The Seven Deadly Sins Of Capitalism (Demo)

On February 2, 2014, Darrin Drda writes on Nation of Change:

What follows is a list of capitalism’s seven deadliest sins (or capital vices), presented in reverse order.

7) Amorality. Although some economic actors do indeed behave immorally (while many strive to do good), the system as a whole frankly doesn’t give a damn.

6) Intrinsic inequality. Due largely to deadly defects in the monetary system (see #1 below), capitalism divides the world into haves and have-nots, inevitably concentrating wealth in the hands of the former—as we have seen in recent years and in the period preceding the Great Depression—until redistribution or revolution.

5) Poverty. One of the most common arguments for global capitalism is that it helps alleviate poverty. Problem is, global poverty statistics are generated by the World Bank, an institution explicitly designed to promote globalization.

4) Externalization. To externalize a cost is to pass it along to someone else, typically the general public and the environment.

3) Gross Domestic Product. GDP is supposed to monitor economic wellbeing by tallying up all the goods and services exchanged within a given area and time frame. But GDP sinfully ignores what is being exchanged, such that war, natural disasters, accidents, disease, depression, and other negatives are counted as positives for GDP because they generate revenue, while life-affirming activities like volunteering and gifting are not counted at all. Furthermore, GDP ignores the distribution of wealth.

2) Private property. The Romans were the first to advance the legal concept of dominium, which was considered “the ultimate right, the right which had no right behind it, the right which legitimated all others, while itself having no need of legitimation… the right ‘of using, enjoying, and abusing.’”

1) Usury. If anything can be considered the root of all evil, it would have to be usury. The practice of lending money at interest is condemned by most religions, including the Abrahamic faiths, although the Bible allows Jews to profit from foreigners as a way of “fighting without a sword.” The implication of violence is inherent in usury, which is basically the opposite of a gift.

http://www.nationofchange.org/seven-deadly-sins-capitalism-1391350401

Gary Reber Comments:

The author is confused and unclear in his understanding of private property principles, productive capital ownership, and the role of government.

The rules and regulations related to the system are the problem, not the concept of private property, physical capital ownership. The system has unjustly facilitated the concentration of wealth ownership and denies ordinary people without savings and pledgeable security assets to acquire wealth-creating, income-producing physical capital assets. We need to reform the system to provide equal opportunity for EVERY citizen to acquire personal ownership in FUTURE productive capital assets using the FUTURE earnings of the investments for their acquisition.

My comments are organized in the same order as presented.

7. Markets are based on demand and supply, without regard to morality. To be moral, the men and women engaging in the supply and demand of goods, products, and services, need to be moral and engage in commerce in accordance with principles of right, not wrong, or goodness, not badness, as with the code of good human character and behavior.

6. Economic inequality is a result of a system whose barriers  exclude the non-halves from access to wealth-creating, income-generating productive capital.

One feasible way to significantly broaden productive capital ownership simultaneously with the responsible growth of the economy is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. Removing barriers that inhibit or prevent ordinary people from purchasing capital that pays for itself out of its own future earnings is paramount as an actionable policy. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the federal government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today — management and banks — that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by the commercial credit insurers, backed by a new government corporation — the Capital Diffusion Reinsurance Corporation (CDRC) — through which the loans could be guaranteed (ala the Federal Housing Administration concept). The CDRC would reinsure any portion of any financing risk assessed as reasonable and insurable but not already insured by the commercial capital credit insurance underwriters. In establishing the CDRC, the federal government would not be undertaking a new responsibility but merely simplifying and rationalizing an existing one. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.

5. Poverty or the lack of sufficient earnings to sustain one’s basic needs, will persist and expand as long as equal opportunity to acquire wealth-creating, income-producing capital assets simultaneously with the growth of the economy is denied and past savings are required to secure capital credit that otherwise is self-liquidating. Tectonic shifts in the technologies of production will continue to eliminate the necessity for human labor and devalue the worth of human labor, as increasingly the non-human means of production dominate the operations of for-profit business organizations, who will need far less workers to produce goods, products, and services.

4.  Externalization is the impact of a lack of government regulations and their enforcements, requiring producers to be accountable for their harms to people and the environment.

3. Gross Domestic Product is an accounting gauge of an economy’s performance. Values are not put on the source of the exchanges.

2. Private property is a natural human right. Collectivists, however, think the way to restore justice is to attack the market system and abolish the institution of “private property” in the ownership of productive capital. The “pursuit of happiness” phrase in the Declaration of Independence was interchangeable in those times with the word “property.” The original phrasing was “the right to life, liberty and property.” “The pursuit of happiness” phrase was a substitute for the “property” phrase. In the forerunner of the Declaration of Independence and Bill of Rights, the 1776 Virginia Declaration of Rights declared that securing “Life, Liberty, with the means of acquiring and possessing Property” is the highest purpose for which any just government is formed.

The problem with “private property in the non-human means of production” is that it is concentrated among a few. And the system perpetuates concentrated capital ownership as the economy grows, so that the same few and their heirs get richer and richer through constant accumulation of future formations of productive capital.

What we need is to define “economic justice” in a way that provides equal universal access to future capital ownership opportunities for EVERY child, woman, and man, without redistribution. That is, reform the tax and monetary system to enable every child, woman, and man to purchase capital on pure credit collateralized with insurance, and pay for it out of the future earnings of the capital itself. This is the smart means to acquire capital, which wealthy people fully understand.

1. Usury is the practice of lending savings to borrowers, who on their own accord borrow subject to paying back the principal loan amount plus interest. Interest is the compensation to the entity lending the savings. Lending past savings is lending wealth already owned by the issuer of the loan.

What needs to transpire is instituting “pure” interest-free capital credit mechanisms that will implement the goal of broadening productive capital ownership simultaneously with the productive growth of the economy in ways wholly compatible with the U.S. Constitution and the protection of private property.

What is needed is equal access to interest-free Federal Reserve financing by EVERY child, woman, and man to purchase new productive capital assets  with the loans repaid out of the future earnings of the investments in the growth of the economy. Through such an economic democratization reform, economic growth would be freed from the slavery of past savings, while creating a domestic source of new asset-backed, interest-free money and expanded bank credit to finance new capital formation repayable out of future earnings (savings). This is necessary if we are to succeed with a quiet revolution in which economic plutocracy will transform to economic democracy.

For a more in-depth overview, see my article “Economic Democracy And Binary Economics: Solutions For A Troubled Nation and Economy” at http://www.foreconomicjustice.org/?p=11.