Capitalism: Fix it or Lose it

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Ronzig the Wizard Ronzig the Wizard's picture
Capitalism: Fix it or Lose it

As more and more of the so called experts begin to say what I’ve been saying for the past 2 years, “The Recession is NOT over, it is merely taking a rest while it builds itself for an even worse comeback” it is clearly evident that we need to rethink the nature of Capitalism itself.

Capitalism as we know it can not and will not survive. Tinkering with various aspects of the system such as bail outs for some companies while others are allowed to perish is no solution. Juggling the money supply only creates conflict as each country strives to gain the upper hand. Reducing interest rates to encourage consumers to buy, buy, buy, has failed to achieve the desired results.

Bailing out the biggest offenders in each crisis on the principle that they are too large or too important to be allowed to fail only encourages them to be more irresponsible with the knowledge that the taxpayer will ALWAYS foot the bill for their avarice and incompetence. By declaring that some corporations are exempt from the natural penalties of mismanagement while others are allowed to perish defeats the whole concept of Capitalism, for by protecting the largest offenders who are in fact the very corporations that cause the economic collapse in the first place, we GUARANTEE  more of the same on an even larger scale, until finally even the government will not be financially capable of bailing them out with the ultimate result of the mighty United States of America facing bankruptcy itself. The necessary result of such a bankruptcy would be the collapse of all of the major economies on the planet followed by  world wide depression, the likes of which humanity has never experienced in all of history.

Increasing the money supply is a fool’s game. Its only possible purpose is to shift the burden of fiscal irresponsibility onto other nations and force them to pay for our mistakes. Anyone with even a substandard level of intelligence can see that printing more paper that has no backing in any tangible way must result in the value of that money being diluted. This dilution of the value of the dollar is called inflation and is the necessary result of this procedure. What inflation means is that everything we purchase costs more money. But you say we’re not experiencing inflation. I disagree. We have only offset the results of inflation by exporting tens of thousands of good jobs to offshore underdeveloped nations where the cost of labour and other factors of production are a small fraction of domestic expenditures. This has resulted in holding prices of goods down, but there Is a price to pay for this policy and we are paying it with ever increasing unemployment levels. The net effect of increasing the money supply is massive unemployment that can never be reversed. As unemployment rises, we experience an overall decrease in buying power in the general population that in turn reduces retail sales on a massive scale causing the collapse of large and small retailers alike. As these retailers collapse there is a domino effect of even more unemployment and a further reduction in the consumer’s buying power and thus even lower retail sales numbers.

In order to increase buying power and encourage more conspicuous consumerism, interest rates have been reduced to the lowest levels in half a century and still retail sales are dropping through the floor. We are now seeing a new and even more dangerous trend.  Consumers are being paid to buy. There are multitudes of cash back and other incentives that actually put money in our pockets for being foolish enough to increase our indebtedness which is already far beyond our ability to pay, effectively creating net interest rates on purchases that approaches negative levels. Governments instead of encouraging the population to increase savings and pay down debt are suggesting that we plunge even further into indebtedness. There can be only one result to this fool’s paradise; defaults in payments, personal bankruptcies followed by even more corporate bankruptcies and eventually national bankruptcy.

All of these and all of the rest of the quick fix solutions are merely panic induced irrational responses to the various symptoms of the disease that threatens to kill the patient. They never have had any permanent solution as evidenced by the fact that the world consistently and periodically falls into recession and each recession is more severe than the preceding one. The second stage of the recent recession when it materializes will most certainly be the worst that the industrial age has ever encountered and unless a radical shift in the very nature of Capitalism is implemented immediately, the world faces a Depression that will make the 30’s seem like boom times.

What can be done to avoid this crisis?

First and foremost, it is imperative to understand that there is plenty of money and more than adequate resources available to prevent a cataclysmic collapse of the global socio/economic system. What is required is a redistribution of these resources eliminating the current situation where less than 5% of the world population holds 95% of the wealth. With this concentration of wealth, it is inevitable that there just isn’t enough to go around for the rest of the population and people no longer have the means to purchase the goods that make the current system stay afloat.

