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Which Capitalism Will It Be?
As America, recession-mired, enters the hope-inspired age of Barack Obama, a struggle for the soul of capitalism is being waged. Can the market system finally be made to serve us? Or will we continue to serve it?
George W. Bush argued that the crisis is "not a failure of the free-market system, and the answer is not to try to reinvent that system." But while it is going too far to declare that capitalism is dead, the philanthropist George Soros is right when he says that "there is something fundamentally wrong" with market theory.
The issue is not the death of capitalism but what kind of capitalism - standing in which relationship to culture, to democracy and to life?
President Barack Obama's Rubinite economic team seems designed to reassure rather than innovate, its members set to fix what they broke. But even if they succeed, will they do more than merely restore capitalism to the status quo ante, resurrecting all the defects that led to the debacle?
Obama's stimulus plan and his homeowner bailout program announced last week are technical steps in the right direction, and have the virtue of working bottom-up through mortgage holders and workers rather than top-down through the inert banking system. But they remain technical fixes aimed at pumping up demand and getting people spending.
It is hard to discern any movement toward a wholesale rethinking of the dominant role of the market in our society.
No one is questioning the impulse to rehabilitate the consumer market as the driver of American commerce. Economists and politicians across the spectrum continue to insist that the challenge lies in revving up inert demand.
For in an economy that has become dependent on consumerism to the tune of 70 percent of GDP, shoppers who won't shop and consumers who don't consume spell disaster. Yet it is precisely in confronting the paradox of consumerism that the struggle for capitalism's soul needs to be waged.
The crisis in global capitalism demands a revolution in spirit - fundamental change in attitudes and behavior. Reform cannot merely rush parents and kids back into the mall; it must encourage them to shop less, to save rather than spend.
Penalize carbon use by taxing gas so that it's $4 a gallon regardless of market price, curbing gas guzzlers and promoting efficient public transportation.
And how about giving producers incentives to target real needs, even where the needy are short of cash, rather than to manufacture faux needs for the wealthy because they've got the cash?
Or better yet, take in earnest that insincere MasterCard ad, and consider all the things money can't buy (most things!). Change some habits and restore the balance between body and spirit.
It's time, finally, for a Cabinet-level arts and humanities post to foster creative thinking within government as well as throughout the country. Time for serious federal arts education money to teach the young the joys and powers of imagination, creativity and culture, as doers and spectators rather than consumers.
Recreation and physical activity call for parks and biking paths rather than multiplexes and malls. Speaking of the multiplex, why has the new communications technology been left almost entirely to commerce? Its architecture is democratic, and its networking potential is deeply social. Yet for the most part, it has been put to private and commercial rather than educational and cultural uses. Its democratic and artistic possibilities need to be elaborated, even subsidized.
Of course, much of what is required cannot be leveraged by government policy alone, or by a stimulus package and new regulations over the securities and banking markets. A cultural ethos is at stake.
For far too long our primary institutions - from education and advertising to politics and entertainment - have prized consumerism above everything else, even at the price of infantilizing society. If spirit is to have a chance, they must join the revolution.
The costs of such a transformation will be steep, since they are likely to prolong the recession. Capitalists will be asked to create new markets rather than exploit and abuse old ones; to simultaneously jump-start investments and inventions that create jobs and help generate those new consumers who will buy the useful and necessary things capitalists make once they start addressing real needs (try purifying tainted water in the Third World rather than bottling tap water in the First!).
The good news is, people are already spending less, earning before buying (using those old-fashioned layaway plans) and feeling relieved at the shopping quasi-moratorium. Suddenly debit cards are the preferred plastic. Parental "gatekeepers" are rebelling against marketers who treat their 4-year-olds as consumers-to-be. Adults are questioning brand identities and the infantilization of their tastes. They are out in front of the politicians, who still seem addicted to credit as a cure-all for the economic crisis.
And Barack Obama? We elected a president committed in principle to deep change. Rather than try to back out of the mess we are in, why not find a way forward?
What if Obama committed the United States to reducing consumer spending from 70 percent of GDP to 50 percent over the next 10 years, bringing it to roughly where Germany's GDP is today? The Germans have a commensurate standard of living and considerably greater equality. Imagine all the things we could do without having to shop: Play and pray, create and relate, read and walk, listen and procreate - make art, make friends, make homes, make love.
There are epic moments in history, often catalyzed by catastrophe, that permit fundamental cultural change. The Civil War not only brought an end to slavery but knit together a wounded country, opened the West and spurred capitalist investment in ways that created the modern American nation. The Great Depression legitimized a radical expansion of democratic interventionism; but more important, it made Americans aware of how crucial equality and social justice (buried in capitalism's first century) were to America's survival as a democracy.
Today we find ourselves in another such seminal moment.
Will we use it to rethink the meaning of capitalism and the relationship between our material bodies and the spirited psyches they are meant to serve? Between the single-minded commercialism that we have allowed to dominate us, and the pluralism, heterogeneity and spiritedness that constitute our professed national character?
Candidate Obama certainly inspired many young people to think beyond themselves. The convergence of his election and the collapse of the global credit economy marks a moment when radical change is possible.
But we will need the new president's leadership to turn the economic disaster into a cultural and democratic opportunity; to make service as important as selfishness (what about a national service program, universal and mandatory, linked to education?); to make the needs of the spirit as worthy of respect as those of the body (assist the arts and don't chase religion out of the public square just because we want it out of City Hall); to make equality as important as individual opportunity ("equal opportunity" talk has become a way to avoid confronting deep structural inequality); to make prudence and modesty values no less commendable than speculation and hubris (saving is not just good economic policy; it's a beneficent frame of mind).
Such values are neither conservative nor liberal but are at once cosmopolitan and deeply American. Their restoration could inaugurate a quiet revolution. The struggle for the soul of capitalism is, then, a struggle between the nation's economic body and its civic soul; a struggle to put capitalism in its proper place, where it serves our nature and needs rather than manipulating and fabricating whims and wants.
