JR'S Free Thought Pages
A Proposal for a Maximum Income
by Johnny Reb
"You can have wealth concentrated in the hands of a few, or democracy, but you cannot have both." - Louis Brandeis, US Supreme Court Justice from 1916 to1939. (Louis Brandeis graduated from Harvard Law School at the age of 20 with the highest grade average in the Universities history. In 1916, President Woodrow Wilson nominated Brandeis to become a member of the Supreme Court. However, his nomination was bitterly contested, partly because, as Justice William O. Douglas wrote, "Brandeis was a militant crusader for social justice whoever his opponent might be. He was dangerous not only because of his brilliance, his arithmetic, his courage. He was dangerous because he was incorruptible. . . [and] the fears of the Establishment were greater because Brandeis was the first Jew to be named to the Court." He was eventually confirmed by the Senate by a vote of 47 to 22 on June 1, 1916, and became one of the most famous and influential figures ever to serve on the high court. His opinions were, according to legal scholars, some of the "greatest defenses" of freedom of speech and the right to privacy ever written by a member of the High Court.)
Thoughts on Inequality
The quote by Louis Brandeis captures the defining principle of democracy as "equality" as any good dictionary or introduction to political philosophy will confirm. Absolute inequality is not possible, and perhaps not even desirable, but when massive gaps in wealth accumulation are such that the top 1% have more wealth than the bottom 90%, something is seriously amiss.
The most recent figures show that poverty in the United States is now an epidemic with 1 in 6 families living in poverty, the highest since records began in 1959. The poverty threshold for a family of four in the United States is a paltry $22,000. But realistically a more accurate poverty line for a family with two children ought to be double this amount. Using this benchmark, over 100 million Americans would fall into the category of poverty. With no progressive political party that serves their interests desperate working people in the USA are turning to the demagoguery of right wing proto-fascism financed by the Koch brothers and other corporate power groups who spin their Tea Party propaganda on Fox News. The right wing corporate media revels in denigrating working class people, spewing out stories of dysfunction, depicting poor people as welfare fraudsters, idiotic, irrational and impulsive in nauseating programs like Jerry Springer and the Maury Show (with Maury Povich). Conservatives like Ronald Reagan and Margaret Thatcher, pathological working class haters and union bashers, were in no small part instrumental in forging this perception of the working classes. In his important and revealing new book Chavs: The Demonization of the Working Class, Owen Jones tells us about the British experience:
"Demonizing people at the bottom has been a convenient way of justifying an unequal society throughout the ages. After all, in the abstract it would seem irrational that through an accident of birth, some should rise to the top while others remain trapped at the bottom. But what if you are on top because you deserve to be? What if people at the bottom are there because of a lack of skill, talent and determination?
Yet it goes deeper than inequality. At the root of the demonization of working-class people is the legacy of a very British class war. Margaret Thatcher's assumption of power in 1979 marked the beginning of an all-out assault on the pillars of working-class Britain. Its institutions, like trade unions and council housing, were dismantled; its industries, from manufacturing to mining, were trashed; its communities were, in some cases, shattered, never to recover; and its values, like solidarity and collective aspiration, were swept away in favor of rugged individualism. Stripped of their power and no longer seen as a proud identity, the working class was increasingly sneered at, belittled and scape-goated. These ideas have caught on, in part, because of the eviction of working-class people from the world of the media and politics.
Politicians, particularly in the Labor Party, once spoke of improving the conditions of working-class people. But today's consensus is all about escaping the working class. The speeches of politicians are peppered with promises to enlarge the middle class. 'Aspiration' has been redefined to mean individual self-enrichment: to scramble up the social ladder and become middle class. Social problems like poverty and unemployment were once understood as injustices that sprang from flaws within capitalism which, at the very least, had to be addressed. Yet today they have become understood as the consequences of personal behavior, individual defects and even choice." (p. 10)
Unfettered Global Capitalism as Theology
During December 2009 at Copenhagen a conference among key diplomats of twenty capitalist powers was held to deal with the serious problem of global warming. From the outset it was destined to fail from lack of will with Canada and the USA being the major detractors. The result of the talks was a nebulous compromise without any fixed deadlines or obligations, more a statement of intentions than a definite plan of action. The lesson is both cynical and clear: the state political elites in the countries represented at the talks serve capital, they are unable and/or unwilling to control and regulate capital even when the very survival of the human race is ultimately at stake. The cultural critic Fredric Jameson's infamous remark is more relevant today than ever. To paraphrase from memory, he stated that it's easier to imagine a total catastrophe which destroys all life on earth than it is to imagine a real change in the nature of our present form of laissez-faire global capitalism - as if, even after world-wide economic dysfunction and cataclysm, capitalism will somehow carry on as before, one more argument supportive of the fact that, when our moral sensibilities and natural environment are both threatened neither the market nor state will save us.
