Two Types of Capitalism

Capitalism type 1
This is the capitalism exemplified by Henry Ford and Thomas Edison. Whatever the personal faults of innovators like these two , their efforts resulted in am increase in the standard of living for everyone. Ford didn’t create Ford Motors solely  to make money, he created it because he wanted to build cars. Likewise Edison didn’t create Con Edison or General Electric because he just wanted to make money, his central interest was in the inventions he developed, the existence of these companies were a means to an end  and the end wasn’t solely to make money. Or more succinctly, the desire to make profit wasn’t a end itself but a means to an end, the ends being the creation of a business that produced products these innovators had an interest in. Neither of these two examples had hardly a shred of social conscience, nonetheless their life’s work improved the living standard of many people. Of course there are more modern examples of this type of capitalism. A very current example that has caught my attention is the highly innovative Tesla Motors company which has quietly been advancing the technology of electric vehicles to the point where it  is far from far fetched to imagine a electric revolution in personal transport saving up to 70% in energy usage for transportation and reducing green house gas emission. Other innovations that may possibly have an significant impact on the future include the Liquid Thorium Fluoride Reactor idea , which may possibly make Nuclear energy safe enough to be  generally acceptable while tapping into a resource that can provide non green house gas emitting energy for thousands of years. And of course there is the electronic revolution which has changed the entire structure of social interaction and connectivity for better or worst, hopefully mostly for better. The potential for renewable energy sources like Solar and Wind comes to mind also.
Capitalism type 2
This is the capitalism exemplified by entities like Bain  Capital, or Goldman Sachs , entities that have as their end , not the creation of any product, but the use of money to make money. These entities have one end , the accumulation of wealth for stockholders or the private owners. This is a kind of vampire capitalism that lives as a parasite off the first type of capitalism, often killing its host in the process. This is the type of capitalism that sees profit in squeezing workers, liquidating  companies to seize pension funds and existing capital assets. This is the Stock Market where the sole value of any manufacturing and service providing entity is the quarterly earning statement and the speculative  price setting often totally disconnected from the real value of the underlying  business. For those of us who have had careers in industry, this is exemplified by the phrase, “the bean counter takeover of business. “. A breed of capitalism devoid of any interest in the creation of any product, solely focused on how the use of financial manipulation and complex schemes to extract the maximum possibly profit. This is not what Ford or Edison did, this is not what Tesla Motors is doing, but this IS the current face of this  kind of capitalism, whose goal is nothing less than the complete takeover of the means of production to maximize the wealth of a powerful elite.
None of this is meant to ignore the reality of the Robber Barren era, where vicious  predation and worker exploitation created an America where 70% of the population lived in grinding poverty while a small glided minority lived in splendid opulence and luxury. It took the creation of organized labor and progressive politicians to force a bigger share of  the wealth created by labor to go to labor. These were changes the first type of capitalists grudgingly accepted in the interest of a socially  stable society with enough general wealth to allow the existence of the consumers needed to sell the products the innovators had created. However, the new breed of capitalists are repudiating these progressives advances , because they are at odds with their central goal, the maximizing their wealth accumulation. They see the gilded age as  their utopian vision for the future. We now  see the results of their success all over the world.
 Bob Zannelli
John Crisp <hannibal.crisp@GMAIL.COM> wrote:
Couldn’t have put it better (or as well) myself. In my youth I would have described myself as a Marxist, albeit of a rather right-on and go with the zeitgeist kind. However, I have come to take a sort of evolutionary view of economic systems, not in the social Darwinian sense, but in the sense that your Capitalism type 1 is an evolved species, whereas systems such as communism have broken down in their attempt to carry out a sort of intelligent design with a teleological perspective. In the shift from robber baron capitalism to the Capitalism 1 widespread in the second half of the 20th century, the social ecosystem brought about mutations that conferred broader advantages. I am not sure how my metaphor takes account of the current shift to Capitalism type 2. It is as if some component of the capitalist organism has become hypertrophied, to the extent that it is draining resources from all the other components.
I think that what we are heading for, particularly in the US, but also in much of Europe, is a sort of capitalistic feudalism. To take the US example, we have the old feudal pyramid with the president at the top and the new barons below, and as in mediaeval feudalism, the barons pay lipservice to the monarch’s “divine right”, but both parties are well aware of their symbiotic dependence, and the monarch knows that he stays at the apex only as long as he creates the conditions for the barons to maintain their hegemony. And at the bottom, of course, as throughout most of history, are what R R Martin called the “small folk”. Of course, there are a lot of small folk, and they are likely to get restive, so in the end capitalism may indeed collapse under the weight of its own contradictions… And of course, none of this takes account of planetary events that will probably, in the long run, bring down capitalist feudalism, and much of what we call civilisation. JC

“We can’t get where we need to go by starting with corporations and asking how to restrain them, regulate them, or rein them in. We need to start with life, with human life and the life of the planet, and ask: How do we generate the conditions for life’s flourishing? Will we continue to rely on ownership architectures organized around growth and maximum income for the few? Or can we shift to new ownership models organized around keeping this planet and all its inhabitants thriving?”


About basicrulesoflife

Year 1935. Interests: Contemporary society problems, quality of life, happiness, understanding and changing ourselves - everything based on scientific evidence.
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