AOC is deeply confused about capitalism, socialism, and just about everything else

The progressive firebrand defines capitalism in a way no one actually believes in the 21st century, if ever.  Next, she confuses government power with corporate power, and finally she calls for “alternative ways of doing businesses” which have already been a part of capitalism for generations before demanding even more government control.

“I believe that in a broad sense because when we toss out these big words, capitalism, socialism, they get sensationalized,” progressive firebrand Representative Alexandria Ocasio-Cortez told Yahoo News last week. “And people translate them into meaning things that perhaps they don’t mean. So to me, capitalism at its core, what we’re talking about when we talk about that, is the absolute pursuit of profit at all human, environmental, and social cost. That is what we’re really discussing.”  Rarely, if ever, does a person complete such a trifecta in a single statement, but Ms. Ocasio-Cortez has succeeded in the following:  First, she does precisely what she accuses others of doing, sensationalizing the term.  Next, she actually defines her own straw man clearly and concisely, and then makes it incredibly easy to counter for anyone paying close attention to what she actually said.  Seriously, do you know anyone that defines capitalism as the absolute pursuit of profit at the expense of everything else in the 21st century?  To be sure, I’m not certain anyone ever did, but for the sake of discussion let’s assume that the robber barons in the 19th century were pure free market marauders and pillagers, and her statement would’ve been accurate in 1880.

That, however, was well over a hundred years ago.  Today, it is broadly accepted, and by broadly I mean by an overwhelming percentage of people, that capitalism is rightly subject to a wide range of regulations including worker safety, the environment, financial reporting, product regulations, building codes, hiring and firing standards, to name just a few.  These regulations already exist and many have been in place in some form for 50 years, implemented through what is described as an alphabet soup of agencies, from the Environmental Protection Agency to the Occupational Health and Safety Administration.  There is not a mainstream politician, pundit, or businessperson, or anyone short of the lunatic fringe for that matter, who believes the pursuit of profit justifies child labor, slave labor, dumping toxic waste in rivers, selling unsafe products, making false claims in advertising, filing false financial statements, discriminating against minorizes and the disadvantaged, or anything even close to it.  Literally, no one and I mean no one is making this argument or believes it, however Ms. Ocasio-Cortez chooses to define it.

There are free market conservatives like myself, however, who believe the profit motive is essential to a functioning economy.  On its own, it is neither evil nor good.  It is instead a metric that quantifies the success and health of a company individually, and collectively the success and health of a market sector.  In other words, it is a number, and a very important one at that.  Profit, or more accurately the anticipation of profit, is what pays peoples’ salaries, ensures products are on shelves with new ones in development, enables businesses to hire more people and invest in new equipment, even pursue charitable causes.  Without profit, a business ceases to exist, either cutting back by reducing wages or outright firing people, or going out of business permanently, firing everyone and stiffing all their creditors and investors.  With profit, however, a business grows, pays people better, seeks new people to hire, and launches new service lines.  Every employee in the world should hope their company is profitable and will continue to be so.  The alternative is making less money or making no money at all.

On a broader level, the collective profit of a market sector or an entire industry is essential to determining future investment, helping to drive down prices via competition and grow the economy overall.  If companies are making large profits producing a certain widget, one can be sure other companies will want in on the action, offering different variations of that hypothetical widget, often both better and less expensive at the same time.  This is why the cheapest television set produced in the 1930’s, a 12 inch black and white model, cost a whopping $8,181 in today’s dollars, but anyone can now go on Amazon and order a 40” full color, HD TV for around $200.  That’s 2.4% of the price for over 3 times the size, 18 times the picture quality, and millions more colors.  Profit, or more accurately again, the pursuit of profit, enabled this to happen, as it does in almost every industry, for almost every product.  This is for two reasons:  First, companies maximize their profits both by reducing their costs and growing their sales.  Therefore, companies often opt to pass on any savings to consumers as more affordable products because that usually results in even more sales.  It is better to make $1 in profit and sell a million units than to make $500 and sell 50.  Second, companies compete with one another to make products that are both better and less expensive.  The first TV sets were produced by Telefunken in Germany in 1934.  Today, there are dozens of companies competing in the same market for the same dollars, driving prices down and quality and features up.

