Herbert Hoover, when President of the USA, famously said, “The trouble with Capitalism is the capitalists—they’re too damn greedy.”
This is not just a frustrated man letting off steam. It pinpoints the exact reason why capitalism wasn’t working as it could be in Hoover’s time, and isn’t working as it could be now. If we compare the capitalist system as it functions now to the way the body functions, then what is happening is that the system is suffering from cancers.
Cancers substitute non-propagating cells for living cells. So what produces the non-propagating cells in the capitalist system?
A fairy story for you. In 1970 a banker’s daughter, with her husband—a sea captain (with some banking experience)—set up a company and borrowed some money to buy an old ship. As the years went by, they bought more ships, commissioned some new ones, then moved into associated services: port terminal, rail, and inland services. By early 2022, their company had become the biggest shipping company on the planet.
This is of course a true story: the story of Mediterranean Shipping Company (MSC). How did they achieve this growth? They never developed any non-propagating cells. They never floated the company on a stock exchange (which demon-driven capitalists regularly do). All the money that the company made went back into the company itself (allowing for stakeholder benefits).
Of course, there is an alternative to ownership by a single person—or, as in this case, a couple. All the company’s stakeholders can become shareholders. This would be the ideal ending to this story. The labour relations of MSC will bear examination, but it is more likely that the fairy story will come to an end, and the company pass to a group of external shareholders.
If a company has external shareholders, then some of the money that the company makes has to be sequestered (made non-propagating) and at some point siphoned off. This is damaging—and especially damaging if there are what are called “activist shareholders”, who only care about the company to the extent that it produces substantial dividends. Or if people buy shares in order to strip the company of its assets—in order to make personal profits.
Many countries propose a ‘wealth tax’ on the rich, and some even have such a tax in place. But this supposes that the system is OK, and that the profits made from it are unfair. The profits may be unfair. However, the system itself is not OK.
What can we do about it? We first need to accept that capitalism, with its free markets, is a valid and viable economic system. (You can find a discussion of some alternatives in this very thread.) But it is not in its present form an efficient system; it is not a system which consistently responds to the needs of a majority of citizens; and it is a system which can be radically improved.
What is needed is efficient regulation. ‘Regulation’ has for years (centuries?) been decried by the wealthy, who often argue that the less regulation, the better the system works. If this were true, it would be a unique system: all systems need regulating in order to work.
The simplest example of regulation which helps a system work is the thermostat. Without a thermostat, a central heating system would struggle to start working when it was cold, and would go on getting hotter and hotter once it started. The capitalist system simply needs similar controls.
To list and define the controls would take more than this “whisper.” Several articles and books, probably. But the important thing is to grasp the point. A 100% healthy capitalism is possible, stripped of all the cancerous excrescences of current stock markets, such as ‘shorting’, along with all the features which attract short-term gambling by the few rather than long-term investment by the many.
Only the power of the entrenched wealthy stands in our way.