Yeah, Herr Karl got a lot of things wrong, but his prediction that economic collapses would prove endemic to capitalism has yet to fail. Six months ago, if someone had asked you how likely it was that a mysterious epidemic arising in a major country would give rise to fears of a major global economic slowdown, leading to expectations of a significant drop in demand for petroleum, leading to a major dispute over future market strategy between oil-producing titans Saudi Arabia and Russia, leading to a declaration of an all-out price war between the two, leading to widespread fears of widespread bankruptcies among American oil companies, leading to a stock market collapse, what would your answer have been? Could you have even imagined that such dominoes existed, much less that they would start toppling the way they have over the past several months, sending our once-soaring stock markets spinning like yo-yos?
Yeah, to repeat myself, Old Karl got an awful lot of things wrong. The working classes, and the bourgeoise, and everyone else, got richer, instead of being “immiserated”, as he predicted. Old Karl thought he had seen it all, but he hadn’t seen anything. But the last few decades have demonstrated both how potent, and how fragile, our modern global economy is. We’ve reduced the number of poor by dramatic levels all around the world, in every continent and almost every country. And where capitalism hasn’t succeeded in dramatically raising the standard of living, it’s almost always the fault of corrupt governments whose hold on power is based on naked repression, with the operation of free markets deliberately inhibited and diverted to selfish political ends.
But this latest eruption is almost guaranteed to raise new demands for something—anything!—that will guarantee more stability. And I wonder what the solutions are going to be, because lately the capitalist system hasn’t been covering itself with glory. Consider two items:
Back in the day, say 2003, folks would day “Of course free markets are self-policing! It’s not like Boeing would build a bad airplane on purpose, would they?” Well no, they wouldn’t, but they might create a corporate culture where embarrassing problems were swept under the rug, where top management lied to the Federal Aviation Administration, and where lower-level employees lost confidence in the honesty of their superiors. Two crashes of the Boeing 737 Max, that took the lives of 346 people, have led to repeated scandals, including the dismissal of former CEO Dennis Muilenberg, who, current CEO David Calhoun “explained”, “ran over the rainbow for the pot of gold on stock.” Said Dave, “I’ll never be able to judge what motivated Dennis, whether it was a stock price that was going to continue to go up and up, or whether it was just beating the other guy to the next rate increase.”
A day later, Dave said he wished he hadn’t said what he said about Dennis, perhaps because it was pointed out to him that his comments were increasing the company’s exposure to both civil and criminal liabilities for the 346 deaths. The U.S. House of Representatives Transportation Committee has released a scathing report on both Boeing and the FAA and there’s bound to be many more revelations, for years to come.
Another “when capitalists go bad” story with legs is Wells Fargo Bank’s multi-billion dollar holdup of its customers. Slate’s Maria Bustillos brings perhaps 5% more righteous indignation to the table than is strictly necessary, but the tale of unending petty, and not so petty, chicanery is stunning in its reach. According to a December 2018 press release from the Pennsylvania Attorney General’s office
Wells Fargo has identified more than 3.5 million accounts [across the U.S.] where customer accounts were opened, funds were transferred, credit card applications were filed, or debit cards were issued without the customers’ knowledge or consent. The bank has also identified 528,000 online bill pay enrollments nationwide that may have resulted from improper sales practices at the bank. In addition, Wells Fargo improperly submitted more than 6,500 renters insurance and/or simplified term life insurance policy applications and payments from customer accounts without the customers’ knowledge or consent.
At both Boeing and Wells Fargo, upper management gave in to the notion that, the louder you yell at the peons, the harder they work, and the richer you get. The guy with the loudest voice wins. It’s just Management 101.
Years ago, when Steve Jobs was a young guy, before he was pushed out of Apple (in 1985), I read an interview with him in which he talked about how skewed the traditional liberal picture of a capitalist is—a capitalist makes his living pleasing his customers, not screwing them. Most of the time, Steve. Most of the time.
Afterwords
To jump back to the coronavirus, Justin Fox has a nice piece at Bloomberg explaining why it’s “different” from our last global disease outbreak, the 2009 “H1N1+”, which spread more easily but wasn’t as lethal.
