Karen House Catholic Worker
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Karen House Catholic Worker |
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The Catholic Worker on Economics (Please scroll down for "Free Market Capitalism: Robbing the Poor")
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From Karen House Catholic Worker: - Building a New Society: Spring 2008 RoundTable - The Global Economy: Fall 2001 RoundTable
From the Los Angeles Catholic Worker: - Free Market Capitalism: Robbing the Poor - Jeff Deitrich - The Bailout: Socialism For Wall Street - Interview with Mark Engler
From the Houston Catholic Worker: - Faith and the Financial Crisis - Jim Consedine - It's All About Usury - John Médaille
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From the Des Moines Catholic Worker: - Trying to Serve God and Money is a Losing Bet - Frank Cordaro - Heterosexism as a Metaphor for Capitalism and Other Sins - Mona Shaw
From the Catholic Worker Founders: - On Economics: Easy Essays- Peter Maurin - On Interest and Money Lending- Dorothy Day |
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More on Distributism (economic system promoted by the Catholic Worker): - "Roots of the Catholic Worker Movement: Distributism: Ownershipof the Means of Production and Alternative to the Brutal Global Market" - Mark and Louise Zwick |
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Free Market Capitalism: Robbing the Poor - Jeff Deitrich
Please visit the LA Catholic Worker website to download the Catholic Agitator, and this article. Information for the following article was drawn largely from "The Shock Doctorine" by Naomi Klein (see Catholic Agitator Aug. 2008) and "How to Rule The World" by MarkEngler.
Karl Marx may have gotten a lot of things wrong, but one of the things that he did get right was the concept of class warfare. We are in a class war and the wealthy elite are winning, and the poor of the world, including the poor and even the middle class of the United States, are losing. The $700 billion Wall Street bailout is only the latest skirmish in a powerful resurgence war of capital against the poor over the last thirty years, which has precipitated a world-wide transference of wealth such that the top 1% of the population now owns more than the bottom 56% combined. Along with our foundress, Dorothy Day, who once said that our problems stem from our acceptance of this "filthy rotten system," I share an abhorrence of a system based upon greed, hoarding, and competitiveness. So, I hesitate to make distinctions between a good capitalism and a bad capitalism, but it is almost impossible to explain our present dilemma without recourse to such distinctions. For purposes of this article, then, we can regard the "good Capitalism" as the one that was born out of the twin disasters of the 20th century—The Great Depression and World War II. This is the economy formed most essentially by economist John Maynard Keynes, and Franklin Roosevelt and the New Deal. It is an economy that was created to save capitalism from its own excesses. It recognized the dangers of unregulated markets and unprotected workers. It was what Naomi Klein, in her book The Shock Doctrine, called “decent Capitalism—social security in the U.S., public healthcare in Canada, welfare in Britain, workers' protections in France and Germany.” It is to some extent the economy that most Americans think we still have, that protects us from the worst aspects of capitalism and redirects wealth towards pressing social needs and the common good." (Klein p. 55) This Keynesian doctrine was also practiced in a more radical form in the emerging Third World nations of the post-war era, where economists sought an even more radical variant of the "managed economy," advocating the regulization or even nationalization of oil, mineral, and other key industries, so that a healthy share of the proceeds fed a government-led development process. "Nationalists like Argentina's Juan Peron put their ideas into practice with a vengeance, pouring public money into infrastructure projects such as highways and steel plants, giving local business generous subsidies to build their new factories, churning out cars and washing machines, and keeping foreign imports out with forbiddingly high tariffs." (Klein p. 56) According to Klein, and others, the post-war engines of regulated capitalism were not only creating vast new pools of wealth, but the wealth itself was being redistributed in an unprecedented fashion—increasing numbers both in the industrial world and the Third World were doing well under a regulated or even nationalized market system. But the titans of capital chaffed at the bit of government regulation and sought to dismantle the ideology of the New Deal. And they found their Avenging Angel in economist Milton Friedman. Again, for purposes of this essay, we will call Milton Friedman's brand of unregulated, rapacious capitalism, "bad Capitalism." In the 1950s, at the height of Keynesian regulated Capitalism, Milton Friedman was a little-known professor at the University of Chicago who developed his theories of unregulated free-market Capitalism as a direct antidote to the New Deal, and called for the complete deregulation of capitalist markets. It was Friedman's project to develop an economic theory that rivaled the hard sciences in its precision and accuracy. He envisioned the market much like a natural ecosystem that, if left to its own, would find its natural balance. Thus, his theories called for deregulation of the markets, privatization of public utilities and services—water, power, health care, libraries, schools—and the elimination of all social services. Once the government got off the back of the market, there would be a painful sorting-out period, but ultimately balance would be restored in a natural manner resulting in tremendous wealth creation and, ultimately, a trickle-down to the poorest levels of the economy. Friedman’s economic theory is variously known as “Free Market Capitalism,” “free trade,” or “neo liberalism.” And during its early years, when John Kenneth Galbraith and