Mulay Mass Capitalism

A Blueprint for Economic Revival
1. Auflage 2014
ISBN: 978-1-940598-50-5
Verlag: Book Publishers Network
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 161 Seiten

Job security flew out the door decades ago-and now seems forever out of reach, thanks to the Great Recession. As much of our economy follows jobs to other countries, especially China, Americans must wonder what we will be left holding. Can we retrieve what we have lost? Apek Mulay knows we can. His book Mass Capitalism: A Blueprint for Economic Revival presents solutions to the economic problems threatening the survival of the US and global economies. Mass capitalism would help: -- establish a balanced economy -- eliminate unemployment -- eliminate deficits and national debt -- revive the US economy -- establish a free-market economy. A true free market-with minimal government intervention and lower taxes on individuals-calls for the majority shares of Fortune 500 companies to be owned by their employees, rather than outside investors.

Autoren/Hrsg.

Mulay, Apek

Leseproben

Chapter 1 - The Crisis of Capitalism

Introduction

Capital is nothing but consumable commodities in their potentiality. Intelligent people collect more capital than others in the form of consumable goods, but since this capital cannot be stored for long, people began to keep it in the form of money. This is how capitalism originated. In a free-market enterprise system, wages of the masses catch up with their productivity. This is how free markets ensure that economic demand catches up with the supply of goods in an economy ensuring a balanced economy. Capitalism encourages acquisition of material wealth, be it land, money, metal, or other property. This acquisition, when left unchecked, leads to huge economic disparity, which transforms free-market capitalism into monopoly capitalism; the accumulation of more and more wealth by any inappropriate means reaches a point of depriving other human beings of their basic requirements, which diminishes their consumer purchasing power. This chapter explains the difference between free-market capitalism and monopoly capitalism. It also introduces the reader to mass capitalism and provides an explanation about how mass capitalism would establish a free-market economic system with minimal government intervention and lead to a sustainable progress of Moore’s law in the US semiconductor industry.

Free-market Capitalism in the United States Post–World War II

World War II led to a total destruction of economies in Europe and Asia, and afterwards, the United States became the nexus of global capitalism, as war was not directly fought on US soil, thereby protecting its manufacturing sector. In fact, World War II played a big role in the revival of the US economy from the 1930s economic depression. The war helped Americans find employment in industries that catered to the building of armaments for US allies in Europe. As a result of World War II, only physical gold was used as a medium of exchange for international transactions, and the United States accumulated huge reserves of physical gold, selling munitions to its allies for fighting the war. This shows the importance of possessing physical gold reserves for any country in times of a global economic chaos from war or other disasters.

After World War II, when Dwight D. Eisenhower took over the presidency, he continued the tax structure put in place by his predecessor, Franklin Delano Roosevelt, following the Great Depression of 1930. The important fact to remember is that, as a result of the progressive tax structure during the presidency of a Republican president, where the highest income earners paid a maximum tax rate of 92 percent, there was less hoarding of wealth and more investments in the economy. These investments led to a creation of more jobs and better macroeconomic growth. In addition, the Federal Reserve followed a monetary policy such that wages kept track with productivity. This led to a balanced economy where the supply of goods into the economy was able to catch up with economic demand for these goods. These economic policies led to a 4 percent year-over-year growth in the US gross domestic product (GDP) during the 1950s, called the golden era of free-market capitalism.

A free market is a market economy in which the forces of supply and demand are free of intervention by a government, price-setting monopolies, or other authority. A free market contrasts with a controlled market or regulated market, in which government intervenes in supply and demand through non-market methods, such as laws creating barriers to market entry or directly setting prices. In a truly free market system, the intervention of the government in the economy is minimal. Because of its centralized economy, the free-market capitalism was possible in the US economy during the 1950s only with a progressive tax structure in which high wage earners paid the highest taxes. A progressive tax structure for a centralized economy forced the Fed to follow monetary policies such that workers’ wages caught up with their productivity. As explained in subsequent chapters, since the US dollar was tied to a gold exchange standard, the Fed was not able to run any deficits during the 1950s. There were no trade deficits, and neither were there any budget deficits due to progressive taxation. This is how the United States had a balanced economy during the 1950s.

