The Flaw of Capitalism
In a somewhat lengthy but accessible polemic at Forbes, tech strategist Sramana Mitra attempts to make the case that Capitalism is flawed:
The banks, however, are another matter altogether, and this is where I think capitalism has hit a roadblock. The government has intervened to save many of them, and now, these bailed out banks want to hand out billions in bonuses to their non-performing employees. Capitalism gave way to welfare economics, and now the government has to intervene further to limit these looters from behaving badly by imposing taxes and regulations. A whole messy cycle that brings me to the core “bug” in the system that Rand once sold me on, fully and completely.
Too many sacred tenets in Rand’s philosophy stand violated. Integrity, justice, fairness, work-ethic, excellence–all have fallen prey to greed. Rand’s flaw? She assumed integrity is implicit in the characters of the “leaders.” It isn’t. And hence again, most intelligent people are coming to the conclusion that the government must intervene to stop further shameless looting of taxpayer money. Free-market capitalism gets halted, regulation makes sense.
First of all, “free-markets” do not imply there is a lack of fraud regulation. Free individuals can communicate and collectively punish offenders more ruthlessly than a government can. The State remains necessary for the enforcement of contracts between free agents.
The other notion I find fascinating is that we somehow Free Markets invested too much stock in “integrity.” The reality is that the more we rely on The State to regulate, the more we invest in the “integrity” of politicians who are increasingly less accountable.
The dangerous notion, however, is that markets can be destroyed. You can’t destroy a market, you merely shift it. Decisions that are removed from what we consider a traditional free-market and placed in the hands of The State still occur. But all you’ve done is created a Market of Influence, and in the process removed the majority of people from having a say.
The more authority you remove from capital and consumer markets and invest in government, the more powerful the engine for graft and fraud. Concentrated power is far easier to co-opt, purchase and subvert.
“Markets” are not a theory, they are a fact. There will always be markets determining what resources are available and how they are allocated. The difference comes with how much freedom you have as an individual, and how much of a say you have in the outcomes. Doubling-down on a State-run market isn’t an act of “avoiding the flaws of Capitalism,” it’s just a riskier way of abdicating responsibility, and pushing all your chips into the middle for the most powerful to play with.
Maybe Mitra is right, and Capitalism is flawed. But it’s better than the alternatives, and handing control to The State only shifts the activity to the highest of high-rollers.
