If you are a thoughtful, rational person, there have probably been many times in your life where you have felt that, “something is definitely wrong here.” You have looked out at the economic world we live in, and what you see seems unmistakably irrational, cruel, idiotic. There are a number of different things that might trigger this kind of thinking. If you live in the United States, this thinking might occur to you when:
- You read how much Americans are spending on medical expenses: insurance plus co-pays plus deductibles plus out-of-network charges and so on, and you know with certainty that the system has become completely absurd [ref][ref][ref].
- Or when you see a headline about another giant executive pay package, or a corrupt CEO who receives a $10 million “golden parachute” as he is booted out the door for his misdeeds. [ref]
- Or when you pick up something in the store that is priced at $5, but you know it only cost a dime to make it. Or something costs $10 to make, but the price you must pay is $700 [ref]
- Or when you see politicians in the ruling party clamoring to cut taxes for the hyper-wealthy, or to cut healthcare for 30 million Americans (so the politicians can give more tax cuts to the wealthy) – even though the majority of constituents have no desire to see these cuts happen. [ref][ref]
- Or when you read that many of Walmart’s employees make so little money that they qualify for food stamps from the government in order to have enough food to eat. [ref][ref]
- Or when you see a news story about a fat cat hedge fund manager or mogul and his $100 million superyacht [ref][ref], while tens of millions of other Americans live in poverty.
- Or when you live through a severe recession, where an “economic downturn” causes millions of people to become unemployed through no fault of their own, and therefore they are cut off from the income they need for food, housing, etc.
- Or when you read that nearly half of Americans will end up retiring in poverty [ref].
On the global stage, you might have the feeling that “something is definitely wrong here” when:
- You read that the people assembling Nike shoes make less than $1 an hour creating shoes worth $100+ a pair. Meanwhile the CEO of Nike makes $7,000 per hour. [See Chapter 3]
- Or when you read that the people at Foxconn assembling the latest Apple iPhones make about the same wage as Nike workers, and appear to be working very nearly as slaves, given that they work 70 hours a week and sleep on cots inside the factory where they work. [ref]
- Or when you further hear about the netting below windows and walkways at Foxconn so that people cannot jump out to commit suicide. [ref]
- Or when you read that people in Bangladesh are “happy” to make 38 cents an hour in a garment factory, because 38 cents an hour is better than starving to death. [ref]
- Or when you hear about another giant corporation breaking laws, murdering people, violating safety regulations, polluting the environment, etc. [ref][ref]
- Or when you read that approximately a billion people on Earth are forced to live in appalling slums, and three billion people are surviving on $3 or less per day.
All of these uncomfortable and insane kinds of things, and thousands more, happen because we live within an economic system called capitalism.
It is important to apply appropriate language to what we are seeing. We have reached a tipping point, and what we are now witnessing is insanity. Tim Cook (CEO of Apple) made $102 million in 2017, or $50,000 per hour [ref]. Robert Coury (Chairman of Mylan) made $97 million [ref]. Also:
The highest-paid executive for 2016 was Marc Lore, CEO of e-commerce at Wal-Mart, who made $243.9 million, according to S&P CapitaIQ. The CEO of Alphabet’s Googe, Sundar Pichai, brought in $199.7 million, while Robert J. Coury, chairman of Mylan, made $136.8 million. They were followed by Thomas Rutledge, the Charter Communications CEO, at $98.5 million, and CBS CEO Les Moonves, at $69.5 million. [ref]
“Regardless of how it’s measured, CEO pay continues to be very, very high and has grown far faster in recent decades than typical worker pay,” Mishel and Schieder wrote.
When an executive makes $50,000 an hour, this is insane. “Insane” is the correct word to apply. When millions of fellow human beings are forced by capitalism to suffer through grinding poverty on 38 cents an hour, this is also insane. The fact that these two things are happening simultaneously… there is no word in the English language to adequately describe the amount of insanity taking place. Such a system is demonic, and it is important to face and acknowledge the monstrosity of it, rather than turning away.
Capitalism in our lives
We are all immersed in capitalism, like a fish is immersed in water. For example, we all use money every day. We don’t even think about money anymore – money simply is. We all know in our bones that money is incredibly important, like oxygen is important. We know that if we run out of money, the next step is homelessness.
Because we all need money, we all need jobs. Money and jobs and all the rest have become an interwoven part of human existence in today’s world, to the point where we take it all completely for granted. We tend not to think about capitalism much because of this complete immersion. At the same time, we hear a constant stream of opinions and stories telling us how wonderful capitalism is. We hear things like, “Capitalism is the only economic system that works,” or “We are all so lucky to live in a capitalistic system.”
But have you ever taken the time to think objectively about the reality of capitalism as an economic system? To really think about it? Have you ever considered how many billions of people on planet Earth are directly suffering because of capitalism?