Redistribution of wealth in itself will not prevent the collapse. It will only postpone it unless strong rules to the Capitalism Game are put in place to ensure that never again will such an imbalance be possible. A reassessment of how we value each person’s contribution to society must be made. No economic system can survive with the inequities that we currently encourage. A system where someone who merely entertains us can earn millions of dollars annually while a person who provides crucial services such as transportation or construction workers for instance barely earns enough to survive can never survive itself. An equitable earning scale for all occupations is the key to creating a system that can endure.

These recommendations may sound utopian and impossible to achieve, but the alternative is the complete and irrevocable collapse of the entire socio/economic system that we live under. It behooves us to do the impossible if we are to survive.

The greatest strength of humanity is its ability to adapt when threatened. Adaptation is no longer a luxury that we can afford to ignore.

See: The recovery illusion            Bank regulators have learned nothing   Carney says headwinds will slow recovery            The great inequality debate Canadian companies put machines before jobs

You can see this article and more on economic issues from Ronzig at...

http://www.DownButNotOut.ca/economy.ca

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http://twitter.com/#!/RonzigsGallery

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Iwant Liberty

Regarding one point "companies put machines before jobs"... that's what happens when wage demands are too high.  That's why jobs are moving overseas.  Can't stop it.  It's economics 101.  Ending the minimum wage would help bring jobs back.  Otherwise unemployment will persist.

Maysie Maysie's picture

Iwant Liberty you can't talk about eliminating the minimum wage on babble.  

Fidel

There are no minimum wage laws in Haiti, Bangladesh, India, Pakistan, Indonesia, El Salvador etc. We really don't want our economy to look like their's.

Another thing unions are weak to non-existent in very many poverty stricken third world capitalist countries, and still they experience inflation from time to time and high levels of unemployment.

siamdave

Iwant Liberty wrote:

Regarding one point "companies put machines before jobs"... that's what happens when wage demands are too high.  ...

- actually that's what happens when a certain predatory section of society puts their personal greed above the needs and rights of everyone else, and is willing to use lies, violence, corruption and other things most average people are too ethical to use to steal from others

 

Ronzig the Wizard Ronzig the Wizard's picture

Actually the point is that because of mechanization and exportation, the jobs are gone and will never return. The net result is that the powerful elite are now able to eliminate the cost of labour from their balance sheet and thereby increase profits exponentially, thereby forcing a huge segment of our society into permanent unemployment and creating a huge rift between those who for the time being remain employed and those who have become iredeemably unemployed. This gap in our society has created animosity between the two and this strife has been used by the elite to focus the blame on the victims rather than on the perpetrators of this atrocious trend, as witnessed by "I Want Liberty's" comment. Only a reassessment of the way wealth is distributed in the developed world will prevent the emergence of a two class system where the powerful elite are masters and EVERYONE else are merely ecoomic slaves who will be disgarded when their usefulness is no longer needed. If this situation is allowed to continue to grow, the only possible outcome will be class violence on a massive scale.

absentia

As long as you rely on employment (jobs) for the income of the majority, you insure continued rule by a minority of employers (bosses). No matter how you regulate it, the basic economic relationship is serf-to-lord. Capitalism can't be repaired, any more than cancer can be repaired. Eliminate it and try a more benign social organization.

Catchfire Catchfire's picture

Fixing thread title and moving to labour and consumption.

siamdave

I vote for 'lose it'. It would be kind of like losing the cancer that's been eating your body for years. Then we could try to become a healthy, prosperous society again, in charge of our own destiny rather than working endlessly for the enrichment of the parasitical few.

Tricky, though. As various discussions have shown here, many if not most people actually like their capitalism, without apparently realising the harm it really does - kind of a Stockholm Syndrome thing, I guess.

