Saving Capitalism Summary

“Capitalism has been hijacked by the rich and powerful, leaving the majority behind. How do we reclaim it for everyone?”

1. Free Markets Need Rules to Function

The idea of "free markets" becomes meaningless without rules to guide them. Markets are not a natural phenomenon; they are created and maintained through a framework of laws and regulations set by governments. This essential structure includes property rights, antitrust laws, contract enforcement, and bankruptcy rules, forming the backbone of any capitalist system.

Without such rules, chaos would undermine any market activity. For example, property laws determine what can be owned and under what conditions, including intellectual property like music or drug patents. Monopoly laws set limits on how much power a single entity can wield, while contract laws facilitate trade by binding buyers and sellers to agreements. Bankruptcy rules allow businesses and individuals facing financial hardship to restructure their obligations while maintaining fairness.

These laws also make capitalism possible by ensuring compliance and integrity. Governments establish agencies to enforce these rules, protecting trust in the marketplace. For example, without clear property laws or enforcement mechanisms, transactions involving physical goods or intellectual rights would be riddled with disputes.

Examples

• Copyright laws allow artists to retain rights over their creations.
• Antitrust actions, such as breaking up monopolies like Standard Oil, curb abusive practices.
• Legal frameworks for contracts ensure businesses have mechanisms to resolve disputes.

2. Property and Monopoly Rules Are Politically Decided

The way property is defined and monopolies are regulated stems from political choices, not natural laws. Governments choose what counts as property, who can own it, and for how long. For instance, drug patents grant companies the right to monopolize production, even when lifesaving drugs become inaccessible to many due to high costs.

One stark inefficiency is how rules favor profitability over public health. Corporations renew patents by tweaking existing drugs, maintaining exclusivity even when a drug's public benefit calls for broader access. Meanwhile, Amazon’s dominance illustrates how monopolies can harm markets and labor. Amazon reduces consumer costs but wields enormous influence over publishers, sometimes holding their business hostage.

Whether such monopolies support societal welfare is a political debate shaped by antitrust laws. Governments have the responsibility to decide whether limits are necessary to foster justice in the economic sphere.

Examples

• Pharmaceutical companies exploit patent loopholes to maintain drug monopolies.
• Amazon temporarily blocked book deliveries from Hachette to pressure contract negotiations.
• The government uses antitrust mechanisms, like breaking up AT&T, to enforce competition.

3. Current Regulations Favor Wealthy Individuals and Corporations

Capitalist rules often disproportionately benefit wealthy elites and large corporations. Legal systems enable powerful entities to dictate terms in ways that disadvantage regular workers and small players. Contracts, for instance, can be one-sided. Employees often sign mandatory arbitration clauses, binding their disputes to biased, employer-appointed arbitrators.

Bankruptcy laws are another example of bias. While businesses and wealthy individuals can avoid financial collapse by declaring bankruptcy, blue-collar workers enjoy no such relief. When companies like Trump’s ventures in Atlantic City fail, workers lose jobs without severance even as companies sidestep accountability.

Moreover, enforcement of labor laws often suffers due to lobbying power. Large corporations influence policymakers to underfund watchdog institutions like the Occupational Safety and Health Administration (OSHA), reducing regulatory checks on workplace exploitation.

Examples

• Trump Plaza’s closure laid off 1,000 workers, but the company shielded itself through bankruptcy.
• Forced arbitration clauses prevent wronged employees from seeking fair judgments in courts.
• OSHA’s weakened inspections, stemming from limited funding, leave workplace rights unenforced.

4. The Myth of “Earning What You’re Worth”

The concept that workers are paid based on their merit is deeply flawed. Wage levels often reflect structural disparities rather than individual abilities. Many low-wage earners internalize blame for their situation, believing their job skill determines pay. This has allowed societies to normalize income inequality, treating high CEO pay as merit rather than exploitation.

Factors like family wealth, luck, or discriminatory practices deeply influence earning potential. Professions with immense social value, such as teaching and nursing, are underpaid, exposing the disconnect between societal good and financial reward. Furthermore, unchecked pay hikes for executives contradict the idea of proportional compensation. CEOs now make 300 times the average worker's pay, compared to just 20 times in 1965.

These income gaps perpetuate the falsehood that success results purely from hard work while ignoring systemic barriers and inequities.

Examples

• Social workers and nurses are underpaid despite their enormous social contributions.
• Hedge fund managers like Steven Cohen earn billions, far outstripping societal benefit.
• CEO-to-employee pay ratios have skyrocketed in recent decades.

