“The modern intellectual separation of economics from politics has made both spheres strangely unbalanced.” –Robert Reich (borrowed from “Class Politics in the Information Age” by Donald C. Hodges)
What is capitalism? In the 19th century (the era of the “robber barons”), the lion’s share of the economic surplus in the US was siphoned off by “capitalists” (those who privately “owned”) in the form of interest (financiers), profit (industrialists) and rent (landlords). The decisive factor in determining economic success in a capitalist economy is the amount of capital held by the individual. Hence, the appropriate characterization of the 19th century US economy as a “capitalist” economy.
That, however, was the 19th century. Where does the lion’s share of the economic surplus go today? Despite all the rhetoric, and the reactionary economic policies of the 1980’s and early 21st century, THE MAJORITY OF THE SURPLUS TODAY IS RETAINED BY “EXPERTS” IN THE FORM OF WAGES/SALARY (experts = knowledge workers, what Mikhail Bakunin termed “savants”, technocrats, engineers, doctors, lawyers, business execs, etc.). For the statistical evidence of this claim, see “America’s New Economic Order” by Donald C. Hodges. The decisive factor in determining economic success in today’s economy is the amount of “education” or brain-power possessed by the individual (Bakunin fudged and termed this “mental capital”, see also Robert Reich on this characterization). Yes, of course there are still “capitalists” who generate a living through venture and speculation, but they do not retain the gross majority of the overall surplus. As should be obvious for some time now, the “owner-manager” is a dinosaur.
UNDERSTANDING CORPORATIONS: What is a corporation? A “private” enterprise? Maybe. Who “owns” the corporation? Individual stockholders. Who “runs” the corporation? Certainly not the stockholders. The “experts” run the corporation. Where does the excess of the economic surplus produced by corporate activity go? To the stockholders in the form of dividends? Hardly. The majority gets paid out in wages/salaries to the “workers” (from the minimum wage janitor to the massively overpaid CEO).
Furthermore, this decisive “shift” away from a capitalist economy has its roots not in the Bush or Obama administrations, but in the Roosevelt “brain trust”, and finds its realization possibly as far back as the Eisenhower administration. At the very least, the shift was confirmed by the time of Johnson. (again, see America’s New Economic Order for the exact figures and calculations).
So what do we call this new economy that’s been with us for decades? Socialism? Fascism? Professionalism? Whatever you want to call it, don’t call it “capitalism”. Or, if you insist on doing so, recognize that doing so reflects vulgar ideological commitments as opposed to reasoned analysis of the facts on the ground.
All my thanks to Professor Donald Clark Hodges (retired) for the ideas above (hopefully I didn’t misrepresent them too badly) and for being an excellent teacher.