Capitalism.

Here are the competing ideas about capitalism that we most often hear today:

Capitalism has ushered in an era of unsurpassed technological advances and prosperity, inspired innovation and made the United States the most powerful and awesome nation in human history. In doing so, it has decisively won the battle over socialism. OR….Capitalism, by design, creates massive inequality, destroys the planet by consuming natural resources, abuses the working class and co-opts the political process for its own self serving interests. The only possible outcome of capitalism is that it collapses in on itself.

Here’s the truth. They’re both right if you think the system we live within is true capitalism. Only, it’s not.

So join me on a brief history of economic theory as we unf*ck capitalism.

If it isn’t evident by now, I’m a bit of a leftist. But a thinking one willing to challenge my own assumptions. Lately, I’ve been annoyed by the reductive way in which the left castigates capitalism and blames it for all the problems of the world. Likewise, I find it incredible infantile when conservatives paint any sort of social or democratic progress as socialism.

Whole Foods founder John Mackey recently defended capitalism on Joe Rogan’s podcast, which my producer rightfully refers to as “intellectualism for basic white guys.” As far as Mackey is concerned, he’s fairly studied on the subject, but still misses the larger point about the failings of capitalism or in even defining capitalism.

His argument follows a basic defense, saying all other economic theories have failed to advance society to the degree which capitalism has, and that human nature is essentially flawed and unfixable; so we are forced to accept that capitalism is the only system that incorporates our predilection towards greed and competition in a way that also produces progress for the greater good. And because the most notable examples of socialism in the modern era are viewed as failed experiments, Mackey, like many others, believe this to be settled evidence that this is indeed the case.

But most of these examples—whether Soviet communism, Venezuela under Chávez or Castro’s Cuba—are extremely flawed versions of classic socialism bent to fit some sort of dictatorial model of governance that ignore important facts. Soviet communism was a brutal example of state sponsored authoritarianism. Venezuela implemented several positive social programs while ignoring economic fundamentals that would have otherwise built a broad based economy rather than one that relied exclusively on oil. And, Cuba was a dictator’s delight that was opportunistically socialist in presentation but also ruthlessly totalitarian in practice.

It should also be noted that many of the would-be socialist states—ones that democratically elected socialist governments—were snuffed out in the 20th Century by an increasingly militant United States bent on destroying socialist regimes in the nascent stages of transformation.

In Mackey’s case, I find it slightly disingenuous to hear him espousing the benefits of capitalism. He’s a brilliant guy, don’t get me wrong, but let’s be fucking real for a minute. The products he sells are part of a highly regulated system of trade where local producers benefit from agricultural subsidies and price fixing. The organic designation, which is his key market differentiator, is a product of the U.S. Department of Agriculture. And nearly a third of all food manufactured in the world goes to waste, while millions go hungry in the world.

If ever there was a pure case for market failure, it is the industry that made him a gazillionaire.

My guess is the majority of people who hate capitalism have never read The Wealth of Nations. Just as I imagine most people who identify as conservatives have never read Das Kapital. There have been scores of great thinkers and theorists since Adam Smith and Karl Marx laid the foundation for the two competing economic and social models of our time who have both built upon these seminal works and torn them down.

The great philosophers over the past 250 years put forward theories that were as much social as they were economic. And each of their theories should be viewed along a spectrum and considered in the times in which they were written.

For example, Smith was an Enlightenment thinker from Scotland who was witnessing the decline of the European states and the birth of the new world in America in real-time. The American Founding Fathers drew heavily from his writings, as was the case with several Enlightenment thinkers of that time, because they were creating an entirely new system of government and economic thinking. A new world with abundant resources was fertile ground for these great minds to break from the feudal shackles of the middle ages. But Smith’s period also meant that his lens was exclusively agrarian.

Marx and Friedrich Engels wrote a full century later at the dawn of the industrial revolution, so their context was entirely different, as the early stages of industry were particularly brutal to the working class. They saw Smith’s capitalist theories as life threatening to the proletariat, which would lead to massive inequality that would erode our very humanity.

John Maynard Keynes, born the year Marx died, would write during the Great Depression and influence a generation of politicians and economists with his theory that capitalism required socialist-style intervention to properly function through boom and bust cycles.

Today, we have Thomas Picketty entering the ranks of the illustrious, challenging the way we view capital and incorporating two hundred years of additional data into his models to re-imagine economic theory as we speak. Each is a great mind in his own right, but entirely influenced by the circumstances they lived through. There are so many other influential minds along the way that would add pieces to each model, along with wars, technological advancements, dictatorships, plagues and crises that would all challenge these theories in different ways.

