The Future of Capitalism: What comes next?

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The Future of Capitalism: What comes next?
1-2-2011
With the current crisis in Europe, and with the defection of Famous People such as Jeffrey Sachs, perhaps the next event on the horizon will be speculation in the mainstream press on a post-neoliberal capitalism, a capitalist system which remains as it is now but has in some important way rejected the Washington Consensus.  Here I'd like to suggest that there will be problems with that vision, as well, and that a full-scale collapse of the capitalist system is the most likely possibility.

 

OK: to clear the air about my thinking on these matters:

1) I am not advocating "socialism" in the form of the Soviet Union.  I have purposely left as an open question the matter of what will come after capitalism.

2) Nor do I think of "capitalism" as some eternal system enshrined in "human nature."  Property, money, and trade are cultural manifestations developed in a small portion of the 200,000 long years in which human beings (of the genetically orthodox variety) have been on this planet.  Their coming-together under the name "capitalism" is thus a cultural confluence, not an automatic result of "human nature."

3) "Capitalism," here, refers to an entire system dominated by businesses which seek to accumulate capital, by realizing the value of the surpluses created by wage labor.  The businesses of the Roman Empire weren't "capitalist" in the same sense as capitalist businesses are capitalist today, because the surplus tended to be "burned off" rather than being reinvested.

I feel obliged to reiterate these points because so many newbies confront me with them.  

At any rate global capitalist system is a manifestation of a developing world-system that came about with Europe's attempt to conquer the world, e.g. the European settlement of the Americas and Australia, England's conquest of India, the humiliation of China, the partitioning of Africa, and so on.

Along with the "conquest" aspect of the developing world system post-1492, there has also been a developing technological complex, and a developing capitalist system.  The developing capitalist system can be said to have several stages, as Kees van der Pijl points out in Transnational Classes and International Relations:

   1. agricultural capitalism, in which the initial stamp of the commodity form was imposed upon the world, while the world economy became profoundly rooted in agricultural commodities trade.  I suppose the quintessential version of this was infrastructure of the antebellum South, largely erected to export cotton, among other plantation economies centered on tea, sugar, coffee, and so on.

   2. industrial capitalism, in which large populations of former peasants were obliged to work long hours at subsistence wages in factory conditions.  This is of course the form of capitalism which attracted the literary critiques of Marx, Engels, Dickens, Zola.  This is also the first form of capitalism which intensively used fossil fuels, specifically coal.

   3. consumer capitalism, in which government re-invents itself as a guarantor of capitalist business through the "economic stimulus" promoted by John Maynard Keynes and his disciples.  The period of fascination with this phase was without doubt the 1950s and 1960s, its objects of fascination including chemicals ("better living through chemistry"), automobiles, airplanes, electronics, and so on.

   4. neoliberalism, in which a global economic overhaul begun in the 1970s accompanied a set of last-ditch attempts to commodify the world for profit.  So we had the financialization of the profits system along with a revolution in communications technology (the Internet) and the expansion of industries such as biotechnology through technologies such as genetic engineering, and the exploitation of nanotechnologies made possible through innovations in quantum physics.

Now, the question at hand for today's thinkers is one of whether we need to oppose just neoliberalism, the current predatory manifestation of capitalism, or is it necessary to oppose the capitalist system as a whole.  Well, neoliberalism was inaugurated as an elite-generated "passive revolution" through the embrace of a global economy based on dollar hegemony (and through the global spread of neoliberal economic ideology).  Capitalism in this form is parasitic -- the demand for profits at the top is so high that it represents an ever-increasing drag on the system as a whole.  

Could capitalism just continue "by other means"?  Well, first you'd have to persuade the profitmongers which currently rule the world that they should drop their resistance to a proposed "post-neoliberal" capitalist system in which they would have to accept smaller profits, because the profits they're making now are far ahead of the actual growth rate of the global economy, which has been slowing down from decade to decade since the mid-1970s.  

Second, you'd have to restructure the system so that it can still be based on capital accumulation while avoiding a reckoning what James O'Connor called "the second contradiction of capitalism."  O'Connor's idea is that capitalism tends to mess up the environment to an extent to which the accumulated environmental damage becomes a drag on the profit rate itself.  This logic, in my humble opinion, also extends to resource production.  We can see with various resources (most clearly metals) a trend in resource production -- as supplies are exhausted, production processes require so much more energy to extract so much less in the way of good, solid resource.  There is also the example of peak oil -- what happens, though, is that as the supply of high quality oil "peaks" from oil field to oil field, there is a tendency for the oil "producers" to produce fossil fuels of lower quality, thus tar sands.  Similarly, we can expect more pollution from the burning of lower-quality coal reserves in the future, as higher-quality coal reserves are burned to exhaustion presently.

