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Tuesday, May 15, 2012


Those of you who, faute de mieux, have been following the current presidential race in the United States, will be aware that Mitt Romney's time at Bain Capital has become, both for him and for his critics, a principal subject of discussion.  Romney touts his success at Bain as evidence of his managerial abilities as well as of his experience "creating jobs."  [His prize exhibit is Staples, an office supply retailer.]  The criticism of his performance at Bain actually started quite some time ago, when he ran against Teddy Kennedy in 1994 for the United States Senate.  The Kennedy campaign produced some devastating television ads featuring men and women who had lost their jobs as a result of Bain's "restructuring" of their employer.  These criticisms resurfaced in the Republican primary campaign when both Newt Gingrich and Rick Perry ran scathing ads attacking Bain Capital and Romney [who started and headed up Bain, making himself a quarter of a billion dollars or more along the way.]  Perry characterized Bain as an example of what he called "Vulture Capitalism," complete with graphic descriptions of carrion birds eating the carcasses of dead animals.

Now that Gingrich and Perry have been driven from the field, Perry by his own manifest incompetence and Gingrich by a series of Romney attack ads funded by deep-pocketed SuperPacs, the Obama campaign has picked up the baton and is starting to run with ads reminiscent of those used to such good effect by the Kennedy campaign eighteen years ago.

As this plays out in the public square, something quite fascinating and rather amusing is happening.  Defenders of Romney, stung by the portrayal of him as a heartless job-killer, have defended him by saying that what Bain does is "just capitalism."  The Obama campaign, by contrast, seeks to draw a distinction between good capitalism, the sort of capitalism that has transformed America into a "middle-class" country of good jobs, home ownership, secure pensions, and health insurance; and bad capitalism, the sort of capitalism that sends jobs overseas, strips companies of their assets and leaves them as road kill, and throws the economy into chaos with unregulated financial dealings and obscene executive compensation.

What makes this such fun to watch is that while the critics of Romney have all decent, socially responsible, progressive folks on their side, the Romney supporters are right. 

Capitalism does not exist for the purpose of creating jobs, any more than it exists in order to create a demand for coal or linen or aluminum.  Labor, like every other input, is viewed by capitalism as a cost of production, to be minimized as much as possible.  In the infancy of capitalism, owners resorted to such primitive devices as gimmicking the clocks in factories in order to extract a few extra minutes of work from the labor force [see Marx's lovely descriptions of this in Volume One of Capital.]  Capital drove down wages by substituting women for men and children for women as machine operatives.  The workers fought back by organizing and withholding their labor, for a while with signal success.  Today, with the communications and transportation facilities of the modern age, capital simply transfers its operations to whatever part of the world offers the lowest wages with the fewest regulations, leaving to their own devices millions of workers whose lives are devastated and their futures destroyed.

Mitt Romney has not been subverting or perverting capitalism.  He has simply been practicing it as it is supposed to be practiced.  The sole and sufficient evidence of his proficiency is his wealth.  But the critics of Romney cannot acknowledge this, for to do so would be to call into question the legitimacy of capitalism itself, and that, for the past three-quarters of a century in the United States, has been quite simply unthinkable.

Dare I hope that Romney's thoroughgoing unlikability will spark a new and critical look at capitalism itself in America?  Alas, I doubt it.


Don Schneier said...

Obama's inability/unwillingness to evolve to this understanding of Capitalism suggests that the vilification in this culture of Socialism is now more deeply entrenched than that of same-sex relations.

Chris said...

Robert Reich is making the same shallow argument, that we do not need socialism, just 'better' capitalism. I hope the denizens of the future look back on this debate as those of us who look back on the debates about 'better monarchy' and better 'slavery.' Of course if capitalism isn't quelled, and environmental degradation continues in full force, we won't be having any debates comes 2100...

Robert Paul Wolff said...

I think Don's comment is spot on. Think about it -- a president can get away with saying he is in favor of same-sex marriage, the hottest hot button topic in our culture, hotter even than abortion. But no politician could get away with saying that he was evolving toward an endorsement of socialism.

Grung_e_Gene said...

Capitalism and the Free Market are never defined by it's proponents other than to heap upon it miracles of all sorts. It's a religion, the Peace of the laissez faire be upon you...

As adherents did in savagely heaping all manners of evil upon Socialism, it's not merely enough we reclaim the name, but that we correctly describe what Capitalism is which is Imperalism re-named.

Once Imperalism became synonymous with Leopold II it lost it's luster. It's the long hard work of correctly identifying the "lion by it's claw". Hedge Fund Vutlrues, BP Oil Spills, stealing aid money for cholrea free drinking water in Africa, these are Capitalism's works.

Of course, this carries the fraught reality that a new generation of Plutocrats will constantly work at getting people to attach the chains of wage slavery and bondage to themselves.

