Culture and environment are major factors in determining what each of us will accomplish with our lives. Culture is a quality of our society and also of our individual families. Environment includes our homes, schools, neighborhoods, work places, and all the people we interact with in our daily lives from birth onward. America prides itself on being a “land of opportunity” implying that opportunity is available equally to all, limited only by the ability of each individual to recognize and exploit these opportunities. That may be true in theory, but reality is not nearly so benign or beneficent.
Our culture promotes individualism, fosters competition, and makes heroes of those who excel in sports, entertainment, or business, but places little value on the efforts of those who work for the benefit of society as a whole instead of for individual attainment. One remarkable example is how little value is placed on education and teaching, irrespective of the constant rhetoric and breast-beating on how our schools are failing and something must be done. Those who have the power and influence to pursue the social and cultural changes needed to prioritize education, have no incentive to do so, precisely because they have the power, influence, money, and access to provide the best for themselves and their children. That the rest of society suffers is of no concern to them. They view themselves as an entitled elite and rationalize their selfishness with the fallacy that opportunity is available to all who choose to pursue it. They are the capitalists.
In a capitalist society, the capitalists own the factories, capital equipment, and other means of production that individual workers cannot afford. The capitalists purchase labor—like any other commodity—to operate their factories and produce goods. After selling the goods to pay for labor and materials, the capitalists keep the profit. By contrast, in socialism the means of production are publicly owned, and the workers keep the profit. From the capitalist’s viewpoint, attempts to introduce this socialist ideal in a capitalist society undermine a system that is organized for their benefit. Capitalists portray socialism as an evil and a threat to the established way of life, and their portrayal is broadcast in the media, which they own, after all.
Neither pure capitalism nor pure socialism are perfect systems, but they need not be mutually exclusive. Capitalism is inherently exploitive, because to maximize profits, it exploits labor, land and resources, and acknowledges no responsibility for the ills of society or for the destruction of the environment. The production of society overwhelmingly benefits the capitalist class. The wealth, power, and influence accrued by this class often is corrupting, and places labor, and the rest of society, at their mercy with little or no recourse from exploitation and abuse.
Government should be the referee that ensures that all of society benefits from its production. However, the capitalist elite, because of their economic power, are able to influence government to protect their interests, with little regard for the cost to the rest of society. Any proposed intervention by government for the benefit of the non-elite is reviled as socialism and a threat to society, with the presumption that capitalism addresses all of society’s needs. If other members of society suffer, it is each individual’s responsibility to improve his/her situation, whether or not the means and the opportunities exist. The capitalist promotes competition and opportunism, individual seeking of wealth and success, irrespective of the effects on other members of society. Unconstrained, the system leads to excessive compensation for a very few, servitude for the majority, and environmental destruction for all, with the poorest suffering most.
Pure socialism has its own difficulties. Public ownership and management of the means of production and distribution requires an entity to assume those responsibilities. If the entity is the government, restrained influence risks tyranny. If it is an entity selected by the public based on knowledge and experience for each particular sector, with an elected government to provide the necessary oversight, there is still the problem inherent in the capitalist system, which results from the power these entities accrue by their position within the society, and thereby, their ability to influence government regulation and oversight for personal gain. Hayek, in his “Road to Serfdom,” explores the concern that socialism leads to a feudal type of system whereby workers’ occupation and production is directed by the government as for a feudal lord. Workers’ status is fixed, with no opportunity for improvement.
However, a similar concern is valid in a capitalist system. Huge, multinational corporations, establish operations in specific areas. They become the economic base in these areas, controlling the local economy, and the lives of the people in the community become totally dependent on them. Numerous examples of bad outcomes have become apparent recently, some as a result of the Great Recession, e.g., the automotive industry in Detroit and other areas of the country, and others due to major accidents, e.g., the Gulf oil spill and the West Virginia mine explosion.
