Capitalism is the crisis

“The American economy increasingly serves only a narrow part of society, and America’s national politics has failed to put the country back on track through honest, open, and transparent problem solving. Too many of America’s elites-among the super-rich, the CEOs, and many of my colleagues in academia-have abandoned a commitment to social responsibility. They chase wealth and power, the rest of society be damned.”

–economist Jeffrey Sachs, in The Price of Civilization: Reawakening American Virtue and Prosperity
Adam Smith, you may remember, was a fan of capitalism. He also wrote a pretty good book on moral philosophy, and had a day job as a professor and tutor of moral sentiments.
One of Smith’s core ideas, which for some reason we forget today, is that capitalism is supposed to be a system which channels base instincts into productive societal activity. Since the beginning of time, there has been some fraction of the human population that is concerned wholly and completely with their own self-aggrandizement – chasing wealth and power, as Jeffrey Sachs puts it. Think of Ghengis Khan. Or Napoleon, off to plunder the wealth and power of Russia. Or your local mafia boss.
At the same time, the great mass of average people have never had enough “commitment to social responsibility” to make a functioning society without some sort of proto-capitalist system – at least beyond the tribal level of perhaps sixty people or so. One thing we have learned from hundreds of experiments in shared, communal living, from the pilgrim settlers or the hippie communes or the artists’ colonies or the kibbutzes, up to the size of communist China, is that they almost always fail. We are simply not spiritually advanced enough, as a whole, to operate in that fashion. We never have been, and probably never will be, for at least a few more millennia.
Smith saw that this rampant self-interest was channeled by the capitalist system – basically a system of private property and common law – into activity that would benefit others. Those focused on wealth and power, instead of using rape, plunder, pillage and enslavement, as was common through millennia of history, would have to provide some sort of useful good or service to others, in a way that provided a profit. Those chasing wealth and power would find that the easiest path to their goal would be to provide something beneficial for society as a whole. Through competition, this profit has never been very high. Corporate profits average about 8.3% of revenues, a lot lower than most people think. Less than most sales taxes.
Despite today’s increasing disgust with the “rich and powerful,” those people who gain wealth and power by providing a useful good or service – who, inadvertently and accidentally perhaps, improve society as a whole — are still celebrated by the masses. Look at the outpouring of affection for Steve Jobs. Steve Jobs was not a saint: there was that business about backdating stock options (a means of outright theft from shareholders), and the working conditions at Apple contract manufacturer Foxconn have been known to provoke employee suicide. Lots of musicians have been complaining about their treatment by iTunes. Nevertheless, the pluses outweighed the minuses. What about billionaire Oprah Winfrey? Or Elizabeth Taylor, who became a billionaire (believe it or not) mostly from perfume sales? How about Ty Warner, who became a multibillionaire from sales of Beanie Babies? A harsh word has never been spoken.
This idea – of encouraging socially productive behavior, and discouraging socially damaging behavior – translates into lots and lots of rules. For example, we discovered that the self-interested pursuit of profit could often lead to rather terrible environmental degradation. So, many rules were made regarding pollution and so forth. This changed the incentives. People can still pursue a profit, but they must do so in a way that is not environmentally destructive. We’ve developed regulations for workplace safety, child labor, bankruptcy, and on and on an on, ideally to prohibit socially damaging behavior, and channeling activity into socially productive behavior.
The United States was not only an experiment in democracy along the lines of philosophers like Rousseau. It was an experiment in capitalism, along the lines of Adam Smith, whose famous book The Wealth of Nations was published in the year of the Declaration of Independence, 1776.
“Capitalism” has elements that go by the code words “free market” or “laissez-faire.” These are labels for rather complex, sophisticated ideas that would take tens of thousands of words to explain in full. They don’t mean that “anything goes” or “do what thou wilst.” Capitalism is a system of rules, finely tuned to produce certain beneficial outcomes, even if the participants themselves have no interest in the condition of society as a whole. The virtue is in the system.
In practice, it helped that many did understand and support the virtuous principles of capitalism. Many corporate leaders wanted to abide by the rules, because they understood that the rules benefited everyone. They did not devote themselves to undermining the system that made America wealthy and prosperous, among all social classes.
However, someone has to make the rules. Technically, this is Congress – not a group known today for its commitment to social responsibility or understanding of capitalist principles. Theoretically, the virtue and high ideals of Congress were supposed to be generated by the electoral process. The voters would choose those who had the interests of society as a whole at heart. But, this system can be corrupted, and clearly doesn’t work today.

Even by design, the U.S. system is only slightly democratic, without the direct proposal and referendum system of Switzerland, for example, where the electorate can decide on policy directly. When was the last time you voted on a war? (Don’t worry – Congress doesn’t either.) Politicians can make promises, and then do something completely different when in office. We get the same Hope and Change blather every year, from both parties, and nothing ever changes.
Today, rather fantastic benefits are being enjoyed by those who have provided nothing to society, whose works have been, especially in recent years, destructive by any reasonable measure. Primarily this has been in the financial system, which is enjoying hundreds of billions in taxpayer funds (euphemistically known as “bailouts” but really just plunder), even after they, in large part, caused the economic difficulties today. In the savings and loan crisis of the early 1990s, over two thousand bank executives did jail time. Societally destructive behavior was punished. In today’s much larger, much more widespread crisis, nobody gets punished; they just get more and more money!
Even Jon Corzine, of MF Global, is still walking free today, after outright securities law violations. When futures broker Refco collapsed in 2005, president Phillip Bennett was prosecuted for similar violations. In 2008, Bennett was sentenced to 16 years in prison. (Refco later became the heart of MF Global.)
MF Global, in turn, is being reorganized under subchapter III of the Chapter 7 bankruptcy law, which is for equities brokerages, instead of subchapter IV of Chapter 7, which is for futures brokerages, although MF Global is a futures brokerage. Why? Because it benefits certain too-big-to-fail banks, who are able to pay for this sort of thing. There are no laws today, only plunder.
This is a lesson not only to those in the financial industry, but to those chasing wealth and power in all avenues of society: you can break the old rules, you can steal, and nobody gets punished.
Today, following the long-established principles of capitalism seems like it is a game for suckers. Capitalism is a tough game. Competition is fierce. The risk of failure is high. The profits, as noted, are often low. No wonder the successful are so highly regarded. American Airlines, General Motors, and Kodak provided useful goods and services for decades, on a grand scale, and provided prosperous employment for hundreds of thousands of employees. Nevertheless, they didn’t quite meet capitalism’s difficult standards.
Theft is a much easier game. The risk is low. The profits are high. There is no competition. You don’t even need employees. You just pay off the Congressman, and stick the money in your pocket.
This is not confined only to the financial industry. The entities that are thriving today are those that enjoy some sort of government favor. Defense contractors and the war industry. The education and healthcare cartels. Government employees and their absurd compensation plans. Competition is low. Profit margins are high. And why do we keep having wars with countries with lots of oil (or heroin)? You know why.
To all who are paying attention, the incentives have changed.  Socially destructive behavior is much more rewarding than socially beneficial behavior. Government-supported cartelism and taxpayer theft pays better than providing goods and services in the difficult capitalist marketplace. A society reaches a perilous tipping point, when, responding to the existing incentives, the energies and ambitions of the most energetic and capable are channeled into socially destructive behavior.
Rape, plunder, pillage and enslavement are back! It is a little soft-edged today, unless you happen to be a Muslim living atop a large oil deposit. This soft edge often helps with keeping the victims docile, since they can’t quite figure out what is going on. But, essentially, it is the same.
Running a normal business is getting less and less rewarding. Small businessmen, in particular, are giving up. Taxes are too high. Regulations are too cumbersome. Competition with government-favored cartels is difficult. Monetary instability is chronic. The economy is getting worse, and there is little hope that it will improve.
For as long as socially destructive behavior is more rewarding than socially constructive behavior, things will get worse. This can go on for a very long time. In 17th century Spain, the government gradually made it impossible for the middle class manufacturers and merchants to survive, while the parasite class of aristocrats, military and government employees grew and grew. The merchants paid huge sums (to the government) to become minor aristocrats, clipped coupons on government bonds, learned the manners of courtiers to gain access to the government feeding trough, and abandoned the unpleasantness of business. The workers rushed into “safe, stable” government jobs. The parasite devoured its host, and the empire collapsed.

Bomber in Chief: 20,000 Airstrikes in the President's First Term Cause Death and Destruction From Iraq to Somalia

Day after day, U.S. air strikes have conclusively answered the familiar question of 9/11: "Why do they hate us?"

 

Photo Credit: AFP

January 20, 2013  |  

 

 

 

Many people around the world are disturbed by U.S. drone attacks in Afghanistan, Pakistan, Yemen, Somalia and elsewhere. The illusion that American drones can strike without warning anywhere in the world without placing Americans in harm's way makes drones dangerously attractive to U.S. officials, even as they fuel the cycle of violence that the "war on terror" falsely promised to end but has instead escalated and sought to normalize. But drone strikes are only the tip of an iceberg, making up less than 10 percent of at least 20,130 air strikes the U.S. has conducted in other countries since President Obama's inauguration in 2009.

The U.S. dropped  17,500 bombs during its invasion of Afghanistan in 2001. It conducted  29,200 air strikes during the invasion of Iraq in 2003. U.S. air forces conducted at least another  3,900 air strikes in Iraq over the next eight years, before the Iraqi government finally negotiated the withdrawal of U.S. occupation forces. But that pales next to at least 38,100 U.S. air strikes in Afghanistan since 2002, a country already occupied by U.S. and NATO forces, with a government pledged by its U.S. overlords to bring peace and justice to its people.

 

The Obama administration is responsible for  at least 18,274 air strikes in Afghanistan since 2009, including at least 1,160 by pilotless drones. The U.S. conducted at least 116 air strikes in Iraq in 2009 and about  1,460 of NATO's 7,700 strikes in Libya in 2011. While the U.S. military does not publish figures on "secret" air and drone strikes in other countries, press reports detail a five-fold increase over Bush's second term, with at least  303 strikes in Pakistan, 125 in Yemen and 16 in Somalia.

 

Aside from the initial bombing of Afghanistan in 2001 and the "shock and awe" bombing of Iraq in March and April 2003, the Obama administration has conducted more air strikes day-in day-out than the Bush administration. Bush's roughly 24,000 air strikes in seven years from 2002 to 2008 amounted to an air strike about every 3 hours, while Obama's 20,130 in four years add up to one every 1-3/4 hours.

 

The U.S. government does not advertise these figures, and journalists have largely ignored them. But the bombs and missiles used in these air strikes are powerful weapons designed to inflict damage, death and injury over a wide radius, up to hundreds of feet from their points of impact. The effect of such bombs and shells on actual battlefields, where the victims are military personnel, has always been deadly and gruesome. Many soldiers who lived through shelling and bombing in the First and Second World Wars never recovered from "shell-shock" or what we now call PTSD.

 

The use of such weapons in America's current wars, where "the battlefield" is often a euphemism for houses, villages or even urban areas densely populated by civilians, frequently violates otherwise binding rules of international humanitarian law. These include the  Fourth Geneva Convention, signed in 1949 to protect civilians from the worst effects of war and military occupation.

 

Beginning in 2005, the U.N. Assistance Mission for Iraq (UNAMI) issued quarterly reports on human rights in Iraq. They included details of U.S. air strikes that killed civilians, and UNAMI called on U.S. authorities to fully investigate these incidents.  A UNAMI human rights report published in October 2007 demanded, "that all credible allegations of unlawful killings by MNF (multi-national force) forces be thoroughly, promptly and impartially investigated, and appropriate action taken against military personnel found to have used excessive or indiscriminate force."

 

The UN human rights report included a reminder to U.S. military commanders that, "Customary international humanitarian law demands that, as much as possible, military objectives must not be located within areas densely populated by civilians. The presence of individual combatants among a great number of civilians does not alter the civilian nature of an area."

 

But no Americans have been held criminally accountable for civilian casualties in air strikes, either in Iraq or in the more widespread bombing of occupied Afghanistan. U.S. officials dispute findings of fact and law in investigations by the UN and the Afghan government, but they accept no independent mechanism for resolving these disputes, effectively shielding themselves from accountability.

 

Besides simply not being informed of the extent of the U.S. bombing campaigns in Iraq and Afghanistan, the U.S. public has been subject to military propaganda about the accuracy and effectiveness of "precision" weapons. When military forces detonate tens of thousands of powerful bombs and missiles in a country, even highly accurate weapons are bound to kill many innocent people. When we are talking about 33,000 bombs and missiles exploding in Iraq, 55,000 in Afghanistan and 7,700 in Libya, it is critical to understand just how accurate or inaccurate these weapons really are. If only 10 percent missed their targets, that would mean nearly 10,000 bombs and missiles blowing up something or somewhere else, killing and maiming thousands of unintended victims.

 

But even the latest generation of "precision" weapons is not 90 percent accurate. One of the world's leading experts on this subject, Rob Hewson, the editor of the military journal Jane's Air Launched Weapons, estimated that  20 to 25 percent of the 19,948 precision weapons used in the "shock and awe" attack on Iraq in 2003 completely missed their targets. The other 9,251 bombs and missiles were not classified as "precision" weapons in the first place, so that only about 56 percent of the total 29,199 "shock and awe" weapons actually performed with "precision" by the military's own standards. And  those standards define precision for most of these weapons only as striking within a 29 foot radius of the target.

 

To an expert like Rob Hewson who understood the real-world effects of these weapons, "shock and awe" presented an ethical and legal problem to which American military spokespeople and journalists seemed oblivious. As he told the Associated Press, "In a war that's being fought for the benefit of the Iraqi people, you can't afford to kill any of them. But you can't drop bombs and not kill people. There's a real dichotomy in all of this." The actual results of U.S. air strikes were better documented in Iraq than in Afghanistan. Epidemiological studies in Iraq bore out Hewson's assessment, finding that tens of thousands, maybe hundreds of thousands, of Iraqi civilians were killed by U.S. air strikes.  The first major epidemiological study conducted in Iraq after 18 months of war and occupation concluded:

Violent deaths were widespread ... and were mainly attributed to coalition forces. Most individuals reportedly killed by coalition forces were women and children ... Violence accounted for most of the excess deaths and air strikes from coalition forces accounted for most violent deaths.

When the same team from Johns Hopkins and Baghdad's Al Mustansariya University did  a more extensive study in Iraq in 2006 after three years of war and occupation, it found that, amidst the proliferation of all kinds of violence, U.S. air strikes by then accounted for a smaller share of total deaths, except in one crucial respect: they still accounted for half of all violent deaths of children in Iraq.

 

No such studies have been conducted in Afghanistan, but hundreds of thousands of Afghans now living in refugee camps tell of  homes and villages destroyed by U.S. air strikes and of family members killed in the bombing. There is no evidence that the pattern of bombing casualties in Afghanistan has been any kinder to children and other innocents than in Iraq. Impossibly low figures on civilian casualties published by the U.N. mission in Afghanistan are the result of small numbers of completed investigations, not comprehensive surveys. They therefore give a misleading impression, which is then amplified by wishful and uncritical Western news reports.

 

When the UN identified only 80 civilians killed in U.S. Special Forces night raids in 2010, Nader Nadery of the Afghanistan Independent Human Rights Commission, who worked on the UN report, explained that  this was based on completed investigations of only 13 of the 73 incidents reported to the UN for the year. He estimated the number of civilians killed in all 73 incidents at 420. But most U.S. air strikes and special forces raids occur in resistance-held areas where people have no contact with the UN or the Human Rights Commission. So even thorough and complete UN investigations in the areas it has access to would only document a fraction of total Afghan civilian casualties. Western journalists who report UN civilian casualty figures from Afghanistan as if they were estimates of total casualties unwittingly contribute to a propaganda narrative that dramatically understates the scale of violence raining down from the skies on the people of Afghanistan.

 

President Obama and the politicians and media who keep the scale, destructiveness and indiscriminate nature of U.S. air strikes shrouded in silence understand only too well that the American public has in no way approved this shameful and endless tsunami of violence against people in other countries. Day after day for 11 years, U.S. air strikes have conclusively answered the familiar question of 9/11: "Why do they hate us?" As Congressmember Barbara Lee warned in 2001, we have "become the evil we deplore." It is time to change course. Ending the daily routine of deadly U.S. air strikes, including but by no means limited to drone strikes, should be President Obama's most urgent national security priority as he begins his second term in office.