What Kind of Capitalism Do We Want

"What Kind of Capitalism do 'We' want?"

Introduction

First of all, I will provide a quick overview of the evolution of capitalism since the Great Depression, which I believe is necessary in order to understand the capitalism of today and some of the problems to it. Then I will analyze four different problematic areas of free-market capitalism in the US compared with the Scandinavian government-managed capitalism. I will then discuss what kind of capitalism we want: We being different interest groups, such as the shareholders, the C.E.O.'s, the average worker and the poor. Finally I will discuss what values might be at stake in capitalism.

The evolution of capitalism

In the U.S., the 1930s Great Depression threatened to destroy the capitalism that had been evolving for the past 400 years and this led to abandoning the laissez-faire capitalism and instead embracing the New Deal concept of government-managed capitalism in order to control money supply and government expenditure, and in order to limit the increasing gap of inequality of income. The 1950s and 1960s were decades of equality, but the energy crises of the 1970s forced the government to kick start the economy imposing new taxation benefiting the rich and once again causing widening inequality. Today, capitalism is the predominant economic system of the Western world, in its' however various forms: In the U.S. a more free-market capitalism exists and in Western European countries (esp. Scandinavia) capitalism is a more government-managed kind.

The government's role

America has the largest real GDP per capita in the world. However, this is only a measure of the economy, not a measure of the well-being of the average American. The GDP isn't being redistributed in favour of the poor as it is in the Scandinavian government-managed capitalist economies leaving a huge gap between rich and poor. The taxes paid in Scandinavia are considerably higher than taxes in the U.S. because the capitalist America of today has very limited government interference.

Plutocratic conditions

Meanwhile, the very rich are getting even richer which shows signs of plutocratic conditions ruling the U.S. The C.E.O.'s are paid huge salaries; in fact today's average real annual compensation of the top 100 C.E.O.'s is 1,000 times the pay of ordinary workers. In a government-managed capitalist country like Denmark, plutocratic conditions to such an extent would not be feasible.

Political influence

The biggest corporations have become the key influence on political organs. For example, the oil industry in the U.S. has major interests in extracting oil from Middle Eastern oil fields in order to supply the future American industry with the oil needed. Thus, they financed the campaign of the President Bush, and in return Bush makes sure to satisfy the needs of the oil industry.

The popular will is not always the right one

Most fundamentally with the American capitalism, the prices in the marketplace and the supply of products reflect consumer preferences. But the popular will is not always the right one. Morally, companies should not always listen to what the consumers prefer but what they could benefit from, such as reducing fat, calories, heart attacks, lung cancer. In a government-managed capitalist country the same problem exists - to a high degree - however not as extreme as in the U.S.

What kind of capitalism do we want?

First of all, "we" must be defined. There are many different "we's"/interest groups in the world of capitalism today, and therefore I think it is essential to draw attention to the different groups of "we" wanting different kinds of capitalism.

The shareholders and the C.E.O.'s

The shareholders, C.E.O.'s and even the board members and auditors are much better off in a free-market capitalism than in a government-managed capitalism, because the free market has a tendency to give them both great power and huge economic resources, primarily supporting their own interests. Whether or not they are worth it is a matter of opinion, but it is certain that it would not be of any interest of the American shareholder or C.E.O. to live in a government-managed country, since it simply is impossible to maintain salaries of such proportions, partly because that just isn't the norm, the high taxes on high income and finally because of the existing transparency about the C.E.O.'s pay - at least in a government-managed capitalist country like Denmark.

The average worker and the poor

In a government-managed capitalist country, like the Scandinavian countries, public goods or services like health care and education are available to everyone - poor or rich - and therefore this kind of capitalism would be the most suitable kind for the average worker and the poor. There exists equality of opportunity . In the U.S. the private sector owns more of the public services and since the poor can't always afford to pay for medical treatment or college education. The result of this - among other things - is lower life expectancy, higher infant mortality, and higher illiteracy than in Scandinavian countries.

The clash of freedom and equality in the U.S.

The two main values in a democratic, free-market capitalist country like the U.S. and in government-managed capitalist countries like the Scandinavian countries are freedom and equality. But in most cases, in order to have freedom you have to sacrifice the equality - and vice versa.

According to the authors of "Freedom, Order, or Equality",