Saving capitalism means a revolution of the spirit. Is the new president up to it? Are we?
50 Comments so far
Show AllKeep dreaming comrade and maybe with any luck East Germany will reappear and you'll have the job of Minister of Kultur..LOL! This guy must be a some kind of left-wing college Prof. I know the type. When, I was a student long ago at the U of ca. I had a Faux Marxist History prof. like this klown. I invited him to go to a big anti-war rally ( Vietnam war) and he deferred saying he had a tennis date. These guys think they can run America from their Ivory towers. Believe me that won't work either. We need to IMHO smash the BIG Corps. like Teddy Roosevelt did 100 yrs ago. break them up and allow for some real competition back into the system. If this guy thinks all it takes is more Arts programs he's obviously never had or run a real business and had to meet a bottom line daily. This is a problem many on the left don't understand. Too many public sector people have a really bad attitude about business in general. They're above it in their minds. Business was for us C students not them. Elitism isn't just a right wing disease folks and this article is just that Ivory tower elitist nonsense.
Hi Seaglass,
You're right that Benjamin Barber is operating from an ivory tower (Professor of Civil Society at the University of Maryland), but, believe me, he is NOT a Marxist. (Both he and true Marxists would be insulted at the thought.)
Marxists believe that cultural values (more art, sports, less consumerism) change significantly only when the power relationships between classes change, especially relationships between workers and owners. Economic relationships, in Marxism, are known as the BASE, whereas culture and even politics are SUPERSTRUCTURE, ultimately dependent on the economic base. In Marxist terminology, those who believe that ideas alone, without structural economic change, can improve society, are known as IDEALISTS; and it is not a compliment. Marxists might also accuse him of "Ivory Towerism."
(Try googling: marxism,base,superstructure for a modest 215,000 websites.)
"Idealism" aside, though, Professor Barber is trying to save capitalism. Definitely not a Marxist. In any event, there are as many types of "marxists" today as there are of capitalists. And they quarrel with each other as much as they cooperate.
Regards, Laurence
Still in Berkeley
It's funny how anti-socialist and anti-Marxist people *always* call their opponents "wanna be" or "faux" socialists/Marxists. But, I thought you hated socialism/Marxism? And I thought you were trying to smear the guy? So, didn't you just help him? Yet it never fails..pay attention and see.
As to the article, there's nothing in it to indicate that the author could even plausibly define capitalism. That's typical. Taking a middle-of-the-road-sounding position sounds good quite regardless of whether it has any evidence in its favor. It's merely a matter of rhetorical framing. Identify a position on one side of yours ("George Bush free market capitalism") and a position on the other side ("anti-capitalism") and voila! You're the voice of reason.
Reaganites told us that markets work and government don't. That belief which has guided so much for three decades has been clearly shown to be wrong. It is obvious except to the most dedicated supply sider that government is needed. But, as Professor Barber states, a mixed economy in and of itself is not sufficient. The third pillar is moral development of we the people. Far too many of us are but HomoShopper (sorry my four years of high school Latin fails here) and be again HomoSapiens. We must find our self-affirmation in more than our material possessions (much of which were purchased by enormous family debt). I join the author in hoping that Obama seeks not a return to the past, but to a more sustainable and just future.
I have not read any of this authors works. Based on this contribution, I will not.
It is writers like this that causes secular, thoughtful, intelligent people to be labeled as elitists.
Thank you CD for exposing this author; he is entitled to his views, but "move along, nothing to see here" is a lot more informative than this article.
They hate us because of our freedom! Right, and I have this bridge....
The hostile comments to this article are curious, particularly on the "left leaning" or "leftist' site. I think this is actually one of relatively few balanced articles one finds here...
The most direct reason for the present crisis has been a prolonged period of wage stagnation in developed economies. This wage stagnation occurred due to a combination of factors. First, governments stopped defending labor and in fact turned against it. Second, a combination of technological progress (automation) and economic liberalization worldwide put new pressures on the labor market. A worker in developed economies can not compete with 100 million peasants who are desperate enough to work for food. The loss in earning power was masked by expansion of credit. The financial deregulation was an important element of this phenomenon, as it essentially allowed for massive printing of money which was sold to the public as "creation of wealth". The financial industry was allowed to violate fractional reserve requirements and cook its books via exotic financial instruments. It was thus allowed to inject massive amounts of money via creation of debt. This in turn created galloping inflation in selected areas of the economy (stocks, later housing). The general inflation in the price of sausage was not excessive, because injection of money into broader economy via credit is inefficient, and labor costs where dropping at the same time. The scheme ran into a proverbial wall, because it created a broad insolvency crisis among the masses, which then boomeranged back into the financial system causing broad insolvency there. The upshot: you can not have functioning market economy without either government protecting labor to some degree, or labor protecting itself via militant unionism. This is the "political economy aspect" of the crisis.
But there is also a secular aspect to it, and the author addresses it well, if not explicitely. The western technological civilization can not be cut and pasted on Asia in its present form. It is too resource intensive, as simple as that. It is fashionable to accuse Americans of gluttony. A sobering realization: energy use per capita in Japan (those efficient Asians) is not that much smaller than it is in the US. This means that the western civilization has to be retooled towards greater efficiency and new energy industries. How this can be best accomplished is what one should debate. I do not pretend to know for sure. But, what I do know for sure is that the consumerist direction can not be sustained, and the economy has to be redirected towards productive investment that solves these problems, assuming that they can indeed be solved (lets be optimistic).
This is the principal danger of lack direction in the new "administration of change". At the moment, there appears to be precious little change in it. The new administration, like the old one, wants to reflate the dead body. It will not work, and it may very well bankrupt the taxpayer, which means that the next wave of financial collapse, when it comes, will be complete. I do not want to live trough this experience. I lived through one partial collapse of society in eastern europe, and do not want to live through another one.
