One of the things I figured out when I was a young man was that capitalism is inevitable. The retention of value in the form of capital is an inevitable result once trade begins. I bumped into a colleague and his mother in Printer’s Ink in Mountain View, California over twenty years ago and over coffee repeated this line. My colleague was born in Poland and had escaped to the West in the early 80′s. His mother had come to visit after travel restrictions had eased. She turned to her son and said “This one is a Marxist.” I said that perhaps in analysis, but not synthesis. Marx as good at analyzing systems, but the solutions he synthesized did not work so well.
I recently emailed my brother, a conservative Republican, the following in an exchange about the relationship between raising the minimum wage and job loss.
Another thought I had recently is that capitalism and socialism are mirror images of each other in a way. Marx said something like “from each, according to his abilities, to each, according to his needs’ and he was banking on the altruism that we have that is part of our humanity. Capitalism is an expression of selfishness, another thing that is a part of our humanity. But each will not work without the other. Capitalism, left to its own devices, led to things like slavery. I just finished a book about the Roman Republic (before it became and Empire) and slavery was an essential part of the system. The place would not have functioned without slaves to work the mines and fields. Socialism, left to its own devices, would degenerate into sloth. Most of the produce in Communist Russia was produced on private plots, not State farms. Capitalism could not exist without altruism and socialism could not function without selfishness.
Underlying the discussion about the economy is a message about the relationship between choices in consumption purchases and moral fitness. The doyens of Wall Street think that they are worthy of judging the character of consumers, while simultaneously committing massive fraud. But I digress.
We need to have a legitimate conversation in this country about the role of government and capital. We, The People, should decide what level of service the government should be providing in many areas and how it should provide it. Too often, business is run the way royal franchises ran in pre-revolutionary France. For example, if you managed to get the royal franchise for collecting saltpeter, a necessary ingredient of black gunpowder, you had a licence to extort. Saltpeter grew on basement walls and franchise holders had the right to go into a house and collect it. More money was to be made by extorting home owners who didn’t want the intruders rummaging around than actually collecting saltpeter. In America, the telecommunications industry runs in much the same fashion.
Imagine that for $33 a month you could buy Internet service twice as fast as what you get from Verizon or Comcast, bundled with digital high-definition television, unlimited long distance and international calling to 70 countries and wireless Internet connectivity for your laptop or smartphone throughout much of the country. That’s what you can buy in France, and similar speeds and prices are available in other countries with competitive markets. But not in the United States. Prices here are three to five times that much for the fastest speeds — the highest prices among advanced economies.
I wonder how much investment was required to achieve this. I look at wireless infrastructure in this country and it has been built out several times, first for analog celular service and then for different digital signal structures.
The Federal Communications Commission’s National Broadband Plan, announced last week, is aimed at providing nearly universal, affordable broadband service by 2020. And while it takes many admirable steps — including very important efforts toward opening space in the broadcast spectrum — it does not address the source of the access problem: without a major policy shift to increase competition, broadband service in the United States will continue to lag far behind the rest of the developed world. Take the commission’s “100 Squared Initiative,” which aims to get 100 megabits-per-second service to 100 million households, at affordable rates, by 2020. Meeting the speed target shouldn’t be difficult; industry is well on track to achieve it within the decade. Affordability is the hard part — because there is no competition pushing down prices. The plan acknowledges that only 15 percent of homes will have a choice in providers, and then only between Verizon’s FiOS fiber-optic network and the local cable company. (AT&T’s “fiber” offering is merely souped-up DSL transmitted partly over its old copper wires, which can’t compete at these higher speeds.) The remaining 85 percent will have no choice at all.
The defenders of capitalism would like to make an argument about how capitalism is the most efficient means of allocating resources. This is patently false. The goal of capitalism is to maximize profits, without regard to the efficiency of distribution.
Those companies aren’t keeping their excitement quiet: a recent Time-Warner investor briefing touted the company’s ability to set higher prices in markets in which its potential competitors provide only DSL services.
The goal of capital is to breed more capital, without regard to ancillary and perhaps not very quantifiable costs in terms of social constructs.
We need to get back to principles and have an honest discussion about the role of capital in a society.