Hollywood, the Capitalist Dream

The Hollywood Motion Picture Industry is the most conspicuous extant example of capitalist
entrepreneurism left in America. That's right; capitalist. That may seem to be a contrarian
statement when one considers Hollywood's reputation as politically progressive, socially liberal,
and outspokenly collectivist. Those characteristics, however, only make it ironic, not false.

Consider the economics of how movies are created and financed.

No one in Hollywood has a secure job. Anyone who is "between projects" at any given time is,
in reality, unemployed until the next project. Even a long-term contract for a television series
typically extends only three years. There are no cradle-to-grave assurances of a livable income
regardless of job performance, no defined-benefit pensions accruing throughout one's work life,
no paternal corporation expected to provide a secure, steady income stream over four decades,
and then a retirement subsidy beyond the employee's productive years. If one's last project was
a failure, an actor's or director's career will suffer or end entirely, even if the reason for the
failure clearly lies elsewhere. The failure of a movie reflects upon one's image and bankability,
notwithstanding his individual performance in it. Even during production, an actor or director
can be fired in a moment and replaced if they are not viewed to be meeting expectations.

Producers take scripts on speculation, purchase movie rights, assume risks on actors and
directors, pour truckloads of investors' money into turning the story into a motion picture, and
then distribute thousands of copies to theaters, all before a cent of revenue is returned to offset
the enormous costs. The risk of financial ruin is enormous, but so is the potential for fantastic
financial gain. The entrepreneurial task of a successful movie producer would challenge even
the early railroad, steel, and oil industrialists. Every project means either the end of a career, or
absolute bankability. Henry Ford only had to build one industrial empire and one financial
fortune over the course of his entire life. A successful producer must start from scratch and do it
dozens of times, never meeting failure with every project he touches.

All these forces cause workers and financiers in the Motion Picture Industry to keep quality and
productivity high.

In decades past, America was the world's premier supplier of automobiles, electrical appliances,
grain, pharmaceuticals, steel, technology of every description, and the greatest American export
of the 1940s, freedom from tyranny. Now, physical goods production has mostly moved
overseas, partially due to increases in the cost of American labor relative to the expense and
availability of labor and infrastructure elsewhere. Indeed, American labor is not only more
expensive than foreign labor, but the difference is greater than the cost of transportation, even for
American-consumed goods. These factors have converted the USA into a more service-oriented
economy, in which Americans sell to one another, but most physical goods are produced abroad.
This may be a mercantilist view of prosperity, but one cannot successfully dispute that exports
create robust domestic economic growth.

The Hollywood Movie, then, is one of the last remaining great American exports. The world
may not be buying cars from Detroit more than any other place, or steel from Pittsburgh, but it is
still watching movies from Hollywood. This is why homes in places like Beverly Hills and
Malibu are ostentatious palaces, occupied by successful Hollywood risk-takers, while the former
homes of people like John D. Rockefeller are surrounded by some of the country's most-
depressed urban slums.

Any time a successful Hollywood producer, director, or actor stands before the paparazzi to
champion the benefits of a socialist society and decry the evils of wealth, he should be reminded
that no one would listen to anything he has to say, if he didn't work in an industry that has been
more successful in preserving capitalism than any other.

© Rex Stanfield
June 23, 2010