In short, I think that even if you could design a post-neoliberal system which was capitalist, it wouldn't last for very long, because the new system would run up against a new set of problems of its own making.  Remember how, during the "poison bloom" of the economy around 2006 or 2007, the price of gasoline went up to around $4.50/gallon?  I can imagine a future spurt of economic growth (in some post-neoliberal capitalist system) pushing up gasoline demand, and thus prices, even further.

Of course, the end of the capitalist system is not going to bring about some sort of new system all by itself.  Barring any new development, we can expect capitalism to undergo a number of ever-increasing convulsions, followed by catastrophe and collapse.  But this is where we enter history -- for it is up to us, and not merely our fearless leaders in the political class, to create the new, post-capitalist future.

On a post-neoliberal capitalism

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Re: The Future of Capitalism: What comes next?

Please check this video out:

http://video.google.com/videoplay?docid=3932487043163636261

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Re: The Future of Capitalism: What comes next?

Great find Mike, and some very sensible questions, in fact, the very questions that should be raised given what we can observe today.

By way of answering the question posed, first we have to consider that there has been a loss in the continuum of discovery regarding classical economics and capitalism, or more specifically, the capitalist mode of production.

Adam Smith’s “The Wealth of Nations” (circa 1776) was both a critique of mercantilism and a call to embrace free markets with the promise of equal opportunity for all, in a utopian  classless system that was governed by free market forces, essentially unseating landed nobility and its lock on wealth distribution.

This was followed by Ricardo’s “Principles of Political Economy and Taxation” (circa 1817) wherein the concept of (free trade) comparative advantage was introduced, and the groundwork was laid for the basis of classic liberalism and the associated economic policies. This gained great traction, especially in the fledgling US, and was deeply integrated with American policy and politics laying the groundwork for globalization as a means of market expansion to feed the soon to be ravenous hunger of the American Capitalist Experiment.

But something happened.

Marx wrote “Capital” (circa 1867) in a series of three volumes (a fourth published under different title) not necessarily as a political treatise, but as a specific critique of Adam Smith’s “Wealth of Nations”. In it, he set out to consider the claims of Smith not in the context of free markets so vibrantly championed by the liberalist sensibilities of the times, but in the context of the means of production for which goods are brought to the free market, realizing that the means of production was far more significant than the means of trade.

In structuring his critique, he approached Smith’s thesis using the idealized and pure conceptual framework exactly as Smith himself described in “Wealth of Nations” ignoring any diluting effects of interventionalist policies or cheating on the part of participating capitalists, wanting to give full opportunity for  Smiths’ concept to demonstrate under perfect conditions, what would be the best outcome that could be hoped for.

The conclusions were devastating.

Unequivocally, he showed over the 1200+ pages of Volume 1, that capitalism had severe and irreconcilable defects that would not only prohibit Adam Smith from ever achieving his utopian vision, but on the contrary, the best one could hope for was massive wealth redistribution with the beneficiaries no longer the landed nobility of feudal and mercantilist times, but the now newly formed  bourgeoisie (capitalist) class. According to Marx (in a hotly contested conclusion) the much more likely outcome was a violent revolution by the proletariat (working class).

This had the effect of a nuclear bomb being dropped on the political and economic community, especially in America at the time, who had “gone all in” on liberalist policies and classical economic theory. An uproar was launched, largely challenging elements of Marx’s “Labor Theory of Value” as incomplete, inconsistent, and incorrect (parts of it likely were), and the associated mandate for capitalism to descend into a socialist state due to declining profit margins and worker revolt. The main complaint was the “mandate” part, this was published in advance of the industrial revolution and although “Capital” is quite specific on the use of machines and machine automation and the pass through considerations to the “socially necessary labor value” there were some weaknesses in the way he presented this work, and Marx’s detractors (and there were many) seized on these weaknesses and sought to discredit the entire work- a massive miscalculation.

In reality, these discrepancies affected maybe 10% of his work, and to my knowledge, no one has ever completed a competing fully integrated Labor Theory of Value that contradicts Marx’s conclusions, nor has his thorough rebuttal of Smiths’ “Wealth of Nations” ever been substantially challenged.