Fidel

Are there any modern day JM Keynes in our midst or on the horizon? Is anyone calling for another Bretton Woods? I imagine that miniature Bretton Woods are being played out around the world today. Or is it more like the early 1930s when western world governments were reluctant to hammer out a new monetary deal between nations? Will it take another world war to set the stage for another 50 years of dollar hegemony? Or are we seeing the decline of the last militant empire? Stay tuned for the 2010s as the future speeds toward us.

Ronzig the Wizard Ronzig the Wizard's picture

@absentia: You are absolutley correct. Jobs are merely a form of economic slavery. That is why the majority of working people hate what they do each day. The time has long since past when we needed each member of society to toil at a job while we built an industrialized society. We are now at a point where most of the production of the goods we need or want can be produced with a minimum of human toil, yet our social structure has failed to keep up with progress and remains stagnated with a philosophy developed at the outset of the industrial revolution. At the beginning of the mechanization era we were promised a near Utopian world where the main problem we would face would be what to do with all our leisure time. We would have the means to purchase everything we need and most of what we want while working a 2 or 3 day work week. There would be no hunger in the world and certainly no homelessness, so what happened?

GREED won the day and the evolution of society was abandoned. We currently have the means of producing everything we need while creating a system where the work we do can be a choice we make without the consideration of our financial requirements. Artists could create art rather than work in a factory or at MacDonalds and our world would see a upsurge in high quality fine art, live theatre, novels and more. Inventors would be free to tinker in their garages or workshops at their leisure and obtain the tools and supplies the need to advance their projects without the necessity of going to a traditional job every day, producing ever more technological advances and perhaps bringing forth an era of new Isaac Newtons, Thomas Edisons and Albert Einsteins.

The more I think about this topic the more aware I become that it requires a whole new post rather than merely a comment on an existing stream. As soon as it is completed I'll post it.

See more about our society at http://www.downbutnotout.ca/society.php

fooz33

You know any attempt to overtake capitalism is going to be a violent one you know that right?  The american government, army, and CIA will not stand for such social change.

Ronzig the Wizard Ronzig the Wizard's picture

@fooz33: Of course the elite will never peacefully give up their stranglehole on society. If anyone ever had any doubts of that they need only look at the events that took place during the G20. It is an unfortunate reality that no tyranny is ever overthrown without tremendous sacrifice and suffering, but It is none the less inevitable.

absentia

fooz33 wrote:

You know any attempt to overtake capitalism is going to be a violent one you know that right?  The american government, army, and CIA will not stand for such social change.

Reminds me of a joke about himbi-himbi.... But never mind. Capitalism doesn't need to be overtaken or overthrown - though some people will undoubtedly get themselves killed trying - it will fall down by itself. Has to. Built into its structure as a natural progression: eat up the food-supply, eat your young, eat your limbs, die.

Ending capitalism is not the challenge - surviving it is.

Merowe

absentia wrote:

fooz33 wrote:

You know any attempt to overtake capitalism is going to be a violent one you know that right?  The american government, army, and CIA will not stand for such social change.

Reminds me of a joke about himbi-himbi.... But never mind. Capitalism doesn't need to be overtaken or overthrown - though some people will undoubtedly get themselves killed trying - it will fall down by itself. Has to. Built into its structure as a natural progression: eat up the food-supply, eat your young, eat your limbs, die.

Ending capitalism is not the challenge - surviving it is.

Well said.

Ronzig the Wizard Ronzig the Wizard's picture

@ absentia: I agree that Capitalism as it exists today is doomed to self destruct, however it could and should be radically redesigned into a more just model. At present we have no better model to replace it with and it is doubtful that one will come along. that said, in order for Capitalism to survive and function in a just society, it must first be divorced from politics and become what it was designed to be in the first place, a system of economics. The failure of Capitalism is in reality a failure in Democracy, for we have allowed our political system to become polluted by Capitalism. They were designed to be and should always be seperate. One of the primary roles of the Democratic political system should be to prevent excesses in the economic system that infringe upon the rights of all members of society to enjoy a fair share in the bounty that Mother Earth has provided.

It is fine to proclaim the necessity of the downfall of unjust systems, but unless a working alternative is simultaneously advanced, it is only rhetoric and serves no real purpose.

