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Yetanotheruser's avatar

Is unregulated capitalism like a cancer to the immune system of society?

Asked by Yetanotheruser (14234 points ) October 8th, 2012

John McMurtry, professor of philosophy at the University of Guelph (Ontario, Canada), in this essay, states that the rampant growth of global capitalism, like cancer, threatens to break down our society’s immune system, and if not soon restrained could reverse all the progress that has been made toward social equity and stability.

There are some transnational corporations which, according to the Business News Insider (among other sources), have a larger annual budget than the GDP of some nations, and with that kind of budget, can influence governments (despotic and democratic alike) to make laws favorable to their interests no matter what the cost to society. How can these corporations be regulated, or should they be?

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38 Answers

YARNLADY's avatar

There is no such thing as the immune system of society. Regulations only work when they are equally enforced. Governments are increasingly being controlled by the very corporations they are supposed to regulate.

The real source of regulation comes from the consumers. It they fail to consume, due to corporation malfeasance, the corporation/system will fail.

CWOTUS's avatar

I don’t know where to start with debunking this preposterous essay. (I can’t get past the first two paragraphs without gagging on his silly assumptions and premises.)

In the first place, no one with an ounce of sense truly believes that a nation can be fully “defended” by its military. Its general commerce and industry, perhaps, but not “the military and defense industries” since those – necessary as they may be – are also necessarily parasitic.

There’s value in weapons systems, trained armies, navies and air forces, and the hardware they own, obviously. But that is not generally “productive” value. If a nation doesn’t have an economy worth defending, then its super-strong military can be effectively hollowed out and rotted from within. For “Exhibit A” I offer the case of the Soviet Union, which sometime in the early 90s found that its naval ships (including strategic nuclear submarines) in port were cut off from shoreside power because they failed to pay their electric bills.

If you can’t keep the electric power plants running by at least paying their costs to produce electricity, then where is the “unregulated growth” going to come from? And without a decent economy, then how to pay for the weapons systems and training that it takes to keep it all operational?

No, if you find something in paragraph 3 or onward, let me know. I’m done here, I think.

dabbler's avatar

It’s a timeless story, the merchant class – the ones with stuff we all need or want – have always been the de facto government or have been trying to influence the government as much as possible for their own interests.
Monopoly in every industry is the end game of unregulated capitalism, where for everything you need there is only one source that can charge whatever it wants.

Stuffing this sad tale into an analogy of the human body is not really that useful. Flaws in the analogy make it easy to dismiss the point of describing unregulated capitalism (e.g. there really isn’t a clear immune system in society, except vaguely the rule of law).

One of the adamant thoughts of most (not all, e.g. Hamilton) of the founders of the U.S. is the exclusion of the merchant class from ruling the country, thereby enabling the freedoms for which the U.S. is so famous. The greatest periods of prosperity in the U.S, have been those with good regulation of companies and banks, e.g. between 1950 and 1980. There are other factors that contribute to the success of the U.S. but fair markets, including labor markets, are way more motivating to most folks than tax cuts for the wealthiest.

It takes well thought regulations to provide freedom to every citizen in a country, not just the ones who can buy it.

CWOTUS's avatar

OMG… the silliness continues. The closest I’ve seen in the USA to “unregulated capitalism” (and it is highly regulated, but very strong competition) is the retail food industry: supermarkets, restaurants and other food producers and distributors.

Tell me which supermarket chain has anything close to “a monopoly” or any likelihood of one, please.

dabbler's avatar

Well I don’t see that anyone claims we are at the end game.

There were certainly monopoly conditions in some industries in the past, where at least regionally you had no choices, e.g. railroad industry a century ago (Vanderbilt). Steel (Carnegie) and petroleum (Rockefeller) and telecomm (ATT).

However, if these days the industry closest to monopoly you’ve seen is retail food then you aren’t looking around. There are at least a few that are approximately in oligarchy stage.
Upstream from retail food a giant majority of agribusiness is in the hands of an oligarchy of just a few corporations. If Monsanto has its way some crops would come exclusively from its seeds.
Away from the food scene, microprocessors for desktop computers come primarily from Intel, the rest from AMD. If it weren’t for fiddling from the feds AMD would be dead by now. We do recently see the rise of several manufacturers of ARM-based processors in phones and tablets, but Intel is intent on taking a bite out of that market if they can lasso a usable operating system.
The control of money itself, in very few hands, has led many to ruminate on the re-emergence of an American Oligarchy the sort of which we haven’t had since the Guilded Age.

