Capitalism is Broken

A few weeks ago I talked a little bit about the “American model of Capitalism” and its obsession with infinite growth.  Truth be told, it’s not a problem unique to America.  It is in fact a major failing of Capitalism in general.  Today I’d like to take a look at how Capitalism encourages behaviors that are detrimental to society at large.

Citizen A starts a small business.  For the sake of this exercise let’s say it’s a barbeque restaurant.  He provides a quality product and excellent customer service and the business is quite successful.  He hires some employees and is able to serve a nice segment of his community.  Now he’s got a solid, stable business that earns him a comfortable living and employs several people in the area providing them with a decent wage and a enjoyable standard of living.

Now he has a choice.  He can be happy with what he’s accomplished and enjoy his success.  Or he can want MORE.  Unfortunately the Capitalist model encourages entrepreneurs to want more.  In fact it creates an environment of competition and greed in which wanting more ad infinitum is just a natural part of the system.

So citizen A opens a second restaurant across town.  Only now his restaurant competes with citizen B’s barbeque restaurant.  Maybe citizen A’s restaurant has better food and better service and they crush citizen B’s business, taking all his customers.  Citizen A opens more restaurants all over the country until he has cornered the market on barbeque.

“Well, what’s wrong with that?” You might ask.  “The market decided who was successful and citizen A won.”  Yes, you could say that, except that citizen A never really needed to expand into citizen B’s territory.  What was the point other than to increase his own wealth?  That growth was not only unnecessary but more importantly, it comes at the expense of everyone else.

At some point, in the name of profit and growth, citizen A will begin reducing wages and benefits to his growing number of employees.  He will begin cutting corners on his product and services because delivering quality goods and services to an increasing number of customers is expensive.  His growth destroys the potential for other citizens to own their own businesses leaving them with no alternative but to enter the workforce as an underpaid employee of someone who has fallen into the infinite growth paradigm.

Again you might say, “Who are you to say how successful I can or can’t be?”  Well how do you define success?  Citizen A was already successful before he decided that he needed to have five barbeque restaurants in every city.  Greed is an inherent human trait and Capitalism rewards greed.  In fact, the fundamental nature of the system is to reward a select few in exchange for exploiting the majority; especially when left unchecked and unregulated.

What’s the alternative then?  We’ll discuss that next time.

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