Maybe it’s just me, but it feels like every other speech and soundbite emanating from top Democrats amounts to a roundabout apology for countenancing the many perils of predatory capitalism.
On Friday, during remarks coinciding with a new executive order aimed at promoting competition across the world’s largest economy, Joe Biden called himself a “proud capitalist.” He added a caveat. “Capitalism without competition isn’t capitalism,” he said. “It’s exploitation.”
With apologies to the president, capitalism without exploitation isn’t capitalism either. In fact, capitalism is almost synonymous with exploitation. Show me a capitalist who isn’t currently (as in, right now, this second) exploiting something (or someone), and I’ll show you a capitalist who’s either already failed and just doesn’t know it yet, or else on the way to failing.
“Without healthy competition, big players can… charge whatever they want and treat you however they want,” Biden went on to lament.
To be sure, Biden said quite a few things right on Friday, during the signing ceremony. For example, he dated the onset of predatory capitalism to the Reagan Revolution and described the last four decades as a “failed experiment” in “letting giant corporations acquire more and more power.” The order will purportedly start the process of “revers[ing] these dangerous trends,” as he put it.
You can read the order (all 31 pages of it) for yourself here. In essence, Biden is directing (or asking) multiple federal agencies to crack down on the tech, agriculture and drug industries in a bid to help solve “the problem of economic consolidation,” which the order says “endanger[s] our ability to rebuild and emerge from the… pandemic with a vibrant, innovative and growing economy.”
Billed as a kind of holistic, “whole-of-government” approach, the White House imagines the order will make American capitalism “work for the people.” That, as opposed to the current state of affairs, in which the people work for capitalism.
I doubt seriously that this order will be efficacious. The sentiment is nice, but when it comes to reining in giant corporates that accumulated too much power, there are really only three approaches with any hope of success. One is to sue them and hope for a landmark, precedent-setting victory. Another is to pass new laws. The most effective approach is only available to autocrats like Xi Jinping, who rely on the (implicit, but highly credible) threat of physical violence to compel offending corporates to rectify their “wrong behavior.” China is currently engaged in just such a dance with its own home-grown tech giants.
Some economists contend that many of the provisions of Biden’s order will help the US economy in the long run. That may well be true. But, coming full circle, Americans are still in denial about capitalism. It’s exploitative by nature and the notion that it works best when markets are totally “open and fair” (Biden’s words) is a patent falsehood.
As Immanuel Wallerstein reminds us, in a totally free market, “it would always be possible for the buyers to bargain down the sellers to an absolutely minuscule level of profit and this low level of profit would make the capitalist game entirely uninteresting to producers, removing the basic social underpinning of such a system.”
The system needs quasi-monopolies to function. And only a strong state can support quasi-monopolies (think: patents, subsidies, tax incentives and protectionist measures).
Ironically, the only people willing to come out and say that American-style capitalism just isn’t working are some of the country’s most successful capitalists. As Ray Dalio put it during a testy exchange with CNBC in 2019, “One way or another, you’ve got to engineer the goddamn thing to get results.”