Today, Explained - Blame Capitalism: Souring on the system

Episode Date: September 8, 2023

Capitalism has entered its villain era. In a new series running Fridays this month, we look at how Americans came to blame it for just about everything. This episode was produced by Miles Bryan, edited by Matt Collette, fact-checked by Laura Bullard, engineered by Patrick Boyd and David Herman with original music by Jon Ehrens, and hosted by Noel King. Additional editorial support from Avishay Artsy, Jolie Myers, and Miranda Kennedy. Transcript at vox.com/todayexplained Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts Learn more about your ad choices. Visit podcastchoices.com/adchoices

We cannot separate capitalism from racism. Market capitalism is not a religion. You have to be a fool to worship it. I am so sick of living in a capitalist society. Everyone's talking about capitalism and they all seem like they're mad. They say that they hate it and they contest and debate it. But they all agree it's bad. Every Friday for the next four weeks, a new Today Explained series, Blame Capitalism. On Today Explained, we will listen to their complaints to find out what is going on. Everything comes with a price, even peace of mind.

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Gambling problem? Call 1-866-531-2600 or visit connectsontario.ca. Modern capitalism emerged about 250, 300 years ago. Our economic system shapes everything. How we get to live, what we get to want, who we get to be. But I think we're at a turning point because many of us aren't happy with how we get to live and what we get to want. On the other hand, most of the people in power still think this is the best system we've got. What is it? How do we get here? Why do we blame it? Can we change it? Should we try?

Everyone's asking those questions. Senator Bernie Sanders wrote a book this year, It's Okay to Be Angry About Capitalism. Used to be people started a small business. You started a small business. You have a business. You have a business. Today, in sector after sector, you have fewer and fewer multi-billion dollar corporations controlling that sector. Over the summer, I interviewed Republican presidential candidate Vivek Ramaswamy, who has clawed his way to a real competition by attacking woke capitalism. A small group of business elites get to decide how we settle questions on climate change to racial justice instead. And I reject that vision.

My friend Max left me a message shrieking that I had to go see the new Indiana Jones movie. You stole it. Then you stole it. Then I stole it. It's called capitalism. So many people are throwing this word around. Just another day living under late capitalism. I first noticed it in 2017. I'd been covering economics for four years, for marketplace and

then for planet money. And I never once used the word capitalism on air. Business, yes. Housing, yes. Energy, sure. Markets, always. It's a half day today for markets in the U.S. and for some European indices. But then that summer, my friend Brittany Luce hosted this very zeitgeisty live podcast taping. And something went down while she and her guests were talking about Jay-Z's new record. There is an album that came out recently. Yes. Oh, God.

That is basically lipstick, Alley, wax. We're talking about 444. Okay. All right, so Vincent Cunningham, a writer for The New Yorker, started talking about the economic message that some writers saw in that album. I could have bought a place in Dumbo before it was Dumbo

for like two million. Greg Tate just had a piece in The Village Voice about 444. He's pretty okay about it, but he talks about it in terms of a black economic nationalism and talks about it in terms of like a Black economic nationalism and talks about him in terms of Garvey and in terms of Booker T. And I didn't agree with it from Booker T and I don't agree with it from Jay-Z. I don't think that capitalism is the answer for Black people. So bad for the Blacks. I don't think capitalism is the answer

for Black people. Thomas Edison's light bulb went on in my brain and illuminated something that had been skittering around the edges. Economics reporters like me weren't talking about capitalism, but the culture was. Now, I am a lot, and days later, I exuberantly reported this observation to my colleagues. They were skeptical. One of them said something like, knocking capitalism is just what college kids do. My excitement dampened. I couldn't square it. I mean, my colleague was right about college kids, but these weren't college kids. These were smart, young culture critics. Except the culture critics were in the zeitgeist, and my colleague was somewhere else. He was in the firmament. It was the thing we all love to hate. It was a

generational divide. Because there is one thing that young people don't have. Memories of capitalism's biggest triumph. I've now reached the western side of Checkpoint Charlie where there are a huge number of people here. 1989. The first East German has come across now. He's been raised aloft. I was alive when the Berlin Wall fell. I was eight years old and sitting in the back of my mom's Oldsmobile. She was letting the engine run so that it wouldn't stall out in the cold. And the man on the radio, who was always so calm, was yelling. One man's just come through, raised his arms in the air and declared, I've made it, I've made it.

I leaned in from the backseat, put down my chapter book, and took leave of linear time for a split second as I decided, someday I'm going to be the man yelling on the radio. Now, at that exact moment, another man who would someday yell on the radio was a lieutenant in the U.S. Navy in Norfolk, Virginia. And I was in the ready room of my squadron when all of this started happening. And I remember where I was. I was having a conversation with Victor,

God, what's his last name? Anyway, a buddy of mine then, 30 years ago. And we said, everything's going to change now. Everything's going to change. You know that voice. That's Kai Rizdahl. From American public media, this is Marketplace. Host of the most popular economics show on NPR stations.

