Capitalism: the Good, the Bad, and the Ugly

Capitalism: the Good, the Bad, the Ugly; Cooperatives: the Good, the Good, and the Good.

It looks like the Frenchman, Thomas Piketty, will soon be a household name in America; this is no mean trick because he comes from the dismal science, the boring economist who has written a "massive (685 pages) study of global inequality . . . that is No.1 on the Amazon best-seller list . . . a 15 year study analyzing data across 30 countries," according to Rana Foroorah (Time, May 19, "Marx 2.0") This economic study has an historical and cross-national perspective with an ugly conclusion. The thesis, according to Foroorah, is "The rich really are getting richer. And their wealth doesn't trickle down. It trickles up." Or one could say that the thesis is a modern scholarly confirmation of Jesus' opinion of the rich found throughout the gospel of Luke, nicely summarized by Jesus: "Woe to the rich."

More from the pen of Foroorah: "It's not often that a 685-page economics tome almost overnight captivates Main Street, Wall Street, and the cream of Washington's trend-minded policymakers and think tankers. But that is what's happened with Capital in the Twenty-First Century and its 43-year-old author, Thomas Piketty. . . . On a recent trip to the U.S., Piketty met with Nobel laureates, billionaire financiers and such top policymakers as Treasury Secretary Jack Lew and Council of Economic Advisers head Jason Furman."

Foroorah quotes Picketty: "The 1% in America right now is still a bit lower that the 1% in pre-revolutionary France but is getting closer," The idea that the U.S today could be on the same economic trajectory as late 18th century France, a society in which many of the 1% eventually had their heads lopped off, may seem, as Piketty writes in his book, "terrifying." Yet the stark historical consequences of unchecked inequality are at the heart of Capital. Piketty concludes that "it's quite possible that inequality will keep getting worse for many more years."

A solution? Piketty advocates a global wealth tax. According to Foroorah, "Some kind of universal wealth duty (tax) was an idea that preoccupied both Adam Smith and Thomas Jefferson." Economically needed, but not politically feasible.

So much for the very ugly, oppressive side of capitalism. Is there any good side? According to Harvard's Kenneth Rogoff, the answer is yes.

On May 9, Dan Weil wrote: "While much of the world's attention is focused on the increase of income inequality [think oppression] in wealth nations [thanks to Occupy, Pastor/Prophet Francis and now Piketty], income distribution is actually becoming more equal in developing countries." Rogoff says that a book of equal importance, The Great Escape by Angus Deaton, shows that capitalism has brought several billion out of poverty in the last few decades. . . . The same machine [capitalism] that has increased inequality in rich countries has leveled the playing field globally for billions." Could a coop economic system both reduce poverty and economic inequality at the same time?

From Paul Krugman, "The Piketty Panic," "What is really new about 'Capital' is the way it demolishes that most cherished of conservative myths, the instance that we're living in a meritocracy in which great wealth is earned and deserved [and is necessary]."

It seems that the existing economic system is deeply flawed; we need revolutionary change, more than tax reform. There are existing alternatives to our fragile and oppressive financial system---credit unions, community banks and state banks [google State Bank of North Dakota]. There are viable alternatives to corporate capitalism---cooperatives, Christian Community Development, family farms, small businesses, Jubilee justice, Mondragon. Vote financially and economically for these more just alternatives.

The last, and most important word, from Arthur Jones, author of Capitalism and Christians (1992); his experience lies in writing and editing for a number of business and financial magazines. Jones asserts that "though I love business, I don't like [corporate] capitalism." Jones describes the Mondragon alternative to American corporate capitalism; Mondragon is a cooperative movement founded by a Catholic priest after the Spanish Civil War had devastated the country. In 1987 there were 172 worker owned cooperatives that employed 20,000 people and grossed two hundred million in sales:

"Mondragon embraces ninety-four industrial cooperatives that manufacture everything from machine tools to refrigerators to auto parts; nine agribusinesses from cattle raising to forestry; seventeen housing cooperatives and 44 educational facilities; a supermarket chain with 225 outlets, plus research and development and technical assistance centers. During the 1981-86 recession not one job was lost---workers took home 80 percent of their previous pay, worked longer hours, but were doing it for themselves, their community and their fellow workers."

"At every level, through plant and regional councils, the worker participates in management, training and disciplinary decision-making. The Mondragon system incorporates some of the most advanced conciliation and worker participation programs yet devised. It lives Catholic social teaching."

"So what is this Catholic social teaching already aware of? That when the workers own factories and hire the managers, the factories don't flee. That when all of the community controls the resources it owns, those resources are treated with care."

