The not so mysterious capitalist economy
A capitalist economy is thought to be somewhat mysterious with different theories as to how it actually works, while it’s often stated no one really understands because of its “complexity”. The complexity issue, or excuse, is what we hear while economists and politicians continue the game of charades by not defining America’s political economic reality for what it is. The real economy itself is not complicated, but what makes it seem complicated are the laws in place along with various invisible “products” and practices which are designed to extract wealth from the real economy.
Defining the real economy
Capitalism is ultimately nothing more than an ideological system of laws regulating the production and distribution of goods and services. And the real economy, for lack of better words, is the actual amount of production and distribution of tangible consumer goods and services required to keep those same tangible producing industries going – this pertains to capitalist, communist, fascist or any other ideologically based economy. The overall health of the economy can be determined by what percentage of the population is employed and the total of what is being produced and distributed over any given time, while taking into consideration the effects of debt on current and future consumption and production. There are large industries in the U.S. such as sports and entertainment and the financial industry that do not actually contribute to the real economy on an equal basis to what they take from it; but they do affect distribution and demand as they extract huge amounts of capital from the real economy through patronage to their industries. Various other factors including debt, debt interest, taxes and laws requiring patronage for things like auto and now health insurance, stifle the real economy by extracting wealth from the actual producers of tangible commodities – this ultimately influences the overall health of the system over any given period of time.
Two Axioms that play a role in automatically regulating economic activity
1. Any time enough people are making more money than they spend, this automatically reduces the amount and frequency of money changing hands and causes less goods to be produced – with less work required to produce less goods – this is an automatic anti-stimulus in the real economy.
If everyone bought only the absolute necessities to survive, while saving any surplus income for investments or a rainy day, the result would be an immediate surplus of any and all unnecessary tangible and non-tangible commodities – halting production of all luxury and unnecessary items and services – the economy would contract.
2. When people put surplus income right back into the economy by making purchases of any kind, luxury or otherwise, this automatically generates a need for more goods – with more goods requiring more jobs and acting as an automatic stimulus in the real economy.
If everybody, including the wealthy, immediately took all income received and purchased goods or services of any and all kinds, barring any unusual circumstance, the economy would immediately pick up – becoming more stable and robust for as long as the practice of spending all income was maintained – a balance of production and consumption would be reached and the economy would be stabilized much more than our cyclical economy has been over recent decades.
Both axioms are opposite sides of the same coin, and somewhere between those two extremes is the current reality at any given time. Barring any unusual event or circumstances an economic slowdown or crash results from too much money being set aside or taken out of circulation from the real economy for any reason. What we’re seeing in the US today is huge amounts of wealth being taken out of the real economy by those who don’t need or want to spend it; whereas if the money was continuously changing hands by being spent, it would stimulate the economy.
Inadvertently or not, this is the one aspect of how demand is effectively being controlled by the anti-stimulus affect. By itself, the anti-stimulus effect restricts the economy from reaching and maintaining maximum production and distribution. There are a growing number of people who work for less than a comfortable living wage today and if they can’t afford anything beyond the basics, fewer luxury items will need to be produced – meaning fewer jobs – in a downward spiral as we go. As mentioned there are other mechanisms that take money out of the real economy and it’s not necessary to discuss them here, and though they all affect the economy in the same way, the major drag on the economy is the total amount of wealth being taken out and not being recirculated back in.
How economic disparity is built into the capitalist system
The economy is governed by the pertaining laws in place. When combined with personal and business practices these laws dictate money will flow upwards to those with an already greater amount of wealth. This is easy to understand when considering a person who makes more needs to spend a smaller percentage of income and therefore they can save or take more out of the real economy to store away if they choose. Over recent decades we’ve seen an increasing disparity of wealth as people at the top income brackets accumulate and take a growing percentage of profit and wealth out of the real economy – concentrating a greater percentage of all wealth generated into a smaller percent of the population. You’ll find the same conditions existed immediately before the 1930’s Great Depression. Again the current bottom line reality of all pertinent laws, regulations and practices combined, (including those laws not enforced), is that the wealthy are taking too much out of the real economy which they do not spend.
