Capitalism’s Self-inflicted Apocalypse

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Capitalism’s Self-inflicted Apocalypse

Capitalism’s Self-inflicted Apocalypse

By Michael Parenti

February 10, 2009 "Information Clearinghouse" -- After
the overthrow of communist governments in Eastern Europe, capitalism
was paraded as the indomitable system that brings prosperity and
democracy, the system that would prevail unto the end of history.

The present economic crisis, however, has convinced even some prominent free-marketeers
that something is gravely amiss. Truth be told, capitalism has yet to
come to terms with several historical forces that cause it endless
trouble: democracy, prosperity, and capitalism itself, the very
entities that capitalist rulers claim to be fostering.

Plutocracy vs. Democracy

Let
us consider democracy first. In the United States we hear that
capitalism is wedded to democracy, hence the phrase, “capitalist
democracies.” In fact, throughout our history there has been a largely
antagonistic relationship between democracy and capital concentration.
Some eighty years ago Supreme Court Justice Louis Brandeis commented,
“We can have democracy in this country, or we can have great wealth
concentrated in the hands of a few, but we can’t have both.” Moneyed
interests have been opponents not proponents of democracy.

The
Constitution itself was fashioned by affluent gentlemen who gathered in
Philadelphia in 1787 to repeatedly warn of the baneful and dangerous
levelling effects of democracy. The document they cobbled together was
far from democratic, being shackled with checks, vetoes, and
requirements for artificial super majorities, a system designed to
blunt the impact of popular demands.

In the early days of the
Republic the rich and well-born imposed property qualifications for
voting and officeholding. They opposed the direct election of
candidates (note, their Electoral College is still with us). And for
decades they resisted extending the franchise to less favored groups
such as propertyless working men, immigrants, racial minorities, and
women.

Today conservative forces continue to reject more equitable electoral features such as proportional representation,
instant runoff, and publicly funded campaigns. They continue to create
barriers to voting, be it through overly severe registration
requirements, voter roll purges, inadequate polling accommodations, and electronic voting machines that consistently “malfunction” to the benefit of the more conservative candidates.

At
times ruling interests have suppressed radical publications and public
protests, resorting to police raids, arrests, and jailings—applied most recently with full force against demonstrators in St. Paul, Minnesota, during the 2008 Republican National Convention.

The
conservative plutocracy also seeks to rollback democracy’s social
gains, such as public education, affordable housing, health care,
collective bargaining, a living wage, safe work conditions, a non-toxic
sustainable environment; the right to privacy, the separation of church
and state, freedom from compulsory pregnancy, and the right to marry
any consenting adult of one’s own choosing.

About a century
ago, US labor leader Eugene Victor Debs was thrown into jail during a
strike. Sitting in his cell he could not escape the conclusion that in
disputes between two private interests, capital and labor, the state
was not a neutral arbiter. The force of the state--with its police,
militia, courts, and laws—was unequivocally on the side of the company
bosses. From this, Debs concluded that capitalism was not just an
economic system but an entire social order, one that rigged the rules
of democracy to favor the moneybags.

Capitalist rulers continue
to pose as the progenitors of democracy even as they subvert it, not
only at home but throughout Latin America, Africa, Asia, and the Middle
East. Any nation that is not “investor friendly,” that attempts to use
its land, labor, capital, natural resources, and markets in a
self-developing manner, outside the dominion of transnational
corporate hegemony, runs the risk of being demonized and targeted as “a
threat to U.S. national security.”

Democracy becomes a problem
for corporate America not when it fails to work but when it works too
well, helping the populace move toward a more equitable and livable
social order, narrowing the gap, however modestly, between the
superrich and the rest of us. So democracy must be diluted and
subverted, smothered with disinformation, media puffery, and
mountains of campaign costs; with rigged electoral contests and
partially disfranchised publics, bringing faux victories to more or
less politically safe major-party candidates.

