Capitalism's unmatched history of failure

If there is one constant in the areas of politics and economics, it's that the facts are unwelcome. This is especially true when the conversation turns to capitalism.

The cheerleaders of capitalism like to muddy the waters by taking credit for things they didn't do.
For instance, just look at that marvel of modern capitalism - the iPhone. Virtually all of the technologies that make up the iPhone were developed by the Department of Defense, and that's only a start.

The parts of the smart phone that make it smart—GPS, touch screens, the Internet—were advanced by the Defense Department. Tesla’s battery technologies and solar panels came out of a grant from the U.S. Department of Energy. Google’s search engine algorithm was boosted by a National Science Foundation innovation. Many innovative new drugs have come out of NIH research.

Very little scientific innovation has ever come from capitalism.

The primary failure of capitalism is it's inability to achieve it's most basic reason to exist.
I'm speaking of the frequently repeated claim about how capitalism has lifted so many millions out of extreme poverty over the past 30 years. First of all, the claim is completely false.

we see that the number of people living under this line has increased dramatically since measurements began in 1981, reaching some 4.2 billion people today. Suddenly the happy Davos narrative melts away.

Moreover, the few gains that have been made have virtually all happened in one place: China. It is disingenuous, then, for the likes of Gates and Pinker to claim these gains as victories for Washington-consensus neoliberalism. Take China out of the equation, and the numbers look even worse. Over the four decades since 1981, not only has the number of people in poverty gone up, the proportion of people in poverty has remained stagnant at about 60%.

It's actually even worse than that, because one of the few regions besides China to reduce poverty in the post-Cold War period was Latin America, and their success was almost entirely due to a turn toward mild socialism.
What's more, the World Bank, when faced with reports showing that extreme poverty in the world is increasing, has simply changed the criteria at the last minute in order to force the numbers to reflect the politics.

“the absolute number of those living on $1 per day or less continues to increase. The worldwide total rose from 1.2 billion in 1987 to 1.5 billion today and, if recent trends persist, will reach 1.9 billion by 2015.”

- World Bank in its 2000 annual report, right before it changed the criteria and poverty magically dropped by 400 million

So if capitalism isn't lifting the poor out of poverty then what good is it? If the objective was to make the rich more wealthy, we already had that covered with feudalism, fascism, oligarchism, and lots of other 'isms'.
There was no need for yet another system to make the wealthy more obscenely wealthy.

At this point the proponents will always point out the history of failures of socialism.
While they do so they almost always fail in three distinct ways:

1. Almost without exception they can never correctly define socialism. Generally their "definition" of socialism is just another way of saying "icky" or "scary". If they can give a coherent response they'll say something to the effect of "socialism is Big Government".
At that point I like to point out that "Anarchism is socialism" and watch their heads explode.

2. The "history of failures of socialism" implies that socialism always fails by itself. I like to challenge the capitalists to point out a socialist country that wasn't attacked politically, economically, and militarily by capitalist nations. There was none. They all collapsed under the violence and brutality of capitalist interests.

3. The cheerleaders of capitalism are almost without exception largely ignorant of real history.
They often call themselves libertarian, while being ignorant that Libertarianism is a socialist term.
They almost always deny the clear connection between capitalism and the slave trade.
They often cite an exaggerated number of victims of communism, but have never even considered that the number of victims of capitalism is infinitely larger even by conservative estimates.

Cheerleaders of capitalism will, in every instance of economic failure, excuse capitalism by blaming the government. All it requires is the very existence of the government. The assumption being that everything the government does can't help but be negative, no evidence required.
The thing is, we can measure this, and capitalism doesn't come out looking good.

Let's start with the deregulation movement that started in the 1970's.

The mantra preached by most lobbyists was that economic regulation was outmoded and market self-regulation should be the norm. The idea they espoused was that government regulation impedes the natural laws of supply and demand, which ultimately increases cost to consumers. They insisted that deregulation would create more competition and thus lower prices for consumers.
...When the Airline Deregulation Act of 1978 passed, there were 43 airline companies. By 2013, there were only nine.
...Deregulation also led to poor services and many customer complaints. In 1978, all tickets were refundable, you could change flights with no penalties, travelers would be compensated for canceled flights, seats had more leg room, meals were free, and checking bags was free.

