Why capitalism doesnt work

First, unions have become almost mythical creatures, unicorns of the labor market. Just one in 20 workers in the US private sector are members of a trade union, down from more than one in four in the s. Sometime around , US businesses declared war on unions, and won. Second, the wage gap between similarly qualified workers in different companies has widened. One widely cited study finds that one-third of the increase in the earnings gap from to occurred within firms, while two-thirds of the rise occurred between firms.

It is the market power of one firm versus another that determines wages, rather than the power of a particular employer versus its workers. Even if workers can get organized, they cannot force a completely different employer to share more of their surplus with them.

Now that would be socialism. Fourth, the labor market is not as tight as it looks. But the headline rate tells us less than in the past, because millions of workers have dropped out altogether, and so are not counted in the unemployment statistics. Black, Hispanic and less-educated adults have all seen the sharpest drops in participation. This powerlessness of workers in specific companies has fueled calls for higher minimum wages. Seminal scholarship from David Card and the late, great, Alan Krueger helped to allay fears about negative economic consequences of a higher minimum wage.

But a big challenge here is that the gap between richer and poorer places has also grown. A worker without power is one with a lighter paycheck. They may also suffer greater indignities or disrespect in the course of daily working life. Horror stories abound of workers under constant surveillance, unable to take bathroom breaks and so resorting to adult diapers, or bullied or harassed by bosses or other workers.

In , the Morning Call of Allentown, Pennsylvania, reported that managers at the local Amazon warehouse refused to open the doors for ventilation despite soaring temperatures. They put ambulances outside instead, for the workers who collapsed. Vivid stuff, and no doubt true in the particular. But it is important to note that it is not the general experience of most workers.

For some critics of capitalism, workers lost the power struggle right at the outset. Whatever material gains workers managed to achieve came at the price of a profound loss of sovereignty. We imagine ourselves free but effectively barter our freedom away in exchange for pay, effectively handing over our passports as we punch in.

What most people want is a job that pays a decent wage and offers both some satisfaction and security. Strong worker movements fought for robust welfare states under unique economic and political circumstances. But this arrangement could not hold. The threat of real working-class power was too great, and the system self-corrected.

Today, we have as few as 12 years to transform our economic system and reverse the climate crisis. Yet just last month Donald Trump signed two executive orders to make it easier for fossil fuel corporations to build oil and gas pipelines and limit our ability to block them.

This has been a bipartisan betrayal, however: in President Obama granted Shell Oil a permit to drill in the Arctic four days after declaring that the US would be a leader against the climate crisis. Desperate times call for radical measures.

This occurs for a few reasons. Capitalism relies on financial markets — shares, bonds and money markets but financial markets have a tendency to cause booms and busts. But, this boom can quickly turn to a crash when market sentiment changes. These market crashes can cause economic downturns, recession and unemployment. At various times, capitalism has suffered prolonged recessions the s , periods of mass unemployment and a decline in living standards.

In a free market, successful firms can gain monopoly power. This enables them to charge higher prices to consumers. Supporters of capitalism argue only capitalism enables economic freedom. But, the freedom of a monopoly can be abused and consumers lose out because they have no choice. For example, in industries like tap water or electricity supply, which are a natural monopoly, consumers have no alternative but to pay the prices charged by consumers.

In the Nineteenth Century, monopolies like Standard Oil bought our rivals often with unfair competitive practices and then became very profitable. Monopsony is market power in employing factors of production. For example, firms can have monopsony power in employing workers and paying lower wages. It explains why with increasing monopsony power we have seen periods of stagnant real wage growth while firms profitability has increased in UK and US. In a free market, factors of production are supposed to be able to easily move from an unprofitable sector to a new profitable industry.

However, in practice, this is much more difficult. He has geographical ties to his birthplace; he may not have the right skills for the job. Therefore, in capitalist societies, we often see long periods of structural unemployment. In capitalist economies, there is limited government intervention and reliance on free markets. However, market forces ignore external costs and external benefits. Therefore, we may get over-production and over-consumption of goods that cause harmful effects to third parties.

This can lead to serious economic costs — pollution, global warming, acid rain, loss of rare species; external costs that damage future generations.

The nature of capitalism is to reward profit. The capitalist system can create incentives for managers to pursue profit over decisions which would maximise social welfare. For example, firms are using theories of price discrimination to charge higher prices to consumers who want to jump the queue.

This makes sense from the perspective of maximising profit. The pursuit of the profit motive has encouraged some law firms to aggressively pursue litigation claims. This has created a society where we devote resources to protecting ourselves from being sued. You might want to fix that. Monetary policy does.

