Whenever something significant occurs in financial markets, or even a major industrial event, people invariably start asking about whether capitalism is doomed. I remember after the BP oil spill in the gulf, one of my old highschool buddies (who’s a great guy, but his ultra-liberal ideals give us some good debating topics) put a thread on Facebook saying “Capitalism must end” or something to that effect. Since he lives in California and he’s one of those artsy types, there were all kinds of high-fives and people railing against America and how Cuba got it right and all this nonsense. I weighed in with how preposterous this notion was and how ironic that he and his hippy friends were venting on none other than…FACEBOOK – a venture that exists purely because of lure of riches that has expanded to its current state by American conventions – an American student at an American university, computer programming, at-risk capital, the internet, mobile technology and all kinds of other contributing factors that exist SOLELY BECAUSE OF CAPITALISM. The irony was lost on these people of course. By simple virtue of being born in America, they’ve already started off life on 3rd base yet they curse the opportunistic environment they find themselves in.
Well, following the recent debt debate, the S&P downgrade leaving 4 AAA Companies with a higher credit rating than the US, the recent market slides and an imploding Euro region, Nouriel Roubini penned a piece asking whether Capitalism is Doomed. While the headline and his mention of Marx being “partly right” drew plenty of controversy last week, his thesis remains pretty much aligned with his usual message – we need to deleverage, divert stimulus to infrastructure, enact more progressive taxation measures and regulate more effectively.
While progressives and “revolutionaries” rejoice at the spectre of crumbling capitalistic support, it’s silly to “blame” capitalism for problems in the world or their current circumstances. Capitalism is here to stay. It is the ONLY way to live and the only way societies will have it once they’ve had a taste. Why?
1) History – Primarily, no democratic society with imbedded capitalistic ideals has ever forsaken it. Sure, there have been coups and wars that have altered the financial models of various countries throughout history, but those were not democratically adopted ideals. Short of China coming in and wiping out our defenses and colonizing America, there’s no way Americans would forsake what made us great. Especially when…
2) The World is Flat -The romantic notion of a Utopian society whereby we can all work a little, live a lot, have everything we need all provided by the government? Well, that’s a pipe dream when there are millions of determined and educated people ready to eat your lunch. They want what you have and they will have it if you don’t make yourself relevant and stay one step ahead of being replaced by a virtual clone for 15% of the cost. While this notion may make unskilled workers nervous, at the same time, it pushes Americans to continue to innovate, educate themselves, work harder, make themselves more valuable, and in the process, continue to foster the capitalistic process. Anyone completely giving up is relegated to the ranks of the welfare state and that picture is looking grim…
3) Welfare States are Crumbling -It is true that people the world wide want to come to America and often, Europe, not just for the opportunities to earn money, but also to enjoy a much improved welfare lifestyle than what exists back home. Well, after decades of both nationals and immigrants increasingly living off the public teet, the Western world is finally coming to terms with its debt issues and unfunded entitlements. It can’t continue. Bond vigilantes will see to it. Once they are done routing Europe, America is next. This in turn, will make it less likely or attractive to live a comfortable life off the state, as opposed to the continued attraction we’d seen since the middle of the last century.
4) Information Age – One of the most effective and popular means to maintain control of a society and impose the will of the despots in charge is through control of information. This was quite easy for centuries until just the past few years. China fears the internet so much, they have an entire army of manual snoops ensuring nothing “damaging” (the truth) is being searched for or shared over the internet. Google has left and yet, internet companies are still thriving, as long as they play along with the state. However, just witness the Arab Spring very much facilitated by social media, mobile devices and an idea. The entire region is being transformed (witness Libya this week) by the ability to access information in real time. Once it exists, it is difficult to extinguish. Americans are used to and relish their freedom, ability to share and devour information, and in recent years, earn a living or extra money online. As long as the internet continues to function, capitalism will continue to flourish. It is a mathematical and behavioral certainty.
There are numerous other theses to support the same argument. I am not threatened by the notion that capitalism is dead because it is so naive to believe so. Capitalism is the only true way to financial freedom whereas all other philosophies make you a slave of the state. While radicals continue to attend rallies, take to Facebook with their complaints or try to convince others that their problems stem from capitalism, I’ll spend my time and efforts making thousands per month blogging, starting up an AutoCAD outsourcing venture, investing in rental real estate, and love life.
What Say You?
Is Capitalism Dead?