Capitalism and Corruption

I’ve been using an accountant for my taxes since 1996. I didn’t want to mess with the business schedules, and by the time we had three separate businesses running out of the house, it was definitely worth it. We’re down to one business, now, but it’s still worth it to us.

In the last few years, our accountant has been complaining about the IRS. It isn’t the usual generic complaints about the growing complexity of the tax code, or the politics of taxation. It’s about simple incompetence. It’s about adding up a column of numbers and getting the wrong answer. It’s about making a blatant data entry error and being unable to correct it. It’s about losing returns — just flat out losing them. The IRS, from his standpoint, is falling apart at the seams. They are no longer doing their job.

This came to mind today as I called our Health Insurance Behemoth, Anthem Blue Cross, over a billing issue that has been bouncing around since last November. I called, and got the usual cheery, bossy electronic female voice demanding — so that she can help me properly — my Social Security number and all kinds of other information, none of which is ever understood by the software, whether I speak it or tap it out on my phone pad, and all of which apparently vanishes into a black hole anyway, since the operator I end up speaking with always asks for exactly the same information all over again. They make notes in my file. They promise to follow up. They promise to call when it’s resolved. Weeks later I have to call again and see what’s going on, and we dance the same dance again.

You’ve all been there, so there’s no point in belaboring this.

I could sing the blues across a wide spectrum of specific complaints, but I’ve come to understand that the basic problem is widespread corruption, and my recent insight is that corruption has a surprisingly simple and far-reaching definition.

Corruption occurs when it starts being about the money.

It’s really that simple.

What is the purpose of your local pizzeria? You think it’s to make pizza for your dinner? Think again. They’re there to make money.

Is your corner health clinic there to help you get well? I’m afraid not: ask your physician how their caseloads have been growing. The clinic is there to make money.

Does your Medical Insurance Behemoth exist to provide you with medical insurance? Of course not: they’re there to make money.

Are defense contractors engaged in defending the United States against enemies at home and abroad? Nope. They’re there to make money.

What about the government? Well, they don’t make money, but they spend it, which means they waste it, so the focus on money is simply inverted. Is the Post Office supposed to deliver mail? Is the Environmental Protection Agency supposed to protect the environment? Is the FDA supposed to ensure that the food supply is safe? Not a chance. Their job is to spend less money.

It’s all about the money. Every last bit of American society is about the money.

Every last bit of American society is corrupt.

Yes, I overstate the case just a bit. There are small, isolated pockets of society that aren’t corrupt. I can’t think of any at the moment because I’m not in the mood, but I know they’re out there. There are individuals, or groups, who hold out against the system, or at least try to. I don’t want to denigrate their efforts, which are sometimes Herculean, and sometimes even effective for a time. But they are fighting a tide of systematic corruption. If they’re honest, they know this. If they’re very honest, they know that they’re fighting a losing battle, though very few of them know why.

It’s all about the money. “You can’t run a business if you aren’t making a profit.” “The government has to live within its means.” “It’s a question of the bottom line.”

This is the language of corruption.

I’ll even quote two of the founders of the religion that most people in this country want to pretend they believe in: “It is easier to pull a camel through the eye of a needle, than for a rich man to enter the Kingdom of Heaven” — and — “The love of money is the root of all evil.”

I suspect they’d both agree with me on this point.

So how did we get to the state where everything is corrupt? What is behind all this corruption? To understand that, we have to look back into the roots of Capitalism.

When you start talking about Capitalism, its supporters immediately try to shift the focus to very specific, technical definitions that make no sense to anyone in the present. I’m going to present a very simple definition of Capitalism that transcends the 18th-century straitjacket and applies to what we all see happening around us.

Capitalism is a system by means of which you do all the work, and I get a fraction of the benefit for no reason other than “owning” the result of your labor. It is, in other words, a wealth pump.

