article: Exorcising Capitalism

Mon, 2 Sep 1996 07:57:49 +0100 (BST)
Richard K. Moore (rkmoore@iol.ie)

Any understanding of contemporary "world systems" naturally must
look at corporations and at capitalism at least as much as it looks at
governments, social forces, religious alignments, etc. In that regard, and
also as a continuation of the "global praxis and the future of the
world-system" discussion, I offer the following for your consideration...

-rkm

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This article may be posted in entirety for non-commercial use.
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EXORCISING CAPITALISM --
A SURGICAL STRIKE FOR HUMAN SURVIVAL

Richard K. Moore
30 August 1996
Copyright 1996 by Richard K. Moore

The New Populism

There is a New Populism at large in America, exemplified by
the Nader/Green campaign, articulated in Ronnie Dugger's "A Call For
Real Populists to Stand Up" (The Nation, August 14/21, 1995), and
evidenced perhaps even by those who flocked to Buchanan's short-lived
campaign or to Perot's Reform Party.

Central to this populism is a recognition that the
democratic process has been deeply corrupted, and that corporate
wealth and power is somehow at the heart of what's wrong.

This new populism is just getting off the ground, and has a
long way to go in accomplishing the grass-roots organizing and
coalition building that will be necessary to achieve any significant
degree of popular political power. The road is especially difficult
given an election system rigged to favor the established parties, and
a corporate-controlled media which frames "public debate" on a
narrow, slanted field of discourse.

But success of such a movement is not unprecedented in
American history. The original agrarian Populists, for example,
achieved remarkable influence in a political environment fully as
hostile to popular movements as is today's.

One can hope that the new populists will learn from history,
adapt what they learn to modern conditions, and succeed in mobilizing
a broad constituency dedicated to radical reform of our decaying
system.

Organizational success can be translated into societal
progress, however, only if the movement is able to articulate a
coherent societal vision, and back it up with a workable legislative
agenda.

In the area of democracy reform, the movement seems to be on
the right track, with campaign finance reform and other such
initiatives. Indeed, it may be fair to say "The Movement IS the
Reform" -- in that the essence of democracy is really active citizen
participation more than it is any particular set of formal rules.

But in the area of economic reform, the movement seems to be
sadly lacking in both understanding and vision. One cannot simply
wish a chicken in every pot (for example), a job for every worker,
and funding for needed social programs -- there must be an economic
analysis that takes into account the realities of today's economy,
and a well thought-out Business Plan for a New America (if you will)
that is practical and realistic.

The absence of a coherent economic vision must be seen as a
fatal weakness in the current movement, and progressive-minded
leaders and thinkers must strive with all due haste to provide that
missing vision. Otherwise the most conscientious, progressive-minded
leaders, even if elected to office, will not have the means to
provide us with other than more-of-the-same as regards our livelihood
and the scourges of of wrong-headed economic "development."

Toward an Economics for The New Populism

The first order of business re/ economic policy must of
course be the establishment of goals. Do we want full employment? A
balanced budget? Adequate financing of government? Sustainable
development? Reform of the Federal Reserve? Reduction in armaments?
Single-payer health care?

Without a set of goals, how can we attract massive popular
support? People must have some reason to hope for relief from our
economic quagmire if they are going to rally to any new movement. We
can't be like Perot in the last election, saying "Give me power, and
then I'll think about what I'm going to do." That approach didn't
sell then and won't sell in the future, and rightly so.

The fact is, perhaps unfortunately, that those who are out of
power have the burden of proof forced on them: they must articulate
coherent plans if they expect to attract a constituency. The
incumbent parties, unfortunately indeed, are allowed to get by with
hand-waving promises to do better next time. They have the
credibility of experience on their side, to the extent that they've
proven they can at least govern without outright economic chaos.

Progressive leadership must begin to address the question of
economic goals and objectives. Having made some efforts in that
direction myself, in previous articles, I've been forced to do some
soul searching about the root economic causes of our societal crisis.

I now believe, and will endeavor to demonstrate, that we must
discuss the taboo "C" word -- Capitalism -- and that our attitude
toward the other dreaded "C" word -- Corporations -- needs to be
radically reconsidered. Corporations may indeed be potent allies in
the progressive cause, rather than the arch enemy of democracy.

