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This article will explore my own observation if capitalism really works or not. Famous saying is that capitalism brings prosperity and wealth to the people. Lets see if that’s really true. I’ve lived in Europe for 20 years and currently am living in U.S for 13 years. That gives me objective perspective on economic conditions from the layman’s point of view.
Here’s a startling fact: Currently most of the worlds countries are one or another form of capitalist economies; and most of the world is poor. That’s a fact. Those who resort to no welfare and social programs usually have greatest class divides and poorest standards of living. Some of those countries are: India, Indonesia, Thailand, Mexico, Russia, Brazil etc..

Let’s see simple example of capitalist economy in action.
In a capitalist economy, labor (working class) is working for the owner (capitalist class) to produce goods. Labor is selling their work abilities in return for wages. With those earned wages, labor goes out and consumes products of their own making, but at much higher price. For example: A person who labors in a production factory could make 200 products an hour, lets say of 1$ per product ; but I guarantee you that he is not getting paid $200 an hour. In an 8 hour shift he can make as much as 1600 products. That’s $1,600 worth of products while taking home (before tax and all deductions)maybe $100 a day, if he’s paid really well. So, he will earn his day pay in about half an hour. He also cannot just stop working once he reaches $100 a day in products; which is within half an hour. But it doesn’t end there. He will then go out and buy some of those products at much higher price. Owners are the only ones who truly benefit. Labor will just survive and have a big choice of products to consume. Not much more. If laborer complains or demands higher wages, he will be immediately replaced by another one waiting in line who will work longer hours for less pay. Capitalist class knows this, and they’re counting on it. That’s called exploiting working class, but I could be wrong.
Let’s look at the United States.
Let me first say that U.S is not a pure capitalist economy. U.S used to be pure capitalist economy 100 year or so ago, and guess what? U.S was considered a third world country at that time. Things have changed since then, but only on the surface, and only thanks to working people who fought for their rights. If capitalists had their way, U.S would still be a third world country.
U.S has now what’s called mixed economy. It’s based on profits but some of the things are regulated. In a true capitalist economy you would not have: Medicaid, Social Security, Labor Unions, workers rights, child labor laws, affirmative action, welfare and other socialized institutions. In capitalist economy everything is privatized and people work for wealthy few who own most of the industries. And I mean everything! Pure capitalism can be illustrated by simple picture like this:

Simple but it’s worth thousand words.

Even though U.S has mixed economy, the whole system is still based on making profits; lots of it. That’s one of the core attributes of capitalism. Every business of course strives for huge profits, but even institutions you would not expect are also in competition to make huge bucks. Media cares about ratings; big ratings bring big bucks from advertisers. Hospitals and the whole health care industry are also striving to make profit for their shareholders. Doctors are accepting large amounts of patients to maximize their bonuses and salaries. (They also accept vacation packages from the drug industries in return for testing few drugs on their patients). FED (Federal Reserve System which is privately owned) are lending money to business, while making huge profits of interest which businesses pay back. Even our government is trying to make profit. I dare you to find me an industry that works for good of the people, instead for profit.
In capitalist society, profit comes before people, education, health, environment and other life’s basic necessities. Oil companies will drill in the wild if it makes them profit. Lumber companies will cut down the whole forests if thats the only way for them to grow and make profit. In the US we indeed see all of this even though it’s not a true capitalist economy; it’s much more subtle but damaging to the people nonetheless.
If business grows to the size, where the only way to sustain itself and make profits is to start hitting work force on their backs, while passing costs to consumers (notice work force and consumers are the same people actually), while at the same time destroying competition at any cost, they will do it; we see them doing it every day.
Average American is then pushed into the corner. He has to compete with his fellow Americans for a better job and better pay, so that he can pay his mortgage, send his kids to school, buy health and life insurance, secure his retirement and basically just survive. Who has time for fun! He has no choice. He will often resort to stumping over his morals and ethics just to get one step ahead. Good people will resort to all kind of innovative ways to make money and survive. We see that in all kinds of scams around us.
He is also constantly bombarded by media and reminded by employer (capitalist class) that giving 110% at work and not complaining a lot is the best way to get ahead. Those who complain get fired really quick and get replaced by other ambitious laborers. Be competitive and have good work ethics and everything will work out they say. Add to that, constant avalanche of consumer products being shoved up his butt, and what you got here is a obedient consumer/worker robot. That’s a person who works as hard as he can, while consumes as much as he can while keeping his mouth shut. Not a bad deal for the capitalist class eh?
If working class is just working and not buying, then whole system breaks down. Opposite is also true. So capitalist class needs obedient worker whol will also consume lots of its products.
Capitalist class these days have yet another weapon to maximize their profits. Offshoring and globalization. Owners will abandon their already overworked and underpaid local labor in return for cheaper and even more overworked labor overseas. Any way you look at it, average American will get short end of the stick every day and twice on the Sunday; and the only thing he really wants is little piece of mind; or as it’s popularly called American Dream.
Every person in US strives for that piece of mind that will never come. It’s a never ending struggle between anxiety and labor, until the day he dies. He just doesn’t know it while he’s in his 30’s or 40’s.
Even if he’s on the right track of fullfiling that dream, something else along the way always comes, just to set him back or place him right back at the beginning. It’s like running in the sand. A true checkmate. Even if he accumulates material goods, anxiety will always be there.
Lets say he has million dollars saved by the time he retires; he’s feeling good and has all these travel plans; but what he doesn’t realize is that all it takes, for him (or a family member) to get really sick and all of that could be wiped out by medical treatments, and if he doesn’t get really sick he will turn in all that wealth to a retirement home. Next time you see him, he will be greeting you at wall mart or bagging your groceries.
Example: Friend of mine was in a car accident and he suffered spinal injury which left him almost paralyzed. He underwent couple of surgeries and he has to be under physical therapy constantly. Let me just say that medical insurance company stopped paying his bills after $300,000. Right now I think his medical bills are over six million dollars! Yes that’s US Dollars.

Point is that no matter what the average person does, he will always have that annoying background anxiety. Be that fear of loosing your job, mortgage, medical bills, kids college, health issues or just a feeling of not doing anything with your life, those anxieties will always be there. All of those anxieties are caused and are pure product of pressures of capitalist society and economy. Even if you have everything paid for; secure retirement and piece of mind is not guaranteed. Something always comes along to put you back in your place of being a laborer.

So conclusion of this article is that capitalism does work. It works gloriously, but only for capitalists. It works great for the wealthy. Those who tell you that capitalism and privatization really work are the biggest bullshitors world has ever spat out. Either that or they’ve been persuaded into believing in a dream that will never come. I really cannot believe that there are normal, healthy people in this world who believe that pure capitalism brings wealth and prosperity to the people.
Problem is that there’s not much average guy can do except to vote in elections only for his/hers interests and not against it. I lived overseas and currently am living in US, so I’ve experienced both sides, but I’m still baffled by people who vote against their own interests.
Reassuring fact is, when cup is full, when working class have had enough, capitalist class will hear the rumble of the people (as Nader used to put it). It happened before and will happen again. We don’t have 14 hour working days anymore. We have women voting rights, child labor laws, work discrimination laws, labor unions, welfare programs etc. Every one of those laws was accomplished by working class.
People fought for their rights before, and be assured, when pushed into a corner, they will fight again.

This entry was posted on Wednesday, April 16th, 2008 at 7:13 pm and is filed under Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.