Jobs and "The Death of Capital"

"The Death of Capital" is a book I just finished reading. The author, Michael Lewitt, is a well known hedge fund manager, who gets to see a lot of what's gone wrong with our economy from the inside. He is highly critical of the current state of affairs in our capitalist system, pointing out that what happened in 2008 was all too predictable, given the nature of both capitalism and human proclivities towards greed. Mr. Lewitt is not someone to be taken lightly. He's studied economics at Brown, and also Yale, as well as law at New York University's renowned School of Law.

The essential thesis of the book is that unrestrained capitalism sows the seeds of its own destruction. My own analogy is to liken the situation to a machine that runs out of control. Most equipment operates within a range of values regulated by what's called feedback control. When the operating ranges (speed, voltage, temperature or some other measurable value) are exceeded, the control system kicks in to restore balance by doing something to control the value and set it back on track. Without this process, any machine will run out of control and eventually destroy itself. You know what happens when you overheat something in an oven, or leave the stove on too long. The pot is ruined, dinner is burnt beyond edibility, a fire breaks out, or something equally calamitous occurs.

Well, the same is true of unregulated capitalist behavior. As Lewitt points out so well, when capitalists are not subject to regulation, their natural behavior is to seek more profit in the short term, regardless of the long run consequences. The function of the regulators is to restrain this behavior, so that the capitalist system continues to generate profit and improvement for society as a whole.

We've gotten away from that, with the result that companies have been gutted, jobs lost, lives ruined and our nation up to its eyeballs in debt. It is essential, as Mr. Lewitt points out forcefully, that the US and other governments undertake to properly regulate capitalist behavior, and repair the damage already inflicted upon us. I can't begin to describe all of the detail contained within this book, but I do recommend that everyone find a copy and read it - slowly. Check the extensive reference material if you're unsure of anything he says. This also shows why economics should be taught to every high school student in the country, with Smith, Marx, Keynes and especially Hyman Minsky being required reading for all. If we're to save not only our country, but the entire capitalist system, we have to realize that "later" has arrived.