Two Forms of Capitalism

Democrato-capitalism works for the common good. Tyranno-capitalism works against it.

According to tyranno-capitalist theory, the people should interact with our system of economics in such a way that the invisible hand will, in real time, combine the dynamic sums and vectors of all the choices that the people have made and then, also in real time, produce the goods and services that are consistent with those choices. So, according to tyranno-capitalist theory, if the economy is not what the people want then they, the people, must have made the wrong economic decisions. They must have done a bad job of interacting with our system of economics. Even though they knew what they wanted, and even though they made choices that they were told would produce the economic life they wanted, they didn’t get it. So it must be their fault, because tyranno-capitalism, if the people made the right choices, would give them what they want. If they don’t survive or thrive, then that is life. Survival of the fittest don’t you know. Evolution by natural selection is always on the job.

But I know the people, lots and lots of them, and I am even related to some. The great majority of them are smart, honest, hard-working, and trusting. They even believe their leaders who tell them that tyranno-capitalism is the answer, just as they believed their leaders who told them that we live in a democracy—and they continue to believe their leaders as each new generation comes of age. Tyranno-capitalists and government officials tell them that if they get an education (even if they have to borrow to pay for it), and if they work smart and hard, and if they buy a home and a car and a refrigerator, and clothes, and if they buy the latest phone as soon as it comes out, and if they buy all the rest that they see advertised on television, and if they watch televised sports on the latest television sets while eating the right salty treats and while drinking the right low-calorie beer, then they will get what they want. So, it couldn’t be the people. They have made the right choices—they have impoverished themselves doing the things that tyranno-capitalists and the government tell them to do. There must be something else that is wrong.

If we look at the record, we can see that tyranno-capitalism, and its miracle-working figment of the invisible hand, produced slavery, centuries of discrimination against non-males, non-whites, non-Christians, non-heterosexuals and the lower classes, voter suppression, hatred of unions and foreigners, waste of national resources, huge financial disparities in our population, damage to the environment on an immense scale, global warming, several recessions including the recent Great Recession, the collapse of the Wall Street banks, the death and destruction caused by the murderous, tyranno-capitalist greed of British Petroleum in the Gulf of Mexico in 2010, the collapse of the savings and loan industry a few years ago, a few wars, the Great Depression that my parents and grandparents lived through—and much, much more. And none of those things was done in service of the common good.

The people haven’t been making the wrong choices—that is not the problem. The problem is that the people, because of our Madisonian republic with its three corrupt branches of government, have not been allowed to make the important choices. For example, if the people were allowed to make the important decisions then all of the failures listed above would have never taken place. We, the people, would have chosen to have a clean environment, we would have chosen to keep jobs in the United States rather than send them to China, we would have chosen to pay our workers a fair wage that keeps pace with corporate profits and productivity increases, we would have chosen to educate and nourish our children, we would have chosen to maintain our infrastructure, and all the rest. But under tyranno-capitalism the people are not allowed to make the decisions that are important to the economic welfare of our nation. They have no power to make any choices other than to buy their pills at this drugstore or that one, or to buy their nuts and bolts at Home Depot or Lowe’s, or to buy their clothing at Wal-Mart or at the little shop on the square. The people have no power to bargain with their employers for decent wages and benefits. So, the invisible hand never worked for the people, it worked only for the tyranno-capitalists. The people never got a chance to make choices that would make a difference. We can see clearly now, the invisible hand is really many hands, and they are not invisible. Tyranno-capitalism is controlled by, is in the heavy, oppressive hands of, tyranno-capitalists. In many respects, our Madisonian republic has been replaced by tyranno-capitalism.

How do I know that the people have not been allowed to make the important choices? I know because the Framers freely admitted it—they were proud of it. The authors of the Federalist essays repeatedly, and unfairly, disparaged the Greek democracies. In Federalist 10 James Madison told us that in his theoretic, “pure” democracy representatives were not used. Instead, he claimed, all the citizens made all the decisions themselves which would lead to destruction of the government by factions. Therefore, according to Madison, our nation had no choice but to implement his Madisonian republic, the one with the theoretic “scheme of representation.” A few representatives, Madison said, were better than many or no representatives—a few representatives were better than letting the people make important choices. But during the debates about whether to ratify the Constitution someone challenged Madison’s sales pitch. This challenger rightly pointed out that in the ancient democracies representatives were used. So, if those ancient democracies were vulnerable to factions, as Madison claimed, and if those democracies used representatives, wouldn’t Madison’s representative republic be vulnerable to factions as well? This was a challenge that had to be answered, so Madison responded. In Federalist 63 he made it clear that even though the ancient democracies and the Madisonian republic both relied on representatives, there was one critical difference. Here is what Madison wrote:

From these facts, to which many others might be added, it is clear that the principle of representation was neither unknown to the ancients nor wholly overlooked in their political constitutions. The true distinction between these and the American governments lies in the total exclusion of the people in their collective capacity, from any share in the latter, and not in the total exclusion of the representatives of the people from the administration of the former. The distinction, however, thus qualified, must be admitted to leave a most advantageous superiority in favor of the United States.

The Federalist essays were written in haste, and therefore some of the arguments they presented do not make sense. The paragraph just quoted at first seems to be a good example of that point, but it is not. I think that Madison said what he meant to say, but he did not want his readers to fully understand the consequences of what he said, so he brilliantly constructed it to make his readers shrug their shoulders and move on. The author of this confusing language actually was saying this:

Yes, representatives were used in the ancient democracies, and they are used in our American state governments, and they will be used in our new republic. But the use of representatives did not cause the ancient democracies to fail, the use of representatives has not caused our American state governments to fail, and it will not cause our new republic to fail. The failure of the ancient democracies was caused by the people having too much transformative power. The people of the ancient democracies could decide among themselves what they wanted their democracy to do and then order their representatives to do it. In effect, the citizens of these ancient democracies retained and exercised all transformative power, and their representatives were delegated administrative power only. In effect, the people ruled. This resulted in all of the failures cataloged in Federalist 10. But we do not have to worry about this in our new republic.

Under our new Constitution, the American people cannot decide for themselves what they want the government to do and then order the government to do it. The people can only delegate their transformative power to a small group of elected representatives.  The American people can only decide which representatives they want to give their transformative power, and in turn, these few representatives will meet in person to decide what they want the government to do—only they will have—only they will exercise—the transformative power of the people. Under the new Constitution, the people will never be permitted to act in their collective capacity. In this way the governing elites will hold all transformative power and thereby be assured that they can keep the factious masses under control. America will be safe in the hands of the elites.

So, in Federalist 63 Madison wanted to show that there was an important difference between the proposed new government and the ancient ones. And that difference was to exclude the people from acting in any way except through their chosen representatives. This “true distinction,” as he called it, emphatically confirms that the new constitutional system, with its scheme of representation, was intended to mute the voice of the people and steal from them their transformative power. And because our national government, by design, is controlled by the wealthy classes, then the transformative power of the people is given over to the invisible, but heavy, hand of tyranno-capitalism which makes all the important economic decisions. And this is the element of tyranno-capitalism that causes it to fail. Just as it is designed to do, it works for the good of a few individuals but not for the masses. In other words, our system of government is deliberately designed to keep the people from using their transformative power to decide whether jobs should be kept in America or sent overseas. Our system of government is deliberately designed to keep the people from using their transformative power to decide whether we should maintain our infrastructure or let it crumble, or to decide whether we should give our children good breakfasts and good educations or let them enter adulthood unprepared to fit into society—you get the idea.

We cannot change our system of economics without first changing our system of government.

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