Capitalism isn’t working very well for us, but we don’t need to toss it out. We just need to reinvent it, or perhaps we need to go back to the basics. Our economic system should work for ALL of the people, not just for the rich ones.

Unfortunately for most of us, capitalism has evolved over the years into an economic and political system (yes, it absolutely is political!) that primarily results in the rich getting richer, and in everyone else getting left behind. It focuses on profits for the wealthy, instead of enhanced competition leading to lower prices for all of us. It leads to the massive inequality that we are seeing right now, not just in the US, but around the world – and especially between the rich countries of the “global North” and everyone else.

There are many benefits to capitalism, not the least being that supply and demand are actually a pretty good way to determine what consumer goods get made and how much things cost. The problem is, for capitalism to work and be efficient, it needs real competition, along with rules of the game that ensure that capitalism can work for everyone, and that consumers and the masses aren’t harmed. There are also some goods where wide-open capitalism is not the right answer, including basic necessities of food and shelter for those in poverty, along with things like paying for education, health care, prisons and police (among others).

Our economic system should NOT dominate our political system, and right now it does. While we often hear complaints that “government is intruding on the market!”, in fact the opposite is true. The market is constantly intruding on the government, in the form of lobbying, campaign funding, and a variety of other instruments of control. It is now to the point that the market effectively controls the government, not vice versa. Capitalism has made a small group of people uber-wealthy, and effectively created an American aristocracy. And it should come as no surprise that these people have used their wealth to influence the way that government functions, to get officials elected who support their perspective, and to create laws that benefit themselves. This includes laws that make it easier for the rich to get richer, to the detriment of everyone else. It’s not that the government is too big (it is in some ways, but isn’t big enough in others), but rather that the rich have exploited government in order to exploit the people.

Tax laws (capital gains, estate taxes, trusts, loopholes), anti-worker laws (right to work, no right to class action suits, etc), bankruptcy laws (why can corporations get out of debts and not students?), contracts, intellectual property and patents, the prison industrial complex, the military industrial complex, lack of funding for education and health care, money = free speech, corporations = people, etc. None of these are “natural” in their current forms, or even “necessary” as they currently stand. They are the result of political processes, not economic laws. And they are highly undemocratic, benefiting the few, and not the many.

Smaller government is not necessarily better government, and in fact aiming for small government is a poor goal. We should be looking at who benefits from government intervention. The real questions are who makes the rules of the game, and who benefits from them?

We also need to change our point of view on profits as the end-all-be-all of the economy — investors do deserve a reasonable rate of return, but they should not be the sole party who defines “reasonable.  Right now we assume that profit is good, and is a sign of a healthy company and economy. In fact, it is the opposite. In basic capitalism, where excess profit exists (above costs of labor, materiel and a reasonable return on capital investment), then there is not enough competition. Adam Smith tells us that when someone is making excess profits, then some other entrepreneur should swoop in and set up a competitive business, bringing prices down for all of us, and profit down to as close to zero as it can go with the company still functioning. In our current system though, we worship profits, when they are really a sign of inefficiency. Part of the problem, of course, is the size of some businesses — not only are they “too big to fail,” but they are also so big that they can effectively control markets through a variety of means, including buying up, eliminating or marginalizing competition, and putting up barriers to entry. If you are too big for someone to jump in and compete with you, then you may be too big for capitalism to be effective.

Similarly, our society and economic system currently provides the lion’s share of the benefits to investors and executives, instead of workers and consumers. When there are excess profits, why do they go to the already rich? Why aren’t they distributed to workers? Why aren’t there price cuts to consumers? These are all political choices – there are no economic rules that make require our current system of distribution of wealth.

And if investors don’t like the returns, and they don’t want to invest, then they can tuck the money in their mattress — or preferably spend it somewhere and put it back into the economy. Perhaps we need a wealth tax to encourage spending, instead of mattress tucking. Every $$$ of profit is a dollar that could have gone to workers, or made products cheaper – that’s what capitalism is supposed to do.

In addition, we need to stop looking at the macro economy. GDP growth and the stock market are now detached from how well our people are doing economically (if they ever were attached). Even jobs numbers are poor, because we don’t ask “what kind of jobs”? Good jobs? Crappy jobs? Jobs that pay a livable wage? Jobs that pay as much as the jobs that we are losing?

In many ways, this is a case of capitalism and DEMOCRACY. When there is a conflict, democracy SHOULD win, but right now the economic/political system that we call capitalism is on a three decade long winning streak, and it is very anti-democratic.

Who benefits here and now? There is power in capitalism, and it is NOT power to the people. But it could be.

I’m not suggesting communism as an alternative, defined as “government plans the economy.” Instead I’m suggesting a version of capitalism that doesn’t look like the one we have now. There are many versions out there, and many more that are possible. We need to stop assuming that our current version is the only one. We need to stop pretending that our current version is good. We need to stop believing the people who tell us these things. And mostly, we need to inform ourselves and start moving toward a system that will actually benefit all of us, and get us out from under the political and economic thumb of the American aristocracy.