Shock Watch

There is a huge problem with capitalism, and it is this: like the Wicked Witch of the West’s hourglass, the money in capitalism flows up, from the people who don’t have much of it to the people who already have a lot of it. This suits the “haves” just fine, of course, because they become richer and more powerful over time, but it isn’t good for the system overall because of two negative consequences: first, people with little money run out of it quickly, and people with no money are a huge problem. Secondly, the money soon stops flowing and you have economic collapse. When the music stops you are left with a feudalistic society; money and power concentrated in the hands of a few overlords, with serfdom for the rest of us.

So, unfettered capitalism leads to people with no money and economic collapse. That unhappy outcome is as old as capitalism itself, and so humans, being clever little monkeys, have put on our thinking caps and devised ways to avoid it.

What do we do about people with no money? For one thing, we promote the social virtue of people living within their means. People running themselves into penury do nobody much good, and so we encourage people to save, to budget, to scrimp, to be careful, to plan for education and retirement costs, to earn, and to take care of themselves. When people run out of money or are in danger of doing so, we have set up systems to provide it for them so they can take care of their basic needs: aid to widows and orphans, Social Security, unemployment benefits, bankruptcy, Medicare and Medicaid, disability, food stamps. All of these systems provide a safety net for people who are unable to exchange their labor for money sufficiently, including but not limited to people who cannot do so because of their age or illness or sudden loss of employment.

The other thing that we do to keep economic collapse at bay is to slow down the rate at which money flows upward by making sure that it goes from the haves to the have-nots at a sufficient rate. So the government enforces things like the 40-hour work week, overtime rules, the minimum wage, and other labor laws including support for unions, which ensure that the captains of industry reward work enough to get money back down to the bottom, to keep the system flowing.

In a capitalistic society, therefore, one of the government’s most important jobs is to take money from the top of the hourglass and put it back on the bottom, either directly through progressive taxation to support the safety net, or indirectly by forcing capital to exchange enough money for labor. It takes from the rich to give to the poor (where have I heard that before?), but the upside is that people aren’t rioting in the streets, we have a generally good standard of living, and (most) people don’t live in economic slavery.

Rich people hate that. A fair chunk of their income (and in some cases their wealth) is taken by the government to give to needy people, and many of them are forced – horrors – to pay living wages to their employees. Shortsightedly, many of them don’t see the benefit of living in a society where the government intermediates on behalf of the have-nots. What is worse is that we have designed our corporations to behave like sociopathic rich people on steroids. And as corporate power has grown, the rich have been eying and opting for feudalism and economic collapse. We are in another Gilded Age, and they just might get it.

For corporations and some rich people (for convenience, let’s call this mindset “corporatist”), feudalism and economic collapse aren’t bad things to be avoided, but rather features. The government can be starved into impotence, the safety net can be taken apart, and the less wealthy will then have to rely on the largess and good will of the rich. Of course, the great unwashed won’t be happy about this, but the corporatists will also have private armies and crowd-controlling weapons, so there is nothing to worry about. And what’s left of the government can be used to serve them as well.

Next: implementing the plan so far