“Under capitalism, man exploits man. Under communism, it’s just the opposite.” – John Kenneth Galbraith
By Morf Morford
Tacoma Daily Index
A key principle of capitalism is that a free and fair market continually restores, correct and balances itself. This is called (originally by Adam Smith, in his book The Wealth of Nations) the “invisible hand” of the marketplace.
The premise is simple – the unyielding forces of market demand and the supply of goods and services in a free market will reach, sustain and restore (as needed) equilibrium automatically – almost as if the market itself were a biological being responding to forces beyond itself like seasons or threats to its existence – like natural predators or disease.
An essential good or service will make a profit for the creator or owner, contribute to the larger health and well-being of the larger community and employ citizens in productive work and encourage young people to develop a range of practical – and transferable skills.
In short, in a fair marketplace there are many “winners” – and few, if any – “losers.” There are few, if any extraordinarily wealthy individuals and few, if any desperately poor people in any given community. (1*)
This is not only sound economic sense and basic human decency, The Bible speaks of this inherent sense of balance and fairness.
“Two things I ask of you, Lord; do not refuse me before I die: Keep falsehood and lies far from me; give me neither poverty nor riches, but give me only my daily bread. Otherwise, I may have too much and disown you and say, ‘Who is the Lord?’ Or I may become poor and steal, and so dishonor the name of my God.” – Proverbs 30:7-9 New International Version (NIV)
I am sure we have all seen situations where too much – or not enough – money has been disruptive – if not destructive to individuals and possibly even corporate or civic entities – sometimes even entire nations slide into economic collapse.
In an optimal – and sustainable – economic system opportunity is available to almost everyone, (especially those with the vision to see and seize it) honesty and diligence are rewarded, criminality and deception are punished and the community itself prospers.
And in this healthy community, no one goes hungry or homeless and no one is intoxicated by the obsession with their own wealth and power.
It is the ultimate virtuous cycle where competition leads to better products and services, more access to opportunity and a never ending investment in improvement in the community, the industry and each individual.
Most of the time, the market does in fact keep itself strong and heathy, with good ideas being rewarded and weaker ideas (and business plans) becoming object lessons for those of us smart enough to learn from other people’s mistakes or lack of experience.
In theory, the freest market, with the most level playing-field and minimal regulation will be the most productive, resilient and stable – and creative.
As I said, most of the time, the system works, at least when we let it.
Subsidies, tariffs, piracy, tax penalties or abatements and various other short-cuts, pay-offs and various other acts of corporate spying or sabotage distort inherently stabilizing market forces.
Amazon’s search for a second headquarters (HQ) was an embarrassing exhibition of civic slavishness and desperation as dozens – in fact, almost 250 – cities offered tax breaks, incentives and what certainly looked like outright bribes to Amazon to locate and provide thousands of (mostly near-minimum wage) jobs to their communities.
This is money that could have – and should have – been used for constructive and productive – and more long lasting – community building purposes – like schools, infrastructure or transportation.
You don’t need to be a professional economist to know that an investment in public education is going to have a deeper, longer lasting and more regionally-rooted return on investment than and factory or “fulfillment center” (Amazon’s euphemism for “warehouse”).
Those tax dollars – as we all know in our saner moments – do not magically appear. Receipts, local, regional or federal, come from property, sales or income taxes.
In other words, tax money comes from us.
No one loves taxes. I, like most of us perhaps, don’t really mind paying fair taxes (taxes, after all, are how we pay for essential services) – but what I don’t like is that my tax money -and yours – is too often wasted – or is going to businesses, industries or even individuals that don’t need it.
Why, for example, would we – or any community – give billions of dollars to a company owned by the richest man in the world?
Subsidies are usually dedicated to fledgling start-up companies – not corporations that are on the verge of a market monopoly.
Seattle has given plenty of warnings about the impact of a single massive “gorilla” company. (2*)
The well-known “rust-belt” of formerly prosperous industrial cites should teach us something about reliance on a single company or even industry.
When funding for schools or streets is threatened or cut in pursuit of any set of corporate promises, we need to seriously consider the purpose of both taxes and civic investment.
We should certainly welcome investment – especially business and individual entrepreneurs with an eye for future development.
But when the glaze of mirage-like riches dazzle us at the expense of safety and stability – or even good schools (https://www.theguardian.com/us-news/2019/jan/27/virginia-teachers-strike-amazon-tax-breaks?) we need to think again about what – and who – we are investing in.
The entire purpose of capitalism, after all, is to provide essential goods and services at reasonable prices and offer fulfilling and rewarding employment – not to drive competitors into bankruptcy and squeeze every dollar from employees and customers.
As entrepreneurs used to say, money is green energy. You can’t do much if you don’t have any, but if you do have it, you have to keep it moving.
Money is like manure. You have to spread it around or it smells. – J. Paul Getty
(1*) You can see an overview and exploration of classic capitalism and the concept of free enterprise here – https://www.investopedia.com/terms/c/capitalism.asp.
(2*) Here are just a few – https://www.cbc.ca/news/canada/calgary/amazon-bad-for-quality-of-life-says-seattle-writer-jeff-reifman-1.4310419 or https://www.theguardian.com/technology/2019/jan/07/seattle-lawmakers-warn-new-york-city-about-amazon