America is purported to be a capitalist society. On this there is consensus, generally speaking. If pressed, Americans will tell you that we are a democracy with a capitalist economy. That’s what we’re taught in school. But here again, this is part of our mythology. In practice, we're a constitutional republic with a tendency toward inverted totalitarianism, a state in which social and economic policy is co-opted by several large corporations that control our lives. If you think that’s a stretch, let’s look at a day in the life of a middle class American.

Your alarm goes off to the sound of a corporately owned radio station or perhaps to the app on your smartphone—also owned by a corporation. I’m guessing you didn’t knit your clothes, cobble your own shoes or grow your own food, so you drape corporate labels on your body after using several brand name products to clean your hair, armpits and genitals. If you’re doing well, maybe you hop on your Peloton and work out before you clean up.

You’ll consume breakfast products from one of the thousands of manufacturers that control the food supply and log onto work from one of your devices. Your kids are taught from schoolbooks and curriculums established or funded by government approved corporations, or maybe they even go to a charter school!

You shave with a Harry’s razor, watch Netflix, Uber here and there, Airbnb your vacations, buy gas from ExxonMobil, chat with friends on an iPhone or through Snapchat and Instagram. You Check your bank balances on an app, Slack your co-workers, adjust your thermostat remotely, (listen to Unf*cking the Republic on Spotify or Apple Music), redeem your Starbucks points, hop on a Zoom call, fuck with a Trojan condom, play Words With Friends, and root for a sports team owned by a billionaire and sponsored by an insurance company.

Don't forget to Venmo your babysitter, buy toilet paper on Amazon, update your pharmaceutical prescription through the CVS app, watch corporate media on a Samsung television with Verizon Fios service, and finally, listen to a sleep app to try and shut your brain off and get a couple hours of sleep inside your own head before waking up and doing it all over again.

Noam Chomsky puts it beautifully in Profit Over People, saying that:

“Instead of citizens, our system produces consumers. Instead of communities, it produces shopping malls. The net result is an atomized society of disengaged individuals who feel demoralized and powerless.”

We are a pivotal part of the economic equation and we wake up and go to sleep under the fantastical blanket of freedom, democracy and the American dream. In truth, unf*ckers, we’re not citizens in a democracy. We’re consumers in a corporate system. One that dictates what we see, how we communicate and get by in the world, writes our laws, funds our politicians, and engages in military actions through the auspices of a private network of mercenaries.

Right now, there are thousands of corporations intertwined in a sophisticated technological web that exerts control over our minds and bodies. It’s no longer science fiction to imagine the grand consolidation of these corporate bodies into a handful of massively influential entities serving us packets of food and regaling us with tales of great battles between Oceania, Eurasia and Eastasia.

Don’t worry, I’m not going full Orwell on you here. Just illustrating the fact that we live in a very different system than one that was imagined by Smith, Marx or any other economic theorist. But the theories of these great thinkers still dominate the lexicon of economic language today, so let’s do ourselves the service of using the terminology correctly, if only to learn how to argue against them.

Let’s take a look at Smith’s tenets of a capitalist society and see how we match up.

First off, we should understand some of his less controversial ideas that illustrate how impactful his writings were. He created the concept of GDP, explained how specialization leads to productivity gains by reducing costs and defined the concept of capital in terms of labor and products. Understand that these were monumental concepts that changed economics forever and provide the underpinnings of modern economic theory even today. It’s hard to appreciate the contributions of Smith like it’s hard to appreciate the Beatles if you’re listening to them for the first time today.

Now, most people like to talk about how he is the father of the free market. And, in many ways, it’s true. Smith viewed trade as a way to provide to all according to their needs. A kind of economic prudence or justice that moves goods and services around the world efficiently, depending upon the needs of those on both sides of a transaction. I need a tool, you need food. We both win.

The idea of equity was central to his calculation of building a just society, which is the part modern capitalists forget. Smith believed that any impediment to these parties finding one another efficiently was destructive. So...free markets. And because direct trade is not always feasible, a commercial system that creates equitable understood value—currency we all acknowledge as a third party value—can facilitate trade. Knowing this, how do you think Smith would characterize our system of trade today?

At first glance, he would be floored by the movement of goods around the world. For that matter, I imagine he would also be pretty pumped about shitting indoors. He would ask how we price goods to see if it’s fair, and that’s where things would begin to fall apart. Unilateral trade agreements, punitive tariffs, price fixing and fiat currency would bewilder Smith. He would call bullshit immediately on fossil fuel and agriculture subsidies and see our military invasions as the ultimate perversion of the free markets. He would ask us to show our best example of a free market and we would show him Uncle Milton Friedman’s prized Chicago Board of Trade, with its elitist and byzantine set of arcane regulations and impossibly high threshold of entry, and promptly choke on his own tongue.

