Freedom, Democracy, and Capitalism

 

Supercapitalism:  The Transformation of Business, Democracy, and Everyday Life, Robert Reich, 2007

December, 2015–I read Robert Reich’s Supercapitalism:  The Transformation of Business, Democracy, and Everyday Life, just after it was published in 2007, and posted the following commentary on my now defunct website in October of that year.  That was the month the “Great Recession” began, so the review, from a 2015 perspective, seems prophetic, given subsequent events.

I followed my own advice to abandon Wall Street for Main Street in January, 2008, after the value of my stock portfolio plunged below mortgage debt.  I used the money to pay down that debt and then devoted every available penny to become completely debt-free.

The following commentary links freedom, democracy, and capitalism by seeking to re-define “capitalism” as we know it.  Milton Friedman, in Capitalism and Freedom (1962) and Ayn Rand in Capitalism:  The Unknown Ideal (1967) both referred to “human capital,” but neither seemed to give “human capital” sufficient status.  I’m presenting my commentary here in its original form, posted when George Bush was still president, to remind readers of where we stood then and how events have grown from seeds sowed long ago.

Supercapitalism’s Crystal Ball Shatters:  The Future Has Arrived
October, 2007

Supercapitalism, by Robert Reich, shows the landscape of the enemy’s mind, and it is lifeless monotony.  Former President Bill Clinton’s secretary of labor trounces capitalism without bothering to define it, yet it’s clear he doesn’t understand the term.  This fatal omission turns the book’s intent upside down to make it a strong example in favor of the “democratic capitalism” he claims is dead.

Freedom, democracy, and capitalism are interrelated qualities only individuals can own or control.  The term “capitalism” has been assigned to those who would harness and control human capital, imperialists who know human capital is the only viable capital.  All other capital is derived from human effort or desire.

I make a career of using the wealth between my ears, my caput – the Latin word for “head” – to work for me.  Supercapitalism shows how amalgamated heads under corporate or government superstructures reduce thinking to the lowest common denominator.  No individual is responsible for the outcome.  That’s supercapitalism.

The word “capitalism” means using your head to generate income, to “capitalize” on available resources. In a truly capitalistic society, tax law would favor individual entrepreneurs and those who can be self-sufficient and perhaps hire and train others.

Human capital respects human dignity and works to create an expanding network of like-minded individuals.  Life is free.  You own your body and your mind. They are your most valuable assets.  No one can live your life but you, and you don’t have to sleep with anyone but yourself.  If you strive to make your life a work of art, and can earn a living doing it, you’ll have only yourself to thank.

In a genuine democracy—which has never really existed–the individual has all the rights, and the corporate structure has none.  Human capital, the only viable capital, assumes priority status, and gives credit where credit is due.  Capitalism within a democracy perpetually renews the individual’s vital self-directed role as a functioning member of a larger culture.

But if you are Mr. Reich, “democratic capitalism” has given way to the “supercapitalism” of “global supply chains.”  Get over it, he tells American customer-voter-citizen-taxpayers.  The supercapitalists are corporations, profit-making contractual arrangements, which have no obligation or responsibility to anyone except their shareholders.  Corporations are inhuman, and they have triumphed over you. They will not be curbed without more government, but politicians are crooked, too.  Nor can you trust the do-gooders, who also benefit from supercapitalism.  That’s progress.

Admittedly, we have social problems, Reich says.  We’re poisoning ourselves out of existence.  Natural resources, manufacturing, and jobs are leaving the country as fast as the supercapitalists can sell us out, but that’s not supercapitalism’s fault.  Supercapitalists are only responsible to the bottom line, and shame on you if you expect otherwise.

Reich doesn’t trace the source of “supercapitalism,” but consider these historical facts:  In 1910 an elite group of bankers, industrialists, and politicians, including investment banker J. Pierpont Morgan and Rhode Island Senator Nelson Aldrich, met secretly on Jekyll Island, Georgia, to engineer the creation of a central bank.  There they crafted the initial version of the Federal Reserve Act, which became law in 1913, and created a debt-backed currency, controlled by private bankers.

According to None Dare Call it Conspiracy, by Gary Allen (1971), “German born international financier Paul Warburg masterminded establishment of the Federal Reserve to put control of the international economy in hands of international bankers.  The Federal Reserve controls the money supply, which allows manipulators to create alternate cycles of boom and bust, i.e., a roller coaster economy.  This allows those in the know to make fabulous amounts of money, but even more important allows the Insiders to control the economy and further centralize the federal government.” p 65.

The income tax, also passed in 1913, guaranteed that American taxpayer income would pay perpetual interest on government borrowing. These two actions created the monster we now see as “supercapitalism,” economic slavery of debt-ridden America to the banks, industrialists, politicians, and their designated favorites.

This system requires ever-increasing debt to prop up the money’s presumed value, but Americans are maxed out on credit.  The banks have stretched the rules to make borrowing easier.  The Fed is fiddling with interest rates to insure its economic health, but the loans are backfiring, and the banks are stuck with tangible, costly assets that they can’t easily unload.   Even the “global supply chain” can’t make it cost-effective to export a piece of real estate to Japan, but electronic money is easily disbursed around the world at the flick of a keystroke.  If money is the bank’s only product, that money better be backed by something of real value, or the bank loses its relevance, and the global supply chain crumbles into a pile of broken links. This is the supercapitalist dilemma.

