I agree with a lot of what’s in Chris Schelling’s post at Institutional Investor but particularly this paragraph:
Rather than being the result of runaway capitalism, these problems [ed.: e.g. great discrepancies in wealth and income], I believe, have been caused by its disappearance. We don’t have too much capitalism; rather, we have far too little.
Most critics contend that this failure of capitalism is, perhaps ironically, the result of unchecked corporate profit maximization. Once again I agree. However, capitalism is not axiomatically about profit maximization; it’s not about corporations. In fact, true capitalism was originally agnostic on both of those subjects. Only in modern times has profit maximization become the broadly accepted definition of this economic model.
The great enemy is the accumulation and consolidation of power whether it is in the hands of rich individuals, companies, or governments at any level. Capitalism and liberal democracy can encompass diversity and dramaticly different approaches to the pursuit of happiness. Crony capitalism (which is what we have now) and state socialism cannot.
Other than the phrase “unchecked profit maximization,†which is just a mindless phrase, I endorse everything written here.
We talked about this before. Capitalism works really well when people behave according to the models that capitalists believe in, but they dont. Absent external interference, capitalists maximize their own outcomes, and that includes the assumption of power. Crony capitalism is one of the natural outcomes and the broad acceptance of profit maximization is part of that package. Capitalism needs to be pulled back from its own worst excesses.
Steve
I agree with that. However, that doesn’t mean that I think the manner in which it should be “pulled back” is via a planned economy which is what state socialism means. As noted previously, we should be breaking up accumulations of power.
If Intellectual Property (patents, copyright, etc.) laws and separating commercial and investment banking, sign me up.