Restructuring Capitalism
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Restructuring Capitalism

Materialism and Spiritualism in Business

Rogene Buchholz

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eBook - ePub

Restructuring Capitalism

Materialism and Spiritualism in Business

Rogene Buchholz

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About This Book

The main theme of this book is that, within contemporary capitalist societies a materialist outlook informed by science has triumphed creating the lack of a spiritual dimension to give meaning and purpose to the activities that are necessary for a capitalist society to function effectively. Capitalist societies are in trouble and need to be restructured to provide for the material needs of all the people who work within the system, not just the one percent, but because of the lack of a spiritual connection with each other and with nature this is not likely to happen.

It has been said that society and the organizations within treat one another as objects to be manipulated in the interests of promoting economic growth and treat nature as an object to be exploited for the same purpose. This way of treating each other, and nature, is consistent with the way a capitalist system has worked in the past and was supposed to enable it to function efficiently to provide a fulfilling and enriched life for all its adherents through growth of the economy.

However, as capitalist societies have become dysfunctional they will need a different kind of orientation to continue in existence. Restructuring Capitalism: Materialism and Spiritualism in Business argues that what is needed is a new sense of a spiritualization of the self and its relation to others and to the establishment of a spiritual connection with nature in order for capitalism to be restructured to work for everyone and for the society as a whole.

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Information

Publisher
Routledge
Year
2017
ISBN
9781351795203
Edition
1

Part I

The Crises of Capitalism

1 The Material Crisis of Capitalism

There is not much doubt that capitalistic economies have been more productive than any kind of socialism that has appeared in history. They have delivered an unprecedented array of material goods to those who have lived in such societies and have generated more so-called material wealth than any other kind of economic organization. Material incentives have proved to be effective in motivating people to work and take the risks involved in bringing a new product to market. The freedom to do what one wants and pursue one’s self-interest within a system that minimizes bureaucratic interference leads to a high level of innovation and growth of the economy. Thus, even countries like Russia and China have adopted some form of capitalism to grow their economies and provide for the material needs of their citizens.
But capitalistic systems are not without problems. When a concept such as freedom is particularized in an economic system, all kinds of problems emerge over time that have to be addressed for the system to continue. In our society, those problems have been addressed by public policy measures designed to keep free-market capitalism functioning and providing benefits to the society as a whole. These benefits for society are not the result of unfettered capitalism working its way throughout history based on the inexorable laws of economics but are the result of conscious decisions by public policy makers to make the system work for all of society.

Concentration

One such problem that appeared in the late nineteenth century was the emergence of concentration in most major industries. Competition as a regulator of business behavior seemed to be disappearing during this period with the emergence of large-scale business enterprises that could exercise some degree of control over the economy. Free-market capitalism seemed to be destroying itself through such concentration and predatory competitive practices. Such developments awakened American’s long-standing fear of concentrations of power whether political or economic. The concentration of economic power was unacceptable as it was believed that such power over markets would be used to ride roughshod over the public interest.
Indeed, it seems that common sense would lead one to understand how a concentrated system could happen. There are no scientific laws that assure that competition is going to continue in a completely unregulated system. Some companies are always going to be better than others in providing products people want to buy and being able to be more efficient and offer their products at a lower price. Some companies may be smarter than others or just plain lucky to be in the right place at the right time. Business managers don’t like competition, and the goal of a business enterprise is to eliminate the competition in whatever way possible and to gain some control over their environment. What this means is that in a completely unregulated system some companies will emerge winners and gain a dominant market share even if they compete honestly. Others will engage in predatory practices such as price-fixing or price discrimination in order to gain a competitive advantage, meaning that other companies will have to do the same in order to remain in business and competitive behavior will sink to the lowest common denominator.
Government thus passed antitrust laws to prevent these things from happening and keep the system functioning. Antitrust laws focus on structure in making sure that competition continues to exist and industries do not become overly concentrated, and conduct in preventing companies from engaging in anticompetitive practices that would destroy the competitive process. The goals of antitrust policy are to maintain a workable competition, often defined as a system where there is reasonably free entry into most markets, no more than moderate concentration, an ample number of buyers and sellers, and the promotion of fair competition by not allowing competitors to engage in anticompetitive practices that would undermine the competitive process.
The Sherman Act of 1890 was the first piece of antitrust legislation. The most important parts of the Act are the first and second sections. The first section attacks the act of combining or conspiring to restrain trade and focuses on anticompetitive methods of competition or firm behavior. This section seems to make illegal every formal agreement among firms aimed at curbing independent action on the market. The second section enjoins market structures where seller concentration is so high that it approaches or attains a monopoly position.
The Clayton Act of 1914 attacked a series of business policies insofar as they could substantially lessen competition or tend toward creation of a monopoly position. The language of the Sherman Act was quite broad, leaving a good deal of uncertainty as to what specific practices were in restraint of trade and thus illegal. The Clayton Act was passed to correct this deficiency by being more specific and barring price discrimination (later supplemented by the Robinson–Patman Act), tying arrangements, and exclusive dealing arrangements. It also contained a section that was designed to slow down the merger movement by forbidding mergers that substantially lessened competition of tended to create a monopoly (later strengthened by the Cellar–Kefauver Amendments).
The Federal Trade Commission Act of 1914 created the Federal Trade Commission (FTC), which was empowered to protect consumers against all “unfair methods of competition in or affecting commerce.” What methods of competition were unfair was left up to the commission itself to decide. In 1938 the Wheeler–Lea Act amended this language to include “unfair or deceptive acts of practices in commerce,” thus giving the FTC authority to pursue deceptive advertising and other marketing practices that did not necessarily affect competition.
Subsequent developments included upgrading the penalties for violations of the Sherman Act in 1955, declaring that violations would be considered felonies rather than misdemeanors in 1974, and in 1990 upgrading the penalties again. The Hart–Scott–Rodino Antitrust Improvements Act of 1976 gave the Justice Department broadened authority to interview witnesses and gather other evidence in antitrust investigations. It also provided for premerger notification requiring large companies planning mergers to give federal antitrust authorities advance notice of their plans, which gives the agencies time to study the proposal and take action to block the merger before it is consummated if is deemed to be anticompetitive. The act also allowed state attorneys general to sue antitrust violators in federal court on behalf of overcharged consumers.
The application of these antitrust laws has been anything but consistent. The intentionally vague language of these laws allows each administration to interpret and enforce the laws in accordance with its economic philosophy. There are benefits to large-scale production, distribution, and organization such as economies of scale; more efficient coordination; and increased research and development expenditures. It is not clear that either a competitive or a concentrated system is superior in terms of pricing or innovations that are of importance to society. The antitrust laws thus maintain an allegiance to the ideals of competition and institutionalize the society’s fear of large concentrations of power. Yet their application is flexible to allow the benefits of concentrated industries to be exploited when society deems appropriate.