Moving on through the continuum to 20th century economics, Keynes was deeply influenced by Marx’s work, and sought to build on his conclusions and to attempt to design economic policies to anticipate and attenuate the inevitability of the disasters that Marx predicted. Keynes soon had his chance to prove the worth of his mettle, as the Great Depression hit and Keynes had opportunity to deploy Keynesian principles to try and address the crisis, which had only partial success, and this success brought with it its own foibles of imperfection which we struggle with today.

Enter other economists, Schumpeter, and of course the modern day free market soothsayer, Milton Freidman, who apparently never read Marx, or if he did, did not agree with him, who set out to blame the (once again) failing economic policies of the day on government intervention, sought (and succeeded) to establish free market economies in foreign countries where he and the so called “Chicago School” of free market evangelists could have a clean slate and using military force, overthrow non compliant governments such as Chile, and force into being an unfettered free market system with capitalism as a backdrop. These efforts also failed as Marx predicted, with much bloodshed, as the causation was never government influence but was always intrinsic contradictions within the capitalist mode of production.

Ironically, what had been the butt of jokes during the late 19 century at the dinner table of the landed nobility, chuckling as the foolish capitalists blamed their woes on external forces such as government intervention, recalcitrant workers, and excessive regulation, the better educated (they had read Marx) nobility knew the intrinsic reasons and laughed at the ignorant bourgeoisie. Fittingly, fast forward a couple of hundred years, and these “jokes” are now being considered as not only proper reasoning but actionable political redress, to explain what we can observe by looking out the window.

So I don’t know what the next steps are, but I’m pretty sure none of them are worth the powder to blow them up if a full accounting of Marx’s principles is not revisited “tout de suite”, and the precautions and axiomatic conclusions fully integrated into whatever the go forward plan is. I guess I’m of the opinion that just combating neo-liberalism is too little too late, we are in nth stage collapse as predicted, and rather precisely, in "Capital".

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Re: The Future of Capitalism: What comes next?

Darbikrash, XrayMike,

I don't think I've told you what a pleasure reading you can be for a little while now ...

Here are the books in question: -

Wikipedia Review wrote:

Adam Smith ~ Wealth of Nations

{Link...}

An Inquiry into the Nature and Causes of the Wealth of Nations (generally referred to by the short title The Wealth of Nations) is the masterpiece of the Scottish economist and moral philosopher Adam Smith. First published in 1776, it is a reflection on economics at the beginning of the Industrial Revolution and argues that free market economies are more productive and beneficial to their societies. The book, written for the educated, is considered to be the foundation of modern economic theory.

Adam Smith ~ Wealth of Nations (1776) PDF

Wikipedia Review wrote:

Karl Marx ~ Das Kapital ~ Volume One

{Link...}

Capital, Volume I, published on September 14, 1867, is the first of three volumes in Karl Marx's monumental work, Das Kapital, and the only volume to be published during his lifetime. Marx's aim in Capital, Volume I is to uncover and explain the laws specific to the capitalist mode of production and of the class struggles rooted in these capitalist social relations of production.

Karl Marx ~ Capital ~ Volume One ~ The Process of Production of Capital (1867) PDF

Wikipedia Review wrote:

Karl Marx ~ Das Kapital ~ Volume Two

{link...}

Capital, Volume 2, subtitled The Process of Circulation of Capital was prepared by Friedrich Engels from notes left by Karl Marx and published in 1885. It is divided into three parts :

1. The Metamorphoses of Capital and Their Circuits

2. The Turnover of Capital 3. The Reproduction and Circulation of the Aggregate Social Capital Part

3. Is the point of departure for a topic given its Marxist treatment later in detail by, among others, Rosa Luxembourg.

Karl Marx ~ Capital ~ Volume Two ~ The Process of Circulation of Capital (1885) PDF

Wikipedia Review wrote:

Karl Marx ~ Das Kapital ~ Volume Three

{Link...}

Capital, Volume 3, subtitled The Process of Capitalist Production as a Whole was prepared by Friedrich Engels from notes left by Karl Marx and published in 1894. It is in seven parts :

1. The conversion of Surplus Value into Profit and the rate of Surplus Value into the rate of Profit

2. Conversion of Profit into Average Profit

3. The Law of the Tendency of the Rate of Profit to Fall

4. Conversion of Commodity Capital and Money Capital into Commercial Capital and Money-Dealing Capital (Merchant's Capital)