How we arrived at pre Great Depression conditions in this modern day
Since the last great depression laws put in place to safeguard against a repeat have been repealed by Wall Street banks lobbying Washington D.C. Ultimately; compliant government officials gave banking industry profits priority over the economic health of the country and vast majority of citizens. To complement those repealed laws, new laws were passed to further enhance bank profits again at the country’s expense. With money being power, our government representatives have become little more than colluding members of an elite subculture that rules America – of which the banks are primary members having one of the most, if not the most, powerful lobbying groups in Washington D.C. The “people’s elected representatives” do not even discuss possible remedies to the fact the system is rigged. Instead we hear vague generalities alluding to “job creation” and restoring America to its former condition and standing. We may see a handout in the form of a stimulus package which is actually a loan we pay interest on. And under the current laws and practices again, this “stimulus package” rises into the hands of the already wealthy that don’t need to spend it.
Corruption is presently built right into the system through the campaign funding and election laws especially since the Supreme Court’s Citizens United ruling. Our republican and democratic parties have created an exclusive one party system having nearly eliminated independents and independent thinking from being on the ballot and having an honest chance at being elected. With corporate interests consistently promoted by government office holders and mass-media alike, any independent that is elected has a very small chance of effectively changing the law in any meaningful way.
When the current U.S. downfall began in earnest
The country took an economic turn for the worse when Arab states retaliated against the U.S. for backing Israel during 1973 Arab Israeli war. Corporate profit margins weren’t maintainable as gasoline prices went up creating less demand for luxuries and other goods. The price hikes were unusual and quickly threw the economic system out of balance absolutely dictating the economic slowdown would occur. So the 1973 downturn was caused by oil producing countries suddenly taking too much money out of the economy which didn’t get put back in – as in axiom number one. To cut expenses the big industrial producers were moving more manufacturing and offices to the Southern states where wages and overall operating costs were lower. The next big move was when manufacturing machinery and jobs were being shipped right out of the country where wages and expenses were even lower. Corporate interests were behind the North American Free Trade Agreement (NAFTA), which the Reagan administration tried to pass into law but failed. NAFTA in effect would have meant a loss of US jobs but also more corporate profits when low-cost foreign manufactured goods were brought back into the US for sale – this was already occurring even without NAFTA being passed into law.
Unpatriotic politicians and media bombarding the public with unpatriotic propaganda
With the Reagan years came a continuous barrage of propaganda against Americans which implied his policies inherently promoted and were the epitome of patriotism, democracy and capitalism all combined. With “the great communicator”, as his fans referred to Reagan, false or mistaken patriotism had been invoked to gain support for flawed economic and political dogma which ultimately subverted true democracy and capitalism by having provided a government today where both parties work for corporate interests and not the American people. It wasn’t until Reagan that the interests of American workers were so openly made subservient to corporate interests. His policies have essentially been carried forward to this day.
Democrats never put up a serious fight, although they still try to promote themselves as the working class party. They followed their republican counterparts by selling out to corporate interests long ago. Both parties and their members, continued their quests for power and personal gain as insiders while accepting corporate campaign “contributions” in exchange for favorable legislation. Together with the press they have effectively sold “We the People”, America itself, to the highest bidders. This was clearly the direction set by Reagan’s policies, which some couldn’t see then and others still talk about as if they were successful – and they were successful, for the less than one percent of the true elites when the truth is acknowledged.
Reagan’s was a misguided and misleading patriotism at best, and deceptively false at worst – if not known to him personally, certainly it was known among his informed supporters that those economic policies worked against everyday Americans – it was simple common sense. As it was then the same unpatriotic propaganda continues to date with politicians and mass media pundits effectively keeping the public ignorant.
