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In Defense of Capitalism: a True Love Story

October 06, 2009 | About:
My writing is a byproduct of my investment process, I think through writing. I don’t do movie reviews and don’t watch Michael Moore’s movies. A Denver Post reporter invited me to a private showing of Moore’s latest flick last Monday Capitalism: a Love Story, it stirred up a lot of memories and I recently finished reading Atlas Shrugged which had a great impact on me. A combination of all those things motivated me to write this.

In the 1980s, in Soviet Russia, a few times a year, my class walked to a movie theater, where we were shown a documentary. Attendance was mandatory. The documentaries were different but the themes were the same: to the accompaniment of patriotic music, we learned about the righteousness of socialism, the greatness of Mother Russia, and the intelligence and foresight of our great leaders. To demonstrate how good we had it, we were shown images of “decaying” American capitalism. Of course, capitalism did not get the benefit of patriotic music as we were shown the poverty-stricken homeless, the KKK burning crosses and lynching blacks, and Russia-hating capitalists being poisoned by hamburgers (of course, later I learned this part about hamburgers was not a complete lie).

Past weekend Americans voluntarily spent a few million dollars to see a documentary by Michael Moore – Capitalism: the Love Story. But don’t kid yourself, this piece of work is not a documentary, it lacks objectivity and has no intention of seeking the truth, and it is anti-American and anti-capitalist propaganda. Mr. Moore is a talented propagandist; in Soviet Russia this documentary would have gotten him a medal and elevated him into a state hero.

A successful propaganda initiative has to have three elements: (1) to influence attitudes, instead of providing information, (2) to selectively present facts (i.e., lying by omission) to achieve a certain synthesis, and (3) to get an emotional rather than a rational response.

There is little information in this movie. Moore spends the bulk of the film going through our country’s trash and presenting it as the main course. For instance, a corrupt judge sentences innocent teenagers to spend months at a privately owned (i.e., for-profit, nongovernmental) youth-correction facility, while the judge is getting kickbacks from the facility owners. Moore interviews these poor teenagers, and we feel bad for them, as we should. We feel angry. Moore directs this anger towards capitalism (i.e., private enterprise): it is rotten and corrupt. Of course, the fact that corruption and bribery are the rare exception in the US, not the rule (as in Russia), is never mentioned.

Really, if you want to make a successful propaganda movie, you must evoke emotion and rightly or wrongly direct it at your subject of hate – in Moore’s case, capitalism. Moore shows families being evicted from their houses, in which some of them have lived for twenty years, and some of them have kids. Again, we feel bad for these people, we feel their pain, and we want to help. We are angry. That’s what Moore wants. But should we be angry at the bank that has given these people a loan? Or perhaps we should accept the fact that some people will make bad financial decisions, and they’ll pay a price. It is the easiest thing to blame a bank, or capitalism – they are not very popular today.

But let’s do the impossible, let’s humanize a bank. Let’s say you and I and a few friends put our life savings together and start a bank. We take deposits and make loans. Should we “forgive” a loan on a house to a person who overextended, made bad financial choices, or found himself facing hardship and unable to earn his way out of it? If we do enough of this “forgiving” we’ll go bankrupt, our kids won’t go to college, and we’ll need to ask someone else to “forgive” us for the loans on our houses, credit cards, etc. I am not even mentioning our depositors losing their money (and the FDIC – the taxpayer – bailing them out) and our employees losing their jobs.

So the heartless bank – you and I and a few friends – have to make a choice between sacrificing the well-being of our families for the sake of strangers. What would you do? See, this point is too rational and lacks the sensationalism of good propaganda; and thus Mr. Moore, who I am sure thought of it, omitted it.

Moore attacks BofA for not resorting to charity and not extending a loan to a factory in Michigan, even after BofA received TARP money. The same logic I just went through applies to the huge, unpopular BofA. Should BofA have thrown away money in a loan to the factory, knowing that the factory would not be able to repay it? Is this not what got us into the present problem in the first place?

Banks and Wall Street in general played a role in today’s crisis, but they were just one of many responsible players. Consumers in pursuit of keeping up with the Joneses overextended themselves (with the exception of cases of outright fraud, no one was forced to buy a bigger house). Rating agencies were getting paid by the customers they were rating. The Federal Reserve kept rates at very low levels for too long, politicians pressured lending at any cost, regulators were not regulating – and the list goes on. Vilifying banks as the only culprit is intellectually dishonest and a very myopic way to look at this complex problem, and Mr. Moore does just that!

