Myths of Capitalism: A Guide for the 99%

By Xlibris US

Myths of Capitalismshows that tenets of the capitalist belief system the sanctity of private property, the social benefits of profit, etc. do not hold up under empirical scrutiny. It also addresses seminal issues such as: enforced scarcity resulting from technological advances in production; the historically unique and unsustainable separation of political and economic systems resulting from the 18th century democratic revolutions; the ruling-class drive to replace democratic government with a global plutocracy; and increased democratic participation as the only route to systemic change. A comprehensive primer on the capitalist system, written in laymans language and non-polemical, this is a book for everyone, including students of economics and political science.

• Language: English
• Publisher: Xlibris US
• Release date: Aug 14, 2014
• ISBN: 9781499041521

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Copyright © 2014 by Andrew Torre.

ISBN:                      Softcover                         978-1-4990-4151-4

                          eBook                              978-1-4990-4152-1

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Rev. date: 08/13/2014

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CONTENTS

Preface

Introduction

Chapter I What Is Capitalism?

Chapter II Myth 1: Private Property Is a God-Given Right

Chapter III Myth 2: Profit Benefits the People

Chapter IV Myth 3: The Market Is Self-Regulating

Chapter V Myth 4: Capitalist Competition Is Essential for Innovation

Chapter VI Myth 5: Only Capitalism Guarantees Abundance

Chapter VII Myth 6: Capitalism Is Synonymous with Democracy

Chapter VIII Myth 7: Capitalism Reflects Human Nature

Chapter IX Myth 8: Capitalism Promotes Individuality and therefore Human Development

Chapter X Myth 9: Anyone Can Make It If He Really Tries or: Education Solves Employment Problems

Chapter XI The Future of Capitalism

Chapter XII What We Can Do

Selected Bibliography:

PREFACE

I have long been astonished (dismayed?) by the inability of so many of my fellow Americans to distinguish between a political and an economic system – usually incorrectly fusing them. With ongoing crisis in both these arenas, this confusion between democracy, our political system, and capitalism, our economic system, has made many suffering Americans aim their guns of discontent at themselves. Mounting anti-government salvos jeopardize the only institution deliberately and meticulously designed to protect the citizenry: democratic process. This misplaced animus poses a real threat to the liberties and self-determinations inherent in that process -as evidenced by the not-so-long-ago rise of European fascism.

This confusion urges an attempt at clarification. Directed to every American, this book is not an academic work; hence the text is not interrupted by copious footnoted documentation. Instead, for those interested in further elucidation, I have appended a partial bibliography of books and periodicals that, over the course of time, have informed this effort.

Andrew Torre

INTRODUCTION

The years from 1929 to today – a very short span in historical terms – have seen a major collapse of capitalism during the Great Depression and what appears to be another collapse today. It is estimated that the U.S. government has so far committed more than an unprecedented $3 trillion of taxpayer money to bail out a troubled financial sector, and given hundreds of billions more to rescue the U.S. automotive industry.

Between these two cataclysmic events, there have been many mini-collapses – one on an average of every twelve years. These collapses are euphemized as normal business cycles – a term calculated to portray such failures, not as man-made, but as natural acts of God which must be passively accepted, like the change of seasons.

These cycles wreak havoc on working people – spiking unemployment, depressing wages, and curtailing benefits such as health insurance, education, and retirement funding – along with the de-funding of innumerable government protective agencies. People ready and willing to work suffer enforced impoverishment, which can include homelessness, hunger, inability to meet medical costs, curtailment of education, loss of credit, and personal bankruptcy, among other tragic consequences. Workers’ wages have been stagnant for over thirty years; 50% of income has gone to 1% of the population for the past fifteen years; many Americans have inadequate health insurance or none at all despite recent passage of a new health-care reform bill; reported unemployment, plus underemployment and unemployed workers who have dropped off the charts and are no longer counted, is 20% or more – or at least 40 million people out of a workforce of 194 million; home foreclosures are at a record high, with 1.2 million estimated for 2010; 43.3 million people are living below the poverty level; home heating costs have become prohibitive to millions; and the latest financial crisis was the worst since the Great Depression.

