The mythology of capitalism and the market economy that it has spawned continue to exert a bizarre intellectual stranglehold over many Americans. As every student of political philosophy knows, the central tenets of modern capitalism evolved out of liberal political philosophy. John Locke's insistence that a human beings were by nature motivated by the singular concerns of the self, that utilitarian calculations formed the true basis of moral decision-making, and that the acquisition and protection of property were the primary animators of human conduct formed its core beliefs.
David Hume, through his essays about the importance of money and trade, Adam Smith, with his emphasis upon the role of market as self-regulating entities, and David Ricardo, with his concept of comparative advantage, completed the edifice of what is today's liberal economic orthodoxy.
The question that needs to be asked about this orthodoxy - as with all other orthodoxies - is, does it, in fact, explain existing social reality? If the markets for goods and services, absent public regulation, naturally seek to move into equilibrium, as advocates of unbridled market economics assert, why then have the annual median incomes of Americans, as of 2010, fallen to the lowest level since 1999? Why have "fair trade" policies, despite increasing levels of education in the U.S., caused a net migration of millions of U.S. jobs overseas during the past four decades, while the U.S. has continued to accumulate ever increasing balance of payments deficits caused by ever increasing purchases of foreign-made goods that were previously made and still could be made in this country?
As Charles Duhigg and Keith Bradsher reported in the New York Times ("How the U.S. Lost out on iPhone Work," January 21, 2012) nearly all of the 70 million iPhones, 30 million iPads and 59 million other assorted products sold by Apple sold last year were manufactured overseas, primarily in China by third-party vendors with whom Apple contracted for services and products. Apple employs only 43,000 people in the United States and 20,000 overseas but,as a result of its exploitation of workers through third-party vendors, Apple made a profit of $400,000 per each of its actual employees, a sum greater than that made by Goldman Sachs, Exxon Mobil and Google.
If unregulated market economies are the answer to economic progress, as Mitt Romney and his GOP allies insist, how then do we explain the implosion of Wall Street and the related financial scandals that have destroyed trillions of dollars of wealth possessed by ordinary Americans?
Conversely, if government regulation of the economy is the problem, how do we explain the growing economic inequality in the U.S. Why is it that, despite what right-wing libertarians claim is a confiscatory tax code, the wealth of the top 1% continues to grow exponentially? In October of 2011, the Internal Revenue Service and the Congressional Budget Office released findings which showed that, as of 2009, the 1.4 million who belong to the top 1% made an average of $1 million dollars in 2009. Since 1979, the share of U.S. Income enjoyed by the top 1% has increased from 9.18% to 17.9% as of 2009, or more than the entire bottom half of the U.S. population. Almost simultaneously, Forbes Magazine reported that, as of November, 2011, the four hundred richest Americans enjoyed a combined worth of $1.53 trillion, which figure had increased from $1.37 trillion over the previous year. Their combined wealth was thus approximately equivalent to the GDP of Canada.
President Obama and Elizabeth Warren, the progressive Democratic candidate for the U.S. Senate in Massachusetts, have been criticized by the Republican noise machine and its right-wing media outlets for stating the obvious: that each of us has depended for our success, to some degree, upon the help, assistance and inspiration that we received from others. Further, they have emphasized the obvious: that public goods - rail, road and airport infrastructure, public education, government support for R&D, public health, food and safety regulation, environmental regulation, civil rights protection, consumer protection, anti-trust regulation, protection of intellectual property - are essential prerequisites for economic success. Consider, for example, the rewards reaped today from the government funding and research to create satellite/GPS technology and the internet.
Market economies are affected by the frailties and foibles of human actors. Many of these actors are motivated by selfish, short-sighted concerns; but the consequences of their actions harm everyone. It is for that reason that regulation in the public interest and investment by the government -as the agent of the people in a democracy - are essential antidotes to the temper the excesses of capitalism and to create the foundations for a truly just society.
The continued clamor to reduce public regulation and investment is a siren call that is orchestrated by corporations and the wealthy elite who want free reign to continue to game the system. Ordinary citizens need to resist that clamor and to understand that their true, long-term interests have little in common with the interests of the top 1%. As Nicholas Kristof remarked (New York Times, "Markets And Morals," May 30, 2012) "If you're infatuated with unfettered free markets, just visit Waziristan."