Requiem for an Economic System
Goodbye capitalism and don't let the barn door hit you on the way out
With less than a week to go before the 2022 midterm elections in the U.S., an election in which one political party has essentially displayed all of the symptoms of insanity, I thought I would write not a political essay, but instead one that focused on economics.
The two are thoroughly intertwined, which is why there’s a field of economics called political economics.
In this essay, I thought I’d talk about why the choice isn’t just between Democrats and Republicans, but about creating a new and sustainable economic system and society, one that says goodbye to capitalism as we know it.
Stevie Wonder understood the reasoning for this 50 years ago. In his song “Big Brother,” from his album Talking Book, the final three lines went like this:
“You've killed all our leaders,
I don't even have to do nothin' to you,
You'll cause your own country to fall.”
Stevie Wonder’s song “Big Brother” was influenced by George Orwell’s classic novel 1984. In his song, Stevie is talking to Big Brother, and at the end, tells Big Brother that the machinations of the leaders and their system are destroying the country.
And that’s where we are nowadays. We are watching the crumbling cinders of a house that’s falling apart.
In defining capitalism for our age, many people call it late-stage capitalism. But we’re beyond the late stages—capitalism can now rightfully be called end-stage capitalism.
What are the origins of this economic system? It goes back to the early Renaissance and the emergence of agrarian style market exchange and mercantilism; eventually, the Scotsman Adam Smith codified it with his book, The Wealth of Nations, written in 1776.
Although Smith never used the word capitalism in his book, he gave it meaning. He talked about the invisible hand of the market, which he described as something that guided how business and commerce operated.
The thing about Adam Smith is that his educational background was not as an economist but instead as a moral philosopher, a branch of philosophy focused on ethics, morals of behavior, and value.
Smith believed the wealth of a nation was derived from the goodness of the people and their ability to live a moral life. He was aware of what it took to subsist in the world in which he lived, an agrarian society: working the land, feeding the family, paying the bills, and hopefully having a small surplus left over was paramount to living a moral life.
Smith saw an imaginary, invisible hand guiding the free exchange of goods, aiming towards a moral code that led people to prosper and live their lives by a code of ethical behavior.
His argument was that the wealth of a nation flourished when all people thrived, and that the invisible hand was guided by a sense of goodness, of ethical behavior, to make sure all did well. Smith felt he was giving guidance to “statesmen” on how to act to enrich both “the people and the sovereign.”
Thus, Smith felt the state played an important role in aiding the free market in its exchange of capital, which is a different portrayal than how free-market economics is seen today.
Today, in our neoliberal, end-stage capitalist world, Adam Smith’s idea of an invisible hand guiding the market has become corrupted into being the framework for laissez-faire economics, a concept that believes that transactions between private parties should be absent any sort of state economic intervention, specifically government regulation and taxation.
And it’s this libertarian version of capitalism, that government has no role in the economic affairs of a nation, that is now the prevailing viewpoint.
Whereby mainstream economic thinking considers Smith the father of capitalism, that is far from the truth.
Economists will point to Adam Smith as the architect of capitalism, because in his writings he discussed the role of self-interest in making markets work.
But Smith, ever the moral philosopher, didn’t see self-interest as the motivational force (or invisible hand) guiding people. Instead he found that the qualities most useful to people were their “humanity, justice, generosity, and public spirit.”
That’s a far cry from how end-stage capitalism is practiced.
Furthermore, the word capitalism didn’t even appear in the English language until the mid-19th century, in the novel The Newcomes by novelist William Makepeace Thackeray. Thackery used the word to describe someone who had “ownership of capital.”
The definition and theory of capitalism as an economic system has evolved to its present connotation, that of a system based on the private ownership of the means of production and their operation for profit.
And a capitalist is still defined by the way William Makepeace Thackery described it, as someone who has ownership of capital (meaning money).
These days, thanks to the era of end-stage capitalism and its corruption of the ethics and morals of a society, those who own capital are the ones who control everything.
The French economist Thomas Piketty, in his landmark 2013 book Capital in the 21st Century, explained why this is so; in addition, he also warned us of the consequences of this.
Piketty stated that the rate of return on capital was too high in ratio to the rate of return on economic growth. What this means is that those who make money on their money—those in the financial sector and those who own the means of production—are making money faster than all those who work for a living.
Piketty also stated that because of the high return on capital experienced by the capitalists—those who own the capital—it has led to an enormous concentration of wealth in the hands of just a few people, and it this unequal distribution of wealth that causes much social and economic instability.
Piketty’s solution was for a global system of progressive wealth taxes and estate taxes.
What Piketty pointed out lies at the root of why capitalism has devolved into end-stage capitalism.
A few people at the top have concentrated the wealth into their hands, which has left very little for everything else—primarily for public investment in democracy, in public goods and institutions, in clean energy, in clean manufacturing, in decarbonization, and so on.
Meanwhile, the wealthy are getting wealthier. The infantile conspiracy theorist billionaire who just bought Twitter has seen his wealth over the last number of years go from $2 billion to $220 billion. And other billionaires have followed the same pattern.
