I skipped Economics in college, never wanting to do what everyone else was doing. It was the most popular course at my school. The omission has no doubt cost me over the decades. But this evasion does confer a certain innocence when I inquire the meaning of “capitalism.” I’m truly a civilian.

Here’s what Google has on the topic, after first stating that capitalism and free enterprise are interchangeable terms:

“A free enterprise economy has five important characteristics. They are: economic freedom, voluntary (willing) exchange, private property rights, the profit motive, and competition.”

Hmm. I see some problems as I apply these criteria to what is daily evident in our system.

Voluntary exchange — this likely referred to the distinction to be made between centrally planned and market economies. In the latter, sellers and buyers freely enter into exchanges of goods. Allow me to suggest an example of an involuntary exchange: Have you read Google’s terms of service? Or Facebook’s? You do understand that they entail your surrender of your power — one you would exercise in France or Holland — to control your personal information. That information and many other indications of your preferences and (importantly) your TENDENCIES is sold every minute of every day to literally millions of interested onlookers.

So, “voluntary (willing) exchange”? Not so much in this most vital sector of our economy.

Private property rights. Well that’s bedrock. This goes back to John Locke and Enlightenment theories at the core of Anglo-American law and American political theory — that when a man (sic) mingles his blood with the soil that soil is his property. Everything in the US is based upon the sanctity of property rights, the indissolubility of contracts, and the primacy of what is earned by the individual. Nothing assaults or insults that. Period. Except, of course, the NSA and all the other public and private tools for invading our sacred private space, and the minds that motivate behaviors therein. We may hold our stock certificates in hand, our deeds and wills, but in a wide range of circumstances — ranging from flood to fire to civil unrest — those rights are abridged or dissolved. So, again, where’s the beef?

The profit motive. Sacred, right? Here is the engine of prosperity. The simple act of assembling something for a certain sum and selling it for a higher number. Voila, profit. This is the supposed fire that animates all innovation, every impulse to join with others and act in the world conceived as a market. Except that’s clearly false and fundamentally idiotic. Profit was once illegal. In Europe. In the late Middle Ages. The idea that you could jack up the cost of something beyond what you paid was enough to get you imprisoned or burned at the stake because it was literally sacrilegious. Some would argue it still is.

Information arbitrage is at the core of profit: I know something you don’t know. I got mine for x. You’re gonna pay X + y. And y is the why for all of this effort. To this day, there are uncountable millions who cannot make any sense of this “logic.” It is not truly logic. It is simply posited. The defenders of profit insist that this is a fundamental human urge: to fool one’s fellows, taking advantage of information asymmetries to make others pay, both literally and emotionally, for some glitch in their knowing. Many of us look at that and just shake our heads.

Competition is at the heart of capitalism. The need to build a better widget and sell it for less than one’s competitor — or to shut them out of a market using corrupt political influence or violence — this is at the core of the system. Competition is supposed to imply innovation, improvement of a commodity so the new thing is more appealing than the old. But we know that competition is the first victim of any vast enterprise (Google and Facebook being prime examples). Their first impulse when they spot a potential competitor is to engulf and engorge, to consume it and either kill it or integrate its improvements into the larger enterprise’s offering.

Again, an ethos endures and a posited conclusion accompanies it. We mouth the words, “Competition is good.” It’s supposed to produce improvements and economic benefits (more for less). But that isn’t the way capitalism operates.

In every domain at the heart of capitalism’s very definition — free and voluntary exchange, property rights, profit motive and competition — we witness principles honored in their breach. The departures are ubiquitous. These deviations become the rule and capitalism gets a very bad rep for good reason.

Can capitalism be fixed? The true believers believe. Surely a free market is “better” than a centrally planed one, they insist. Look at the examples, and they’re rife. All centrally planned economies become kleptocracies. Corruption in the end dooms the system. A central cookie jar is just too tempting a target. Why not divert that hundred-car train of platinum ore and pocket the proceeds, if you can?

Capitalism and socialism both get a bum rap for being lousy at re-distribution. Both systems claim to be the best at motivating and protecting practicing populations. Neither does the job.

Capital tends to accumulation at the top. Capital often acts to quash competition and constrain “free” operation of markets. Capital is compelled to capture information or resources that are lying around unclaimed — your personal proclivities, political and sexual, for example — and to privatize and commodify them. “Empty” lands and “natural” resources — forests, oceans full of fish, the atmosphere — can likewise be exploited without discernible “cost.” These itty bitty things are literally termed “externalities” by economists. No wonder economics is called the “dismal science.” I might term it the “dismissal science.”

Capitalism unfettered yields oligarchy and stifled competition. It unavoidably slides toward monopoly as “free” enterprises move to protect their property. And the planet is the ultimate witness to and victim of this spiraling devolution.

A conversation about free enterprise that touches these rocky shores inevitably veers toward “So what is the alternative?” I would avoid that, for the moment, and just ask the gentle reader to let the immensity of capitalism’s egregious failings — of humans, other living creatures, and of the Earth’s viability — sink in. We can turn to alternatives once we confront the dead end at which we’ve arrived.

So: Capitalism? Um, no.


Interactive video and immersive technology pioneer, activist and social justice warrior. Teacher, writer, producer and painter.

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Martin Perlmutter

Interactive video and immersive technology pioneer, activist and social justice warrior. Teacher, writer, producer and painter.