During this same period, enormous wealth has been created. But this wealth has become increasingly concentrated in fewer hands. The gap between the rich and the majority of Americans today is the greatest since before the Great Depression when, in 1928, the income of the top 0.01% was 892 times greater than that of the bottom 90% of the population – against 976 more in 2006. From 1976 to 2006, the average income of 90% of Americans rose only 2.3%, while that of the top 10% rose 57%. The rich are also keeping more of their money by paying income tax at rates as much as 30% lower than they paid in 1944. The richest 1% of Americans hold wealth worth $16.8 trillion, nearly $2 trillion more than the bottom 90% (The Nation, 6/30/08).¹1 Inequality and crushing economic ills in the world’s wealthiest society make it impossible to conclude other than that our economic system is failing most of us.

What is an economic system? It is simply the means by which wealth – money, commodities, homes etc. – is created and distributed in a society. The rational measure of an economic system is how well it provides for the society at large. Our economic system is capitalism, and by that measure it is obviously doing a terrible job.

Yet for more than sixty years – since the beginning of the Cold War – capitalism has been immune from criticism in the U.S. We need only to recall the shameful McCarthy-era witch hunts, the onslaught (and unconstitutionality) of the House Un-American Activities Committee, and the gross injustices of the blacklist that destroyed the lives of thousands of people accused of being commies.

This historic animus toward real or alleged communists never addressed – and therefore cleverly repressed – the substance of their position: a critique of capitalism. Instead, the establishment accused communists and socialists of wanting to overthrow American democracy and replace it with a repressive Soviet-style regime. This tactic preempted any substantive public economic debate. And it was easy to employ in the 1940s: the recently concluded brutal war allowed communism, as exemplified in the non-democratic Soviet Union, to be deceitfully equated to fascism so as to avoid the critique of capitalism at the root of communist thought. Even to this day, anyone critiquing capitalism is reflexively red-baited as blood brother to Stalin. Merely suggest the need to redistribute wealth and you’re branded a socialist – a word that nine out of ten people cannot accurately define, but one so loaded that it’s enough to end any reasonable discussion. Any serious critique of capitalism today is largely confined to academic journals and progressive periodicals of which the public is, for the most part, unaware.

This situation is very unfortunate, because it deprives the public of an open, objective, and possibly helpful discourse on the system under which it labors – a dialogue that might even provide some remedies and ease the people’s plight.

It wasn’t always so. During the Great Depression of the 1930s, vibrant intellectual debate was conducted over the viability of the capitalist system itself. Arguments ranged from those of laissez-faire conservatives to those of Marxists and included the world’s leading economists, from Harvard’s Joseph Schumpeter to England’s John Maynard Keynes, whose revolutionary book, The General Theory of Employment, Interest, and Money, appeared in 1936. This work gave new analytical insight into the mechanisms of capitalism, shed new light on the causes of the depression, and unveiled the theoretical basis of Franklin Roosevelt’s New Deal, which over the past thirty-odd years has been gradually dismantled to the detriment of most Americans.

Nor did the debate at the time confine itself to the intellectual community. Masses of workers, suffering economic oppression, organized to make their voices heard in one of the most politically dynamic eras in American history. It was many of these working people who were persecuted during the subsequent repressive era for protesting against the system that had failed them.