5. Division of Profit Into Interest and Profit of Enterprise, Interest Bearing Capital.

6. Transformation of Surplus-Profit into Ground Rent.

7. Revenues and Their Sources.

The work is best known today for part 3 which in summary says that as the organic fixed capital requirements of production rise as a result of advancements in production generally, the rate of profit tends to fall. This result, which orthodox Marxists believe is a principal contradictory characteristic leading to an inevitable collapse of the capitalist order, was held by Marx/Engels to, as a result of various contradictions in the capitalist mode of production, result in crises whose resolution necessitates the emergence of an entirely new mode of production as the culmination of the same historical dialectic that lead to the emergence of capitalism from prior forms.

Karl Marx ~ Capital ~ Volume Three ~The Process of Capitalist Production as a Whole (1894) PDF

~ VF ~

 

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Re: The Future of Capitalism: What comes next?

Thanks for the scholarly responses DK and VF.

I had to laugh at this line from a recent MSM news article:

"...if U.S. businesses keep prospering while Americans are struggling, business leaders will lose legitimacy in society...­"

Where are the jobs? For many companies, overseas - USATODAY.com

The Neolibs are taking their show on the road in search of new hosts.

The deveopling middle class societies in these emerging market countries are being encouraged to  fill their wallets with credit cards.

Obama is continuing the push for Big Ag and Walmart into India.

China's and India's car culture is reving up.

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Re: The Future of Capitalism: What comes next?

 

Maybe you know about this one already, maybe not...: http://www.amazon.com/After-Capitalism-New-Critical-Theory/dp/0742513009

 

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Re: The Future of Capitalism: What comes next?

Who knows what the uncertain future will bring.      Put you egalitarian theory to action and trade citizenship with a Cuban.

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Re: The Future of Capitalism: What comes next?

 

The theory that can absorb the greatest number of facts, and persist in doing so, generation after generation, through all changes of opinion and detail, is the one that must rule all observation.

Adam Smith, 1776

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Re: The Future of Capitalism: What comes next?

Put you egalitarian theory to action and trade citizenship with a Cuban.

Just a wild guess on my part: I'll bet you never read any of the material referenced above. If you did so, do you have any specific critical thoughts? Indoctrination -- of any stripe -- is the unwillingness to consider new ideas.

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Re: The Future of Capitalism: What comes next?

If you won't trade citizenship with a Cuban, your own answer is my critique.    I don't have a scholarly piece to share but we can both make an observation to see how many people prefer to live in the capitalistic West by foreign immigrants trying to enter as opposed to the other way around.

Wether they are making a mistake is open to debate but they all disagree with the system they're trying to leave behind, whatever they're called.

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Re: The Future of Capitalism: What comes next?

"In 1960 the psychologist Milton Rokeach published an influential book called The Open and Closed Mind. Subtitled 'Investigation into the nature of belief systems and personality systems', it discussed dogmatism, or closed-mindedness. Individuals scoring highly on tests of dogmatism were resistant or even hostile to new ideas, more anxious about the future, less tolerant of ambiguity, more concrete in their thinking, and less flexible in their problem-solving behaviour than individuals low in dogmatism. Dogmatism was found to show little or no correlation with intelligence, but a strongly negative correlation with creativity. Highly dogmatic individuals may also appear extremely charismatic to others because of their strong sense of self. Their high confidence in their beliefs is attractive to others with weaker convictions, especially those who are actively seeking security." - Kathleen Taylor (2004)

 

~ VF ~

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Re: The Future of Capitalism: What comes next?
Carl Veritas wrote:

Who knows what the uncertain future will bring.      Put you egalitarian theory to action and trade citizenship with a Cuban.

Comrade Carl,

     I'm sure you are not one of those stuffy, close-minded individuals that VF is referring to. I'm sure you'll agree that if you just watch a documentary as  The Power of Community: How Cuba Survived Peak Oil, you'll agree that we can learn even from those evil Cubans. If, once viewing the documentary, you feel that commie Cuba has no redeeming values, then we'll just bomb them to smithereens and usurp their oil....Oh, sorry...That's right, they have no oil. Then we will still bomb them to smithereens and make their country one big Guantanamo. We'll need the space since there are now nearly half a million individuals on the terrorist watch list.



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Re: The Future of Capitalism: What comes next?

Viewing the system from the other side:

Imagine a happy society.

