Post No. 45: Capitalism and Its Discontents

INTRODUCTION

I was stimulated to write this blog by the May 17, 2025 car bombing of a fertility clinic in Palm Springs, California.  The bomber’s manifesto, loosely connected to the anti-natalist movement, revealed extremist views such as “sterilizing the planet of the disease of life” and rejection of traditional values.  There are a number of other extremist groups that overlap with one thing in common: anti-capitalism.  In addition there has been a turn toward anti-capitalist sentiment in some circles, even by some in American universities, including faculty and students.  Fortunately, these are not widespread and the discussions about the ills of capitalism in these universities may, perhaps, lead to creative ideas for reform.  This post is intended to give you a sense of why capitalism is the best game in town, and why reform of capitalism is very much needed.

Note: Appendix 1 provides short descriptions of some of the extremist groups, and Appendix 2 provides examples of some university courses and activities associated with anti-capitalism.

CAPITALISM NOW HAS COMPETITION

There was a brief time not long ago when it seemed there was no alternative to capitalism.  When the Soviet Union and communism fell in 1989, the historian Francis Fukuyama wrote a much publicized essay, “The End of History”.  His main thesis was that with the fall of communism there were no viable competitors to liberal democracy coupled with capitalism.  He argued that democracy coupled with capitalism was the most widely adopted form of government and that it satisfies both economic needs and human desires for freedom and recognition.  With no competing ideologies, there will be no more wars.  Hence the “End of History”.   Thirty five years later, it’s not so clear.  Communist China has become a major economic and military competitor, and some Western countries have become more authoritarian.

OUTCOMES OF CAPITALIST REVOLUTION

Communism, like extremist groups today, hoped to eradicate suffering caused by capitalism.  With communism it was the suffering of the workers, the proletariat.  Communism was enacted on a large scale in the Soviet Union and China.  What are/were the outcomes?  The first clear result is the ending of democracy and free speech.  Also the rise of a huge central bureaucracy including  repressive intelligence agencies, such as the KGB in Russia and the Stasi in Germany during the communist era.  In China, today, the Ministry of State Security has instituted a Social Credit System that monitors citizens through facial recognition, AI and data aggregation.  They assign scores based on compliance with laws and social norms, and loyalty to the CCP.  An example from the somewhat recent past of the power of the Chinese government is their “One Child” policy that was enforced on its citizens from 1979 to 2015.  During the Soviet era people lived more equally and the State ensured that they had basic, though sparse, living accommodations.  Citizens in China are doing significantly better now because the government has embraced capitalism since about the early 1980s, under State supervision, and their economy has boomed.  But that is not all that has happened in these countries that wanted to eliminate democracy, and especially capitalism, because they were compassionate and wanted to eliminate the suffering of workers.  The number of people murdered during purges, particularly under Stalin and Mao, is staggering.  The number ranges from 20 million to an unbelievable 60 million if all communist countries throughout the world are included (Wikipedia article: Mass killings under communist regimes).  Not a good outcome for the world.

OUTCOMES OF CAPITALISM

Capitalism has led to tremendous strides in reducing poverty, defined as income below a level to meet basic needs.  For example, it is estimated that poverty in 1900 was well over 50%, and in 2023 was 11.1%, according to the government’s Supplemental Poverty Measure.  These changes were driven by economic growth and policy interventions that were made possible by a growing capitalist economy.  China also made great strides in reducing poverty; but only after they adopted a capitalist economy.  If like me, you think that reforms within capitalism are preferable to throwing the baby out with the bathwater, what are some actions that could be taken?

REFORM IS POSSIBLE

In the early 1900’s when social revolutionaries were organized (mostly in Europe) and actively searching for an end to capitalism and democracy, significant reforms began in the United States under a Republican president, Teddy Roosevelt (see martinsblogs.com Post Number 36).  He was able to push through legislation that limited the monopoly power of big industry, created new labor protections, and consumer protections most notably through a newly-formed Food and Drug Agency.  Although the big industrialists of that time contributed major improvements for society, they often misused their power to consolidate their monopolistic positions and take advantage of their powerless workers.  Some examples are John D. Rockefeller (oil), Andrew Carnegie (steel), Cornelius Vanderbilt (railroads and shipping), and Henry Ford (automobiles and the assembly line).  Teddy Roosevelt took his “big stick” to strike down some of their excesses.

WHY REFORM IS NEEDED:  THE WEALTH GAP AND THE DEFICIT.

Reform is needed for two reasons: the widening wealth gap, and the ever-increasing deficit and interest on debt.  Interest on debt is now about 18% of total federal revenues.  It exceeds the military budget.  This is unsustainable for a functioning government.

