Sunday, November 05, 2017

Capitalism As a Blatant Failure

Greg Jericho in the Guardian

On becoming New Zealand’s prime minister, Jacinda Ardern said that capitalism was a blatant failure, and in light of the deluded positions taken by proponents of capitalism and free markets this week it is hard not to agree.

Ardern’s comments are revealing in how she framed the question. She suggested, “If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure. What else could you describe it as?”

For those drinking from the free-market well, Ardern might be talking gibberish. What about international competitiveness, productivity, efficiency? What is this talk of poor people? Doesn’t she know government regulations are to blame for reducing incentives to work?

But let’s be honest, capitalism is all about winners and losers, and it’s a bit silly to pretend otherwise. As the head of Eastern Airlines said when his company went bust in the 1980s, “capitalism without bankruptcy is like Christianity without ​hell”.

The difference of course is that capitalism generally sees those with enough money being able to pay their way out of hell, such as for example the current ​president of the United States, Donald Trump, whose companies have gone bankrupt six times.

Which brings us to this week’s lesson in “late capitalism”, in which Trump’s son Donald Jr decided to use his daughter’s haul of candy from Halloween to teach everyone about the failure of socialism.

Showing a photo of his daughter holding a bucket of candy, he tweeted, “I’m going to take half of Chloe’s candy tonight & give it to some kid who sat at home. It’s never to early to teach her about socialism.”

Now of course Donald Trump Jr is hardly a shining light of free-market intellectual thought, but that is actually the point. His voice is more prominent and the position he holds is more powerful than those who might bring reason and rationality to the debate from his side of the economic and political fence.

He is the smiling, clueless face of capitalism – the millionaire who is one because he is the son of a millionaire who is one because he was the son of a millionaire, who seems to believe that literally begging for free candy is an example of being justly rewarded.

Trump and his son Donald Jr are not where they are in spite of capitalism but because of it.

It is a capitalism that has poorly served the democratic process. This week Facebook, the eighth largest corporation in the world by market capitalisation, admitted it took money from Russian sources (paid in roubles no less) for electoral advertisements that were crafted to sow discord and disinformation.

So the democratic process was undermined but hey, there’s a profit to be made.

The vice-president of Facebook, Colin Stretch, told the Senate judiciary subcommittee: “There were signals we missed and we are now focused”.

But don’t worry, in our clueless, blatantly failing capitalistic world, there will be no repercussions for Facebook.

It is a capitalism, as the ACTU noted this week while advocating for an increase in the minimum wage, in which the focus of workers’ wages is most often on how they will affect “profits, international competitiveness, investment, economic growth and other economic objectives” but not how they will affect the lives of those workers.

It’s a capitalism that has become so lost to reason and beholden to a deluded belief that the market will correct all wrongs that an organisation such as the Institute of Public Affairs is taken seriously by some within the government.

The IPA responded to the call for an increase in the minimum wage by arguing that the way to improve the lot of working people was “abolishing the Renewable Energy Target and withdrawing from the Paris climate agreement.”

Australians really should not get too smug about Donald Jr.

It says a lot that the most visible and influential champions of capitalism and free markets in Australia ​ are so struck dumb by climate change. Rather than acknowledge the market failure, their response instead is to publish turgid books suggesting it is all a hoax perpetrated by the UN and government agencies such as the Bureau of Meteorology.

Were capitalism not a failure, the drive to combat climate change would not require government intervention.

It is a capitalism where the government’s key employment policy is to provide cheap labour to companies with little discernible benefit for workers. This week it was revealed that only 40% of those participating in the government’s low-paying youth internship scheme were getting a job as a result.

It’s a system where a government employment policy is really an employer subsidy program that can involve workers being paid less than the minim wage if they work more than 20 hours a week.

Were capitalism not a failure we would also see balance in the industrial relations systems.

Instead we are told the key is less government intervention and more flexibility, all the while ignoring that the flexibility inevitably exists mostly from the employer’s point of view.

One of the key tenets of industrial relations since the early 1990s has been the reduction in the ability for workers to strike – thus the flexible IR system is founded on less flexibility for workers to protest their conditions and wages.

As such the options involve workers and their representatives using other means.

Currently the AMWU is leading a boycott of Streets ice creams in protest against Unilever, its multinational owner, attempting to terminate a collective agreement for workers at its Sydney factory which the union says will lead to a 46% pay cut for workers.

Actions such as those by Unilever are becoming commonplace as corporations seek to subvert the IR system by in effect blackmailing workers to negotiate or be forced onto the minimum wage.

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