To Save the Capitalist System
Here are 50 fascinating words from a leading member of the U.S. financial aristocracy and political class, captured and reproduced in a front-page article in the New York Times on October 20: “There is some failure in the finance industry to appreciate the level of public antagonism towards whatever Wall Street symbolizes. But in order to save the capitalist system, the administration has to be responsive to the public mood, and that is a nuance which can get lost on Wall Street.”
The speaker of these words was Orin Kramer, a partner in a leading Wall Street investment firm. Kramer served as a co-chair of a Democratic Party fundraising dinner at the Mandarin Oriental Hotel in New York. The dinner was held for 200 donors, each of whom paid the legal maximum of $30,400 a couple. The dinner was attended and addressed by no less a Democrat than President Obama.
Kramer, 64, “helps manage” the hedge fund Boston Provident, LP. A graduate of Yale and Columbia Law who once worked as a staffer in the Jimmy Carter administration, he is what the liberal weekly New York Observer last year called “an undisputed leader among [the] ancient, wealthy, largely Manhattan-based species of political fundraiser.” He is “well known in government and donor circles for his gruff, sardonic manner” and was “the most established of Barack Obama’s early supporters in the mega-bundler community” (Jason Horowitz, “Orin Kramer: King of the Obamasaurs,” August 5, 2008, www .observer.com). Kramer’s words were in response to Times reporter David Kirkpatrick’s query as to why Wall Street financial giants like Goldman Sachs, JP Morgan Chase, and Citigroup were sending only six representatives (with a total contribution of “just” $91,200) to the posh gathering (D. Kirkpatrick, “Financial Giants Donating Little to Obama Party,” October 20, 2009).
According to a Wall Street lobbyist interviewed by Kirkpatrick, the low attendance reflected top Wall Streeters’ “growing disenchantment with Mr. Obama over the angry language emanating from the White House over million-dollar bonuses and anti-regulatory lobbying.” Dr. Daniel E. Fass, another co-chair of the fundraiser, lives “surrounded by financiers” in Greenwich, Connecticut. He told the Times that, “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year and they don’t want to be held responsible for the global financial meltdown” (Kirkpatrick, “Financial Giants”).
This attitude struck Kramer as short-sighted. The profit system’s smarter defenders grasp the need to demonstrate openness to the worries and anger of the populace, he told Kirpatrick. To keep the business order intact, Kramer was saying, Obama needed to occasionally rebuke (and perhaps even mildly half-“regulate”) the nation’s financial overlords.
Is Capitalism in Danger?
Is capitalism really in danger? Kramer’s comment might sound unduly paranoid in light of the relative absence of any meaningful revolutionary anti-capitalist movement in the United States and the system’s recurrent success in overcoming its inherent cycles of boom and bust. Still, according to the leading global investment analyst, entrepreneur, and economic commentator Marc Faber in September, the current crisis of the hyper-leveraged, debt-finance western profits system is no passing phase. Faber, no leftist, said that the future “will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society” (Marc Faber, “Capitalistic System Will Collapse” Huffington Post, September 25, 2009).
Whatever the accuracy of Faber’s prediction, majority public attitudes about that system have certainly been pushed leftward since the epic financial meltdown of September-October 2008. As giant financial bailouts have exposed the chasm between the investor and political classes on one hand and the increasingly destitute citizenry on the other, liberal journalist William Greider has noted that, “People everywhere learned a blunt lesson about power, who has it and who doesn’t. They watched Washington run to rescue the very financial interests that caused the catastrophe. They learned that government has plenty of money to spend when the right people want it. ‘Where’s my bailout,’ became the rueful punch line at lunch counters and construction sites nationwide” (William Greider “Obama Asked Us to Speak, But is He Listening?” Washington Post, March 22, 2009).
Last April, the national polling firm Rasmussen Reports asked 1,000 randomly selected American adults: Which is better, capitalism or socialism? Only 53 percent picked the profits system. Among younger adults (18- to 29-year-olds), just 37 percent preferred capitalism, 33 percent socialism, and 30 percent were undecided (Rasmussen Reports, April 9, 2009). These were remarkable results considering decades of ongoing Red Scare propaganda in this country.