Perhaps it will take some kind of industrial policy. Throw your ideas if you have them, do not just reflexively attack.
My comments were hostile, perhaps too much so.
But, this author and, to an extent, your excellent comments (recent history) ignore or even refute the reality of the situation.
Capitalism, as described in the theory and practiced by the financial elite, does not exist and never has. Globalization is not and was not inevitable.
The victims of this charade cannot correct the symptoms of a corrupt and elitist system by consuming less. We are already doing that, less health care, less education, less relaxation, less creativity, and soon (already for millions) less food and shelter.
They hate us because of our freedom! Right, and I have this bridge....
"Globalization is not and was not inevitable."
Certainly the globalization that is occurring now was not inevitable. There could be an infinite number of different kinds of globalization. What we have now was obviously crafted by economic elites for economic elites.
It's pretty simple, really. And it's not about elites, but about social classes--workers and owners.
Global integration, i.e. a global trade network, is a good thing for everybody.
Global integration carried out by privately owned capital is not.
On the benefits of global trade, see Global Capitalism: Its Fall and Rise in the Twentieth Century by Jeffry A. Frieden, or . On the benefits of an international specialization in production, google "comparative advantage" and read up on David Ricardo's theory. On the problems of it being carried out by private capital, see Karl Marx.
Hell, you can see Karl Marx on the benefits of free trade, too:
http://www.marxists.org/archive/marx/works/1848/01/09ft.htm
>>It is fashionable to accuse Americans of gluttony. A sobering realization: energy use per capita in Japan (those efficient Asians) is not that much smaller than it is in the US. This means that the western civilization has to be retooled towards greater efficiency and new energy
Facts please. Energy use per capita in the United States is almost twice as high as in Japan. Japans use per capita is the lowest of the major Industrialized nations and by a significant amount.
What do you deem not much difference?
4135 KG Oil equivalent per capita in Japan versus 7885 kg per oil equivalent in the United States.
I deem that a significant difference.
Today's Times has an interesting story about Japanese consumers. It stated that one common practice was to use left over bath water for other washing purposes. It also said that a large percentage of 20 year olds had no interest in owning a car.
The Japanese have one of the highest population densities in the world, 10 times that of the US. Houses and apartments are tiny as a result. Also, they have a fabulous public transportation system, most people do not have to drive to work, and parking is a problem anyways. They also have no military to speak of, while ours consumes more energy than most countries. Japan also only produces 13% of it's energy needs, while the US is 70% self sufficient. On a per capita basis, Japan is more of a hog of global resources (ex-japan) than the US (ex-US)
'Japan also only produces 13% of it's energy needs.' That's surprising and sad for them. WW2 was a resource war for them. I wonder why they havn't invested heavily in tidal and wind power instead of leaving themselves so vulnerable?
>>Japan also only produces 13% of it's energy needs, while the US is 70% self sufficient. On a per capita basis, Japan is more of a hog of global resources (ex-japan) than the US (ex-US)
None of which changes the fact they use about half the energy per capita then the United States.
That they live on a landmass that is lacking In Natural resources does not mean they therefore HOG more resources.
If I grow my own food and eat 10,000 calories of food per day and feed another 40,000 calories worth a day to some cows this due to the fact that I live on agriculturaly productive land and thus can grow all my own food . it hardly means I am less a hog then someone who consumes 1600 calories a day but has to import all their food.
Perhaps hog is not the right word, but Japan is more of a drain on global energy resources on a per capita basis than Americans who are more self sufficient. And residential energy consumption in the US has not increased at all since 1970 so I see no evidence of energy gluttony in the US among consumers.
Also, we spend 22% less on food than in the 70's, 44% less on appliances, 30% less on furniture, and 20% less per car, but the myth of Americans overconsumption lives on. We do spend more on home entertainment +23%, 170 dollars per year, and computers 300 dollars per year-no computers in the 70's, and mortgaes +69%, health insurance +90%, child care +100% and taxes +38%.
http://epb.lbl.gov/homepages/Rick_Diamond/LBNL55011-trends.pdf
http://www.yale.edu/law/leo/052005/papers/Warren.pdf
>>Perhaps hog is not the right word, but Japan is more of a drain on global energy resources on a per capita basis than Americans who are more self sufficient. And residential energy consumption in the US has not increased at all since 1970 so I see no evidence of energy gluttony in the US among consumers.
No I do not seeit. the United States is part of the Globe. That you have your own Oil deposits on US Soil does not mean you are not consuming Oil.
The NUMBERS speak for themselves. Energy consumed per capita.
Furthermore the 22% less spent on food 44 percent less spent on appliances and so on is due to the fact that food is being subsidized with tax dollars and many of PRODUCTS you buy are being made in China.
Indeed this one thing those supporting capitalists point to when supporting the system. They claim WAGES do not have to grow because the products being bought from China are cheaper, therefore higher wages not needed.
Again this does not show less consumption. Again your own charts show Americans eating more calories per day then in the 1970s' They show ever larger houses.
Your first chart refers to DOLLARS spent. This are inflation adjusted dollars but are simply RAW dollars not accounting for the fact that MADE IN CHINA stickered onto a product means it is cheaper.
To accurately measure whether the consumer is buying less then in the 1970s a person measuring has to count the number of THINGS bought, not the price paid for them.
The First Computer I bought in the 1980's was over 6000$$. I kept that sucker for 7 years.
I now spend less then 1000$$ to buy a computer and do it three times as often.
I have spent 3000$ less but consumed 3 times as much.
PK
Basically, my focus is on Americans living standards which is what this article is about, as it suggests we reduce consumer spending which they imply is directly related to our consumption.
We have a right to consume what resources we own, they are not global resources. As I mentioned, household consumption of energy has not increased since the 70's, even if the houses are a bit bigger.