On top of that, unions were gutted. worker were treated worse, and hundreds of thousands were fired. Just four airlines had virtual local monopolies.
This same experience was repeated everywhere.

The Motor Carrier Act of 1978 deregulated the trucking industry.
100 large companies went out of business and 150,000 people lost their good-paying jobs.
In 1996, a bipartisan Congress deregulated agriculture. Many farmers and agribusiness interests supported the bill.

But for family farmers, the Omnibus Farm Bill – and the export-led growth strategy upon which it was based – has been a massive failure. The U.S. farm trade balance declined by more than $13 billion between 1996 and 1998, and prices have plummeted. August U.S. corn prices fell from $4.30 per bushel in 1996 to $1.89 in 1998, or 56%. Wheat prices fell from $4.57 per bushel in 1996 to $2.46 in 1998, a drop of 46%.

The combination of export dependence and deregulation have left increased numbers of family farmers facing extinction. At the same time, U.S. agriculture becomes more centralized in the hands of large farms and national and multinational companies.

The list of deregulation bills are too many to list. The Bus Regulatory Reform Act, The Surface Freight Forwarder Deregulation Acts, the Ocean Shipping Reform Act, the Energy Policy Act of 1992, the Telecommunications Act of 1996, just to name a few.
However, the most disastrous deregulation was the financial industry.

The new securitization became globalized and eventually affected the world economy. The speculation and lack of effective regulation eventually led to the crash of 2007 and The Great Recession.

Most people think that the big bank bailout was the $700 billion that the U.S. Treasury Department used to save the banks during the financial crash in September of 2008. But the bailout is ongoing. According to the Center for Media and Democracy, $4.6 trillion has been paid out by the government and trillions of dollars are still committed. Yes, trillions not billions, and the banks are now larger and still too big to fail...The 12 largest banks now control 70% of all bank assets.

In almost every instance, deregulation was disastrous for the workers in those industries, created poorer quality products and/or services for consumers, and led to massive consolidation. The opposite of what capitalists promised.

The next level we need to look at is privatization, which is not new to this country.

Moshe Adler's research on privatization in the 19th Century shows a pattern of corruption, poor quality, and failure to provide services the public had paid for.

Nevertheless, with the Reagan Administration we decided to try privatization again, because capitalism.

A 2007 survey found that over half of the local governments that placed services back under public control did so because privatization didn’t cut costs. After Iowa hired insurance corporations to manage its Medicaid program in 2017, the average cost of insuring people climbed nearly three times as fast as when it was under public control. An Indiana toll-road built using private financing — known as a ​“public-private partnership” — launched in 2014 by then-Gov. Mike Pence turned out to be $137.3 million more expensive than if the state had used traditional public financing. Charter schools, which are publicly funded but privately operated, are costing San Diego’s school district $65.9 million a year. And then there’s healthcare, an area where the United States spends twice as much as other countries thanks to a ​“free market” of private doctors, nurses, hospitals and drugs.
...In fact, the decades-long campaign to push privatization policies has gone hand-in-hand with efforts to slash taxes on the wealthy, bust unions and target the rights of working people.

Privatization efforts are generally based on ideology rather than evidence, and have caused harm to vital public services and infrastructure.
Capitalists are united in denying these obvious facts. Not because they are liars, but because they are indoctrinated.

Finally, we have the Holy Grail of capitalism - Free Trade.

whatever measures you use, the data shows that free trade agreements (FTAs) have been a disaster for U.S. trade and the U.S. economy. In the last 25 years, our trade position with our two NAFTA partners has changed from rough balance in 1992 to a whopping huge deficit of $160 billion last year.
...And it’s not just NAFTA. After the Korean-US trade agreement was approved in 2011, our trade deficit with Korea more than doubled to $32 billion on the narrower measure last year--or $28 billion on the wider measure.

While we don't have an FTA with China, granting China Most Favored Trade status in 2000 and bringing them into the WTO, dropped tariffs to nil. The outcome has been apocalyptic for the working class.

The growth of the U.S. trade deficit with China between 2001 and 2018 was responsible for the loss of 3.7 million U.S. jobs...Three-fourths (75.4%) of the jobs lost between 2001 and 2018 were in manufacturing (2.8 million manufacturing jobs lost due to the growth in the trade deficit with China).
...U.S. proponents of admitting China into the World Trade Organization frequently claimed that letting China into the WTO would increase U.S. exports, shrink the U.S. trade deficit with China, and create jobs in the United States.