With a high standard of living.

Large spacious houses.

No such thing as unemployment.

No hunger.

A remarkable new documentary -- The Economics of Happiness -- opens with a focus on such a society.

In Ladakh -- or Little Tibet.

Before the invasion.

In the mid-1970s, Ladakh was suddenly thrown open to the outside world.

Cheap subsidized food, trucked in on subsidized roads by vehicles running on subsidized fuel, undermined Ladakh’s local economy.

At the same time, the Ladakhis were bombarded with advertising and media images that romanticized western-style consumerism and made their own culture seem pitiful by comparison.

"As the area was increasingly exposed to the consumer culture, I saw how people started to think of themselves as backward, primitive, and poor," says Helena Norberg-Hodge, who lived with the Ladakhis for 35 years and directed the documentary. "In the early years I went to this beautiful village, and just out of curiosity I asked a young man from the village to show me the poorest house. He thought for a bit and then he said -- 'We don’t have any poor houses here.' The same young man I heard ten years later saying to a tourist -- 'Oh, if you could only help us Ladakhis, we’re so poor.'”

"The changes in Ladakh were so clear-cut, and I saw with my own eyes cause and effect."

"One minute you’ve got vital people and a really sustainable culture. The next minute you’ve got pollution, both of air and water, you’ve got unemployment, a widening gap between rich and poor."

"And perhaps most shockingly of all, in a people who had been so spiritually grounded, divisiveness and depression."

Norberg-Hodge says that "these changes weren’t the result of innate human greed or some sort of evolutionary force -- they happened far too suddenly for that."

"They were clearly the direct result of exposure to outside economic pressures. And I witnessed how these pressures created intense competition, breaking down community and the connection to nature that had been the cornerstone of Ladakhi culture for centuries."

This was Ladakh’s introduction to globalization.

The movie is an attack on big corporations, globalization, and debt.

At its heart, it exposes what it calls "eight inconvenient truths" about the global economy.

One: Globalization makes us unhappy.

Two: Globalization breeds insecurity.

Three: Globalization wastes natural resources.

Four: Globalization accelerates climate change.

Five: Globalization destroys livelihoods.

Six: Globalization increases conflicts.

Seven: Globalization is built on hand outs to big business.

Eight: Globalization is built on false accounting.

The movie makers had it right to start with happiness.

In the movie, Bill McKibben puts it this way:

"Every year since the end of World War II one of the big polling firms has asked Americans, “Are you happy with your life?” The number of Americans who say, “Yes, I’m very happy with my life”-- the percentage -- peaks in 1956, and goes slowly but steadily downhill ever since. That’s interesting because in that same fifty years we have gotten immeasurably richer. We have three times as much stuff. Somehow it hasn’t worked, because that same affluence tends to undermine community."

happiness010411

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Re: The Future of Capitalism: What comes next?

 

If there was ever any doubt about the aloof, callous mindset of the uber rich, this article [excerpt below] from The Atlantic clarifies exactly what their attitudes and thinking are on the rest of humanity. Workers are simply expendable and interchangeable on the chopping block of the global market, and there is no allegiance to any country or people. All is sacrificed on the alter of mammon. This article dovetails nicely with a study I posted here:

http://www.peakprosperity.com/comment/79303#comment-79303

1-4-2011

If you happened to be watching NBC on the first Sunday morning in August last summer, you would have seen something curious. There, on the set of Meet the Press, the host, David Gregory, was interviewing a guest who made a forceful case that the U.S. economy had become “very distorted.” In the wake of the recession, this guest explained, high-income individuals, large banks, and major corporations had experienced a “significant recovery”; the rest of the economy, by contrast—including small businesses and “a very significant amount of the labor force”—was stuck and still struggling. What we were seeing, he argued, was not a single economy at all, but rather “fundamentally two separate types of economy,” increasingly distinct and divergent.

This diagnosis, though alarming, was hardly unique: drawing attention to the divide between the wealthy and everyone else has long been standard fare on the left. (The idea of “two Americas” was a central theme of John Edwards’s 2004 and 2008 presidential runs.) What made the argument striking in this instance was that it was being offered by none other than the former five-term Federal Reserve Chairman Alan Greenspan: iconic libertarian, preeminent defender of the free market, and (at least until recently) the nation’s foremost devotee of Ayn Rand. When the high priest of capitalism himself is declaring the growth in economic inequality a national crisis, something has gone very, very wrong.