Moore brought a brigade of priests to proclaim: “Capitalism is evil, immoral”; “Jesus doesn’t like the rich”; “the rich will have a hard time getting into heaven.” Two employees from a factory, talking on camera, made a really important point about capitalism. They said something along the lines of, “Maybe we should start a cooperative or something, but no, we cannot; we don’t have the money, we are not capitalists.”

Ayn Rand said it well in Atlas Shrugged: “But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy?”

Moore neglects to admit that capitalism has brought people out of poverty and socialism sunk them there. He blames rising health-care costs on HMOs, though HMOs are just a pass-through vehicle between payers and service providers. He accuses capitalism as a system that “allows getting away with paying so little.”

He offers no alternative to our “broken” capitalism system other than let’s have “democracy.” This is laughable, as democracy is not a market system, it is a political system. What he wants is a command-based economy – the Soviet Russia that failed so miserably. He wants Mr. Mouch from Ayn Rand’s Atlas Shrugged, a mediocre bureaucrat who failed at everything in his life, to be put in charge of Mr. Moore’s version of a “democratic” economy (still not sure what that means). Mr. Mouch decided how much everyone produced, at what prices goods were sold, and what “fair” wages everyone got paid. In the end, despite sacrifice after sacrifice, Mr. Mouch’s economy collapses. Mr. Mouch’s visible “fair” hand fails to accomplish what the invisible “impartial” hand of the free market accomplishes so effortlessly.

Mr. Moore’s propaganda flick ends with pictures of the aftermath of hurricane Katrina. The images are powerful, full of emotion, and again in his final misdirection Moore manages to blame it on capitalism.

Vitaliy Katsenelson

http://contrarianedge.com/

About the author:

Vitaliy Katsenelson
Vitaliy Katsenelson is Director of Research at Investment Management Associates and teaches at the University of Colorado. To read more of his articles visit www.ContrarianEdge.com . His book Active Value Investing was published by John Wiley & Sons in September 2007.

Visit Vitaliy Katsenelson's Website


Rating: 3.8/5 (37 votes)

Comments

Evan
Evan - 4 years ago
"A successful propaganda initiative has to have three elements: (1) to influence attitudes, instead of providing information, (2) to selectively present facts (i.e., lying by omission) to achieve a certain synthesis, and (3) to get an emotional rather than a rational response."

You have successfully included your own piece of writing as propaganda by invoking this definition.

Its unfortunate what Stalin and the Bolsheviks did to your people, but you have to be careful, after recognizing the evils of the soviet system, not too turn a blind eye towards the failures of the capitalist system. Capitalism is not faultless -- it has many problems that a lot of people in the USA (and especially on this site) refuse to acknowledge.

mtnrunner2
Mtnrunner2 - 4 years ago
Vitaly,

Nice post. I dragged myself to the movie last Friday so I could review it, and had much the same reaction. Yes, he is good at evoking emotion, but there is little analytical content.

Moore fails to realize (like commenter Evan above) that what we have is not capitalism, so most of what he criticizes in the film is in fact government intervention on behalf of business, something that would not be permitted under laissez-faire capitalism.

As you point out, he also incorrectly criticizes things that are not in fact wrong. Even though we may not like the sight of people being evicted, there are many prior actions that bring them to that point, and we can't simply sit there at the very end, as if this was the only possible outcome, and say it can't be allowed to happen. Sometimes in order to have the benefits of freedom, some people must have misfortune.

But one thing is certain: if we are not free, then we will all have greater misfortune, and we will live under an immoral system that squashes creativity, progress and ultimately life itself.

My review is here if you're interested: http://funwithgravity.blogspot.com/2009/10/review-of-michael-moores-capitalism.html

Take care,

Jeff Montgomery

newman5736
Newman5736 - 4 years ago
Vitaliy;

I think you are missing the point. This movie is not about glorifying socialism but lack of capitalism.

Besides, many people think that we should find out a different/new social and economical system which would be fair to all of us; New world order in a good sense of this meaning.

This may include all what was positive during all these centuries of our civilization: socialism, capitalism, freedom and equality of all the mankind but the most important is that this new system should include first of all FAIRNESS.

I also want you to remember you are not the only one with socialism-time experiences. I can perfectly acknowledge that during socialism as a child I was never exposed to any anti capitalism hatred, in contrary, learning from western movies of those days one could only be taught of anti socialism hatred. I was taught to love socialism not to hate capitalism. Pure ideology - that's the reason why socialism lost this war against American pro capitalism propaganda.

newman5736@gmail.com
newman5736
Newman5736 - 4 years ago
Vitaliy;

I think you are missing the point. This movie is not about glorifying socialism but lack of capitalism.