Yeah, so Smith would instantly recognize that the United States doesn’t operate a free market. We are the market, and bend the rules to do whatever the fuck we want with it.

So what about the rights of the poor and bolstering the working class? Here again, Smith is a complicated cat. On the one hand, there is great evidence in his writing, particularly in his earlier and no less influential work, The Theory of Moral Sentiments, that Smith was suspicious of the monied class and supportive of the poor. Once again, however, it’s important to understand that Smith was an elitist in the spirit of other Enlightenment figures of the time who believed in a moral society that provided for all so long as it was on the terms of the opulent minority. Nevertheless, to quote Smith directly: “No Society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

In The Illusion of Free Markets, a brilliant book by Bernard Harcourt, he calls Adam Smith the ultimate “Rorschach test in the discipline,” saying:

“George Stigler, one of the founders of the Chicago school, presents Smith as a purist who placed rational self-interest and free markets at the very center of his enterprise. Emma Rothschild and Amartya Sen emphasize a kinder, gentler Smith, portraying him as an anti colonialist thinker who opposed monopolies and objected to imperialism. To them, Smith conceived of wealth of nations as the general living condition of all members of society, not just the large property owner. The Smith who argued for taxation of commerce and who opposed unfettered self-interest of merchants.”

In contrast to Marx and Engels in the next century, Smith saw increases in wealth and production as the primary driver of wealth—meaning wage increases—to laborers. And contrary to the cold version of Smith sold to us today, he was suspicious of merchants and landowners. He believed they would share their gains to a certain extent that directly benefited them, but wouldn’t necessarily share the increases in productivity without being compelled to do so.

My take on this is that he believed in “trickle down” to an extent. The better the owner does, the more they will give the laborer to remain competitive. But also inherent in his theory was general competition in a free market would prevent anyone from accumulating massive gains beyond what is reasonable because it would rob the lower classes of capital. Smith would bristle at the amount of wealth possessed by someone like Jeff Bezos, for example. And we’ll talk about why in a moment.

So Smith was more of a socialist? Nope.

As much as Smith was suspicious of the merchant class and believed that labor should benefit from the increased wealth of their proprietors, he was even more suspicious of organized labor. He believed unions, for example, would constrict the movement of labor and prevent others from participating. Smith favored pure competition over unions or apprenticeship. Remember, he was an elitist who didn’t much trust the masses. Very similar to the Founding Fathers and why so much post Enlightenment energy went into protecting the upper class and giving just enough to the lower and working classes to prevent uprising and dissent. That’s the history of America, more than anything. If we understand the fundamentals of his theory and apply a modern lens to them, it’s easy to see why competing versions of Smith and capitalism exist.

So what about the elephant in the room? Ah, yes. Taxes. Interpreting Smith on this matter is, and will forever be, an excellent debate. We know that he was in favor of enriching the merchant class and landowners. On this, he’s clear. And that anything that impedes this process should be stripped away. So it would seem, on the surface, that he would argue for the lowest possible taxation, if any at all.

But Smith also believed government had a legitimate role in promoting and protecting a free market system, and government obviously has a cost. Let’s check the boxes:

• He believed, as did the Founding Fathers, that the government should provide for the common defense of the nation. Check.

• It should preserve property rights. Check. (Disclaimer: These rights only apply to white male property owners and cannot be combined with any other race, gender or ethnicity. Offer expires with the Voting Rights Act. Use only as directed.)

• A government should levy taxes for public works like roads, bridges and canals. Check!

• And taxes to provide free education to young and old regardless of class with a particular emphasis on the arts, because art is a sign of a functioning and healthy society. Ch...Wait. What?

Ooooh. Young and old? Art? And free? Pretty woke shit for a white dude dead a couple hundred years. If you take this in conjunction with his belief that a prosperous working class is the key to a happy society and intertwine this with his theories on morality that made him a household name, it’s evident that Smith is far more of a humanist than modern economic theorists typically ascribe to him.

Smith’s thoughts on morality and capitalism are interesting in that he always sees science, the arts and intellectualism as benefiting from increased wealth and capital. How capital is ultimately distributed from the monied class to the artisans and scientists—without simply classifying them as a voluntary philanthropic endeavor, or what John Mackey calls Conscious Capitalism—isn’t wholly clear. Mackey, for one, shits all over intellectuals and claims they rob society of the urge to innovate, whereas Smith sees funding the arts and intellectuals as a core responsibility of those who benefit from a capitalistic system.