Interestingly, this also has the added result of reducing the profit margin overall in a given industry.  Contrary to the insinuations of Ms. Ocasio-Cortez and other progressives, most businesses are not swimming in their ill-gotten gains, storing their money in huge vaults where rich people have tea and bask in the glow.  Rather, they operate on a very small margin, both of profit and of error.  According to data compiled by New York University’s Stern School of Business, automotive and truck manufacturers averaged a 3.96% profit margin in 2021.  Auto parts were even lower at 1.34%.  Food processors racked up 8.4% while food distributors eked out only .69%.  Computer and tech companies generally perform better, but even then services were at 3.42%, while computer and peripheral makers at 18.72%.  Electronics as a whole is down at 7.08%.  The much maligned oil and gas companies were even lower depending on the sector, from .92% to 5.19% for distributors.  Retailers were at 2.65%; groceries at 1.11%.  Overall, rarely is any industry over 10%, though a few computer affiliated industries like software do rise to close to 30%.  Call me an irredeemable capitalist, but if the relentless pursuit of profit results in Walmart raking in less than three pennies on every dollar in exchange for the ability to buy thousands of household products in person and online at the lowest prices available, I’m fine with it.  Of course, the real question for Ms. Ocasio-Cortez is:  What metric does she propose other than profit that would provide this useful a measurement?

Nor was she quite finished propping straw men she herself defines in her own statements.  “They can control massive markets that they dictate and can capture governments,” she continued.  “And they can essentially have power over the many. And to me that is not a redeemable system for us to be able to participate in for the prosperity and peace for the vast majority of people.”  Here, Ms. Ocasio-Cortez is intentionally confusing two completely separate issues, the influence of large companies on the political process and the power of government.  Central to the capitalist system is competition, but you can only unleash the benefits of competition when the exchange is entirely voluntary.  No company exercises direct power or authority over you in the way she suggests, hiding behind the word “essentially.”  You can and often do take your business somewhere else for any reason you see fit.  To be sure, there are certain markets where a handful of companies dominate, but there are none that I am aware of without alternatives.  If you don’t like Google, choose Microsoft.  If you don’t like Apple, choose Samsung.  Social media might be a possible exception, but neither is it necessary to anyone’s survival.  If you don’t like Facebook, don’t use it, period.

It is true that large companies seek to influence and exert power over the operations of government, but this is because governments allow them to do precisely that.  The corporations are not exercising “power over the many” by any direct means, nor can they. The government is the only organization that has that authority, and they often put it up for sale, sadly.  Regardless, blaming the corporations is precisely backward:  They are as entitled to protect their interests as anyone else.  If a politician is going to take their money to do their bidding, it’s the politician’s fault.  The concern for power being exercised by the few over the many is also ironic coming from a progressive that has supported every conceivable pandemic restriction, in many cases funneling money to large corporations like Pfizer, who has made billions throughout this ordeal.  It’s almost like she’s fine with exerting power she agrees with.  Thus, Ms. Ocasio-Cortez has supported every conceivable expansion of government, voting to give her and her colleagues more centralized authority at every turn.  Next, she asserts that capitalism has failed to provide “prosperity and peace for the vast majority of people.”  How did she arrive at that conclusion?  We live in the most prosperous and peaceful age in the history of the known universe.  The average person, rich or poor, has access to conveniences and necessities that would make a French emperor blush.  Things that were inconceivable to the richest of the rich less than a hundred years ago are literally in our pocket right now.  No system is perfect.  The question is:  What system produces the most peace and prosperity for the most people?

The Congresswoman’s confusion over systems like capitalism and socialism doesn’t end there either.  She continues to imagine “alternative ways of doing business,” noting that “free markets are not the same as capitalism” without really explaining the difference.  Then, she concludes “You can have markets where businesses and ways of producing, trading, selling goods are really controlled and not just controlled but giving more power to workers.  People get a fair shake. Union jobs, unionized workplaces, all of these are different steps and levels that we’re talking about in a more just economy.”  This is true, of course, but it’s also completely compatible with capitalism.  There is nothing in a capitalist system that prevents workers from organizing to make their voices heard.  The first labor union in the United States was founded in 1794, the Federal Society of the Journeymen Cordwainers, another term for shoemakers, almost 25 years before Karl Marx was born.  The Mechanics Union of Trade Associations followed in 1827; the Typographical Union in 1852; the National Labor Union in 1866.  This was all before Marx published Capital, making it clear that socialism isn’t required for robust labor unions.

In addition, capitalism supports a near endless variety of ownership models and ways of doing business.  There are privately held companies and employee owned companies, public companies and partnerships.  Currently, pension funds have over $35 trillion invested in the capitalist system including investments in publicly traded companies.  In fact, publicly traded companies allow anyone to buy shares, growing their own wealth and better participating in the economy.  All of this exists right now in a system Ms. Ocasio-Cortez insists isn’t “redeemable.”  The question is:  Why not?  The answer, she alludes to when she says “selling goods are really controlled.”  Once again, she fails to specifically define that clause, but it is hard to read it as anything other than a desire for even more government control, in other words control she would exercise as a member of the government.  Given the confusion we’ve found in a single interview, does anyone believe either she or other members of Congress are capable of such a thing?


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