On October 3rd of 2008 a Bill was passed entitled the “Emergency

Economic Stabilization Act of 2008.” The Bill,created out of need after

disaster struck the banking industry was one of many steps in the United

States’ past of nationalizing pieces of the market when necessary. It

provided money to bailout the banking industry, rather than taking the

purely capitalistic approach of allowing the corrupted and failing banks to

collapse (the results of which would have inevitably put millions out of

work). To pure capitalists, the Bill goes against their core economic values.

“The only viable solution to this financial crisis is to keep the government

from intervening any further.” — Said by Ron Paul when speaking before

Congress. A typical capitalist in the purest sense, would say that virtually

any governmental intervention in the market place would cause serious

issues.

While capitalist approaches do, in many cases, work to do things like

spur innovation and create wealth, capitalism can no longer be seen as the

purest of economic systems because of its variable: people. The economic

system of capitalism requires people to go about their daily lives regardless

of the state of the market. The pure theory of capitalism does not account

for the fear, doubt, and so on that will drive consumer spendingbehavior.

Nor does it account for human impatience while waiting for the markets to

stabilize again after failing. It also fails to take into account human greed,
and the types of mistakes made when there is an inevitable accumulation of

wealth upward creating a “ruling class” that mostly controlswealth. This

exact “ruling class” can be seen as reason that the economic bailoutmust

occur in the first place.

The alternative to this system is known as socialism. Although the

name of the concept has been propagandized by governments that would use

it to promote a good feeling about their politics (The Nazi party of Germany

rings the bell here), it is thereforeimportant to clarify exactly what socialism

is. Socialism is “a theory or system of social organization that advocates the

vesting of the ownership and control of the means of production and

distribution, of capital, land, etc., in the community as a whole.”

(citationhere) This means that the government, usually, controls the means

of production (as a representative of the community) and that government

control is typically a failure of the system because, again, human greed and

ignorance are not clearly factored into the equation. Socialism is also

thought of as the step before communism, under Marxist theory.

Obviously, both of these theories are ideal in and of themselves, but

when placed into action in the real world the variable of people will

inevitably cause these systems to break down because human behavior

cannot be reliably predicted. So, then, what’s left? America, and much of

Europe, is a good example of what’s left. An update of this system is

happening in America where a new economic model may be occurring

through a process of economic evolution.

Historically, America is a capitalist country, but what can be found

when looking back through its economic history are numerous examples of

human variables causing complete disasters in the economy (the Great

Depression, stock market crashes, and even the economic disaster of 2008).

In each of these cases, an interesting thing occurred that should not have

occurred in any capitalist system: government intervention. Government

intervention in the market will take many forms, be it the mandate of a

minimum wage, the partial nationalizing of our banking system, or a public

school system.

What’s interesting about this is that it is new ground economically

speaking. The government becoming a player in a capitalist market place,

and allowing organizations to compete with it, is completely unprecedented

in any major economic theory. It’s also important to outline the exact

concept of the theory which is: At any point where the capitalist, profit

driven, system of the United States fails to meet the needs of the people as a

whole, the people will move government into the area to meet the need. In

short: where it’s needed, the government of the United States will become

The People’s Corporation. In order to examine why this may be occurring

it’s important to look at important (but otherwise unprofitable) industries

where the profit motivation of a capitalist system seems to wane, and where

an overly ambitious profit motive created just as much of a problem. These

two extremes of the spectrum represent the areas where the government has

traditionally become involved.

A major concern of many Americans today is healthcare, many

believe that the system is just “plain broken” (citation needed). If you could

put the current medical system of the U.S. as a proposal before congress, it

would probably not garner a single vote: no one would support it

(paraphrased citation here). It’s been said that America has one of the most

expensive, and inefficient health care systems on the planet. Much of this

could be attributed to human greed such as CEOs and other important

members of these organizations giving themselves more than just

compensation, it could also be attributed to the corporations need to return

an a profit to it’s investors. This system, in the state it’s in today (as of

2008, that is) is ripe for the kind of government intervention that is

becoming more common practice in America. In fact, health care reform is a

major issue in the presidential election of 2008, where the most popular

candidate, Barack Obama, suggested that the government should offer the

same health insurance to the people that it offers to it’s workers, among

other things. This makes health care a perfect forward looking example of

the policy of America’s democracy: either the market will meet the need
appropriately or the government will, but the needs of the people will be met

in some form, eventually.

Another firm example of past government intervention is USPS: The

United States Postal Service. The USPS is the earliest possible example of

this kind of government intervention, but is most notable for the fact that the

government has not outlawed competing with it. Today many package

delivery services exist: UPS, and Fedexare the most notable examples.

Although they don’t traditionally deliver letters back and forth, they do

compete with the USPS on delivering packages. This is important because it

means that the government, while intervening in the market place in order to

meet a need, is not necessarily discouraging competition. In fact it’s entirely

possible that the government’s intervention spurred competition in this

event by allowing companies to detect the USPS’s weaknesses and build

businesses out of beating it on those points.

Perhaps the easiest to miss, but not the least important by any means,

is the nationalized education system of the United States. It’s very easy to

look over this system as a ‘basic need’ but that’s why the government

became involved in the first place. It’s not at all difficult to find data that at

one point in American history (mostly during the age of agriculture) getting

an education was a luxury afforded to only those with the money to pay for

private schools. This is an area where it was obvious there was a need of the
people, and the private, market driven, system was incapable of delivering

thanks in no small part to it’s profit motive. This particular instance should

also show that all government intervention isn’t necessarily positive as the

public school system in America is subjected to worldwide criticism.

Looking back (and forward) at these examples of government

intervention in the markets would probably give both capitalist and socialist

idealists a small heart attack. While the socialists would praise government

intervention, they might criticize the constant sway of the markets that the

government allows; however, while capitalists might praise allowing

competition, they’ll readily denounce any and all government intervention in

the markets as something bordering on blasphemy. Clearly though, one

thing can be seen by giving a hard look at reality: while it is good to have

ideals, and it is good to move towards them, not every possible variable can

be accounted for in creating them, and virtually every extreme vision is

utopian in nature.

When capitalist systems first arose, they were wealth building. But

now, ascapitalism is ‘coming of age’ a number of faults (many of which

were, indeed, pointed out by Karl Marx in his criticisms of capitalism) are

coming to light. However, rather than a revolution replacing the whole

thing, as Marx may have suggested, we’re patching the capitalist framework

with socialist ideas. It’s important to note that much of Marx’s theories have
been discredited in practice, that some of it still describes conditions that

work today:

Although Marx's economic analysis is based on the

discredited labour theory of value, there are elements of

his theory that remain of worth. The Cambridge

economist Joan Robinson, in An Essay on Marxian

Economics, picked out two aspects of particular note.

First, Marx's refusal to accept that capitalism involves a

harmony of interests between worker and capitalist,

replacing this with a class based analysis of the worker's

struggle for better wages and conditions of work, versus

the capitalist's drive for ever greater profits. Second,

Marx's denial that there is any long-run tendency to

equilibrium in the market, and his descriptions of

mechanisms which underlie the trade-cycle of boom and

bust. Both provide a salutary corrective to aspects of

orthodox economic theory.

It is entirely plausible that, for so long as America exists, it will be

inherently a capitalist nation; however, as faults in the capitalist system

continue to show themselves it is increasingly likely that the government in

America will have to take on the roll of The People’s Corporation.