Tuesday, October 25, 2005

More Criticism of Corporate America

Bernard Rapoport, a member of the Board of Contributors - Central Texans who write columns regularly for the Tribune-Herald - is chairman emeritus and founder of American Income Life Insurance Co. He wrote an article “Andrew Jackson, where art thou?”, on Sunday 23 October in Wacotrib.com (Waco Tribune-Herald)”

“President Jackson: He liked rugged individualism and capitalism. Then again, he wasn't worried about the smooth polish of moneyed society. He would denounce today's CEOs getting $5 million, $10 million or even $50 million bonuses, sometimes for performances that aren't even satisfactory.

How can such a thing happen? The board of directors authorizes it. The money doesn't come out of board members' pockets. Stockholders pay for it.
Adam Smith, the father of theoretical capitalism, perceived that competition would be the regulator of such matters.

Smith never came to grips with the possibility of monopolism. But I think he understood the problem when too few have too much and too many have too little.”

Seems there is a distinct dissatisfaction in the US media about the state of capitalism. Add the New York Times, among many others, on the subject of capitalism and the US government, and you would conclude the level of criticism is worrying (protectionism, need for price controls, etc.,), as well as feel re-assured that democratic rights are still very much OK in the US compared to countries that murder journalists and opposition politicians who step out of line.

But Adam Smith, once again, is being used under false flags. He was never “the father of theoretical capitalism” (where do these ideas come from?). He neither knew about it nor the word itself (first used in 1854).

As for the sentence: “Smith never came to grips with the possibility of monopolism”, it beggars belief, given he wrote many thousands of words decrying the monopoly practices of ‘merchants and manufacturers’ in “Wealth of Nations”.

Assuming Bernard Rapoport looks for Adam Smith on ‘monopoly in capitalism’, he won’t find anything on the subject for Smith to come to ‘grips with’. Smith wrote about commercial markets in the 18th century, not capitalist markets in the 19th and 20th centuries. This should be obvious to the authors of such articles, just from looking at Smith’s lifetime (1723-1790). Bernard Rappoport states that “Jackson was president from 1829 to 1837” and, therefore, presumably knows that Smith had been dead for 39 years when Jackson became President.

Rappoport’s article, excepting his remarks about Adam Smith, is a strong case against what he calls ‘monopolism’ and does not need incorrect attributions about ‘capitalism’ to Adam Smith. If he wants to add to his case against monopolies and the remedy (competition, within the law and justice), he is spoilt for choice in “Wealth of Nations”.


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