While watching the latest Michael Moore film, “Capitalism: A Love Story,” I was surprised how much I agreed with him. He made excellent points, including his condemnation of the bank bailouts, his scathing depiction of Goldman Sachs and its influence in the Treasury, and the horrific discussion of teenagers being held at a privately owned juvenile detention center in Pennsylvania. I was surprised to find myself agreeing with Moore because I am a supporter for capitalism, the very system that Moore professes to attack in the film.

Which brings me to the movie’s obvious flaw: Moore has a false idea of what capitalism really is. He views it as an economic system of privately owned companies making profits with little or no regulation or taxation. This is a commonly held view by those on both the right and the left, but it misses the key component of capitalism. True capitalism, or free enterprise, involves privately owned companies making just profits. Profits are acquired justly when both parties agreeing to the exchange believe that they will benefit and they exchange goods voluntarily.

The difference between Moore’s definition of capitalism and the correct one is demonstrated in an early scene in the movie with a scheme that involves corrupt judges and a juvenile detention center. In Pennsylvania, a company called PA Child Care was able to lobby judges for the closure of a public juvenile detention center. The company then built its own facility and the same judges packed this center by sentencing teenagers for just about anything, all in the name of profit.

Moore uses this incident as evidence against capitalism, but what occurred in this case wasn’t really capitalism — the company was earning profits unjustly. The judges were much stricter in enforcing crimes against teenagers, and taxpayers were forced to pay for teens’ room and board at the PA Child Care facility. An arrangement where business teams up with the government to forcibly take money from taxpayers isn’t capitalism — a better term would be corporatism or even fascism.

Compounding Moore’s intellectual error regarding capitalism is a somewhat erroneous view of history. His view is that after World War II, Americans became wealthy and a middle class was built. Then Reagan was elected, and through his “capitalistic” reforms, the richer got richer while the poor stayed poor and the middle class joined them. There certainly are elements of this story I agree with, notably the reduction of the middle class since the Reagan Era. But the Reagan financial sector takeover was miniscule compared to an earlier takeover that took place as a result of the Panic of 1907 — the founding of the Federal Reserve.

With the goal of providing a stable economy and price level, seven powerful bankers and legislators got together in November 1910 and rode a train in secret to Jekyll Island, a premiere resort in Georgia, and hashed out what would become the Federal Reserve. The Fed is the banker’s bank, and all of its actions necessarily benefit large banks at the expense of people. It is a big counterfeiter and provider of bailouts to rich corporations that cuddle up to it.

Some people may think that Moore is a conspiracy theorist for his absolutely correct analysis of the “power elite” in the banking community, the same people who used their power to secure the Troubled Asset Relief Program bailout in September 2008. But he’s quite right: Wealthy bankers got together with Congress and secured a bailout that everyone else had to pay for.

In criticizing the current economic system, Moore proposes worker’s co-ops as a praiseworthy alternative to the typical business arrangement. Under these co-ops, workers get to vote on each other’s pay. What Moore doesn’t understand is that worker’s co-ops are completely acceptable under true capitalism. There should be no laws telling people that they need to have a business of x size making y profits and paying workers z amount. If workers are happier with lower wages as long as they have the power to vote, then businesses will adopt this system.

Under capitalism, there would be no bailouts, no unjust profits by exploiting teenagers’ crimes and workers would be absolutely free to participate in co-op systems. The fact that Moore and I agree on these points demonstrates that his beef is with corporatism, not true capitalism.

Vincent Patsy can be reached at vapatsy@umich.edu.

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