Due to our 60-plus-year history of incessant propaganda, prosecutions, preconceived notions, and corporate control of the media, education, and culture, capitalism has placed itself beyond reproach as an economic system. It has been elevated in the public mind to a religion, replacing the waning established faiths, with the profit motive as God – accepted a priori as an eternal and unassailable principle. However disastrous the economy becomes for most people, we are programmed to believe it is never the fault of intrinsic flaws in the system itself. When the economy falters, the experts tell us it’s because of the greedy few…or globalization…or the government…or people overspending… or the price of oil…or China…or the unions…or the politicians…or illegal immigrants…or corporate misbehavior… or credit-card abuse… or the bursting of the high-tech, housing, financial, or some other bubble…or poor oversight…or over-speculation…or miscalculation…or outsourcing…or competitive short-sightedness – anything but the system itself.

The reasons proffered range from the most abstruse and imaginative to the downright deceitful, such as this in The New York Times (7/09/08), claiming that the economy would continue to suffer as a result of declining consumer confidence [my emphasis]. Consumer confidence is a phony phrase employed to disguise the fact that inadequate income has robbed the great mass of people of buying power. The term clearly implies that the system is failing not because of the material deprivation it creates, but because the people have a psychological problem: a lack of confidence. So our stumbling economy becomes the people’s fault for not having the confidence to spend money that they don’t have.

Because extrinsic reasons are always advanced in times of economic crisis, the remedies are also extrinsic and therefore temporary – be they monetarist, supply-side, laissez-faire, or government-interventionist. No matter which solutions are employed, we still keep getting recessions about every twelve years, with the current one a continuation of the one of 2000 – the period since dubbed the jobless recovery. How can an economy recover from crisis without providing jobs, which in turn provide the income necessary for people to consume? Since it can’t, not only has there been no recovery, but things have become progressively worse.

Since these standard solutions to economic crisis are short-lived, simple intelligence would dictate that something more systemic was at fault. The public is shielded from that examination. Nevertheless, beyond all the deception, avoidance, and blame shifting in a time of crisis, there are real reasons for it. The current crisis is not a result of a malfunctioning of the system, but of its normal functioning according to its own internal mechanisms.

Economic conditions have become so dire that I believe it’s time to reopen the debate on the capitalist system itself. A good place to begin this process would be to explore some of the myths promulgated by capitalism as absolutes. Among them: capitalism is rooted in human nature in that it expresses humankind’s ineffable competitiveness; because it is the natural system, capitalism has always existed; capitalism is synonymous with democracy; profit benefits the people because it fuels production, which in turn fuels employment; the capitalist market system is self-regulating; only capitalist competition can spark the creativity that leads to progress; capitalism promotes individualism, thereby promoting human development; capitalism is the only system that allows anyone and everyone to make it; and only capitalism can provide plenty for everyone.

These notions have their source in simplistic explications of capitalism – many of them rooted in Adam Smith’s 18th-century economic treatise, Wealth of Nations – and none of them having any resemblance to what is actually happening in the real-life, day-to-day functioning of the system in today’s world. This is very hard to accept for most people, who have dutifully learned their capitalist catechism. However unrelated to reality they may be, catechisms absorbed in youth remain comforting and difficult to discard.

But as with all myths, none of those propping up the capitalist economic system can survive the light of evidence. It can also be shown that capitalism through mechanisms peculiar to itself inevitably generates crises; that it demands deprivation; that it must impoverish the worker and so, contrary to its own interests, curtail consumption; that it eliminates rather than encourages competition; that it tends by its very nature to the concentration and consolidation of money (and power) to the detriment of the people; and that it probably cannot survive the advance of technology.

This book intends an examination of these elements with the hope of stimulating meaningful, intellectually honest debate, which is the first step toward finding solutions and a better life for most people. It is not a scholarly tome, but rather an introduction to how our economic system actually functions. It reflects the experiences of every working person and employs basic concepts that everyone can readily recognize, understand, and possibly benefit from.

It is my hope that the discomfort of economic disaster will so outweigh the discomfort of relinquishing treasured notions that people will reach a new level of consciousness, which in turn will lead them to take action in their own best interests.

Chapter I

WHAT IS CAPITALISM?

