Posts Tagged ‘Industrialization

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.

06
Jun
09

Capitalism Defined

While Communism may summon unbidden images of dictatorships, oppression, and poverty; Capitalism brings to mind images of freedom, wealth, and luxury. Like Communism, Capitalism does not deserve the reputation it has.

Capitalism, in its simplest definition, is this- a social system in which the end purpose of politics, labor, business (and indeed, life in general) is capital, i.e. money. When a person works, he or she works for the highest wages possible. When a business sells a product, the product is sold for the highest profit possible. When a government acts, it acts in such a way as to create the highest inflow of cash possible (though admittedly, Smith states that the best way for this to happen is for the government to stay out of economy altogether).

According to Capitalism’s advocates, this system creates a healthy, strong society where everyone is rewarded according to their individual efforts and intelligence. The inventive and hard-working move to the top while the stupid and lazy are left behind.

Now in theory this sounds like a good system, but how does it work when put into practice?

In reality, this system creates a survival-of-the-fittest that not even Darwin would’ve imagined possible. Individuals engage in brutal competition with each other for high-paying jobs, businesses war with each other to sell their products and services, and so on. Even Smith himself states that “But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and shew them that it is for their own advantage to do for him what he requires of them… Every man is, no doubt, by nature, first and principally recommended to his own care; and as he is fitter to take care of himself than of any other person, it is fit and right that it should be so… Every man is… first and principally recommended to his own care… it is fit and right that it should be so.”. In other words, “let each and every person act in his own interests”.

“Harsh but fair.” you might argue, “it is a jungle out there and it’s only natural that the fittest survive.”

That’s all good if you’ve got a steady occupation and decent health- but what if that changes? If you suddenly were fired (maybe the company can make a better profit without you) then survival-of-the-fittest system doesn’t sound so great anymore. If you come down with some disease and the treatment is expensive, what are you going to do if you can’t come up with the cash? This is Capitalism- you can’t expect the doctor to save your life out of human compassion! Or worse yet, what if you’re born to a lower class? In that case, you’re stunted from birth- cursed with a worse education than your bourgeois and elite counterparts (after all, education’s a marketable service- the best educations go only to those who can afford it). You’ll be lucky to get a job at all.

Capitalism still sound great? It gets worse.

With all of this going on, now add on the fact that you yourself don’t count as a person in grander scheme of things. For the employer, you don’t exist as a person but as a source of revenue- a money-machine. If you “break down” or if an “upgrade” comes along, you can be replaced. That means in addition to struggling to keep your head above water in a system where you’re being squeezed for every penny, you have to fight tooth-and-claw with your fellow man for each and every opportunity. If you and a co-worker are competing for sales, what’s to stop the co-worker from lying about the product to potential buyers in order to ensure that the product is sold? He’s making money for himself and for his bosses and if the buyer’s a gullible enough to fooled, then that’s just Capitalism. The smart (or at least, those who could afford an education) and hard-working (or unscrupulous) move ahead and the stupid (or those who couldn’t afford college) and lazy (or those with mental/physical disabilities or those who simply won’t lie and cheat) are left in the dust. And what about cases where a profit can be made from direct exploitation, such as prostitution, pornography, sweat-shops, and pure and simple slavery? Since the end goal is money, is is justified to con a person or to bribe a public official for profit?

Does Capitalism still truly deserve its reputation? I submit that it does not.