All one has to do is to compare both the liberal and conservative reaction to the financial meltdown of September 2008 with the Copenhagen conference of 2009: save the planet from global warming (or alternatively: rescue the government health care system, restore our dysfunctional public education system, save those dying for lack of funds for medications, expensive treatments and operations, save the starving children in the Sudan, provide relief for the hundreds of thousands of victims of sub-prime mortgages and impending foreclosure, and so on ad infinitum) — all this can wait. But in 2008 the call by the financial masters of Wall Street and Washington to "Save the banks" is an unconditional imperative which demands and receives immediate action. The much-praised bi-partisan approach effectively meant was that even democratic procedures were de facto suspended: there was no time to engage in proper debate, and those who opposed the plan in the US Congress were quickly made to fall in with the majority. Bush, McCain and Obama quickly got together, explaining to bewildered congressmen and women that there was simply no time for discussion - we were in a state of emergency, and action simply had to be taken immediately. The "financial discipline" that the IMF and World Bank regularly impose on Third World countries suddenly disappeared with the generous no-strings attached bailouts of the First World countries. We no longer have an American empire with a brutal face under George W Bush but rather Barrack Obama with a human, articulate and far more intelligent face - but it's the same old empire.
The reason for the trillion dollar taxpayer bailouts is summed up in a convenient faith-based axiom: "they're too big to fail", which is sheer theological nonsense. In fact it flies in the face of a genuine capitalist axiom, namely, "flourish or die." Before it grinds to a halt, the capitalist system, especially the indispensible villainous financial institutions, must be salvaged at all costs. As in all wars, the state creates money seemingly out of thin air, especially when the traditional entitlements and interests of the wealthy are at risk. On the other hand, when there's a dire need to protect the interests of the working classes and our most vulnerable and disenfranchised - or even save human lives - the political aristocracy declares the state piggy bank empty.
The panic and urgency of the financial crisis was absolute, a trans-national, non-partisan unity was immediately established. All major and minor ideological squabbles among state leaders from left leaning liberals to hard right conservatives were abruptly forgotten in order to avert the contagion. We may worry as much as we want about global realities, but it is the free flow of capital which provides the true meaning and authenticity for our consumer driven lives. The ethical dimension of this situation can be located within capitalism's drive towards its own ever-expanding reproduction: a capitalist who dedicates himself unconditionally to the capitalist crusade is effectively ready to put everything, including the survival of humanity at stake, not for any "pathological" gain or goal, but simply for the sake of the reproduction of the system as an end-in-itself; fiat profitus pereat mundus (let there be profit, though the world shall perish*) might be his motto. As an ethical adage, this is of course bizarre, if not categorically evil - however, from a strict Kantian ethical perspective, we should recognize that what ought to make it repulsive to us is our purely pathological survivalist reaction: a capitalist, insofar as he acts in harmony with his ideology, is someone who faithfully pursues a universal goal, without regard for any pathological obstacles in the form of externalities or collateral damage.
* Fiat iustitia, et pereat mundus is a Latin phrase meaning “Let there be justice, though the world perish”, and the most famous use is by Immanuel Kant, in his 1795 Perpetual Peace, which he employs to sum up the counter-utilitarian quality of his moral philosophy, in the form Fiat iustitia, pereat mundus, which he paraphrases as "Let justice reign even if all the scoundrels in the world should perish from it".