ETpro's avatar

Like @dabbler, I find the cancer analogy off-putting. But what the professor claims its symptoms to be is most clearly underway, and the ultimate harm it will do is as disastrous as a diagnosis of cancer. Corporatism is on the rise as a governing rule in much of the world today, and with the fascist merger of corporate and government power it brings, we can expect accelerated movement toward environmental destruction and a rollback of all worker protections and wage guarantees. We can expect wage slavery to be the rule for most of those lucky enough to get a job.

tedd's avatar

I didn’t read the article.

I’m in semi agreement, that un-regulated pure capitalism is not to be trusted. But at the same time I think a healthily/wisely regulated capitalist economy can be a very powerful engine for our society.

gorillapaws's avatar

I agree with @dabbler and @ETpro. Cancer doesn’t work for me. Real capitalism is the best system in the world, but only when companies succeed through innovation. When it’s more profitable to buy politicians, lobby for corporate welfare, externalize costs onto society and profit through anti-competitve behavior, than invest in researching/developing new and better ways of doing things—it falls apart. It’s the government’s job to make sure the playing field is fair, and it’s the individual’s job to get an education, work hard and create innovations that push society forward (that’s the secret sauce).

@CWOTUS I think the mobile telecoms are a great example of how corporate mergers and acquisitions have left us with ATT, Verizon and Sprint (t-mobile is barely hanging on), all of which suck compared to what you can get in many other parts of the world. If we had more viable choices consumers would be much better off.

CWOTUS's avatar

Hmm, well, it’s still a relatively new technology, @gorillapaws, and it cannot be said that the government is uninvolved with regulating the broadcasting frequencies and licenses to a huge degree. So it’s somewhat akin to the railroads of the 19th century: highly regulated rights of way and direct competition limited by law.

And you think things are bad now? Did you ever try to have a landline phone installed back in the days when you didn’t have to “shop” for telephone service, because you already knew, you always knew, who you “service provider” was? Things are a whole lot better than they have been, for sure. Don’t blame my ideas because life isn’t perfect.

wonderingwhy's avatar

I skimmed over the essay and while his analogy is needless and just makes for attention grabbing he states some valid points. Particularly in how the lack of independent systemic regulation all but ensures continued degradation and subversion of our society and environment. And that society has not effectively recognized, and perhaps is not practically capable of recognizing or addressing, the fundamental, ancillary, and derivative problems caused by our currently accepted and promoted model(s) of capitalism.

How can and should such large/transnational corporations be regulated? Yes, they should be strictly regulated (and proportionally punished) through a socially beneficent system of independently derived and modifiable ethics. How we get there, well that issue is why I’m far from convinced we are practically capable of addressing this situation.

Skaggfacemutt's avatar

I think socialism is the enemy, not capitalism. My son can’t afford health insurance, but you can bet that his tax dollars are paying for health insurance for others. Not fair!

rojo's avatar

@Skaggfacemutt I think it interesting that you say that your son can’t afford health “insurance” and not health “care”. This is true of the present debate. We actually never discuss health care, except to say that the US has the best in the world, we only discuss health insurance and how to get it. And I think this is a result of a heavily capitalist, corporate society. If we were more socialistic we would be discussing how to actually get health care for all.
Socialism is not the enemy. Capitalism is not the enemy. There is a need to balance the two to achieve a workable society. Too much one way or the other is unworkable..

tedd's avatar

@Skaggfacemutt I have to agree with @rojo here. In the case of healthcare capitalism is the enemy. Capitalism has made our health insurance industry for profit, meaning that no matter what their number one goal is to make money. They will provide health insurance to the point that they are required to do so and still make money, but they will turn away people who are already sick, or are more likely to become sick, or who simply don’t have enough money (IE your son). In a socialist healthcare system it would cost us all more in taxes, but the overall system would be cheaper, and everyone would be able to get healthcare.

Honestly I don’t see how anyone even debates for the privately run clusterf*ck we have at the moment.

JLeslie's avatar

@Skaggfacemutt His tax dollars would pay for his health care if health care was paid for by our government. Right now if he walks into the emergency room, God forbid, will he pay the bill?

Skaggfacemutt's avatar

Good points. I have to say that it does have to be in balance, because I don’t think the government should be redistributing the wealth. Some people actually do work harder and obtained more education than others. They should get rewarded, when compared to those who don’t want to work and those who mooch off of society.