Time and time again, capitalists have promised the opposite of what was delivered, and the working class suffered because of it. And it was all easy to predict. Labor unions fought it every step of the way, but those in charge didn't want to listen.
I found this article in the 1986 Harvard Business Review.

We have elevated the economic theory of free trade to the status of a national theology, and we follow its simple dictums as if they were immutable laws. We appear prepared to follow the precepts of free trade wherever they lead us, even if that means plunging lemminglike to our economic ruin.

Today the evidence should be clear to anyone who wants to look at it: our blind allegiance to free trade threatens our national standard of living and our economic future. By sacrificing our home market on the altar of free trade, we are condemning ourselves and our children to a future of fewer competitive businesses, fewer good jobs, less opportunity, and a lower standard of living.

All unquestionably true, and all have come to pass.
Yet like our wars, failure is never something that must be acknowledged, much less punished.

When push comes to shove, the capitalist will simply deny that capitalism ever existed.

However, there is no capitalist country anywhere in the world today. The closest was the 19th century America, but even there capitalism was not pure. It was adulterated by the governments’ interference in the economy. So there hardly could haven been any “victims” of capitalism then, and there cannot be any today.
More fundamentally, there cannot be victims of capitalism because the concept is a contradiction....
as Ayn Rand explained, capitalism is a system in which the initiation of physical force and fraud is banned, as both violate the rights of individuals.

Under capitalism, only the government can use force—but exclusively in retaliation against its initiators, such as terrorists and other criminals. Therefore, such a social system has no victims: capitalism is the only victimless social system.

What is being described here is Utopia, not capitalism. If you look up the definition of Utopia you will find "an impractical scheme for social improvement; an imaginary and indefinitely remote place".
Nothing written here is even remotely close to the definition of capitalism, nor it's history. This "definition" of capitalism is useless. When you encounter these people, just understand that you are dealing with a religion.

18 users have voted.


Cassiodorus's picture

That's what underlies its claim to fame. Thomas Edison invented a lot of stuff, and it's anyone's guess as to whether or not he'd have invented all those things without the accompanying hustle. I have a copy of the recent Edmund Morris biography; I haven't read it yet.

It's pretty much outlived its usefulness, though, as you've illustrated quite well.

9 users have voted.

"Freedom is always, and exclusively, freedom for the one who thinks differently.” -- Rosa Luxemburg

is how capitalism has become the religion of democracy, at least for the 1%. I'm not sure, but winning a national election must boost the winner to near 1% status. Given enough time that is bound to be a sure thing. Ask Obama about his multiple mansions. His employers have been generous.

14 users have voted.
Dawn's Meta's picture

the government agencies, departments and services have at times performed well. I'm thinking of the Post Office, Social Security, National Park Service, GI Bill, CCC and WPA plus others, we could be proud of our government and trust it.

The one percenters have ruined government, imho, to prove their point, which still doesn't work.

Give us back a working government with people who work for less but do more.

14 users have voted.

A society grows great when old men plant trees in whose shade they know they shall never sit. Allegedly Greek, but more possibly fairly modern quote.

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Raggedy Ann's picture

greed is NOT good. Gordon Gecko got it wrong but tptb still think he's right. Pleasantry

13 users have voted.

"The “jumpers” reminded us that one day we will all face only one choice and that is how we will die, not how we will live." Chris Hedges on 9/11

It was under the umbrella of the Dept. of Energy and thus that is their main funding. The work of the scientists there is pure research. Nothing is done for marketing purposes or profit. And yet, out of their work came technologies like MRI's and dozens of other results that became machines or parts of machines that were sold for profit. I'm not sure how you separate the two.

8 users have voted.

"Without the right to offend, freedom of speech does not exist." Taslima Nasrin

CB's picture

to operate under other than their historic capitalistic zero sum - winner take all - trade deals.

They need to follow the East which has been rapidly transforming in this century despite the US-EU continuing attempts to thwart and subvert their progress.

The future energy source to power these burgeoning economies will be hydrogen. The ultimate green fuel. Both China and Russia have made long term commitments to this to ensure its success.