Besides, many people think that we should find out a different/new social and economical system which would be fair to all of us; New world order in a good sense of this meaning.

This may include all what was positive during all these centuries of our civilization: socialism, capitalism, freedom and equality of all the mankind but the most important is that this new system should include first of all FAIRNESS.

I also want you to remember you are not the only one with socialism-time experiences. I can perfectly acknowledge that during socialism as a child I was never exposed to any anti capitalism hatred, in contrary, learning from western movies of those days one could only be taught of anti socialism hatred. I was taught to love socialism not to hate capitalism. Pure ideology - that's the reason why socialism lost this war against American pro capitalism propaganda.

newman5736@gmail.com
newman5736
Newman5736 - 4 years ago
Vitaliy;

I think you are missing the point. This movie is not about glorifying socialism but lack of capitalism.

Besides, many people think that we should find out a different/new social and economical system which would be fair to all of us; New world order in a good sense of this meaning.

This may include all what was positive during all these centuries of our civilization: socialism, capitalism, freedom and equality of all the mankind but the most important is that this new system should include first of all FAIRNESS.

I also want you to remember you are not the only one with socialism-time experiences. I can perfectly acknowledge that during socialism as a child I was never exposed to any anti capitalism hatred, in contrary, learning from western movies of those days one could only be taught of anti socialism hatred. I was taught to love socialism not to hate capitalism. Pure ideology - that's the reason why socialism lost this war against American pro capitalism propaganda.

newman5736@gmail.com
LwC
LwC - 4 years ago
"What he wants is a command-based economy – the Soviet Russia that failed so miserably."

IMO the author of the above piece should consider the possibility that a command-based economy is not necessarily doomed to be a miserable failure. The jury is still out on China's command-based economy.
ar-admirer
Ar-admirer - 4 years ago
Nice article and a good description of propoganda. It's nice to see that there are people who get it; meaning who can understand appreciate Capitalism :-) Many people criticize Capitalism without even knowing it's definition. Capitalism has failed we hear, as if there was Capitalism in America. What we've had for decades now in the US is a mixed economy and not pure Capitalism.

Thanks.
Cowboy77
Cowboy77 - 4 years ago
Truly hard to believe that we even have to defend Capitalism. That's how screwed we are!
Cowboy77
Cowboy77 - 4 years ago
Gangstarr
Gangstarr - 4 years ago


I wasn't aware that there are socialist sympathisers on this board until I read some of the responses to Vitaliy's thoughtful article above. Great piece Vitaliy, thank you for your insights!!! The hypocrisy of Michael Moore is that he makes quite a sum of money from his exposes on controversial subjects. He has benefitted directly from both America's capitalist and political system. I support the capitalist system fully, otherwise I would not be interested in purchasing fractional ownership shares in outstanding companies. What are these sympathisers doing on an investing sight?
Sivaram
Sivaram - 4 years ago
It's amazing that people have to drag out Ayn Rand to defend capitalism. After all, hasn't it been Alan Greenspan, who is as close to a Randian as anyone, who is partly in the thick of things? Unfettered capitalism is essentially dead now; so is monetarism.

The greatest threat to capitalism right now are the capitalists themselves--what I call the crony capitalists. It's too bad the "defenders" of capitalism don't even see their enemy.

Cowboy77
Cowboy77 - 4 years ago
Sivaram:

What's even more amazing is that since Obama was elected that Atlas Shrugged was moved from the fiction category to the non fiction category.
batbeer2
Batbeer2 premium member - 4 years ago


and we will live under an immoral system that squashes creativity, progress and ultimately life itself.


Capitalism is an economic system based on private ownership of income generating cash or goods.

Creativity, progress and life were around before such a system was devised. One cannot logically maintain that these things can only exist within a capitalist system. Capitaism may work, that doesn't prove it is the only or even the best system.

Some random thoughts; most who know me consider me right wing.
Sivaram
Sivaram - 4 years ago
Cowboy77 Wrote: ------------------------------------------------------- > Sivaram: > > What's even more amazing is that since Obama was > elected that Atlas Shrugged was moved from the > fiction category to the non fiction category.

LOL that's a good come back but...

Why is it that pure capitalists always rely on fiction to guide their lives? Is it perhaps because the real world does not function as Ayn Rand and her followers like to pretend?

