Posts Tagged ‘Sweat Shops

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.

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22
Jun
09

Fareed Zakaria’s Capitalist Manifesto

The June 22 issue of Newsweek displayed a cover similar to what one might find on a copy of Marx’s Das Kapital or Che Geuvara’s Guerrilla Warfare. In reality, it’s just the opposite, bearing the title of “The Capitalist Manifesto”.

The central article of this issue was acclaimed journalist Fareed Zakaria’s “In Defense of Capitalism”, in which the author makes an eloquent, though logically unsound, vindication of the system.

For example, one of Zakaria’s primary arguments is that in order to avert economic crises (such as the current recession), “there’s a need for greater self-regulation…”. This is faulty by both the standards of Communism and (ironically) classic “Capitalism”. From a Communist perspective, one could argue that regulation isn’t the issue, it’s the system itself. An economic system based on self-interest will, inevitably, create more losers than winners. Even with regulation (be it self or state regulation), the “survival-of-the-fittest” process will be simply slowed, not altered. From a classical or “pure” Capitalist standpoint, Zakaria’s statement is also flawed since regulation, in any way, shape, or form, inhibits the growth of the free market. And even if one were to ignore the arguments against Zakaria’s statement (from both ends of the political-economic spectrum), one would be forced to ask whether or not “greater self-regulation” is even feasible. Humans have a hard enough time keeping themselves on their diets or giving up smoking, how can one be expected to self-regulate something as gargantuan as the economy? Again, the laissez-faire will argue that Capitalism shouldn’t be regulated and the Communists will argue that Capitalism shouldn’t exist period.

Now if it were the only flaw in Zakaria’s argument, then it might be excusable as simple idealism- a problem every system has to some degree. Sadly, this isn’t the case and there are plenty more defects plaguing the article.

At one point, Zakaria asserts that “What we are experiencing is not a crisis of Capitalism… Finance screwed up, or to be more precise, financiers did… Finance has a history of messing up”. Now before we can pass judgment on this statement, we have to dissect it first. Capitalism is, as described in previous posts, a system in which the end goal is capital, i.e. money. Finance is the current state of that capital, and financiers are those who deal in the exchange and/or circulation of money. In more simple terms, Zakaria has claimed that “The system isn’t to blame for the current situation being bad, it’s the people, and the situation is going to be bad a lot”. While this might sound reasonable, let’s take the logic behind this and apply it to a different scenario. Using Zakaria’s reasoning, one could look at a disease and claim that it’s not the fault of the treatment or the medicine the treatment requires but the patients who are to blame for not recovering. Of course, this is ridiculous. Anyone with a basic grasp of algebra can tell you that when there’s a problem with the result there must be a problem with the equation. Even if an advocate of Capitalism were to argue that the system is made up of humans and humans are naturally fallible, he or she would still arrive that the same conclusion (“therefore, Capitalism is naturally fallible”)!

And there’s more.

Zakaria claims that “over the past quarter century, more than 400 million people across Asia have been lifted out of poverty”. Now there are several issues with that statement in and of itself, not counting it’s wider implications. Firstly, there may or may not be any connection between these people’s rise out of poverty and Capitalism. Firstly, by simply redefining the word “poverty” one could technically determine the percentage of the world that is “impoverished”. Secondly, if poverty is defined by a person being paid less than one dollar a day, that said person could be “out of poverty” by being paid one dollar and one cent, rather than ninety-nine cents. Just because he or she is no longer in poverty, doesn’t mean his or her life is in any way improved. Thirdly, one must keep in mind that four-hundred million people have been [allegedly] lifted out of poverty in Asia. Zakaria fails to mention that poverty levels in Africa and much of the rest of the world continue to rise. Even if one were to look at Asia alone, at what cost has it dragged itself out of poverty? South East Asia has one of the highest levels of prostitution and sex-slavery in the world, and sweat-shop labor is rampant in the rest of the continent. All in all, Capitalism may have lifted many people out of poverty, but the number is negligible compared to the number of people still destitute, starving, and homeless.

In short while Zakaria’s article is well-written, in all honesty, the arguments made in the defense of Capitalism are unsound. Zakaria makes as good of a defense of Capitalism as Don Quixote made a good assault on the windmills, though in Don Quixote’s defense, he thought the windmills were evil giants, whereas Zakaria has no illusions of the nature of the system he’s defending.