In terms of how much to tax, here’s where the interpretation of Smith gets a bit dicey in modern terms. Smith believed in these four tenets:

1. Taxes should be paid in proportion to the income derived under protection of the state.

2. They should be certain and clear.

3. They should be levied at a convenient time.

4. Taxes should be no more than “necessary.”

This is where interpretation matters. If you look at one of these tenets in isolation, it’s easy to create a favorable argument for every position. John Mackey from Whole Foods would likely zero in on the “no more than necessary” part and try to forget the “paid in proportion to the income they derive under protection of the state.” Why? Because Mackey’s world and that of his new boss Jeff Bezos relies heavily on the state. The roads, canals, bridges, tunnels, barges and airplanes, the price fixing, subsidies, government oversight to ensure our food is safe to eat, the tariffs that punish other countries and make our producers competitive. Or in the case of Bezos and Amazon—the fucking internet itself, the U.S. Post Office for last mile delivery, fuel incentives, tax incentives every time they set down a plant, and so on.

I’ll say this, Smith would look at the current tax environment and laugh his ass off.

Take Amazon again. They paid $0 in federal income taxes in 2017 and 2018 and $162 million in 2019, or an effective rate of 1.2%.

Or how about Aramark, Arrow Electronics, Chevron, Delta Air Lines, Eli Lilly, General Motors, Goodyear, Halliburton, Honeywell, IBM, jetBlue, MGM, Molson Coors, Netflix, Occidental, Owens Corning, Penske Automotive Group, Pitney Bowes, U.S. Steel and Whirlpool? Those are just a few names you might recognize who also didn’t pay taxes in 2018. If these companies paid the statutory 21% federal tax rate, they would owe $16.4 billion in federal income taxes in one year. Instead, they collectively received $4.3 billion in rebates.

That’s $20 billion a year—over lord knows how many years—these companies pocketed that would have otherwise gone into the economy. Instead, they gave the government nothing.

I like to view the writings of our great philosophers in much the way we should view a religious document like the Bible. Written in a specific time and place and for a purpose. Not meant to be taken literally, but to be used as a guide. If you take the Bible literally, you’re allowed to murder family members for some pretty basic infractions. Or you’re not allowed to murder anyone under any circumstances. If you take the Constitution literally, then our perfect union was designed for everyone. Or everyone except women, Native or Black people. If you take Adam Smith literally, you might think the markets are more important than whether people are starving. Or, if you take Smith literally, you might think the point of the free market is precisely to prevent people from starving.

The point is, sometimes it’s important to break from orthodoxy and use our heads.

So what’s the one big takeaway from all this?

Well, apart from hopefully inspiring some light reading on economic theory, there is one belief that undergirds every theory that we hold dear, whether it’s socialism, capitalism, Marxism or one of the dozens of tributary models that stem from them. Every one of them was designed to create a system where no one was left behind and living in abject poverty.

That leaves people like John Mackey in a 'Sophie’s Choice' scenario when defending capitalism. Because if you truly believe we live in a capitalist system, then your system has failed, as nearly 40 million Americans live in poverty. Otherwise you’re forced to admit that what we have today isn’t capitalism. Which is it?

The point is people like John Mackey are defending a system that measures success by technological advancements, production and his personal ability to accumulate wealth rather than population health, education and food security. You’re not defending capitalism, you’re just a fucking monster.

We’re bastardizing these models by measuring the wrong outputs of the system. We like to contrast Adam Smith and François Quesnay, Cesare Beccaria and Jeremy Bentham, Karl Marx and Friedrich Hayek, John Maynard Keynes and Milton Friedman; and they’re important discussions to have because their theories are inexorably linked and have provided various blueprints for economies around the globe for the past 250 years. But most of these theories were attempting to solve the problem of inequality in their own ways.

Today, we’re so obsessed with poverty shaming and protecting the mechanisms of inequality that corporation dollars are protected as free speech. Even the petty arguments we have on television or social media are sorely misguided. None of these theorists would be in favor of the massive accumulation of wealth that we have today. None would support a system that destroys the planet and our fragile ecosystem. None would support invading countries to steal their natural resources and decimate their populations. But most of them would be supportive of free education, funding the arts, healthcare as a right and ensuring a dignified retirement.

Okay, maybe not Milton Friedman, he really was a douchebag.

Here endeth the lesson.