As for Energy consumed per capita, you conveniently neglect my point about the MIC and military's consumption and our low population density, and lack of decent public transportation that is seen in many other countries which helps lower per capita energy consumption. Governments refusal to build up transportation infrastructure due to a lack of funds while they are able to bail out banks with trillions have made Americans reliant on the automobile/trucks for transportation and shipping goods across the country.
Concerning China, surely you know that in the 70's, many consumer goods came from Japan and Hong Kong. In the 80's, this moved to Taiwan, Singapore, Korea and then to China and South Asia in the 90's. During this period, of course the amount and scope of products manufactured abroad has increased. But it's not as if we did not have cheap imports in the 70's.
Now while it is true that the unit price is cheaper, so too is the quality, as you pointed out with your computer example, which BTW has also gotten much smaller and consumes less resources to produce. So people must purchase more frequently lower quality (durability) product which in many cases decreases in size to maintain what they had in the 70's, off-setting the price drops.
While you may look at this as increased consumption by the consumer, they receive little benefit since the cost of outsourcing manufacturing to make cheaper goods is paid by the consumer with fewer available jobs which suppress wages. Manufacturing has been replaced by the growth of the FIRE Industry monopolies and government spending, which absorbs much of their disposable income to pay insurance, interest and taxes which have increased at rapid levels.
Since 2 members of a household must now work to make ends meet, unlike in the 70's, this means an additional car and day care expenses. Then there are the tuitions for college which require the parent or child to go into serious debt only to end up with a job as a waiter.
As for food and calories, yes, calories have increased. Partly because people are working more and both parents work, so less meals are eaten at home, and fast food becomes the alternative. So they eat more calories, but they are lower quality calories which have adverse health effects, and health care costs have increased rapidly. While you make an issue of food subsidies in the US you ignore the universal health care most other developed countries provide to their citizens.
So my point is that while people like to give the perception that Americans are living high off the hog and consuming the worlds resources while living standards go up and up, the opposite is true, and even accounting for trade deficits, much of the resources consumed are homegrown or regionally produced and are not the worlds resources.
"a combination of technological progress (automation) and economic liberalization worldwide put new pressures on the labor market." "The financial industry was allowed to ... inject massive amounts of money via creation of debt. This in turn created galloping inflation" "The western technological civilization ... is too resource intensive"
"the economy has to be redirected towards productive investment that solves these problems"
The way to redirect investment is through enlightening/empowering the people to make the particular kinds of demands in the markets that serve the society's better interests. So the people will demand apples from the local small orchard to ensure that producer has a reasonable standard of living. In this case we are not leaving it to the market. We are leaving it to the people. Localism is the natural economic organization that comes out of the people's enlightenment/empowerment. With localism, investments will be directed to serve the people's demands, serving "labor" in the process. Localism also prevents the "galloping inflation" simply by removing demand for the elites' financial rackets. Localism also eliminates resource gluttony because the "externalization of costs", another of the elites' deadly rackets, is fully rejected by an enlightened/empowered people.
We believe in "benevolent capitalism" because we think it existed once. We ignore the context of history and the existence of class relations. There is a reason capitalism is not benevolent, it inherently serves the benefit of the capitalist class. Let's take the issue of consumption. Blaming the majority of Americans for overconsumption is nonsense. There is a reason, a purpose, behind such consumption. It serves the capitalist elite. If I buy more, the capitalists profit more. That is why the elite deems mass consumption so important, that the elite encouraged us to consume more even as they reduced wages.
One may think it is idealistic to desire socialism, but it is far more absurd to believe that inherent parts of the system can be changed while keeping that system intact.
Collective capitalism could be the solution. Buy them out and give each American equal shares of their stock and equal voting power in banks and corporations.
This is what you do when you start playing a "Monopoly" game. Of course the game ends when one person has the money. Then if there is more time, you start over. Which means you take the money from the winner, ie revolution, and distribute it equally among the remaining players, which is sort of communism, I guess. If you haven't tried Monopoly for some time, it is a great way to study how changes in the rules affects the nature of the game.
Hello Curtis,
When I was a kid in the fifties our neighbor Richard was better at flipping baseball cards than all the rest of us. Every few months he would win all the cards in the neighborhood. So he would call all the kids to stand beneath his second story window and he would throw out all his cards. We below would scramble to pick up as many as we could, and then in the next few months Richard would win them all back. (It's a good thing he never anticipated how much a rookie year Mickey Mantle would now be worth.)
Richard understood the basic principle of economics better than all our capitalists. When one side wins all the cards, the game comes to an end.
And that is what is happening now. The capitalists have won enough cards so that the game is coming to an end, at least for now. The more money they get, the more political power, the more power the more money, and so on in circularity. They have lowered their taxes, broken unions, brought in competition from fascist states like China where union organizing is illegal, and from India where there are between 25 and 60 million slaves.
For India, see, www.newyorker.com/reporting/2009/01/19/090119fa_fact_power
They have lowered working class purchasing power so much that we can only survive by borrowing, and now the loans have reached an unsustainable level.
Professor Barber thinks this system can be reformed with more humanistic values. No, Mr. Barber.
Maybe the capitalists can escape this cycle of inequality and bust without revolution (peaceful or otherwise) breaking out in more places than they can control. Maybe. But if they do escape this time, they will start the whole cycle of enrichment and poverty all over again. They always have, and they always will. But this time, with an ecological crisis added to the mix, we cannot afford too many more cycles.
If the equal shares of stock are made non-transferable, there can be no wealth concentration from such actions and therefore no monopoly game created.
Socialism had to be 'demonized' because it was already the tool of the corporate rationale cum legal entity as 'individual', mime made into a meme.
Reciprocity, the root of civil life, and the notion of taxes at the local level to pool individual resources to attend to a range of community needs.
Marginalization and profit margin are not two separate concepts.
Contemplating the artile also on CD today of the French group addressing billboards - advertising conflates the local with the 'global'. The former has personal dimensions in community. The latter is largely abstract and an article of 'faith' - material goods enter the community with an unknown history that all too often these days represents 'externalized costs' - a term that seems destined to become part of our education and consciousness, for the better.