the Harvard School of New Deal economics held sway, his theories got very little traction in the intellectual world. But not surprisingly, he found quite a following among the powerful. “Though always cloaked in the language of math and science, Friedman’s vision coincided precisely with the interests of large multinationals, which by nature hungered for new unregulated markets.” (Klein p. 57) Friedman, a brilliant mathematician and skilled debater, lent an aura of academic respectability and scientific detachment to doctrines that would otherwise seem selfserving, at best, or rapacious and immoral, at worst, if proposed by members of the wealthy corporate elite. Friedman quickly became the darling of the rich and powerful who enthusiastically promoted his ideas. As Mark Engler says in his new book, How to Rule the World: “Of course a select group of elites stood to profit handsomely from the implementation of Milton Friedman’s ideas and they were naturally eager to see them put into practice. The event that provided the neo-liberals a real world opportunity to test their ideas was one of the most ignoble moments in Latin American history: the 1973 assassination of Chile’s democratically elected president, Salvador Allende, and the institution of dictator Augusto Pinochet.” (Engler p. 10) The implementation of Friedman’s policies was a disaster for Chilean workers and the poor, but the wealthy elites made out like bandits, and the “Chilean Model” became the prototype for other emerging states in the world economy. “As a generation of neo-liberals gained power over time...their ideas became known as the ‘Washington Consensus.’ In country after country they recommended privatizing public industries, opening markets to foreign investment and competitions, and reshaping local economies that were traditionally based on small scale agriculture; they curtailed government spending which cut away safety nets for the displaced....they promoted reforming taxes, often shifting the burden away from the wealthy; they advocated tight money which limited government’s ability to stimulate their economies and reduce unemployment. And they favored controls on capital flows, changing investment from a longterm ‘bricks and mortar’ endeavor to a speculative game in which billions of dollars could cross borders in an instant.” (Engler p. 13) Though most Americans are unfamiliar with the term neo-liberalism, Milton Friedman’s doctrines of free trade and free markets have actually been the guiding principles of the U.S. domestic economy since Ronald Reagan, and they form the very heart of the neo-conservative doctrine of the Bush regime, providing religious fervor to its growing number of advocates, Republican and Democrat alike, who want to “get government off our backs.” Every time a Republican legislator calls for increased tax cuts, he wraps himself in the ideology of Milton Friedman and speaks with the righteousness of an Old Testament prophet, seeking to save his people from the abomination of big government. But, unlike most religious fanatics, we can, thanks to Friedman, actually “prove” mathematically and scientifically that tax cuts to the rich will in fact bring salvation to all the people, rich and poor alike. He fervently believes that the world will be saved by tax cuts to the rich. The beauty of the Friedman ideology is that it provides its adherents the best of both worlds: religion and science, faith and certainty,all in the same package—it is an incomparable doctrine of religious orthodoxy. But it has been a disaster for the U.S. economy, precipitating the loss of manufacturing jobs, the plethora of cheap Chinese goods produced by slave labor, the deregulation of markets, rampant speculation and exorbitant bailouts. It is the source of many of our domestic ills; increasing illegal immigration, (a direct result of NAFTA, which destroyed the domestic economy of Mexico and forced millions to migrate north or die) and creating our exploding prison population of over two million (the largest prison population in the world, a sure sign of our nation’s inability to provide jobs and education). It is the single most important reason why the U.S. has the worst healthcare system in the industrialized world. Beginning with Reagan, taxes on the very rich (those making over 2.5 million) have been slashed from 91% to 27%, and with George Bush, their taxes have again been slashed to 15%. According to Warren Buffet, the richest man in the world, the poor are losing the class war. "Since Bush became president," he says, "over 5 million people have slipped into poverty; 7 million people in the U.S. have lost their health insurance; median household income has gone down by nearly $1,300; 3 million manufacturing jobs have been lost; 3 million U.S. workers have lost their pensions; home foreclosures are now the highest on record; personal savings is below zero, which hasn't happened since the Great Depression; real earnings of college graduates have gone down by 5%; entry level wages for male and female high school graduates have fallen by over 3%; and salaries are now at the lowest share of the GDP since 1929." (quoted on Air America) We can only hope that this ongoing market disaster unveils the failure of neo-liberalism and exposes it for the self-serving ideology that it is: vile plunder of the poor and of the common wealth of the nation. Though I am a Catholic Worker and I find the entire capitalist system reprehensible, I much prefer a "leashed capitalism" to the unrestrained, rapacious capitalist dogs of neoliberalism that have run rough-shod over the world economy for the last thirty years According to economist Robert Polin, "This is a massive crisis of Friedmanite economics and neo-liberalism in general—which all along touted free markets and de-regulation to privatize profits, but comes begging for government bailouts when the inevitable crisis emerged...I would say that if the Left is unable to defeat neo-liberalism now, and build some version of social democracy or 'leashed capitalism,' then we will never do it." Ω
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