By now, it should not be all that surprising when Rep. Alexandria Ocasio-Cortez (D-NY) bashes capitalism and shows her socialist sympathies. After all, AOC is a self-avowed democratic socialist and one of the most anti-free-market members of Congress.
However, her latest inane rant against capitalism demonstrates two things: AOC does not understand the most basic elements of capitalism and she has more in common with billionaire bankers than you might think.
In a recent interview with Andy Serwer, AOC pontificated that “capitalism at its core … is the absolute pursuit of profit at all human, environmental, and social cost.”
Actually, capitalism, at its core, according to Investopedia, “is an economic system in which private individuals or businesses own capital goods. The production of goods and services is based on supply and demand in the general market—known as a market economy—rather than through central planning—known as a planned economy or command economy.”
AOC, who graduated from Boston University with a degree in economics, also believes capitalism is “irredeemable.”
According to AOC, “And what we’re also discussing is the ability for a very small group of actual capitalists– and that is people who have so much money that their money makes money, and they don’t have to work. And they can control industry. They can control our energy sources.”
She continued, “They can control our labor. They can control massive markets that they dictate and can capture governments. 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.”
To begin with, it sounds like AOC is confusing capitalism with socialism.
In a free-market capitalist system, not the current crony-capitalist system we are operating under, it is nearly impossible for a “small group” to control industry, energy sources, labor, etc.
Unbeknownst to AOC, a truly free-market system rewards businesses that produce goods and services that customers desire for a fair price. This is called a system based on voluntary exchange and it is exclusive to capitalism.
Moreover, despite AOC’s contention that capitalism and “control” go hand in hand, the opposite is true. In a classical capitalist economy, businesses, no matter how large they become, are not capable of exerting or exercising excessive control over customers, labor, markets, or the government because competition and innovation are constantly lurking and disrupting the status quo.
Some call this creative destruction. But the point is that in a truly free-market economy, predicated on shareholder capitalism, the laws of supply and demand always triumph.
Yet, AOC is among many who are calling for the end to shareholder capitalism.
Even though shareholder capitalism has lifted billions from abject poverty and created more wealth and a higher standard of living than any other economic system ever implemented, AOC and elites are all-in on stakeholder capitalism.
Consider the following Q and A:
Andy Serwer: “So people talk about stakeholder capitalism like Larry Fink at BlackRock where the weighting for different constituents besides shareholders is more equal. Is that something you’d be amenable to?”
AOC: “Well, I think at the end of the day, it is about who has control over the very core assets of production and society. … Now, these are alternative ways of doing business. Free markets are not the same thing as capitalism. And 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.”
In other words, AOC is saying that shareholder capitalism, wherein consumers steer the market based on their desires for goods and services and businesses profit by delivering goods and services to their customers at a fair price, is outdated and ought to be replaced by stakeholder capitalism.
But, stakeholder capitalism is a nebulous term that means many things to many people. For some, stakeholder capitalism means corporations should address climate change. For others, like AOC and Sen. Elizabeth Warren (D-MA), it means, “workers being elected to the governing boards of companies.”
Stakeholder capitalism may seem innocuous, but it is far from it. In a stakeholder capitalism world, the government would wield immense control over corporations. What’s more, in a stakeholder capitalism economy, mega corporations have a huge advantage compared to mom-and-pop businesses.
Perhaps this is why socialists like AOC and billionaire bankers like Larry Fink, whose interests rarely align, are both high on stakeholder capitalism. In the end, they get more rich and powerful.