Some say the wealth gap isn’t necessarily a problem.  After all, 10% of earners pay about 76% of total federal taxes.  The bottom 10% pay virtually nothing or get tax credits.  When the economy grows, the wealthy make more money, as well as most earners, and tax revenues increase.  It’s important to keep the economy growing and to incentivize innovators who grow the economy.  Conversely, during recessions and financial crises, the economy slows, tax revenues plummet, and everybody suffers.

But the wealth gap (and taxation) is about the perception of fairness.  A main reason for the American Revolution was that the colonists thought taxes, and the way they were imposed by England, were unfair.  This perception of unfairness was acute during the early 1900’s when Teddy Roosevelt made the reforms described earlier in this post.  There were also limited reforms in Europe, but none in Russia.  We all know what happened in Russia in 1917: the communists overthrew the government.  Reforming capitalism helps keep extremists away.  John Locke wrote in his Second Treatise on Government (See martinsblogs.com post no. 39) that governments have an obligation to secure the public good, which includes ensuring economic stability.

The wealth gap is increasingly being seen as obscene, and eroding confidence by many in the fairness of the government. It is corrosive to our system when, for example, struggling wage earners are not able to travel to NYC to see a Yankees game while the wealthy can enjoy the game in luxury boxes removed from the commoners in the stands.  Likewise for income earners who feel owning a house is out of their range while the wealthy can afford several mega-mansions.  Many workers with little savings worry that a health mishap would leave them homeless.

If the wealth gap were shrinking, there would be less of a problem.  But the gap is increasing and has increased substantially since 1983, based on data from the Federal Reserve’s Survey of Consumer Finances (SCF).  Comparing SCF data available from 1983 to 2022, the wealth gap widened with the top ten percent’s share increasing from 68% to 76%, and the bottom fifty percent’s share dropping from 3.6% to 2%.  There is also a huge wealth gap between White Americans and African Americans, which has changed little since 1983.  This adds to the perception of unfairness.

WHY HAS THE WEALTH GAP WIDENED?

IT TOOK OFF UNDER PRESIDENT REAGAN: Ronald Reagan left office in 1989.  The top marginal tax rate was reduced from 70 percent when he entered office to 28 percent when he left.  That means that the top earners paid considerably less than half in taxes for the same earnings of what they were paying when Reagan came to office.  His same tax reforms also increased payroll taxes which disproportionately hurt workers’ income and the middle class.  These changes did give a boost to the economy which helped all citizens.  From the standpoint of the wealth gap, this was anti-reform, and it supercharged the growing wealth gap.

TAX REFORM ACT IN 2017:  The tax reform package in 2017 has a mixed result in narrowing the wealth gap.  Low income earners received a larger percentage reduction in their tax brackets than the wealthy.  For example, for a single filer taking the standard deduction earning $70,000, the effective tax rate is lower by 6.37 percentage points due to 2017 tax reform.  For the same single filer making $500,000, the effective tax rate is lower by only 2.28 percentage points. Even though the wealthier filer gets less relief on a percentage basis, he benefits more in absolute dollars and also pays much more in taxes.  See Appendix 3 for a summary of tax changes under the 2017 tax reform act.

Under 2017 tax reform, the standard deduction and the child tax credit were both doubled, giving significant tax relief to many middle and low income earners.  The wealthy were also dinged on the changes to the SALT deduction, which limited total state and local taxes to a maximum of $10,000. This increased the tax burden for many high earners, especially in high tax states.  The change to the corporate tax rate, which was reduced from 35% to 21%, was a boost to the economy and the stock market.   A rising economy and stock market disproportionately favors the wealthy although it helps everyone.  The impact of these tax reforms on the wealth gap, therefore, is very mixed. 

The takeaway from these numbers is that the major increase in the wealth gap started under President Reagan’s massive drop in tax revenue from the wealthy.  This helped the economy, but it started a dangerous widening of the wealth gap.  The deficit ballooned under under President Reagan’s tax changes and the 2017 tax reform act.  Real reform is needed now that addresses both the wealth gap and the rising deficit.

IDEAS FOR REFORM

I suggest six main areas of focus to reduce the wealth gap and the deficit.

ONE: Tax reform

TWO:  Curb the use of leveraged financial instruments for the sole purpose of accumulating wealth

THREE:  Policies to make housing more affordable

FOUR:  Improve access to and cost of health care

FIVE:  Policies to increase better paying lower and middle class jobs

SIX:  Reduce the bureaucracy and make the government more efficient

Regarding tax reform, here are a few ideas that may help, if implemented:

1. Simplify tax regulations and eliminate tax loopholes for the wealthy.

2. Increase (even more) the capital gains tax from stock market gains for personal incomes over a certain amount.

3. Consider a tax on leveraged transactions such as options and futures that are not part of a legitimate business strategy, such as airline companies hedging on the price of jet fuel.