Capitalism vs. Prosperity

The
corporate capitalists no more encourage prosperity than do they
propagate democracy. Most of the world is capitalist, and most of the
world is neither prosperous nor particularly democratic. One need only
think of capitalist Nigeria, capitalist Indonesia, capitalist Thailand,
capitalist Haiti, capitalist Colombia, capitalist Pakistan, capitalist
South Africa, capitalist Latvia, and various other members of the Free
World--more accurately, the Free Market World.

A prosperous,
politically literate populace with high expectations about its standard
of living and a keen sense of entitlement, pushing for continually
better social conditions, is not the plutocracy’s notion of an ideal
workforce and a properly pliant polity. Corporate investors prefer poor
populations. The poorer you are, the harder you will work—for less. The
poorer you are, the less equipped you are to defend yourself against
the abuses of wealth.

In the corporate world of “free-trade,”
the number of billionaires is increasing faster than ever while the
number of people living in poverty is growing at a faster rate than the
world’s population. Poverty spreads as wealth accumulates.

Consider
the United States. In the last eight years alone, while vast fortunes
accrued at record rates, an additional six million Americans sank below
the poverty level; median family income declined by over $2,000;
consumer debt more than doubled; over seven million Americans lost
their health insurance, and more than four million lost their pensions;
meanwhile homelessness increased and housing foreclosures reached
pandemic levels.

It is only in countries where capitalism has
been reined in to some degree by social democracy that the populace has
been able to secure a measure of prosperity; northern European nations
such as Sweden, Norway, Finland, and Denmark come to mind. But even in
these social democracies popular gains are always at risk of being
rolled back.

It is ironic to credit capitalism with the genius
of economic prosperity when most attempts at material betterment have
been vehemently and sometimes violently resisted by the capitalist
class. The history of labor struggle provides endless illustration of
this.

To the extent that life is bearable under the present U.S.
economic order, it is because millions of people have waged bitter
class struggles to advance their living standards and their rights as
citizens, bringing some measure of humanity to an otherwise heartless
politico-economic order.

A Self-devouring Beast

The
capitalist state has two roles long recognized by political thinkers.
First, like any state it must provide services that cannot be reliably
developed through private means, such as public safety and orderly
traffic. Second, the capitalist state protects the haves from the
have-nots, securing the process of capital accumulation to benefit the
moneyed interests, while heavily circumscribing the demands of the
working populace, as Debs observed from his jail cell.

There is
a third function of the capitalist state seldom mentioned. It consists
of preventing the capitalist system from devouring itself. Consider the
core contradiction Karl Marx pointed to: the tendency toward
overproduction and market crisis. An economy dedicated to speedups and
wage cuts, to making workers produce more and more for less and less,
is always in danger of a crash. To maximize profits, wages must be kept
down. But someone has to buy the goods and services being produced. For
that, wages must be kept up. There is a chronic tendency—as we are
seeing today—toward overproduction of private sector goods and services
and underconsumption of necessities by the working populace.

In addition, there is the frequently overlooked self-destruction
created by the moneyed players themselves. If left completely
unsupervised, the more active command component of the financial system
begins to devour less organized sources of wealth.

Instead of
trying to make money by the arduous task of producing and marketing
goods and services, the marauders tap directly into the money streams
of the economy itself. During the 1990s we witnessed the collapse of an
entire economy in Argentina when unchecked free marketeers stripped
enterprises, pocketed vast sums, and left the country’s productive
capacity in shambles. The Argentine state, gorged on a heavy diet of
free-market ideology, faltered in its function of saving capitalism
from the capitalists.

Some years later, in the United States, came the multi-billion-dollar
plunder perpetrated by corporate conspirators at Enron, WorldCom,
Harkin, Adelphia, and a dozen other major companies. Inside players
like Ken Lay turned successful corporate enterprises into sheer
wreckage, wiping out the jobs and life savings of thousands of
employees in order to pocket billions.

These thieves were caught and convicted. Does that not show capitalism’s self-correcting
capacity? Not really. The prosecution of such malfeasance— in any case
coming too late—was a product of democracy’s accountability and
transparency, not capitalism’s. Of itself the free market is an amoral
system, with no strictures save caveat emptor.