This widening gap between the rich and non-rich has been evident for years. In a 2005 report to investors, for instance, three analysts at Citigroup advised that “the World is dividing into two blocs—the Plutonomy and the rest”:

In a plutonomy there is no such animal as “the U.S. consumer” or “the UK consumer”, or indeed the “Russian consumer”. There are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie.

Before the recession, it was relatively easy to ignore this concentration of wealth among an elite few. The wondrous inventions of the modern economy—Google, Amazon, the iPhone—broadly improved the lives of middle-class consumers, even as they made a tiny subset of entrepreneurs hugely wealthy. And the less-wondrous inventions—particularly the explosion of subprime credit—helped mask the rise of income inequality for many of those whose earnings were stagnant.

But the financial crisis and its long, dismal aftermath have changed all that. A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider—and not unreasonable—fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.

Through my work as a business journalist, I’ve spent the better part of the past decade shadowing the new super-rich: attending the same exclusive conferences in Europe; conducting interviews over cappuccinos on Martha’s Vineyard or in Silicon Valley meeting rooms; observing high-powered dinner parties in Manhattan. Some of what I’ve learned is entirely predictable: the rich are, as F. Scott Fitzgerald famously noted, different from you and me.

What is more relevant to our times, though, is that the rich of today are also different from the rich of yesterday. Our light-speed, globally connected economy has led to the rise of a new super-elite that consists, to a notable degree, of first- and second-generation wealth. Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.

The rise of the new plutocracy is inextricably connected to two phenomena: the revolution in information technology and the liberalization of global trade. Individual nations have offered their own contributions to income inequality—financial deregulation and upper-bracket tax cuts in the United States; insider privatization in Russia; rent-seeking in regulated industries in India and Mexico. But the shared narrative is that, thanks to globalization and technological innovation, people, money, and ideas travel more freely today than ever before.

Peter Lindert is an economist at the University of California at Davis and one of the leaders of the “deep history” school of economics, a movement devoted to thinking about the world economy over the long term—that is to say, in the context of the entire sweep of human civilization. Yet he argues that the economic changes we are witnessing today are unprecedented. “Britain’s classic industrial revolution was far less impressive than what has been going on in the past 30 years,” he told me. The current productivity gains are larger, he explained, and the waves of disruptive innovation much, much faster.

From a global perspective, the impact of these developments has been overwhelmingly positive, particularly in the poorer parts of the world. Take India and China, for example: between 1820 and 1950, nearly a century and a half, per capita income in those two countries was basically flat. Between 1950 and 1973, it increased by 68 percent. Then, between 1973 and 2002, it grew by 245 percent, and continues to grow strongly despite the global financial crisis.

But within nations, the fruits of this global transformation have been shared unevenly. Though China’s middle class has grown exponentially and tens of millions have been lifted out of poverty, the super-elite in Shanghai and other east-coast cities have steadily pulled away. Income inequality has also increased in developing markets such as India and Russia, and across much of the industrialized West, from the relatively laissez-faire United States to the comfy social democracies of Canada and Scandinavia. Thomas Friedman is right that in many ways the world has become flatter; but in others it has grown spikier.

One reason for the spikes is that the global market and its associated technologies have enabled the creation of a class of international business megastars. As companies become bigger, the global environment more competitive, and the rate of disruptive technological innovation ever faster, the value to shareholders of attracting the best possible CEO increases correspondingly. Executive pay has skyrocketed for many reasons—including the prevalence of overly cozy boards and changing cultural norms about pay—but increasing scale, competition, and innovation have all played major roles.

...

Meanwhile, the vast majority of U.S. workers, however devoted and skilled at their jobs, have missed out on the windfalls of this winner-take-most economy—or worse, found their savings, employers, or professions ravaged by the same forces that have enriched the plutocratic elite. The result of these divergent trends is a jaw-dropping surge in U.S. income inequality. According to the economists Emmanuel Saez of Berkeley and Thomas Piketty of the Paris School of Economics, between 2002 and 2007, 65 percent of all income growth in the United States went to the top 1 percent of the population. The financial crisis interrupted this trend temporarily, as incomes for the top 1 percent fell more than those of the rest of the population in 2008. But recent evidence suggests that, in the wake of the crisis, incomes at the summit are rebounding more quickly than those below. One example: after a down year in 2008, the top 25 hedge-fund managers were paid, on average, more than $1 billion each in 2009, quickly eclipsing the record they had set in pre-recession 2007.