Even with all the technological gains in efficiency and rising GDP over recent decades, the vast majority of Americans are not receiving a percentage of those gains. Our capitalist elites have effectively exploited the American public and the country’s resources, along with other countries in more forceful ways, with personal greed being the elite’s primary concern. And while the corporate profits grew, corporations lowered real wages paid to workers and/or eliminated American jobs altogether. Reagan’s economic ideology has effectively limited capitalist opportunities for a greater percentage of Americans than ever before – basically revealing him as being a professor of manipulative rhetoric meant to serve the purposes of America’s less than one percent ruling class.
And today as it was then, rhetorical words of patriotism, democracy and capitalism make government policies sound appealing. If not for so many people being economically disadvantaged and getting killed in wars that originated from US actions for profit and greed, it would be comical how everyday Americans who voted for these policies have been voting against their own best interests and that of the country overall – while thinking they are being patriotic. If anyone happens to like the US starting wars and having the fear of retaliation as an excuse for more unjustifiable wars of aggression – with the added costs of “Home Land Security” and losing our freedoms – then I suppose everything going on today is all right with their way of thinking. We might just want to plan on continuing to make weapons and wage wars that benefit corporations but not those citizens who fund the wars with their tax dollars and blood.
Eventually NAFTA passed into law during the Clinton years while being sold with the promise to create “markets” for American goods. But it had the exact opposite effect. Common sense would have told anyone the policy was flawed from the American worker’s perspective due to cheap labor outside the US. Even without corporate lobbying having influenced the laws and practices to where they are today, the economic disparity we’re seeing may have eventually taken place without the 1973 oil embargo as the “rules of capitalism” would have promoted it anyway. But the embargo immediately shocked the economy when it occurred and everything since then has fallen right into place stacking things up in favor of corporate rule and increasing elite economic and political power over the US public. The banks and corporate elites have effectively commandeered the human and natural resources of America for their disproportionate, undemocratic and elite fascist gain.
The Orwellian nightmare is an American reality
To put it in the vernacular, it all seems very strange – reality that is. America has become a facade of Orwellian distortions and outright lies promoted by corporate oligarchs through systemically corrupt politicians and mass media. It makes you wonder what percent of the human race is thinking at all. It should be no surprise that the ones actually doing the thinking and implementing decisions are ultimately enriching themselves at the majority’s expense. For many it’s no surprise, and most Americans sense something is wrong even if they don’t know exactly what it is or how to describe it. Often they blame the situation on only one political party as the politicians and media mislead them to do; but, in fact, both parties are a large part of the problem with the media’s crucial role not to be left out.
Modern day economists and Wall Street bankers schooled in elite schools and immovably believing in archaic ideological dogma and working in concert with our government non-representatives and biased mass-media, all claim innocence and ignorance while in continued denial of the facts concerning the economy and so many other realities. With the corporations controlling who runs for office and our corporate-governance invading our privacy and subverting our democratic rights with the intention to keep the system going as is, the country has shrugged off any remaining vestiges of democracy while true capitalistic opportunity is reserved for a decreasing percentage of citizens. Corporate greed has effectively legislated advantages to itself while ensuring grossly undemocratic inequality providing less choices and opportunities for everyday citizens. As we ride the distinctly made in America merry-go-round, at what are presently pre Great Depression era conditions, regardless of how well one is personally doing, the sense of deception and betrayal should be felt by anyone that is aware of the long running manipulative propaganda campaign still being waged against everyday Americans for purposes of exploitation. Of course, if you’re benefitting from this reality you might also be one of those enjoying the betrayal.
Even the law itself has often been ignored for the sake of corporate greed and this is more than evident with Wall Street bankers still skating free after numerous blatant criminal violations led to the 2008 economic downturn – while they just happened to have profited from creating it. The corporations, US politicians and mass-media alike, all personally benefit by manipulating the law and parameters of acceptable public debate. They’ve been doing it for decades and there’s no reason to think they’ll stop on their own. What truly drives this cycle is nothing more and nothing less than common greed – yes the elites are as common as human greed – greed that is transformed into laws that are supposed to regulate the economy, but the law itself is then selectively enforced anytime it benefits the elite power structure to ignore it – this is the same as having no law at all.