Capitalism's Built-In Limitations and Anti-Stimulus Realities

Mark Weiser I Social Economics I Analysis I August 27th, 2014

Capitalism has always been sold as the best way for the greatest number of people to benefit from their own labor. I would agree that was true enough for a good number of men of European decent over most of our U.S. history. When Adam Smith, the "father of capitalism" was alive in the 1700s, the world was thought to be infinite with an unlimited supply of natural resources waiting to be discovered and forged into useful tangible consumables. As we now know the world's resources are not infinite, and we can correctly deduce that capitalism is limited by the amount of available resources. Capitalism also requires someone, or a group, to save "capital" before investing or embarking on a capitalist venture. However, saving money or "capital," whether temporarily or continuously, is actually an anti-stimulus with the given limitations in a finite capitalist economy.

These realities concerning limited resources and the anti-stimulus effect of accumulating capital cannot be underestimated. The fact that capitalism has limitations due to finite resources is inarguable. The fact that saving capital equates to an anti-stimulus is one that many would argue against, but if results are the judge, they will lose that argument. Some might think these are flaws in the system, but the flaws are actually in the beliefs people have regarding how they "think" the system behaves and "should" work verses how it actually works in reality. Because the people who set economic policy have flawed beliefs, or are intellectually corrupted for one reason or another, the economy does not behave as we're told it should and does not deliver the promises made.

Having "beliefs" and "faith" not based in reality creates unrealistic expectations regarding the economic system which can also be defined as delusional thinking. The negative psychological effects of these irrational beliefs cause many in our society to wrongly feel personally responsible and or inadequate from an earnings or occupational standpoint. There are numerous other psychological affects resulting from that same reality. Indeed, we've been told, with hard work, we can rise to our own desired level in the economy as long as we're qualified, But, paradoxically, that premise is simply not a mathematically possible given everything we currently have to work with.

As we've been noticeably moving swiftly toward unregulated capitalism since the Reagan Presidency, it is effectively undermining the spirit and workings of our democratic process and society by giving the wealthy more "votes" through campaign funding and lobbying laws. Can we really call the U.S. a "democracy" where political candidates are voted in by industry big buck$ to serve only their own financial best interests? Can we even call it a capitalist society if the larger majority who, although ideologically may side with capitalism, are not participating in the economy as capitalists themselves?

This buying of elections, and thereby buying favorable policy, is the same as manipulating the government and economy to favor the wealthy. Because the economy is manipulatable, the question becomes; why should policy grant more benefits for the relatively very few at the top (who accumulate way more than they can possibly use in one lifetime) as opposed to being manipulated to provide more benefits for the very many in the middle and bottom echelons of the society? Unregulated capitalism, as practiced today, is excluding a large percentage of the population from being capitalists themselves, as well as limiting their available choices. For those who have fewer choices, it means less freedom, and might be un-American depending on your concept of what America should be.

Having collectively invested in the capitalist ideology for over two centuries, the current U.S. population is now sensing something's amiss, and yet many display an absolute phobia when discussing system failures or any possible alternatives. The result of this phobia allows the public to be easily manipulated into a collective-denial regarding system failures, as well as a collective denial concerning the conflicting objectives and realities between capitalism and democracy in general. When you add it all up, the system is adverse in many ways to the overall well-being of majority whom the capitalistic economy as regulated is supposed to serve. The total number of possible jobs and the total of what can be produced at any given time on planet earth are both exclusive and finite numbers.

It's easy to recognize some of these finite limitations by looking at industries which require raw or refined natural resources to operate. If there is limited farmland on the planet, with all of it being owned and not for sale, then by default everybody else is excluded from entering the market as a grower of farm produce. When all mineral deposits are already owned and not for sale, then by default everyone else is excluded from extracting and mining minerals. Renewable resources contained in the earth's ecosystem are not unlimited, and if we harvest too much of certain stocks it actually becomes counterproductive. The overharvesting of any particular fish species results in limiting their reproduction and future annual harvests, as well as limiting the future number of fisherman. Having limited finite and renewable resources automatically excludes a certain percentage of the population from being able to participate to their full or desired capacity.

The idea that capitalism will allow anyone to attain whatever level of success they desire is not even close to being a universal truth, and is absolutely one of the biggest myths ever propagated. There are Five-hundred Fortune 500 companies and there may be 3,000 or more 'qualified' individuals who want to be the CEO of any one of those 500 companies at any given time. Yet simple math deems it impossible for 2,500 of those 3,000 individuals to realize their aspirations at any given time. Likewise, there are 4,000 jobs in a manufacturing plant and at any given time there are 30,000 qualified people who would like to have one of those jobs. When there are more applicants than positions across nearly all aspects of the economy, there is a certain percentage of the population which is automatically excluded from participating in the capitalist system at their desired and or qualified level of success - this includes all those employed who apply for more fulfilling or financially rewarding positions. Are they all doing something wrong which keeps them from reaching their own self-determined level of success? Or is the system restricting them from opportunities?

The latest polls in the U.S. indicate roughly 65% of the population is dissatisfied with their occupations and or income level. If 65% of the working people move up or over, one or two steps on the occupational ladder, there would not be enough people left to fill the vacancies they leave behind. We can deduce from our capitalist economy that everyone who's qualified does not have the possibility to rise to their full desired level as it is a mathematical impossibility. It would be more accurate to say that the greatest percent of the population will ultimately reach a level at which there is no room for them to move up regardless of desires and qualifications. Having stratified income levels dictates that the majority is required to stay at the bottom or the middle levels of the economic system as it currently exists. Therefore capitalism, with inherent and absolute limitations, has proven itself to be one of the biggest myths ever sold. I can hear the denials now, but denials won't solve the issues that are built into the system as practiced.

