The inherent flaws in our capitalist, mixed economy are similar to that of the American judicial system–While far from perfect, they are the best systems out there and, by and large, work well most of the time. As you will find during every other secular bear market over the past one hundred years, when the going gets tough and the flaws of the system are exposed for all to see, there are serious questions raised as to just how durable capitalism is.
Pure, unbridled capitalism only works when the overwhelming majority and powerful participants have a certain moral backbone. Doing business in good faith sounds like a basic concept, but with the dot-com and debt bubbles we have seen in recent years trust has evaporated like boiling water thrown into below-freezing air. Corrupt, pirate capitalism with no conscience allows the worst of the worst to exploit the system and threatens to bring everything down, even those playing by the rules. Just as Thomas Jefferson often discussed during the founding of America, the motivation to contribute to society and do right by each other needs to come from within individuals and encouraged by those around them, rather than being thrust upon them by the King of England or a central government in general. Beyond that, the increased commingling of government-business interests has further added corruption to and depleted morality from the system. Indeed, government is just as culpable in corrupt capitalism as any institution.
At the end of the day, though, the market wins out, as you cannot fool all of the people all of the time. History says that the market has a few more years, at least, to cleanse the excesses from the system during this secular bear. The fact that the problems we face are becoming more apparent and widely-discussed is a sign of progress, but there is likely much more work to be done. Stocks will fluctuate, as they always do, but my belief is that we have a long ways to go before we have another August of 1982, off-to-the-races-for-a-secular-bull-market moment.
Until that happens, central bankers and politicians can try all they want to keep the ATM machines working and prevent full-scale social unrest. While they may or may not be saving us from the abyss, I am certain that the only thing that can eventually pull us out of the malaise is capitalism…with a conscience, where trust and good faith become more prominent in doing business. And that can only come from within communities, within social circles, within families, and within the individual.
On this Thanksgiving Day, it is a good reminder to recall how the Pilgrims found capitalism in its purest form:
The fall of 1623 marked the end of Plymouth’s debilitating food shortages. For the last two planting seasons, the Pilgrims had grown crops communally–the approach first used at Jamestown and other English settlements. But as the disastrous harvest of the previous fall had shown, something drastic needed to be done to increase the annual yield.
In April, Bradford had decided that each household should be assigned its own plot to cultivate, with the understanding that each family kept whatever it grew. The change in attitude was stunning. Families were now willing to work much harder than they had ever worked before. In previous years, the men had tended the fields while the women tended the children at home. “The women now went willingly into the field,” Bradford wrote, “and took their little ones with them to set corn.” The Pilgrims had stumbled on the power of capitalism. Although the fortunes of the colony still teetered precariously in the years ahead, the inhabitants never again starved.
That passage is from page 165 of Nathaniel Philbrick’s bestselling book, Mayflower: A Story of Courage, Community, and War (New York: Penguin Books, 2007, paperback edition).
I hope you all have a happy, safe, and enjoyable Thanksgiving.
24 Responses to It Comes from Within
Brilliant! Happy Thanksgiving to you and yours Chess.
Happy Thanksgiving to you sir, wonderful post.
Extremely positive and encouraging piece Chess, THANK YOU!!
“my belief is that we have a long ways to go before we have another August of 1982″
Yeah, read something today that the average secular bear lasted 16 years and some have gone 20.
Great post – disagree with even calling this “free market” capitalism anymore. It is a “free market” when we trade up, but immediate intervention by the masses on any weakness.
Thank you Chess, for sharing the wisdom in your thoughts. It’s so nice to enjoy a thinking man’s Thanksgiving. Have a comfortable and peaceful Holiday.
Have a wonderful Thanksgiving. Thank you for all you share.
Good stuff chess. You are one heck of a writer. Happy Thanksgiving.
Great article Chess, I have it bookmarked for future reference.
Great Post …you have done a great job putting into words the things I think about every day.
For the most part we have such a great standard of living here..it makes us passioniate whenever its in question.
I agree we have the best court system in the world. I had a long conversation with someone who worked in the Ugandan high court. He was proud of the work he had done, but he said that their court system just doesn’t compare with the US system.
My theory, Chess, is that the current managerial/bankercrat class has grown, in the past 10-20 years into a capitalist version of the old Soviet politburo. If you want to do anything, they get a cut of the pie far larger than is tolerable. They essentially levy a tax on every transaction, not to mention that they turn all government activity their way, corrupting the whole edifice. Everyone pays for them to live as they do. Currently, the average money market charges about .25% and pays .05%. The spread goes right into the bonus pool of these lazy asses who add not a single iota of value to this economy, and who, rather, drain it of productivity and resources every day.
If you’ve ever worked for a large corporation, you know that once the lawyers and finance guys are in charge, and the engineers are not, it’s only a matter of time before the company is doomed. Steve Jobs said this very well and he’s right.
The US was conned into accepting a china yuan peg that allowed them to steal 8 million jobs in the past decade. This peg was supported and defended by the class that moved production overseas and pocketed the huge windfalls of doing so. Now China has 8 million jobs we don’t and we have 15 trillion in debt. But hey, the managers have had record profits and bonuses. I’m talking trillions. They are traitors. Do you think they were acting morally? What is their fiduciary responsibility?
You’re such an excellent technician, and I’ve marvelled at your work on this sight. You clearly understand how systems function and the very systematic nature of market participants. But here you fall back on a mythology of the individual that I feel is off base. I think it is a profound historical mistake when people imagine the old American individualist fighting the good fight. What made this country what it is was the rise of big business and men like H. Ford–fascist fuck that he was–willing to pay men a living wage. It wasn’t the plains farmer and his individualistic ethos. The US suffered multiple depressions in the 19th century, and morality did little to uplift the masses. What did that was pure old-fashioned political organizing and fighting for the scraps. I’m a pretty moral guy, but none of that is going to bring back 8 million manufacturing jobs to this country, sorry to say. And you can be sure that morality had nothing to do with China taking those jobs from us. They used our system against us by thinking strategically, essentially bribing the managers. But I think that game is up, too, and it’s now an open catfight about the ethos of this country.
I’m not saying that there’s no role for individual morality. But corruption and morality are systemic problems that require systemic solutions. Moreover, one shouldn’t understand systemic to mean the same thing as big government. I take it to mean, in the first instance, as the rule of law for the greater good. Until that is re-established, this country is fucked. I have two little boys, and I tell you honestly that I’m very apprehensive about the future they will have here, and I say that knowing full well that there isn’t a magical fairy-tale land on the other side of the ocean.
Manage your negativity, manage your demise. Manage your optimism, manage your success.
Please tell Fly I apologize and ask him how long I’m banned for Chess. Thank You
Are you asking for forgiveness ???
An honourable deed, indeed.
Excellent post, Chess.
Awesome post, Thank you. What can an individual one do to combat the complex corruption and effect change? I penned a letter to my congressmen yesterday with a list of grievences. I have written to him in the past on contentious issues but he doesnt listen and does what the party tells him. How about the IRS? is there a moral basis to not support the fed govt which dictates the corrupt policies?
Send to Obama -thanks