Posts Tagged ‘businesses

07
Jul
10

Norman Rockwell’s America (is Dead)

If you’re familiar at all with contemporary art, then you’ll no doubt have heard of Norman Rockwell. Indeed, chances are if you’ve lived anywhere in the West you’ll have come across one of his iconic paintings (as an original or as a recreation). For the few of you who might not be aware of his work, Norman Rockwell created paintings depicting (most often) bourgeoisie life in idyllic Middle-America*. There’s the family farms and small, private businesses that politicians love to talk about (see Sarah Palin’s “Real America” speech) and Capitalism tries to market to you (see ‘Aunt Jemimah’, ‘Uncle Ben’, ‘Quaker Oats’, ‘State Farm‘, ‘Pepperidge Farm‘ etc.). For many it’s the very face of Capitalism- just look at this 1948 “instructional” video of (exclusively white) high-school teens discussing Capitalism.

Coronet Instructional Films “What Is Capitalism?”, 1948

This is a prime example of the twisted understanding of Capitalism many have, but even in this video we can see the roots of the disparity between the Rockwellian portrayal of Capitalism and the harsh reality. Throughout the film, one word stands out: Competition. The young woman to Jimmy’s right describes how the shop-owner, Mr. Brown, agrees to lend out his truck to ensure she and Jimmy buy from him, rather than the competition. She asserts that Mr. Brown’s interests aren’t in providing service but in making a profit, and it is here we have the crux of the matter. Mr. Brown wants to make profit- the sole existence of his business is to make profit, and so Mr. Brown does whatever he can to ensure his merchandise is sold, rather than the merchandise of his competitors. In short, Mr. Brown is trying to run the other shops in the community out of business to maximize his profits. I’m not arguing that Mr. Brown is morally corrupt (though let’s not rule out of the possibility), we have to understand that in a Capitalist system, the rules of competition apply to everyone. Mr. Brown has to run his competition out or his competition will run him out. Eat or be eaten. At the same time, if Mr. Brown is indeed concerned not with his own livelihood but with his profits, if he does succeed in running his competition out of business he will have a monopoly and Jimmy and his friends will be forced to buy “weenies” at whatever price Mr. Brown sets.

Melodramatic? Consider this:

Starbucks was a small, privately owned coffee shop that has burst into a world-wide empire that has obliterated competition. Walmart also started as a small shopping center before expanding to the point where it has replaced nearly all beloved mom-and-pop stores you see in Rockwell’s art. McDonalds didn’t start out was a global food-chain but just as a privately owned restaurant. Coca-Cola started out as a tonic.

Now of course, there’s the temptation to side with corporations on this issue. One might argue ‘Hey, the fact is that Starbucks, Walmart, and other stores became economic empires by being better than the competition- they deserve the power they have!’. This argument forgets, however, that most corporations don’t get to where they are by simply having better products. The Mr. Brown of the video might run his competition out of business by offering lower prices by (1) temporarily lowering his prices so that his competition will be destroyed and he will make more money in the long run, (2) lowering the quality of his goods, (3) smearing competitors (and if you don’t think this happens, look up a Mac vs PC commercial), (4) lowering the wages of his workers, (5) sabotaging his competitors (corporate espionage), (6) convincing the public that his products are better (actually making them better would decrease profit), or even (7) collaborating with other businesses to harm competition (just look up the tactics of J.D. Rockefeller). Now out of these seven options, do you think that Mr. Brown is going to go with the one that lowers his immediate income? And what happens when Mr. Brown gets a monopoly? Is he going to lose his customers to cheaper options in other towns? Of course not- the astute Mr. Brown is going to open a shop there, and use his profits to undersell his competitors into working for him.

It’s a sad but simple fact. No matter how much we swear by the good, ol’ family farm or shop, small businesses inevitably become big businesses, which become global corporations with a reputation for low prices and even lower wages, product safety standards, and environmental consciousness. To answer the question of the video, what is Capitalism? This is Capitalism: pointless competition, exploitation, monopolization, and the general degradation of all the values we see in Norman Rockwell’s paintings.

*Admittedly, he did do a few pictures of working class Americans and even school children in Soviet Russia- but overwhelmingly his paintings were of the bourgeoisie.

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30
Jun
09

Communism, Capitalism, and Competition

Capitalism is a lot like a game of monopoly. Brutal competition, endless buying and selling and trading, a massive luck factor, and above all, the only way you can “win” the game is if everyone else loses. It’s survival of the fittest where only the most lucky and savage win- anyone else is crushed like the grass between two charging elephants.

So it is with our Capitalist system- though to get a capitalist to admit it is far from easy. Take Henry Ford, for example. Henry Ford is popularly credited with stating “There is but one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.”.

This statement, of course, is vile propaganda- pure and simple. Unless a monopoly controls the product in question, the profit that can be made off selling said good is reduced dramatically. In simpler terms “Since the purpose of Capitalism is to get the most money possible, increasing the quality of a certain good (which would cost more to make), lowering the cost of that good (reducing the immediate profit), and paying the highest possible wages to those making the good (increasing the cost of production even more) all lower the profit, then the application of Henry Ford’s quote would defeat the purpose of going into business in the first place.