I understand that Mondragon is now working in the US. Now that the stock market is at an all-time high, why not sell (divest) from Wall Street and reinvest in Mondragon.

Unless some unanticipated catastrophe occurs, Piketty predicts that economic inequality [the Scriptures prefer economic oppression by the rich] will continue to grow. Only another depression, a violent revolution (such as the French Revolution] might break the stranglehold of the 1%. Tax reforms might help some, but usually clever lawyers and loopholes defeat, in part, such efforts.

During the Civil War industries/corporations made huge profits leading to the Gilded Age or plutocracy, making a mockery of a government of the people, by the people and for the people. During World War II, the federal government micromanaged industry/corporations, instituting wage and price controls, setting up an economic system that led to the growth of America's middle class. Even President Eisenhower resisted pressure to grant tax reforms to favor the rich. Ironically it was a Democratic president, Kennedy, that favored the rich with tax reform. Ironically it was a Democratic president, Clinton, that deregulated banking; this in turn contributed to the 2008 Great Recession. While it would have been exceedingly painful for the masses, I think that Bush/Obama should have let the financial/economic system collapse to break the stranglehold of the rich. By coming to its rescue, we only postponed the inevitable.

In a fallen society and an oppressive economic system, we all get caught coming or going; there are no perfect solutions, no ideal ways to spend and divest. But here are some possibilities:

1. Support corporations that pay a living wage such as Costco, Trader Joes and QuikTrip and many others; google "companies that pay a living wage".

2. The stock market is at record highs; now is a good time to sell your stocks, divest in Wall Street, Big Banks, Corporate Capitalism, and reinvest in Mondragon or other cooperatives.

3. Another way is to live simply and give generously; I try to spend as little as possible on American materialism and thereby support corporate capitalism. Instead I drive a 1991 Ford Escort and give as much of my savings to assist the poor of Haiti (Haiti Christian Development Fund) as I can.

4. If millions of American Christians and churches would divest from corporate capitalism and reinvest in better, more just alternatives; if we would vote wisely with our financial and economic resources, we could significantly change our current oppressive systems and possibly avoid another depression or even a violent revolution.

Our deep American allegiance to the American trinity of hyperindividualism, hypermaterialism and hyperethnocentrism will probably prevent American Christians from taking actions. But it will take drastic action to create a economic paradigm shift from corporate capitalism to cooperatives and credit unions. Tax reforms would be good, but not good enough. Allow me to give you an historical example.

When America abolished slavery, this action appeared to be a paradigm shift; 90 percent of Americans would probably say that it was a paradigm shift. I disagree; it was only a reform that was soon replaced by neoslavery---segregation, sharecropping, mass incarceration and debt slavery. Why did this happen? Slavery was abolished but not the racism (or I prefer the term WMASP---White, Male, Anglo-Saxon, Protestant, a combination or racism, sexism, presumed cultural superiority and distorted religion) behind it. Many abolitionists including Lincoln, were WMASPs who wanted freedom for slaves but not economic justice for blacks.

A final thought: We have looked at the good, the bad, and the ugly of corporate capitalism; we have looked at the good, the good and the good of cooperatives which combine personal and social responsibility; now a few thoughts about the good of Marxism. You have already been bombarded with the bad and ugly of Marxism---the atheism and materialism, etc.,---but here are the thoughts of Christian scholars about the good of Marxism.

Klaus Bockmuehl: "Marxism is a secularized vision of the kingdom of God." David Lyon: "the power of Marxism could be seen in its closeness to Christianity. It was an impressive counterfeit, using many Christian themes and often echoing biblical philippics against the love of money, exploitation and injustice. Marx uncovered the seamy side of industrial capitalism---to which the church has so often turned a blinkered eye---with a searing indictment." C. Stephen Evans, a Christian philosopher, claims that Marxism is more humanistic than materialistic in that it stresses "cooperation and community." Evans claims that "the fundamental social ideal for Marx is not equality, but community." Individualism and capitalism destroy community. In the early days of capitalism, women and children were exploited---almost slave labor. This oppression was terribly damaging to marriage and family. Capitalism was marvelously productive but socially destructive; cooperatives can be both productive and supportive of community. Imperfect as Marxism is, it at least championed the cause of the oppressed. Christianity which could have had a better theory and should have been a vigorous champion of the oppressed in modern times, by and large, has failed its biblical assignment to do Jubilee justice.

ps. If you can't find time to read Piketty's large book, rereading the gospel of Luke will do (it might even be better!). Google Rana Foroorah on Piketty; google Kenneth Rogoff on Piketty; google Paul Krugman on Piketty.