The Transformation of the US Economy from a Free-market System into Monopoly Capitalism

The free-market system, where wages keep track with productivity, transformed into a monopoly system because of unenforced anti-trust laws leading to mergers and acquisitions. Post?World War II, US-based multi-national corporations (MNCs) influenced free-trade agreements, like the General Agreement on Tariffs and Trade and, later, the World Trade Organization, pushing for treaties to lower or abolish trade barriers between member countries, whose economies were destroyed as a result of the world war. This led to offshoring of manufacturing jobs from the United States to low-wage countries resulting in trade deficits. This phenomenon is analyzed in great detail in subsequent chapters.

In 1971, Congress passed FECA (Federal Election Campaign Act), under which corporations, unions, and individuals could contribute unlimited “non-federal money,” also known as “soft money,” to political parties for activities intended to influence state or local elections. This gave an opportunity for big money to influence US democratic elections resulting in the passage of laws that transformed its free-market economy into monopoly capitalism. As a result of monopoly capitalism, the trade deficits and budget deficits started to grow in the United States. Later chapters show how these policies not only resulted in a growing wage disparity in the United States but also affected the market value of the US dollar. The twin deficits forced the US dollar off the gold exchange standard. The monetary policies of the Fed have also resulted in a kind of financial conglomerate, whereby government officials aim to provide the social and legal framework within which monopoly capitalism can operate most effectively. This is how free-market capitalism has been transformed into monopoly capitalism.

Mass Capitalism

Mass capitalism is a panacea for the integrated progress of human society. It aims to bring about equilibrium and equipoise by totally restructuring economics towards a balanced economy. Only mass capitalism can usher in reforms towards a free-market economy to save the world from an economic depression because of monopoly capitalism. It will lead to a free-market economy whereby workers’ wages catch up with their productivity. Through the restructuring of economics, mass capitalism would make the supply chain more efficient through decentralization. Subsequent chapters explain how centralized supply chains followed by MNCs have resulted in twin (trade and budget) deficits. Decentralized supply chains lead to better cooperation between different business entities and lower possibilities of mergers and acquisitions between the entities in a supply chain. In this way, mass capitalism would lead to a wholesome decentralization of the economy.

This economic decentralization would also lower income taxes on individuals and lead to robust growth of both regional and national economies. Under mass capitalism, the majority shares of Fortune 500 corporations would be held by their employees rather than outside investors. Since, employees would become majority shareholders of corporations, it would transform monopoly capitalism into mass capitalism. Such a free-market system, which is employee owned and operated, would naturally ensure that workers’ wages catch up with productivity. This would preserve the incentive to work hard because workers, as owners, would have a stake in the success of their businesses.

Such employee-owned corporations would eliminate the problems of unemployment and would provide health insurance to their employees at competitive group insurance rates. In this way, the US government would not have to spend money for unemployment and insurance benefits of laid-off workers. This way, the budget deficits could be eliminated from the economy. Mass capitalism would also eliminate trade deficits by replacing free-trade policies with fair-trade policies. Most important, since the majority of employees (i.e., the masses) would become majority shareholders of corporations, such an economic system would minimize speculation by non-employee investors, which results in a bubble economy. Mass capitalism would also eliminate the influence of money in elections, as employee-owned and employee-run businesses would not influence government policies through lobbying. In such a framework, the majority shareholders of corporations, i.e. employees, would not let corporations influence those policies that hurt the masses.

Mass Capitalism and the US Semiconductor Industry

The semiconductor industry is strategically the most important industry for the US economy, the most capital-intensive industry, and thus, a major contributor to the US trade deficits (these concepts are elaborated with great detail in subsequent chapters). The progress of Moore’s law has helped the global semiconductor industry plan for its investments in R & D for providing consumers with the most advanced electronic gadgets. As explained in subsequent chapters, the globalization of the semiconductor industry has changed its business model from a few large integrated device manufacturers (IDMs) to several fabless semiconductor companies (a semiconductor fabrication plant or foundry is also called a fab; companies which make use of external foundries to...