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A THUMBNAIL SKETCH OF MANAGED CAPITALISM FROM ADAM SMITH TO TODAY

October 14, 2016

A THUMBNAIL SKETCH OF MANAGED CAPITALISM FROM ADAM SMITH TO TODAY

Today I responded to a professor’s invitation to comment on this topic and offered the following, which I decided was worth a blog and have accordingly here blogged the following (with minor editing).

I suppose I am one of the last to believe that a “managed” capitalism can work. Trouble is, those in charge of “managing” the system are political persona, not some invisible hand trumpeted by Smith in his world of perfect competition and ethical actors.

Things have become more complicated since Smith’s Wealth of Nations was printed in 1776. Indeed, Joseph E. Stiglitz (one of my favorite economists) has won a Nobel Prize for his work on asymmetry of information among such actors but, of course, corporations have taken over the political process that could otherwise be used to regulate their excesses. Net result? Monopoly pricing has destroyed the illusion of perfect competition and ethics among such corporate actors is rare in their myopic pursuit of profit.

What to do? Pass laws and adopt stern regulations that look to the public interest as well as corporate bottom lines. Chances for such statutory and regulatory reform in the present political atmosphere? Slim to none. Result? Total corporate control of America and its people by the rich and corporate class – my greatest fear.

Final result? Either a failed state or some form of socialistic mayhem in which private enterprise is virtually outlawed, since unregulated and unrestrained capitalistic practices will have proven to be self-destructive. It doesn’t have to be that way, since reasonable regulations and adoption of a system of corporate governance could serve as a platform to bring back a modicum of ethics and competition to the marketplace, but given the present trajectory of corporate control with its capture of the political class one cannot be optimistic.

As usual, we need new and more enlightened (and less greedy) members of the political class to represent all of the actors necessarily involved in this economy. Generally speaking, and in the real world, that means electing more Democrats and fewer Republicans and Libertarians, so let’s do it. (End of response)

It is too bad that Smith’s (theoretical) invisible hand is nowhere to be found these days (if it ever existed, which Piketty denies), because most any economic system I can imagine short of total public control could not be worse for all the actors than the one we are now laboring under, a system with structural wage inequality built in, a lack of public control of accelerating corporate power, and a devastating domestic policy of austerity. It is also too bad that we must resort to a political solution to harness the runaway increase in corporate power, but that is the reality with which we are confronted, and we must respond by voting for candidates who will vote the public interest over corporate interest when best for all of us. I have early voted, and strongly recommend that every reader of this piece vote as well, since the vote is about all we have left in defending our democracy from corporate takeover.   GERALD      E

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