The trouble with capitalism
OpEdNews / Niloufar Parsi
27-May-2010

once in a while the capitalist system requires a fire, a crisis, to shake it and get rid of the bad fruits, the reckless, and to reward the prudent. But when the crisis rewards the reckless bankers and punishes the rest of society, then a political crisis of legitimacy emanates, and there will be a face-off between economic and political elites, if such a distinction is indeed true.

the capitalist economic system has a central weakness in the concept of 'limited liability' for corporations. so anyone who buys into a corporation has no real responsibility toward the harm that the corporation might do. the profits and losses can be enjoyed by anyone who invests, but the non-financial harm caused is borne by others.

'limited liability' is therefore a political tool not an economic one. it distorts markets because it removes the natural link between 'cause' and 'effect' within economic, social, environmental and political relations.

the company that i manage may make many homeless, engage in slave labour, benefit from gender disparities, destroy the environment or profit from causing war, but this will have no implications for me. i will simply benefit or lose depending on how much profit the company makes.

doing away with the notion of limited liability would make economic activity far riskier, as it would make liability a natural part of the process. as it should be. but instead, the liability is pushed back on consumers, shareholders and taxpaye... >>>

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