Economics and Global Capitalism Essay

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1. The clip “What is Capitalism?” presents a certain vision of capitalism. Do you feel that the image they present is realistic? 

I do not feel that the image of capitalism that is presented is realistic because it imagines that the wealth created by the U.S. because of its economic philosophy was real when in fact it was highly manipulated and fabricated by political and centralized banking forces. Capital is used to squeeze, inflate, exploit, and destroy and the idea that some noble or holy form of capitalism exists that is separate from human nature, where greed, corruption, pride and ignorance go hand in hand, is to be disconnected from reality. The U.S. boomed because of easy credit and it went bust at times because of a tightening of credit. The idea of a free market is absurd because the economy has always had an element of command and control to it since, after all, there is no real separation of business and state in America.

In theory, the video accurately describes the ideal form of capitalism as an economic system in which government does not take an active role and instead lets the free market govern itself. It also accurately states that it is not a system of government ownership. Then it states that in a capitalistic system, the people own the property that is used to provide goods and services for others. This is all fine and true—but that doesn’t mean the system actually works towards a beneficent end or that the system as it is defined in the video is the system we have today.

Three elements that are not included in the video are the fact that capitalism is just the other side of the coin of communism—before are entirely materialistic systems that require virtue as a frame or else neither works. Because human nature consistently tends to pursue selfish ends, neither system really works for the good of all mankind because those who manage to accrue power in either system end up exploiting the weaker and/or ignoring their duty to be virtuous. The video also fails to show that the U.S. government does indeed intervene in the free market and does indeed take ownership of property. The video also leaves out the fact that capitalism can be just as disastrous philosophically as communism because it places too much emphasis on consumerism.

Overall, I think the video gives a limited view of capitalism and presents it in a very stilted manner that is meant to make the viewer think that capitalism is a sound economic system in and of itself, as though it dropped down straight from Heaven to save mankind. The video gives the impression that so long as the right laws are in place and enforced by the government the ideal form of capitalism will usher in an era of peace and prosperity from which all men will benefit. This idea is outlandish and based on utopian visions that simply do not consider human nature as it is and has been for all time.

No economic system can lead to peace and prosperity in and of itself. At root it is going to be dependent upon the virtuous actions and ideas of individuals. If they do not act ethically or with principles that reflect the Golden Rule, there will be no peace and prosperity. There may be a great deal of wealth made from the movement of capital from one place to another, from investments made in one industry or placed into another, from breakthrough innovations that consumers desire—but in the end, an economic system is bound to and at the mercy of the character of the people who operate within it—whether they are businessmen, workers, government authorities, judges, legislators, or law enforcement officers. The economic system should be considered a secondary concern after a philosophy of life has been established—not a primary concern.

2. Using the Commanding Heights series, compare the ideas of Keynes and Hayek (or Friedman, in which case you might also refer to the debate video) in terms of the different forms that capitalism can take, specifically in relation to the distribution of goods, regulatory frameworks, and property. 

Bowles states that he hopes the end of Socialism in the East will be the end of the myth of the centrally planned society—but that myth is really getting underway here in the West, what with the central banks of the world—the ECB, the BOE, and the Fed all taking an active role in propping up markets through QE and trying to control the flow of capital.

This role of central banks, planners and political leaders, however, is consistent with the different forms of capitalism that are presented by Keynes and Friedman.

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Keynes believed that well-planned policies and interventions by centralized powers could prevent the free market from crashing in economic downturns—and Keynesian economics has been demonstrated here in the U.S. since 2008 in a big way with QE causing inflation in major asset classes and in other areas as well (see stocks, bonds, housing, education, health care, commodities).

Friedman’s view was that the whole point of business was to make money and that if that meant crushing one’s competitors out of existence then so be it. He represented a type of unregulated, uncontrolled ego of the economic realm—an ambitious and materialistic drive to always go for more: more wealth, more dominance, more power, more market share. This leads to a type of zero sum game in which there is but one winner—and the resulting monopoly is the prize of the winner. This is also akin to a kind of economic totalitarianism because it is unbalanced by any sense of virtue or ethic. The ethic underlying Friedman’s sense of capitalism is that making money is the most ethical thing to do.

Hayek promoted the idea of private investment rather than government spending in order to facilitate growth, and while this idea is certainly helpful in the sense that it can promote a greater good for society, it still must be governed by a system of virtue wherein investors seek the good of their own communities by investing in them and giving meaningful work to them (and not just robotic work like sorting needles in a needle factory ala Adam Smith).

Considering the way in which the economy of the U.S. is currently organized, both Keynes’ and Friedman’s ideas can be seen to be in operation (as well as Hayek’s in some cases). Keynes’ ideas represent the central banks intervening with quantitative easing to prop up the markets following the crash of 2008. (Will they do so again? Now that Powell is in as Fed Chair, the Fed is signaling a more hawkish tone and it knows that if it doesn’t back off and let rates rise, inflation could truly begin to rise quickly and sharply—as though it hasn’t already, of course). Friedman represents the type of vulture economics that is seen on Wall Street—i.e., the type of lending and selling of derivatives that led to the crash of 2008 in the first place. Hayek’s ideas are there as well, for instance, in Trump’s plan to spur economic growth through private investment. Still, the only way the U.S. will really improve the economic system is to adopt a virtuous stance in which the greater good is first identified and defined and then allowed to be pursued. If that cannot be achieved, no amount of greed or centralized planning will allow the economy to develop or grow.

3. The video “The Story of Stuff”, brings up an ecological dimension in economic analysis, describing some of the environmental consequences of the overall functioning of our economic system. 

Leonard states that the current economic set-up in the U.S. is unsustainable because it is a linear system and you cannot run a linear system on a finite planet indefinitely. This makes sense and opposes the view of Friedman, for instance, in which life is a zero sum game and the winner takes all. In Leonard’s view, the planet will not allow such a system to last because in the end it is finite. Sustainability, therefore, is a real issue that has to be considered.

Could U.S. capitalism be reformed to become sustainable? Yes, but only if those with capital begin to exercise a large degree of corporate social responsibility—policies that put sustainability at the heart of their mission and values. It also has to be real sustainability—not imagined or promoted just to sell a brand (like Tesla). Leonard shows that corporations now represent the largest economies in the world—in other words, the world is a business, just as Paddy Chayevsky stated in the film Network. Unfortunately, the principles guiding that business/world are not rooted in virtue but in greed and the Friedman/Keynes vision of power and control.

Three policies that could be put in place to promote sustainability would be:

1)….....

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