Capitalism: The decade's biggest loser
Capitalism has become such a whipping boy for all that is wrong in the world that its true nature has been nearly obliterated.
By Jim Woods, InvestorPlace.com
I've read quite a few retrospective articles over the past month or so on the decade that was -- a decade that comes to an end at midnight tonight. One of the more memorable, albeit more pedestrian, pieces was a Time article that proclaimed the 2000s the "decade from hell."
One of the major casualties was the U.S. real-estate market, which collapsed like a veritable house of cards in 2008. The fallout caused by the deleveraging of mortgage-related debt sent trillions of dollars of wealth into the financial ether. It also caused a worldwide fiscal panic that prompted governments around the globe to step in and attempt to save the world from financial ruin.
But I actually think the biggest casualty of the past decade can be found in the not-so-subtle subtext inherent in the idea that the government needs to step in, bail out and, in effect, rescue us from the ravages of our own avarice.
To put this notion in simpler terms, I think the biggest casualty of the decade was capitalism.
To prove this thesis, we need only examine the frightening results of a recent BBC poll. The survey of more than 29,000 people in 27 countries revealed serious misgivings with respect to capitalism. Nearly one-quarter of respondents (23%) think capitalism is "fatally flawed." A majority of those questioned expressed strong support around the world for governments to distribute wealth more evenly. Sadly, it seems that the takeaway from this survey is that a majority of people around the globe actually want less capitalism and, let's just say it, more socialism.
Now, I wish I could say I am surprised by these survey results, but I must admit that they come as little surprise. First of all, capitalism suffers from gross misrepresentations by the mainstream media for what it actually is. A quintessential case in point is filmmaker Michael Moore, whose purported assault on capitalism in his film, "Capitalism: A Love Story" was more about criticizing corporatism than capitalism.
Then we have a distortion of market concepts from both Democrats and Republicans here in the U.S., both of whom love to use the purported flaws in capitalism to pass more laws that give them more power of citizens. Finally, we can't even trust our so-called economic leaders to accurately represent capitalism; case in point is New York Times columnist and Nobel Prize winner Paul Krugman.
With all of the distortions, confusion and false blame assigned to capitalism, is it any wonder why there's hostility toward it? In fact, capitalism has become such a whipping boy for all that is wrong in the world that its true nature has nearly been obliterated this century.
Now, for the record, real capitalism is simply a social system based on the recognition of individual rights, including property rights, and the concept that the government should leave people alone to conduct whatever legal business they choose. Capitalism, in essence, is just the system that best protects the rights of everyone to act free from coercion. In short, capitalism is just freedom applied to the economic realm.
When I say that capitalism is the real casualty of the last decade, what I'm also saying is the very concept of freedom has largely fallen victim to the prevailing zeitgeist of the last decade. The new milieu is to distrust individuals, to punish the so-called greedy businessmen who purportedly got us into the financial mess, and to give more power to the politicians who supposedly know what's best for us poor slobs.
Forget the fact that nearly all of the financial woes of the past decade were essentially just fiscal blowback from earlier government intervention in the economy -- e.g., artificially low interest rates; Fannie Mae and Freddie Mac and the Community Reinvestment Act. The majority this century now argue that the best policy is just to let these political inmates keep running the asylum.
My real fear as we enter the next decade is that capitalism, and by extension freedom, will fall by the wayside throughout the world.
If we expect the next decade to be better than the last, a clear case must be made for both the practical and moral efficacy of capitalism. You see, it's only via freedom that the world progresses, and the only social system that completely nurtures freedom is true, unfettered laissez-faire capitalism.
The closer we get to this ideal, the closer we'll come to making the next 10 years better for everyone.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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