In the meltdown
of 2008-09 the mounting financial surplus created a problem for the
moneyed class: there were not enough opportunities to invest. With more
money than they knew what to do with, big investors poured immense sums
into nonexistent housing markets and other dodgy ventures, a
legerdemain of hedge funds, derivatives, high leveraging, credit
default swaps, predatory lending, and whatever else.

Among the
victims were other capitalists, small investors, and the many workers
who lost billions of dollars in savings and pensions. Perhaps the
premiere brigand was Bernard Madoff. Described as “a longstanding
leader in the financial services industry,” Madoff ran a fraudulent
fund that raked in $50 billion from wealthy investors, paying them back
“with money that wasn’t there,” as he himself put it. The plutocracy
devours its own children.

In the midst of the meltdown, at an
October 2008 congressional hearing, former chair of the Federal Reserve
and orthodox free-market devotee Alan Greenspan confessed that he had
been mistaken to expect moneyed interests--groaning under an immense accumulation of capital that needs to be invested somewhere--to suddenly exercise self-restraint.

The
classic laissez-faire theory is even more preposterous than Greenspan
made it. In fact, the theory claims that everyone should pursue their
own selfish interests without restraint. This unbridled competition
supposedly will produce maximum benefits for all because the free
market is governed by a miraculously benign “invisible hand” that
optimizes collective outputs. (“Greed is good.”)

Is the crisis of 2008-09 caused by a chronic tendency toward overproduction and hyper-financial
accumulation, as Marx would have it? Or is it the outcome of the
personal avarice of people like Bernard Madoff? In other words, is the
problem systemic or individual? In fact, the two are not mutually
exclusive. Capitalism breeds the venal perpetrators, and rewards the
most unscrupulous among them. The crimes and crises are not irrational
departures from a rational system, but the converse: they are the
rational outcomes of a basically irrational and amoral system.

Worse
still, the ensuing multi-billion dollar government bailouts are
themselves being turned into an opportunity for pillage. Not only does
the state fail to regulate, it becomes itself a source of plunder,
pulling vast sums from the federal money machine, leaving the taxpayers
to bleed.

Those who scold us for “running to the government for
a handout” are themselves running to the government for a handout.
Corporate America has always enjoyed grants-in-aid, loan guarantees,
and other state and federal subventions. But the 2008-09 “rescue
operation” offered a record feed at the public trough. More than $350
billion was dished out by a right-wing lame-duck Secretary of the
Treasury to the biggest banks and financial houses without
oversight--not to mention the more than $4 trillion that has come from
the Federal Reserve. Most of the banks, including JPMorgan Chase and
Bank of New York Mellon, stated that they had no intention of letting
anyone know where the money was going.

The big bankers used some
of the bailout, we do know, to buy up smaller banks and prop up banks
overseas. CEOs and other top banking executives are spending bailout
funds on fabulous bonuses and lavish corporate spa retreats. Meanwhile,
big bailout beneficiaries like Citigroup and Bank of America laid off
tens of thousands of employees, inviting the question: why were they
given all that money in the first place?

While hundreds of
billions were being doled out to the very people who had caused the
catastrophe, the housing market continued to wilt, credit remained
paralyzed, unemployment worsened, and consumer spending sank to record
lows.

In sum, free-market corporate capitalism is by its nature
a disaster waiting to happen. Its essence is the transformation of
living nature into mountains of commodities and commodities into heaps
of dead capital. When left entirely to its own devices, capitalism
foists its diseconomies and toxicity upon the general public and upon
the natural environment--and eventually begins to devour itself.

The
immense inequality in economic power that exists in our capitalist
society translates into a formidable inequality of political power,
which makes it all the more difficult to impose democratic regulations.

If
the paladins of Corporate America want to know what really threatens
“our way of life,” it is their way of life, their boundless way of
pilfering their own system, destroying the very foundation on which
they stand, the very community on which they so lavishly feed.

