Adam Ash

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Wednesday, April 04, 2007

Critique of capitalism and corporations

1. Overselling Capitalism
Why Today’s Markets Are Headed For Disaster Unless There is a Shift in Focus.
by Benjamin R. Barber/LA Times

The crisis in subprime mortgages betrays a deeper predicament facing consumer capitalism triumphant: The “Protestant ethos” of hard work and deferred gratification has been replaced by an infantilist ethos of easy credit and impulsive consumption that puts democracy and the market system at risk.

Capitalism’s core virtue is that it marries altruism and self-interest. In producing goods and services that answer real consumer needs, it secures a profit for producers. Doing good for others turns out to entail doing well for yourself.

Capitalism’s success, however, has meant that core wants in the developed world are now mostly met and that too many goods are now chasing too few needs. Yet capitalism requires us to “need” all that it produces in order to survive. So it busies itself manufacturing needs for the wealthy while ignoring the wants of the truly needy. Global inequality means that while the wealthy have too few needs, the needy have too little wealth.

Capitalism is stymied, courting long-term disaster. We still work hard, but only so that we can pay and play. In order to turn reluctant consumers with few unsatisfied core needs into permanent shoppers, producers must dumb down consumers, shape their wants, take over their life worlds, encourage impulse buying, cultivate shopoholism and invent new needs. At the same time, they empower kids as shoppers by legitimizing their unformed tastes and mercurial wants and detaching them from their gatekeeper mothers and fathers and teachers and pastors. The kids include toddlers who recognize brand logos before they can talk and commodity-minded baby Einsteins who learn to shop before they can walk.

Consumerism needs this infantilist ethos because it favors laxity and leisure over discipline and denial, values childish impetuosity and juvenile narcissism over adult order and enlightened self-interest, and prefers consumption-directed play to spontaneous recreation. The ethos feeds a private-market logic (”What I want is what society needs!”) and combats the public logic fashioned by democracy (”What society needs is what I want to want!”).

This is capitalism’s all-too-logical way of solving the problem of too many goods chasing too few needs. It makes consuming ubiquitous and omnipresent, turning shopping into an addiction facilitated by easy credit.

Compare any traditional town square with a modern suburban mall. In the square, you’ll find a school, town hall, library, general store, park, movie house, church, art gallery and homes — a true neighborhood exhibiting our human diversity as beings who do more than simply consume. But our new town malls are all shopping, all the time.

When we see politics permeate every sector of life, we call it totalitarianism. When religion rules all, we call it theocracy. But when commerce dominates everything, we call it liberty. Can we redirect capitalism to its proper end: the satisfaction of real human needs? Well, why not?

The world teems with elemental wants and is peopled by billions who are needy. They do not need iPods, but they do need potable water, not colas but inexpensive medicines, not MTV but their ABCs. They need mortgages they can afford, not funny-money easy credit.

To serve such needs, however, capitalism must once again learn to defer profits and empower the needy as customers. Entrepreneurs wanted! With micro-credit, villagers can construct hand pumps and water filters from the clay under their feet. Pharmaceutical companies ought to be thinking about how to sell inexpensive retro-virals to Africans with HIV instead of pushing Botox to the “forever young” customers they are trying to manufacture here. And parents can refuse to relinquish their gatekeeping roles and let marketers know they won’t allow their kids to be targeted anymore.

To do this, we will require the assistance of democratic institutions and an adult ethos. Public citizens must be restored to their proper place as masters of their private choices. To sustain itself, capitalism will once again have to respond to real needs instead of trying to fabricate synthetic ones — or risk consuming itself.

(Benjamin R. Barber is a professor at the University of Maryland and is the author of many books, including “Jihad vs. McWorld.” His latest book is “Consumed: How Markets Corrupt Children, Infantilize”)

2. Another Inconvenient Truth
by Robert C. Hinkley

Government in the liberal democracies of the developed world is based on an experiment undertaken in the last half of the 18th century. That experiment theorized that the public interest could be protected under a system of laws enacted by the vote of the people’s elected representatives. Under this system, people are free to do as they please as long as no law has been passed restricting their freedom. Laws are not passed restricting freedom until legal behaviour damages the public interest to the point where it makes another law necessary.

This system relies on the assumption that extensive harm cannot be done to the public interest before a law can be passed prohibiting the offensive behaviour. In the late 1700s this assumption may have been true. Today it is not. The modern corporation can legally do more damage to the public interest in one afternoon than a human being can do in a lifetime. Problems such as global warming, third world sweatshops, big companies walking out on small towns for greener pastures elsewhere and nearly five million deaths each year from tobacco, are attacks on the public interest that show government does not always have the will to make corporations stop. Indeed, by granting corporate charters, governments in some sense authorize these attacks rather than making them cease.

If big corporations can keep government from fulfilling its purpose, we should understand why and then change one or the other -– either give government more power to deal with corporations than it needs to deal with people or make the corporation more respectful of the public interest. Changing the corporation is the better choice.

The liberal democracy was designed more than 100 years before the creation of the modern corporation. It was not designed to govern large institutions dedicated to the pursuit of self-interest. This is why government has so much trouble governing corporations today.

Although companies only act through their people -– directors, officers and employees -– these people must obey a rule which government sets down for all corporations. That rule makes profit the corporation‘s only goal.

Many say this causes companies to put greed above the public interest, but this analysis only polarizes. What really happens is really more subtle than that. A company goes into a particular business and finds itself successful. Eventually, a huge amount of shareholders’ money is invested in the business -– sometimes billions of dollars. Then, a hidden adverse side effect of the company’s products or operations is discovered.

The law provides that corporate personnel must react to this discovery in a way that protects the financial interests of the company. To do this, a number of strategies are employed to frustrate calls to make their behaviour illegal. The first of these strategies is usually denial. Eventually, however, the truth comes out and corporate personnel must employ other measures to protect their company’s assets. Usually these measures include trying to keep government from passing laws that would restrict the company’s ability to carry on business as usual.

It should come as no surprise that modern corporations are highly successful at this. The environment, human rights, the public health and safety and the welfare of our communities are all elements of the public interest that government should be able protect. Today, liberal democracies in all parts of the world are continually frustrated in fulfilling this purpose by a small minority of large corporations which make money through means that harm the public interest.

It is no secret how this happens. Companies use their right to free speech to lobby and finance the election campaigns of politicians. They threaten job loss and economic ruin if they are forced by new laws to change their ways. They crank up their public relations machines to entice people to vote against each other and the public interest. Their task is made easier in today’s globalized world where jobs in one state or country often create damage in another.

The inconvenient truth is that a system of government of the people, by the people and for the people is well down the road to becoming a government of the corporations, by the corporations and for the corporations. Ask yourself these questions: “do you believe governments can protect the public interest from today’s big corporations or not? Do governments control companies or do companies control government?”

Some despair that nothing can be done. But Al Gore makes a good point, there is a long way between denial of the problem and despair that it cannot be solved.

A system of government designed to protect both the public interest and freedom cannot cope with powerful institutions dedicated to the furtherance of their own interests. We shouldn’t expect it to do what it was never designed to. However, rather than deny or despair, we should recognize another not so inconvenient truth –- profits and protection of the public interest need not be mutually exclusive.

The rules establishing corporations can be changed. Profit should remain the goal, but its pursuit should not come at the expense of the environment, human rights, the public health and safety or the welfare of our communities. Making this change will give people at work the flexibility to respect the public interest that today is missing. When it is made, the modern corporation will be more compatible with our system of government and the public interest under a lot less threat.

(Robert C. Hinkley is an American corporate lawyer who lives in Mosman, NSW. His email address is


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