Seven months later, millions of Americans had attended Michael Moore’s documentary Capitalism: A Love Story, released in early October. “Capitalism,” Moore proclaims near the end of his movie, “is evil and you can’t regulate evil.” Maybe Orin Kramer has reason to worry for the life of his cherished profit system.
Whatever Wall Street Symbolizes
On the same day that the Times quoted Kramer and Dr. Fass, Times columnist Bob Herbert wrote of his shock at “another orgy (with taxpayers as the enablers) of bonuses” inflicted while a rising sea of Americans struggled to keep jobs and homes and their health coverage. “Even as tens of millions of working Americans are struggling to hang onto their jobs and keep a roof over their families’ heads,” Herbert noted, “the wise guys of Wall Street are licking their fat-cat chops over yet another round of obscene multibillion-dollar bonuses—this time thanks to the bailout billions that were sent their way by Uncle Sam, with very little in the way of strings attached…. Goldman Sachs is thriving while the combined rates of unemployment and underemployment are creeping toward a mind-boggling 20 percent….” Herbert was struck by a sense of “deja voodoo” as he recalled a column he wrote on the same topic—Wall Street big shots “harvesting a record crop of bonuses” and “ordering up record shipments of Champagne and caviar” while working families struggled to survive—three days before Christmas in 2007 (Bob Herbert, “Safety Nets For the Rich,” New York Times, October 20, 2009).
The financial giants’ relative no-show at the New York fundraiser did in fact demonstrate “responsiveness to the public mood.” As Wall Street told Kirkpatrick, giant firms feared “getting caught in public rage over the perception that Wall Street titans profiting from their government bailout may use their winnings to give back to Washington in return” (“Financial Giants”). Going to the event would have provided an all-too public window on the close-knit alliance and revolving door quid pro quos that exist between concentrated wealth and the political class under America’s “unelected dictatorship of money,” which “vets the nominees of the Republican and Democratic parties, reducing the options available to U.S. citizens to two candidates, neither of whom can change the foreign or domestic priorities of the imperial U.S. regime” (Edward S. Herman and David Peterson, “Riding the ‘Green Wave’,” Electric Politics, July 22, 2009).
The government “responsiveness” that Orin Kramer recommends is qualified in interesting ways. He told the Times that the Obama White House must show itself receptive to the public’s “antagonism towards whatever Wall Street symbolizes.” He did not argue that the Administration should honor the democratic ideal by actually governing in accord with that public’s progressive social and policy preferences.
For what it’s worth, the U.S. citizenry’s majority attitudes on key policies and values have long stood well to the left of both of the two dominant U.S. political parties, the investor class, and the nation’s “mainstream” (corporate) media. Contrary to “mainstream” pundits’ routine description of Americans as “center-right”:
Twice as many Americans back more government services and spending (even if this means a tax increase) as the number who support fewer services and reduced spending (National Elections Survey, 2004)
- 71 percent think that taxes on corporations are too low (Gallup Poll, April 2007)
- 77 percent think there is too much power concentrated in the hands of a few big companies (Pew Survey, 2004)
- 84 percent of Americans think that big companies have too much power in Washington (Harris Poll, 2007)
- 62 percent of Americans believe corporations make too much profit (Pew Survey, 2004)
- Just 38 percent agree with the statement, “Business corporations generally strike a fair balance between making profits and serving the public interest” (Harris, 2007)
- Two-thirds of respondents think that “big business and big government work together against the people’s interests” (Rasmussen Reports, 2009)
- Less than 15 percent of the population believes each of the following capitalist industries to be “generally honest and trustworthy”: tobacco companies (3 percent); oil companies (3 percent); managed care companies/HMOs (5 percent); health insurance companies (7 percent); telephone companies (10 percent); life insurance companies (10 percent); online retailers (10 percent); pharmaceutical and drug companies (11 percent); car manufacturers (11 percent); airlines (11 percent); packaged food companies (12 percent); electric and gas utilities (15 percent) (Harris, November 2007)
- 66 percent of Americans think taxes on upper-income people are too low (Gallup Poll, April 2007)
- 59 percent are favorable toward unions, with just 29 percent unfavorable (Gallup Poll, 2006)