The culprit is economic growth, which is indispensable as a substitute for global wealth redistribution and economic justice. Our massive debt, particularly as applied to non-productive housing expansion, was the substitute for real wage increases in the United States as we waited for the supply-siders' promised trickle-down effect.
That growth is also responsible for the destruction of the environment as we hurtle toward the illusion that globalization will "raise all boats" -- vastly improving living standards around the world -- absolute folly when we've already surpassed the planet's carrying capacity and are running out of the raw materials that really sustain life, namely water and soil.
Which leads me to my argument with Barber, which is not his gentle prescription for lower levels of consumption, but his suggestion that we procreate. What utter stupidity.
Yes, drholmquist, as long as we worship growth - growth in economy, population and consumption, we will be creating our own self-destruction. It bothers me more that we're killing so much other life in the process. I see the human race as a cancer on the planet, lead by a small percentage of aggressive people who believe greed and competition are good (it's good for them!), and followed by the majority of basically cooperative people who lack the aggressive gene to keep the "leaders" in check. In other words, we're screwed!
"President Barack Obama's Rubinite economic team seems designed to reassure rather than innovate, its members set to fix what they broke. But even if they succeed, will they do more than merely restore capitalism to the status quo ante, resurrecting all the defects that led to the debacle?"
Anyone who listed to Tim Geithner address Congress and answer some of their million dollar lobbyist questions would realize that he has no intentions of changing the status quo. Essentially what he told Congress was that he would try to find a "balance" between the Treasury and Federal Reserve.
Considering that the taxpayers are already in the "red" for trillions of bailout dollars and that we can expect our "fearless" leaders in Congress to demand more from us in an effort to maintain the staus quo, it would seem that the Rubinites will do nothing but perpetuate the same defects that led to this debacle.
Hillary Clinton ended her trip to China by asking that China continue to buy up US debt.
>>Clinton made the plea shortly before leaving China, the final stop on a four-nation Asian tour that also took her to Japan, Indonesia and South Korea, where she worked the crowds to try to restore America's standing abroad.
>>In Beijing, she called on authorities in Beijing to continue buying US Treasuries, saying it would help jumpstart the flagging US economy and stimulate imports of Chinese goods.
In other words do not look for Jobs for Americans. Look for America and the "consumer economy" to keep borrowing more money from China to buy all that stuff that is made in China.
All that Obama's "New Economic team" tries to do, is to reinflate the Bubble, so that American Consumers who work for less and less real wages borrow more and more money against assets that are inflated in value so as to buy more goods made in China.
There is no new thinking here. The authors contention that Capitalism can be made to work by consuming less is not logical. A Capitalist can not make "profits" without consumption.
Shut down consumption and you shut down Capitalism.
I can't believe this guy can mention capitalism and democracy all in the same sentence. What a joke. A professor speaking from his "ivory tower" in the US has about as much credibility as an ss officer speaking from his underground bunker (each in defense of his beloved view of life).
It is amazing to see intelligent, educated people defend an institution like capitalism, or the modern equivalent of slavery. I think it is something akin to really brilliant people thinking of "nothingness" or "infinity". It scares the ^&%$ out of them. The same applies to the obvious truth that if you defend capitalism, you defend the right of the strong to do whatever they please, but you fear that someone stronger will eventually take what you have. Thus, either A) all property and power is illegitimate and we should run our societies accordingly, or B) the strongest wins, swallow your pride and be obedient for you did not win the nature/nurture lottery.
Cheers
Here we go again with Herr Professor Barber giving us his garbage about the soul of capitalism!
He already did that in January of this year in an article called "A Revolution in Spirit" posted on Common Dreams.
Is this all academia has to offer these days, some third-rate apology of capitalism?
Is it surprising that the term “capitalism” seems to act as a red rag to so many commentators? Paraphrasing Churchill, it should be called the worsted economical system, save all the other ones that have been tried in complex societies. Name a better system rather condemning this.
Now is this very, very bad system perfect? No, not by a long shot and partially because we are not.
So, why do so few people see, that Benjamin Barber is trying to make this a better system by drawing attention to the fact that WE have to change to achieve that goal? That may have to do with the fact that it is so much easier to blame anybody else for our misery than take a good look inside us.
Capitalism is inherently flawed as a structure for making a living, Mr. Bluemoon. This flaw has nothing to do with those who labor within it, with their flaws or perfections. As such, it cannot be saved by changing our behavior. See my longer post above for why that is so.
Also, I must say that your suggestion that we have to change to make a better variety of capitalism is such formidable news that it ought to be printed on the front page of the New York Times tomorrow morning, for that is precisely what communists and Marxists used to say: man has to be changed in order for the better society to arise. In response to that, one would hear the defenders of capitalism and free-market ideology tell us in an endless stream of articles and books that capitalism is the right economic arrangement, for it is suited to our self-interested nature.
Remarkable what the apologists of this rotting and rotten type of economy will come up to salvage it. They will even pull out the old arguments of those dirty pinkos.
How desperate can ya get!
How often does Common Dreams give “capitalists” a forum? How many of us Common Dreams junkies are hard-core capitalists. I am amazed at the fury that this one word “capitalism” raises.
Please! - answer me just this one question: Which industrial or postindustrial country that does not or did not use capitalism in one form or another should be our model for a new economical system? Should we create one de novo? I am not a creationist. I believe in evolution(joke).
What a great article and what an important statement and questions... "Saving capitalism means a revolution of the spirit. Is the new president up to it? Are we?"
I believe that many, many people are ready for just such a change. And I believe that many more would be if they saw that we do indeed have such a choice. But, I also believe that few of us, including me, know what to do... today... tomorrow... to help move us in such a direction.
Since Professor Barber insists on disseminating his thought, I feel obliged to counter him with what I already stated on this site.
