Capitalism: April 2007 Archives

"By the time, the British and American forces reached Northern Italy, it had been pretty well liberated by the resistance, they had driven out the Germans mostly, and they had established their own institutions: worker-managed industrial systems, cooperatives, and so on. The British and Americans were totally appalled, they had to dismantle the whole thing and restore the rights of owners..."

by Noam Chomsky and Dennis Ott

Dennis Ott: In a recent interview you quoted Thorstein Veblen, who contrasted "substantial people" and "underlying population."[1] At a shareholder's meeting of Allianz AG, major shareholder Hans-Martin Buhlmannn expressed the view that there is only one limit to the increase of the dividend: "The inferiors must not be bled so much that they can no longer consume. They must survive as consumers."[2] Is this the guiding principle of our economic system? And if so, is there any substance to the notion of a "social market economy"?

Noam Chomsky: Those are traditional questions in economics. It's part of Marx's reasoning about why there's going to be a continuing crisis of capitalism: that owners are going to try to squeeze the work force as much as possible, but they can't go too far, it'll be nobody to purchase what they buy. And it's been dealt with over and over again in one or another way during the history of capitalism; there's an inherent problem.

So for example, Henry Ford famously tried to pay his workers a higher wage than the going wage, because partly on this reasoning - he was not a theoretical economist, but partly on the grounds that if he doesn't pay his workers enough and other people won't pay their workers enough, there's going to be nobody around to buy his model-T Fords. Actually that issue came to court in the United States, around 1916 or so, and led to a fundamental principle of Anglo-American corporate law, which is part of the reason why the Anglo-American system is slightly different from the European social market system. There was a famous case called "Dodge v. Ford." Some of the stockholders of the Ford motor company, the Dodge brothers, brought Henry Ford to court, claiming that by paying the workers a higher wage, and by making cars better than they had to be made, he was depriving them of their profits - because it's true: dividends would be lower. They went to the courts, and they won.

Full interview: On Capitalism, Europe, and the World Bank

"Capitalism reverses the law of gravity, with money flowing up instead of down." By STEPHEN FLEISCHMAN There are winners and losers, an old, bearded, 19th Century economist told us once. That's the way the system works. Capitalists have been chewing each other up since the Industrial Revolution, said Karl Marx, world famous analyst of "the system", and the battle of mergers and acquisitions still goes on. Dog eat dog. There are always a few good men left at the table; but winners grow increasingly fewer and richer. There are now 946 billionaires in the world, according to Forbes, and 371 of them are in the United States with Bill Gates and Warren Buffett topping the list with $56 billion and $52 billion respectively. So, we wind up with a few winners, a lot of losers, and a plethora of monopolies and oligopolies. Full story: Winners and Losers : A Dog-Eat-Dog System