Catchfire Catchfire's picture

absentia wrote:
Ending capitalism is not the challenge - surviving it is.

In an interview, John Dos Passos was asked if he thought that the failure and collapse of capitalism was inevitable. He answered, "Sure...We've already got the failure. What I don't see is the collapse."

kropotkin1951 kropotkin1951's picture

I think that the term you are really talking about is closer to corporatism.  There is a major difference between a market of relative equals and a market with one giant, near monopoly, with the resources and capability of manipulating the market for their benefit.  We need to regulate all the corporations that operate in our countries.  We seem to have forgotten that all corporations are in fact government sanctioned and regulated.  Time to break up the hedge fund managers hold on the world economy and let the people have access to capital to start small businesses and co-ops and syndicates. 

To me centrally planned economies are dysfunctional.  That is the case whether they are centrally planned in a government office or a hedge fund office. Diversity is always the key.  Cancer is a good analogy for our current system since we allow these corporations to grow regardless of the fact that their growth suppress all the healthy cells around them.  

I would love to see a lifting of the Corporate Veil legal concept to allow for the bankrupting of greedy individuals for the actions of the corporations they CONTROL.  Not the shareholder but the managing mind. 

siamdave

kropotkin1951 wrote:

.....  We seem to have forgotten that all corporations are in fact government sanctioned and regulated.  ....

- may have been true at some distant point in the past, but for a long time now it's very much been the other way around - governments are corporate sanctioned and regulated - if you don't do as the corps want, your chances of being a government are pretty minimal ....

KenS

Catchfire wrote:

In an interview, John Dos Passos was asked if he thought that the failure and collapse of capitalism was inevitable. He answered, "Sure...We've already got the failure. What I don't see is the collapse."

Great line.

Another from Dos Possos, even if not original: Dos Passos became a right wing intellectual and was on the Board of Buckley's National Review. Interviewer asked him why he changed. "I havent changed. The world has."

Do you know if your quote of JDP was before or after the political switch? Sounds more like before, but you never know.

ETA: By WWII- only several years after the USA trilogy, his politics had thoroughly moved right, if not before.

kropotkin1951 kropotkin1951's picture

siamdave wrote:

kropotkin1951 wrote:

.....  We seem to have forgotten that all corporations are in fact government sanctioned and regulated.  ....

- may have been true at some distant point in the past, but for a long time now it's very much been the other way around - governments are corporate sanctioned and regulated - if you don't do as the corps want, your chances of being a government are pretty minimal ....

Indeed this is true but it is still the case our governments have the power to control corporations if they chose to use it.  The advent of the global corporate rights agreements is a new twist in an old game of monopoly but again those corporate rights treaties can be rescinded by governments.  

Now I am not saying that I expect this to happen or that it is even a remote possibility but it is a way forward to try to reverse the concurrent trend of widening the gap in incomes across society and societies.  I believer that reversing the income disparity would have the most immediate effects.

Quote:

Income inequality has increased significantly in the U.S. during the current recession, perhaps more than at any time in recent history, a trend that may have significant damaging effects on the economy and social fabric.

The BBC reported startling economic equality figures in a recent documentary: the top 200 wealthiest people in the world control more wealth than the bottom 4 billion. But what is more striking to many is a close look at the economic inequality in the homeland of the "American Dream." The United States is the most economically stratified society in the western world. As The Wall Street Journal reported, a recent study found that the top .01% or 14,000 American families hold 22.2% of wealth, and the bottom 90%, or over 133 million families, just 4% of the nation's wealth.

The U.S. Census Bureau and the World Wealth Report 2010 both report increases for the top 5% of households even during the current recession. Based on Internal Revenue Service figures, the richest 1% have tripled their cut of America's income pie in one generation. In 1980 the richest 1% of America took 1 of every 15 income dollars. Now they take 3 of every 15 income dollars.

...

Emmanuel Saez, an economist at the University of California, Berkeley, who analyzed the Internal Revenue Service data with Thomas Piketty of the Paris School of Economics, argue that such growing disparities were significant in terms of social and political stability.