I am for socialized medicine, though. I have lived in three different countries (England, Canada, South Africa) who had it, and it is wonderful and works. There were no drawbacks to socialized medicine that I could see, and I had babies and toddlers at the time. We all got excellent care and didn’t pay a dime. I don’t know how these countries make it work, but they do.

@jleslie All I know is that my son can’t go to the doctor. He doesn’t have health insurance and can’t afford it on his own. He suffers from migraines, and we think he might either be diabetic, hypoglycemic or might have a cyst on his pancreas, but who knows? If he was an illegal immigrant, they have clinics set up for them to receive health care, but not for my son. Someone is paying for the illegal, unemployed and low income free clinics, but my son doesn’t qualify. If not our tax dollars, than who? I know the employees in the free clinics aren’t working there for free!

tedd's avatar

@Skaggfacemutt Your son almost certainly qualifies for the same level of care those illegal immigrants are receiving. Hospitals, by law, cannot turn anyone away. If your son went to one for his migraines or what have you, they would do the appropriate tests and treatment, even if he told them point blank he couldn’t pay for it. They would then stick him with the bill, and when he doesn’t pay it, it will fall onto the federal government to pay it (via tax write off).

While it’s possible (and probably likely) that there are some clinics in this country that cater to illegal immigrants and provide better or more specialized care than what I’ve just described…. they are definitely not funded by the government, and I would suspect they were set up by a charity of some sort.

Yetanotheruser's avatar

@Skaggfacemutt I think the concept of “redistribution of wealth” has become a conservative catch-phrase. The socialized healthcare systems you cite are made possible because of higher taxes, and progressive tax rates (England 10%-50%, Canada 15%-29%, South Africa 18%-40%) see links for sources. These taxes are then “redistributed” through the various government programs, including healthcare. I don’t see this as a redistribution of wealth, but rather a means to “promote the general Welfare” as it states in the Preamble to the US Constitution.

Skaggfacemutt's avatar

I realize that socialized medicine would mean higher taxes. In the case of health care, I would agree to that. @tedd I have gone to the doctor with my son before, and they really do turn him away. The only way they treat a person and worry about the money later is if they are literally dying right there in the waiting room. My son isn’t.

As far as the other programs to redistribute wealth – why would anyone strive to be a success and make more money, if it is just taken away and given to those who don’t contribute as much and don’t care. This situation is what I am worried about, because although the United States isn’t there yet, that is the direction we seem to be going.

ETpro's avatar

@Skaggfacemutt Actually, all taxes inherently involve redistribution of wealth. Without redistribution, we would have no interstate highway system, no military, no police or fire protection, no public education.

Likewise, all private spending redistributes wealth. I don’t understand how the word, “redistribution” has become such an incantation from Hades.

dabbler's avatar

@Skaggfacemutt “why would anyone strive to be a success and make more money, if it is just taken away” It’s certainly a matter of degree. But nobody is proposing taking it all away. Those who strive will make more.
Higher taxes historically actually cause a change in behavior in the high earners, instead of pulling income out of their enterprises to take advantage of low tax rates, they will leave money invested in their companies, creating more wealth for themselves and usually creating more jobs. It’s ironic that misguided people advocate lowering taxes on ‘job creators’ when lower taxes will cause the opposite effect.

JLeslie's avatar

@Skaggfacemutt I really don’t understand why anyone thinks taking an extra $300k away from someone who makes $10million a year, or an extra $9k from someone who makes $300k is redistributing wealth to such a degree that the wealthy person won’t strive to make money (those are just 3% increases, but go ahead and double it to 6% all those people are still doing alright. No one is talking about taking all of anyone’s money away. If you could make $100k on an investment and the tax level was 20% or 30%, would it stop you from wanting to earn the $70k or $80k you can have in your pocket at the end?

As far as your son, he most probably can get health care at a clinic, but the clinic might not have all the diagnostic machines you need to scan his head, and I am not sure about the pancreas, that is either ultrasound or CT probably. Why do you think he has a cyst on his pancreas? I absolutely agree ER’s care about people who are dying, only because they have to by law. Doctors will not treat people inntheir offices if the patient cannot pay. This is the truth that most conservative simply don’t believe, and I cannot understand for the life of me how non of them have ever had this situation, and don’t start pushing back on the Republican party for telling untruths on the topic. Socialized medicine would mean more controls on pricing, and health care overall would be cheaper for all. Instead of paying an insurance company we would pay tax for the care, and by every other example in the world the tax would be less expensive than what we pay insurers. But, the US probably won’t go to socialized medicine any time soon, so it is not realistic to discuss it I guess.