The reaction of some neo-conservatives to the global economic debacle is eerily similar to other totalitarian or utopian ideologies, they blame the failure on the compromises of those who did not follow the global capitalist play-book rigidly enough. The avoidance of the economic meltdown demanded an even more unyielding and radical implementation of their faith based doctrines. Despite these ratiocinations, they always knew that they could count on the Conservative Corporate Nanny State to provide the golden parachute. We can stuff untold billions in a banks bottomless pit made penniless by greed and speculation, but it's not possible to make up a shortfall on the education budget or social security.
Income v Wage
Income can be derived under a capitalist system in a variety of ways: by wage labour which is synonymous to renting one's services to another or from income derived from investment, business revenue or rent. When we think of minimum income, we usually restrict it to a wage in the form of an hourly remuneration or annual salary. In discussing maximum income I would suggest it ought to be applied where the really large incomes are acquired, which is via investment and business profit. This is because the entire legal system and concomitant tax laws have always existed to serve wealth, privilege and power. In today's world of corporatism and unfettered capitalism, this means big business, particularly financial institutions and their dubious dealings. As we have seen from the recent global financial meltdown and subsequent bailouts, this translates into legalized theft and pillage of public assets.
With the exception of some professional athletes and entertainers, I can't think of many salaried or hourly wage earners that could even remotely measure up to the incomes garnered from investment, businesses or management of the former. Jack Welch, former CEO of General Electric (GE) is now retired on a company pension of $750,000 per month which include GE's $80,000 per month luxury apartment in Trump Tower (New York City), free food and wine, access to a $300,000 per month Boeing 737 corporate jet, VIP tickets to the Metropolitan Opera, the Knicks, Wimbledon, the US Open Tennis Tournament and the Red Sox, an office and a secretary in the GE building and a limousine with driver. What Welch (take note it rhymes with Belch) made as CEO I can only speculate as to its level of obscenity. But I'm sure he "earned" every penny. By the way, GE rarely pays taxes to the US government despite consistently declaring billions in profits every quarter both at home and abroad.
Capitalism's Internal Logic
Certainly there is a pressing need for a minimum income because when an employee is paid so little in compensation for work done, it's truly not much of an improvement over slavery. Surely a business is not viable when it can't provide for a liveable wage combined with decent conditions of employment. Managers, utilitarian cost-benefit analysis number crunchers and owners of businesses would naturally prefer to pay workers nothing. This is because due to capitalism's internal logic cost is sin and profit virtue. So, since labour is the major cost of most businesses, driving down wages or eliminating jobs altogether is desired. The real competition in a capitalist economy is, and always has been, among workers for jobs.
I've been a student of the machinations and psychology of the stock market for a long time and whenever there is an announcement of a massive layoff such as the recent firing of 30,000 employees by Bank of America, the company stock rises. After all, capitalism flourished and profited under slavery as it never has since. In fact capitalism has been able to adapt itself to any political environment, preferring totalitarian regimes. Corporations after all, like monotheistic religions, are top down, anti-democratic and hierarchical.
The current global depression for workers has been a boon for corporate profits because when there's high unemployment, companies can drive down wages. But even corporate profits cannot be sustained for long when unemployment becomes prolonged or systemic because the ability of consumers to buy their products represents about 75% of today's economy. The recent gyrations in the stock market are the result of digesting this fact, along with the impending financial collapse of some countries and their financial institutions that were bailed out in 2008-09. Because of the government bailouts of rogue corporations and the ever-diminishing tax revenues from corporations and the wealthy, another even more acute financial meltdown may be imminent. Now that countries are on the verge of bankruptcy, the already beleaguered working classes are being subjected to "austerity" which translate into reducing pensions, health care, public education, and other social programs for the worst off in society. Not surprisingly however, there's no austerity in the form of higher taxation for corporations or the wealthy investor class who held most of the equity and debt in the corporations, many of which were bailed out by the Corporate Welfare States.
