Friday, April 9, 2010

Fee For Service-What’s Wrong with Capitalism

It occurred to me a few years ago that there was something fundamentally wrong with all forms of ism. Communism, socialism, capitalism all seemed to be different forms of colonialism whose only claim to greatness according to it’s advocates was this decidedly chauvinistic claim that, for instance, Capitalism is good because Socialism is bad. Not much of a recommendation since all any of these did was promote a hierarchy of opportunists that game the system for their personal pleasure to the detriment of the vast majority of the people who like good herd animals willingly follow the latest strong man as long as he is packaged in the appropriate phraseology and images.

One of the latest crazes, a slight improvement over medieval feudalism, is Capitalism, generally an English invention that was spectacularly successful in launching the widespread exploration of the planet on tiny wooden sailing ships and then the industrial revolution. I will lump all forms of ism together with the name of capitalism for the remainder of this discussion since it is the only form of ism that really exists today despite what corporate propagandists would have you believe.

What made capitalism so successful in part was what started out as Lloyd’s of London, a service that sent young boys as runners out to solicit subscribers to invest in different capital projects that would have been impossibly large for the English government to fund at the time. Although there were some short lived examples of large scale enterprises funded directly by the government in other European countries during this same period, it was the direct involvement by the middle class in these investments and direct participation in the rewards of these projects had a much more lasting effect, allowed for much more rapid and enduring growth and in fact those same financial markets have grown, become more complex, and drive the world economy today.

What was a novel way to finance large projects without interfering with traditional ways of feeding, clothing, and attending to the health, education, and welfare of the people has now been applied to every aspect of life much to the detriment of our economy as a whole and the ability to deliver high quality services as the corporate model of cost reduction has been applied to systems that have gotten far too large and complex to be sustainable in this kind of system. Strangely, what made the system so robust has come full circle to not being able to exist without the direct intervention of the government in every economic and public service sector. The economy has gotten to the point where it is no longer sustainable and the situation will continue to deteriorate until there is a paradigm shift into a new system beyond the current era of colonialism whose last and ultimate expression of capitalism is the corporate fascism and it’s addiction to handouts by the government at taxpayer expense.

No system is perfect and people, being the adaptable creatures they are, will always find a way to manipulate the system to their advantage. After taking care of chickens for a few weeks I call this chicken behavior-they are always trying to steal food from each other and if one starts to bleed then the entire group will attack that chicken and peck it to death while they eat it’s flesh. Nothing describes capitalism better than that in which every kind of opportunism is not only expected but encouraged. It took me a long time to come up with something that might replace fee for service capitalism but after discussing cooperative and community life with people from every economic sector I think that cooperatives and guilds are worth reviving and that they would work better than ever before especially with the communications technology available today. Guilds and cooperatives aren’t new. They were a traditional method of doing business before the capitalization of the industrial revolution created a system of people that controlled the ability to create things people wanted and another class of consumers that were subordinated to service them. Described like that I don’t discern any difference of the worst excesses of those two twins Communism and Capitalism.

I define guilds as professional organizations that produce goods or services. People that belong to guilds could negotiate with other guilds and cooperatives to receive compensation, services and goods. This isn’t a radical departure from the way things work now, just more honest about describing the relationships. For instance, doctors currently decide how doctors are going to be trained, how many are trained, and even have a lot of influence over the cost of the training. The doctor industry has a virtual monopoly and have been the driving force in keeping fee for service medicine alive at all costs and preventing any reform for over 100 years that interfered with their ability to charge what they will with complete disregard for the efficacy of treatment or the cost to our economy.

The American Medical Association fought the establishment of Medicare in the 1960’s but, since Medicare institutionalized the fee for service system in medicine, they have reversed course and now fight any attempt to change the way they are compensated preferring to pursue a corporate model of increasing revenues by providing as many goods and services as possible and always charging as much as the market can bear for each and every delivery whether it is a benefit to the receiver or not. In a system that is twice as expensive as the next most expensive country in the world on a per capita basis, that means that we are paying providers over a trillion dollars each year, in other words-more than the entire cost of the Iraq war every year, more than we should be for a high quality health care system. The cost to our economic development in other areas has been enormous. Instead of being the most progressive and well educated country on earth we are the largest debtor nation subject to theatrics and theft by our government with little to show for it.

Cooperatives can be operated by workers, producers, buyers, or even guilds. Typically members of cooperatives are owners. They can negotiate to buy or trade goods and services with others and participate in a democratic and equitable way with the proceeds. There really isn’t any point in talking about all the different types of cooperatives because they are endless. The point of this is that we need to move beyond the quaint and inefficient separating and isolating individuals to promote the counting and accounting of money. The worth of individuals can be based more on their worth to their community, not their ability manipulate and compete with other in a system that disregards the needs of communities. We also need to move beyond this kind of compensation as the sole reason to do things that we all agree need to be done anyway.

People need to have housing, eat, receive healthcare and clothing. In order to maximize production and communication we need to have a robust education system, but not this factory model that is common today where we mostly produce cheap labor for corporations. Not providing those things or not giving everyone access to basic resources actually costs more than providing basic essentials if you assume that society at large will feel the effects of every sickness or disability in one way or another and really unless we are going to start culling what we see as the weak and disadvantaged from our society by various means of mass murder then we will be affected in a negative way for failing to care for everyone. What is happening now is more like a slow death for many people that are simply ignored if they can’t be utilized as a profit center for an investor and we all pay the cost of deferred maintenance either directly or in the increased cost of goods and services.

By identifying the needs of groups of people in a system of guilds and cooperatives it is possible to have a much more honest discussion about how to meet the needs of individuals and to concentrate on the quality of enterprise as opposed to the cost or profit. We waste hundreds of billions of dollars a year regulating enterprise under our current colonial model and the larger the systems get the less able regulation is able to solve problems like the spread of infectious organisms in a highly distributed food supply. These complex systems are not just prone to failure. Failure is predictable and a sure thing as we have seen repeatedly. One of the things that we have learned from the local food movement that applies to all of our enterprises is the importance of knowing your farmer and the source either directly or through someone else that you trust. That lesson goes far beyond a discussion about the food supply. It is a metaphor about how business can be conducted in general.

When there are no community ties or the ties are known to be unreliable, as is the USDA and all of the schemes that Congress has been foisting on us in an attempt to rationalize a system that by it’s nature will always defy any attempt to bring order, then the means does not exist and cannot be artificially created to replace community and personal communication back and forth and up and down the chain to ensure that the system is not only robust but that communication is timely. Trading between guilds and cooperatives limits the size and complexity to make a more open and safer society.
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