- 74 percent agree with the statement “Labor unions are necessary to protect the working person” (Pew, 2004)
- A majority of voters think that the United States’ “most urgent moral question” is either “greed and materialism” (33 percent) or “poverty and economic injustice” (31 percent). Just 16 percent identify abortion and 12 percent pick gay marriage as the nation’s “most urgent moral question” (Zogby, 2004). Thus, nearly two-thirds (64 percent) of the population think that injustice and inequality are the nation’s leading “moral issues” (Katherine Adams and Charles Derber, The New Feminized Majority, Paradigm, 2008)
- Just 29 percent support the expansion of government spending on “defense.” By contrast, 79 percent support increased spending on health care, 69 percent support increased spending on education, and 69 percent support increased spending on Social Security (Chicago Council on Foreign Relations, “Global Views,” 2004)
- 64 percent would pay higher taxes to guarantee health care for all U.S. citizens (CNN Opinion Research Poll, May 2007)
- 69 percent think it is the responsibility of the federal government to provide health coverage to all U.S. citizens (Gallup Poll, 2006)
- 59 percent support a single-payer health insurance system (CBS/New York Times poll, January 2009)
- 65 percent respond affirmatively to the following question: “Would you favor the government offering everyone a government-administered health insurance plan—something like the Medicare coverage that people 65 and over get—that would compete with private health insurance plans?” (CBS/New York Times, September 23, 2009)
- 71 percent feel that we need “fundamental changes” or to have the U.S. health system “completely re-built,” compared to 24 percent who wish only for “minor changes” (Pew Research Center, 2009)
The national health care reform “debate” is an excellent example of democracy deficit. Despite the social-democratic health care opinion data just cited, the most that a Democratic president (Obama) and a majority Democratic U.S. Senate seem ready to advance is a strictly limited, deeply conservative version of “the public option”—one that would be available only to those without access to private insurance and only in certain States. President Obama, who once (as a state senator in 2003) argued passionately for an “everybody in, nobody out” single-payer system, is reported to prefer a “public option” with a “trigger,” meaning a small and weak program for the otherwise uninsured that would only be activated at some time in the future, if it was determined that the private insurers had failed to meet certain benchmarks.
The Manipulation of Populism
The Obama administration has repeatedly cranked out populace-pleasing, progressive-sounding rhetoric even as it governs in service to existing dominant corporate, State, and military institutions and ideologies. Obama has lectured Wall Street chieftains on the immorality of their bonuses and visited hard recession-hit towns like Elkhart, Indiana and Pomona, California to show solidarity with downtrodden working people. He has pounded his chest at excessive executive compensation and the evil behavior of insurance corporations. And then he has given yet more of the public treasury and commons away to the privileged few, justifying the handouts and protection proffered to the rich and powerful as a noble expression of “sensible,” “realistic,” and “pragmatic” commitment to “rising above ideological divisions” to “get things done” for the American people.
Thus, Obama and the Democrats’ “financial reform” efforts may actually increase the likelihood of another disaster by failing to address what Times financial editor and columnist Gretchen Morgenson (no radical) calls “the most significant issue of all: how to make sure that companies do not grow to the point where they become too big or interconnected to be allowed to fail” (G. Morgenson, “Wall Street Follies: The Next Act,” New York Times, October 25, 2009). According to Neal Barofsky, special inspector general of the U.S. Treasury’s Troubled Asset Relief Program (TARP), the Bush and Obama administrations’ sponsorship and support of several mergers at the top of the financial sector mean that the risk of a major collapse is alive and well. “If anything,” Barofsky told CNN in mid-October, “we could be in more danger than we were a year ago.”
This reality went largely unacknowledged in “mainstream” media reports that focused heavily on Obama’s superficially progressive proposal in October to (briefly) rein in runaway executive pay at seven federally bailed out companies. “The white-hot focus on pay,” Morgenson noted, “looks like a way for the government to reassure an angry public that they are making genuine changes. Meanwhile, compensation is a trivial matter compared to, say, true reform of derivatives trading” (Morgenson, “Wall Street Follies”) or to the urgent necessity of breaking up gargantuan banks.