5. Middle-Class Bargaining Power Has Collapsed

The post-WWII era was marked by a thriving middle class, but this has eroded since the 1980s. Today, union membership has declined sharply, with fewer than seven percent of private-sector workers unionized. The absence of collective bargaining significantly weakens employees’ ability to negotiate for better wages or conditions.

Economic insecurity also reduces worker leverage. High unemployment leads people to accept substandard wages out of necessity. Even full-time employees often lack job protections—many lose workers' benefits or their jobs outright without severance pay. Additionally, deliberate labor cost reductions by corporations turn full-time workers into members of the working poor.

This long-term stagnation in wage growth has left many unable to afford basic family needs, even while employed.

Examples

• Walmart employees struggle without unionized protections.
• Fast-food workers earn wages below the family-support threshold.
• Automation and outsourcing by companies have reduced middle-class opportunities.

6. Declining Economic Power Threatens Democracy

The growing concentration of economic and political influence among the wealthy undermines equity. The richest 400 Americans hold more wealth than the bottom 50 percent combined. These imbalances aren’t just financial—they generate political inequality.

Research reveals that the views of average Americans have almost no effect on policy decisions compared to the priorities of wealthier citizens or corporations. Such disparities corrode public trust and skew governance, threatening democratic systems. The loss of economic balance points to growing unrest and cynicism about fair play in society.

Additionally, as incomes drop and distrust increases, individuals might reject market rules outright. This erosion of civic trust has far-reaching consequences, from workplace dishonesty to contentious labor relations.

Examples

• The top one percent owns 42 percent of all U.S. wealth.
• Study findings show negligible policy influence from average citizens.
• Widespread populist uprisings, like in the 1890s, reflect frustrated middle-class revolts.

7. Economic Inequality Destabilizes Markets

An unequal economy cannot be indefinitely sustained. A shrinking middle class means diminished purchasing power, hampering overall consumption—the primary driver of economic growth in capitalist systems. On top of that, trust between consumers, businesses, and states diminishes when market perceptions skew unfairly toward benefiting elites.

This growing instability disincentivizes efficiency, replacing it with added costs, such as extended contract negotiations and legal disputes. Meanwhile, broader dissatisfaction fuels populism, threatening market stability by normalizing opposition to capitalist principles.

Without redistribution mechanisms, these consequences will deepen future crises.

Examples

• The wealthiest Americans disproportionately influence consumption trends.
• High disparities result in distrust toward corporations like Amazon or Apple.
• The 2008 financial crash exposed the fragility of unchecked inequality.

8. Political Shakeups Are Needed to Save Capitalism

Fixing capitalism requires a reformed political platform. One solution is to mobilize disenfranchised nonvoters, who form the country's most significant constituency. A new political party focusing on everyday citizens could limit corporate influence while prioritizing middle-class prosperity.

Such reforms should tackle unethical lobbying, revamp minimum-wage policies, and crack down on monopolistic practices. Empowering unions would help balance corporate pay scales by improving conditions for ordinary workers.

This grassroots effort could restore political systems to reflect democratic ideals rather than catering disproportionately to elite interests.

Examples

• Nonvoter turnout exceeded 40 percent in the 2012 election.
• Grassroots systems in Nordic countries ensure minimum-wage floors.
• Public movements from unions or gig-economy platforms echo this shift.

9. Corporate Structures Need an Overhaul

Corporations must reshape their practices to prioritize wage fairness. Legislation could tie corporate tax rates to salary disparities between executives and workers, incentivizing fairer pay distribution. Such measures would encourage pay raises among average employees.

Corporations can also be motivated to invest in training, workforce retention, or affordable services rather than stock buybacks or executive compensation schemes. Giving workers representation on corporate boards could ensure decisions reflect their interests too.

These steps aim to restore capitalism’s equitable promise, mitigating its internal contradictions.

Examples

• Germany’s codetermination model includes worker representatives on boards.
• Excessively taxed systems sometimes adopt stronger employer-employee discussions.
• Linking corporate taxes with income fairness has been piloted globally.

Takeaways

1. Advocate for union membership and collective bargaining to empower workers and rediscover bargaining strength.
2. Support policies promoting wage equality, including tax rules discouraging CEO-to-worker pay disparities.
3. Engage in political activism or voter outreach to combat voter apathy and reform campaign finance laws.