Capitalism existed before widespread limited liability–for instance, the textiles revolution (a.k.a., modern industrial capitalism started before it, even). We’ve been running on forms of capitalism in parts of the world for hundreds of years. There was, in fact, violent opposition to limited liability from some capitalists when it was introduced. They thought it unfair.
In this case, of course, one should have very robust bankruptcies — in the sense that people are not destroyed. You keep a house, a car, basic resources. You are not made destitute. (This also means a robust social safety network.)
What is desired is simply that failure does not destroy people, so they can try again. It should, however, remove their power — money in excess of what is needed to support themselves. They used that money/power incorrectly, and what capitalism actually requires for correct functioning is that people who fuck up lose the ability to command other people’s labour and resources.
To be explicit, all the bankers and all the broker dealers and so on should have lost all their money in 2007/8/9. They fucked up. They put massive resources into the wrong things. This is not “socialist,” this is pure capitalist reasoning. Without people actually losing the resources they have fucked up, it is NOT capitalism.
What is MOST important is that those who made the decisions lose their power and money. If you invested money in something, OR you made the decisions, you must lose a proportional right to make such decisions at such a scale.
I find it odd that I continually have to explain Capitalism 101, when I don’t much like capitalism.
But the real fix goes beyond limited liability. Most of those bankers should have also wound up in jail and lost all the money they earned during the financial bubble. They had committed mass fraud (no, don’t even, it was my job to cover this stuff, and I have no time to waste on BS) and were liable under the laws as they existed then. A political decision was made to NOT indict them, but rather, to immunize them, which was done by levying fines against them. This decision was made by Obama and his senior officials, and the equivalent in the UK, etc.
Dividing this question bewteen government vs. corporations is about 70 percent a category error. They are in bed together; the corporations own the politicians (yes, yes, they do, this is not hyperbole). Right now, any serious fights are between elite factions.
Democracy does not operate when you allow these levels of inequality. Capitalism does not run at this level (again, capitalism ended for a large part of the economy when the bailouts happened).
Capitalism and Democracy 101. Capitalists must be held accountable, and control of government by other forces, as FDR pointed out, is not democracy. Right now, what we have are the appearances of capitalism and democracy and very little of their substance.
That most people defending capitalism or democracy can’t recognize this indicates a particularly bought or propagandized set of intellectuals.
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Herman
There are a few intellectuals who recognize that politics is largely dominated by economic elites. Larry Bartels, for example, has pointed out that less affluent people have almost no influence on public policy.
In this presentation Larry Bartels discusses economic inequality and public policy.
https://www.youtube.com/watch?v=LGzXFMCtZ8U
My guess is that intellectuals don’t often recognize the truth about unequal democracy because most intellectuals are fairly economically privileged and think the system is fair. Also, it is disturbing to think that our system is almost totally dominated by elites so many people simply don’t want to believe it.
profan
So, Obama is a socialist, after all
Ten Bears
What does Obama have to do with it, bozo?
GrimJim
All Capitalism ever did was replace one set of hereditary elites based on banditry and replace it with another set of elites, also based on banditry. So a minor but significant portion of the population has more stuff, but they are not in truth any more free than the slaves, serfs, and peasants that proceeded them, they just have the dubious honor of choosing from different masters or starving…
ricardo2000
What you are describing isn’t ‘capitalism’, but ‘corporatism’. Any mass organization is subject to capture by those who cynically mouth the appropriate words while engaging every treacherous impulse to gain power.
By the way, the bankers didn’t suffer bankruptcy because the elites would have lost their looted money when the banks went bust. Obama, Wall Street’s favourite lawn jockey, told them he was the only one between the banks and pitch fork carrying mobs.
The current problem with the economy isn’t limited liability, it is the anonymous, consequence-free, nature of ownership. And the fact that money is pumped out of productive enterprises into the hidden accounts of the 1%. So much money that the demand for bonds now routinely offers negative interest rates.
Tom
Well at least some good news. Bolton was fired by Trump.
DMC
As Chomsky put it: “State Socialism for the rich; Free Markets(or what goes by that trade name) for you and me.” If there are no consequences, and no-one otherwise prevents them, the same malefactors of great wealth will certainly crash another FIRE sector through short sighted over-investment. If I was the betting type, I’d put a saw-buck on the derivatives market, just for the mind boggling sums involved and the fact that almost no-one actually understands the details of how most of them work. There’s a famous anecdote to the effect that the Federal Reserve Board met to have explained to them how a new Credit Default Swap was going to work. They get an hour and a half of “chalk and talk” and at the end one board member says to the other “Did that all make sense to you? and the other replies “He lost me in the first 15 minutes”. If something seems like double talk, it probably is.