Wage Labour as Slavery
It's important to note that wage labour was considered a form of slavery when it was first conceived. From the start workers were treated, and it remains so today as mere commodities, not unlike the products produced in the factories in which they toiled for starvation wages. As Noam Chomsky points out, the sentiment expressed by the Lowell Massachusetts millworkers predated Marxism:
“At one time in the U.S. in the mid-nineteenth century, a hundred and fifty years ago, working for wage labour was considered not very different from chattel slavery,” Chomsky told David Barsamian. “That was not an unusual position. That was the slogan of the Republican Party, the banner under which Northern workers went to fight in the Civil War. We’re against chattel slavery and wage slavery. Free people do not rent themselves to others. Maybe you’re forced to do it temporarily, but that’s only on the way to becoming a free person, a free man, to put it in the rhetoric of the day. You become a free man when you’re not compelled to take orders from others. That’s an Enlightenment ideal. Incidentally, this was not coming from European radicalism. There were workers in Lowell, Mass., a couple of miles from where we are. You could even read editorials in the New York Times saying this around that time. It took a long time to drive into people’s heads the idea that it is legitimate to rent yourself. Now that’s unfortunately pretty much accepted. So that’s internalizing oppression. Anyone who thinks it’s legitimate to be a wage labourer is internalizing oppression in a way which would have seemed intolerable to people in the mills, let’s say, a hundred and fifty years ago. … [I]t’s an [unfortunate] achievement [of indoctrination in our culture].”
Why not a Maximum Income?
The idea of a "maximum income" is really not so novel. When I say "not so novel" it's because the graduated income tax which has been all but rescinded over the past three or four decades served the purpose of redistribution and entailed the idea of a maximum wage, or more appropriately, maximum income. But most of the super-wealthy acquire their cash flow from inheritances, investments or owning businesses which are subjected to very low tax rates; but form of income is a different and perhaps more serious problem. There's an old adage among entrepreneurs that "you don't get rich by working hard, it's getting others to work hard for you." Getting rich also entails taking advantage of generous pre-existing tax laws, perks and outright gifts sanctioned by the Conservative Corporate Nanny State. It's been thus since the drafting of the US Constitution. Renting yourself out for wages and selling your soul to the corporate hierarchy is a demeaning mugs game. It seems reasonable and far more just and democratic that those who do the work ought to own the businesses for which they toil. Anyone who cares about the concept of real democracy ought to pay attention to its defining principle: equality. Look up democracy in a good dictionary such as the OED. Absolute equality is never possible, or perhaps even desired, but it ought to be a goal. The graduated income tax was one way of addressing it but that idea has been rejected by libertarian market ideologues referred to as neo-conservatives (in North America) or neo-liberals (in Europe) who have dominated government policy since the early 1980s. When a guilt-ridden Warren Buffet inform us that his maid pays a higher income tax rate than he, something is seriously amiss.
I suggest that the reader consult Chris Hedges recent article "Power Concedes Nothing Without a Demand", an historical capsule history of the struggles of labour in a system of state and corporate power rigged against them from the start. The rights of oppressed workers and minorities were not conceded willingly by either liberal or conservative governments - they had to be fought for and many people died in the process at the hands of corporate thugs, police and the military. If you are more ambitious and curious about the history of the working classes, read the works of the late Howard Zinn, starting with his classic, A People's History of the United States.
The litmus test of a just and moral state run society is what it does for its most vulnerable and worst off. I believe that the state must ensure that every citizen is nourished and housed. These basic benefits throughout history have been opposed by conservatives who are only interested in self-interest and maintaining the status quo with themselves perched atop the economic pyramid. The Republican vitriol south of the border to balance the budget on the backs of the country's poor and retirees is scandalous.
I believe that a caring society is judged, and rightly so, by the compassion it shows to the underprivileged. Even those who think, as did George W Bush and Ronald Reagan (two men who claim to be Christians) that those who are poor deserve it because they lack ambition is ludicrous. Surely these men and others with like opinions feel for children who, through no fault of their own, face daunting challenges in lifting themselves up by their bootstraps and creating a decent life for themselves. Many wealthy people I know allay their conscience by saying "if I can do it, so can they," which ignores two things: Not everyone is blessed with being born into a caring and economically stable family, inheriting the family business or fortune having access to the best schools and "bailed out" when they have scrapes with authority. Not everyone has the wherewithal to "make it" because the "bootstrap hypothesis" is only plausible if you have boots.