Anyway, you are for socialized medicine so I don’t need to sway you on that, but think about this, your son needs to kitty $20 a month every month like it was a tax for socialized medicine if you are in favor of it, and then he could afford to get diagnosed probably by now, if he had been doing it all along, or you, I don’t know how old he is. In the end you are right that someone has to pay. If your son goes and gets free health care today, probably I pay, with the high price the hospital and diagnostic centers charge me to cover people like your son. I much rather you both be paying in some pennies to help cover yourselves and somehow we need to control the cost of the services overall. Your sons emergency is basically a “tax” on people like me. You are taking my wealth.

I do think if he went to the hospital and said his head feels like it is splitting they would diagnose it if you fear something like brain tumors, and they would run a basic blood panel (he should go to the hospital having not eaten for 12 hours so the sugar test is accurate). However, I have head CAT scans as inexpensive as $350 (although some places will charge $2500. They are theives). I just had an ultrasound of part of my leg for $50 and a sugar test for diabetes is extremely inexpensive. It’s probably $15 to do the basic test. That is what it is for me self pay to get the panel done that includes glucose, and I get to see some other tests done on the panel too, which are useful. At minimum get that test done. You can buy it in the drug store, the pharmacist should be able to help you. Or, if you have a diabetic friend use theirs and just buy some needles for him to use their monitor; very very cheap.

Skaggfacemutt's avatar

@JLeslie I am not worried about the wealthy. It is all of us “used to be middle class” people who are paying the brunt of the taxes that I worry about. There isn’t a whole lot of difference between us and the poor, because we are paying so much taxes and the poor is receiving so much help. That is what I mean about redistribution.

As far as my son – his condition is not life-threatening, so he won’t get any help at the hospital. He does have a good job, so he can’t qualify for any kind of discounted health care. His employer does not offer health insurance, and he can’t afford to pay for private health insurance. If he goes to the doctor to get a bunch of tests done, he will have to pay for the doctor visit, the lab, the tests, etc. and I know it will wind up being several hundred if not several thousand dollars.

His migraines seem to be caused by wind swings in his blood sugar. When he was younger and on my health insurance, we took him to the doctor. The did an MRI or cat scan, and determined that there is nothing wrong with his head. Then they prescribed some migraine medication, and that was it. It has only been recently that we connected the migraines with a blood sugar or insulin production problem, and that was us being backyard MD’s.

He did buy a monitor from the drug store, and confirmed that his blood sugar is a problem.

JLeslie's avatar

@Skaggfacemutt Diabetes is life threatening.

gorillapaws's avatar

@Skaggfacemutt “There isn’t a whole lot of difference between us and the poor, because we are paying so much taxes and the poor is receiving so much help.”

Taxes are as low as they’ve ever been on the middle class in recent history. Taxes were higher under Clinton, and the middle class was doing great, and they were much higher in the 50’s when the economy was booming. The problem isn’t taxes.

Under the Republican plan, he’s not going to be able to get coverage either since he has a pre-existing condition. At least with Obamacare, he can apply to get insurance through the exchanges that will be set up by the states by 2014. With the exchanges he should be able to get a much more affordable plan than he would prior to Obamacare, if he could even get one at all with his pre-existing condition.

I would prefer to have a public-option in there, and hopefully we’ll get there one day. For now, this is a hell-of-a-lot better than what was there before.

JLeslie's avatar

@Skaggfacemutt Just to add, if he is checking his sugar levels now and then, at least he would catch if it became very high, so that’s good. I understand now why you are not panicked about the migraines.

Skaggfacemutt's avatar

@JLeslie Well, I am kind of panicked about him maybe having diabetes, but what can we do? Life-threatening or not, the doctors will not run the tests and lab work on him unless he pays. It would even be expensive WITH health insurance – can’t even imagine what it would be without. And if he needs insulin or some other drug, how would he pay for that?

Hey, I just had a great idea. He was born in Canada and has dual citizenship. Maybe we can take a trip up there and get him some health care. It is still very sad that we have to go to a different country to get something as basic as health care.

Skaggfacemutt's avatar

@gorillapaws Regarding taxes – that is impossible! I have been working since the 70’s, and have never seen so much of my check not making it home. Of course, I have no tax shelters anymore. My kids are raised and house paid off, but I still have to live. I have to pay for insurance, utilities, food. A third of my check goes to Uncle Sam. That is insane! There is no way they were paying that much in the 50’s.

gorillapaws's avatar

@Skaggfacemutt It’s not impossible, it’s a fact: tax rates are at a 30-year low.

