The excesses of capitalism

I am constantly surprised by the disingenuous defences offered for the often unforgivable practices of capitalism, where some (including some on Thought Leader) even claim that a company’s concern for ‘its market’, instead of its blind pursuit of profit, is simultaneously a concern ‘for others’.

Capitalism is driven by the profit motive, and by nothing else. If, in the course of doing business with this in mind, managers also, incidentally, show in concrete terms that they care for people — not just their own staff, but the public as well — it is a rare bonus, and does not derive from the nature of the beast (capital), but rather from the (well-nigh futile) attempt on the part of the individuals in decision-making positions, to ‘give capitalism a heart’.

There are indeed managers and CEOs like this (I know of some), but they are far and few between. This explains why Joel Kovel remarks in The Enemy of Nature: The End of Capitalism or the End of the World? that the soft-hearted are pushed off the corporate ladder early on in their careers, and that the CEO who does not work single-mindedly to increase profits (because of concern for consumer hardships, for example), will be quickly ‘swept aside’.

Don’t get me wrong — it is everyone’s right and inclination to do something to make a living. The guy in the corner store, although engaging in ‘free enterprise’ which, strictly speaking, is seamlessly connected with capitalist practice, is doing nothing wrong as long as he or she treats customers fairly while making a profit for the sake of surviving and, if possible, prospering.

The capitalist beast rears its ugly head when monopolisation (or outright exploitation, or barefaced profiteering) occurs — when all the small people in a certain line of business are bought out by the wealthier companies, so that in the end the few with the monopoly control the product in question, with all the usual attendant ills, such as price fixing and exploitation of the public. And this tends to happen even in countries where competition is encouraged. Witness South Africa where, over the last few years a number of price-fixing deals among producers of bread, milk, cars and other products have been exposed — deals that netted the producers in question millions of rand, but left the public as the losers.

Or witness the United States, where banks, in their zeal for still greater profits, have been directly responsible for thousands of American home-owners losing their homes, without themselves (the banks) really suffering much in the process. I am talking about the sub-prime crisis, as it is known. It resulted from, among other things, the banking practice of ‘steering’ clients in the lower income brackets towards home loans specially tailored for them, that is, loans at a very low repayment interest rate for a limited period. This enabled many people who would not otherwise have afforded a home of, say, $200000, to buy one.

Those who did not read the fine print carefully were shocked to find, after two years, that their repayment interest suddenly went up significantly, so that the percentage of their salaries spent on loan repayment shot up to unaffordable levels. Many of these home owners had no other option but to sell their homes, or they were repossessed by the banks. Naturally, some of the banks ended up in trouble too, because of clients’ inability to make the repayments, after initially making huge amounts of money from them. They needn’t have worried. The Federal Reserve handed over, if I remember correctly, a cool $200 billion to the banks in order to save them from liquidation. But thousands of ordinary home owners lost their homes, and this because of unscrupulous profiteering practices on the part of banks.

The biggest culprits are the corporations, however. Here is what Joel Bakan says about them in The Corporation (on which the award-winning documentary by that name is based):

‘Over the last 150 years the corporation has risen from relative obscurity to become the world’s dominant economic institution. Today, corporations govern our lives. They determine what we eat, what we watch, what we wear, where we work, and what we do. We are inescapably surrounded by their culture, iconography, and ideology. And, like the church and monarchy in other times, they posture as infallible and omnipotent, glorifying themselves in imposing buildings and elaborate displays. Increasingly, corporations dictate the decisions of their supposed overseers in government and control domains of society once firmly embedded within the public sphere.’

Roosevelt’s New Deal of 1934 in the US was aimed at restricting the power of corporations, and the decades-long period that it lasted in America has been referred to as the time of ‘decent capitalism’, for good reason. However, with the oil crisis in the early 1970s, the world economy returned to neoliberal principles, according to which the market is taken as the sole organising principle of the economy (and therefore also of society), in effect subordinating the state to corporate power. This need not, in principle, be the case, of course. The state could easily, through legislation, subordinate corporations to considerations of the public good. It does not take a genius to guess why this has not occurred. Money endows one with tremendous power, including the power to ‘buy’ politicians. Hence, corporations have asserted their dominance in no uncertain terms. In fact, judging by what Bakan says in The Corporation, it seems to have reached pathological proportions:

‘The corporation, like the psychopathic personality it resembles, is programmed to exploit others for profit. That is its only legitimate mandate. From that perspective…millions of…workers across the globe who are driven by poverty and starvation to work in dreadful conditions for shocking wages, are not human beings so much as human resources. To the morally blind corporation, they are tools to generate as much profit as possible.’

The Corporation is an undilutedly critical and thoroughly researched book (and film documentary), and would probably disillusion readers who still adhere to the fallacious conception, that corporations are our benefactors in both behaviour and production. Bakan is relentless in his exposure of corporate greed and unscrupulousness, and he is especially ruthlessly critical where the welfare of workers and consumers is concerned.

I do not here have the space to discuss the majority of the shocking case-studies referred to by him, so one will have to suffice (discussed below). What it illustrates well is that, as far as corporations are concerned, people and nature are reduced to mere ‘resources’ which are quantified in monetary terms to be able to determine companies’ policy towards them.

It is not difficult to conclude from Bakan’s discussion of these case studies that corporate decision makers have to suspend their ‘normal’ or ‘private’ moral principles (assuming they claim to have such) to reconcile themselves with certain decisions. A telling example focuses on a cost-benefit analysis report on the safety of a certain GM-model car based on actual, reported collisions, as compared with the projected cost to the company of settling claims resulting from court cases where people are likely to be killed or maimed in fuel-fed fires related to a less safe, cost-saving car design. The report dispassionately stated that building the smaller, comparably unsafe model would save the company money, compared to the cost of the projected (larger than before) number of court settlements with victims of fuel-fed fires relating to these vehicles.

What one may conclude from this, is that the humanity of people is conveniently ignored by the corporation. What really takes one aback though, is Bakan’s reminder that it is illegal for a corporation to go beyond its only legal responsibility (at least in America), namely to generate profits for its shareholders, by giving ‘too much’ priority to social and environmental concerns, because these would undermine optimal profits. In his words: ‘Corporate social responsibility is thus illegal — at least when it is genuine’.

In other words, when corporations profess social and environmental responsibility, it is not because of a genuine concern, but because it amounts to a PR exercise which is ultimately aimed at netting them more profits. Joel Kovel makes the same point (in the book referred to earlier) regarding the notorious Bhopal industrial accident of 1984 in India where, because of corporate cost-saving procedures — a lack of maintenance of pesticide-producing equipment — a disaster was precipitated that left thousands of people dead, with many more dying painful deaths in the course of the months that followed.

It would be silly to advocate the wholesale abandonment of capitalist economic practices at present, however. For the time being it is the economic system within which we live. But unless people start waking up to the excesses of capitalism’s abuse of people and nature, and resolve to practise it in a more humane, responsible manner, many more humans and other living beings will endure unnecessary suffering. To their credit, there are some writers on this site (including Khadija Sharife and Chris Rodrigues) who have courageously exposed excesses of this kind. Their example should be emulated.