Capitalism is not a political system, and its twentieth-century history shows very graphically that it is in fact compatible with just about any regime: for example, with a phony democracy such as the one Japan has had since the end of World War II (basically, a one party system; see the analysis of Chalmer Johnson in his book "Blowback"), with Germany's Nazi dictatorhip, with Franco's brand of authoritarian rule, with Mussolini's fascism, with the Greek military junta (installed by courtesy of the CIA), with the terror regime of Suharto in Indonesia (1965-1998; another gift to the world from the CIA), with a theocracy such as that of Saudia Arabia, with Communist China, et cetera.
As long as a political regime can accomodate the greed, venality, disregard for human decency (not to mention human rights), the plundering of the ecosphere (its animals, plants, minerals, water, etc.) characteristic of capitalism (all of it euphemistically called 'growth'), capital will move in and make itself at home.
In other words, Mr. Barber, capitalism does not need democracy and couldn't care less about democracy
I suppose that the apologists of capitalism are as numerous as the apologists of Empire, and that Mr. Barber is to be counted among them.
How many more recessions, depressions, crises, hordes of suffering, unemployed people, of children lacking medical care, of families thrown out of their homes, of people robbed of their life-savings and pensions by cynical financiers, of millions of nearly illiterate citizens (yes, that is what happening right in the U.S.), and uncountable other ills generated by capitalism, will be needed before a university professor such as Mr. Barber finally gets it?
How goes the saying about being unable to learn from experience and about persisting with the same scenario in the face of repeated failure? Is not the stubborn refusal to learn from prior experience contrary to the very spirit of scientific inquiry, which one would assume a university professor would want to uphold? Is it not a sign of a severe disconnection from reality?
One could also liken this resistance to reality to a form of religious consciousness. Indeed, religious man typically learns only with great difficulty: see how long it took the Vatican to accept heliocentrism and other scientific discoveries, and witness its stubborn resistance to contraception in the face of hundreds of millions of people's misery.
The response to this exercise in the poverty -- or should I say the sheer misery -- of a certain type of academic thinking was given on this site on January 21, 2009, by Michael Parenti in his article "Capitalism Self-Inflicted Apocalypse."
Capitalism, as a mode of production, is very simply doomed because of its emphasis on unlimited growth, which is not compatible with the finitude, the limited character, of Earth's resources. However, given the psychological traits exhibited by academic authorities such as Mr. Barber, and, worse, given the dismal mental landscape of our wonderful leaders, capitalism will in all likelihood not be abolished deliberately. However, the Earth will abolish it, by sheer force and immense, catastrophic suffering. Just consider capitalism's energetic Achilles' heel: once the oil goes, capitalism will stagger towards its end. No plentiful energy, no growth.
>>Capitalism, as a mode of production, is very simply doomed because of its emphasis on unlimited growth, which is not compatible with the finitude, the limited character, of Earth's resources
It worse then that, it Infinite growth based upon creating false scarcity.
Thank you Abendland,
You say it very well.
Two questions, however, remain.
1) What system, call it socialism or anything else, is going to replace capitalism? Certainly not the Stalinism or Maoism of the 20th Century: inherently autocratic and ultimately unstable. More state capitalist than socialist, since the state is the single capitalist. So what, then? What is the shape of a society which is both democratic and co-operative?
2) How do we get there?
Not enough time to answer these questions here, especially since each question set attracts attention for only 2 days. But calling down the evils and instabilities of capitalism is just a beginning. What follows, and where do we debate it?
Thank you for your questions, Laurence.
Denouncing capitalism, as I did, on the basis of energetic and ecological considerations, in addition to the more traditional social and ethical grounds, takes one out of the communism versus capitalism framework. From an ecological standpoint, a communist economy is no less wrong-headed than a capitalist one. In fact, they share exactly the same presuppositions, save for the manner in which wealth is distributed. Although communism at least ideally wants to end the exploitation of man by man, it does not question the exploitation of nature by man. Nor does it question the requirement of constant growth and massive industrialization.
In view of the generalized ineptitude of most world leaders in the face of the ecological crisis (climate change, extinction of species, etc.), I would suspect that we will be ushered out of capitalism by various types of decline and collapse.
This exit will be extremely painful. It will return those who manage to survive to very localized economies, of a predominantly agricultural sort. It is my hope that the decision-making process (the political fabric, if you will) of these new ways of making a living will be democratic in character. However, it is very difficult to say whether it will. Some regions of the world and of the United States will be, owing to their traditions, better suited for that to happen than others.
In view of our contemporary economic and especially political predicament (Congress does not listen and is in denial), it does not seem realistic to me that a programatic and thus reasonably painless exit can be fashioned.
At this point, I am not aware of a satisfactory forum for debating the very grave situation we find ourselves in.
Wonderful overall response to the article --
"Capitalism, as a mode of production, is very simply doomed because of its emphasis on unlimited growth, which is not compatible with the finitude, the limited character, of Earth's resources. However, given the psychological traits exhibited by academic authorities such as Mr. Barber, and, worse, given the dismal mental landscape of our wonderful leaders, capitalism will in all likelihood not be abolished deliberately. However, the Earth will abolish it, by sheer force and immense, catastrophic suffering. Just consider capitalism's energetic Achilles' heel: once the oil goes, capitalism will stagger towards its end. No plentiful energy, no growth."
Somewhere along the way the supposed "systems" overtook sanity, reason and
common sense. But I agree with you that religion also plays its role in
confusing the public and "Manifest Destiny" and "Man's Dominion Over Nature"
are certainly examples of how organized patriarchal religion paved the way
for exploittion of nature. These are the licenses to the elite to exploit
nature, animal-life, natural resources and even other human beings according
to various myths of inferiority. Organized patriarchal religion is the
underpinning for patriarchy which is where our sanity and common sense begin
to leave us in the face of patriarchal authority sanctioned by "god."
