In feudal society, the community common was public space shared by all. Consequently, if a serf allowed his cow to graze on the commons’ lush grasses, his self-interest would be enhanced, but at the expense of his neighbors’ well-being. That is, if every serf turned his cow loose after dark to graze the common, in no time a public asset would be trashed.
Eventually, however, moral philosopher Adam Smith put a different spin on feudalism’s disdain for self-interest. Instead of exploiting the common, Smith admonished, entrepreneurialism combined with capital ownership, actually enhanced the common good through economic growth.
When Smith’s system works well, as often it has for Americans, each successive generation has experienced increased material abundance. Now, however, the Great American Bread Machine seems to be stalling, at least in comparison with decades immediately following World War II.
Consider, particularly, the plight of legions of younger Americans who struggle—unlike their predecessors—under the costly weight of acquiring human capital, as a hoped-for toe hold into the economic future.
Last year Pope Francis reminded Americans, global corporate capitalism is falling short, hindering the economically marginalized, even as it turns the earth into what he calls a pile of filth. It seems, language of the feudal commons is creeping back into popular perceptions of how the world works. Implied, now, is a zero-sum world, like a game of checkers, in which one may win, pretty much only if someone else loses. Too often, corporate frauds mimic the feudal act of turning one’s cow loose on the common.
Indeed, the language of popular culture is the language of game theory—that winning requires gaming the so-called system.
Republican Presidential candidate Donald Trump is under fresh attack for gaming the American tax system. Rather than enhancing the common good, allegedly Trump used business savvy to amass nearly a billion dollars of tax credits, then to avoid paying federal taxes—presumably—for years on end.
His acolytes shout praise for the perceived business acumen of their leader’s tax avoidance scheme. Others, however, see Trump’s strategy and style as merely a sophisticated way for rich people to game fellow Americans. If someone wins—a billionaire like Trump—then someone else must lose, it appears—actually millions of someones…who become Donald Trump’s…chumps.
Economic ripoff is now a common corporate mantra.
Consider recent alleged frauds at Wells Fargo, at the maker of EpiPen, or at Martin Shkreli’s Turing Pharmaceuticals, among a host of others. Indeed, do any of their business plans sustain the common good? Or are their schemes somehow akin to the feudal act of throwing one’s garbage on the common?
A lacuna is a void. Incredulously, there is no theory of profit implicit within doctrinaire capitalism. There is nothing spelling out what the extra rate of compensation for the capitalist should be, beyond the rate received by the financier. Consequently, Donald Trump, allegedly, and other pseudo-capitalists of his ilk—too often act as pseudo-capitalists. That is, they game the American system, rewarding themselves as if legitimate capitalists, but at the expense of the masses.
Needed, now, is a searching revision of capitalism’s paradigm. Doctrinally, the most important tweak needed to American corporate capitalism is repair of the profit lacuna. Needed also—sorely needed—are new strategies for teaching MBA’s, politicians and policy analysts, the ethics of legitimate capitalism.
More on a proposed patch for paradigmatic capitalism’s profit lacuna, shortly. For now, please check out Capitalism in Crisis on the Web.
From Boulder, Colorado this is Jim Sawyer for Capitalism in Crisis Dot Org