I fully support government programs to help those who have been handicapped by their upbringing. When JFK said "ask not what your government can do for you, but what you can do for your government", it's the inverse of what the proper role of government ought to be.* The government certainly looks after their buddies in the corporate world who contribute literally billions to the election campaigns of politicians and bribe the same with their powerful lobbies. Let's face it, people like Bill Gates and Warren Buffett had huge built-in affirmative action programs based on to whom they were born, their "social class," their ability get the very best education and the ability of their loving parents to provide them with a safety net if they were to fall on tough times.
*Of course Kennedy, a Catholic Conservative, really intended his axiom to apply exclusively to the working classes, not the privileged wealthy and their precious traditional entitlements. Workers of the world unite but don't expect any social assistance. And by all means be ready to march in lock step when your country launches one of its imperialistic wars. Be ready to kill and die on the fields of battle to enhance the profits of rich investors and corporations, the real owners of the country and beneficiaries of government munificence.
I get myself bent out of shape about cheating since I saw plenty of it in my thirty years as a senior high school mathematics teacher. But when I contort myself into a pretzel over cheating, I'm not thinking about some of my former students, destitute people on unemployment insurance or social assistance or the Ronald Reagan faux welfare queens who drive to the welfare office in their Cadillac. Rather I think of the rampant cheating by the wealthy with their offshore accounts and in the world of business, all with the assistance of generous tax laws that favour them and their clever lawyers and accountants. They pay far less tax per annum in proportion to their wealth than the less well-off. A recent study in Britain revealed that annual welfare fraud amounts to about £1 billion but tax evasion alone accounts for £70 billion.
Apparently in the U.S., a whistle blower who often with the threat of being fired or bodily harm, turns in a tax dodger he gets 10 per cent of the tax collected with this proviso: that the pay-off is limited to $10,000,000. In other words there are taxation thieves stealing over $100,000,000. You can forgive a hell of a lot of welfare cheaters for that kind of dough! As you may surmise, I have that quaint notion that the rich, individual or corporate, should pay their share of taxes as they did in the post war era before the neo-conservative onslaught. President Obama can't even get Republicans to consent to having tax rates for the wealthy rolled back to the pre-Bush era in the 1990s. Republicans now led by the ideology of Ayn Rand Christian Evangelists are determined to bring down Obama, even if it means bringing down the country.
Justice and fairness entail answering the question: "who deserves what?" There's a tacit acceptance by most people within Western capitalist societies that we live in a meritocracy. In the United States a few years ago there was a hateful conservative backlash to the program of "affirmative action", a program that was an admission of the falsity and failure of the idea of a meritocracy. Socio-economic background, inherited traits of intelligence, appearance and personality are primary for worldly success in our hyper-competitive culture of self-interest. Does anyone mention cooperation and community anymore other than within the confines of business dealings and cost-benefit analysis? For those of you not familiar with the notion of affirmative action, it refers to policies that take factors including "race, color, religion, gender, sexual orientation or national origin" into consideration in order to benefit an underrepresented or marginalized group, usually as a means to counter the effects of a five century history of racism, discrimination, persecution, exclusion and genocide. This policy attempts to "level the playing field". It focuses on such policies that range from employment and education to public contracting and health programs.
The idea of a meritocracy is a myth, particularly when government policy, particularly with regard to the tax system, is so highly biased toward business, not workers and consumers. This was the thrust behind the recent HST fraud and subsequent fiasco in British Columbia, the HST being a value added tax law intended to shift even more of the tax burden from business to wage earners and consumers. Another myth and "beautiful lie" of the state capitalist system is that it's primary mission is to promote competition and create jobs. The truth is that businesses hate competition and do everything in their power to gain market share and monopolize markets if possible. Jobs, in addition to market competition, are a major cost and therefore anathema, to any business enterprise.
So how do people like Bill Gates, Larry Ellison and Warren Buffet end up amassing fortunes in the tens of billions? Is it because they love their competitors, are compassionate, caring and feel a moral obligation to create jobs? Take off your rose-tinted glasses and join the reality club.