We must face the fact that capitalism must always demand
unlimited growth to feed its inherent insatiable appetite -- that is
its defining nature and no one disputes it. We must also recognize
that unlimited growth of corporations is inconsistent with a
sustainable environment or with human welfare. This is being made
abundantly clear by the neo-liberal assault on our society in pursuit
of greater global corporate growth.

Our pivotal point of leverage is to notice that capitalism
and corporations are not actually the same thing -- capital owns
corporations, but it is corporations that actually run the wheels of
our economy -- not capitalism. This may turn out to be a
strategically momentous observation, as I hope you'll agree from what
follows.

Commerce and Capitalism Are Two Different Things

Both commerce (meaning business and industry in general, both
large and small) and capitalism employ trade and manufacturing to
create profit, and in both cases, profit is an important "invisible
hand" driving-force of system operation and optimization. Commerce
preceded capitalism, capitalism grew out of commerce, but capitalism
operates at a higher level than commerce.

What is special about capitalism -- and this creates a
qualitative difference in its fundamental structure -- is that
capitalism is concerned not primarily with making a profit from
commerce, but with increasing the value of an investment. This may
sound like a subtle distinction, but the consequences are profound.

Suppose you have a commercial operator who has a $1 million
to make use of. He will presumably start a business, operate it, and
then enjoy and live off the profits. It is not essential that the
business grow and expand, only that it keeps operating and continues
to generate a reasonable profit. If the operator happens to be
personally greedy and aggrandizing, he might make growth an
objective, but that is not essential to commerce itself. Think of a
mom & pop grocery store, or a family farm.

A capitalist, on the other hand, with $1 million to work
with, is interested only in having $2 million in hand (arising from
investing the $1 million) in, say, five years time. This is
accomplished, to put it simply, by investing the $1 million in a
commercial enterprise (a corporation) which is likely to increase in
its market value, that is: the corporation, as an operating asset,
can be sold for twice as much after five years pass.

Capitalist Funding Distorts Commerce

When a corporation depends on capitalism for its funding,
there is then an imperative placed on the corporation that it expand
and grow (by cutting costs, increasing market size, diversifying into
new products, wiping out competitors, subverting regulations, etc.).
Otherwise it will not attract capitalist investors.

The capitalist economic system we currently live under is one
where nearly ALL commercial ventures are corporations which are
funded by capitalist investors (some big, some small) who are
collectively concerned only with the growth of their investments.

There is thus created a situation where nearly all commercial
operations have the primary goal of growth, not merely profitability.
Profit is valued primarily as a source of internal funding for
growth, and profit is largely siphoned off to support growth, in
preference to better salaries and working conditions, refurbishment
of existing plant, or better servicing of existing customers.

The classic case is the American auto industry, which
purposely allowed its plant to decline, and its product lines to
become outmoded -- while domestic operations were milked to provide
funding for offshore ventures. This was a move which benefitted
industry stockholders, but which abandoned industry employees as well
as the market for quality domestic products. It was also a move
which helped wreck the U.S. balance of payments picture.

This commerce-distorting growth imperative is imposed on
corporations from the outside, and is frequently in opposition to the
natural pursuits of managers and workers. No matter how hard they
work, or how successful their business is, they find themselves
always on a treadmill, always required to work still harder just to
keep pace with investor expectation, while the fruits of their labor
is siphoned off for the benefit of outsiders. Corporations and their
employees thus suffer from capital-induced stress.

Capitalism Is a Cancer Infecting Our Economy

Our economy is not a commercial system that pursues profit,
but a capitalist system that pursues growth. A commercial economy is
like an animal's regulatory system, which moves nutrients around the
body and keeps the host (society) healthy. A capitalist economy is
like a cancer, which sucks nutrients out of the body and consumes the
host.

The cancer cells in our societal body are capital-owned
corporations, which as we've seen, are corporations infected from the
outside by an insatiable growth hormone. It is not corporations per
se which consume the host, but the effects of the growth hormone.

If the cancer epidemic continues -- if capitalism proceeds on
its current course -- the inevitable consequences are widespread
poverty and suffering, environmental devastation, and global
feudalism, as the host (humanity) succumbs to its terminal disease
and as capitalists work ever harder to squeeze the last nutrients out
of the failing host.

This is not theory (marxist or otherwise), this is based on
empirical observation of the current global economic crisis, as
capital scours the finite earth for ever-cheaper labor, ever-new
markets, ever-fewer constraints on operations, and ever-greater
control over setting the rules of the game. Increasing the size of
the already-immense horde of capitalist wealth becomes ever-more
difficult year by year, and capital's desperate grasping becomes
necessarily ever-more host-threatening.

