7 Ways to Fix Capitalism

Last Updated Nov 20, 2008 11:40 PM EST

Capitalists have done a bad job of keeping the world safe for capitalism, asserts Harper's magazine. It propose a few fixes for the system, in seven essays that range from paranoid conspiracy theories to utopian idealism. Check that; all seven will represent someone's idea of utopian idealism. And all seven will cause others to gnash their teeth in horror. Some of them are contradictory â€" Bill McKibben's call for localization seems unable to save capitalism if we also heed Eric Janszen's cry to reindustrialize. The Harper's collection is a CliffsNotes of potentially creative steps to solve our sweeping problems of energy dependence, climate change and financial foolishness. You can only read the beginnings online, unless you subscribe to the magazine. Here are my quick recaps.
  • Realign the interests of Wall Street. Joseph Stiglitz, generally no worse than sensible in his public writings, gives a concise outline of the factors behind Wall Street's egregious behavior and subsequent downfall, and then veers off into a series of what amount to fantasies for fixing Wall Street, like forcing CEOs to take losses on their shares, and not just gains, or mortgages that might adjust in favor of cosumers, not banks. One could only hope they'd actually be implemented.
  • Abolish stock options. Barry C. Lynn has a slavering attack on those evil short-term shareholder activists who enslave long-suffering managers and prevent them from doing their jobs. He gives far too much credit to managers and how well they might behave if freed of stock options. But it's an interesting alternative to Silicon valley orthodoxy, and a fun read.
  • Protect Financial consumers. Elizabeth Warren and Amelia Warren Tyagi propose a Consumer Product Safety Commission for financial instruments. I like the idea, though it's easy to see this turning into a full-time target of government watchdogs, instead of an effective protector of consumers.
  • Tax the Land. Michael Hudson will terrify any one who lives off the land (and I don't mean farmers). He argues that we have not completely left the feudal economic system behind, instead giving privileges to monopolies and inherited wealth. Thus, we should shift taxes to those who own 'property,' writ large, rather than on income. Whether or not you agree with that, he does raise the question of why we're giving free rent to broadcasters, and argues that such government subsidies deprive the nation of half-a-trillion dollars in revenue, while lining the pockets of a privileged few.
  • Some of his statistics are eye-opening. For instance, if the U.S., like Canada, got rid of the real estate tax deduction, we would gain three-quarters of a trillion dollars in tax revenue, which would go a long way to fixing our budget problems, and probably would reduce wild real estate speculation (and it must be noted that Canada has traditionally had a higher percentage of home owners).
  • Plan. Since when is 'plan" a four-letter word? James K. Galbraith argues that it shouldn't be, despite its association with Communism. He says that if the government only had a brain â€" that is, it was not influenced by lobbyists â€" it could come up with a plan to fix our future. Good luck â€" there are lobbyists in the book of Genesis. Let's call it the world's second oldest profession.
  • Reindustrialize. Eric Janzen's essay includes an apt acronym, FIRE, for our finance, insurance and real estate sectors, whose respective bubbles have torched our economy. I'm puzzled by his assertion that the government was responsible for all our bubbles since the 1980s (perhaps he believes that Al Gore created the Internet and thus was responsible for its bubble). But it's interesting to think about what we could do if the government were to do things like spin out Fannie Mae and Freddie Mac and invest in infrastructure instead of mortgages.
  • Localize. Bill McKibben bangs the drum for a future in which farmer's markets and other local shopping adventures save our society. I like farmer's markets a great deal, too. Perhaps he's on to something.
  • Michael Fitzgerald

    Michael Fitzgerald writes about innovation and other big ideas in business for publications like the New York Times, The Economist, Fast Company, Inc. and CIO. He’s worked as a writer or editor at Red Herring, ZDNet, TechTV and Computerworld, and has received numerous awards as a writer and editor. Most recently, his piece on the hacker collective the l0pht won the 2008 award for best trade piece from the American Society of Journalists and Authors. He was also a 2007 Templeton-Cambridge Journalism Fellow in Science and Religion.