Michael Parenti received his Ph.D.
in political science from Yale University. He has taught at a number of
colleges and universities, in the United States and abroad. He is the
author of twenty books: Please visit his website http://michaelparenti.org

Farmer Brown's picture
Farmer Brown
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Re: Capitalism’s Self-inflicted Apocalypse

I suppose commie's such as this guy must be peeing their pants in glee right about now.  I wonder how he sleeps at night knowing that he's making money (gasp!) selling books (double gasp!) published by evil capitalists (faint!!!).

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Re: Capitalism’s Self-inflicted Apocalypse

Patrick, is your comment in jest or are you serious?

Try commenting on the content of his message rather than attacking the messenger. Making fun of the messenger like this make's me think that he really hit a nerve with you and that you don't have an intelligent response.

Charlie

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Re: Capitalism’s Self-inflicted Apocalypse

Uh, I read Patrick "five-by."  What's the problem?

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Re: Capitalism’s Self-inflicted Apocalypse
Quote:

Patrick, is your comment in jest or are you serious?

Try commenting on the content of his message rather than attacking the
messenger. Making fun of the messenger like this make's me think that
he really hit a nerve with you and that you don't have an intelligent
response.

Charlie

I suppose you're right, Charlie.  This is usually not my style.  There are just so many things wrong with this article, I don't even know where to begin.  His transitions and justificatons are so transparently flawed and biased there really isn't much content to attack because it's hollow.  It's offensive to my intelligence as I hope it is to yours.  I did start a thread on what capitalism is and isn't which you can find here: http://www.peakprosperity.com/forum/time-get-out-way-what-capitalism/12461 

If you know of a way of sending it to Mr. Parenti, please let me know.  That is a debate I would love to have.

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Re: Capitalism’s Self-inflicted Apocalypse

That's a bit rich Patrick....  I posted this, and my intelligence isn't offended, what's wrong with yours?

After re-reading it, I'm still convinced he's right....  and it's well written to boot.  So if you think it is that inaccurate, let's hear it, where is he wrong?

Mike 

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Re: Capitalism’s Self-inflicted Apocalypse

OK, Mike, you've suckered me into it.  I'll just hit a few main points because to do the whole thing I'd need two keyboard and four hands:

Quote:

The document they cobbled together was
far from democratic, being shackled with checks, vetoes, and
requirements for artificial super majorities, a system designed to
blunt the impact of popular demands.

How is this a flaw with our system?  Checks and balances keep too much power from being concentrated in one arm of government.  Super-majorities are only required for major changes, like ammendments to the constitution.  They were designed to keep too much change from happening too soon, and for avoiding mob rule and dictatorship of the majority, which was warned against repeatedly by the founders.  Instead, Parenti argues this was designed to protect wealth from being transferred from one group of people to another.  How could that possibly happen if income taxes didn't even exist at the time, and the only people who paid taxes were the wealthy to begin with? 


Quote:

In the early days of the
Republic the rich and well-born imposed property qualifications for
voting and officeholding. They opposed the direct election of
candidates (note, their Electoral College is still with us). And for
decades they resisted extending the franchise to less favored groups
such as propertyless working men, immigrants, racial minorities, and
women.

Property-qualifications were required to vote because only property-owners paid taxes.  That actually still makes sense to me Not that voting should be restricted to property-owners, but certainly to those who pay taxes - otherwise it's just theft by the majority.  Some offices, like those for Senator, were chosen by the governor, instead of by popular vote, so what?  Immigrants still can't vote and as long as someone is not a citizen, why in the world would they be able to vote?  I don't know of any country that allows non-citizen immigrants the right to vote.  As for the Electoral College, this was designed to give small states an equal voice in the senate and a larger voice than their population would grant them in general elections.  The reason they did this was to get all the states to agree to become a Union.  Without the assurance of an equal voice in at least one chamber of the legislature, the smaller states would have never gone along with the formation of the United States of America.  This is basic history that unfortunately is not taught very well anymore, but I would expect that Parenti's alma mater, Yale, would have a decent history program so it wreaks of blatant distortion on his part, which is confirmed by reading the rest of his article.


