Pseudo-capitalism always involves deception or fraud, either illegal or legal. It’s about the economic swamp needing to be drained. This is the real economic swamp of short-term thinking, corruption, wealth-hoarding, rigging and gaming schemes and the like.
First brought to attention one half-century ago by English economist Joan Robinson, pseudo-capitalism’s origins lie in the imprecision of original doctrinal capitalism. She called this omission the profit void or profit lacuna. The Lacuna fails to specify what the extra profit reward to legitimate capitalists ought to be, beyond lesser compensation received by those doing little or nothing to further the common good. More recently, this glitch has grown into a time-bomb carrying with it threats to the viability of America’s entire economic system.
According to Adam Smith, capitalism is not merely about self-interest, but instead about the pursuit of self-interest rightly understood. Often, fraud occurs when self-interest fails to align with the common good; when corrupt self-interest metastasizes and masquerades under legitimate capitalism’s mantle.
Pseudo-capitalists revel in imprecision created by policy makers, elected officials and economic analysts. Tragically, even when public leaders look carefully, often they fail to recognize self-interest run amok. They fail to recognize widespread corruption within the workings of huge swaths of business and government.
You may be surprised that the reward to holding capital ethically was not specified by ethicist Adam Smith or his predecessors. Because this omission continues unrectified, many wealth-holders are tempted to segue into wealth-hoarders, rather than to remain legitimate capitalists contributing their fair share in support of self-interest rightly understood.
Consider the business empire of Donald Trump. Think of scams led by the person now holding the title President of the United States.
Read David Graham’s Atlantic article The Many Scandals of Donald Trump.  See allegations of tenant intimidation, mafia ties, broken casino regulations, and on and on. Contemplate findings from The New York Times investigation into Trump family finances.  Ponder 11 takeaways, including The Times’ conclusion that aided by a variety of tax dodges, Trump and his family paid only a small fraction of their wealth [5 percent or $52.2 million] to settle the father’s estate.
About Capitalism In Crisis
The economic world changes, but doctrine tends to remain static, with its explanatory value tending to ossify over time. Consequently, there is inadequate accounting for implications of the nonproductive uses of wealth, even completely nonproductive uses such as gambling.
The profit lacuna can be resolved practically by targeting fraudulent rigging and gaming schemes, and then subjecting those schemes to oversight including tax and regulatory oversight.
For American capitalism to become great again, it must be accompanied by a thorough clean-up of fraudulent practices. It must be accompanied by good faith due-diligence, even innovative and constructive risk-taking prescribed initially by Adam Smith over two centuries ago in his epic Wealth of Nations.
Capitalismincrisis.org is a doctrinaire and policy-oriented patch to capitalism’s practical workings. It prescribes how to set limits on pseudo-capitalism and pseudo-capitalists.
The site also is a backhanded salute to Donald Trump. It relies upon zombie characters. Perhaps zombies are no less credible in the age of Donald Trump than many of the actions and utterances inflicted by him upon the American public. In so many ways, he transports fiction into the realm of reality. We must remember. When media-blitzed by Donald Trump or by anyone, democracy may prevail when information and assumptions are questioned vigorously, ethically, even critically.
Capitalism in Crisis dot Org is built upon three-plus decades of theoretical work by Jim Sawyer. The lead book in this series is a paradigm clarification of work related to macroeconomist John Maynard Keynes. Sawyer’s publisher is Keynes’ original publisher. Professional views, of course, are in some cases innovative, even controversial within the economics profession.
More about Jim Sawyer
Jim Sawyer is a radio producer and commentator who holds a PhD in labor economics. He is emeritus professor at a Jesuit university where he also held an endowed chair in social ethics. Prior to entering academia, Jim managed human resource programs and served as policy advisor to a governor. Jim has taught graduate courses in economics, finance and management directed at working professionals in public and nonprofit management. He held a joint appointment at a research institute in a French university and served as a Fulbright scholar in France and Portugal. His work is published in the U.S., U.K., France and Belgium.
Some Publications by Jim Sawyer/James E. Sawyer:
- Why Reaganomics and Keynesian Economics Failed. London and New York: The Macmillan Press Ltd. and St. Martin’s Press, 1987.
- “Reframing Capitalism” in John Kenneth Galbraith and the Future of Economics. Blandine Laperche and Dimitri Uzunidis, Eds. London: Palgrave Macmillan, 2005.
- “Doctrinal Roots of Short-Termism” in Powerful Finance and Innovation in a High-Risk Economy. Blandine Laperche and Dimitri Uzunidis, Eds. London: Palgrave Macmillan, 2008.