The Eastern Economic Forum Accelerates a Grand Strategy of Win-Win Cooperation

One can only hope that wiser forces among the nations of the west (and those among the global south trying to foolishly operate within two opposing worlds) will recognize which future is worth living in, Matt Ehret writes.

The battle lines for the future of humanity were made explicitly clear during this week’s Eastern Economic Forum held in Vladivostok under the theme of “Opportunities for the Far East in a World Under Transformation”.

President Putin set the tone of the event by noting:

“The strategic vector for the development of the Far East is towards a new economy, those areas for economic, scientific and technological development that shape the future, set long-term trends in entire industries, countries, and regions of the world. Here a broad range of opportunities for international cooperation opens up as well as the chance to really look at the development of the traditional sectors and branches of the economy."

Over the course of the three day event, 380 agreements totalling 3.5 trillion rubles were signed vectored around a long term growth strategy for Russia’s underdeveloped North East which. These agreements bring together dozens of nations and private interests into a new long term strategic framework that is not only opening up one of the last undeveloped frontiers on Earth, but which also ties Moscow’s destiny ever more firmly into the Asian Pacific. This is no surprise since China’s growth model has set the tone for an alternative political-economic order and Russia’s relationship with that new order is among the highest priorities for anyone in Russia committed to survival.
The strategic necessity for hydrogen and also nuclear power has finally struck many nations who have woken up to the reality that the windmill/solar panel boondoggles that technocrats managing a Global Green New Deal have been pushing might look nice in computer models, but are completely dysfunctional when measured against the actual productive needs of humanity.
With the International Northern-South Transportation Corridor begun in 2002 stretching from Russia to India with maritime and land routes touching dozens of countries now taking on new life as a win-win design in total synergy with the east-west New Silk Road corridor, the importance of the integration of the Eurasian Economic Union with the BRI Framework can not be overstated.
With these new pro-development programs in place, a new environment is quickly being shaped outside of the increasingly defunct “rules based order”. This alternative system is bringing hope to Afghanistan, Syria, and every other nation caught in the fires of empire. Reflective of this new hope, Taliban spokesman Zabiullah Mujahid has stated:

“Chinese assistance will form the foundation of Afghan development. One Belt, one Road will revive the ancient Silk Road. China will be our gateway to international markets”.

With the BRICS Summit just around the corner and the BRICS Development Bank poised to hopefully take on new life as a driving force of long term development alongside the Asian Infrastructure Development Bank, one can only hope that wiser forces among the nations of the west (and those among the global south trying to foolishly operate within two opposing worlds) will recognize which future is worth living in.

8 users have voted.

He stole, OK, took up, the idea and repurposed it.

I wish you would look at democratic syndicalism, workers own and manage the factories, a trend which is having some successes here in the USA. King Arthur flour is a worker owned company. It also produces the best available product at the moderate price range. I have been baking for 50 years; I can remember when Gold Medal was a good product. Now, it is worthless.

4 users have voted.


The basic premise of capitalism is absurd, that one of society's most important assets, its capital, should be owned by a handful of obscenely rich people. It's also a sad commentary that with all of our intelligence, universities and economists we can't come up with a means of allocating capital that promotes a successful economy and social justice, and as a corollary - why would you sign up for a society that did not do these things? The capitalists promote the absurd lie that an economy cannot prosper unless the oligarchs get to make the important decisions, and are personally fabulously wealthy. China has, by example, laid waste to the primary premise of our capitalism. Sure, the Chinese system with its unique characteristics uses the free market at the broad level, but sure enough guides the economy at the top level to achieve success and better the lives of all of its citizens.

Which reminds me of my analysis of democracy. Representative democracy is a method, not a goal. The goal is to create the best outcome of all of your people, and in the process get their approval. In my opinion, our 18th century form of democracy doesn't even come close to those goals, especially in the 21st century. Congress exists to please the corporations and to get donations in return. The people almost never get what they want, as has been proven over and over again. The two parties run a scam, to keep control and to not allow any serious challenge, whatever it takes. That's one of the reasons that we get such defective candidates for higher office, these are the folks that fit into the scheme of the scam. I can say that we have not had a world class statesman in the presidency in my life time. Unfortunately for us our two adversaries (we made them adversaries) both have world class statesmen at the helm.

2 users have voted.

Capitalism has always been the rule of the people by the oligarchs. You only have two choices, eliminate them or restrict their power.