Thursday, October 29, 2009

Capitalism: A Love Story:: Is the Plutonomy Killing Capitalism?

Crossposted on ThickCulture

So, I'm in Westchester County, NY and it's a drizzly autumn evening on the Tappan Zee. A perfect night to brave the elements to see Michael Moore's Capitalism: A Love Story out at the Jacob Burns Film Center over in Pleasantville, which is a great screening facility.



I find Moore to be a colourful character and I "get" his shtick. That said, no matter how you feel about his politics or this documentary, he brings up some interesting food for thought. In the documentary, there is a reference to an internal Citibank {a "zombie" bank these days} report on the "plutonomy." While the idea of a power elite is nothing new in sociology -or- to anyone familiar with institutions and the macro-structural, I don't think everyone is on the same page with respect to this being a bad thing or not. Well, let's not get too far ahead. What is this plutonomy business anyway? According to the Citibank report::
"Our thesis is that the rich are the dominant drivers of demand in many economies around the world (the US, UK, Canada and Australia). These economies have seen the rich take an increasing share of income and wealth over the last 20 years, to the extent that the rich now dominate income, wealth and spending in these countries. Asset booms, a rising profit share and favorable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries. Also, new media dissemination technologies like internet downloading, cable and satellite TV, have disproportionately increased the audiences, and hence gains to “superstars” – think golf, soccer, and baseball players, music/TV and movie icons, fashion models, designers, celebrity chefs etc. These “content” providers, the tech whizzes who own the pipes and distribution, the lawyers and bankers who intermediate globalization and productivity, the CEOs who lead the charge in converting globalization and technology to increase the profit share of the economy at the expense of labor, all contribute to plutonomy. Indeed, David Gordon and Ian Dew-Becker of the NBER demonstrate that the top 10%, particularly the top 1% of the US – the plutonomists in our parlance – have benefited disproportionately from the recent productivity surge in the US.
So, this is good if you're in the top 1%, right? Let's move on to the "risks"::
"Furthermore, the rising wealth gap between the rich and poor will probably at some point lead to a political backlash.Whilst the rich are getting a greater share of the wealth, and the poor a lesser share, political enfrachisement remains as was – one person, one vote (in the plutonomies). At some point it is likely that labor will fight back against the rising profit share of the rich and there will be a political backlash against the rising wealth of the rich. This could be felt through higher taxation (on the rich or indirectly though higher corporate taxes/regulation) or through trying to protect indigenous laborers, in a push-back on globalization – either anti-immigration, or protectionism.We don’t see this happening yet, though there are signs of rising political tensions. However we are keeping a close eye on developments."
One of the themes in Moore's film is that there is collusion between government and business. Moreover, this is NOT a Republican vs. Democrat issue, as deregulation and the repeal of Glass-Steagall was signed under Bill Clinton's watch.

Have we gotten to a point where within the context of "democracy," we are now seeing an unholy alignment of interests of an unfettered private sector that seeks to influence the "rules" of the market and a public sector willing to bargain? I would argue that we are so far removed from the idealized capitalism of the flavour of Adam Smith's waxings, as the market has been replaces in many instances by "the visible hand" of managerial puppetry in the private and public spheres.

The checks-and-balances in "idealized" capitalism are that competition and the profit motive driven by shareholders will allow for smoothly functioning and efficient markets. In financial markets, undermining faith in the institution of the market through insider trading carries stiff penalties. The plutonomy sees fit to alter the rules for the political and economic elite. Some may argue that the plutonomy is fine. The alignment of interests is a way to channel wealth and capital towards successful ventures. The sociological "Matthew effect" in action, where the rich get richer and success breeds more success.

I'm not convinced. Historically, Microsoft has a marginal track record at managing and commercializing innovations and the well-heeled US pharmaceutical industry knows that newly patented drugs with incremental benefits are far more profitable than truly innovative drugs with an unknown track record. The entertainment industry strives to find or replicate a "formula," rather than try to push the envelope with creativity. Success breeds plutonomy...and Spiderman 4.

The thing is that the plutonomy doesn't care about companies or shareholders, let alone workers or pension plans. It's all about the power elites, who control, enable, and reap the rewards of wealth creation. I'm not sure Moore has the answers here, but Scorsese might. The plutonomy is all about feeding the top of the pyramid. The motto..."f*ck you, pay me."



Twitterversion:: #MichaelMoore's Capitalism: A♥Story brings up food 4 thought re:plutonomy. In the end, is it just Scorsese's #Goodfellas. http://url.ie/2qaw @Prof_K

Song:: The Birth of the True - Aztec Camera




4 comments:

Success Love Stories said...

Nice post.........

fred strauss said...

well ... i know for certain i'll enjoy the movie ... i'm totally capable of getting into the spirit of it ... the populist rebellious poor little victim (me) way of thinking. i'm serious. not kidding. those big ole mean powerful rich guys who unfairly control everything are so wrong ... BUT - what does the so thoughtful mr. moore have to say about a replacement system? (i assume he's for socialist programs and policies and solutions -- no?) how's that been workin' out around the world? i really will have fun watching the film - i know ... but i just wish mr moore wasn't sooo misleading so many people about where and how and why wealth is created - by, and for, all of us - not just the mean rich guys. i wish michael moore cared enough about the truth to make films about how wealth is created and how humans living in freedom over the past hundred and fifty years have improved their lives. the only real power any of these 'bad guys' have over any of us is in their ties to government power (the only legitimate coercive power in my life, and yours) ... is that wrong? ?? who else has real power over you? let me know, and i'll personally help fight them. are those rich mean guys stopping michael from making his unflattering movies about them? why not? michael's got the power ... and so do you and i - over our lives .... except when government interferes - especially in illegitimate ways. some limited government's a good and necessary thing ... i guess. but could michael please let us know how much of it he suggests we should wish for? ... how much more than we already have?

sorry. i didn't say anything about the 'plutocracy'. okay -- it's a somewhat imaginary - and misunderstood - problem. the only rich people screwing things up for we 'little' guys, are the people rich with their corrupt and immoral and unconstitutional associations and activities with excessive government power.

fred strauss said...

..."One of the themes in Moore's film is that there is collusion between government and business."

yes. that's a very big problem. but what's michael's solution to the problem?

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