The Popular Capitalist View, No. 16: Where Once Was Capitalism by Carl Peter Klapper

Time was when your family could make something or buy the somethings your neighbors made, hang a sign on the front of your house and enough neighbors and visitors would walk by and step into your mom-and-pop store that you could make a decent living being a “merchant”. You and the other merchants in your town and nearby towns, the ones you could walk to if you didn’t have a horse, would provide enough of a market for can openers or canned goods, that some folks in the area would see an opportunity for a new canned food or can opener. These folks and others could all pitch in their spare cash as a company to buy the metal presses and what not (capital) and pay to employ some of their number or others to use the machinery to make the product which the mom-and-pops would then buy and stock on their shelves. As the mom-and-pop stores sold their product, they would order more to re-stock their shelves and, once this process hit a groove, the company would be paying dividends to the people who pitched in money to buy the company stock. These stockholders would be happy to get a little extra money later which they might otherwise had wasted sooner and, more importantly, to have played a role in starting an enterprise which benefited their communities with productive employment, better products and not a little local pride. Years later, they would be electing the Localsville Canned Beans Queen and holding parades down Main Street celebrating the success story of their local genius.

Time was before planning for the automobile. With the automobile-based development, or sprawl, came the demise of the mom-and-pop stores upon which the entire structure of capitalism was based. Hardly anybody walks from their house to the store anymore and, if you tried to sell anything from your house today, you would be cited for a zoning violation. Your neighbors deserted the local stores when the national stores started opening up branches “convenient” to the highway. Some of the national chains moved into the vacated storefronts, got the town to knock down some other houses with storefronts, and to seize the backyards by eminent domain so they could put up a parking lot to “serve” Main Street. The local manufacturing companies got fewer orders, none from the national retail chains, of course. As those companies failed, the remaining local stores started stocking fewer local items, until you couldn’t tell the difference between the mom-and-pops and the chains. The only real difference was the mom-and-pops were less convenient to the automobile driver. The mom-and-pops become denigrated even as they try to conform to sprawl. People actually talk about a new chain store opening up as if that was something to be proud of. At that point, capitalism is dead in their town. To be certain, there are, here and there, some vestiges of capitalism left, though they may strike us as unremarkable. It was always misleading to characterize capitalism as a road to unfathomable riches. People confuse it with debt and global mercantilism, with the creditor sultans oppressing their people, which is very much in evidence.

The Localsville Canned Beans company was bought up by investors from out-of-town using borrowed money — it was purchased in a leveraged buyout by General Foods — and General Foods now grows and cans the Localsville Canned Beans in South America. The plant is closed and the people in Localsville, those who are left, now work and shop in the Walmart down Highway 666. They had to cancel the parade this year. They didn’t choose a Localsville Canned Beans Queen, either.

Copyright © 2011 by C. P. Klapper

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A Corporation is not A Person, A Home is not An Investment – Carl Peter Klapper

The Popular Capitalist View

There is a lot of confusion in our business world about what is or is not personal which seems, to this observer, designed to misplace our sympathies.  A deliberate legal fiction that a corporation be treated like a person, so that it gain some benefit thereby, has been accepted as fact. Glib sales talk, intended to make a high price for a house more palatable, is taken as the gospel truth.  But beyond the initial trickery is the molding of our minds and hearts to endorse, in the same breath, compassion for the dear, old corporation in dire straits who may be left out in the proverbial cold without a few, small billions of dollars and callous disregard for real people who will be left out in the real cold because their home is in a house for which some investments have soured.

To be sure, the patent absurdity of both situations becomes briefly apparent to even the talking heads on television.  But then the corporation and the home dweller are colored in the tones of hero and villain, respectively, so that the public compassion, which believes everything it sees and hears on television, can continue to be misplaced.  The corporation is an industrial giant with millions of employees who will lose their jobs and, it is assumed, all chance for future income if it fails.  Or the corporation is a financial conglomerate which will lose the pensions of millions of widows and orphans if their investments sour, of course through no fault of their own.  These true-blue American multinational conglomerates are neighbors in need of our help.  At the other end of the melodramatic chasm lies the evil homeowner who has greedily bought a million dollar home, which we assume is more spacious and luxurious than a two bedroom condo.  This sinister foreigner, whose family illegally entered the country in 1848, does not have the income to support his extravagant lifestyle.  Certainly, he has misrepresented his finances and fabricated documents to support his perjury because the loan officer would not have otherwise extended a mortgage to someone so manifestly unqualified.  So our beloved television news, minions to the financial-political complex, breathe a sigh of relief as trillions of tax dollars are given to personified companies while dehumanized people are victimized by those same companies.