Why is it that, in democratic states where the voters are not forced to vote in any particular direction, pure-capitalism/extreme-libertarianism/etc don't even garner 1% of the vote? Are 99% of the population dumb or is it that the 1% is a bit too idealistic and live in the clouds?

Something to think about...
Sivaram
Sivaram - 4 years ago
Gangstarr Wrote: ------------------------------------------------------- > > I wasn't aware that there are socialist > sympathisers on this board until I read some of > the responses to Vitaliy's thoughtful article > above. Great piece Vitaliy, thank you for your > insights!!! The hypocrisy of Michael Moore is that > he makes quite a sum of money from his exposes on > controversial subjects. He has benefitted > directly from both America's capitalist and > political system.

Is it fair to assume you are a descendent of Senator McCarthy? ;)

Obviously you haven't grasped the fact that econopolitics is not a binary issue. Admittedly conservatives love to think in black & white--George Bush and his "with us or against us" epitomizes this--but the reality is anything but.

As somone above remarked, what is China right now? Communist? How about India? Socialist? How about most of Europe/Canada/Australia/etc? Mixed economy? I don't know. Are these all evil socialists?

> I support the capitalist system > fully, otherwise I would not be interested in > purchasing fractional ownership shares in > outstanding companies. What are these > sympathisers doing on an investing sight?Although many like to pretend economics is a standalone field, I have a different view. To me, economics is, has, and always will be, intertwined with politics. Hence, I call it econopolitics; in the distant past, people called it political economy.

There is more to life than just money--and capital. People like you may prefer to look in simple terms but human behaviour and social elements impact economics. For instance, would you love to live in the capitalist utopia known as Nazi Germany or Fascist Italy? Those were even more capitalist than America under FDR! Or how about present day Singapore or Saudi Arabia, two countries more capitalist than even America?

I actually respect true capitalists, even though I don't consider myself to be one (my view is that left-leaning people, such as most liberals, cannot be true capitalists because we often have a bleeding-heart and try to protect everything--but it depends on one's definition). But people like you probably have no idea what a true capitalist is. If you want to know what a true capitalist is,[/url][url=http://can-turtles-fly.blogspot.com/2009/09/capitalist.html]check out this blog entry I made a month ago. I suggest you spend time correcting the fake capitalists running loose these days before attacking the so-called socialists. Those fake capitalists will do more harm to capitalism than Michael Moore ever will!
Sivaram
Sivaram - 4 years ago
batbeer2 Wrote: ------------------------------------------------------- > Creativity, progress and life were around before > such a system was devised. One cannot logically > maintain that these things can only exist within a > capitalist system. Capitaism may work, that > doesn't prove it is the only or even the best > system. (This quoting system is messed up but anyway...)

The problem is that many in America--and this is almost entirely on the right wing only--equate liberty with capitalism. It's truly remarkable that many still don't admit the flaws of the Bush administration and are against regulation that could curb some of the worst abuses. The ironic thing is that many who consider Obama to be the socialist Incarnate have no problem with the Federal Reserve socializing risk, bailing out priviledged companies (Goldman Sachs, GE, etc,) capping bond yields, etc. I actually agree wtih the FedRes actions but it is definitely not acting capitalist. If anything central banks policies are very socialist right now. Yet little criticism of that.
Cowboy77
Cowboy77 - 4 years ago
Sivarem wrote:

"Why is it that, in democratic states where the voters are not forced to vote in any particular direction, pure-capitalism/extreme-libertarianism/etc don't even garner 1% of the vote? Are 99% of the population dumb or is it that the 1% is a bit too idealistic and live in the clouds?"

My response:

Huh?
Gangstarr
Gangstarr - 4 years ago


Sivaram wrote: Is it fair to assume you are a descendent of Senator McCarthy? ;)

Gangstarr just wrote: I will be opening up a full investigation into these comments Sivaram, and will be recommending that your blackmail file be pulled for my review.

JK

Relax buddy!!
pigsgetrich
Pigsgetrich - 4 years ago
It's not often that I like articles written, but yours was magnificently on the money. First, the movies premise presupposes we live in a free market, which with our government growing ever more powerful, we obviously do not. I am a student of Austrian economic theory that promotes laissez faire government policy in business, but just as Moore sometimes KICKS THE POLITICIANS, in this movie he seemed to plead with them. It was a weird thing to see. I agree with everything you said brother. Keep up the good work.

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