HOW

NOTE:  This page is  a work in progress; as we develop new insights and learn how to say things more clearly we'll edit it.

 

Talking Capitalism is about people talking to each other about how capitalism plays out in their lives.  Anyone can talk about it because we all live in it and interact with it in many ways every day

 

We all know about having a job, getting a paycheck, paying the bills and taxes, trying to take care of the kids, preparing for the future and trying to get ahead. You don't need any special training or education, you don't have to be "good with numbers" or be a business person. 

 

This is what makes the conversation so interesting:  we're all experts on our own capitalism.  And we know we're "in" it and that it's important, somehow.  But we aren't used to talking about it and because we sort of don't even really know what it is we may feel intimidated about talking about it.  In addition, because some key pieces of capitalism (work, pay, etc.) affect very personal parts of our lives it can feel uncomfortable to talk about it.

DEMOCRACY

Ariselis Sanchez, Central CT State University student 9/5/18

Business

(produce VALUE)

Capital

Profit

Taxes

Pay

 High

Please ignore differently shaped arrows - limits of the software

Low

Government

The diagram summarizes the relationships between key pieces of capitalism:  businesses create VALUE, using resources (or "inputs"), adncombine them in some way and produce something new of greater value: pizzas, cars, movies, financial services...

In order to create value businesses need CAPITAL.  Capital is a special kind of money: it is money that is used to make more money.  It is not the money you have in your bank account to pay the rent.  Capital is the same as "investment".  Businesses use capital to buy equipment and materials, pay rent and hire employees.  In exchange, people who invest capital receive PROFIT. 

Businesses also need people to do WORK.  In exchange for doing work people receive pay (or wages, a salary, sometimes benefits).  Sometimes pay is HIGH and sometimes it's LOW.  Most people in the U.S. (and world) rely on their pay to buy the things we need to survive.

Businesses also pay TAXES to the GOVERNMENT.  In exchange the government provides a legal system, education, roads, bridges, and many other services that make it possible to make value.

Work

What about democracy?

In the Talking Capitalism diagram "DEMOCRACY" appears above the boxes and arrows of business.  We see the business of capitalism operating (in the United States) under an umbrella (see messy diagram on the blackboard in image, below) of democracy. 

 

In a democracy, ordinary people, participating through systems of civic discussion, collaboration and representations are understood to be the most effective and desirable authority to make decisions about the political and economic systems. 

 

Government is not the same thing as democracy; it is the mechanisms created by the democracy to implement its plans and enforce its values.  The government (the offices and institutions) gets its power to collect taxes and enforce laws and the responsibility to provide public services (education, infrastructure, defense, legal system, etc.) from the democracy. 

 

In terms of capitalism, business is under the protection and the supervision of the democracy.  We can see this in everyday life: if I want to open a business I have to apply to the government for licenses, incorporation papers, etc.  I have to file certain financial and other reporting documents.  I have to follow certain laws regarding employing people, building standards, waste disposal, etc.. 

Often, when business people talk about government they focus on the burdensome aspects: the paperwork, regulatory requirements and, certainly, the taxes.  Sometimes the benefits business receives from government are overlooked.  But business relies on the government to provide important goods and services which no private organization is eager to make the investment to provide: roads and bridges to transport goods and people, regulators to ensure food, drugs and building materials suppliers sell are safe, a legal system to enforce contracts, a basic educational system that helps - among other things - to prepare people to be effective workers and entrepreneurs, etc. 

 

One way to highlight the importance to business of democratically controlled government is to look at situations where it is absent.  In some countries the government is not controlled by the democratic power of the people or does not have the authority or resources to collect taxes.  In such places the ability to operate a successful business suffers: the roads aren't paved, the meat isn't inspected, the courts don't enforce contracts and people aren't educated.  And, importantly, where people don't feel their government represents them there can also be political unrest. 

Of course, business owners can make lots of profit in situations where there the government is not controlled by a democracy and where government does not exercise effective supervision of business.  But that becomes a different kind of capitalism than the ideal we tend to embrace in the United States today, a capitalism that doesn't pretend to be good for the majority of people.

Sarah Stookey, talking capitalism, CCSU 9/5/18

note DEMOCRACY umbrella over business

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