MODERN TIMES
Art Hobson
ahobson@uark.edu
NWA Times 2009
A crisis of
capitalism
Is
something dreadfully wrong with America's basic economic assumptions? It certainly seems so to me. An economist I'm not, but so much is so
awry that I think all of us must ask some fundamental questions. Leaving it up to the economists won't
do, because the problem is also social, historical, cultural, and
political. Financial bailouts and
stimulus packages are essential first aid, but they're not going to solve the
systemic problems.
It's
time to admit that our system isn't working. We've had six recessions since
1970, and the current recession might eventually rival 1929. Our 20 percent child poverty rate is
one of the highest in the industrialized world, second only to Russia and far
higher than the northern European nations. In a United Nations assessment of poverty among 18
industrialized nations, the U.S. has the highest percentage of poor people,
higher than nations such as Italy, Ireland, and Spain, while northern European
nations have the lowest percentages.
Among these 18 nations, Americans have the highest probability at birth
of not surviving to age 60, and the highest percentage of adults lacking
functional literacy skills.
Inequality of wealth distribution has been studied since 1912 using a
standard measure of statistical dispersion. In a comparison of 30 industrial nations, the most unequal
nations are Mexico, Turkey, Portugal, and the U.S. Again, northern Europe comes out best. It's generally acknowledged that in
terms of outcomes such as infant mortality rates, the U.S. has the least
effective yet most expensive medical care in the industrialized world. Similar statements apply to U.S.
education and transportation.
The
most important evidence that our economic system is neither working nor
sustainable is the mess it's made of the environment. Despite the popularity of being "green" and the
clout of powerful environmental organizations, we are losing the battle for the
environment. Gus Speth, in his
remarkable book "The Bridge at the End of the World," considers this
situation to be an indictment of capitalism as it now operates. Other thoughtful critiques, such
as Bill McKibben's "Deep Economy," make a similar point.
Modern
U.S. capitalism has, as Speth points out, long been out of control. Our nearly religious adoration of
economic growth is driving us off a cliff. Indeed, we seem to be in mid-fall. Our priority on making money has led to a ruthless economy
that ignores the environment and social needs. We cannot prevent the collapse of nature and much else
without an overhaul of American corporate structure.
The
needed overhaul won't get far unless we can get over our fixation on hot-button words such
as "socialism" or "welfare state." We need to worry more about what will
work, and less about what it's called.
What
are our options? Economic systems
seem to run along a one-dimensional axis, from extreme capitalism (individual
ownership, market economy) to extreme socialism (state ownership, controlled
economy). Extreme socialism has been tried and found wanting. But the U.S. has experimented with
extreme capitalism since 1980 and found the nasty consequences mentioned above. It seems clear that America must move
back toward the center of the spectrum, back toward the social democracy of the
many nations that are more successful than ours.
Companies
cannot become too big to fail. Any
single company whose failure would endanger the nation must either be broken up
into smaller companies or controlled sufficiently that the public has a real
say in its operations. General
Motors should have been broken up long ago, and banks that cannot be broken up
but that are economically crucial must be more tightly controlled. I'd recommend banking oversight that's
similar to our public service commissions that control utilities.
Financial
instruments that few people understand, such as the "credit default
swaps" that control $20 trillion worldwide, should be banned.
Most
industrial nations have universal health care financed by a single-payer system
administered by the government.
Our own employer-paid system hasn't worked, and it's crippled many
companies such as General Motors.
Most other industrialized nations have better yet cheaper health care
than ours. We ignore these facts
at our peril.
It
needs to be harder to get rich, and harder to become poor. Multi-million dollar salaries and
bonuses need to become a thing of the past. Income taxes need to be steeply raised on the very rich,
beginning at incomes of a few hundred thousand. Somehow, we've got to reduce America's fixation on money as
the source of all salvation.
I
once lived for six months in Stockholm, Sweden. I walked all over that large city and saw not a single case
of real poverty or homelessness such as we see everywhere in America. Sweden isn't perfect, but it works
pretty well. Because Sweden has
little crime, abundant and cheap mass transit, plenty of safe places to walk,
and plentiful access to beautiful places, I felt far freer there than I do
here. Europe has exuberant market
economies and energetic stock markets, but also enough state control to tame
capitalism's brutal edges. We need
to learn from these nations.
As I was about to leave Stockholm in July of 1985, I was walking through town with my friend and colleague Michael Nossov from Moscow. He put his arm around me and said "Art, my nation is a big, rough, communist country, and yours is a big, rough, capitalist country. I think that here in Sweden, they have it about right. What do you think?" I said I had to agree.