Hugh
Who gets to determine the correct use of money? OK, to answer my own question. Money is a social construct whose purpose is to direct society’s resources to accomplish social goods.
And bankers didn’t pay fines after the 2008 meltdown. The banks did. The fines announced, often in the billions, were still, as in an order of magnitude, below what should have been assessed (and still would have been far, far less than the damage done which ran into a couple tens of trillions of dollars). They, the bankers and the banks, avoided criminal liability. The fines often included money already paid out for one reason or another or money that theoretically was to be paid out, but might never be. And the banks could write it all off their taxes, meaning that ordinary taxpayers ended up shouldering part of these costs.
Willy
Sooner or later Trump fires everybody, whether they resign nor not. Ted Cruz worries that this is yet another Deep State triumph.
It’s pretty much impossible to know if Bolton wanted to nuke Iran already, or if Trump did, or if Sloppy Steve, Lyin Ted and Crooked Hillary were all behind all this somehow.
Only in America. I await a post Trump-era reality TV show where all the fired are reunited to fight for cash prizes.
Willy
Somebody told me there’s a genetic component in all this. I said yeah, psychopathy. They said it actually involved the unconscious desire to pass on their own genes instead of another’s. Whatever. I settled on power pathology dependency, a mindless march towards hit-bottom just like any other dependency. The end result seems about the same.
S Brennan
Right on Brother Ian…we disagree on stuff but, rarely on the facts.
bruce wilder
The only economic use of purely financial wealth — piles of money or rent-earning legal rights — is for insurance. Mobilizing resources, per se, does not even enter into it.
If we allow the rich to destroy the ability of everyone else to cooperate in establishing mutual insurance and banking, thru cooperatives and democratic government, then the economy becomes a game of attrition — a giant game of Texas Hold-em where the guy with the biggest bank wears everyone else down and out.
The rich will make everyone else precarious, because that is what pays, when the source of your income are insurance premiums of one sort or another. Destroy the savings and loans. Destroy cooperatives in every field. Promote “access” to health insurance in place of providing health care or promoting public health. Substitute inadequate and risky savings plans in place of social insurance for retirement. Encourage student loans as a means to finance higher education, because nothing serves the rich better than an educated peon. Put no limits on usury. In fact, let banks compete to distribute high-interest credit cards.
None of this is exactly rocket science, and if economists are not upfront about this, it is because they work for the rich to justify a system that redistributes upward as it uses the distribution of risk alongside income to “motivate”.
Eric Anderson
And yet, the age old question persists.
How on earth can we claim to be a nation of educated adults when the only ones who truly understand your argument, or can be roused to care, are the 1%.
Quite a paradox.
Tom
Okay, more information coming out. Bolton crossed the line with Trump when he sabotaged Trump’s planned meeting at Camp David with the Taliban to end the war. Trump was also trying to meet Iranian President Hassan Rouhani in person to get out of the spiral to war Trump was in.
I’m guessing Tucker Carlson had a hand in this as well.
However, Pompeo is still around.
Eric Anderson
The age old answer:
https://www.politico.com/magazine/story/2019/09/08/shawn-rosenberg-democracy-228045
Tal Hartsfeld
I’ve always gone on about the U.S. being a “civilian aristocracy” for quite some time now.
I’ve always taken that notion for granted based solely on personal observation and logic.
anon y'mouse
what “should” happen under a human made system is rather like calculating how many indulgences should work towards paying off x amount of sins. ok, perhaps that is too hyperbolic since “capitalism” is creating real world effects, but it is a parallel to that. what “should” happen is that we do away with that system.
also, what “should” happen is what does happen. all else is PR/advertising for the owners. they have the power, rules are changed and made up on the fly to suit them. thus is ever was. this argument is akin to those saying it could be made to work if only we “followed our own rules laid down 200 yrs ago”.
https://theconversation.com/a-globalised-solar-powered-future-is-wholly-unrealistic-and-our-economy-is-the-reason-why-118927
Hugh
Shorter Rosenberg, when elites royally f*ck things up, blame the proles.
Mike Barry
Rosenberg has left pessimism behind for outright defeatism. Let\’s embrace our new masters!
Like hell.
bruce wilder
It would not be the first time in history when liberal negligence and indifference led to tragedy and political reaction. In the U.S., the soi disant “resistance” has only resisted acknowledging responsibility for policy consequences.
If a lot of people are very unhappy with the state of things and they cannot get liberals to notice the need for reform, then of course they may turn to demagogues as a “volatility” voter. But, no, it was Russia,Russia,Russia!