George Entenman's recent comment on my post celebrating entrepreneurship called to mind a recent email debate on the differences between capitalism and corporatism. Many people today don't recognize this critical distinction, and even worse, many people fear capitalism when they should really fear (and fight) corporatism.

From B.J.:

Is the current mess in education the result of too much federal government? Or too little? Or would we be better off with more Nativity Schools? I'd take Durham Nativity School, charter/charitable schools, and local public schools with local control and parental involvement any day.

 

Disclaimer: my mistrust for government services was earned the hard way, in years of service within VA medical centers. I think the federal government does as good a job with education as it does with health care.

Friend's Response:

Defining the argument as either/or is bad logic. Better government may often mean less government, but the private sector is full of horrors, like the pharmaceutical industry's lies and manipulations and the health insurance industry's corrosive attack on prevention and heartless cost reduction/profit driven policies. I fear less government intrusion than corporate takeover of our lives. At least when the government screws up, we can start a revolution with armed insurrection. If the private sector screws up, they hire Blackwater, move their assets overseas and hire lawyers to create endless litigation to shield themselves.

B.J.'s Response:

I'd rather avoid spending my money with an errant corporation than take up guns against a government. And if we had a free market, not giving a corporation my money would make it bankrupt, and powerless.

Consider this: The only reason that crooked corporations are able to run roughshod over us is because they have nearly unrestricted access to government money! The pharmaceutical industry would be a shadow of its drug-pushing self without Medicare Part D. Blackwater wouldn't be a threat if it wasn't funded by our government.

Normally I'm a pretty soft-spoken guy, but I do not believe it's possible to distinguish between government and corporations in the current environment. You can't draw a line between them because our government (especially federal, since it can print its own money) has so completely sold out to corporate interests.

Friend's Response:

True. Constitution gives us rights against the government, little against corporations.

B.J.'s Response:

Our fundamental "right" that controls corporations is (or should be) freedom to not give them money (or today, freedom from government coercion to give them money).

Friend's Response:

The problem with subverting government is that businesses have a bottom line and that is to make money. Very few have a moral or ethical base to do for others, or help the poor, environment or under represented. Non-profits may do a lot to help, but everyone I know is desperate for revenue and that is a hell of a way to run a country.

Government has provided services and support, and plays an extremely important role in social cohesion, communication infrastructure, etc.

Undermining the role of government, is making folks jaded and keeping us from focusing on the need to reform government.

I am no fan of bigger government, just better government and that is up to us, we the people.

Private industry also produces and has produced massive problems, death and destruction.

Balance is needed.

B.J.'s Reponse:

I'm in violent agreement that we need better government, and that better government is up to us -- we need to take our country back! From our current position, a "better" government must be smaller, because right now there is no difference between government and corporate bureaucracies. Government (especially federal) exists largely to siphon money out of the economy (along with creating an additional $1-3 billion per day in new debt) and giving it to special and corporate interests. I fear those government dollars the most, because they are given to corporations who can act immorally, unethically, and destructively without fear of being punished by those who should hold businesses accountable (i.e., consumers).

Like [another friend] wrote below, 80% of responsible small biz (sounds like a good number to me) *are* good at what they do. Why? Because if you're a small biz, your very survival depends on it. If you do bad things, customers stop giving you money, and you die. Big corporations don't need to satisfy customers, though, they just need to hire a lobbyist and get on the government gravy train of unaccountability.

I would assert that companies running based upon a bottom-line need to make money are not the problem. The problem is that many companies are taking advantage of a corrupt government that allows them to take money, instead of needing to create the desire in the customer to give it to them.

Taking money from "customers" is theft. I feel like Time Warner robs me every month, but because telecommunications is so highly regulated, competitive offerings are limited and I don't have much of a choice. Instead of paying over $100 per month for hundreds of brain-dead channels to gain access to seven, I would love to pay just for broadband Internet access, and the seven channels we occasionally watch.

But I literally enjoy giving money to Southwest Airlines when I travel, because they generally provide excellent customer service and respect their customers enough to have rational fares with no change fees.

If you are in an open, competitive market, you generally cannot survive unless you convince your customers to enjoy giving you money. That's a good thing.

If you are in a highly regulated or monopolistically-managed market, you can rape, pillage, abuse, and destroy with reckless abandon. How many times have we (taxpayers) bailed out crappy airlines over the past decades? These same airlines then take our taxpayer money, go through bankruptcy, abandon their employee pension plans, and treat their employees poorly. Inevitably, this poor treatment then flows downhill to the customers. Read this stunning article.

But Southwest has been consistently profitable for over 30 years, and didn't need any of the bailout funds that we were throwing towards the airline industry after 9/11. Go figure.

Another possible conclusion is that it's not possible to become a successful big company without a moral or ethical base to do well for your customers. Like I said, we're in violent agreement :-).

Friend's Response:

I'm not the one who is negative. You guys are cynical about government, and unrealistic about the private sector. I've been ripped off by little guys too. We need to get beyond the corporate versus government, small versus big. It is human nature and the foibles of mankind (mostly men) that we have to worry about, small or big, big is made up of small, individuals. You can't pin the problem necessarily to the institution.

Individuals need to take responsibility and fight the culture or system that looks the other way, fears roughing feathers, puts their own security and success at the expense of others. That's the problem. Game theory, 101.

B.J.'s Reponse:

I'd wager we've all been ripped off by "little guys". But usually only once, and that's why little guys who rip off their customers stay little!

It's not about government *versus* corporations - that statement is a false dichotomy. Just check out opensecrets.org or read a few appropriations bills, and government quickly becomes indistinguishable from corporate interests.

So what is capitalism, anyway? My favorite recent example is a lady we met at a party in Carrboro recently who weaves baskets. She gathers a variety of vines during the winter, seasons them, and makes intricate baskets for decorative and functional purposes.

That's capitalism. Take a raw material, apply effort and human ingenuity, and sell the resulting product in a voluntary exchange at a higher price to earn a profit. Even the basket weaver in Carrboro needs to earn a living. But if no one buys her baskets, she's not in a position to lobby for a government basket-weaving contract. When the government distorts the market by taking your money (or creating new money) to subsidize a business, that's corporatism.

We should embrace capitalism, and reject corporatism.