Don't Blame Capitalism for Wall Street's Corruption and Lawlessness → Washingtons Blog
Don't Blame Capitalism for Wall Street's Corruption and Lawlessness - Washingtons Blog

Monday, November 9, 2009

Don't Blame Capitalism for Wall Street's Corruption and Lawlessness

When Mahatma Gandhi was asked what he thought about Western civilization, he answered:

I think it would be a good idea.
I feel the same way about free market capitalism.

It would be a good idea, but it is not what we have now. Instead, we have either socialism, fascism or a type of looting.

If people want to criticize capitalism and propose an alternative, that is fine . . . but only if they understand what free market capitalism is and acknowledge that America has not practiced free market capitalism for some time.

I'm not talking about Michael Moore's latest movie. I'm talking about worldwide opinion.

Specifically, a poll conducted by the BBC shows that the vast majority of people worldwide say that capitalism is not working.

The poll shows that:

Nearly a quarter -- 23 percent -- said the system is "fatally flawed."

RawStory describes the poll by saying:

Worldwide poll: Vast majority say capitalism not working...

Dissatisfaction with capitalism is widespread around the globe 20 years after the fall of the Berlin Wall that heralded the demise of European communism, a poll released Monday showed...

A bare majority, 51 percent, believed its problems can be solved with more regulation and reform, the poll said.

People pointing to the Western economies and saying that capitalism doesn't work is as incorrect as pointing to Stalin's murder of millions of innocent people and blaming it on socialism. Without the government's creation of the too big to fail banks, Fed's intervention in interest rates and the markets, government-created moral hazard emboldening casino-style speculation, corruption of government officials, creation of a system of government-sponsored rating agencies which had at its core a model of bribery, and other government-induced distortions of the free market, things wouldn't have gotten nearly as bad.

As Justice Louis Brandeis said:

In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy.
If there has been lawlessness and corruption among Wall Street players, it was partially simply modeling the lawlessness and corruption of the Executive Branch and Congress members. I've written elsewhere about how the government lied by saying Saddam had weapons of mass destruction and was behind 9/11 (when he didn't and wasn't), that we don't torture (when we did), that we don't spy on Americans (when we did), etc. Just like kids model what their parents do as well as what they say, Wall Street modeled the unlawful and corrupt actions of our government employees.

Being against capitalism because of the mess we've gotten in would be like Gandhi saying that he is against Western civilization because of the way the British behaved towards India.

Note 1: I am not anti-regulation. I believe we need laws like Glass-Steagall, antitrust laws, fraud laws and other laws to ensure a level playing field. You can't have a football game without rules designed to keep the game fair. Same with capitalism.

Note 2: Maybe somebody can convince me that something else is a better system. I am open to listening to alternatives. But - to date - I have never heard of a better economic system than free market capitalism ... but if and only if it is truly free.


  1. hey, i really like your blog, but i think your train of thought is a bit flawed here.

    if you do the research you will see that the time that we were closest to real capitalism was the industrial revolution. back then children worked 16 hour shifts in mine shafts. retirement was an unheard of concept, so people worked to death.

    is this what you want us to go back to?

    additionally, there is a reason that we got to where we are now. it is because in free market capitalism there was nobody to stop predatory monopolies like standard oil and rothschild and what not. they took over whole countries' infrastructures, paid for the politicians and took over the government as well.

    then they made the looting kind of system we have now. so you see, it is free market's monopolies and vultures who took over government and caused the decline and looting, not the other way around.

    this is an evolution of capitalism and there is no going back.

    if you think differently i welcome you to debate me on this issue. i'd love to bring out all my sources and research and elaborate.

  2. to answer your note 2.

    i can hardly see a worse system than free-market capitalism. leaving private interest to monopolize whole lands' energy resources, water and use it all for greedy private interest is not just outrageous, it is incredibly foolish and we are seeing its negative effect all over the globe.

    there is no difference whether a king claims rule over the land via divine right and imposes it with his army and whether a capitalista claims rule over the land, because he has a piece of paper he got from his grandfather, which says he is the owner and imposes the ownership via police, army and national guard.

    greed is greed, tyranny is tyranny no matter how you try to justify it.

    another point to make here is that there really never was a fair free market capitalist system.

    in capitalism the rich get richer and the poor stay poor, because it takes money to make money. the people who set up capitalism and wrote thousands of volumes of propaganda in its support were the same people who had been stacking gold and wealth for centuries before that.

