The Problem With Capitalism
by James Jaeger

Richard Wolf recently gave a lecture on C-SPAN about the subject material of his new book, OCCUPY THE ECONOMY. I believe Mr. Wolf is a Marxist or at the very least an anti-capitalist but I have to admit -- even as a free-market capitalist and Libertarian -- I was impressed with his talk.

Wolf made the point that the system we call capitalism is flawed. In the current system, stockholders own the corporation and appoint a board of directors to control the distribution of profits, salaries, wealth and resources of the corporation. This usually results in top management getting 300 to 400 times the pay the lowest workers get.

Wolf also makes the point that, after the Great Depression, Roosevelt's New Deal got perks for citizens and laws changed for business entities. Citizens suddenly got social security and unemployment benefits and the rich and corporations were forced to turn over wealth through a 90% income tax and regulations on their activities, such as wall between commercial and investment banking.

Wolf maintains that we are right back in the same "Great Depression" situation because the regulations and taxes were relaxed from 1945 to 1999, when the banking wall came down and the "financial services industry" was born. He says the mistake was leaving the capitalist structure in place so that it could re-constitute itself over time -- like a post-war enemy with their army still in tact. Now, with the bank bail outs, austerity measures and the global economic collapse, the masses are waking up and OCCUPY WALL STREET is evidence.

As I have stated many times, what pulls an investigation (of a situation, man, subject, theory, ideology, etc.) along is WHAT IS OMITTED. What is not mentioned. And what Mr. Wolf did NOT mention is the following: FIAT CURRENCY, PRINTING MONEY, DEBT, FRACTIONAL RESERVE, BIG GOVERNMENT, OVER REGULATION -- but the problem we face today, is a result of CAPITALISM.

Okay, I will agree, part of the problem we have today IS capitalism.

Capitalism is a machine that, once rolling, DOES keep the means of production in private hands and it does seem to give all/most of the advantages to one class of people over all others: those that have access to the most capital. And even Einstein acknowledged this when he reportedly stated that 'compound interest is the most powerful force in the universe.' So, if capital (augmented by compound interest) is the basis of capitalism, how can those without capital ever have a place at the table with those who DO have capital for those that DO have capital don't even have to work beyond a certain point because their capital -- like a creature with its own life -- works for them generating and compounding interest endlessly.

We talk about the technological Singularity endlessly, i.e., "The Singularity." I would like to introduce an extrapolation of this term: The Capital Singularity. The Capital Singularity is the moment capital compounds so quickly it is impossible to spend it. If you have a trillion dollars earning compound interest at 5%, that is much more money generated every day than an individual can wisely spend, or even comprehend. So the Capital Singularity is the exact moment the human mind cannot think fast enough to spend the money automatically generated by the mathematical interest algorithm. And the reason for this is because the interest algorithm runs much faster than the allocation algorithm, for it takes time, thought and human effort to budget and spend money wisely.

So the world is awash in a system where hundreds of trillions of dollars of principle (capital) are generating hundreds of billions of dollars in interest (capital) and the ONLY way all this fiat currency can be allocated is to be literally burned or "paid" to top management. If it were leaked out into the worker class, all the money would instantly loose all its value and the top management class would have killed the goose that lays the golden eggs.

Wolf didn't mention any of this, of course, because none of this is in the language Marx understood. Read Marx, and he never mentions things like compound interest, fiat currency or fractional reserve banking.

In short: socialists and marxists don't understand mathematics or production very well.

All Wolf, Socialists and Marxists deal with are EFFECTS -- never actual CAUSES of runaway, greed CAPITALISM. They only think in one or two dimentions. Taxes are all too low or corporations are too free. The hero is always the thugs with guns who come to the rescue of the rank and file worker. More regulations is always the solution. More government to take all this money AWAY from the rich and the corporations is always the solution. And yes, these corporations and their rich owners ARE disgusting pigs that should be rounded up and shot, but they can't help themselves, because they are being prodded on by equal and opposite disgusting pigs like Wolf and his crowd of math-challened morons.

John Stossel, in his new book, NO THEY CAN'T, makes the point that the capitalists are buying up congressmen on K-Street because they are afraid of all the laws and regulations. The hundreds of thousands of laws in the National Register and the thousands of new ones every year, FORCE the corporations to get in there and buy up Congressmen so they can maintain some control over the laws Wolf-like socialists want to endlessly impose. Stossel says the corporations would much rather be making PRODUCTS than crapping around in DC with POLITICS.

I doubt this, for Rockefeller once said that competition is a sin. Thus a big corporation is really nothing other than an extension of big government for the corporation is a creature of the state. In other words: BIG GOV = BIG CORP.

So we have, in essence, a fight between predatory, greedy people using the WEAPON of big capitalist corporations and compound interest fighting the poor masses using the WEAPON of big government and the sword to beat and tax them into submission. Take whatever side you want. It doesn't matter because you have entered a catch-22 argument: A is bad because B is bad and B is bad because A is bad.

CAPITALISM is bad because SOCIALISM is bad and SOCIALISM is bad because CAPITALISM is bad.

GOVERNMENT is bad because ANARCHY is bad and ANARCHY is bad because GOVERNMENT is bad.

So what's the solution?

The solution is some newly-engineered, socio-economic civilization we have not yet derived. Wolf suggests the co-op company, companies that are worker-owned. He also gives examples of such companies and says they are scalable, as demonstrated by on company in Scottkand with hundreds of thousands of workers. His book, probably gives the details and if not he recommends the works of John Curl who discusses the history of co-ops.

But the only way I can see a newly-engineered, socio-economic civilization happening is for it to be constructed in virtual reality with millions of citizens and "run" for "centuries." After we see how most of its inhabitants ended up in virtual centuries, only then can we really make a determination whether we should deploy it on real human civilization.

The future of civilization may rest in the hands of AI computer programmers.

29 September 2012

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