Exaggerated Capitalism

Imagine a belief system with only one value, a faith with one sacrament: Maximize immediate return on investment.  How would devotees of that faith behave? What consequences would follow from that devotion?

Customers: Corporations must provide, or seem to provide, enough values to customers to earn loyalty.  Any additional value offered to customers comes at the expense of investors.  Therefore, the customer should receive as little additional value as possible, just as much as necessary to keep the customer for repeat sales.  If the corporation has a reputation for providing high-quality goods or services at reasonable prices, the corporation must monetize that reputation by reducing quality or by increasing prices as soon as possible.  Customer service, like value to customers, amounts to a necessary evil.  Market conditions force corporations to provide some service,  or to seem to provide some service, but the wise corporation provides as little as necessary.

Workers:  Paying workers deprives investors of their anticipated wealth.   A corporation needs workers  generate profits, so some workers must get paid.  As long as management hires as few workers as possible, pays them as little as possible, and lays them off as soon as possible, managers have fulfilled their obligation to investors.  Since the corporation must pay enough to attract and keep talented workers, it pays to convince other corporations to cooperate and keep their wages low.   Corporate lobbyists must convince governments not to pass minimum wage laws.  Retired workers who have already earned pensions generate no income for investors, so managers should always try to find ways to renege  on pensions.

On the other hand, managers can claim generous remuneration for themselves, as a reward for skillfully reducing all other employment  expenses.

Externalities:  Followers of exaggerated capitalism can support protecting the environment, with the understanding that “environmental regulation should never infringe on economic growth.”  Put in other words, that means, “never poison the population unless you can make a profit doing so.”  Corporations that unfortunately discover that they have been spreading poisons , or that they can now make a profit by spreading poison, need protection, so that their investors do not pay for damages.  Fortunately, corporations can accomplish that goal.  They can hire scientists to cast doubt on the evidence.  They can lobby the government to avoid new regulations.  They can corrupt regulators to prevent enforcement of regulations. Corporations can hire lawyers to fight against paying damages.  In the worst case scenario, corporations can buy back stocks, thereby protecting investors, and then go bankrupt, to keep funds away from injured parties

Extractive industries: Extractive industries turn profits faster than other industries.  Exaggerated capitalists therefore favor extractive industries over other economic activity.  A hillside forest with a trout stream could provide a steady income to a community of a few farmers, a fishing guide, a small hotel, and the services the community needs, but that represents only long-term wealth.  Strip mining the hillside for whatever mineral it has generates profits now, for the instant benefit of the  landowners and corporate investors.   Exaggerated capitalists applaud the strip miner.

Financial institutions: Like other corporations, financial institutions exist to generate wealth for investors.  Depositors amount to a bank’s customers; the bank succeeds if it gives depositors as little as possible, and siphons as much of the accrued wealth to the bank’s shareholders.  Hidden fees, for example, fulfill the bank’s mission beautifully.  Providers of financial services want to seem to offer fiduciary responsibility without legally having to do so.  In that way, the providers can succeed in siphoning wealth from customers to the owners of the financial service corporation.

Taxation:  Taxing corporations takes money from investors, so exaggerated capitalists fight against corporate taxation. Capital gains taxes apply only to investors, so exaggerated capitalists fight to remove all capital gains taxes.  Let the government get its income from somewhere else. The biggest investors have the most wealth.  Taxes which focus on wealthy people primarily hurt investors, who deserve protection.  Exaggerated capitalists therefore tolerate only regressive taxes, which focus on poor people.   Exaggerated capitalists endorse sales taxes, or even better, Social Security payments withheld from every penny of low salaries but not at all from the additional incomes of high-earners.

Investment in infrastructure:   Government projects can create a platform for long-term economic health.  Infrastructure for transportation, communication, and education pays off over the decades.  However, exaggerated capitalists pay attention exclusively to short-term consequences.  Corporations favor government projects as long as the corporations stand to profit from government grants, especially if the corporation gets to keep the finished product of cooperation between private and public investment.  Corporations favor programs for railroads, highways, hospitals, schools and prisons, when the corporation winds up owning and generating profits from the resulting institutions.

Government regulation: Exaggerated capitalists despise government regulations, which limit their ability to generate profits.  Exaggerated capitalists make an exception for situations in which government regulations can prevent upstarts from competing with established corporations.  If corporations can provide enough  benefits to elected officials, those officials will design regulatory bodies to protect the corporations from competition.   Even better, the officials will appoint corporate lobbyists to administer the regulatory bodies.

Research: The most exciting research gets done by gigantic corporations, sometimes in partnership with government agencies.  Whoever pays for the research, the products belong to the corporations.  Big data, artificial intelligence, and cutting-edge progress in biology, all belong to the corporations.  Corporations will dedicate these discoveries exclusively to generating bigger profits for a small group of investors.

Consider the price of medications.  Corporations can produce insulin inexpensively, using well-understood technology.  Diabetics need insulin to live.  So what should a pharmaceutical company do to set the price of insulin? It could set a low price, since it stands to profit even from that low price.  It could set a low price to protect customers’ health.  In a regulated market, market forces would keep the price low, since competitors would undersell those who overcharge.  What do producers actually do? They all set the price as high as necessary to guarantee the largest profits for investors.  Since diabetics need insulin to live, they pay the high price (or their insurance company does), it they can. If they cannot (and cannot get insurance), they die.

Mental health: Charles Duhigg notes (in the New York Times Magazine 2/21/2019) that many upper echelon workers now feel   “wealthy, successful, and miserable.”   Duhigg expresses wonder: “This wave of dissatisfaction is especially perverse because corporations now have access to decades of scientific research about how to make jobs better.”

It does not occur to Duhigg that literally no one cares, at least, not professionally.  Upper management has a job description, to maximize investor profit. Making the underlings happy does not figure into the bottom line in any direct way.  No one has the job of making underlings happy.

The future of a society governed by exaggerated capitalists might look like this: Income inequality grows indefinitely, a feature, not a bug, of the system. Excellent health care remains available for those who can pay enough to obtain it.  The common wealth, the air, the ground, the oceans, and the rivers, become progressively ruined, but wealthy investors can avoid some of the bad effects if they can pay enough to purchase safe spaces.  The system may return a bare minimum to the rest of us; or it may not.

About the Author
Louis Finkelman teaches Literature and Writing at Lawrence Technological University in Southfield, Michigan. He serves as half of the rabbinic team at Congregation Or Chadash in Oak Park, Michigan.
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