Assume that every dollar is made honestly and a percentage of every dollar represents the labor of one or more individuals who have produced a tangible consumable. And instead of dollars, people are given labor credits which they can make purchases with. If they store enough labor credits away they can take five years off work, and instead of working to pay their bills, they pay with the labor credits they've saved up. We've all heard about the government stimulus packages designed to kick start a sluggish economy. Now think of those labor credits as dollars and understand that storing away dollars by taking them out of the general economy is the exact opposite of a stimulus package.

Of course, the exact opposite of a stimulus package is an anti-stimulus. By storing these dollars away, people who invest may be benefitting personally, but it does not change the fact they are stifling the overall economy by not re-circulating their earnings directly back into the system through purchasing tangible, consumable items. The billionaires themselves don't benefit once they've accumulated enough to live out fifty lifetimes in absolute luxury. Of course, hundreds of billions in assets may be required if one suffers from grossly exaggerated and malingering financial insecurities, or outright selfishness and egoism, with the possibility of some enjoyment thrown in while watching others struggle and actually suffer through no fault of their own.

And yes, there are those who will now claim the stored money will be re-invested to create yet more jobs. Please refer back to our discussion of a public inflicted with a phobia causing a collective-denial of reality and being easily manipulated because of it. And now let's take a look at the 1980s "Supply-side" and "trickle-down" economics, or "Reaganomics" as it's still often referred to. This was one of those false promises stating that re-investment of wealth accumulated by the wealthy would create jobs all the way down the economic ladder. Many Americans bought into "Reaganomics" at the time, and some still believe it will deliver the promises. In the end, the implementation of the policy, at best, revealed itself as flawed reasoning; at worst, it was pure propaganda designed to lower the tax rates for the wealthy while limiting public outrage. Just like the scenario above where storing money away by taking it out of the general economy has the real effect of being the opposite of a stimulus, Reaganomics was and is that same system and has historically proven itself to be a complete falsehood when implemented in our finite world.

What we're seeing today is Reaganomics on steroids, with a relatively very few acquiring more and more wealth which they don't need and can't personally enjoy in fifty lifetimes. While the vast majority gets by with fewer choices, less purchasing power, and less freedom. The "economic stimulus packages" dumped into the economy from time to time are merely a temporary boost to the overall population as the money flows upwards in the economic stratosphere where it eventually gets stored away as "capital."

Just to make sure we understand each other, let's look at a couple more scenarios. Imagine if all people with income stopped spending on anything that wasn't absolutely necessary and saved all the rest for future investments. Of course that's an exaggeration, but the economy would certainly contract over any duration that policy was implemented. For our purposes here, "spending" is the purchase of needed or desirable goods or services, while "investing" is using stored capital for the purpose of making a profit. Somewhere between the two extremes of "spending," all or zero percent of discretionary income is the actual percentage of what's being produced that is being taken out of circulation for capital "investments," and this is unequivocally the opposite of a stimulus. If all the people and businesses who've been saving money over the last one, or ten, or twenty years stop saving and spend all discretionary income plus what's already been saved over the next five year period, now that would be some real and genuine stimulus!

The intention with all of this is not to propose solutions but rather to point out a few simple but pertinent realities affecting the entire U.S and world economies. Many would think it's all too complex to change a system we've invested in for over two centuries. I personally consider the "complexity argument" to be a denial in acknowledging the limits and contradictions contained within our capitalistic-democracy, as well a denial of the economic feudalism which capitalistic-democracy is presently delivering to the majority.

At this time, our U.S. politicians are unable to honor their sworn oaths of office in representing "the best interests of we the people." This is due to the realities of campaign funding and election laws which have evolved and they, themselves, enacted. We could all just throw up our hands and surrender to a life of serfdom for the vast majority and those we leave behind. It does seem a puzzle and "would be" a difficult nut to crack, but the truth is any changes deemed beneficial could be made with an informed public working to effect political change. Those who have power over others do not generally volunteer to give it up; and my personal belief, though possibly naïve, is that a sweeping grassroots reformation is more likely to occur than redemption of our corrupted two-party system administered by all the corrupted intellects which pervade and influence Washington D.C.

And to the contrary, my personal belief is that it's naïve on the part our government non-servants and their masters to think they can all continue leading us down this dead end road. With the policies in place today, they are inviting, if not inciting, eventual chaos of one repugnant flavor or another. The U.S. government and insecure oligarchs are frightened by the possibility of the U.S. population taking back what is legally and rightfully ours. Their fear is revealed through the NSA domestic spying, preparation to combat peaceful civil unrest or dissent through the Minerva Research Initiative, and with the 2011 - 2012 National Defense Authorization Act (NDAA), HR 1540) which now authorizes military force against our own civilian population.

They deserve to be scared as well as blamed for effectively replacing our democracy with capitalistic feudalism. Nothing scares those who are guilty more than having the truth revealed and recognized among the masses. This is, after all, our democracy, as in we the many, directly opposed to them, the few, as deemed by their own cumulative actions over the course of decades. Most if not all laws concerning business and the use of natural resources, as well as the political funding and lobbying laws, were all arbitrarily legislated to begin with. Any law(s) can and should be expanded or collapsed if deemed beneficial to our county and society as a whole.