Liberal Forum

The Looting Machine Called Capitalism 

Paul Craig Roberts

I have come to the conclusion that capitalism is successful primarily because it can impose the majority of the costs associated with its economic activities on outside parties and on the environment. In other words, capitalists make profits because their costs are externalized and born by others. In the US, society and the environment have to pick up the tab produced by capitalist activity. In the past when critics raised the question about external costs, that is, costs that are external to the company although produced by the company’s activities, economists answered that it was not really a problem, because those harmed by the activity could be compensated for the damages that they suffered. This statement was intended to reinforce the claim that capitalism served the general welfare.

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Consider just a few examples. When a taller house is constructed in front of one of less height, the Gulf view of the latter is preempted. The damage to the property value of the house whose view has been blocked is immense. Would the developer build such a tall structure if the disadvantaged existing property had to be compensated for the decline in its value? When a house is built that can sleep 20 or 30 people next to a family’s vacation home or residence, the noise and congestion destroys the family’s ability to enjoy their own property. If they had to be compensated for their loss, would the hotel, disquised as a “single family dwelling” have been built? Walton County, Florida, is so unconcerned about these vital issues that it has permitted construction of structures that can accommodate 30 people, but provide only three parking spaces. Where do the rental guests park? 

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Now consider the external costs of offshoring the production of goods and services that US corporations, such as Apple and Nike, market to Americans. When production facilities in the US are closed and the jobs are moved to China, for example, the American workers lose their jobs, medical coverage, careers, pension provision, and often their self-respect when they are unable to find comparable employment or any employment. Some fall behind in their mortgage and car payments and lose their homes and cars. The cities, states, and federal governments lose the tax base as personal income and sales taxes decline and as depressed housing and commercial real estate prices in the abandoned communities depress property taxes. Social security and Medicare funding is harmed as payroll tax deposits fall. State and local infrastructure declines. Possibly crime rises. Safety net needs rise, but expenditures are cut as tax revenues decline.

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Contradicting the neoliberal claims, Apple’s and Nike’s prices do not drop despite the collapse in labor costs that the corporations experience. A country that was intelligently governed would not permit this. 

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Neoliberal economics was constructed in order to support this looting. In other words, neoliberal economists are whores just like the Western print and TV media. Yet, Americans are so insouciant that you will hear those who are being looted praise the merits of “free market capitalism.” 

So far we have barely scratched the surface of the external costs that capitalism imposes. Now consider the polution of the air, soil, waterways, and oceans that result from profit-making activities. Consider the radioactive wastes pouring out of Fukushima since March 2011 into the Pacific Ocean. Consider the dead zones in the Gulf of Mexico from agricultural chemical fertilizer run-off. Consider the destruction of the Apalachicola, Florida, oyster beds from the restricted river water that feeds the bay due to overdevelopment upstream. Examples such as these are endless. The corporations responsible for this destruction bear none of the costs.