While the wealthy are getting wealthier, the middle and working class are having a hard time making ends meet, living paycheck to paycheck, in debt, working precarious jobs, and having to choose between putting gas in their car, buying groceries, paying their medical bills, paying their rents and mortgages, and so on.
The wealthy are getting wealthier, and the corporations are making record profits.
For instance, look at the fossil fuel companies—the International Energy Agency said these corporations stand to make a record $4 trillion in 2022.
These fossil fuel companies will make their record profits while being responsible for destroying life on Earth and causing a mass extinction—you have heard of climate change, yes?
To add insult to injury, recently, one of the latest UN reports concluded that we’re on track for something close to a three degree centigrade increase in planetary warming before the end of century.
All thanks to the obscene profits made by the fossil fuel companies.
That’s why it’s called end-stage capitalism.
Now, the economist Thomas Piketty is a socialist, which means his ideas on capitalism get readily dismissed by the protectors of capitalism, which not only is the entire Republican Party, but also is a wide cross-section of Americans who have been conditioned to think socialism is evil and capitalism is the greatest economic system in the history of the planet.
Socialism’s detractors claim that socialism takes away your money, your property, and your life, and gives it all to the state. They look to the former Soviet Union and China as places where socialism was and is a totalitarian state.
And to add further grist to their argument, they state that socialism has killed tens of millions of people, through the purges of Stalin and Chairman Mao.
Yes, totalitarian states are evil, and yes, the twisted minds of Stalin and Mao committed horrific acts of violence on their own people.
But capitalism doesn’t exactly have a clean slate. The U.S. is becoming its own version of a totalitarian state—an oligarchy, plutocracy, kleptocracy, and theocracy—and capitalism in the U.S. has much blood on its hands: think of the Native Americans killed, the epoch of slavery and racism, and the consequences of U.S. imperialism in many countries around the world.
But I’m not here to argue on whether capitalism or socialism has caused more people to suffer.
Instead, I’m here to warn you about end stage capitalism and to say, if we don’t change the system, we’re in deep shit.
Capitalism in the U.S. is now a runaway freight train, and is causing the country to fall—just like Stevie Wonder sang in his song “Big Brother.”
The system is completely broken. And what we’re seeing now with this midterm election cycle are the ramifications of a broken system, with a far right lunatic fringe that is espousing fascist ideas and has taken over the Republican Party.
They have no interest in fixing the planet, in fixing capitalism, of making corporations answer for their actions, of allowing democracy to flourish. They are on a lemmings-like death march off the end of a cliff, and they would like to take all of us with them.
Capitalism cannot be saved. Sure, small scale entrepreneurship and small businesses, along with innovation, is essential to the lifeblood of a society.
But capitalism as it exists today is poison.
It’s literally poisoning the planet.
There is an answer, though; of course, it’s a solution that critics would deride as socialism.
This so-called “socialist” solution is for the world to work together to right the ship, while there’s still time.
You see, the same UN report that stated we’re going to see close to a three centigrade increase in global temperature by the end of the century has given the answer to fixing this.
They said that the world needs to invest the money to transform civilization.
These were their words: “A global transformation from a heavily fossil fuel- and unsustainable land use-dependent economy to a low-carbon economy is expected to require investments of at least U.S. $4–6 trillion a year.”
That might sound like a lot of money, but look at it this way: global GDP currently is $103 trillion, which means we’re talking about an annual investment of five percent of GDP to save the planet, and civilization.
The developed nations would be the ones most responsible for financing this project, as they are the richest countries in the world, and also the biggest polluters.
And the U.S., being the richest nation with a GDP of $25 trillion—meaning the U.S. accounts for 25 percent of the world’s GDP—would be the one to put the most money in the pot.
The money would have to be managed by an international agency, something like a Ministry for the Future, which just happens to be the name of a novel by the science fiction writer Kim Stanley Robinson.
In Robinson’s novel, the Ministry for the Future is tasked with saving the planet and making the world a more humane and peaceful one.
For the U.S. to be the largest contributor to a planetary fund to create this planetary transformation that the UN envisions, it would take a sea change in the paradigm the U.S. operates from.
It would mean ending this brutal, winner takes all, predatory, end-stage capitalist economic system.
It would have to be a transformation into an economic system that centers on the public good, with massive public investment year after year.
This might be considered a social democracy, or a socialist ideal that has yet to be realized.
But either way, it entails singing a requiem to an economic system that has failed all of us.
Karl Marx believed that a democratic capitalist state would transform into a democratic socialist state when its citizens saw the brutality of capitalism.
Perhaps this might happen.
But instead, what we’re seeing is the antithesis of what Marx envisioned: a democratic capitalist state, such as the U.S., is descending into fascism, as the working class, realizing how much they’ve been screwed over by a rigged system, falls sway to demagogues preaching ideas not for the betterment of the working class and society in general, but instead preaching vicious, vile, and violent ideas that conjure up a Darwinian, survival of the fittest, type society.
We need to hurry up and start shouting from the rooftops the requiem for an economic system.
Before it’s too late.