Quote:

Today conservative forces continue to reject more equitable
electoral features such as proportional representation,
instant runoff, and publicly funded campaigns. They continue to create
barriers to voting, be it through overly severe registration
requirements, voter roll purges, inadequate polling accommodations, and
electronic voting machines that consistently “malfunction” to the
benefit of the more conservative candidates.

Now Parenti is just making suff up.  Until now, he was distorting history, now he's just making unsubstantiated claims.  If all these things are true, let's see the evidence.  By the way, the vast majority of voter-registration polls in the US are run by democrats, especially those in minority districts, so I find it very difficult to see how conservatives could pull off such a fraud, even if they wanted to.

The next three paragraphs are some sort of recreation of what some labor leader in a jail cell thought.  So what?  I'm sure I can find a jailed capitalist that thought differently - would that matter to anyone?

OK, and that's just Section 1.  Forgive me for not picking apart sections 2 and 3 just yet. If nobody else has done me the favor, I'll take a hack at those tomorrow or the next day.  Hey, I live in Costa Rica:  "manana" is a perfectly legitimate excuse. 

Cheers,

Patrick

 

 

 

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Re: Capitalism’s Self-inflicted Apocalypse

Damnthematrix - thanks for the post.  Usually I enjoy your posts and always find some good information but this time...well.  Let me use the United States as an example.

The error in this logic is that it assumes that capitalism is being practiced in the United States.  Its not.  One of the basic requirements for capitalism is to have unfettered and transparent markets.  We have had neither for many years. Our current system is constantly manipulated - look at the FOMC and PPT alone! 

Larry 

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Damnthematrix
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Re: Capitalism’s Self-inflicted Apocalypse
DrKrbyLuv wrote:

Damnthematrix - thanks for the post. Usually I enjoy your posts and always find some good information but this time...well. Let me use the United States as an example.

The error in this logic is that it assumes that capitalism is being practiced in the United States. Its not. One of the basic requirements for capitalism is to have unfettered and transparent markets. We have had neither for many years. Our current system is constantly manipulated - look at the FOMC and PPT alone!

Larry

Larry, I keep hearing this on this site all the time......  however, how could it possibly be otherwise?

There are some things in that article that hit a chord with me, not least your appalling electoral system....  man it SUX!  You could really learn a thing ot two on how to run a Republic from the French, and how to run the ballot boxes from us in Australia.  When I saw the goings on at Bush's first election, I was gobsmacked.

Mike 

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Re: Capitalism’s Self-inflicted Apocalypse

.

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DrKrbyLuv
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Re: Capitalism’s Self-inflicted Apocalypse

Mike said:

There are some things in that article that hit a chord with me, not
least your appalling electoral system....  man it SUX!  You could
really learn a thing ot two on how to run a Republic from the French,
and how to run the ballot boxes from us in Australia.  When I saw the
goings on at Bush's first election, I was gobsmacked.

No doubt our election system stinks.  We have a two party tyranny - the two parties jointly run the presidential debates which makes the decision much easier for the voters by limiting the choice between two perpetually bad candidates.  Most of the time people end up voting against the candidate that they dislike the most.

But back to capitalism - I may lose my capitalist membership card for saying this, but I also believe in international protectionism.  No country may sustain a healthy economy if it chronically runs a trade deficit.  And on the other side of the equation, countries that export more typically have - and maintain cheap labor.  If trade is balanced, it forces nations to treat the people more like consumers rather than cheap labor.

You're right in saying that capitalism may look for profits from both sides - production and cost cutting.  The cost cutting side (the drive to reduce expenses) may exploit the people.  If I were in charge, I'd require that companies provide health and retirement benefits and if an executive bonus or dividend is paid, the employees should also get a percentage in order to qualify for a tax deduction.  Then I'd get out of the way and let the people prosper.

The beauty of capitalism is that it is very efficient and fair and should provide lots of opportunity.  But you're right too, it should be implemented in a way that also provides a socially just society.

Larry

 

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