Capitalism contains the impulse for self-destruction in the aversion to risk and the desire to control it. Risk is uncertainty, and uncertainty can engender fear.
By obsessing with what one fears, one brings about their eventual demise. I have seen this repeated in human institutions over and over again, both in direct experience and in the study of history.
We fear that freedom will be undermined by some exterior force, so we kill it first to save it. We fear that risk will erode our profits, so we ensure our profit by controlling risk and destroying the efficiency of the markets, thereby eliminating any real growth. But we have maintained the profits, for at least a short time, and in the end there is a furious struggle among the insiders to divvy up the remains and feed on the corpse.
Fear surrenders itself to control by dark powers, often precipitated by a traumatic event. Fear provides the rationale, the excuse, to suspend reason and conscience, and then the madness has its way with us.
Faced with the risk and rigor of 'free markets' and the drive to zero economic profit through increasing competition, there is the impulse to create monopolies, manipulate prices, and control information to line one's pockets.
It is the natural tendency for clever people to stretch the rules and even break them to gain an advantage over other participants. This is what makes the idea of the natural efficiency of free market systems so laughable. They work fine as long as there are no people involved in them. Freedom and justice take hard work and dedication, and are not the natural state of the world.
This is a basic principle of transactional systems, whether ownership resides in the capital or the labor end of the equation. It explains the quicker failure of state communism since it concentrated power in the corruptible few from the start rather than dispersing it more widely in 'the market.' It is the government of the few versus the government of the many. The one percent are the one percent, no matter the color of their flags.
Even better for the powerful is when the government can be subverted and brought into the picture to create the opportunities to obtain a license to collect rents.
This 'partnership' between corporations and the government is what is called 'crony capitalism' or corporatism. The power base shifts back and forth between the participants, but always it is based on the monopoly control of markets.
This is what Simon Johnson referred to when he said that a coup d'etat had occurred in the States. And it is where we are today.
The US has encountered this problem many times in its relatively short existence, under various names and characters. The 'Trusts' at the beginning of the 20th century were an example of this. They were reborn as the Trading Pools and Financial Trusts, the funds of funds, of the 1920s.
So, is the solution to eliminate government, the law? Destroy it so it can be reborn again, naturally better? What a romantic notion. This only eliminates the middle men, and puts the powerful directly in charge in the manner of an oligarchy. This was the solution chosen by Italy, Germany and Japan in the aftermath of the last Great Depression.
The US can recover from this current impasse as well. But it will take something to change it, because the impulse for change is not likely to come from the status quo. They are not that wise.
