In Praise of Capitalism and Socialism?
By the late 1980s, the prevalence of the counter-culture attitudes of the 1960s had dramatically faded, though they’ve never disappeared. Many of the hippies of the 1960s seemed by the 1980s to have turned into “yuppies”, which is short for “young urban professionals.” Seemingly, the collective anti-establishment spirit of youthful Baby Boomers had morphed into a more self-centered focus that desired the maximization of financial well-being.
No movie better captured the new social and cultural dynamic than did Wall Street in 1987. That movie focused its attention on “corporate raiding,” which essentially was a practice in which investment firms used debt to take over established businesses that may have become a bit “fat and lethargic.” They would reduce costs dramatically and after profitability and market value rose because of the cutbacks, cash out for a big payday. The practice was epitomized in the character of Gordon Gekko, who famously declared that “greed was good” in a speech during the movie.
One could make the argument that in that same year I was making my own transition along these exact same lines, though I was born 20 years too late to have been any kind of “authentic” hippie. But my favorite things in life were (and still are) my guitars and my longish hair would have been very much okay with the youth of the late 1960s. Yet, in 1987 I was working on my MBA with a concentration in finance, and was doing so having previously earned an undergraduate degree in economics, so educationally (and, truly, only educationally) I was much more comparable to Gordon than John and Yoko.
As was the case then, and is still the case today, I not only find that I can happily live with a foot in each of those worlds, but I feel that those two worlds very much need each other. I would further argue that a majority of Americans feel this need for balance and that the “success in general happiness and overall well-being” apparently experienced by the countries of Scandinavia are proof that a strong social safety net can comfortably live alongside competitive, successful, and profitable private enterprises. I would go even further and argue that you cannot have the former (social progress) without the latter (economic progress). The failed 20th century experiment in communism seems to have proven that conclusively. (And, socialism, of which the extremely popular programs that are Social Security, Medicare, and Medicaid are clear ingredients, is absolutely not communism.)
Regardless, I have often confessed to being a member of the “greedy bloodsuckers” by virtue of having earned that MBA in Finance in the late 1980s. My son took a different educational path and earned himself a degree in environmental science. He is, and has been since he was old enough to vote, a proud member of the Green Party. Personally, I have never felt any affinity for the party system we have in this country, so I’ve always been an independent voter and my voting preferences have moved back and forth over my lifetime. I like my candidates steeped in reality with compelling solutions to real problems, and they’re hard to find in any party.
While in school, my son would love to goad his “greedy bloodsucker” father into economic and political debates that basically centered around the notion that capitalism is failing the populace. My defense has always been that capitalism has done more to reduce poverty and improve the lives of human beings than any other form of economic organization. I think that’s categorically accurate and numerically provable. At the same time, though, I argue that unfettered capitalism is bad. It tends to really only benefit “the few” when things are going well and, without market constraints, it creates “bust cycles” that devastate the populace as a whole, many of whom never truly recover during a “boom cycle.”
Since the constructs of capitalism are all inventions of people—it is absolutely not the natural way of things—then it has to be operated in such a way to maximally benefit people. All people.
Getting there, though, requires balance and balance is all too often fleeting or difficult to establish in the first place. However, the ingredients are simple and easy to identify. The most critical element is competition. That is, competition of ideas as well as fair competition for both talent and resources. The second necessary element is a consistent set of constraining rules, meaning that information and opportunity are as evenly available to all comers as possible and that use of the “commons” (the air and the water, for example) is not misused (or abused) to the detriment of current or future populations. Finally, there needs to be a safety net for those unable to viably compete in a capitalist system, such as the elderly or people with disabilities.
For a generation after World War II, we seemed to have the balance right and not only did economic prosperity bloom, but we also moved decidedly forward in terms of social integration and inclusion. But then, in the 1970s, a variety of factors led to things getting out of balance and by the 1980s we were back on a track towards greater economic freedom for competitive enterprise, which was probably not wrong. However, over the intervening decades we clearly allowed the correction to continue unabated and now have resulting levels of income inequality not seen since the Gilded Age. A huge chunk of Americans have literally not had a real wage increase in decades and face daily economic struggles.
To my eye, stemming directly from that situation you end up with the social and political unrest we see today. You see backwards steps in terms of social cohesion, inclusion and equality. You see an unacceptable percentage of American children who face significant challenges in food insecurity and hunger (double-digit percentage points, which is shameful in a wealthy country). And, you have discussions with your children who question their faith in the American economic and political systems that have, especially during the second half of the 20th century, so greatly benefitted so many.
Interestingly, as is typical of our discussions, when we get to the fundamentals of the problem and the solutions, my son and I find we are usually just splitting hairs. As per above, it’s a matter of balance. The country greeted him differently upon his graduation into the “real world” than it had me. Simply, I had more opportunities, more choices, and brighter prospects for the future. Interestingly, this "greedy bloodsucker" took his MBA and spent decades working in the non-profit world to better the lives of people with developmental disabilities.
So, the work in front of us is about re-finding that balance. And, that means making sure that competition really works (right now it doesn’t), that the rules and opportunities are presented equally for all participants (they’re clearly not at the moment), and that the social safety net truly works (there’s work to do, but there seems to be evidence over the past 15 years that it works reasonably well already if one uses previous economic downturns and public health emergencies as benchmarks).
We have succeeded before in achieving balance. We have never had better technology and more access to knowledge and skills. If we choose to, and that is a giant “if”, we have it within our power to usher in an age of healthy and widely distributed prosperity the like of which humankind has never experienced before. The responsibility is ours and the quality of the future world we live in will be decided by those who manage it. In a democracy, ultimately that is us. We collectively choose and deserve the world in which we live. The current state of affairs indicates that we may need to start making smarter choices.