Capitalism gets its name from capital and is an economic system whereby capital is invested in order to produce a commodity or service that is sold for profit – an amount in excess of the costs of production, promotion, and distribution. Capital can be distinguished from money in that capital "is self-expanding value. Money acts as capital only when it is used to generate more money."² Investment can also be in money itself (also considered a commodity), as when capital is invested in securities.

The essential characteristics of capitalism are capital, private property, and profit. Socialized labor – the system of production whereby a single product is made by multiple workers, each making a different part of the same product – has also been a feature of capitalism, but not necessarily exclusive to it. The defining characteristics of capitalism existed in some form in pre-capitalist economic systems, but, being essential to capitalist development, they were refined, inextricably entwined, and institutionalized in the process.

How Capitalism Actually Works

In theory, money is invested in productive facilities that turn out products that are sold at a profit. Part of that profit is reinvested in order to expand the productive facilities so that more product can be turned out and sold, which means even more profit – and further expansion of productive facilities. This process envisions ongoing growth of these facilities and the attendant consumption – which, as we’ll see, is an impossibility.

Consumption is the engine of capitalism. Without it, there is no motive for production. No production means no employment to put money in the hands of the people. If people have no money, they can’t consume. And so capitalism is a circular system, with production, employment, and consumption the three spokes in a wheel that theoretically keeps revolving perpetually and perfectly uphill along the stable highway of supply and demand. It’s obvious that any change in any of these spokes changes the turning of the wheel.

It would therefore appear incumbent upon the system to maintain a large force of well-paid wage earners who would assure ongoing consumption. But that presents problems, since it comes into conflict with the singular goal of the system: maximization of profit. Under capitalism, nothing is produced because people need it, but only if it can be sold at a profit. To assure profit, the capitalist must keep his production costs as low as possible – and labor is one of his essential costs. The conundrum is obvious: lowering wages to increase profit also lowers consumption, which in turn reduces profit.

Adding to the problem of consumption is the constant improvement of productive forces through new technologies. Factories are always increasing their capacity to turn out more product faster, more efficiently, and with less labor, thereby further decreasing the wages needed for consumption. The capacity to produce so outstrips the ability to consume that production must regularly be cut back to avoid amassing inventories of product that have no market. This is a problem peculiar to capitalism because product can only be distributed for profit. During these slowdowns inventories pile up, production is curtailed, workers are laid off, and unemployment rises, further limiting consumption. So the three-spoked wheel, instead of turning steadily uphill, rotates in reverse: less production, less employment, less consumption. Today’s productive facilities are working at an average of 30% idle capacity.

These basic contradictions at the core of capitalism have plagued the system since its inception, resulting in periodic recessions, financial crashes, and depressions³ – including our own current crisis. Orthodox economic theory holds that the laws of supply and demand result in equilibrium – that is, the invisible hand of the unfettered market automatically balances the forces of production and consumption, thereby creating economic stability. Almost two centuries of regularly recurring economic collapses of varying magnitude, wreaking untold hardship on working people, proves the hollowness of this notion. The British economist John Maynard Keynes demonstrated how capitalism does not tend to equilibrium and that in times of economic crisis forces external to those of the system – namely, government – must come to the rescue. In other words, as a result of its core contradictions, capitalism in crisis cannot rescue itself.

While the internal contradictions of capitalism tend to impoverish the working majority, it simultaneously creates a wealthy minority – an elite that through its direct or indirect ownership of capitalist enterprises accumulates profit not reinvested in production. This creates an ever-widening economic gap between a small group of haves and the majority of have-nots, which has reached historic proportions today. Over 14% of Americans – 43.3 million people – live under the poverty level today, while the top 1% earns more than the bottom 50%. Since 1973, incomes barely increased for the bottom 90% of earners, while it increased 300% for the top 1% who own 83% of the stock and $2 trillion more in wealth than the bottom 90% of the population. The socio-political implications of this dramatic inequality are vast and will be examined later.

