happen. The arguments I presented are not subjective.

Corey June 3, 2009 6:24 pm (Pacific time)
The U.S Constitution and the Bill of Rights is all that is needed to see what the Founding Fathers wanted. That was their gift to us. Growing the government is the opposite of what they wanted and the vast majority of Americans also want less government interference in their private lives. I have found that you can read many biographies and depending on the author's ideology, you will come away reading what they want you to read. That's why just going over the Bill of Rights is a sure way to cut through the smoke, for it is what it is. That is why it is so important that when we give a lifetime appointment on the U.S. Supreme Court that we get a judge who goes by the law, not their feelings. That is why Lady Justice is blindfolded people, we are all "equal" under the law.
Henry Ruark June 3, 2009 1:06 pm (Pacific time)
Corey et al: For further detail on turning point for nation, see ADAMS AND JEFFERSON:The Tumultous Election of 1800; John Ferling;Oxford, 2004; ISBN 0-19-516771-6; and Tocqueville: Democracy In America;ISBN 0-06-091522-6. HAVE you read any of these refs. ? If not, in all due friedliness, you are uninformed, and probably also misinformed by long-continued din from GOPster noise machine and previous propaganda emissions clouding America;s true history.
Henry Ruark June 3, 2009 12:36 pm (Pacific time)
Corey: Further re bailouts, even though not highly relevant to ours re genesis and development of Constitution. One of major issues fought and modified/remedied/compromised by Founders et al in setting up governance originally was precisely this issue of will of the majority on current issues, not always best decision via same problems as we now face. That's why representative governance via Congress, with executive and judiciary always subservient, was choice of both Founders and mass of people via conventioneers acting for them to set up Constitution. You can check it out, sir, and it may help resolve your own difficulties with ongoing actions now reflecting the same question precisely.
Henry Ruark June 3, 2009 12:31 pm (Pacific time)
Corey: Au contraire, sir ! Strongest sentiment among Founders, echoed by citizens, is proven by Constitution and its genesis, including Bill of Rights. Factions there were, in depth and number; but the Founders and supporters won strong public support, despite dirty work done then, too, as the final result clearly shows and historians have confirmed ever since. History of its genesis, development, drawing-up and determination to accept by ratifying states denies your statements, sir. Have you checked ? If so, cite your sources, since obviously neither of us was there,albeit I may be closer to their time than you are now... !! IF you can, document yours via statements, links, quotes, authors, reports, dates and details...whatever you have. Will be happy to check 'em out and furnish others here for "see with own eyes" and "evaluate with own minds", rather than personal statement -only (no confirmation) denying many pages in easily accessible history. To check, start with Chernow new biog. of Hamilton, with its several early chapters detailing precisely the deep struggle resulting in choice for strong central government and won only by overwhelming dialog, discussion and deep probing of national will. It took more than twelve years (after '76") to get the issue settled, through nearly as much dialog as we now have from same forces denying that decision now as fought it then in bloody fashion, including assassination. Other major biogs. of the Founders group in general support same basic conclusion, from same historic events, firmly ensconced in history, and there for the guidance of current generation...vs the myths generated then in malign opposition and still in use today, for the same reasons of winning control and domination of government for private purposes. Your previous Comment shows clearly from whence you cometh with this one, and demands dialog to confirm what our history clearly shows, if one will but read it in depth and detail, from award-winning historians and biographers, drawing on original sources in depth and reporting on decades of solid study. WHO do you wish to cite, sir and from what published works: Let's see it right out here in public, for direct exam and evaluation by our readers.
Corey June 3, 2009 10:21 am (Pacific time)
Of course one thing the Founders wanted as per my observation over many readings was a small national government, with most of the powers given to the states. That is clearly spelled out in the Bill of Rights. What is happening now is anethma to what they set up in our Constitution. In fact several polls lately acknowledge the vast majority of Americans did not want the Union Auto Worker Bailout (some call it the GM bailout mistakenly), so we the people are being ignored by our representatives. They are ignoring us on many other issues as well.