With respect to maximum income, the argument by some libertarian free marketers against such an idea is that capitalism is not a zero sum game and that if someone makes billions in "earnings" within a year, it's not necessarily true that it is taken from someone else. This is a very specious argument, as Marx argued when he talked about "surplus value", the important value of labour that's skimmed off from workers in the form of profit for themselves. The other lame argument is that entrepreneurship would be subverted since we've removed the factor of unlimited greed and profit from the game.
John Locke's transcendental argument about the sanctity of private property is another dubious argument. All the land we live on in North America and throughout most of the rest of the world, was literally stolen from indigenous peoples, followed by centuries of genocide and eventually exclusion. "Property", as the anarchist philosopher Pierre Joseph Proudhon stated, is "theft". Theft and the morally repellent principle of "might is right" has been the primary route to riches throughout history. In one of my favourite movies Viva Zapata (1952) a riveting story about the Mexican Revolution, Emilio Zapata, played brilliantly by Marlon Brando, makes a plea to Spanish government authorities that the peasants have a natural right to the land, land they have lived on for many centuries before the Spaniards arrived. The indigenous Mexican people, like most native Americans had no concept of private property, believing that anyone owning the land or any of its resources was sacrilege. An arrogant officious government bureaucrat replies to Zapata, "you have no proof of ownership or title to the land." By "proof of ownership" or "title" he meant a meaningless piece of paper artificially created by the feudalistic aristocracy of the conquering Spaniards to parcel out huge tracts of land in Mexico to themselves.
In today's world "theft" is accomplished by more cunning, subtle and deceitful means, as the example of the countless scams such as sub-prime mortgages and overall pyramid scheme economy have graphically demonstrated. Not unlike the Wall Street pirates of today, the obscene wealth accumulated by the "robber barons" of the late 19th century was for the most part the result of corruption, cronyism and complicity with government. This was certainly true about the building of the railroads. This criminal behaviour still persists and thrives as we have seen with the recent criminality of financial institutions and their subsequent taxpayer bailouts.
From the time of Columbus, the Native American Indians were the big losers at every turn. It continues even today as the deceit, unmitigated greed and impending ecological disaster of the Tar Sands project in Northern Alberta has shown.
So how does one justify a hedge fund manager making billions by simply shuffling paper around and trading financial instruments they themselves cannot even clearly explain? The pirates who sold sub-prime mortgages knew they would crash and burn and even betted against their own witches brew by selling them short.
A Modest Proposal
Even if a maximum cap on income was set at 100 times the national average, with perhaps the excess funnelled into government social service programs it would not seem to me unfair. I could be so lucky to be making tens of millions each year and having to pay high taxes on the perceived excess. The notion of a maximum income was for the most part realized by the graduated income tax system we had in the post WW II period whereby upper marginal tax rates were over 90%. For the sake of illustration, if the average annual wage is $40,000, then 100 X $40,000 is $4 million. That of course would shave a lot of income from professional athletes like Alex Rodriguez of the New York Yankees who apparently is paid a paltry $35 million per annum. How does he get by? Cry me a river. But even Rodriguez's salary pales in comparison to those of CEO's and many investment managers of large banks and brokerage houses. Hedge Fund manager John Paulson, ranked 17th by Forbes in the list of wealthiest Americans has a net worth of $15.5 billion and last year took home a personal income of $4.9 billion, an obscenity by anyone's standards. I'd be curious as to how much income tax he paid.*
*Extreme inequality in the U.S. was uncovered in a recent blog post by Paul Krugman using a link to U.S. government data on the top 400 taxpayers. This tiny group - just .002 per cent of all U.S. taxpayers - accounted for 4.55 per cent of all U.S. dividend income, and 10.5 per cent of all capital gains income in 2008. Their effective tax rate has unjustly fallen from 29.35% in 1992 to 18.1% in 2008. I'd be elated to pay 18.1% on my pension income rather than the estimated 35-40% I presently pay.
