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The end of capitalism?Only 57 percent of Americans say they support capitalism in a recent U.S. Chamber of Commerce poll. After the ups and downs of the last decade I can see the point of those who say they don't support capitalism, but I can't believe mankind has real hope for the future without the risk and reward of a capitalistic economy. Capitalism is uncomfortable and unpredictable. These are its greatest strengths and greatest weaknesses. Capitalism is amoral, meaning that it doesn't have any soul of its own to set a compass of what is right or wrong. Pure capitalism always points toward profit. Capitalism is good, because everything else is bad. To prevent capitalism from existing you have to have a strong government that places penalties on those who partake in the profits of trade. The backlash against capitalistic behavior today seems to mirror that of the late 19th century in Europe and Asia. From that period, the teachings of communism emerged. When revolutions overthrew governments in Russia and China, each installed a form of communism as their economic system. The key to communism is to bring everyone to the same level--no princes and no paupers. In Russia, under Vladimir Lenin, they all became equally poor. But soon, government officials began taking care of themselves in a manner better than was being offered to the workers. Under Joseph Stalin, the system distorted and soon became a police state, with the 10 percent who were in power imposing their will on the rest. Soviet communism didn't work, literally. The joke was: "We pretend to work and you pretend to pay us." In China, Mao Tse-Tung formed the Socialist Party and took power in 1949. His government implemented communism and became poorer and poorer until his death in 1976. Rather than have another revolution, the communist government of China implemented "trade zones" and encouraged capitalism under the control of socialism. To say that it works is an understatement, as China has seen a sustained economic growth rate of almost 10 percent since 1980. The government is still dictatorial and acts quickly and decisively to put down any social unrest, but it is powered by capitalism. Around the world, the wealth and progress of a country is determined by the relationship between its government and its capitalists. Corrupt government hinders economic growth and stability. People want to invest their labor and money in enterprises that generate wealth, whether it be farming, manufacturing or information transfer. When government fails to bring stability or officials skim profits from their people, investment declines and workers become less productive. The system spirals down until a new base of stability is found and then begins to build again. Haiti is a classic example of the government keeping the country in poverty. In the United States, we have reached a high level of investment and productivity several times. Each time, those who benefited most tried to insulate themselves with huge salaries or protective policies. Each time, the corporate tower collapsed under its own weight, and those at the top wound up at the bottom while taking out many workers and investors on the way down. An emerging challenge of capitalism is "globalism," where a product or service can be produced in another country at a lower price. An established producer with increasing overhead costs can be undercut in price by a producer on another continent and lose his business in a very short time. U.S. Steel producers found this to be true in the 1980s as cheaper steel from Asia closed their factories. In manufacturing, Japan and China have displaced workers in Europe and the United States with their textiles, vehicles and consumer electronics. The role of government in encouraging and controlling capitalism is critical. The military must protect it while the bureaucrats must regulate it. Corruption and influence pedaling are always in play. In the last two years, we have seen the worst examples of corporate greed and government mismanagement in a lifetime. Unfortunately, the problems we now face had been growing for many years without recognition or resolution. Still, with all the uncertainty that is tied to financial markets, the U.S. economy is resilient and has the ability to withstand huge swings in its economic fortunes. Government can reduce the downside with regulation and taxes, but it also restricts the upside with those same actions. Countries that don't have a capitalist heritage have a challenge in implementing the system. In the early 1990s when the Soviet Union collapsed, many people wanted it to come back for the stability they felt it brought to them. They were willing to live with a meager income, rather than risk the vagaries of a capitalist system. When I look at our social security system, I am thinking much the same thing. We want stability and an allowance from the government when we are disabled or reach retirement age, rather than taking our chances by investing in the marketplace and saving a portion of our income over a lifetime. I would like to believe that the owners and managers of businesses base their decisions on Christian principles and that they look out for others as much as they do for themselves. In some cases they do, but often they drill down to the bottom line and choose the path to profitability. I recently asked a lady what her company made. "We make money," she said flippantly. Without the infrastructure provided by government, businesses cannot flourish. Without the profits from businesses that are paid in taxes, government cannot exist. In a capitalist system does business run government or does government run business? The answer is "yes." Editor's Note: Ken Root is an independent agricultural journalist. He was named the 2009 Farm Broadcaster of the Year and was the 2008 winner of the Oscar in Agriculture. He is an Oklahoma native and an experienced print, radio and television journalist. He has spent the last five years as Lead Farm Broadcaster at WHO Radio in¬ Des Moines, Iowa. He and his wife Gail have two adult children and two grandchildren.
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