Here is the simplest possible example: through capitalism, about a billion people on planet Earth live in disgusting slums today. A slum is defined in this way:
A slum is a highly populated urban residential area consisting mostly of closely-packed, decrepit housing units in a situation of deteriorated or uncompleted infrastructure, inhabited primarily by impoverished persons. While slums differ in size and other characteristics, most lack reliable sanitation services, supply of clean water, reliable electricity, law enforcement and other basic services. [ref]
See also: https://www.youtube.com/watch?v=Q67gldZ1P_8 (there are hundreds of videos like this on YouTube documenting the conditions in slums)
As pointed out here [ref], “50 years from now, one in three people worldwide will live in slums.”
Given a choice, would you choose to live in a slum like this? Of course not. Would any family choose to live in a slum, where the family huddles in decrepit housing, cut off from clean water, basic sanitation services, and electricity? No, obviously not. No human would choose this. People never choose to live in slums; they are forced to live in slums. They are forced into slums by capitalism.
With the example of slums alone we can understand that capitalism is an insane system for huge swaths of humanity. One billion fellow human beings are suffering in profound ways by being forced into and trapped by slums. And there are myriad other examples, similarly depraved. We must ask ourselves: Why would we use an economic system that leaves a billion fellow humans suffering like this?
If you have a decent job (e.g. $60K+ per year, or $240+ per day, or $30+ per hour) in a developed country like the U.S., it might be easy to be complacent because you are “doing OK.” Capitalism, to you, might seem alright. But there are three things that you are ignoring in order to maintain complacency:
- On a global scale, your situation is rare. The number of people, planet-wide, in your elite bracket is measured in the hundreds of millions. Less than 10% of humanity lives at your level of wealth.
- Meanwhile, there are billions upon billions of people who are desperately poor, and who are therefore being crushed by capitalism. The fact that billions of fellow humans are having their lives on Earth destroyed by capitalism is insane.
- Meanwhile, there is a tiny segment of the population, known as the 0.01%, who are stockpiling enormous, staggering, impossible-to-comprehend amounts of wealth, and you have no idea it is happening. These two videos can introduce you to this bizarre situation: [ref, ref]. In 2017, the 500 richest people on Earth increased their wealth by $1 trillion. [ref]
What can we say about these billions of people who are being crushed by capitalism? Through the rules of capitalism, approximately 70% of the people on planet Earth make $10 per day or less [ref]. This is approximately $1 per hour, or less. Also note that about half of Earth’s humans make less than $3 per day. These billions of people live in deep poverty, obviously. With $3 a day a person cannot buy much. These billions of people are therefore cut off from things they obviously need, like real health care services, decent housing, clean water, basic sanitation, and so on. If a human is making $1 an hour, obviously they cannot afford much in terms of food, clothing, housing, etc. Again we must ask: With more than half of humanity living in poverty like this, why would we use an economic system that leaves so many billions of people suffering in such profound ways?
Meanwhile, while the rules of capitalism are forcing billions of people on planet Earth into grinding poverty, these same rules are creating a gigantic and incomprehensible concentration of wealth. Two recent headlines make this problem easy to understand:
- “The top 0.1% of American households hold the same amount of wealth as the bottom 90%” [ref]
- “World’s 8 Richest Have as Much Wealth as Bottom Half, Oxfam Says” [ref]
The insanity of this situation is impossible to express, yet this is how capitalism is designed.
Understanding the Full Insanity of Capitalism
Simply step back and think about the full list of insanity that directly results from capitalism. The list includes:
- Unemployment – Every adult or family in the economy needs a good job in order to buy food, pay rent, purchase electricity, and so on. Why should any adult who wants to work ever be faced with a “job market” that has no good jobs to offer? Why would we accept an economic system that creates this situation? People must have jobs to buy food and housing, but often the capitalistic system offers no jobs. [see Chapter 14 for details]
- Ridiculously low wages – Ditto for the billions of people forced into the terrible jobs that capitalism usually creates – jobs paying only 50 cents or $1 or $2 per hour. A wage like this results in intense poverty for the recipient. Why would we accept an economic system that leaves billions of fellow humans in intense poverty? [see Chapter 14 for details]
- Poverty – The intense poverty that we see all around the world is a direct result of capitalism, caused by the terrible jobs (or no jobs) that capitalism prefers to create. Half of Earth’s population makes less than $3 per day as a result [ref]. Why would we accept this from the world’s predominant economic system? Why not design a new economic system that completely eliminates poverty? [see Chapter 5 for details]
- Slums – Ditto.
- The gigantic concentration of wealth – The purpose of capitalism is to create a gigantic concentration of wealth in the “wealthy elite.” But why do we want the “wealthy elite” to exist at all? Why accept an economic system that strives to create billionaires by stealing money from everyone else? [see Chapter 7 for details]
- Billionaires – The existence of billionaires is a complete absurdity – a totally ridiculous outcome that directly results from the rules of capitalism.
