WAKING UP FROM THE AMERICAN DREAM

 

Jonathan Tepper’s article “American Corporations Are Winning Their War on Capitalism” hints precisely at the gradual demise of the spirit of capitalism. Typically, capitalism has come to be associated with a certain enterprising spirit of economic competition in which resourcefulness, creativity, and hard work even the playing field for those willing to engage in such competition. In a sense, this kind of competition is synonymous with what’s commonly referred to as The American Dream. Therefore, it is ironic to see that in the most advanced capitalist nation on earth, the United States, entrepreneurial competition is being replaced by oligopoly. As indiacoates writes in “Competition is Dying and Taking Capitalism With Capitalism”, when “large firms stay large, and the little ones are overpowered” this condition “generates the death of the ideal of capitalism”.

 

Seen from another angle, however, it might not be ironic at all but almost fitting. It poses a compelling question: what if the unrestricted progress of capitalism naturally leads to monopolisation? In that case, should capitalism still be viewed as the model which guarantees the most sustainable and healthiest economic growth? Tepper’s article casts doubt on the traditional faith in capitalism. Almost all the conventional wisdom related to entrepreneurial activities of big companies is overturned by this article. For instance, the notion that big companies spend more research and development (R&D) is shown to be not only false but rather the reverse of what actually occurs, so that the larger companies become, the less they invest in real innovation; Tepper states, categorically, “monopoly power deters innovation”.

 

But perhaps the most harmful characteristic of the trend towards monopolisation described by Tepper is the way in which it chokes off productivity. To eliminate even the possibility of competition, behemoth companies will buy off budding startups under the guise of better mentoring the work of innovation. However, when, for example, Google bought nine of the US’s most promising robotics companies to consolidate control and resource management over the industry, we are told “it turned into disaster”, ultimately because Google “was really in the business of selling internet ads”. This is also due to the fact that the bigger a company becomes, the more resources have to be devoted to the maintenance of its correspondingly growing workforce, namely bureaucracy. Tepper’s findings suggest that capitalism as it’s currently practiced might need to take a sharp right turn and even back up a little, to a time when big was bad and small was beautiful.

Image Reference: http://trinityeconexpress.blogspot.com/2012/11/andrew.html

2 Comments

  1. Hello,

    thank you very much for your post. Going off of what you wrote, do you think the current situation could be fixed, or at least improved if the government stepped in? Tepper criticizes the government with his definition of competition: two sides aware they are competing plus a neutral referee, which is supposed to be the government, which is however not doing it’s job.

    On the same note, do you think competition would be improved if we moved away from capitalism to some other ideology? So far, capitalism sounds like the most competitive one, I’d liek to hear your views on that.

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  2. Your question whether I “think competition would be improved if we moved away from capitalism” is very intriguing. Maybe we should entertain the idea that improving competition should not be the ultimate goal of society. Right now, it is the ultimate goal because we’re resigned to capitalism as the economic order of our day. Historically speaking, new developments usually come out of collapses and failures. In a way, economic systems themselves have living cycles and they tend to die and transform into other systems. Perhaps the current trend of competition becoming less and less fair is anticipating the collapse of capitalism. Perhaps.
    Many believe that the success of modern capitalism is deeply tied in with the political system of liberal democracy as this kind of system guarantees the individual liberty which empowers a person to be the ideal consumer of manufactured goods. In more traditional systems (e.g. feudalism, etc.) the individual is never fully free to become an autonomous consumer since their individuality was subordinated to a social, spiritual, or collective ideal that far transcended their purchasing power (i.e. personal wealth) as a buyer of consumer goods. Thus capitalism is a relatively recent historical development. What comes next may look very different, or it might be more of the same.

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