Adam Smith gave the world a new paradigm, connecting self-interest, positively, with the common good. More recently, however, that beneficial linkage is fraying, particularly between what is good for the self-interested wealthy, and what may be good for the rest.
In this series we highlight a widening gap between useful capitalism, and nonproductive, even destructive pseudo-capitalism. To illustrate, public leaders are called to challenge the efficacy of mortgage interest tax write-offs for the rich, particularly. These are but one among a myriad of tax dodges, loopholes and outright frauds crying out for heightened oversight.
Also sorely needed is a thorough up-dating of the capitalist paradigm. It must be brought into conformity—not with mere fantasy—but with the way in which the contemporary, dynamic economic world actually works.
Three approaches are possible, but two are doomed.
One is to continue to hang with the status quo.
Another is to do something, but futilely. This is the choice of jailing the bastards, but it isn’t working. It is a mere dance in which rules are gamed by sophisticated MBA’s, attorneys and public relations consultants. Then more rules are created, and broken. It is a pseudo-capitalist dance in which evermore private wealth is stashed in nonproductive financial schemes, real estate, vintage autos and art.
The good news is a third choice could actually lead somewhere. It would require, however, searching, critical, even animated citizen dialogs in public squares across America. It would require naming and defending stewardship for generations yet to be born. It would require a new definition of what is—and what is not—productive investment capital.
To get there, first we must turn away from destructive rhetoric that impugns the worth of the public square—and the value of public service—and all things public. With our fellows, we ought to turn away from Ronald Reagan’s shameful assertion that government can never be the solution, but ever must be attacked as the very problem.
Reclaiming America now calls—urgently—for across-the-isle consensus-building. Now, we the people are called to build a consensus vision of the future and within it, to distinguish nonproductive economic behaviors from a populist sense of what constitutes productive investment, in service not only to the present, but the future as well.
Asset placements we reward publically must contribute in a stewardship way to the world we choose for our children—and our children’s children. To that end, it is essential to rethink all subsidies—and all tax breaks—and the rationales for whether they should continue to be awarded. To get there, we must also specify what constitutes rentier and even egregious disinvestment behaviors, then scrutinize those behaviors continuously.
Well, more on this thing I call relative capital, to come. That is, relative capitalism is about setting positive and negative incentives, connected to specific outcomes Americans wish to gain (or avoid). Capital is not absolute but relative, then, for its special status becomes evident only according to how the asset is used. For instance, a plow horse in the field is capital, but the same animal—assigned as a hobby horse—is merely a nonproductively used asset, instead.
The future of American capitalism, I argue, is the future of consensus decision-making about what is productive capital—and what is not—in public spaces across our great land.
From Boulder, Colorado this is Jim Sawyer for Capitalism in Crisis.