4. Eliminate ways of avoiding the estate tax for the wealthy.

5. Create two new tax brackets with higher rates: Incomes between $500,000 and a million, and incomes over one million.

A main reason for the growing wealth gap has been oversized gains by the wealthy from the stock market.  Incredible minds have scoured ways of taking advantage of the stock market system to benefit themselves and their wealthy customers.  Hedge funds are built specifically for this purpose. This is one of the main reasons for the vast wealth gap that now exists.  The use of options and futures should be restricted to legitimate business purposes (companies that need to hedge, such as farmers, airlines, oil companies and many more).  If this becomes politically unfeasible, then strongly tax these leveraged transactions.

CONCLUSION

Democracy coupled with capitalism is the best system of government, and we should definitely keep it!  Shout out to Adam Smith and John Locke.

It is the responsibility of any government to ensure economic stability.  We currently have a problem with a rising wealth gap, and ever-increasing deficits whose interest payments are taking a huge chunk (18%) of our annual revenue.  Both problems are unsustainable and reform is clearly needed.  As our country has done in the past, we will rise to make the necessary reforms … eventually.  Our main task as citizens is to elect the right people to do the job.  I could give you my opinions, but then I would have to go into politics.  Despite a comment by one of my readers, martinsblogs.com has not been about about politics, only policy and other areas of interest.

So what say you? … is reform needed? … what are your ideas? … share this post … write your representatives.

APPENDIX 1: Other Extremist Groups:

The fertility clinic bomber was not alone in his extremist ideology that blames capitalism for the problems of society.  Here is a sampling of what is out there, mostly in cyberspace, but some are small organized groups. The Anti-Natalist movement believes that being born human brings suffering, therefore people should not have children. The Voluntary Human Extinction Movement (VHEMT) advocates for people to abstain from reproduction so that mankind gradually goes extinct.  VHEMT’s focus is on the environment and the harm that humans cause.  Extreme animal rights movements have a different approach but agree on the harms caused by humans and capitalism.  The Animal Liberation Front (ALF) is one example.  Primitivism advocates for a return to pre-industrial society, even to the hunter-gatherer stage of human existence.  They argue that the wealth disparities of capitalism and the hierarchical system in industrial society cause human suffering.  They believe the hunter gatherers had none of these.  Ted Kaczynski, the infamous “unabomber” sent bombs in the mail to people he thought were advancing modern technology.  He was a primitivist and wanted society to go back to pre-industrial times.  Extreme environmental movements have some overlap but all advocate against capitalism.  Examples are the Earth Liberation Front (ELF), Extinction Rebellion (XR) and Deep Green Resistance (DGR).  Extreme Eco-Feminism advocates for a cultural rejection of capitalism that they see as exploiting both women and nature.

APPENDIX 2: AI RESPONSE TO “EXAMPLES OF UNIVERSITY ANTI-CAPITALIST SENTIMENT”

Anti-capitalist activities and actions at top U.S. universities often manifest as student-led protests, academic courses, and activism targeting institutional practices perceived as tied to capitalist systems. Below are examples drawn from various sources, focusing on activities at prestigious institutions like those in the Ivy League, UC system, and other top-ranked universities. These examples reflect a mix of direct activism, academic engagement, and institutional critique, often intersecting with broader social justice movements.

### 1. Academic Courses and Curricula

   - Middlebury College: Anti-Capitalist Feminism and Economics of Discrimination

     Middlebury offers courses like “AMST 0269: Beyond Intersectionality: Developing Anti-Racist and Anti-Capitalist Feminisms” and “ECON 0405: Economics of Discrimination.” These courses critically examine capitalism’s role in perpetuating inequality, encouraging students to explore alternatives like socialism or cooperative economic models.[](https://blessingsthroughaction.org/christian-national-news/50-college-courses-that-show-americas-students-indoctrinated-into-socialism/)

   - University of Minnesota: Marxist and Social Justice Courses

     The University of Minnesota offers courses such as “CSCL 3405: Marx for Today” and “AFRO 1917: Inequality and the American Dream,” which explicitly engage with Marxist critiques of capitalism and explore systemic inequalities in wealth distribution. These courses foster anti-capitalist thought by analyzing how capitalist structures exacerbate social and economic disparities.[](https://blessingsthroughaction.org/christian-national-news/50-college-courses-that-show-americas-students-indoctrinated-into-socialism/)

   - University of Iowa: Social Justice Education

     Courses like “GWSS 1005: Introduction to Social Justice” and “GWSS 2045: Working for Social Justice” at the University of Iowa encourage students to critique capitalist systems and advocate for collective, egalitarian alternatives. These curricula often frame capitalism as a driver of social injustice, promoting activism as a response.[](https://blessingsthroughaction.org/christian-national-news/50-college-courses-that-show-americas-students-indoctrinated-into-socialism/)

### 2. Student Protests and Divestment Campaigns

   - UCLA: Protests Against Endowment Investments

     In March 2025, students at UCLA mobilized outside a UC Regents meeting to protest the University of California’s $180 billion endowment, specifically its investments in the "war machine" and industries accused of profiting from genocide. The rally demanded transparency and divestment from companies tied to military-industrial complexes, reflecting anti-capitalist sentiment against profit-driven war economies.