Look to the war on nature, the war on creed, the war on race, the war on gender,
the war on sexual orientation and you will find the patriarchal Wizard of Oz.
What makes patriarchy violent, aggressive, exploitive -- ?
Global Warming is the greatest threat to humanity and to this planet, but it
is suicidal patriarchy which has created this horror.
"According to all myth, the female - not the male -- gives life"
"What if Obama committed the United States to reducing consumer spending from 70 percent of GDP to 50 percent over the next 10 years, bringing it to roughly where Germany's GDP is today? The Germans have a commensurate standard of living and considerably greater equality. Imagine all the things we could do without having to shop: Play and pray, create and relate, read and walk, listen and procreate - make art, make friends, make homes, make love."
Sounds like a recipe where the consumer simply has not enough money, and GDP reduction is all on the consumers back. Should this reduction happen, sounds like people will have so much time to do all of the fun things because they won't have jobs, and won't have any money to shop. It is well known that increasing poverty or reduced living standards results in increasing population, hardly a desirable thing. We should be talking about raising living standards, not lowering them.
Also, Germany has a very generous social welfare system and universal health care and it's reunification with Eastern Germany was responsible for the drop in per capita GDP relative to the US. West Germany GDP is likely not much different than the US although they do not break it out anymore.
Also, last I checked the Germans were almost entirely white, mostly non-immigrants and 95% Christian/secular population, so not sure the equality comparison means squat.
"...putting capitalism in its place: SERVING people "...........
is a great example of the ultimate in CONTRADICTION.
capitalism SERVING PEOPLE as its "proper place?"
it's laughable. it's like saying "the proper place of a cadaver is to make babies"....
or "the proper place of a GUN is to never be fired"
or "the proper function of the eye is to listen"...
it's all sophistry trying to make capitalism worth saving because it is "inherently benevolent..we just screwed up in using it".........
even if the exact opposite is true.
"to save rather than spend"
"to save rather than spend"
"to save rather than spend"
"to save rather than spend"
"to save rather than spend"
"to save rather than spend"
"to put capitalism in its proper place"
The more general solution is to put elites in their proper place, to halt their class war aggression against the people. This is achieved through the enlightenment/empowerment of the people. As a result, the people will naturally embrace the only sensible market policy: Market demands serving society's better interests. The implication of this is all the advertising, marketing, and other manipulations of market demands are eliminated.
Knowing their better interests and the market demands that serve them, and making those demands are the responsibility of the people. The people may opt to delegate part of the task to the government, for example to calculate and enforce full costs in retail prices. This allows the people to streamline a significant chunk of their civic duty for increased leisure time.
Beyond the markets, and in every sector the question has to be asked repeatedly: Do we need this? For example, we don't need standing armies, corporations, banks, political parties, or copyright protection. We thereby trim all the excess activity, the result being reduced workweeks, down to 15 hours/week. Add to this a limit on asset ownership and enterprise size to ten man-powers, plus closed cycles (food/material recycling). Add to this a reduction of energy consumption by a factor of four and we maintain a reasonable standard of living (1/4 of today's standard in material terms) while eliminating most of the unnecessary pressure we now exert on the biosphere.
Add to the 15 hour work weeks another 15 hours of civic duty to keep everything in order. There you have it. A sustainable healthy society by and for the people. There is no role for elites.
"Candidate Obama certainly inspired many young people to think beyond themselves. The convergence of his election and the collapse of the global credit economy marks a moment when radical change is possible."
Now all he has to do is get the wealthy elites to think beyond themselves!
That's not going to happen any time soon; so the best we can do for ourselves is to realize that darker days are ahead and try to embrace that reality as another teacher on our life's path. Individually and collectively, we must try to turn our self-interests and ambitions into a more positive vision for all of humanity.
The "wealth creation" game is over because finance capitalism is in a state of collapse. No life-support system exists to keep it functioning in the long term without destroying entire societies. What governments around the globe are doing right now is taxing their citizens and using most of that money to "preserve wealth" for the elite.
Radical change is necessary and possible! Let's stay on top of their game and demand that necessary change.
http://www.nytimes.com/2009/02/24/business/worldbusiness/24euro.html?hp
link to a new york times article today......
the erstwhile "model reform for capitalism" countries of eastern europe -- the very ones supposedly demonstrating the greatness and magic of capitalism , in following the USA model --
are now becoming breadbaskets once again....with riots growing...and threatening to be the "domino effect" like the Asian Crisis in the late-80's -- due to the same capitalist shenanigans....
brief and limited "prosperity and glitter" -- to be paid for with the REAL BILLS that never stop coming.......
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February 24, 2009
As It Falters, Eastern Europe Raises Risks
By NELSON D. SCHWARTZ
PARIS — Since the fall of the Berlin Wall, the countries of Eastern Europe have emerged as critical allies of the United States in the region, embracing American-style capitalism and borrowing heavily from Western European banks to finance their rise.
Now the bill is coming due.
The development boom that turned Poland, Hungary and other former Soviet satellites into some of Europe’s hottest markets is on the verge of going bust, raising worrisome new risks for the global financial system that may ricochet back to the United States.
Last week, Wall Street plunged after Moody’s Investors Service warned that Western banks that had recently beat a path to Eastern Europe’s doorstep now faced “hard landings,” spooking investors with new fears that the exposure could spread beyond Europe’s shores.
“There’s a domino effect,” said Kenneth S. Rogoff, a professor at Harvard and former chief economist of the International Monetary Fund. “International credit markets are linked, and so a snowballing credit crisis in Eastern Europe and the Baltic countries could cause New York municipal bonds to fall.”
The danger is on several fronts. The big European economies, including Britain, France, Germany and Spain, are already in recession, and many of their largest banks have curbed lending at home and abroad.
