Article: How are you making out?

What is it with capitalism? I mean, is it heading south? That's televisionese for "losing." Talk has it that there is a capital crunch. Some say there is a "crisis of confidence" because of a capital crunch. If I feel a pinch every time I buy a jug of milk, isn't that just inflation? Why must banks be propped up by the Federal Reserve? My money buys less, and now the Almighty Dollar just went on life support. The Euro and the Dollar were once each worth-what else-a dollar. Last I looked at TV, the dollar is worth less than .70 of a Euro. Obviously, I'm not a trained economist or I wouldn't be displaying ignorance. Talking heads say there is a downturn, and the economy will turn around once the housing bubble deflates. Some of my friends are plenty deflated from it. I picked out an old textbook from the library, published in 1975. That seemed like a good year to remember. Jimmy Carter and family were running around the country trying to take a lease on the White House. Oil was on the agenda. Let's say gasoline was on American minds. Never again would we see 35-cent gasoline! The book is The Economic Problem, written by two professors. Robert L. Heilbroner, who died in 2005, was a professor at the New School. Lester Thurow, a professor of management and economics at MIT for more than 30 years beginning in 1968, is the other. I have followed Thurow's ideas since the mid-1990s with his The Future of Capitalism. If I'm to write about capitalism it stands to reason I have to know something about socialism, because if I suggest capitalism might be on its last legs, someone is sure to yell SOCIALISM at me. I wanted definitions and found them in the textbook mentioned above. Briefly, capitalism means ownership by individuals who have the right to make a profit. To make it work, a market system allocates resources for various uses, keeping in mind such factors as rents, wages and profits. (Therein lies room for argument.) Socialism presumes all individuals of the group are owners, and resulting profits are shared by all. Heilbroner was once a socialist and has come to believe that capitalism works better in the market place. When their book was published, no one had any idea that the Wall was about to Fall. Reading in another book (below), I learned how China in recent times has introduced more capitalistic practices but has a long way to go to satisfy Americans on the democracy issue. It is also theoretically possible to have the usual characteristics of democracy, such as voting and free speech, but limited private ownership, the book says. The United States has gone for capitalism, which is best run by a government of, by and for the People. ******* I luckily found Leonard Silk's last book, called Making Capitalism Work. It was published in 1996, copyrighted by the Twentieth Century Fund. His son Mark helped to finish the book he began in 1992. I have related to Leonard Silk since the late 40s. When I worked for the American-Scandinavian Foundation, it gave a dozen or so Fellowships to postdoctoral candidates for study in Scandinavia. Two recipients, interested in political economy--albeit in widely different ways--were Glenn Seaborg and Leonard Silk. Seaborg, a Nobel laureate is known for his work at the Atomic Energy Commission. Leonard Silk was an economist who came to be regarded as master of writing economic articles understamdable by the public. At the time, I realized Silk wanted to study social democracies. That was right up my boat! In 1950 I finally procured shipping to spend a year in Denmark, without stipends and sponsorships. I did have an invaluable support system from Danish, Swedish and Norwegian exchange students who had visited America. Making Capitalism Work is actually a series of chapters, weaving together the work of Silk (edited by his son) and two prominent economists writing on phenomena resulting from the Fall of the Wall--namely Russia in transition and the emergence of the European Union. Robert Heilbroner makes a summary in the Epilogue. He points out that to discuss government and capitalism, one must understand the interconnection. Writing before the second Bush administration but after Newt Gingrich's contract in 1994, he points out that further dampening of capital would result, which already had been declining since the mid-70s. This, at a time when post-colonial nations needed capital badly. The more robust capitalistic countries are usually democratic. However, it stands to reason that the whole world does not look like one big USA. As a nation, we think of Wall Street and Main Street and hope the two will continue to find government compatible for both. Now that globalism is evident in Wall Street terms, it is necessary for Main Street to acknowledge its reality. The word "neoconservative" does not appear in the book. But the seeds of what it has come to mean were clearly evident in this book written just after Dick Armey and Newt Gingrich had their way in Congress. Silk's chapter titled "Military Spending as Industrial Policy" spells out how worldwide making and selling of weaponry prevailed. Congress increasingly views it as an important constituent. He discussed the first Iraq war and expected short engagements for definite purposes would be the mode of the future. I can't imagine how Leonard Silk would have criticized the second Iraq war. Heilbroner makes an interesting observation on federal deficit and debt. The US government needs some of both for an orderly economic expansion. What is public and what is private enterprise have differences but they also have similarities. It is expected that corporations would borrow (need capital) in order to expand their enterprise. Likewise, he says, it would be ludicrous for the government not to issue bonds. He further goes on to say that having US debt is necessary. Although it is hard to determine which part of the federal budget has major long term worth, it is necessary to try to come up with a figure. Federal accounting has not devised a system to show how funds appropriated for infrastructure are national assets. It is this part of the appropriations which should not be reviled when we discuss "the deficit." I'm just a former bookkeeper who realized that if a company didn't go in debt (risk capital), it could not expand into making more money. After years of making out payrolls, I thought paying FICA (by employee and employer) is what set up the Social Security system. I don't take lightly what's been going on in American business. Enron and WorldCom became code words for failed business practices. With all the talk of how FASB was scuttled in Clinton years, and all the fixes to the SEC, it seems like speculators have the upper hand. Always some new way to say "venture capital" and we have empty houses and betrayed families to prove it. So I do wonder how many, perhaps most, of Baby Boomers will make it if inflation rises and Social Security is cut back. Those born after the end of Viet Nam hostilities seem to get the message. Don't depend on the government to take care of you, and get involved. I don't know whether I've convinced my Boomer friend to vote. Maybe her children and grandchildren will.