A Surgical Strike on Capitalism Is Possible

If we could sever the link between corporations and the
capitalist-outside-investor system, while allowing the corporations
to continue operating as commercial entities, we could exorcise the
cancer from our economic system, without needing to disrupt it and
start over (with socialism or whatever). This seems to be a prudent
path to explore.

We would then have a commercial economy instead of a
capitalist economy, and the growth hormone would be eliminated.
Purely commercial enterprises would be far less resistant to
reasonable regulations, could be more responsive to consumers, more
focused on quality of product, and more adaptable to reasonable
demands of labor for adequate remuneration and favorable working
conditions.

This is because commercial enterprises are part of the fabric
of the environment they live within -- members of the community if
you will -- instead of being the tools of outside-the-community,
value-extracting investors.

Effecting this change -- severing the capitalist link --
requires two things, from a strategic point of view. First it is
necessary to define the legislation/rules that would implement the
change, and second, it is necessary to analyze the self-interests of
the various players in order to determine how they can be incented to
cooperate.

It seems that the legislation/rule-making required would be
to eliminate outside ownership of corporations. Instead a
corporation would be owned by its employees (including managers.) To
get funding, they could not sell shares in the corporation, instead
they could issue bonds, solicit loans, dig in their own pockets, or
re-invest profits.

Outside investors, if any, would then be looking for
dividends from their investments, rather than growth, and their
interests would be identical to those of the corporate operators:
continued profitable operations. The growth-imperative cancerous
hormone would be removed.

What the transition would amount to would be the
expropriation by each corporation of its own stock, exchanging it
instead for corporate bonds or annuities. This change could be
called the "enfranchisement" of corporations.

You might think of corporations as serfs -- working for a
landowner. What is being proposed is that the serfs be given
ownership of their plot of land -- and that their rents be converted
into mortgage payments. The hope is that enfranchised corporations
can be more easily induced to become good citizens -- once they are
unchained from anonymous outside interests, interests whose only role
in operations is to tug the chain blindly and irresponsibly in the
direction of growth.

There Need Be No Losers

This brings us to the question of the various players and
their self-interests. Interestingly enough, managers, employees, and
customers of corporations could all be expected to benefit from the
change to "commercialism." Ending capitalism, ironically, can
actually be framed as corporate liberation. This would seem to open
up the possibility of a very large progressive constituency indeed.

Stockholders could be expected to have mixed reactions, with
the more enlightened perhaps welcoming the enhanced stability that
could be expected from a healthier, cancer-free economy. But a
difficult compromise formula would need to be worked out so that
investors would accept the terms of their debt instruments, while not
so saddling corporations with debt that they couldn't operate
effectively. A narrow wicket, this, but not impassable.

Within these enfranchised corporations, there arise the
questions of how ownership is to be distributed within the internal
corporate community, who it is management "reports to," and how
employment is granted and terminated.

These questions are a topic unto themselves. But it is fair
to say that robust solutions are possible, and that we can look to
existing employee-owned firms, and other self-managed organizations,
for instructive models.

Enfranchisement Makes Progress Possible for Humanity

All of these considerations assume the context of a greatly
revitalized political democracy, driven by a mobilized and organized
citizenry. By means of corporate enfranchisement, the cancerous
growth hormones would be removed from the corporate gene pool, but
corporations would continue to be formidable entities for society to
deal with. And there would still be compulsive aggrandizers whose
personal ambition would generate the hormones spontaneously.

Hence corporate regulation, anti-trust laws, environmental
safeguards, appropriate corporate taxes, etc. would continue to be as
important as ever, and still problematic to negotiate. But a
solution would have become possible! There is no inherent reason why
a healthy society and enfranchised corporations cannot co-exist
symbiotically, to their mutual benefit.

A corporation lives within an economic ecosystem. It has its
appetites and its competitors, and can work out its niche in the
marketplace. Some will die, some will thrive, and new ones will
arise. Reasonable stability and harmony are achievable.

But a corporation infected with capitalist growth hormones
can never be happy with its niche. It must always have a larger
niche. It can never be satisfied, but only temporarily appeased.
The capitalist infection should be stamped out for the benefit of
society, the health of the economic ecosystem, and to relieve the
treadmill stress under which corporations currently operate.
Everyone benefits.

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Posted by Richard K. Moore - rkmoore@iol.ie - Wexford, Ireland
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