A Brief History of Capitalism

Pre-Capitalist Economy

Contrary to a lot of popular thought, capitalism did not always exist. The economic systems immediately preceding capitalism were feudalism and mercantilism, which existed more or less simultaneously. Feudalism denotes the control of land by an aristocratic minority, while mercantilism is defined by the trading of goods. An economic system grows out of a society’s method of producing things, and the things produced, at any given time. As these things change, so does the economic system.

Feudalism accommodated the essentially agricultural nature of a society in which land was obviously the predominant basis of wealth. Large tracts of land called fiefdoms were commanded by privileged aristocrats, who were the feudal lords. Of course, the more land the lords controlled the richer they were, so feudal lords were always warring against each other in order to grab more land for themselves. In the pre-capitalist era, all of Europe was so organized – or perhaps, more aptly by current standards, disorganized.

Feudalism was hierarchical in that whatever land was held, and by whom, was all by virtue of the king – the apex of the hierarchy who claimed absolute rights over all the land in his kingdom. The king was the ultimate government and stemming from him land was dispensed in a descending order according to aristocratic rank.

While feudalism remained an overarching system, a parallel economy based on the trading of goods – mercantilism – long existed. Ancient wars were fought over the control of trade routes, both land and sea. Mercantilism brought about major changes in twelfth-century Europe. The Crusades gave Europeans a taste for the exotic goods of the East, and early entrepreneurs began to satisfy those tastes by opening new trade routes between East and West. Small and mobile markets – called fairs – were created to exchange these goods in towns across Europe. But as the system advanced, these markets grew so large and unwieldy that permanent locations were established. Accommodating ever-expanding markets, these locations grew into cities – which led to conflict with the feudal lords who claimed the land the cities sat on, and therefore the right to control the cities.

These conflicts were resolved in many cases by the lords granting the merchants – many of them now grown rich – the rights to control these cities in exchange for payments. The leading merchants, being the actual powers in the cities because of their economic ascendancy, controlled the cities’ governments.

Mercantilism gave rise to a new phenomenon: the central role of money. In the Middle Ages, prior to the advanced trading economy, there was very little use for money since there were virtually no products to buy. The land rarely produced enough of a surplus to market and there were no manufactured products to buy. With all product coming from the land in small communities, exchange was made primarily through barter – a sheepskin for a bushel of potatoes, or a day’s labor, etc. But with people trading their goods for other goods on a larger scale in the new expanded markets, money became the necessary medium of exchange. And because the merchants themselves needed money to move an ever-growing quantity and variety of goods from more and more areas, an elaborate financial system of banking and credit was established. This also led to an accumulation of capital.

The transition from feudalism to capitalism was not natural, painless, or welcomed by all. Capitalism – which required the industrial revolution to assume the defining form we recognize today – did not evolve naturally out of market forces, nor did it assert itself through its own power without outside assistance. A major extrinsic force abetting capitalist development in England was the British government. Though many theories are offered to explain why England was particularly propitious for the development of capitalism, certain conditions stand out. First, it was a small, relatively isolated island subjected throughout its history to incessant invasions from the European continent. Secondly, because it was surrounded by water, it developed aggressive and lucrative trading capacities – which drove it into deadly competition with continental powers, primarily Spain, France, and Holland.

These circumstances encouraged a national unification and the cessation of internecine battles between feudal lords, as were still prevalent on the continent. This was relatively easy to accomplish in England since, because of its size, it had fewer competing fiefdoms than the continent. Unification was also a precondition for the development of capitalism, which required consistent laws, an integrated financial system, free flow of goods from one geographic area to another, and markets relatively free from sectional interference. Therefore, unification in the form of the modern nation-state and the development of capitalism go hand in hand. It’s worth noting that the full development of capitalism was delayed in Germany and Italy, which did not become integrated nation-states until the middle of the nineteenth century – a historical circumstance which arguably led to the two World Wars of the twentieth century.