These things ought not to be.  More hopefully, we can make sure that they no longer happen by striking at their hearts with the stake of truth.  Both falsehoods should be stricken down, but I have already addressed the second in a previous article somewhat by advocating Adjustable Equity Mortgages so that the purchase of a house to serve as a home does not become a tool of speculation.  For the rest we will focus on the first fiction.

A corporation is a government, not a person.  Consider the operation of a corporation compared to that of a government on one hand and a person on the other.  A corporation has laws, which they call “bylaws”.  A government has laws, but a person does not.  A corporation is owned by stockholders who vote on various matters and sometimes for leaders, such as board members.  A government is owned by its citizens who vote on various matters and sometimes for leaders, such as members of a legislative council.  Persons are just themselves and if they have to take a vote to decide matters we admit them to a psychiatric hospital.  A corporation has paid servants, who are called “employees” who do the business of the corporation.  A government has civil servants who do the business of government.  A person may hire a domestic, if they are wealthy enough, but the domestic is doing the other stuff that gets in the way of the person doing their business.  A corporation can continue well beyond the life of any one officer, stockholder or employee.  A government can continue well beyond the life of any one officer, citizen or civil servant.  A person continues just as far as their life, no more, no less.  It should be fairly clear from the foregoing that a corporation is indeed a government and not a person.

Since a corporation is a government, it is necessarily in conflict with other governments, both other corporations as well as the governments of the people.  As Adam Smith pointed out in “The Wealth of Nations”, companies should be in conflict with each other:

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.

— Adam Smith, “The Wealth of Nations”, Book I, Chapter X

However, as a corporation grows in size it engages in such conversations regularly within itself.  And as it grows in scope beyond that of a public government, it is able to implement those conspiracies with impunity.  It must be pointed out that the nature of contrivances is a bit broader than Smith described.  The goal, after all, is profits and the price of the product sold is only half of the equation.  The other half is the price of the resources used to manufacture that product.  It is that other half that has been used by large corporations whose scope extends beyond the jurisdiction of public governments to eliminate competing companies with more limited scope.  For example, cheap labor in another state or another country can be used to drive out local competition with prices that would leave no profit for any company using only local labor.  Because the multi-state company is not under the jurisdiction of a single state, it is able to play one state off of another in offering employment and income to its people and thus become a government more powerful than the governments elected by the people.  As such, they pose a threat to the people and their liberty and power much greater than that posed by their state government.  The popular capitalist, in seeking power to the people first and then, as necessary, to smaller, local governments more under their control, opposes these multi-state corporations as a usurpation of power.

Many have pointed out a similar problem with multinational corporations and have railed against them for decades.  However, their attempts to curb those greater powers have been in vain.  It seems clear to me that their failure is in attempting to control multinational governments with national governments.  Similarly, attempts to control multi-state governments with state governments will come to naught.  The best tactic is not to control them, but to exclude them.  Rather than placing regulations on all companies doing business in the state or require certain benefits or impose additional taxes to ensure that the multi-state corporations are “good citizens” — and thus fall into the personification trap – we should only allow corporations which are registered in the state to operate within the state.  If the products of an out-of-state corporation are so superior or so inexpensive to produce, they will remain so as imports, but they will not be assured of a lack of competition in the state.  And with respect to retailers, whom we used  to call “merchants”, we have no use for out-of-state corporations.  Many a capitalist entrepreneur has started as a merchant who saw an opportunity in a new idea or product.  That is the type of capitalist we would like every citizen to become or ally themselves with as a capitalist investing in their new venture.  Not from the national big-box, but from the local corner store comes the popular capitalists.

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