Sunday, August 14, 2011

Republicans and austerity hawks are endangering Capitalism

The Republicans in the United States and austerity hawks around the world are endangering Capitalism with their insistence on drastic cuts in government spending and their refusal to address spreading income inequality.  The turmoil in England and the plight of the declining middle-class in the U.S. and elsewhere are a danger signal.  Capitalism works only when it works for everyone—rich and poor alike.  Indeed, the survival of capitalism depends upon it working for everyone.  When it starts working only for the rich, the disaffected masses will eventually revote and tear the system apart.  Massive greed leads to the ultimate destruction of capitalism, not its salvation.  Workers will not tolerate extreme income inequality for long.  When they lose hope of sharing in the rewards of their labor, they will reject capitalism and turn to communism or worse. 

In his book The Post-Capitalist Society, Peter Drucker, the capitalist hero, wrote that the capitalist society of the early 1900s was saved from Marxism by a progressive-driven Productivity Revolution.  Drucker credits the Productivity Revolution in great part to the work of Frederick Winslow Taylor (1856-1915) who introduced Scientific Management to American capitalists and then to the world.  Drucker writes this about Taylor’s motivation:

Taylor's motivation was not efficiency. It was not the creation of profits for the owners. To his very death, he maintained that the major beneficiary of the fruits of productivity had to be the worker, not the owner. His main motivation was the creation of a society in which owners and workers, capitalists and proletarians, could share a common interest in productivity and could build a harmonious relationship on the application of knowledge to work. (Peter Drucker, The Post-Capitalist Society, p. 34.)

Drucker continues:

By 1930, Taylor's Scientific Management…had swept the developed world. As a result, Marx's "proletarian" became a "bourgeois" The blue-collar worker in manufacturing industry, the "proletarian" rather than the "capitalist," became the true beneficiary of Capitalism and Industrial Revolution. This explains the total failure of Marxism in the highly developed countries for which Marx had predicted "revolution" by 1900. It explains why, after 1918, there was no "Proletarian Revolution" even in the defeated countries of Central Europe where there was misery, hunger, and unemployment. It explains why the Great Depression did not lead to a Communist revolution, as Lenin and Stalin-and practically all Marxists-had confidently expected. By that time, Marx's proletarians had not yet become affluent, but they had become middle class. (Peter Drucker, The Post-Capitalist Society, p. 39.)

Progressives aren’t enemies of capitalists.  Progressives are capitalists’ greatest friends, their protectors.  Progressives don’t seek to destroy the capitalist pie; they seek only that it be equitably shared.  Give the people a fair share, say progressives, and the capitalist pie will just grow larger.  By giving up part of the pie now, the rich will enjoy a much larger future pie.  Accepting a fair slice of a very secure large pie is much better than greedily demanding all of a much smaller pie, particularly if that pie is increasingly in danger of being stolen by those who are desperately hungry and have little to lose.

True Capitalists, whatever their political philosophy or party affiliation, should be worried—very worried—about the developments in Great Britain and the increasing inequality in the United States and the rest of the world.  The riots in London, Greece and elsewhere are a wakeup call.   Learn to share, Capitalists, if you want your economic system to survive.  Start making the system work for everyone just like Taylor and informed Capitalists did in the 1930s, or you may pay a terrible price.  It is a price you do not have to pay.

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