The real issue facing Americans is not the superficial and distracting debate over the relative merits of capitalism and socialism but the tragedy of the commons that is playing out today in our country. Unfortunately, despite the exploitation of war, the poisoning of the Gulf of Mexico, and the rape of the American economy by corporate pirates, Americans still seem to grant these enemies of society a measure of legitimacy. We have been well trained to honor those who exploit us.
Protecting the commons is the fundamental principle on which we should be concentrating. If we can figure out a way to protect the commons, i.e., all those attributes of life that we share from the air we breathe to civil liberties, while still permitting capitalism, fine and good. Capitalism is an efficient way, at least in principle, to generate creativity. But capitalism is only a tool, not a virtue; hammers have their role…but not for washing windows. Capitalism must be understood as a tool of use under certain conditions.
We also need to understand what capitalism is NOT. Federal bailouts of corrupt casino-banks in which the criminals are protected from the law, retained in their positions, and allowed to keep the money they have stolen is the ultimate in welfare fraud; socialism at its worst. All the big banks should have been allowed to do what, under capitalism, they would have done: gone broke and disappeared. That would have allowed true capitalist banks to compete and innovate and redesign the economy.
Consider national defense. Imagine a system in which arms manufacturers compete as true capitalists to produce the best possible arms to defend the American people and provide those arms at the lowest possible cost, as their patriotic contribution to the common good. Imagine that, in the case of war, the CEOs of such corporations immediately take a pay cut, perhaps to minimum wage, for the duration of the war. After all, as decent Americans, they would not want to be seen as personally profiting from a war that their magnificent weaponry should have made unnecessary.
Consider the financial investment system. Imagine a system in which vigorous, capitalist investments are encouraged, with the caveat that when an investment firm goes broke, while the government may step in to dismantle and protect certain portions of the business deemed of social value, all the members of the corporate board and all the officers of the corporation will 1) lose their jobs, 2) be required to pay back the money they earned while the corporation was collapsing, 3) will face legal investigations for fraud, and 4) will be banned from financial positions for the rest of their lives. This is known as “taking responsibility for your behavior.”
Both for the armaments industry and the financial investment industry, capitalism is one possible approach, as long as the capitalist behavior is contained by transparency requirements and tight regulation such that it remains within the bounds of what is socially beneficial. Were the alternative approach–socialized arms manufacturing and socialized financial investment business–employed, transparency would remain equally fundamental to ensuring that these theoretical bureaucrats, just like our theoretical patriotic corporate heads, kept their eyes on the target of the common good.
A capitalism that protects the corrupt rich is as bad as a socialism that protects a repressive bureaucracy. The U.S. economic system today exemplifies all that is wrong with capitalism just as the Soviet system exemplified all that was wrong with socialism. The US system of corporate welfare does not prove that capitalism is necessarily bad nor did the Soviet communist system prove that socialism is necessarily bad.
We need a system that allows capitalism constrained and contained and used appropriately as a tool for efficiency and creativity along with socialism used appropriately to protect society. Whatever the mix of capitalist and socialist characteristics in a governing system, the focus should be on the commons. Unfortunately, today in the U.S., the major political argument is between those who care about protecting the common needs of society and those who have their own private advantages and want to exploit those advantages at the expense of everyone else. It is time Americans started to recognize how dangerous it is to engage in this dialogue between honest people and pirates. All it does is implicitly give legitimacy to the pirates..