Environmental costs and externalities are not features of capitalism per se. Jared Diamond has documented these problems, along with local resource overconsumption, in his book Collapse. They date from the very earliest civilizations, and in some cases are found even in foraging societies. Monopoly power does not derive from the market alone. Except in the case of natural monopolies, every true monopoly that ever existed was created by government.

It offered a superior product at a better price, and consumers responded to that. Inequality is perhaps exacerbated by corporatism, but is not a feature of capitalism per se. This means there are no long-run economic profits, and therefore no tendency to drive wealth upwards. The concentration of wealth is a feature of highly-regulated markets, not free markets.

So, not capitalism per se, but rather corporatism. Rather capitalism is this utopian mythical system that has been corrupted by its own institutions that make it up? Concentration of economic power is a result of people doing their jobs the best out of anyone, thus they get more capital to do their job better at larger scales.

This is the one of few situations where the government needs to intervene to prevent one business from gaining too much, in order to keep competition healthy. Wealth accumulation is not bad in itself. If you own a business, everyone is buying from you, thus you make money.

People rip on Jeff Bezos for his wealth, and yet they contribute to his wealth by buying from Amazon. Wages get driven down by increased competition. Minimum wage jobs are ones that require little to no skill to complete, and a large amount of unskilled immigrants competing for these jobs only makes it worse. In the past, immigration at least brought its own specializations. That trend has decreased.

The problem today is that people see a problem, and they blame the wrong thing out of ignorance. Just like people blame slave wages on capitalism as a whole instead of unskilled immigrants and failed education systems. Blaming capitalism draws attention away from any negatives of immigration, allowing people to continue blindly supporting unlimited immigration. Political issues are tied to one another and often used as tools to complete other agendas.

I, too, want to believe that they are entitled to their wealth because they are of good use for society. But what about inherited wealth? But maybe, the one who earned the money wanted his family to be rich for decades without them having to work, so this may just be alright. I think what makes the situation a bad one is that money equals power. Money can buy political advantage as well, it seems. At least in a democracy. At the end of it all, human well being should be the highest priority, on a global scale and universal scale.

An economic system that does not provide that MUST be changed, else like every system that is not fair, it is not sustainable, and will eventually lead to revolution and bloodshed. Lessons we seem to have forgotten. Love this reply, my feelings to a tee! A society should be judged by the wellbeing of the least of its citizens and we as a whole are doing a terrible job of creating a fair and equitable society.

Capitalism prioritizes profit over people, as long as the well being of humans takes a back seat to how much money can be made we continue the cycle of wealth being concentrated into the hands of the few. This will eventually lead to the average person not being able to have even close to a decent life. We are already seeing this with low wage workers being forced to work ungodly amounts of hours to support their families and this is looked at as normal? And just the way things are… There is no reason some people should be allowed to accumulate so much wealth and property that it causes the ownership of property to the average person to become almost unattainable.

And yes smaller towns have much better real estate prices, but they also have the least amount of available jobs, especially decent paying jobs. While the elite continue to accumulate more and more the rest of us have to work harder and harder just to carve out a decent living and we have to get loans for just about everything necessary to provide for ourselves and our families, first and foremost cars and housing.

I could go on and on, but the basic point is that Capitalism does nothing in the way of regulating how much one person or a very few can attain and the planet has a finite amount of resources, natural or otherwise. And on this path eventually the few will have so much the rest of society has no choice other than to redistribute those resources by force.

Some of the wealthiest people and industries have historically and continue to be the most damaging to society. Oil, mining, deforestation, fishing, tabacco and the list goes on and on have damaged the world profoundly people and environment included. Yet, the only thing that seems to matter are the wallet s at the top. Perhaps if you were better educated you could learn more about the devastating effects some of these people and their industries have actually had on society.

While traditional capitalism has unlimited freedom and unlimited consumption, communism has sticky limited freedom and limited consumption. So there you have it. To make matters worse, our capitalist belief system relies on an infinitely growing economy in a finite world — a folly of monstrous proportions. And now, with Trump, Ryan and the rest of the wrecking crew, we are doubling down on the uber-free market system that is, literally, killing us, and the Democrats, as usual, mumble lame protestations, and suggest half-measures, too afraid to take on the Myth of the Magic Markets , or to cross their campaign financiers.

You must be logged in to post a comment. Skip to content [ John Atcheson, Common Dreams, The logical end-point of a competitive system is an oligarchic monopoly A recent report by UBS reveals that the global march of economic inequality is accelerating. But the costs of this denial are staggering.

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