Superfluous Man said...

Professor RD Wolff, you know him as Rick is arguing for a modified form of capitalism, that is, the workers own the means of production in a democratic sense, yet placing these modified socialist businesses within the framework of a capitalist society. Whether such a means of production is possible in the sense that it would be competitive with capitalist organized businesses with leadership in a top down hierachical structure is something that I question with a great deal of doubt. It's an interesting concept but I don't know that it solves the fundamental problem of differing standards of living that exist across the globe. In the long term if the method were adopted it would theoretically result in a more socialist world, i.e. businesses organized in such a fashion would probably find an equilibrium point globally but that doesn't solve the problem that each nation would have to agree to either downgrade or seek to upgrade the standard of living for its inhabitants. The resources of every nation would of course influence the outcomes although theoretically it could result in a better world with such a system reaching an equilibrium point at some indeterminate point in the future. Still it's an interesting concept.

Craig said...

I agree that Romney's actions are expected and encouraged within capitalism, and I agree with the comment by Don that endorsing socialism is political death for politicians in our juvenile political culture.

That said, I find myself somewhat sympathetic with the desire to discover "capitalism with a human face," or whatever euphemism you want to use for "good capitalism."

Largely this is because I have a somewhat pessimistic view of human nature and worry about the feasibility of socialism -- though I am attracted to something like David Schweickart's "economic democracy" proposed in his book After Capitalism. I heartily wish that would be tried somewhere (preferably here, but not gonna happen).

All that said, my main point is that I think in Northern and Western Europe there are forms of capitalism that seem to me to be less rapacious than American capitalism. I am thinking of the Scandinavian countries and Germany and France.

Agreed, these are perhaps best described as "mixed economies," but that is true of most industrial democracies, even ours (though the mix in our case is of course much more tilted to the private sector).

But even as mixed economies, these countries have a significant amount of privately owned enterprises, and so have a capitalist element within their economies. Might that count as a decent form of capitalism?

Murfmensch said...

We should stop blaming "political culture". The US election system discourages both parties to commit to any actual program at all.

Corporations are free to lobby both parties. The fact that there are some differences b/w the two makes it harder for anyone with some political convictions.

Romney implements a medical insurance mandate proposed by the Heritage Foundation. Obama federalizes it and the Republicans denounce it in apocalyptic terms.

We have many of the disadvantages of a one-party system and many of the disadvantages of a "no-party" system.

If we had Germany's electoral system, we would have Americans representing Green and Socialist positions with percentages similar to, well, Germany.

Craig said...

Murfmensch: I agree. I would love a proportional representation (PR) system. Short of that, even a lesser alternative such as "instant runoff" voting would be better than our current system.

And in theory it is possible. Some states in the past have used PR to choose House Representatives. (Since there are only two senators per state, PR is not really possible in that chamber; but for the House to go PR would suffice in transforming political debate.)

However, an obstacle to electoral reform is our political culture which refuses to engage in grown up conversations about such things, and treats any suggestions that we can learn from other countries as irrelevant at best and unpatriotic at worst.

So political culture still matters.

Ram Neta said...

While I agree with every claim that you make in your post, Professor Wolff, I think it is worth adding that, when capital goes in search of cheaper, less regulated labor, many of the desperately poverty-stricken people of the third world become less poverty-stricken. While the surplus population of Americans and Europeans increases through globalization and automation, billions of Asians (and eventually Africans) can become part of the proletariat.

Janet Vickers said...

This issue and the politics of every nation is more about power than capitalism and socialism. Because the people of the US and Canada aren't fully aware of their own power they cannot work together to create more equality and a better standard of living - which is not just buying lots of stuff, but focusing on what really matters to our future. And because we can't talk about our own power we can't fully understand how power-over manipulates good people.

W said...

Yes, it is just 'capitalism' but it's corrupted capitalism, especially in the U.S. It's protected, it's not a free market & so much of it lives off corporate welfare. It will protect its industries that it can't off shore (steel, agriculture, etc) rather than allow the consumer to decide.

The consumer is not only having their choice limited but they're paying welfare through their taxes to keep unproductive companies or overpaid executives.

Capitalism in countries like the US & UK are starting to resemble Third World dictatorships in the way the same people control most of the money with the help of the military & police.

The voting public seems to have a clash of idealistic societies, what it loves (consumerist capitalism) versus what it wants (socialist-style communities). The two are not compatible & yet somehow they expect Obama to deliver on that.

The U.S. political system is way ahead of the rest of other Western democracies. They have successfully reduced the parties to a One Party state where all the parties are right of centre. Other countries like the UK & Australia aspire to this but are still a long way from succeeding.

Ironically the U.S. government seems rather like the old Communist Party of the USSR, you get to change the leader but the ideals stay the same.

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