The unification of England enabled the passage of nationwide laws that gave the landed aristocracy a way to enhance wealth, other than grabbing each other’s land. These were the enclosure laws, first enacted in the seventeenth century and later in the eighteenth, officially privatizing land that had been virtually public, and requiring peasants who had subsisted on that land to now pay rent for the parcels they farmed. Through government edict, profit from the renting of private land and the marketing of all produce helped establish early capitalism.

At the same time, through the success of British trade during the later mercantile period – roughly the sixteenth, seventeenth, and a good part of the eighteenth century, a time called The Age of Exploration – large amounts of capital were accumulated by others besides the landed aristocracy. This created a new class in competition with the old aristocracy, which partially expressed itself in the seventeenth-century Cromwellian Revolution.

It’s important to note that, during this period, commodities consisted primarily of those traded for, those produced through agriculture, and those produced by independent, individual craftspeople – weavers, woodworkers, goldsmiths, ferriers, etc. who owned the tools of their trade and turned out complete and finished products themselves. To the extent of this ownership, a tradition and concept of private property existed, but it was not institutionalized and enshrined as a sine qua non of an economic system, as it was with capitalism.

When the harnessed energy from steam was available to power machines, huge factories housing complex machinery manned by armies of workers came into being. Now, many workers were brought together in a single factory with each working on a different phase of producing the product. This process – called socialized labor – became the labor basis of the new, mechanized factory system, and by the end of the eighteenth century the Industrial Revolution was well underway in England. The principle of private ownership of the means of production was transferred from the individual craftspeople to the new factories – only now the privately owned tools were no longer a hand-powered hammer and awl, but steam-powered machines quickly rolling out miles of fabric in vast new mills.

Institutionalizing private property through law was also essential for supplying workers to the new factories. The enclosure laws enacted by the British government drove armies of poor peasants, who could not afford the new rents, off the land and into the cities where wage labor in the new factories was their only means of survival. In addition, poor laws were enacted that made any unemployed man subject to incarceration as a vagrant. This drove the desperate into factories for minimal wages. These evicted people were so impoverished that women and children of all ages sought employment for pennies.

This government-engineered source of labor was a boon that the new industries could probably not have survived without. Not only were labor costs the lowest possible, but there were no laws addressing the abysmal working conditions, the number of hours worked, the age of the workers, or worker safety – laws that would have cut into the profits of the new entrepreneurs. One only needs to read Dickens for a look at the working-class horrors of early capitalism – none of which could have been possible without governmental collusion.

Competitive Capitalism

This is the first stage of capitalist development, and it prevailed throughout most of the nineteenth century. Employing the new technologies and massive capitalization, products proliferated, as did the companies who made them. Competition between these companies for market share and control in any given industry was fierce, resulting in ruthless price wars, bankruptcies, consolidations, and the amassing of capital in ever fewer hands.

By mid-nineteenth century, simultaneous with the rise of a new middle class, problems of the system were manifesting in the creation of extreme wealth for a few and desperate poverty for many, intermittent systemic meltdowns, and conscienceless exploitation of the working class. During the Revolutions of 1848 in Europe, there were many uprisings against the deplorable working conditions. In the same year, Karl Marx and Frederick Engels published the Communist Manifesto, which encouraged worker overthrow of capitalism while explicating what they saw as some of the unresolvable systemic contradictions causing the problems. Marx followed this with his seminal work, Capital, an extensive and meticulously detailed attempt to dissect every facet of capitalism’s internal mechanisms – the first work of its kind.

In the U.S., this was the age of the legendary industrialists, financiers, and robber barons – the Vanderbilts, Morgans, Carnegies, Fisks, Melons, Rockefellers, et al – who, through ambition, intelligence, obsessive drive, some luck, and much government help providing land for the railroads and building canals, ports, and other essential infrastructure, cornered the wealth and power of the time. The weeding-out process of this period and its attendant concentration of capital, moved the system into a new developmental stage – monopoly capital – which, by the end of the nineteenth century, had eroded much of the competition of capitalism’s initial stage.