Henry Ruark June 3, 2009 8:59 am (Pacific time)
To all: Re Founders,their motivation clear in Boston Tea Party, vs E.India Brit corp. and tax with no representation --remember ?? Re general attitudes, biog. of Hamilton by Chenow has Chapter 13, "Publius",re his major work The Federalist Papers (with Madison, Jay). Chenow analyzes FedPapers in great detail, showing precise history, developments and Founder attitudes very clearly precisely as relevant here. ISBN: 1-59420-009-2. "See also" Chapter 1 "A Nightmare Vision";PARTY POLITICS; L.Lurie;ISBN 0-8128-2754-6, Note esp. his direct quote from Franklin, setting theme of chapter AND book... !!! This one classic in field, dated 1980 ! Mine abstracted from Air Force Library when discarded there. What many never learn is the tremendous struggle Founders led after '76 to establish strong central govt. set up to protect Americans from same century-old drive by wealthy and powerful to assume full power for themselves --still underway !! Took more than 12 years...see refs. We've won some and lost far too many, and same struggle now continuing, driven by the same motives and the same two major groups. Connect-dots to every part and parcel of our current economic crisis, now worldwide in scope and impact, to see the consequential damages now impossible to ignore. We need to remediate flaws and strengthen, improve and extend system, NOT abandon and begin-again, probably nearly impossible. We CAN and MUST learn from "democratic experiment" --and 250 years should be strong beginning. moredoc. when time allows. Currently facing eye surgery, thus otherwise occupied on cleanup details here.
Corey June 3, 2009 7:20 am (Pacific time)
"CAPITALISM DOESN'T WORK!" Remember Big Brother is Watching you. WAR IS PEACE- FREEDOM IS SLAVERY- IGNORANCE IS STRENGTH-and the Founders also questioned our economic system?
Henry Ruark June 2, 2009 8:11 pm (Pacific time)
Marty: Drawn from various sources, based on quotes, statements, interpretation by multiple authors. Can document with some effort but do NOT do so for free anymore. For access ID self to Tim with phone and will share via conversation if you prefer. Some difficulty since must use speakerphone, work with imperfect hearing aid. Mostly from some half-dozen biographies, can share list, but dead sure of statement. Was root of desperate fight re strong central vs strong state plan, with states thus free to regulate or otherwise control corporations.
Marty June 2, 2009 12:33 pm (Pacific time)
"Founders recognized great flaws apparent even then in what we already had as embedded economic system." Does the poster have a source for this statement? Thanks
Ersun Warncke June 2, 2009 11:04 am (Pacific time)
Your title excellently summarizes the core issue. However, I doubt that the current so-called nationalization of GM will make much difference. In essence, companies have lost their ability to convince people to buy their products, and now they are simply forcing people to buy their products, by means of the Federal Government. This does not seem like a huge improvement. If we had a legitimate government that could be relied upon to reform these companies once they pass into the "public's" hands, then this nationalization might be beneficial, but there is little reason to believe that the Federal Government is any less corrupt and incompetent than the management of the companies that they are taking over. Instead of having the public takeover all of the dead and money losing industries, why doesn't the public take over the profitable socially essential industries like health care, energy, telecommunications, and banking?
Henry Ruark June 2, 2009 8:38 am (Pacific time)
To all: Founders recognized great flaws apparent even then in what we already had as embedded economic system. World-change since massively nultiplies probabilities for miscarriage leading to regular recurrent recessional impacts. Wiser from experience, many have been working for a century for changes clearly demanded ever since '76 --and now absolute necessity more than ever. Thank you, DJ, for your very insightful report, opening way for radical, honest, and yes, democratic, dialog to work out some of what MUST NOW happen to massively modify what we have in ways we KNOW MUST now happen, if we are to retain it as system supplying ALL of us with its benefits now also very clearly blessing the very comparative few, totally true internationally speaking with TWO BILLION more now joining THEIR "middle classs", despite very low income levels, in the developing natons. Please note 2B number from The ECONOMIST,world-renowned Brit magazine specializing in highly reliable economic reporting. (See Op Ed some weeks ago...date later when can confirm via STAFF "Written by..." line. Recen further documentation to come, too.)
Daniel Johnson June 2, 2009 12:28 am (Pacific time)
Bill: Thanks for your comment. The problem with the auto industry has nothing to do with whether people can fix their own cars. My point is that the management of these companies have spent decades not listening to their customers but, instead, making what they deemed to be the most profitable and spending mega dollars on advertising to convince the unsophisticated consumers to buy them. I argue that on a small scale capitalism does indeed work, but on a large scale it poisons itself. Do you think that Enron, Worldcom, AIG, CitiGroup, etc were flukes? If you have more to add, I'll be happy to try to understand your viewpoint and see where we can agree.
bill June 1, 2009 10:42 pm (Pacific time)
So capitalism not working, maybe this man needs to really read the history of this u.s.a. We have the highest living standard in the world.As cars go , its the people who can't even fix there own cars that have caused the problems with the auto industery. EPA, C.A.F.E. and D.E.Q. that have driven the cost of cars why up,and the top heavy managment.The last true american cars where produced in 1988, the rest are juke, they just trow away cars. The energey used to make the new cars cost much more than the older stile to make. The mileage increase was not that great,at least those who new how to tune a car. If this isn't how you see it I'll be back to explain the rest.
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Capitalism Doesn’t Work. Period

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