A benefit of capitalism is that it encourages innovation and entrepreneurship, as these are paths that can lead to the accrual of great wealth. Society as a whole is assumed to benefit from this wealth. But the degree to which it benefits depends entirely on the degree to which corporate profits allow for fair wages and investment in economic growth rather than saved for personal wealth or consumption. Capitalism encourages opportunism by individuals as well as corporations. In their pursuit of wealth, individuals often exploit the poor, the weak, the uneducated, the unwary. That few ever succeed, and many are exploited, does not compromise their belief in opportunity for all. Thus, capitalism holds out opportunity as a lottery ticket that all receive at birth, each with the hope of winning someday, however small the chance!
Socialism, on the other hand, demands that wealth be equitably distributed throughout society and does not accept individual accrual of great wealth. This ensures that all members of society receive adequate benefits; there are no extremes in either wealth or poverty. This approach eliminates the promise of vast wealth that incentivizes entrepreneurs and innovators in a capitalist system, but socialism encourages these roles in other ways, as part of broader support for creative pursuits. De Tocqueville, in his “Democracy in America,” points out that in a society that focuses on the accumulation of wealth, there is little time or incentive for creative pursuits. A socialist society can provide an environment that is more conducive to creative pursuits if the society values the potential results because artists, writers, musicians, and inventors would receive the same share of society’s wealth as other members. This positive aspect of socialism is tempered by the potential for government support to lead to government control of creative work. But in a capitalist society, the threat of government control would simply be replacing the fact of capitalist control.
In Polanyi’s “Great Transformation” he chastises capitalism’s “fictional commodities”, i.e., the capitalist belief that land, labor and money are commodities to be bought and sold, used and abused, as required to maximize profits. Examples abound where this belief leads to bad consequences. We can begin with “land,” which includes our environment and all natural resources. Wasteful and destructive uses of land, contamination of water, land and air with toxic wastes are all too common, and though their ill effects are known and often well-publicized, little is done to counter them because of the capitalist mantra that to do so would hurt business and cause irreparable harm to the economy. In reality, the threat is that in some instances corporate profits would be reduced because required changes would be costly. However, this argument ignores the social costs of living in a toxic environment, such as, illnesses that increase the expense of medical care and reduce productivity. It should be the government’s responsibility to protect the environment from corporate abuse.
Labor exploitation also is fundamental to the capitalist. To maximize profits, labor must be procured at the lowest possible cost. Therefore, wages will be set at the lowest level possible to obtain the required labor. The needs of the laborer are not considered. The capitalist has no social conscience, no loyalty to persons or country; the only criterion is profit maximization. We see examples of this where corporations have routinely moved their manufacturing operations to foreign countries where labor is cheaper. That this harms the society of its parent country through lost jobs and increased unemployment is of no concern; that labor in foreign countries may be subject to such abuses as forced labor camps, equivalent to slave labor, and “sweatshops” where workers are required to work long hours for minimal compensation, also is of no concern. The abuse of basic human rights is of no consequence so long as it does not reduce profits. Workers can be hired and fired at will, and have no recourse unless the government intervenes or they are protected by a union. Unions developed precisely for this purpose, to protect workers from the abuse and the whims of management. Unions have at times been accused of holding companies hostage, but there is a need to maintain a balance between the needs of the corporation and those of the workers. The capitalist feels justified in retaining the wealth he “creates.” However, this ignores the fact that he or she can only create wealth by exploiting land, labor and money. Because the capitalist exploits resources that belong to society as a whole, he or she incurs social obligations The wealth belongs to the community that invested labor, money, and land to create it. All that participate in the accrual of wealth are entitled to a fair share of it, based on their role in its creation. The land, money, and labor all come from society, and the wealth that accrues must benefit society, not just the “capitalist titans.” Government’s role is to ensure that this occurs.
The challenge is to develop a system that builds on the benefits of each one to rectify the negative effects of the other. How this balance is defined is based on social and cultural values. In a heterogeneous society such as ours, there are many differences in values, and the common values are not readily apparent. For instance, capitalist culture focuses on the individual, whereas socialist culture focusses on all of society. Those that come from a socialist culture have a greater sense of community and emphasize community needs and rights over individual needs and rights. However, there should be some basic values that most can agree on, and these can be used as the basis for defining government responsibility for a society that builds on both capitalism and socialism.