End of Capitalism as We Know It? Might Be Closer Than We Think.

Capitalism did this

Is our economic model sustainable? 88 percent of our national income growth went to corporate profits, while 1 percent went to wages between 2009 and 2011.

Adam Smith himself, father of free market economics, said, “No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Yet we are hesitant to open our eyes to the damage done by unfettered capitalism.

Karl Marx believed capitalism’s normal trajectory would lead us to a time when individuals would have little in a time of plenty. Sound familiar?

Today, we can find examples everywhere: Our stubborn unemployment and jobless recovering economy while corporate profits soar. Or gasoline prices at the pump going up while we’re awash in oil and the industry makes historical profits.  Or drug companies pocketing enormous profits while more and more people can’t afford their meds. In each of these cases, it’s a time of plenty for corporations and time of scarcity for too many individuals.

Businesses have three groups of people who have a stake in their success. They are the owners, the employees and the customers.   The owners provide the capital and have a right to a fair return on their investment.  The employees provide the labor and have a right to a fair wage for their efforts.  The customers have a right to expect the quality they pay for.

Today, the owners’ interests far outweigh those of the other two. With the exception of the top executives, (CEO pay increased 571 percent), the employees share of the pie has remained the same for the past three decades.  From Paul Buchheit, “The income gap is growing faster in the United States than in any other developed nation. Between 1990 and 2010 in the U.S. worker pay adjusted for inflation remained approximately equal, while corporate profits rose 93 percent.”

And what about customer service or shoddy product quality? Think about the computerized customer service system that requires us to answer a dozen irrelevant questions, which brings us back to the beginning of the process. It takes our time while it enhances corporate profits by externalizing the costs of answering our questions – to us. And when we finally talk to a human being, we can’t understand the agent because it’s even more profitable to offshore the service.

So why this disturbance in the balance of these interests?

From Wikipedia, Karl Marx wrote, “Because commercial transactions imply no particular morality beyond that required to settle transactions, the economic sphere and the moral-legal sphere have become separated in society: subjective moral value becomes separated from objective economic value”. The only morality left in capitalism seems to be maximizing profits for the owners.

Capitalism and executives are not at fault. They are working the way the system is designed and performing well according to accepted conventions. We must change those conventions by legitimizing morality in the form of social responsibility in corporate decision processes if we’re going to save capitalism from itself and preserve way of life in the process.

The game of Monopoly is a wonderful analog for capitalism. The game is over when one player owns all the wealth. And that’s where we’re going. In America, the top 1 percent own 40 percent of the wealth and the bottom 80 percent own 7 percent.

I worry more about how many people own the 7 percent than the 40. I don’t know how low the percentage ownership for the bottom 80 percent will go, but to be completely honest, I don’t think it makes any difference anymore. I can’t see anything on the horizon that will change our current trajectory but a complete economic collapse. Heaven help us if I’m right. Capitalism will have succeeded in destroying itself and the economy in the process.

Here’s the ironic part: The most outspoken defenders of capitalism will blame the collapse on creeping socialism and point to Europe as their proof, failing to acknowledge the government austerity programs that hasten its demise.

Robert DeFilippis


photo by: