Economic Revelations

For a very brief period of time in my floundering undergraduate career, I was considering economics as a major. Naturally, I discovered that this topic was not something I wanted to pursue further than intermediate microeconomics. The mathematical/technical element of economics ended up boring me to tears. Still, though, I am interested in the ethical implications of economies because money and commerce are inextricable from our relationships with other people and other nations.

I think that many people do not realize that capitalism and free market theories of economics are relatively new inventions in the history of human civilization. Hell, my dad reminds me that even credit cards--those dangerous pieces of plastic we rely upon so heavily nowadays--were not all that common in the 60s and 70s. Credit makes things convenient for people. It makes large purchases (i.e. cars, homes, etc.) possible for those who do not have the liquid assets to make them immediately. But the more we ensnare our finances in credit, the further we remove ourselves from the real implications of exchange and value. Well, until bill collections come knocking and calling, I suppose.

Part of the reason that so many people find themselves mired in debt is because they aspire to an untenable standard of consumption set by the American economic elite. Bigger cars, bigger homes, more expensive gourmet items, fancy dinners, designer clothing and accessories--it's the American dream, is it not? Most of us are here today because family members somewhere down the road of ancestry fled their places of origin for a better, more prosperous life, right?

In the later 19th and early 20th centuries, the United States saw an influx of immigrants unparalleled by any other period of time. Jews from Eastern Europe, Poles, Italians, and anyone else who could fled harsh economic or political environments for the blank slate of the New World. I remember watching Charlie Chaplin's short film, The Immigrant, in my AP American History class during high school. Despite its comedic intent, this film was one of the most instructive elements of the entire course. It really captures the wonder, the fear, and, in some ways, the disillusionment of being a cultural outsider in this country. Some of those who endured the treacherous boat ride across the Atlantic Ocean made a much better life in America. But more often, immigrants found themselves condemned to abject poverty, squalid working and living conditions, and... well, let's just say not a great deal of tolerance from the established American citizenry.

What we did not really touch upon in history class that much is what turmoil and unrest resulted from the early 20th century immigrant experience. We did learn about the Red Scare and about the hysteria that surrounded the Cold War, but never about the enormous immigrant-led revolutionary leftist movement in the United States. At the turn of the century, Russian-Jewish immigrants, like Emma Goldman and Alexander Berkman, led a powerful anarchist movement. Sympathizers were jailed and blacklisted constantly. Often obscured from mainstream portrayals, even Helen Keller was a leftist sympathizer!

It is obvious that the Marxist analysis of class struggle deeply resonated with immigrants in America. To abandon their places of origin--their languages, their cultures, and their religions--only to see the greediest few exploit them for labor was the exact scenario Mr. Marx describes in his writings. Whether they were reading Marx or not, early 20th century immigrants helped spurn the great communism versus capitalism debate in this country that still manifests itself today. With few exceptions, though, it seems like capitalism may have won--for now.

I was thinking about all of this last night and grappling with the different economic systems in my mind. My personal views are pretty far to the left at this point, but I am, above all, a pragmatist. I know that, attractive rhetoric aside, communism in practice has been an abhorrent failure, empowering some of the most oppressive regimes in history. So how is it that the disparate systems of capitalism AND communism both result in an exploitative hierarchical structure?

The problem, I think, is that the closer both systems get to being the idealized versions laid out by economists and philosophers, the less impetus there is to uphold the system. In other words, both capitalism and communism--even in less pure forms--provide incentives for people to tip the scales to their own advantage. Think for a moment: if the standard of ideal capitalism is self-interest, wouldn't it be in one's best interest to create an imperfect market?

Not to beat this example into the ground, but Wal-Mart is a case-in-point. In terms of free markets, I argue (and think others with more credentials would agree) that Wal-Mart is actually a market failure in multiple ways. It is not even necessary to get into the technical details to see that Wal-Mart succeeds in our economy not by being the best competitor but by stamping out all competition. Because it has such a disproportionately large share of the market, it can artificially lower its prices. This goes for many other modern-day corporations, as well. Capitalism works so well for these corporations because they create market failures that benefit them.

Communism is no different when you dissect it a bit. Unlike capitalism, which touts self-interest, however, communism is about the collective and equitable distribution. But as history has demonstrated, communism has incentives for greedy individuals to create imbalances, too. Some people might refer to this as the collective action problem: if there is an opportunity to freeload from the work of others without consequence, what is the impetus to contribute? More simply put, the "aggregate good" is not an attractive enough cause for most people. The ability (and desire?) to have more than others at little or no cost to one's self proves to subject communist systems to the same pitfalls. Again, individuals have every reason to want to subvert the system for their own good.

I don't really have a verdict about what does work or what should work. What I do know is this: ideals are not pragmatic. It is a bad idea to hold steadfastly to principles that history proves unsustainable. The upcoming election scares me because Americans are addicted to attractive rhetoric, but are piss poor students of history. I fear that these past 8 years under the Bush regime have made the public so government-phobic that we forget what we elect officials to do. Free markets and competition do benefit us. But taxes and restraints on commerce are important safety nets for those who are new to this country and those who barely get by day-to-day. When one fantasy scenario fails, it is inevitable that its idealized antithesis will, as well.