And Kai's also a veteran of the Cold War. You know, I had been on missions up around the North Cape in Norway flying against Soviet bombers in 1986, 1987. And that was what we knew. And communism was the ever-present threat. A threat because very real atrocities had happened under communism. See Joseph Stalin's Soviet Union. And communist leaders wanted theirs to be the only economic system in the world. Now, capitalists wanted the same thing. And the way the West saw it, capitalism had to beat communism. It was an existential fight. And it

did. The Berlin Wall came down. Capitalism won. Throughout the 90s and the early 2000s, there were certainly critiques of capitalism. But envisioning a world without it? No. Capitalism was the system we had. And experts and economists were all very confident that it was the best system. And then... Lehman Brothers is going bankrupt. The financial crisis hit. And financial markets from Asia to Europe are doing their utmost to prevent Monday from turning from dark to black. I remember the day that the TARP, the Troubled Assets Relief Program, failed in the House for the first time.

Wall Street watched Washington with shock and fear. Nobody could believe it. As the bailout package went down on Capitol Hill, the Dow went down like a sub. You know, Henry Paulson and Ben Bernanke had gone up to the Hill and said, please, please, please, please, please, we need this money, right? Paulson said, I need a bazooka. I don't want to have to use it, but I need a bazooka. And that was this $700 billion package that was going to get the economy through the collapse of the financial system, the near collapse of the financial system. And I remember long slog because you got through Bear Stearns, you got through Lehman Brothers, you got through the March 2009 lows in the stock market, and then that long, slow recovery

where jobs weren't coming back and people were still struggling and the real estate market was still challenged and people didn't have work. And it was really tough for a long time. Not for me and journalism, but for people out there. More than 500 people applying for a shot at 50 slots at a local iron workers union. Many of these people have been camped out for days, hoping for the promise of a steady job with health care. healthcare. Do you think that's why instead of people blaming the banks and the bankers and the people who really got us into trouble, that they decided some percentage of them decided to blame the whole system? Yeah, the blame did get spread to the entire system, how we run this economy.

But I think also, and this is not to be discounted, especially as we find ourselves in the political moment we find ourselves in today, I think people got equally angry at capitalism and equally angry at the politics of American capitalism. Because what you had was the government coming in and saving the big banks and giving them tens of billions of dollars. And CEOs mostly, right, did okay. A couple of big bank CEOs, you know, got canned, but mostly the people on Wall Street survived and the system endured. I think the challenge is that the average person in Des Moines, Iowa looks at what happened and looks at the bailouts while he or she is still, you know, bailouts were 2008, 2009. Let's fast forward to 2013, 2014.

This person is still having trouble making rent, is still working two jobs, trying to get the kids to school on time, has a clunker of a car or the combine on the farm needs a repair or whatever it is. And they saw these tens of billions of dollars. And that justifiably got people angry, really angry. And then it just got worse. Hella degrees, student debt, garbage job, work your ass off, never going to buy a house. Mom's got a pension. Good for her. You're going to work forever. Oh, mom doesn't? Well, you're responsible for her now, too. Babies someday? Nah, they cost too much. GDP growth? Absolutely. Love it. Trash the planet on our way there, though. Oh, and the guys with the money, Elon, Zuckerberg, Bezos, they do not pay taxes. It can drive you crazy if you let it. Or you can just have fun. Mock it. Meme it. Over the summer, Serena Toros wrote a think piece for Vox.

It's called How Frog and Toad Became Queer Anti-Capitalist Cottagecore Icons. Frog and Toad are these two characters from this children's book series from the 70s. Toad, Toad, the sun is shining. The snow is melting. Wake up. Oh, I am not here. I feel like they inhabit this sort of like anti-work sentimentality where their lives are structured around taking care of each other, doing the sorts of activities that don't rely on generating income, that don't rely on market forces. We'll skip through the meadows and run through the woods and swim in the river.

In the evenings, we will sit right here and count all the stars. I was an early teenager when the 2008 Great Recession happened. And I feel like I really started to question how things worked and why they worked. And, you know, it kind of was a moment I realized, like, maybe money is fake, you know, and that the free market is not something that is free, that there are regulations to it, external regulations to it, that could change people's lives. So all the things that I've been struggling with are things that could very easily be taken care of by, you know, stronger government intervention. And so to me, I was like, oh, that's capitalism. So, you know, it's a very easy scapegoat to blame. Blame capitalism. Or maybe fix it? Well, you can't do that until you can define it, understand it. And that's what we're doing from here on out. Stay tuned. Today Explained. It's never been easier thanks to their digital picture frames. They were named the number one digital photo frame by Wirecutter. Aura frames make it easy to share unlimited photos and videos directly from your phone to the frame.