Skaggfacemutt's avatar

I want to see percentages or tax tables. Just throwing a statement out there like “tax rates are at a 30-year low” doesn’t do it for me.

Not saying that you are wrong – maybe you are right, but I followed your link looking for hard facts, and couldn’t find anything but political double-talk.

Yetanotheruser's avatar

@Skaggfacemutt Here’s the complete history of tax rates from 1913 to 2011, both in nominal terms (e.g., 1960 amounts stated in 1960 dollars) and inflation adjustments.

You will notice that up during WWII and for a decade or so after, the maximum tax bracket was anywhere from 85% to 91%. If high taxes on high income earners is so detrimental to the economy, why was the US economy so powerful and booming after the war during the high taxes?

Most high earners at that time earned their money through manufacturing or related industries. The extremely high taxes on these high earners, it seems to me, provided an incentive to re-invest those dollars back into the industry, rather than as executive pay. This investment in turn led to jobs. Jobs in R & D, which in turn led to improved products, which in turn led to more demand, which led to more jobs in production.

gorillapaws's avatar

@Skaggfacemutt “Just throwing a statement out there like “tax rates are at a 30-year low” doesn’t do it for me.”

If you follow the first link on the article I referenced, you will find the congressional budget report. On page 14, figure 5, you will see the chart with the historical tax rates since 1979.

It might be worth re-evaluating where your information is coming from when it seems to be misleading you on such basic factual information.

Skaggfacemutt's avatar

Thanks for the info. I am surprised. Like I said, I was raising kids in the late 70’s to the late 90’s, so really didn’t have to pay much in taxes. Now, however, I have to pay the full amount and it seems like a lot. Also, 3 of my 4 kids are single, so they are also paying through the nose.

emilianate's avatar

Nobody paid those high tax rates after ww2. This simple chart will prove it. Chart

If you want a more detailed explanation, see here… 90% tax rate myth

ETpro's avatar

@emilianate Ñot so. I was around back then. Truth is not MANY of us paid 90 percent, and those who did only paid it on a small part of their income. That top marginal rate didn’t start to apply till you had earned your first $200,000 to $400,000 in that tax year. It jumped between those two figures depending on the year. But either number was a king’s ransom back then. Most who earned substantially more than $200,000 were not earning wages but capital gains.

emilianate's avatar

Yes, I’m aware. My parents lived in that time. They said there were so many deductibles in that time that the government eventually introduced the Alternative Minimum Tax to offset the mass deductions.

The highest income rate the rich paid back then didn’t exceed 40%, and as you said, a lot of the wealth came from capital gains. Most of the earning were simply not counted as taxable income, hence the very low government revenue as seen in the chart.

YARNLADY's avatar

I showed my husband this question and he said how would anyone know since there is no such thing.

dabbler's avatar

Capital Gains taxes used to be higher too. they were lower than the top income tax rates but still substantial. There were few loopholes related specifically to that kind of income, until the hedge fund folks bought enough politicians to give them a special rate on their billions.

It’s too bad the rates on Capital Gains have come down so much because when they are higher it encourages the Big Money people to keep their capital where it is and pay more attention to where it is. <== creates jobs and economic stability.
As rates are much lower BigMoney people are encouraged by that to speculate and churn their money in and out of anything that produces a profit.

emilianate's avatar

Historically, it simply isn’t true. In 1968–81, when capital gains taxes gradually rose from 25% to as high as 40% average GDP growth fell from 3.8% to 3.1% per year. Same thing happened again after 1987, when the rate increased from 20% to 29% as average annual growth declined from 3.5% back down to 3.1%.

The same thing happened when Ronald Reagan slashed the rate in half from 40% to 20% in 1981: average annual growth rose from 3.1% to 3.5%.

Bill Clinton cut the capital gains tax rate from 29% to 21% in 1997, economic growth rose from an average of 3.1% to 4.5% per year.

There was a 1.8% growth after the dot com bubble and 9/11, but when George W. Bush cut the rate from 21.19% to 16.4% by 2003, the average annual GDP growth increased a full percentage point, from 1.8% to 2.8%.

Also, a look at government revenue. Reagan’s 1981 cut increased average annual revenue from capital gains from 0.42% to 0.68% of GDP; Clinton’s 1997 cut from 0.67% to 1.05%; and Bush’s 2003 cut from 0.52% to 0.9%.

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