And Henry Ford knew this. Ford’s genius was by no means limited to his inventive or economic prowess. Ford was also a brilliant wordsmith who could appear to say one thing, when in reality he was affirming the opposite. “People can have the Model-T in any color, so long as it’s black” is one of his better known quotes. Technically the “Do what you want (provided that it’s what I want)” statement isn’t a logical fallacy. There isn’t any contradiction- just a clause. The equivalent would be a TV advertisement promising to “cover all medical expenses”. While some healthy, attractive (and well-paid) actor is making these promises, for a brief moment at the bottom of the screen, some fine print letters appear to inform you that the service or product will “cover all medical expenses” except a long list of expenses. When Henry Ford made his statement about the goal of industrialists, one must remember to keep the emphasis on the repeated word “possible”. Possible can mean any number of things or situations. “Possible without violating moral standards”, “possible without charging over one US dollar”, “possible without actually hurting the profit you make”, and so on, though the last “possible” is the most probable. Ford made both a fortune off of his industry and appeared to the public of his time to be a generous, witty, and fair-playing man (and that reputation lasts to this day, the vast majority of Americans being uninformed of Henry Ford’s virulent anti-Semitic and anti-immigrant views).

And that’s the way it is with Capitalism. Every corporation or company or individual with a product to sell or a service to hire out follows the Capitalist doctrine of profit (by any means possible). Like a player in the game of monopoly, the capitalist attempts to make the best quality of good possible (possible meaning “just superior to everyone else’s product to be more marketable) at the lowest cost possible (possible meaning “just enough lower than the competitor’s product to be more marketable), paying the highest wages possible (possible meaning “just high enough to tempt employees away from the competition”).

Now one might be fooled into thinking that this is somehow good- that competition will inevitably raise quality and wages, and lower the price of the product. A nice illusion- but it simply isn’t true. Corporations will raise and lower their prices and raise the quality of their product or service but rarely at the same time! If one corporation lowers the price of it’s product by ten cents, the competing company has the option of trying to undercut the new price or attempt to raise the quality of their product. “Quality”, however, is a tricky word. “Quality” might mean anything from a new toothpaste formula to a brighter toothpaste tube cover. The company might boast “new, brighter, better!” but since all of these words are totally relative, the don’t really mean much of anything. Sure one company could sell toothpaste for less and another could maintain the same price but promise “whitening power” but in the end, the goal of both companies is to make a profit. They’ll only undercut and outdo each other to a certain extent. As for paying higher wages- that part of Ford’s statement no longer applies. In this time of globalization, corporations can sell products in the West and manufacture them in the third world, where the workers are so destitute that they’ll take whatever job they can get- even working sixteen hours for a dollar a day. Corporations have a stranglehold on these people and since there’s more than enough cheap labor to go around, no reason to raise the wage (or provide healthcare or pensions, for that matter). Additionally, corporations- already locked in a barbaric struggle with each other- have no desire for new competition to enter into the market. Small businesses can be bought out by larger ones. Unless working on a very local level, small (and often family-owned) industries have no way of competing with larger ones (take, for example, the extermination of so-called “mom-and-pop” stores by massive chains such as Wal-Mart and Target). “So some small, private stores went out of business- that’s part of the free market system!” one might argue, “If these companies can give me lower priced goods, why should I complain?”. The answer is simple- the price isn’t lower. If you work for a company that makes a product (shoes, let’s say) you might be led to believe that the shoes you make are being sold to corporations like Target. Actually, Target is getting shoes from a sweat-shop in Taiwan for a fraction of the price your company’s selling them at. Your company, unable to compete with virtual slave-labor, is forced to lay-off thousands of employees (including you) because it can’t sell shoes for the same price. “But I don’t make shoes! It’s not my problem!” you might retort. But keep in mind that stores like Target, Wal-Mart, and so on are selling virtually everything now, from toothbrushes to garden fertilizer to suites to frozen turkeys to optometrist appointments. Whatever you’re manufacturing- whatever product or service you sell- you can bet that a massive corporation is selling it for less.

How’s competition sound now?

And that’s only how competition affects you. Imagine that you own a business and you’ve successfully run the competition into the ground. That’s great for you but what about everyone who’s just been put out of business? They’ve been forced to compete with each other for whatever jobs are available, no matter how low paying or exhausting those might be. And what about their families? If the daughter of one of the recently laid-off workers comes down with some disease, her family won’t have the medical insurance to pay for her treatment. Are we really part of such an egocentric society that the suffering we cause to others is justified as “part of the system”? Are we so obsessed with this “survival-of-the-fittest” economy that every moment of life is a vicious struggle to stay at the top of the food chain?

I propose an alternative: Communism.

As legendary economist John Maynard Keynes once put it “Capitalism is the astounding belief that the most wickedest of men, will do the most wickedest of things for the greatest good of everyone.”. Since we have seen that the good of the individual is not equivalent to the good of society (in most cases, it’s detrimental) I submit that we try the reverse. By cooperating, rather than competing, we can ensure that everyone is provided for, that the wages are fair, and that quality is controlled by the consumer, rather than the corporation. Sure some people won’t rise to the top, but at the same time, we can prevent anyone from being trampled below.