In feudal times, capitalism was the privilege — literally, “private law” — of the Second Estate, the “owners” of the land. Serfs, legally bound to work a particular piece of land for life, were also legally bound to turn over a substantial share of the crops to the landowner. The agreement was that the landowner would compensate the serfs with military protection, but the reality was that the landowners grew very rich while the serfs remained very poor.

During the Age of Empires, in the sixteenth and seventeenth centuries, the Second Estate gave way to the merchant class, which “owned” royal charters allowing them to own by proxy and exploit virtually any wealth they found, anywhere in the world. In the eighteenth and nineteenth centuries, the merchant class gave way to the industrialist, who “owned” capital equipment. In the twentieth century, the industrialist gave way to the financier, who “owns” money. But the principle has remained exactly the same. You do the work; I collect a cut of your work because of my ownership of your work.

This is not a successful economic model — it is, in fact, disastrous. People try to pooh-pooh that statement by smirking and pointing out that commoners today live like kings of the fourteenth century. That’s true. But these smirkers very carefully ignore a simple question: where does all that wealth come from?

Capitalism is a very efficient wealth-pump, and it’s at its very best when it is allowed unrestrained permission to extract wealth from a pool of resources. It doesn’t matter whether the resources are renewable or non-renewable, natural capital or human capital: capitalism will, if unrestrained, suck its resource-base completely dry in the shortest possible time. That’s what it does.

Feudal capitalism was already doomed by the late fourteenth century due to this very fact. Ransom wars were a bottomless hole down which an infinite amount of wealth could be poured. The codes of chivalry required that the Second Estate support a vast (and growing) entourage of sycophants, chefs, entertainers, artists, tutors, and other non-productive souls, and in grand style. Tithes were required to support the First Estate (the clergy), another non-productive class with enormous appetites. Serfs and villeins (paid farmhands) were taxed, and taxed again, then plundered, sometimes by their own lords. By the mid-fifteenth century, forests had been razed, the farmland soil was exhausted, the mines had declined or played out. The details of that time are a rich tapestry of rise and fall, wealth and poverty, but the overall trend was a clear arc toward a Malthusian crisis, mass starvation, and collapse.

And then Columbus discovered America.

The European incursions into the Americas set loose plagues that may have wiped out as much as ninety-five percent of the indigenous populations of the two continents within a few generations. The Europeans walked, essentially unopposed, into an entire world of new, untapped resources in a virtually unpopulated land. Instead of crashing in chaos, capitalism exploded with a cocaine rush of new activity.

What we live with now is the result of turning capitalism loose on two continents full of every imaginable kind of natural wealth. Timber. Fertilizer. Gold. Silver. Iron. Acres and acres and acres of land. And then, in the 1800’s, the steam engine and oil, which increased the power and reach of capitalism a hundred-fold.

It was one hell of a rush.

But the twenty-first century is unfortunately going to be the morning-after. We didn’t use our technological prowess at its peak to figure out how to move to the next exploitable resource base, whatever that might have been, and every possible path to our next cocaine high is rapidly fading. Indeed, it’s been fading since about the middle of the twentieth century, say 1950 for a round number. Capitalism started to run out of things to suck dry, and has turned back on itself.

That’s what drove us into financializing the economy, starting in about 1980. Just as our industrial economy drove the merchant marine out of business — why ship silk when steam-powered mechanical looms can weave fabrics equivalent to or better than common silk at a fraction of the cost? — the mechanical age itself has given way to the financial age. Why make products when you can flip houses and cash in on junk bonds and default credit swap derivatives?

What this means in practice is that every single business and government agency is now pitting product and service against money, money which is being pumped inexorably out of businesses and government into the hands of a few individuals, who have absolutely no incentive to give any of it back: it is their ownership of money that makes them more money! So workloads increase, resources disappear, and the quality of work provided — well, customers don’t care about quality of work. They can’t afford quality of work. They take what they can get.

It’s all about the money. It’s all corrupt.

Barring the discovery of a whole new world of unplundered resources, capitalism will soon reach the point it would have reached in the 1500’s, had Columbus never reached Hispaniola.

It isn’t pretty.

This entry was posted in General.

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