For Central and Eastern Europe, which enjoyed breakneck growth thanks to a wave of credit from these banks, the squeeze could not have come at a worse time. Already bruised by the global downturn, they are on the verge of a downward spiral as the flow of credit dries up. Average growth among countries in the region slid to 3.2 percent last year, from 5.4 percent in 2007. This year, it is forecast to contract by 0.4 percent — and very likely more.
“These numbers will be coming down,” said Charles Collyns, deputy director of the research department at the International Monetary Fund.
Add to that a new worry: International finance officials fret that the worst regional economic crisis since the Berlin Wall came down could set off a contagion among the region’s currencies, with echoes of the Asian financial crisis of the late 1990s. Then, emerging markets like Thailand borrowed in foreign currencies to fuel growth, but suddenly owed more than they could afford to pay back once their own currencies lost value.
Since peaking last summer, Poland’s currency has slumped 48 percent against the euro; Hungary’s has fallen 30 percent and the Czech Republic’s is off 21 percent. “Very simply, Eastern Europe has become Europe’s version of the subprime market,” said Robert Brusca of FAO Economics in New York.
On Monday, the central banks of Poland, Hungary, Romania and the Czech Republic sought to restore calm by issuing statements arguing that the recent sell-off was not justified by economic fundamentals.
In addition, Western banks could very likely suffer a further increase in nonperforming loans. “Most of the banks in this region are from the euro countries and will have to undergo further recapitalization,” Gillian Edgeworth, an economist with Deutsche Bank in London, said.
Another problem is that big institutional investors in Western Europe — banks, pension funds and insurance companies — have large holdings of East European debt. If the banks need further infusions of capital from Western governments already straining to pay for stimulus packages and to maintain their social safety nets, it could put additional pressure on the euro as well.
“The threat to more developed economies goes through the banking channel,” Dominique Strauss-Kahn, the head of the monetary fund, said in a recent interview.
As the downturn worsens across the Continent, Mr. Rogoff explained, risk aversion can quickly spread to other parts of the world. Some investors hurt by plunging markets in Europe are having to sell American assets to raise money, adding pressure to a United States stock market already weakened by fears of nationalization.
“It’s one big trans-Atlantic money market out there, and these banks lend money to each other all the time,” said Simon Johnson, another veteran of the monetary fund who is a now a professor at the Sloan School of Management at the Massachusetts Institute of Technology. “Deutsche Bank and UBS and Goldman Sachs and Citi are all intertwined.”
In Eastern Europe itself, the risks for Western companies doing business there have also surged.
Until recently, for example, Eastern Europe and Russia were rare bright spots for the beleaguered American automakers Ford Motor and General Motors. In Poland, where G.M. has a major factory, sales rose 10 percent last year to 38,000 cars, while sales in Russia soared 30 percent to 338,000 vehicles.
Since then, demand has fallen sharply. In the Baltic countries, which were among the first to feel the chill, G.M.’s sales dropped an average of 57 percent in the final months of 2008.
Among the biggest victims of the crisis are tens of thousands of workers who had clawed their way to more prosperity, only to see their dreams crumble as jobs and the financial system eroded.
Because their declining currencies make it more expensive to import goods and to pay off foreign debts, governments have cut spending and reduced public services, leading to a wave of increasingly violent protests across the region that is threatening governments.
On Friday, the coalition government in Latvia — where the economy contracted more than 10 percent on an annualized basis last month — became the second European government, after that of Iceland, to collapse.
Meanwhile, in the Ukrainian capital, Kiev, demonstrators took to the streets Friday as depositors rushed to pull their money out of local banks.
The crisis has forced the monetary fund to step into the breach. In recent months, it has extended Ukraine, Iceland, Hungary and Latvia billions in aid. “I’m expecting a second wave of countries to knock at the door,” Mr. Strauss-Kahn said.
Two years ago, “the idea was very, very consistently projected that the I.M.F. would not have to help emerging countries any more,” and that the “financial markets would take care of it,” Jean-Claude Trichet, president of the European Central Bank, said Friday. Now, he said, this has proved to be “totally false.”
For Mr. Johnson and other students of financial history, the latest developments in Europe — especially in Austria, whose banking industry is heavily exposed to its Eastern neighbors — raise eerie parallels with the 1930s. Mr. Johnson notes that it was the failure of a Viennese bank, Creditanstalt, in 1931 that was a turning point in what became the Great Depression.
Mr. Johnson said he did not expect a repeat of that calamity, but he does foresee a long period of minimal growth, akin to Japan’s “lost decade” of the 1990s, in both the United States and Europe.
And while the United States may have been the trigger for this international financial crisis, it is hardly alone in shouldering the blame. “We set off the sticks of dynamite, but a lot of people had tinderboxes under their houses,” he said.
a very telling remark in the NYTimes Article is the paragraph that cites a similarity -- or a repetitiousness - of capitalism's habit of building up towards crises :
such as the depression in europe and particularly hit germany hard -- creating the conditions for the rise of fascism and Adolf Hitler......
WHERE did that manipulative capitalism really begin?
same as where it began now -- USA and ENGLAND. banking, monetary policy manipulations. etc. etc. etc.
=======================
For Mr. Johnson and other students of financial history, the latest developments in Europe — especially in Austria, whose banking industry is heavily exposed to its Eastern neighbors — raise eerie parallels with the 1930s. Mr. Johnson notes that it was the failure of a Viennese bank, Creditanstalt, in 1931 that was a turning point in what became the Great Depression.
If this isn't the final failure of capitalism then we are, indeed,
a very stupid people!
Capitalism is fairly new to the world -- a few hundred years old.
Capitalism is a ridiculous "King-of-the-Hill" system intended to move
the wealth and natural resources of a nation from the many to the few.
It succeeds very well at this.
Unregulated capitalism is merely organized crime.
Let's move on to economic democracy -- democratic socialism.
And let's re-regulate capitalism out of existence.
Btw, WHERE IS TALK OF RE-REGULATING CAPITALISM ...??
"According to all myth, the female - not the male -- gives life"