Examining Capitalism

I've been thinking a bit about some of the weaknesses of capitalism - something I haven't done very often.  I used to be something of a laissez-faire capitalist, but I'm seeing quite a bit of how centralized control of money can make for a very imperfect system.  By way of a hypothetical example... If you were to invest in building a new agri-business company by increasing process efficiency for the farmer, that's great.  You invest in making new seeds that produce disease-resistant crops with higher yields and you start to run your competition out of business.  This is good.  The fit survive and innovation is rewarded.

Take that same agri-business company, and develop seeds that produce plants that won't reproduce.  You leverage your reach into the marketplace and your capital to make it deceptively easy for farmers to plant your seeds.  They're faced with a choice - plant your inferior seeds and give you a recurring yearly revenue stream or plant the competition's seeds and pass along a higher cost to the consumer.

See how the drive toward efficiency produces an inferior product?  It actually rewards it.  This is partly the dynamic that we see in play with big box stores, large conglomerates and yes, agri-business.  We don't end up rewarding innovation.  We end up rewarding large pools of capital.

This is one of the things that is broken in our capitalistic economy.  It rewards large concentrations of wealth and it forces smaller companies into dumb business decisions.  Like that famous Wal-Mart-Vlasic case study where Vlasic is forced to produce gallon jars of pickles that consumers can't finish and that they can't profit from.  There's little choice but to let Wal-Mart win, lest they go to the competition.

Why was I thinking about this stuff now?  Well, with the looting of the U.S. Treasury, we're putting more wealth into fewer hands.  This can't be good.