When you give an aura frame as a gift, you can personalize it. You can preload it with a thoughtful message, maybe your favorite photos. Our colleague Andrew tried an aura frame for himself. So setup was super simple. In my case, we were celebrating my grandmother's birthday, and she's very fortunate. She's got 10 grandkids. And so we wanted to surprise her with the oro frame. And because she's a little bit older, it was just easier for us to source all the images together and have them uploaded to the frame itself. And because we're all connected over text message, it was just so easy to send a link to everybody. You can save on the perfect gift by visiting oraframes.com to get $35 off Aura's best-selling Carvermat frames with promo code EXPLAINED at checkout.

That's A-U-R-A frames.com promo code EXPLAINED. This deal is exclusive to listeners and available just in time for the holidays. Terms and conditions do apply. It's Today Explained. We're back. I'm Noelle King. In the autumn of 2021, I'd been thinking about capitalism and our discontent for four years. And I came across a story in The New Yorker about an economist named Wendy Carlin. Wendy had earned this rare and coveted profile

by writing a new economics textbook. She told The New Yorker, somewhat slyly, that she wanted to teach economics as if the last 30 years had happened. Wendy Carlin has a doctorate in economics. She's a CBE, Commander of the Most Excellent Order of the British Empire has a doctorate in economics. She's a CBE, Commander of the Most Excellent Order of the British Empire, for her contributions in economics. Wendy Carlin is super

duper smart. But when the financial crisis happened, Wendy had no idea how to explain it, to her undergraduates no less. I was in the classroom, literally in the classroom, with hundreds of students, and they were asking about why was there a crisis. Economics was happening in the real world, in a really big way. They felt embarrassed when they went home and their family asked them to explain about the crisis, and they really had nothing to say. It didn't relate at all to what they were learning

in their economics classroom. And like many, many other economics professors around the world, I was pretty hopeless at giving them a good answer. Okay, so economics as a profession isn't keeping up with the real world. You wrote a textbook. Give me the textbook definition of capitalism. Capitalism is an economic system. So it's a set of rules of the game,

and it has three defining characteristics. So one is private property. The second is markets. And the third is a particular kind of firm, a capitalist firm. And a capitalist firm is one that employs workers for wages with the intention of producing goods and services for sale on markets. There's private ownership of the production means, so that's where the private property comes in. And the objective of the firm is to be able to sell its output of goods and services above the cost of production, making profits. So it has the intention of making profits.

The definition that you gave me, is that largely agreed upon by people in your profession? If I were to ask another economist, would they tell me something similar? They might. They may not have ever thought about it. How is that possible? Economics, like many sciences and other forms of academic inquiry, is very specialized. And people work in a particular area. So they might work on the economics of migration or of competition policy or of macroeconomics. There's not really a sense of the study of the whole system. And so they might feel a little uncomfortable if you ask them to define capitalism. Economists get uncomfortable defining capitalism, should you ever feel inadequate. And Wendy says, we don't even actually know

who first used the word. It's a good question, actually. I don't know the answer to that question. But we know who first and best wrote about its emergence. Adam Smith was a philosopher who was born in Scotland 300 years ago. Like Wendy, he was very smart. He was kind of some sort of genius

who went to university at the age of 14, I think. He studied first in his native Scotland, then he went on to Oxford, like Wendy. He had a bit of a sickly constitution. He didn't think much of Oxford and wrote to his mother asking for her to send some socks or stockings because he was cold. He became a philosopher, wrote a book called The Theory of Moral Sentiments in 1759,

moved to France, became a tutor. Get a job, long hair. While he was there, he started writing The Wealth of Nations. It took him 10 years to finish. A decade? Really? Smith was describing what he saw around him. It sounds simple, and shockingly, it really sort of is. There was private property, there were firms, and those firms wanted to make profits,

and there wasn't a king or a czar or a president, God forbid, making all of this happen. It was as if an occult hand, an invisible hand, were guiding everything. The invisible hand is a phrase that was introduced by Adam Smith, and he was pointing out that in order for a butcher or a baker or a candlestick maker to make an income, he had to produce something that somebody wanted to buy. And therefore, in the process of promoting his own interest and looking to his own profit, he ended up serving the interests of his customers. Was what Adam Smith was describing a natural process? No, I don't think you can describe it as natural.

