The Free Enterprise System vs. Capitalism

It’s a common mistake in the media to equate Capitalism with the Free Enterprise System, implying they are one and the same. But it’s a fallacy promulgated by those who control capital as it serves their agenda; it provides the sheep’s clothing for blending into society making it more acceptable. In simple terms capitalism is about the bottom line of making a profit, it makes no difference if it makes a profit building prisons or schools.

Capitalism is nothing more than a capital accumulation scheme, and more often then not it acts as a cancer on the Free Enterprise System and the values that it nurtures.   Capitalism, particularly the cartel Capitalism that presently exists, seeks to mitigate, or even eliminate the values that sustains and nurtures the free enterprise system, as those values do not contribute to the bottom line of making a profit. 

Capitalism is myopic, focusing on the bottom line of making a profit; it makes no difference if it makes a profit on manufactured needs or on real needs.  It is indifferent to the needs essential to our individual wellbeing and the wellbeing of the global environment which sustains us; yet, it is our wellbeing that is at the heart of our pursuit of happiness.

Capitalism, as it is presently practiced, is not sustainable, not just due to the pyramid scheme nature of the practice, but also environmentally as it externalizes many of its cost to the environment and to society at large in order to achieve its short term profits. Capital seeks “efficiencies” and will externalize processes that pollute the environment, while it also reduces the cost of labor either through improvements in technology, or by outsourcing. 

Capital is hailed as a great savior, but capital has no conscience; cartel capitalism capitalizes on our fears, doubts, desires and superstitions.  Capital will chase capital and will continue to increase wealth even as the economy as a whole stagnates, pooling in ever larger reservoirs.

The holders of these vast pools of capital, in symbiosis with government, provides the power to promote capital’s own vested interests; whether it is in banking, real estate, military procurement, “national security”, medicine, oil, transportation or high tech, you name it.  Indeed this power and authority to control is furnished by government through a plethora of means such as limiting their liability by law, providing subsidies, guaranties, bailouts, government contracts, loans, price controls and on and on. 

For Capitalism to flourish with its corporate structure requires the authority to control, with a perverse allegiance and vigilance to its bidding.  Those who control capital control the Capitols of the world; money interest skews the political process.  It’s no longer a democracy of one-person one vote; the almighty dollar is the measure of the vote. When capitalism is given full reign, we no longer have a government of, by and for the people; democracy is allowed to languish and by default the holders of capital become the masters! 

Capitalism is equally at home in a fascist system or in a totalitarian regime, as in so called democratic republics, as governments, in all cases, protect and defend it from the people.  This assertion is echoed in a recent article by foreignpolicy.com, “In China, Russia, and the sheikhdoms of the Persian Gulf, state-led brands of capitalism are holding their own.”   Indeed the power and authority for capital to control the economy is furnished by governments through a plethora of means such as limiting liability by law, providing subsidies, guaranties, bailouts, government contracts, loans, price controls and on and on. 

In contrast to “Capitalism”, the free enterprise system is about finding needs and filling them; fulfilling useful and beneficial needs of society; profit is only one of the myriad rewards or values accrued towards this end.  The perceived inefficiencies in the Free Enterprise System support the human needs and values of the community; it is less efficient than capitalism as profits are often forsaken to fulfill these other values. 

Among the countless values that motivate people to engage in “free enterprise” activities is self-direction, independence, a sense of accomplishment, the freedom to work for oneself, an economic activity which employs the whole family, as well as a desire to simply serve the community; to provide for community needs and to accomplish this in a sustainable manner.  For entrepreneurs engaged in free enterprises ventures, profits are often sacrificed to meet these diverse values and ends.  The Free Enterprise System at its core is about self actualizing, expressing oneself, being fulfilled while at the same time fulfilling the needs of others.

The Free Enterprise System, when it’s vigorous and vital, is the bulwark of a vibrant democratic meritocracy; it provides the structure of freedom where the actions of a free people can flourish.  When capital concentrates in the hands of the few, democracy suffers; it misappropriates the invisible hand of the Free Enterprise System and converts it into slight of hand of politics and government.  Free markets do not breed a free people, free enterprise does! The present “free market” is about promoting corporate interest around the world to manipulate resources.  Free enterprise represents individual efforts to solve problems; find a need and fill it!

The free enterprise system is the invisible hand expressed by Adam Smith, although he expressed it as a free market of a multitude of small producers primarily producing for their local communities.  Capital with its seductive power distorts this concept of “free markets” to mean the freedom of capital to go wherever it wishes to be directed and have power over the market. 

This is accomplished by multi-national corporations that have allegiance only to the holders of capital with no allegiance to any sovereign state, whether expressed as being communist or capitalist.  It is simply greed that motivates the holders of capital, not the self interest of the myriad members of society as they interact in personal commercial pursuits.

