Monday, March 25, 2013

Nothing But Your Chains

Steven Pearlstein had a long piece in the Washington Post that asks some hard questions about the morality of a capitalist economy that distributes rewards so unevenly.  Pearlstein notes that both left and right have some serious misconceptions as the basis of their perceptions of capitalism.  The entire column is worth the read but I was struck by his his strong focus on inequality, not to mention seeing this idea addressed so prominently in a MSM publication.
In our current debate over capitalism, too much attention is focused on whether, how or how much to redistribute the incomes that markets have produced, with too little focus on the institutional arrangements that determine how that income is divided up in the first place. Such a focus would take in everything from minimum-wage laws to labor laws to the rules of corporate governance. At this point, the markets’ uneven distribution of income has become so dramatic that it threatens to overwhelm the ability of a progressive tax-and-transfer system to keep up with it.
Capitalists assume that their rewards a ordained by the Invisible Hand of the Free Market (aka God) when in fact capitalism is a man-made system that gives capital vastly more power and reward than it gives to labor.  In our overheated capitalism on steroids, that imbalance leads to a small owning class and a much larger owning-far-less-or-nothing class.

You'd think that, rich as they are, the owning class would understand the perils of inequality, that hoarding all of the wealth leaves far too many with nothing to lose.  Karl Marx may have been wrong about the  Communist Utopia but he was dead-on correct about what people with nothing to lose can do.

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