Destructive Forms of Competition

A second problem resulted in industry regulation that proved to be an acceptable way to stabilize some industries that were believed to be inherently chaotic and where destructive forms of competition were likely to appear. Such was the case with the railroad industry in 1887 when the Interstate Commerce Commission (ICC) was established to provide continuous surveillance of private railroad activity across the country. Although some states had practiced such regulation before the federal government intervened, the inability of states to regulate railroads effectively led to passage of the act that created the ICC, which set the pattern for additional regulatory commissions of this type. The ICC was an innovation because it represented a new location of power in the federal system and served as a prototype for regulation by an independent commission as federal regulatory powers were extended into other areas of industry and commerce.
Other commissions such as the Federal Power Commission (FPC), the Civil Aeronautics Board (CAB), the Federal Communications Commission (FCC), and the Securities and Exchange Commission (SEC) soon followed. This type of regulation focuses on a specific industry and is concerned with its economic well-being as well as the way business is being conducted in the industry. The major concerns of the ICC, for example, are with rates, routes, and the obligation to serve. The FPC was created to regulate an industry such as utility companies, where natural monopolies exist such that one firm may be able to supply the market more cheaply and efficiently than several smaller firms. Since competition cannot serve as a regulator in these instances, government must perform this function to regulate these industries in the public interest. The CAB was created to prevent destructive competition in the airline industry and to see that service was provided to small towns and cities that would be ignored by the market. The FCC was created to allocate a limited space to broadcasters, among other things. And the SEC was created to prevent fraud and deception in the securities industry, something the industry cannot do for itself.
Over time many began to view these regulated industries as nothing more than government-supported cartels, where companies in the industry earned higher profits and charged higher prices than if competition prevailed. Thus, a deregulatory trend began to develop in 1978 when Congress passed a deregulation bill aimed at air passenger service. The bill allowed airlines to offer new services without CAB approval and granted them a great degree of freedom to raise and lower their fares. The CAB itself went out of existence with its remaining activities transferred to other agencies. Companies in the railroad industry were given the right to charge as little or as much as they pleased for hauling certain goods instead of following ICC-approved rates. Similar pressures mounted to deregulate some aspects of the trucking industry and to abolish some of the FCC’s control over commercial radio and television broadcasting.

Instability

Another such problem appeared in the late 1920s when the Great Depression started. The system was seen to be inherently unstable due to over-investment and under-consumption and needed government action to try and stabilize things. While there had been boom and bust periods before this event, it was the Great Depression that brought the issue to a head so to speak. During this period the bottom dropped out of the economy, as the stock market crashed, banks closed their doors, people were thrown out of work, others lost their savings, and thousands of businesses went bankrupt.
The traditional approach to downturns of this nature was based upon a view of the economy as a self-correcting system. Unemployment would drive down the price of labor to the point where companies would find it profitable to hire people again. These workers would then buy more products so demand would begin to increase. Factories that were lain idle drove down the price of borrowing money to the point where entrepreneurs would find it feasible to take out loans and create new enterprises. Thus, an upward spiral would be set in motion that would eventually pull the economy out of a depression. Prosperity would thus be restored if people would just be patient and resist attempts to hasten this process with government intervention.
Roosevelt won the election of 1932 by promising a new deal for the American people. The depression was such a shock to the self-confidence of the nation and the distress it caused was so widespread that people came to fear that self-correction would not happen soon enough to do any good. They were not willing to sit in their Hoovervilles and starve to death while waiting for the market to correct itself. The traditional view of an inherently self-correcting market proved bankrupt to deal with the problems of the depression. The unregulated market was too unsta...

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