Instead of citizens participating in a democracy enhanced by the Free Enterprise System, we have been reduced to consumers and laborers in a capital driven scheme that dominates and subjugates the market.  Until we reinvigorate the Free Enterprise System and democratize capital, we the citizens will continue to be at the mercy of capital’s interest.   Changing the metrics of capitalism is the challenge ahead; it must evolve into a new form that is equitable and inclusive and provides value to all of society, only then will democracy have a chance to flourish.  

Bureaucratic Discretion Rules

When society perceives a problem that seeks a solution, it’s a knee jerk reaction to expect government to provide the answer.  But, the same conditions necessary for government agencies to be proactive in solving problems, also insulates them from actually fulfilling their duties and worst of all allows them to set and then carry out their own agendas.  

Government requires a burgeoning superstructure of agencies populated with officials to function; these officials on all levels of government demand a great deal of discretion to carry out their duties.  Bureaucratic discretion has expanded exponentially as a consequence of the growing complexity of the duties government is being asked to perform.  

Prior to 1935 the courts held to a non-delegation theory when it came to government agencies creating policy.  This theory was based on Article I of the Constitution which provides "all legislative Powers herein granted shall be vested in a Congress of the United States;" therefore, allowing agencies the power to create policy was seen as a delegation of the power to legislate.  After the New Deal, the courts relaxed their restrictions on legislators, allowing them to delegate powers to make national policy to non-elected bodies such as administrative agencies.  This has opened the floodgates to an escalation of discretion, which has percolated down to the states and local jurisdictions. Government officials, federal, state and local have in essence become ad hoc legislators as they create the regulations that allow them to wield their ever expanding discretion.

Under these conditions of burgeoning discretion, public officials are inclined to use their discretion as a prerogative in resolving competing political claims, often at the expense of applying the best solution to the problem.  A political system which gives power and immunity to a handful of the people is corruptible and I believe already corrupted.  Public officials are not hesitant to exercise broad discretionary power, because the reviewing courts tend to routinely defer to agencies expertise. This highlights the problem faced by the individual public official who may be pulled politically in more than one direction, personal political loyalties often sway government officials, influencing and sometimes dictating their decisions.  

…in the course of a long life my opinion of government has steadily worsened:

the more intelligently they try to act (as distinguished from simply following an

established rule), the more harm they seem to do – because once they are known

to aim at particular goals (rather than merely maintaining a self-correcting order)

the less they can avoid serving sectional interest.”  - F.A. Hayek

The government’s discretion continues to expand as legislators persist in passing loosely or vaguely stated laws couched in complicated language, leaving government agencies the power to fill in the details; fundamentally giving the administrative agencies the opportunity define their own level of discretion.  This discretion has become so broad that in many cases the government can virtually operate by fiat; they can treat two people in similar circumstances in completely opposite ways.  Even if we could make laws that were clear and unambiguous, we cannot make individuals who exercise them without bias.  The way one interprets law is always affected by one's self determined moral and political beliefs.  Besides their broad discretion, these bureaucratic rulers-of-the-laws enjoy a remnant of sovereign immunity that protects “public” officials from legal tort action when operating within their area of discretion; this immunity is maintained “whether or not the discretion involved is abused.”

http://www.leg.state.nv.us/NRs/NRS-041.html

http://legal-dictionary.thefreedictionary.com/Federal+Tort+Claims+Act

Many government officials increasingly see this discretion as a prerogative or a right. A startling example of this abuse of discretion by a government official occurred on the national stage when Katherine Harris, the Secretary of State in Florida, called an end to the vote count.  It is my contention that the secretary of state abused her discretion by calling off the vote; the result of this decision ultimately handed George W. Bush the keys to the White House. 

The Secretary of State claimed the discretion entrusted to her made it her “prerogative” to end the vote count, by this she meant it was her right to make any decision she wished.  But in fact, it was the Secretary of States duty to ensure that the voting process was fair and impartial, therefore, her duty as the Secretary of State required Katherine Harris use her discretion to extend the deadline and to make a reasonable attempt to get a fair count.  It would be difficult to argue Katherine Harris, as a Bush appointee and operative, was not motivated by a political agenda when she called off the vote; as such this was an abuse of discretion, a transgression against democracy and the American people. 

This growth of discretion, together with its abuse, is the greatest threat to our personal freedom and welfare.  The American Revolution was conducted to put an end to the monarchs arbitrary edicts and fiats, to create a “government of laws”, but we have arrived at a situation were an entrenched bureaucracy with its expanding discretion now has the power to dictate the political agenda and by extension the public agenda.  

The claim that “we are governed by the rule of law” masks the fact that laws are administered by individuals that come to the table with their own agendas.  With their broad operation of discretion, government officials are increasingly able to use their positions of power to determine the winners and the losers.   In short, the laws are continually being skewed in actual application towards meeting the agenda of those entrusted to administer it, rather than to the will of the people.

"A government big enough to give you everything you want, is strong enough to take everything you have."
— Thomas Jefferson

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