Another strategy that could be added to the maximum wage is a cap on inherited income. You could hypothetically use the same 100X factor. Or perhaps you could set a fixed amount of $100 million? Anything more than that would have to be donated to a non-religious charity (we don't need more mega-churches and bruised knees) or directly to the government for social services such as health, education and welfare.
But most people in the United States and elsewhere in the Western World have been inculcated with the notions that an untrammeled free market is the only alternative (like Margaret Thatcher's TINA principle) and particularly among today's young people, that the most accurate measure of success is how much money you have accumulated, indeed that general merit can best be gauged by one's net worth. But surely there is more to the concept of "wealth" than the size of one's bank account? How about family, friends, freedom, education, knowledge, art and a clean environment? We have been indoctrinated by a culture where accumulation of money has gone way too far, where a hedge fund manager can demand an income synonymous with the gross national product of a small country. Of course a country like the United States could solve most of their financial woes by ceasing their imperialistic wars and shutting down the 700 or so military bases around the world. The cost of the war in Iraq has been estimated to eventually be $2.5 - 4 trillion by the time they get out - if they ever get out.
The "trickle down" theory (Reaganomics or Supply Side Economics) and globalized economy based on so-called free trade agreements have been proven to be frauds and resulted in a failed economic model based on the faith based premise that capitalists can regulate themselves. Both Adam Smith and Karl Marx warned about the pitfalls of unbridled capitalism that in the past three or four decades has only promoted more chaos, inequality and the build-up of a more daunting and insidious plutocracy.
The first lesson to be drawn from this is that we must avoid the confusion between individual convictions and beliefs inscribed into the internal logic of the capitalist system in which we participate. When, in his Christmas message of 2008, the Pope announced that if humanity did not learn to overcome its egotism, then human history would end in self-destruction, he not only stated a moralistic platitude, but also uttered a clear falsity. Let us accept that the two principal dangers today are unbridled capitalism and religious fundamentalism —nonetheless, as an even superficial analysis of "fundamentalist" subjectivity makes clear, fundamentalists are not egotists but, on the contrary, are ruthlessly dedicated to a transcendental goal, for the sake of which they are ready to sacrifice everything, their lives included. As for capitalism, one could also show that as ever-expanding circulation cannot be reduced to the egotistic striving of capitalists for more and more profit.
Consequently, we should not say that capitalism is sustained by the selfish greed of individual capitalists, since that greed is itself subordinated to the impersonal striving of capital to reproduce and expand. One is thus almost tempted to say that what we really need is more, not less, enlightened egotism. Take the ecological threat: no pseudo-animistic love for nature is needed here, just a calculation of long-term egotistic interest.
One can determine the distinction between individual greed and the striving of capital itself as the difference between desire and drive. Apropos the financial breakdown, Paul Krugman made a perspicuous observation: "If we could spin a time machine back to 2004, so that people could ask themselves whether to exercise caution or to follow the herd, most of them would still follow the herd, in spite of knowing that there will be a breakdown."' This is how capitalism works, this is the material efficiency of capitalist ideology: even when we know how things are, we continue on the delusionary path by acting on our false beliefs. Cognitive dissonance and its partner wishful thinking functions in almost all areas of human endeavour. As we have with the endless wars, we've learned nothing from the financial contagion of 2007-08, refusing to accept that dramatic changes are needed and the delusion that we have emerged from a recovery and may be heading for a double dip. Not one of the many delusionary talking head financial analysts on the business news networks admits we've never recovered from 2008. The failure to learn from past mistakes is the essence of stupidity. Investors wait with baited breath each day for the next government intervention from the corporate nanny state to kick start the economy. As I write this on 09/22/2011, the Dow Industrial Average is off 400 points, another ugly day for true believers, but a boon for short sellers, the only realists in all this chaotic market.
But let's face an obvious fact: it took us 30 years of a neo-conservative free for all casino capitalism to get us into this predicament, so it'll take longer than three years to get out of it. It's quite conceivable the entire system is FUBAR, cannot be resuscitated and we never will get out of this gruesome mess. Another obvious fact: it's a rotten to the core system of greed and plunder and not worth saving anyway.
Perhaps feudalism is about to make a return?