It's a particular form of economic organization. There have been lots and lots of different forms of economic organization. It's a totally fascinating one. So it has very special characteristics, but it's not a kind of natural thing. It's also not something that in some sense had to be. It wasn't predetermined. Adam Smith writes Wealth of Nations in 1776, also that year, a little country is born. Can you get us into the recent present? So global capitalism got going in England in the 18th century. If we jump into the 20th century, then we start to see firms owned in the United States

introducing new technology. Ladies, are you tired of room temperature food just strewn about all over your kitchen, expiring as soon as you get home from the store? Are your children constantly complaining about contracting salmonella? Well, it sounds like you need General Electric's newest invention, the refrigerator. Taking advantage of economies of scale, so a growing market, a large domestic market, and a lot of innovations were coming from America in the 1920s.

And then what's so striking is that that gets kind of snuffed out by the Depression. It was panic. 16.5 million shares of stock sold in a single day. A macroeconomic failure, a failure of the organisation of the economy as a whole and of the way it's being managed by the government. The United States was particularly hit by lots and lots of banking failures. New lines appear on American streets. Depositors swarming to snatch out what savings they have left before it's too late. And it had failures of farms, failures in agriculture, failures of firms,

and that's when mass unemployment emerged in the United States. A report from Detroit says men are sitting in the parks all day long, out of work, muttering to themselves. During the Depression, everything had failed. The banks, the farms, the firms. It was not enough to laissez-faire. The invisible hand was elsewhere, and something needed to intervene. That something was the government. Now, having lived through COVID, when a lot of us were getting government stimmy checks, this is old hat. But at the time, it was revolutionary. And the gentleman who introduced this revolutionary idea was one John Maynard Keynes. As events have turned out, change has been forced on us under circumstances extraordinarily fortunate and favorable. His idea was that if it failed,

capitalism sometimes needed the government's very visible hand. You know, with the idea that the state has an obligation to support people who are unemployed, for example, that the state has an obligation to intervene to ensure that the economy doesn't fall into the grips of persistent weak aggregate demand and high unemployment. And then that capitalism is one that produces rather extraordinary results. That's the period during which there was the fastest capital accumulation, in other words, the fastest growth of machinery and equipment, of the capital stock in the United States and in the other high-income countries. And it was an extraordinary epoch

because those benefits of growth were shared. You could say that sharing prosperity shifted the balance of power away from the owners, away from capitalists or away from profits, if you like, towards workers. The share of wages went up. This was a period when unions were quite strong, so they were able to get wage increases to enable them to share that prosperity, including right down to workers who only had high school education. Is there a word for that time?

If we were to trace it from Adam Smith's invisible hand to Keynesianism, oh, now there's some government hand, you're saying in the 1960s something kind of explodes. What is the capitalism of that period? So the 1950s and 60s is often referred to as the golden age of capitalism. So two decades of golden age, or sometimes it's called the glorious three decades. So you can sort of count it in different

ways. But the golden age. Now, for every American golden age, there's a college class telling us it didn't really happen that way. Or there's a Florida high school history textbook insisting that it did. The historical fact is that the golden age of capitalism was wonderful for the people it included, but it often excluded women, Black people, Hispanics, gay people, among others. And those groups of people knew this. And then they, along with the sweep of history, conspired to change it. And when it all shook out, capitalism was changed forever. In July of 1964, on a hot summer night, some residents of Rochester, New York, threw a block party.

A young man got drunk, and when the police tried to arrest him, he got disorderly. Bystanders took issue with the degree of force the police were using, and no one exactly knows who threw the first brick. As you can see now, we're in front of a public safety building where the members of the state police brought in here to relieve Rochester police officers at the scene of the rioting. After that, Black residents of Rochester started to organize against police force, and then against so much else. The golden

age of capitalism passing them by. No, no more. They demanded the city's most prominent employer, Eastman Kodak, the camera company, start hiring Black people. At the time, it didn't hire many. The activists wanted to push this big corporation to actually just do what was fair. But part of that meant engaging with the burgeoning civil rights movement. Now, during that time period, many activists, many ordinary Americans went out in the streets to protest. The activists from Rochester took their fight out of the streets and to Kodak's annual shareholder meeting in New Jersey. They staged a protest outside. They humiliated this big company. Kodak backed down.

It promised to start a job training program for Black residents of its home city, Rochester. A corporation had just been forced to and agreed to take a position on civil rights. It was the 60s. Those were the times. This was the start. Two men were living this history.

One was an economist and the other was an activist. One man thought the purpose of a corporation like Kodak was to make money and nothing more. The other man insisted that corporations had to do better by the people and the communities where they worked and by the planet. One of those men, one of those points of view would win decisively. And that, and he, I will argue, is why we're all so angry today. That's coming up on the next episode of Blame Capitalism. Kennedy. Laura Bullard is our fact checker. Our engineers are David Herman and Patrick Boyd. Special thanks to writer Max Bernstein. Be like Max. If you see capitalism out in the wild, call us, DM us, text us, tweet us, X us. I'm Noelle King. It's Today Explained. Listen to their complaints to find out what is going on.