The economics of capitalist myopia

Did Wall Street's recklessness achieve what generations of labor organizers failed to accomplish?

Published August 18, 2010 11:07PM (EDT)

What's not to like about "Capitalist Myopia," a blog post by an economist that starts with a consideration of the song "Sixteen Tons" and ends with the speculation that "socialized investment banking" -- the effective subsidization of the financial industry by the U.S. government -- might achieve  "what generations of coal miners, steel and auto workers, teamsters, teachers unions, and union organizers could not": the emergence of true class consciousness in the United States?

The economist is Maxine Udall, (found via a tip from Mark Thoma), and her posts appear to be routinely provocative and thoughtful. I was particularly struck by a passage in the middle of "Capitalist Myopia" that deftly encapsulated a very important point about the proper intersection of governments and markets. (Italics mine.)

I think about company towns and company stores whenever someone starts bleating about government power; the sameness that would be induced by government control of the means of production; the two-tiered system that will evolve if government has too much power; the inefficiencies that will result from government regulation. All more or less true. But then I think of the sameness of company town housing, the two-tiered system of worker and management, and I think of the "inefficiencies" of unsafe workplaces and the "race to the bottom" that must necessarily ensue in the absence of a common standard for consumer and worker safety. And I conclude that economic and political power should not be concentrated excessively in anyone's hands, whether public or private, and that a government constituted to be of, by and for the people will almost certainly have to provide some countervailing force against excessive corporate economic and political power.

Finding the balance will always be the problem. Simple answers will almost never be right.

Udall's overarching point is that excessive corporate economic and political power ultimately dooms itself. I guess we'll have to see how that plays out in the long run -- right now, it looks like Wall Street is still doing pretty well, while the rest of the country suffers. But in the meantime, Udall's entire post is very, very smart.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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