Categories of Capitalism

By Glen Wallace

In the movie Wall Street the character Gordon Gekko makes a famous speech before shareholders where he states "greed, for a lack of a better word, is good." I would counter that 'greed' is neither necessarily good nor bad. Greed, rather, is simply a motivational tool that can, if allowed, motivate people to make money by taking advantage of workers and the environment. But greed can also motivate someone who has lost their job to start a new small business that provides a needed good or service, along with perhaps some jobs to provide or manufacture the goods, to the community. Therefore the correct approach to greed and capitalism is a pragmatic one. Greed and capitalism should be seen as a powerful team of horses that needs to be directed to aid society, but if not guided would run wild trampling people everywhere. Herein lies the fundamental flaw of the free market capitalists: they seem to be in some kind of fantasy land where they only imagine how capitalism can be beneficial to society and assume that it then is always beneficial if allowed to roam freely unfettered by regulation or laws imposed by the government. First they don't recognize the fact that where the capitalistic business has benefited society, that business has been carefully directed to so by intelligent people with benevolent intent. Therefore, it is not capitalism itself that is acting like some intelligent machine or robot looking for ways to help humanity, it is people that are directing the machine properly. But if the robot of business is being run without regard to humanity by its operators, anyone in the way of that robot better scramble away or hope for luck that the robot randomly veers away from your direction. The only way that we can insure that the robot of business is directed in a manner benefiting the community is to have a powerful government oversight imposing regulations that mandate that the business robot or the team of greed horses are directed in a manner that will benefit the community and not trample it. How else can we insure that the human designers and operators of the capitalistic business are driving their machine with benevolent intent? The free market capitalists, however, never bother looking at the manifold examples that refute the belief that unfettered capitalism is so great for the whole world. The free marketeers would rather live in their lala land where every business is this nice mom and pop operation that pays all their employees great wages, never dumps any toxic sludge out the back door, provides a product or service that the community greatly needs and would be facing hardship if the business never existed in their community. This brings me to my theory of the three basic forms of capitalism: 1) Crony 2) Parasitic 3) Symbiotic. The free marketeers in the fantasy land of their own minds prefer to imagine that if it were only allowed to roam free, then all businesses would be operating under the third form of capitalism, symbiotic. The symbiotic form is one that exists much like the mom and pop business example I described above where there exists a mutual benefit between the owner of the business and community where that business exists. The parasitic form of capitalism is where someone finds a way to drain money off of the flow of currency without putting anything back from where the money was drained. The best example of the parasitic capitalist brings us back to the start of this essay: Gordon Gekko. In the movie he gives the example of a painting he bought for X amount of dollars and could turn around and sell it for a much greater Y amount of dollars today. He didn't do anything to the painting -- he didn't improve it in any way. That is the goal in parasitic capitalism -- to take out from the flow of currency more than you put in. Any example of 'flipping' is an excellent example of parasitic capitalism. The term flipping is often used in the sale of houses where someone buys a house and immediately turns around and sells it for a profit without doing any improvements to the house. If that is the definition, buying something and without improving it in any way, sells it for more than what was payed for it, then most all forms of stock market trading would be considered flipping. The only possible exception would be if someone in buying shares used that opportunity to use their stake in the corporation to influence the board of directors as to how the company is run. It is a little ironic that we come back to him since he's the one that said that greed is good. But in parasitic capitalism the only sense of 'good' exists for the parasite himself. Now it sounds like I'm painting a rather bad picture of parasitic capitalism, but I think just as with capitalism as a whole we should treat this subset of capitalism pragmatically as well. While due to its nature, it's hard to see how parasitism could be beneficial to the community at large, I do think there can be, like in the biological world of parasites, where the negative effect for the host is either insignificant or nonexistent. Perhaps, to a degree, I'm trying to defend myself since I have in the past and am currently trying to 'play the markets.' In so doing I'm trying to come up with some way to realize some capital gains, but I'll have to admit I don't see how what I'm doing in playing the markets, in itself, will benefit humanity. However, if I succeed, that will leave me with more time to write essays like this one with intent to benefit mankind and without regard to the commercial success it might have with whatever I write. Additionally, especially considering the very small amounts I have to play with, I'm lead to believe that I'm engaging in the neutral form of parasitic capitalism where there is little or no negative impact on the host of commerce. But like in nature where there can be parasites that are very harmful to the host, the same problem exists in the world of commerce. An example of malevolent parasitic capitalism exists in the movie Wall Street (and I suppose I should issue a **spoiler alert** for what follows for those who haven't seen the movie) where Gekko tries, after buying it, to break up and sell off in parts the fictional Blue Star Airlines. Along with the break up, all the jobs would be lost along with the all benefits of the airline to the community where it was based. Gekko was planning to sell the airline, in parts, simply because he thought he could suck off more capital gains that way than by running it as a symbiotic business. Of course there is very often a great deal of overlap in all the categories of capitalism when looking at real world examples of how businesses are run. A business may alternately by parasitic at times and symbiotic at others or some parts or divisions of the same business may each be engaging in the different categories. However, its hard to imagine that one particular business act could be simultaneously parasitic or symbiotic. It would seem that the two terms are mutually exclusive if were using them as the business equivalents of the same two categories in the biological field. That is, if the relationship between two or more entities is mutually beneficial then I don't think that in biology that it would be correct to call the relationship parasitical. Rather the relationship if mutually beneficial would necessarily be called symbiotic. While the free marketeers seem to be completely oblivious to the reality of capitalism often devolving into malevolent parasitism, they do, to their credit, recognize the harm to society of capitalism engaging in its third basic form: Cronyism.