If Americans aren’t working, spending, and paying taxes, government income can’t keep up with obligations. It can’t repay the loans, or even interest on the loans.  The “consumers” aren’t consuming enough.  Bottom lines have suffered.

Former President Bill Clinton’s Secretary of  Labor touts Clinton solutions.  Under his scenario, government has the answer to everything.  More laws, more regulation, more oversight, more paperwork, more money. . . this is the Clinton team answer, but it does nothing to repair the sidewalks in Savannah.

But of course Clinton is no longer the worst president in American history.  Bush is the next logical progression in the supercapitalists’ slave trader tradition.  Unfortunately, “consumers” are overstuffed and have lost their appetites.  They are fed up.  The supercapitalists might have to start earning their income.  Their seemingly unlimited stable of revenue-producing taxpayers isn’t performing up to economists’ predictions. The money churners on Wall Street and the asset plunderers in Washington are lost in the never-never-land of money backed only by money, and nobody knows where the value went.

Reich talks about “consumer buying power.”  What you have, Joe and Josie Taxpayer, is “withholding power.”  Note the crammed retail shelves and store aisles.  Bad choices abound, as the products worth buying slyly disappear, only to re-appear later with new price and packaging. Hardly worth the walk from the parking lot, or the time spent in the check-out line. Bottom line is they can’t move all that cheap plastic junk made by slave labor in China, and overhead is tightening the designer nooses around their supercapitalist necks.

The term “consumer” insults “customers” and reveals the anachronistic, aristocratic mentality at the core of supercapitalist thinking. This seduces the individual customer-voter-citizen-taxpayer into believing she is receiver rather than giver of charity to government and industry, yet both depend on “customer” income for survival.

But, all taxes fall disproportionately on those who can least afford them.  These individuals—who pay the largest share of disposable income in taxes–suffer first and most severely if the delegated power is abused.

That’s why we should abolish corporate income taxes, Reich says on page 216 of his 225 page book.  Let those profits flow through to shareholders, who are individuals. He claims the corporate income tax rate is higher than what low-income shareholders would pay if it were reported as personal income instead.  He claims lower income shareholders and company employees are unfairly taxed by the current arrangement.

Reich neglects to mention that the megacorporate supercapitalists, inhuman as they are, leave giant footprints on the communities they trample.  The corporate income tax is a token acknowledgment of their superhuman presence within the environment and on the local infrastructure.  The bipartisan, concerted move to abolish corporate income taxes reveals the supercapitalists’ latest ploy to shift costs to neighbor-customer-citizen-voter-taxpayers, better to pad bottom lines and pretend they deliver more than they cost.

Large corporations thus export money and resources out of town while local communities bear the costs.  The small business person, the entrepreneur, is the capitalist who does not depend on government help, yet suffers more than anyone from the political favoritism granted through corporate contractual agreements.  The supercapitalist’s greatest competitor is the genuine capitalist, the individual, who is free to use her head to negotiate her way through local markets, the stock market, and life, whether as seller or buyer, giver or receiver.

In supercapitalist jargon, customer-voter-citizen-taxpayers are not free thinking individuals.  We are “consumers,” “covered lives,” “special-interest groups,” “minorities,” “the elderly,” “the poor,” identities encoded in numbers that can be stolen without a gun, and, by the way, the source of all the supercapitalists’ revenue, whether through product purchases or taxes.  Shareholders are also customer-voter-citizen-taxpayers, and as individuals and capitalists, they are free to buy or sell their stock at any time.

Our society exploits human capital and degrades itself by not appreciating the rich variety of its human talent.  Human capital can’t be owned, but it can be manipulated and controlled through force and deceit.  These tactics eventually fail, because they engender passive aggression and passive resistance that ultimately undermine the predator, to no one’s benefit.  This sadomasochistic dance is the enemy of capitalism, because no one profits in a power struggle.

“Consumer spending” accounts for two thirds of US revenues, and as “consumer spending” decreases, so do tax revenues, an unfortunate, unintended consequence of putting everybody out of work or on the public dole.

My take-home message from Supercapitalism, the bottom line, is this:  The so-called supercapitalists have painted themselves into a corner, and they are desperate. They couldn’t have grown to their current size without significant government help, at the expense of the customer-taxpayers who finance both sides.  But legislation and tax law favor large over small, and the group over the individual. This heavily weighted advantage is the opposite of capitalism, freedom, fair trade, and democracy.

The easiest way to shrink the supercapitalists’ overinflated self worth is to work less, earn less, consume less, spend less, drive less, waste less, want less, and pay less in taxes.  I could repair the sidewalks myself for what I pay in taxes, and if I quit working, I might have the time.

The “customer” is always right. Joe and Josie Taxpayer have the right not to spend, the right not to pay for products shoved down their throats.  Get out of debt.  Interest payments do not give value for money.  Do you think the international investment bankers—the most superior of supercapitalists—want you discovering you have better uses for your money than debt-plus-interest payments?  You think the government wants you to shrink it to a manageable level?  You, Joe and Josie Taxpayer, are the genuine capitalists in America. Your minds are more vital than any supercapitalist contractual agreement. Life is free.  It’s your choice how you spend it.