- Asset capture – Asset capture is a powerful tool that billionaires use to concentrate wealth. It is absurd that the capitalistic system allows asset capture, yet this is how capitalism is wired. [See Chapter 9 for details]
- Arbitrary pricing – Prices in capitalism are completely arbitrary. A company is free to charge “what the market will bear”, regardless of the cost of production – an absurdity that fuels the concentration of wealth. Why design the world’s predominant economic system to allow arbitrary pricing? Why not instead design a new economic system in which all prices are rational? [see Chapter 13 for details]
- Profit – Profit is an overcharge – typically 10% or 20% over the cost of production – that capitalism tacks on to every sale that takes place in the economy. No consumer wants to pay for profit, yet consumers have no choice under the rules of capitalism. [see Chapter 13 for details]
- Dividends – Dividends allow companies to distribute the profits that they take from consumers, sending all of the profit to shareholders. Shareholders do no work to receive this money, and are usually the wealthy elite [ref]. It is yet another absurdity of capitalism fueling the concentration of wealth. [see Chapter 7 for details]
- Recessions, Depressions – Recessions and depressions are a direct result of capitalism, and cause massive suffering by creating waves of unemployment throughout an economy. Why would we use an economic system that periodically causes massive suffering? [see Chapter 14 for details]
- Inflation – Like recessions and depressions, inflation if an artifact of capitalism that causes suffering by reducing the value of money. It is absurd to use an economic system that has inflation baked in, yet here we all are.
These 12 absurdities are the direct result of the rules of capitalism. Why should humanity tolerate, much less embrace, an economic system harboring this much insanity? It is time to replace capitalism with a new economic system that completely eliminates all of these problems.
The worsening situation in the United States
This article highlights the worsening situation in the United States:
“Billionaire entrepreneur and financier Ray Dalio says there are two very different economic realities in the United States right now. That divide is threatening the nation’s stability, the Bridgewater Associates founder says, and it’s only going to get worse as technology replaces workers.
“[T]here are two economies. We talk of ‘the economy.’ Recognize that you can’t talk about the economy … there are two economies,” says Dalio, speaking to Recode executive editor Kara Swisher on her podcast, Recode Decode, published Monday.
There’s the “top 40 percent” and “the bottom 60 percent,” says Dalio. And for those at the bottom, life is hard without a lot of hope.”If you look at the economy of the bottom 60 percent, it is a miserable economy. Not only hasn’t it had growth and economic movement and so on, it has the highest rising death rates, it is the only place in the world where death rates are rising because of a combination of opiates, other drugs and suicides,” Dalio says. (Indeed, Princeton Professors Anne Case and Angus Deaton found that drugs, alcohol and suicide are a major reason behind rising death rates among non-Hispanic whites in the U.S. with a high school diploma or less.)
Meanwhile, the most privileged at the top have a radically disproportionate amount of wealth. “The top one tenth of 1 percent of the population has a net worth that is equal to the bottom 90 percent combined,” according to Dalio…” [ref]
We could go on and on and on and on with examples, because they are endless. Billions of people on our planet are suffering, and they are suffering as a direct result of capitalism. If we simply open our eyes and accept what we see instead of turning away, we can find innumerable examples of capitalism’s absurdity.
Even in the United States, with the world’s largest economy and the world’s most powerful military, tens of millions of people are forced to use food stamps. Capitalism has reached a point where tens of millions of working Americans do not have enough money to feed themselves. And this is just the start.
- That ghetto downtown where no one wants to go? Capitalism causes it.
- The ridiculous situation with health insurance costs and medical prices in America today? Capitalism causes it.
- The purchase of the U.S. government by oligarchs and plutocrats, so that the needs and hopes of the “common man” are completely ignored? Capitalism causes it. [ref]
- The loss of thousands of factories and mills across America, so that thousands of small cities and towns now teeter on the brink of economic collapse? Capitalism causes it.
- The gigantic rents that people are now forced to pay in major cities? Capitalism causes it.
- The immense concentration of wealth in the United States? Capitalism causes it.
- The giant recession we had in 2008? Capitalism caused it, and causes all recessions.
The examples of capitalism’s insanity are endless, everywhere we look. We simply need to open our eyes to reality.
There is now a recognized condition in the developed world colloquially known as SLS, or “Shit Life Syndrome” [ref, ref]. Imagine this – we are creating societies in the developed world that are so awful, people are getting SLS. And sometimes SLS is so bad that people kill themselves either directly, or indirectly through opioids, alcohol, etc. Three recent headlines paint the picture:
- “US life expectancy drops for second year in a row” [ref]
- “Why the UN is investigating extreme poverty in America, the world’s richest nation” [ref]
- This nation pioneered modern life. Now epic numbers of Americans are killing themselves with opioids to escape it [ref]
This is in the developed world, in the country with the world’s largest economy. Never mind all of the cruelty and perversity that capitalism forces upon the human beings living in the developing world.
Why do we allow this? Why would human beings tolerate, much less embrace, an economic system that creates so much suffering and insanity?
We no longer need to accept capitalism. It is time to create a new economic system – one that is much, much better for the vast majority of humans living on planet Earth today. This book is about this new economic system.