Monopoly Capitalism

The vicious struggles and chaos of competitive capitalism led to two major changes: first, the weak producers were either annihilated or devoured by the stronger ones, resulting in the concentration of capital that gave even greater command to the survivors; and secondly, these survivors recognized the dire threat to themselves of the price wars and other internecine battles. With fewer and fewer producers in any given industry, the remaining producers deemed it better to collude in some way – even if indirectly – rather than to risk extinction. The smaller the number of producers, the less choice for the consumer. With few consumer options, prices can easily be established by the leading firms at a set level favorable to all of them – a tacit collusion that guarantees profits formerly threatened by the old competitive price wars.

Since the monopolization process was seen as harmful to consumers as well as to aspiring entrepreneurs, the U.S. government sought to break up monopolies by passing anti-trust laws in the early twentieth century. These laws have had little effect on the concentration and consolidation of capital, a tendency inherent in the system. For example, the dominant financial institutions in 1909 – Goldman Sachs, Citibank (then National City Bank), and J.P. Morgan – are still among today’s handful of banking powers. A century later, these three were among the only six banks that held two-thirds of U.S. assets. In 1901, 165 separate firms were brought together to form U.S. Steel. As we’ll see in Chapter III, this pattern of capital concentration continues to intensify throughout the system and even accelerates in times of economic crisis.

The formation of capital into monopolies and oligopolies4⁴ has never been convenient for those who insist that competition is the essence and unparalleled advantage of capitalism as an economic system. While many orthodox economists have advanced arguments that capitalist competition still exists, for the most part they accept monopoly and oligopoly as characteristic of contemporary capitalism.⁵ The globalization of capital has given rise to new claims of capitalist competition, on the basis that transnational corporations (TNCs) now compete for market on a global level, as do nations themselves.

Contrary to these claims, capital in our globalizing era is concentrating and consolidating at ever-increasing rates. While worldwide mergers and acquisitions reached a record $3.4 trillion in 1999, that figure jumped to $4.38 trillion by 2007.⁶ Since the 1980s, only five multinational firms…produced nearly half the world’s motor vehicles, and the ten largest firms produced 70 percent….There is little or no chance that newcomers will rise out of the blue or from another planet to challenge the dominance of the handful of firms that rule global automobile production.⁷ Another source cites that In the 1980s mergers and acquisitions were valued at $1.4 trillion, growing to $11 trillion during the 1990s, then between 2000 and 2003 to $7.6 trillion in only 3 years.⁸

The overwhelming data revealing the accelerating process of the monopolization of capital on a global basis shows the emptiness of claims – such as those made by President Obama – that to solve our economic crisis we must compete better on a global stage. There is no national competition on the global stage, only monopoly capital through the TNCs overarching the world.

Imperialism

Empire building is as old as recorded history, with the ancient city-states such as Rome, Greece, and Carthage – not to mention the empires of the Far East – vying for dominance. The game was to conquer and bring the wealth of the conquered back home in the form of raw materials, tribute, and even labor through enslaving

Reviews for Myths of Capitalism

[xlsg_1 · Rating: 5 out of 5 stars]

I've been recommending this to everybody I've talked to for weeks now, but just finished it today. It is well written, sometimes quite amusing, but as a serious work of non-fiction it still takes a while to get through it. But time and effort well spent! I found it gave me a lot of new insights and a new respect for economics. [Mind you, Heath is a philosopher, not an economist, so I now have greater respects for philosophers too!] The book is organized around debunking a number of common fallacies of both the right and of the left. A fallacy, he explains in the epilogue, is an argument that, while starting from a reasonable place and sounding pretty good - ends up in the wrong place because of some error - for example forgetting that for every buyer there has to be a seller.

