I hear people crying for limiting capitalism, due to greed and corrupt behavior in big corporations in these times of global financial crisis.

I think people are making a big mistaking in not realizing that capitalism is not corruption (in fact corruption really flourishes in non-capitalist systems, because there are no legal way to directly act to better your life, so corrupt economic systems emerge),  any power can be abused no-matter which political system you live in.

The AIG management is not behaving like capitalists, they are just trying to abuse the power they have had in their position, and get as much cash out and and get out before the house comes down. If they and the company were true capitalists they would have a part in the up-side of the company making money, and share in those profits (and handsomely at that), and perhaps even fund the company in these times.

And if they were true capitalists, they would not take government financial aid in the first place…

I agree with those saying that we can not have capitalism on the up-side of and socialism on the down-side, the current period is a cleansing of many bad companies and bad business practises (and sadly some good business go with it). But the US government (and other western governments) have had a big part in making the current financial crisis a happen, and they too need to step in be part of solving it (as they do, I am not sure they are making the right choices for the long run though).

1 reply
  1. Wille
    Wille says:

    Not all capitalists are for free markets.
    In fact, there is a vested interest to gain special favour, protectionist measures (the Detroit car makers for decades), regulatory barriers of entry (banking industry, anyone?)..

    People sometimes mistake capitalism and markets for the actors working within them – they are not one and the same, and their interests are rarely aligned (which company wants more competition for themselves?).

    It is a bit bizarre to see how some companies like Fannie and Freddie for years have received government grants and similar favours, then turned around and used those same favours to pay lobbyists and ask for even more special favours.
    It is almost a system where politicians subsidize market actors so that they can get the subsidies back as bribes through the backdoor.

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