Between 1983 and 1999, men's life expectancy decreased in more than 50 U.S. counties, according to a recent study by Majid Ezzati, associate professor of international health at the Harvard School of Public Health. For women, the news was even worse: life expectancy decreased in more than 900 counties-more than a quarter of the total. The United States no longer boasts anywhere near the world's longest life expectancy. It doesn't even make the top 40. In this and many other ways, the richest nation on earth is not the healthiest.

...

Ezzati's results are one example. There is also evidence that living in a society with wide disparities-in health, in wealth, in education-is worse for all the society's members, even the well off. Life-expectancy statistics hint at this. People at the top of the U.S. income spectrum "live a very long time," says Lisa Berkman, Director of Harvard University's Center Population and Development Studies, "but people at the top in some other countries live a lot longer."

Research indicates that high inequality reverberates through societies on multiple levels, correlating with, if not causing, more crime, lesshappiness, poorer mental and physical health, less racial harmony, and less civic and political participation. Tax policy and social-welfare programs, then, take on importance far beyond determining how much income people hold onto. The level of inequality we allow represents our answer to "a very important question," says Nancy Krieger, professor of society, human development, and health at Harvard "What kind of society do we want to live in?"

 

 

Catchfire Catchfire's picture

KenS wrote:
Do you know if your quote of JDP was before or after the political switch? Sounds more like before, but you never know.

ETA: By WWII- only several years after the USA trilogy, his politics had thoroughly moved right, if not before.

The interview is from 1932, when Dos Passos was in the process of renouncing his communism for New Deal liberalism (the second book of U.S.A., 1919, was published 1930). By the American Writers' Congress of 1935, he had already made the switch (the last book of the trilogy, The Big Money, was published in 1936).

I'd like to see where he said the line you quoted too, Ken. I'll try to track it down!

KenS

I doubt if this will help you find the quote- but I either heard JDP say it, or saw it in print. So we're talking towards the end of his life [late or at least latter Sixties]. I could at the time have been reading something that was not new, but I doubt it was an older quote.

absentia

Ronzig the Wizard wrote:

@ absentia: I agree that Capitalism as it exists today is doomed to self destruct, however it could and should be radically redesigned into a more just model.

About all you can do is tax the hell out of it, which, of course should be done, and can't be done, because the people with the most money make governments do anything they want.

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in order for Capitalism to survive and function in a just society, it must first be divorced from politics and become what it was designed to be in the first place, a system of economics.

It's not a system. It has only one moving part: money. Take away money, and every other economic system would work reasonably well on the salt standard or barter or scrip. Take money out of capitalism and there is nothing left. Capital is supposed to be only one component in a complex economic system of enterprise and industry - not a whole 'ism' all by itself.

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The failure of Capitalism is in reality a failure in Democracy

Because the sharecropper's vote could never equal the planter's?

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for we have allowed our political system to become polluted by Capitalism. They were designed to be and should always be seperate.

I'm not convinced of this. North American democracy was set down by well-born venture capitalists, who subdued and/or bamboozled the indigenous people, shipped in slaves, convicts, and indentured servants, women and orphans, to whom they never intended to give land, wealth or votes. The European peasants were allowed to own land in return for clearing it, but still had the governors, administrators, planters, shipping magnates, bankers and whatever else, lording it over them. Those guys were divested of their power only very slowly, at great cost to the exploited classes.

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One of the primary roles of the Democratic political system should be to prevent excesses in the economic system that infringe upon the rights of all members of society to enjoy a fair share

True, and certainly something all socialists have striven for. Sometimes quite successfully - but no gain is guaranteed to last.

Quote:
It is fine to proclaim the necessity of the downfall of unjust systems, but unless a working alternative is simultaneously advanced, it is only rhetoric and serves no real purpose.

Rhetoric is always the start of movements. Ideas and entire well-thought-out schemes have been advanced for centuries. But it's not ever going to be an easy, tidy substitution. It's always messy, difficult, contentious and haphazard.