Goldman Sachs asks a fundamental question about capitalism today.


The secular left is not effective at criticizing capitalism. For the same reason that the so-called “conservatives” and Libertarians are at defending it: Both sides make moral arguments that miss the point – e.g. neither show understanding of the express purpose of the American political system.

There are two justifications for capitalism as a system. The Good American Citizen is supposed to accept these criteria – these justifications for our system WHEN THEY ARE OPERATIVE; when they make true claims. These criteria are: One: Capitalism allocates resources in an efficient and fair way. Fairness for this system is defined as, Two: Rewards to individuals high up in the system correlate and are causally related to the efficient allocation of resources. In other words, their actions have some relation to the distribution of wealth throughout society. What this means is that the right makes things up when it says “the individual” has a moral right to “make as much money as he can free of government involvement”. There is no moral reason for economic freedom ever given by our founders or Adam Smith. These two criteria are it. That’s all. The left would do much better if it stuck to our actual principles and showed how capitalism does not live up to them UNLESS there is strong central government. Notice that this position does not hold a moral position separated from practical application of principles. Freedom and equality are not supposed to be treated as moral values.

When Goldman Sachs makes this remark about capitalism, it is saying that these two assumptions are not true right now. A) If this is true, and B) Sanders can make clear both that this is true and C) show how it relates to the American moral value of fairness, he has potential to win the election this year . A, B and C have to hold however.

Here’s the quote:

“Goldman wrote: “We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism.”

Click here for the article.

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