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Wednesday, July 21, 2010

Myth: Capitalism is a Perfect System

As incredible as it may seem, there are prominent political, intellectual, and business leaders who believe that unfettered capitalism, a "free" market, can do no harm. For example Alan Greenspan, the principal architect of our recession, believed financial regulation stifles innovation. Thus his support of GW's deregulatory spree.
But as Stanford economist Joe Stiglitz points out in his latest book, "FreeFall", the only innovations the banksters and Wall Street came up with were how to avoid accounting and tax regulations. Had they really had any interest in innovation they would have figured out how to eliminate the risks of home ownership rather than compounding them.
Our capitalist system is imperfect and fails frequently and spectacularly. This happens, as Stiglitz points out,when private rewards become disconnected from public benefit. There will probably always be the type of "business" person who chortles at raking in profits while providing absolutely nothing of material value in return. This is known as sociopathy. It is a mental illness. This is why we need a strong, equitably enforced regulatory structure to keep such people from entering the market and to take them out if they somehow manage to get in. I dream of the day when everyone has to follow the rules, from the President on down to your local plumber.  Not that plumbers are at the bottom of any strata, it just sounded good.  Ok, how about down to the local kid mowing your lawn.


  1. Capitalism is an economic system in which the means of production are privately owned and operated for profit; supply, demand, price, distribution, and investments are determined mainly by private decisions in the free market, rather than by the state through central economic planning; Definitely its a poor system....It makes richers more rich and also poorer more poor....Declaring Personal Bankruptcy

  2. Thanks for the comment "Declaring . . . " I don't think capitalism in its pure form is a "poor" system, it is just incomplete. Left to itself, there would be no commons, no infrastructure, none of things which escape easy economic measurement but are, nonetheless, essential for capitalism to work. Besides, capitalism does not include the notion that labor, goods & resources are all privately owned. See
    Unfortunately, our current fascist system (government of by and for the corporate powers) seeks to own or exclusively control not only capital and land but also labor, goods and resources. They want it all. Nothing good ever comes from that desire.


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