[libbybeens · Rating: 3 out of 5 stars]

A highly interesting book on economic fallacies. Heath explores economic fallacies perpetuated by left and right wing media and politicians. The aim of the book, according to Heath, is to correct economic illiteracy.Heath does a decent job of correcting these fallacies. Heath is a philosophy professor, and as such has a good grasp of logic and how to effectively use it with his readers. (Though at times I wondered if his writing was more rhetoric than logic).The redeeming factor of the book is Heath's minimal bias towards any economic doctrine. Though more a supporter of government involvement than libertarianism, he does recognize that government involvement (ie setting prices) is detrimental. Heath, though, has difficulty in fully explaining economic concepts. Economics was one of my minors in university, yet at times I had to pause to think through his theories and models. Unless other readers have a decent understanding of basic micro/macro economics (or logic) than I suspect many will have trouble understanding the book.This is a major flaw; the point of the book is to show fallacies in media and politics. It is to help normal people see through rhetoric. In this way, Heath fails.Overall, I enjoyed the book but think that Heath needs to make his work more accessible.

[miro_4 · Rating: 5 out of 5 stars]

There's a saying in Swiss folklore that if you get lost in the mountains, don't try to find a new trail. Retrace your steps until you find something familiar.The author tries to do something similar with regard economics, looking at basic assumptions rather than fishing around in current theory.He sees a big problem in Left / Right polarization but still concludes that at a basic level they are both right. The Left is correct in that a united society has to respect its sick and old, and give children from every background the best opportunities. The Right is correct in that America was founded on personal responsibility with the rejection of a bloated and dangerous central government.In reality Heath shows that the US and most other Western countries have developed a malignant form of both ideologies. The Left has extended costly government "care" to whole sections of the adult population that like it but shouldn't receive it. The Right tries to dispense with government all together and doesn't recognize that government provides a framework for growth. Just because it's corrupt and inefficient doesn't mean that it isn't necessary.The author is following the theme of his excellent earlier book, "Efficient Society: Why Canada is as Close to Utopia as It Gets" where he argues that societal/economic efficiency is not a Left/Right concept and is basically non-political. Your chosen system either gives you good value health care or it doesn't.However there are some problems with the book:Any known trail in economics leads to Comparative Advantage which the author supports, although probably a more valid view is expressed by Harvard professor Stephen Marglin (quoted in Paul Streitz's book "America First"): "First, we don't live in Ricardo's world, where trade is determined by fixed natural resources. In this world technology and capital are immobile: You can't move Portuguese vineyards to England, nor can England's lush sheep pastures survive in Portugal's climate. Today, technology and capital move almost as easily across international borders as within a country."In a world where new international competitors are quickly able to scale up technology, capital and skilled labour ,Comparative Advantage starts to look like an intellectual refuge for outsourcers. The reality is that the required average skill level for American labour is falling fast with 80% of new employment in very low paying service work.Another obligatory stop on the trail is Keynesianism, where (in the opinion of this reviewer) he also gets it wrong. He says that Keynes has taught us that recessions/ depressions are just a glitch in the system that can now be corrected by pumping up demand. However, speaking from personal experience of a complete boom/ bust cycle covering decades in a small Spanish town, I can see a whole range of boom time businesses being tested with regards to efficiency (financing, skills, organization, costs, market adaption, technological adaption, suppliers etc.) with many failing but a core of efficient ones remaining profitable. They have raised average efficiency and will presumably do well when the good times return.In this view, recessions force efficiency onto a free market. If a high level of demand is artificially maintained then maybe inefficiencies continue undisturbed.Heath also states that, "Technological innovation has no tendency to generate either over production or unemployment." which is doubtful as we see the first example of cashierless checkouts, driverless cars, teacherless online schools etc. (see Martin Ford's interesting book, "The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future").Nevertheless, I have no hesitation in recommending the book.

[wbell539 · Rating: 5 out of 5 stars]

Although I can't accept all of his arguments, I learned a lot.