How Capitalism Deals with Inequality

President Obama and the Democrats have finally decided, five years after his election, to begin talking about the issue of income inequality, which has been increasing since the early 1970s. But their rhetoric makes it sound like inequality is a weird byproduct of capitalism when, in fact, it is a key feature of an economic system that relies on poverty and exploitation. This is the best system ever conceived?

16 thoughts on “How Capitalism Deals with Inequality

  1. Well, it’s certainly a feature so far as those in charge are concerned. They’re too greedy and short-sighted to realize they’re starving the goose that lays the golden eggs.

    Given a truly free market, capitalism *can* work the way that Adam Smith envisioned. It’s just that he didn’t live in a world where mass media could drown out word-of-mouth, or where multinational corporations had more money and power than many national governments.

    He did realize that that crony capitalism was a detriment to the free market, and saw government’s role as that of preventing abuses by the wealthy. We’ve forgotten that part. Unlike Saint Raygun preached regulation does not hinder the Free Market; but rather it ensures a level playing field in which everyone can prosper.

    • Well, I see you’ve said my piece for me. Thanks. Capitalism is supposed to be about competition, opportunity, efficiency, and government protection against fraud.

      One thing I don’t think is mentioned enough in discussions of our labor problems today is that technology has replaced so many jobs while our population continues to rise. In constrast, the Black Death created a labor deficit, so wages and the need for tech innovation soared. We’ve nearly eliminated all natural population controls. Even with all the poor diets, sedentary lifestyles, drug abuse, contraception, war, and preventable accidents we still have such a population crisis.

  2. The capitalist system relies on the popular belief in the eternal pyramid; only your position in the pyramid can change but never the pyramid itself.

    Therefore, the poor will always be with us; they are that without which the wealthy cannot exist; they are a feature of capitalism.

    • … not only an eternal pyramid, but also eternal growth. Given that our Earth is finite, infinite growth is simply not possible. Eventually a purely capitalistic system will break down.

      But neither do I believe a purely communistic system would work long-term or over large numbers of people. Were I king, I might enact the rule, “From each according to his ability, to each according to his needs” but as a baseline. Together we provide for all, you work: you eat. If you can’t work, the rest of us will see to it that you still get to eat. However, there would also be a rule along the lines of “to each according to his contribution” The Engineers and UAW contribute far more to society than the Ford & GM CEOs, and compensation should be distributed accordingly.

      • Since we’re discussing eating, shouldn’t that mean that farmworkers and people who do food prep be compensated the most?

      • @Miep

        “shouldn’t that mean that farmworkers and people who do food prep be compensated the most?”

        I see no reason why they should be compensated better than the CEO.

        To avoid a silly slappy-fight (not with Miep, with someone else 😉 I’ll concede that SOME CEOs do, indeed, contribute to the greater good. But the majority have more in common Ken Lay and Angelo Mozilo than with Thomas Edison and Lee Iacocca. .

      • eh-hem:

        I see no reason why they shouldn’t be compensated better than the CEO.

        Need a better proofreader… %^P

    • What’s more – anesthetized by endless gospels of ascendency, the squirming masses invert the shape of the pyramid and believe that the top has plenty of room for them. Check out the rationales for success that are mouthed so enthusiastically on “Shark Tank” and “American Idol”; participants hold their work ethic and desire for success as proof of their inevitable triumph.

      • > anesthetized by endless gospels of ascendency

        Yep, and I’ve got a name for those people, “Capitalarians” they see capitalism as a religion, and just like most Christians, they don’t really understand how it’s supposed to work.

        Their icons are dead presidents, their bible, “The Wealth of Nations” (which they’ve never read – again much like the Christians) Their prophets are the likes of Glenn Beck, and their Saints include Reagan.

        And again like Christians, no matter how many times they see their beliefs refuted, they still believe.

        :: wanders off humming the Grateful Dead’s “Estimated Prophet”

  3. Jack Heart’s Black Death comment.

    Yes. We’ve eliminated pretty much ALL the constraints to uncontrolled reproduction. But do you really think that we can do that indefinitely? Nature ALWAYS bats clean up. Global warming? Come and see me in 10 years, if we still have a technology that provides around-the-world instantaneous communication.

    Right now, drug-resistant TB is making a comeback. And — this is the important bit — there are no drugs in the development pipeline. This isn’t like before where something new was two years away. The drug companies have nothing. And that’s just for tuberculosis. There are other drug-resistant germs out there that will turn a trip to the hospital into a death sentence.

    Back when the recession was going gangbusters (and I was one of the victims of that) I noticed something. The street outside my apartment block used to be filled with traffic during rush hour. Not quite a jam, but solid car-to-car flowthrough. Then the recession hit and about 5% of the working population (the ones driving at rush hour) lost their jobs. The traffic just flowed like you wouldn’t believe. That road was almost empty. NOT because there was a tremendous loss of volume but because there was sufficient loss to prevent traffic jams from forming, thus eliminating all that delay.

    A lot of things in our society are not just operating at slightly-over capacity (thus, traffic jams). A lot of things in our society are operating at just-barely-enough-there capacity. Consider a McDonald’s or a supermarket. How many people work there? How many (how few) of those people need to not be there for services to become noticeably worse? What about the electric company or the subway system? How many people at MTA control actually know how to keep the trains running? Not just mechanically, but the IT infrastructure, the payroll, the pass cards, etc.

    We — the human race — are due for a correction, and it’s gonna make the stock market dropping 9,000 points in four hours look like a gentle kiss from the baby Jesus.

    • Thanks for the reply. I’m sure it’s coming; there’s no way it isn’t. For people who purport to care about human life (everyone?), this should be the biggest concern. We are about to lose a lot of it, and it’s too late to do anything.

      • The big thing we could be doing is saving what can be saved. Norway has a seed vault. Does anyone have a vault to store the films, the tv shows, the books, the music?

        In 200 years, what will they look back at and sigh, “Why did not one person think to save this?”

      • > In 200 years, what will they look back

        … and say, “WTF are all these shiny disk things?”

        I’ve got books that are over a century old & I can still read them, but I’ve got disks less than a decade old which I cannot.

        Consider, as soon as we wave goodbye to the printed page the only records of those writings will be electronic – and someone else will have the power to censor, change and “correct mistakes” in our reading material.

        I’ve got paper copies of The Anarchists Cookbook and a few others that I won’t admit to while the NSA is listening in.

    • Your average grocery store carries only three or four days worth of food. When the ball drops, food riots will rule the day – followed by massive die-offs all across the Eastern Seaboard and So Cal.

      This will thin the herd PDQ, and that’s a good thing for Mother Earth. We can only hope the survivors learn from history better than we did.

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