Who Is Killing Capitalism

Capitalism – the free movement of money, goods and services based upon market demand by consumers rather than some super-authority directing such flow.  It has been the fundamental economic driver of America since our first colonial settlement.  Jamestown was originally chartered as a commercial venture by English businessmen, with expectations of high profits to be returned to those businessmen.  Upon landing at Jamestown, the anticipated gold and other treasures were never found.  So the profit motive was redirected to the abundant agriculture, where survival required hands-on labor by each individual, performed on individually-owned farms (the first American sole proprietorship “businesses”).  Individual ownership of the land and its resources, individual career paths, independently driven production and marketing decisions, individual profits, were the hallmarks of Jamestown.  They are still some of our economic hallmarks today.  All quite different compared to the Puritan’s settlement at Plymouth, which exemplified the religious aspect of our founding, and whose communistic sharing economy was in stark contrast with Jamestown.  They are two contrasting and often conflicting economic and religious philosophies, a conflict that remains with us today.

Entrepreneurship is a key (though not required) component of a capitalistic economy, at least as capitalism is practiced in America.  Entrepreneurship is what has allowed America to reach economic heights unforeseeable to pre-American generations.  It is entrepreneurship that sees an unmet need or opportunity, or a shift in consumer interests.  It is entrepreneurship that has the visionary idea of how to meet that need and fulfill that opportunity.  It is entrepreneurship that then has the creativity to produce that idea and bring it to market where consumer demand can kick into gear and pronounce the product a success or failure.

The potential of success drives some people into entrepreneurship; the risk of failure drives other people away.  America has had a long, exemplary history of spectacular economic and innovative successes, as well as glaring flame-outs of failure.  For entrepreneurship, risk-taking is required, and the capitalistic structure must be there to freely and easily render its judgment of success or failure.

The components that entrepreneurship needs from the capitalistic framework are: 1) freedom of action and creativity for the entrepreneur, yet done within an ethical and responsible framework; 2) a funding market which provides operating capital; 3) a labor force able to produce the product in the specifications, quality and quantity required; 4) an open marketplace for selling the goods and services produced, each seller on an equal footing with another; 5) a customer base willing and able to buy the products and services; and 6) an absence of artificial supports that prop up failing ventures.

Unfortunately, these required elements for successful entrepreneurship and capitalism are no longer sufficiently in place in America.  1) Regulation oversight is not properly aligned with the business endeavors – too much in some cases, not enough in others.  Too often the overseen outnumbers the overseer.  2) Funding has become severely constricted due to previous unethical and illegal lending practices in spite of government subsidies that now underwrite the everyday lending business.  3) As old-styled jobs disappear, the American labor force is not keeping up qualitatively or quantitatively with the new skill bases that are adequate for successful employment, even as financial access to a proper education is declining.  4) Independent selling in the open market has become limited because major national/multi-national corporations and franchises now dominate the marketplace both for price and available products.  5) Real income for the middle class – the true “mass market” – has been long stagnant if not shrinking, thereby stifling the consumer demand that drives our economy.  Meanwhile, wealth continues to be concentrated in fewer and fewer wealthy individuals, a number too small to drive the economy in spite of its spending excesses.  (The statistics of the concentration of wealth among the very few are frightening here.)  6) Inequitable tax regulations and anti-competition laws favorable to the few bigger players are crushing the small business person.  Businesses who have not proven themselves in the customer marketplace are being propped up because they are deemed “too big to fail,” or they enjoy special treatment from politicians or judges.

There is much moaning and crying in many business and political circles about capitalism and the supposed assault on it.  An assault supposedly coming from “spendthrift socialist politicians.”  Many business executives and their political supporters talk incessantly about the virtues of capitalism and its ability to promote the American economy and provide jobs for people.  By their reasoning, they beg that this great economic force be unleashed and unrestrained.

Most of this talk is a smokescreen hiding the real truths.  By their actions, these same people are doing everything possible to dismantle the very capitalism they talk about.  Self-preservation and unfair advantage all too often takes priority, hidden behind deceptive marketing advertising; a slew of attorneys, tax accountants and lobbyists; and friendly politicians more interested in campaign donations than giving wise direction to the country and keeping our free market truly free.  Good and responsible business leaders are deservedly to be appreciated, whether the small-business person or the multi-national CEO.  But there are not enough of them in today’s economy, and not enough checks and restraints on the misbehaving ones.

So who is killing capitalism?  Not the Communists.  Not the Socialists.  Not the Liberals nor the Libertarians.  Not even the Conservatives.  It is Capitalists themselves who are killing capitalism, and doing it as an inside job.  It is true entrepreneurship that needs to be saved.  But I am not sure who can put this broken Humpty Dumpty back together once again.

©  2013  Randy Bell