Driving home from work the other day, I heard an interview on NPR with a woman who had lost her job, run out of unemployment benefits, and was on the verge of losing her home.
“I don’t know what I am going to do,” she said. “I am willing to work for any amount.”
I began to sob. And once I started, I could not stop.
Later that night, I tuned into the Real Housewives of New York, a “reality show” (an oxymoron), and saw a housewife named Jill buy herself a birthday present of an $18,000 custom-made red horror of a handbag.
And then I realized why, for the last few weeks, I have been hooked on this mind-numbing show in which women spend their lives attending fashion shows wearing Manolo Blahnik shoes.
All along, my subconscious had been computing the disparity between the world’s rich and poor. And now my conscious mind was wondering if the price of that one bag might have been enough to save the about-to-be-homeless woman from utter calamity.
The next day, over tea, a co-worker said, “We know the capitalist system has failed; we just don’t know what to replace it with.” This from a guy whom I have always thought of as having pretty moderate political views!
A week before, a friend from Texas had called to say, “You know, I am glad all the stuff about these high salaries is coming out. After all, how much money does a human being really need? After the first few millions, does it matter?” This from a woman who watches Fox News, who thinks kids should not be shown Michael Moore’s films.
The writing on the wall is clear.
Public sentiment in the U.S. is rapidly shifting in favor of caps on corporate salaries. There also seems to be unanimity that in a civil society, socialized medicine is a must. Education, too, the public is realizing, is something that only the government can provide to the masses. Cleaning the environment and protecting the planet, too, are things only national and international governments can address. Yet, our leaders at the G-20 summit resisted salary caps.
For months, Paul Krugman and others have been proposing nationalizing the banks, yet Timothy Geithner and Larry Summers are throwing good money after bad into the Troubled Assets Relief Program, which is clearly protecting the rich and beautiful people of AIG and Goldman Sachs.
Are our leaders in Washington totally out of touch with the nerve of the planet?
The majority of Americans today seem to realize that the capitalist system is, if not a total failure, then seriously flawed. We no longer tolerate racial slavery, but curiously, economic slavery has been acceptable to us so far.
Yet, a consensus is emerging that some level of socialism is necessary for us to survive as a planet, if for no other reason than to remove the glaring inequality that persists throughout the world today. The voices of dissent indicate that we are on the verge of a new era in which the debate will focus not on whether to have socialism, but on what kind and level of socialism to accept.
Distinguished people like Bill Moyers and economist Joseph Stiglitz are noting that Adam Smith’s invisible hand has failed to protect us from being robbed blind.
Adam Smith propounded that in a free market, if consumers and producers chose what to buy and what to produce and sell, the resulting prices and product distributions would be beneficial to the community. Sadly, this model works for potato chips but not much else these days.
But perhaps it was not entirely the fault of Smith, who could not have imagined the evolution of the military-industrial-governmental complex and the resulting oligarchy, in which power is concentrated in the hands of the few to the exclusion of the majority.
Smith was well aware of the limitations of his theory. He predicted that the invisible hand would destroy the possibility of a decent human existence “unless government took pains to prevent” such an outcome. He warned against the tendencies of the business class, which called for state intervention to protect it from market forces in his day, just as it does today. Take GM, for example.
Smith’s theory’s paradoxical consequences were evident even in his day. There was the tragedy of the commons, for example, in which two shepherds competed using the same grazing grounds until the commons were overgrazed and ruined. We are, in fact, facing the same dilemma today–except it is our planet, not the commons, that is threatened.
Classical economists always treated all these exceptions as “externalities.” Environmental effects were externalities, so were the self-interest-driven lobbyists, who continued to strike blows to the invisible hand of economics almost from its very inception.
If you watched Alan Greenspan’s testimony to Congress a few months ago, you would have seen him hanging his head in shame and admitting that the model of economics he had relied upon had utterly failed to materialize. He had apparently believed that CEOs of corporations would work in their self-interest, which would coincide with the interests of their shareholders, consumers, and society at large.
Greenspan should have known that since CEOs were allowed to earn billions regardless of performance, and could leave their companies unscathed in case of trouble, they had zero incentive to worry about the common good.
Which brings me to socialism. Sean Hannity of Fox News will tell you that it is a dirty word. But that is because he doesn’t know what it means.
Socialism today is defined as “a liberal social democracy which retains a commitment to social justice and social reform, or features some degree of state intervention in the running of the economy.”
I don’t know how anyone could argue that we don’t want that or don’t already have some of it now.
Let us not persist with a failed system. Let us instead put our intellectual energy into creating a new economic system for the new millennium.