In a similar vein, Obama’s overly complex and corporate-captive “health reform” efforts are a great gift to the Democrats’ “frenemies” atop the big insurance and drug corporations and those firms’ Wall Street investors. Obama’s record-setting “defense” (empire) budget and related colonial war expansion in South Asia has rewarded the giant military industrial complex. Unlike the Administration’s “health reform,” Washington’s war spending is unburdened with the requirement that it (as Obama promised in his health care speech to a joint session of Congress in September) “not add a dime to the federal deficit.”
Obama’s auto restructuring gives the big U.S. carmakers a green light to further dismantle the lives of American working people by building more vehicles and parts in lower-wage countries. American unions’ hopes for an overdue and urgently required labor law reform have been kicked to the curb with no meaningful resistance from the “pro-labor” White House, which has failed to push for an economic stimulus remotely close to what would be required to stem a rising unemployment rate that has helped the Pentagon meet all of its recruiting goals for the first time in many years.
The climate issue is another disastrous case in point. The Obama administration has won accolades from environmentalists for acknowledging the legitimacy of modern climate science. Still, it has rewarded the top energy firms by leading a retreat from the enforcement of serious carbon emission controls on the rich nations who have done the most to create the global climate crisis.
Capitalism v. Democracy
The most interesting aspect of Orin Kramer’s comment was the reason he gave that Obama must demonstrate responsiveness to public feelings: “to save the capitalist system.” Not because we claim to live in a democracy where the populace and the government are supposed (in theory) to be identical. Not because the popular majority is understood to be the ruling force in a nation that purports to be based on the principle of one person, one vote. No, the point, for Orin Kramer, was to “save the capitalist system,” as if Obama and his team had taken an oath to honor, defend, protect, and preserve the private system of socioeconomic management, not the U.S. Constitution.
In one of many darkly humorous moments in Capitalism: A Love Story, Michael Moore examines a copy of the Constitution at the National Archives. He asks a guard to show him the part of the document mandating that the U.S. organize its economic life on a capitalist basis. It’s a purposefully ridiculous request, of course. No such section or passage exists in the Constitution or, for that matter, in the Declaration of Independence. The term “capitalism” was not in use in late 18th century North America or Europe.
Still, both of the founding documents can be reasonably cited in opposition to the corporate profits system that later overtook the nation’s economic and political life. More than being merely different from the nation’s founding principles of popular government and common good, and absent from its founding documents, capitalism is opposed to those core precepts. Its key characteristics include:
- a consistent drive towards a greater concentration of wealth and power
- a constant and unequal battle between the wealth of the capitalist few and the income, security, autonomy, health, and sanity of the working class many
- the relentless subordination of the majority populace to employee status (wage- and salary-slavery)
- the authoritarian and hierarchical division, command, and stultification of the human work process
- the contingency of employment on profitable exploitation by business firms
- the soulless, dehumanizing hegemony of exchange value over social and human use value
- a relentless, profit-addicted, “cost-externalizing” business assault on livable ecology
- the private ownership and propagandistic, pro-capitalist management of core opinion-forming, population-controlling, and “reality”-distorting cultural and communications sectors
- wildly disproportionate political influence for the capitalist elite, with much of its surplus pooled and protected in giant, corporations whose directors are legally mandated to privilege investor profit over any and all other concerns
None of these and other core characteristics of the modern profit system can be meaningfully reconciled with the pre-capitalist republicanism of the founders or with modern democratic ideals. The last thing any Administration claiming to represent “We the People” in a democracy should be doing is acting to save the capitalist system—a system which threatens to bring the human experiment to a close sooner than many had imagined.
Paul Street is an author and activist in Iowa City, IA. His publications include Empire and Inequality: America and the World Since 9/11 (Paradigm, 2004), Racial Oppression in the Global Metropolis (Rowman & Littlefield, 2007), and Barack Obama and the Future of American Politics(Paradigm, 2008).