   - Cornell University: Fossil Fuel Divestment Protests

     On May 24, 2025, members of Cornell on Fire and Scientists Rebellion staged a protest at Cornell University, targeting the university’s ties to the fossil fuel industry. They vandalized a statue of the university’s founder, chanting “You deserve a fossil-free degree,” as part of a broader push for divestment from fossil fuel companies, which they view as emblematic of capitalist environmental exploitation.

   - Columbia University: Anti-Corporate Protests

     In recent years, Columbia students have organized protests against the university’s financial ties to corporations like Amazon, accused of labor exploitation and tax avoidance. These actions often frame corporate partnerships as prioritizing profit over social good, aligning with anti-capitalist critiques of institutional complicity in neoliberalism.

### 3. Broader Anti-Capitalist Sentiment in Academia

   - Influence of Marxist Scholarship

     Since the 1960s, universities like UC Berkeley and Columbia have seen a resurgence of Marxist scholarship, particularly in humanities and social sciences, driven by campus radicalism tied to anti-war and civil rights movements. These academic efforts critique capitalism’s role in social class dynamics and U.S. foreign policy, fostering anti-capitalist ideologies among students.[](https://www.nakedcapitalism.com/2017/02/universities-increasingly-choosing-capitalism-education.html)[](https://www.alternet.org/2017/01/capitalist-university-book-henry-heller)

   - Critical Theory and Postmodern Critiques

     The Frankfurt School’s critical theory, influential at universities like NYU and Columbia, has inspired anti-capitalist thought by examining how capitalism reinforces power dynamics. Courses drawing on thinkers like Herbert Marcuse and Michel Foucault encourage students to question capitalist structures and advocate for alternative systems.[](https://en.wikipedia.org/wiki/Anti-capitalism)

### Context and Analysis

These activities reflect a broader trend where students and faculty at top universities critique capitalism’s role in environmental degradation, wealth inequality, and institutional priorities. Surveys indicate that college campuses often foster more positive views of socialism than capitalism, with 27% of students reporting a more positive view of socialism due to college experiences, compared to only 8% for capitalism. This shift is partly attributed to the dominance of progressive faculty, with liberal professors outnumbering conservatives 12 to 1 in some institutions, shaping curricula and campus culture.[](https://www.newsweek.com/college-kids-dont-understand-socialism-capitalism-our-research-proves-it-opinion-1608876)[](https://www.forbes.com/sites/rainerzitelmann/2020/02/16/anti-capitalism-on-us-university-campuses-the-culture-war-is-fought-dirty/)

However, these actions are not without controversy. Critics argue that such activism can oversimplify complex economic systems or promote ideological conformity. For instance, a 2021 Newsweek article suggested that universities often fail to teach the benefits of free-market capitalism, which has lifted billions out of poverty globally, potentially skewing students’ perspectives. Additionally, anti-capitalist movements on campuses sometimes face accusations of stifling free speech when protests turn confrontational, as noted in debates about “culture wars” on U.S. campuses.[](https://www.newsweek.com/college-kids-dont-understand-socialism-capitalism-our-research-proves-it-opinion-1608876)[](https://www.forbes.com/sites/rainerzitelmann/2020/02/16/anti-capitalism-on-us-university-campuses-the-culture-war-is-fought-dirty/)

APPENDIX 3: Table: Comparison of Federal Income Tax Brackets (2017 vs. 2018-2025) 

Rate (2017)	Taxable Income (Single, 2017)	Rate (2018-2025)	Taxable Income (Single, 2018)	Taxable Income (Single, 2024)
10%	$0 - $9,325	10%	$0 - $9,525	$0 - $11,600
15%	$9,326 - $37,950	12%	$9,526 - $38,700	$11,601 - $47,150
25%	$37,951 - $91,900	22%	$38,701 - $82,500	$47,151 - $100,525
28%	$91,901 - $191,650	24%	$82,501 - $157,500	$100,526 - $191,950
33%	$191,651 - $416,700	32%	$157,501 - $200,000	$191,951 - $243,725
35%	$416,701 - $418,400	35%	$200,001 - $500,000	$243,726 - $609,350
39.6%	Over $418,400	37%	Over $500,000	Over $609,350