Capitalism and other Problems: A Political Economy Primer on Capitalism, Communism, Dictatorship and Democracy
One of the most frustrating aspects of today's political discourse (or what passes for it these days) is that commentators throw around terms like "capitalism", "democracy" "privatization" and so forth without defining them clearly. Then they can always deny that they said what they said, because that was not what they really meant. If you want to critique capitalism, you get accused of hating America, or democracy or freedom. WTF?
I want to begin a discussion of alternatives to our disastrous political economy, so I will start off by defining some terms. This is my first diary. Please question, comment, complain.
Economic Systems
Economic systems are ways of rationing and distributing scarce resources. Since no society can give everybody everything, there has to be a way of determining who gets what. Who gets the mansion on the hill and who gets the cardboard box on the sidewalk? Who gets steak and who gets hot dogs? Who gets the new Mercedes and who gets the old Toyota?
Capitalism
Capitalism is an economic system. It distributes resources through market exchange. If you have something to exchange in the market, capitalism is for you. The more you have to offer the market, the more you get from the market. Capitalism is easy. Nobody has to do anything but get out of the way and "let the market decide". In capitalism, there is competition between many producers. That leads to a variety of products, more choices, lower prices and a range of quality. This works pretty well for TV's, ice cream and push-up bras. It does not work so well for health care, education, drinking water, or police protection.
The Free Market
In an unregulated laissez faire free market, that is, without any government controls, everything anyone wants is available for exchange--food, shelter, and clothing, but also nuclear weapons, votes, heroin, babies, human kidneys. Imagine Ebay without any regulation on what can be exchanged, and you have a good idea of laissez faire free market capitalism. The free market is efficient and amoral. It does not care whether you are a good person or not. A contract killer's money is as good as a nun's. In many cases, better.
Cui Bono?
Capitalism obviously benefits people who already have resources to exchange. People without resources are left out. In the unregulated case, it ultimately leads to extreme inequality as those who have, get more and more. People become concerned, even obsessed with getting exchangeable resources, to the exclusion of other meaningful endeavors. Unregulated capitalism also leads to a society where everything that can be is treated as an exchangeable commodity. People, places, things, air, water, beauty, truth all get assigned a price. You get what you pay for.
Privatization
Privatization is the process of turning something into an exchangeable commodity, to be sold for a price to the highest bidder. Given this framework, you can see why something like health care is problematic when privatized-- treated as an exchangeable commodity.
Imagine an Ebay-style auction on heart bypass surgeries, tuberculosis treatment or prenatal care. The person with the most severe TB might be a homeless bag lady without a dollar to her name. She will die. Bill Gates with a slight cough can get the treatment no matter what the price. He will live. Paris Hilton will live. Since most people can't pay what they can, producers will develop cheaper, not quite as effective TB treatments for poorer people.
Similarly, privatizing education, drinking water, transportation, police and fire protection leads to various levels of quality for different income levels. But this is economically efficient rationing, at least in the short run. The rich become richer, better educated, healthier, and more beautiful. (In the long run, it becomes very costly for the rich to shield and protect themselves from the ill, ignorant, unattractive and poor.)
To get an idea of what a privatized society based on unregulated free market capitalism looks like, refer to novels by Charles Dickens, or visit nearly any Third World country.
Next: Alternatives to Free Market Capitalism