    then they started issuing receipts for that gold and using fractional reserve lending, i'm sure you know this. i'm also sure that you know that the church had outlawed this kind of scam, so really the enlightenment was simply a revolution in which power went from the church to the money changers. then they rewrote the history books and called the rule of the church - the "dark" ages. but if you wiki the continuity theory of history you will say there were never dark ages.

    then the thugs (and they were criminals and thugs as described by neil ferguson's "the ascent of money") kept on sucking more and more wealth from the people into their vaults and started pushing propaganda and paying for politicians to justify their racket with laws, and voila, this is how we have our system.

  3. I don't blame capitalism as much as I blame FU Capitalists.

  4. It is an error to say "free market" and capitalism in the same breath. Capitalists will always claim to be free marketers, but they will only practice free market principals when it is in their best interest. A good capitalist that sees the chance to maximize profit by engaging in monpolistic practices will always take it.

    Remember that the fundamental assumption of free market theory is that no individual or group will be able to manipulate the market. History clearly shows, over and over again that this assumption does not prove true in real life.

    A current example is the mega inflation of CEO salaries over the last 30 years. There is no free market in CEO and related salaries. Insiders have manipulated the market to the point that thre are virtually no restraints or real competition. This has happened as ownership participation in corporate governance has greatly declined.

    There are no free markets without law and order, or without some power that can step in and fix the problems that come from monopolies and market manipulation. In short, there are NO free markets without government.

  5. I wonder if Rocco Leonard Martino, author of a great book about coroporate and governemnt greed titled, "Cancel Christmas" isn't correct when he asks... Do our representatives and senators look upon their elected seat as a personal asset to be continued for the lifetime or for as long as they want. I believe that he is exactly correct and that it is this type of thinking that has gotten America to where it is now.

  6. There is a sane, civilized system waiting to be developed:

  7. Another thought, from an old post based on a conversation with a friend:

    Worst Supreme Court Decision ever, according to Elliott:

    The decision was "County of Santa Clara vs. Southern Pacific Railroad", you can read all about it here.

    From the wiki article: "Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886) was a United States Supreme Court case dealing with taxation of railroad properties. The case is most notable for the obiter dictum statement that juristic persons are entitled to protection under the Fourteenth Amendment."

    This was the beginning of the end for America. Once corporate personhood became established, the Republic was mortally wounded. As President Lincoln (himself a lawyer for the railroads early in his career, that’s how he made his money and was able to get started in politics) once wrote in a letter, "I see a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned. An era of corruption in high places will follow and the money power of the country will endeavor to prolong its reign by working on the prejudices of the people until wealth is aggregated in a few hands and the republic is destroyed."

  8. Millions of Americans alive today are post-Reagan generation. They've been indoctrinated to believe in capitalism in a way past generations didn't. In the past the country knew very well about poverty and dislocations caused by bankers. Post Reagan, the Free Market was sold as a religion.

    It was sold to the public and used as a cover for stealing our representative democracy.

    Two terms: democracy and capitalism. Most people think democracy means being free. But what is freedom? It doesn't mean anyone can do anything because then you have the tyranny of the strong and/or anarchy. Freedom depends on limitation: You are free up to the point that your freedom impinges on someone else's. The law mediates as to where that point is.

    Wasn't this principle at work in our economy, too? Capitalism is a brutal force. To the degree that it was subjugated to societal goals and norms, it worked. It helped to create prosperity for many instead of a few.

    Both of these, democracy and capitalism, depend on limiting what some people can do in the interest of promoting a greater good. Both need limitations to work, but both can also be harmed by excessive or corrupt limitation. As is often the case, the key is moderation.

    In short, I agree that democracy and capitalism themselves are not what has failed here, but rather their subversion. Capitalism, like democracy, is a terrible system, except for all others. Ultimately both are regulated by law. We seldom look at that branch, but the erosion of public interest under the guise of the Free Market rotted every check and balance put in place to defend us from the result we've arrived at, which is properly called fascism.

  9. Free markets are like fire: a useful servant, but a terrible master.

  10. I have to agree with most commenters here that Capitalism is the problem. We will probably have a reset before the needed changes are can be made. The "Capitalist's" religion will bring about its own demise because even the left is unable to see through the fog of lies, deception sold as truth.


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