...

Pinchuk’s growing international Rolodex illustrates another defining characteristic of today’s plutocrats: they are forming a global community, and their ties to one another are increasingly closer than their ties to hoi polloi back home. As Glenn Hutchins, co-founder of the private-equity firm Silver Lake, puts it, “A person in Africa who runs a big African bank and went to Harvard might have more in common with me than he does with his neighbors, and I could well share more overlapping concerns and experiences with him than with my neighbors.” The circles we move in, Hutchins explains, are defined by “interests” and “activities” rather than “geography”: “Beijing has a lot in common with New York, London, or Mumbai. You see the same people, you eat in the same restaurants, you stay in the same hotels. But most important, we are engaged as global citizens in crosscutting commercial, political, and social matters of common concern. We are much less place-based than we used to be.”

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.

I heard a similar sentiment from the Taiwanese-born, 30-something CFO of a U.S. Internet company. A gentle, unpretentious man who went from public school to Harvard, he’s nonetheless not terribly sympathetic to the complaints of the American middle class. “We demand a higher paycheck than the rest of the world,” he told me. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”

At last summer’s Aspen Ideas Festival, Michael Splinter, CEO of the Silicon Valley green-tech firm Applied Materials, said that if he were starting from scratch, only 20 percent of his workforce would be domestic. “This year, almost 90 percent of our sales will be outside the U.S.,” he explained. “The pull to be close to the customers—most of them in Asia—is enormous.” Speaking at the same conference, Thomas Wilson, CEO of Allstate, also lamented this global reality: “I can get [workers] anywhere in the world. It is a problem for America, but it is not necessarily a problem for American business … American businesses will adapt.”

Wilson’s distinction helps explain why many of America’s other business elites appear so removed from the continuing travails of the U.S. workforce and economy: the global “nation” in which they increasingly live and work is doing fine—indeed, it’s thriving. As a consequence of this disconnect, when business titans talk about the economy and their role in it, the notes they strike are often discordant: for example, Goldman Sachs CEO Lloyd Blankfein waving away public outrage in 2009 by saying he was “doing God’s work”; or the insistence by several top bankers after the immediate threat of the financial crisis receded that their institutions could have survived without TARP funding and that they had accepted it only because they had been strong-armed by Treasury Secretary Henry Paulson. Nor does this aloof disposition end at the water’s edge: think of BP CEO Tony Hayward, who complained of wanting to get his life back after the Gulf oil spill and then proceeded to do so by watching his yacht compete in a race off the Isle of Wight.

It is perhaps telling that Blankfein is the son of a Brooklyn postal worker and that Hayward—despite his U.S. caricature as an upper-class English twit—got his start at BP as a rig geologist in the North Sea. They are both, in other words, working-class boys made good. And while you might imagine that such backgrounds would make plutocrats especially sympathetic to those who are struggling, the opposite is often true. For the super-elite, a sense of meritocratic achievement can inspire high self-regard, and that self-regard—especially when compounded by their isolation among like-minded peers—can lead to obliviousness and indifference to the suffering of others.

Unsurprisingly, Russian oligarchs have been among the most fearless in expressing this attitude. A little more than a decade ago, for instance, I spoke to Mikhail Khodorkovsky, at that moment the richest man in Russia. “If a man is not an oligarch, something is not right with him,” Khodorkovsky told me. “Everyone had the same starting conditions, everyone could have done it.” (Khodorkovsky’s subsequent political travails—his oil company was appropriated by the state in 2004 and he is currently in prison—have tempered this Darwinian outlook: in a jail-cell correspondence last year, he admitted that he had “treated business exclusively as a game” and “did not care much about social responsibility.”)

Though typically more guarded in their choice of words, many American plutocrats suggest, as Khodorkovsky did, that the trials faced by the working and middle classes are generally their own fault. When I asked one of Wall Street’s most successful investment-bank CEOs if he felt guilty for his firm’s role in creating the financial crisis, he told me with evident sincerity that he did not. The real culprit, he explained, was his feckless cousin, who owned three cars and a home he could not afford. One of America’s top hedge-fund managers made a near-identical case to me—though this time the offenders were his in-laws and their subprime mortgage. And a private-equity baron who divides his time between New York and Palm Beach pinned blame for the collapse on a favorite golf caddy in Arizona, who had bought three condos as investment properties at the height of the bubble.

It is this not-our-fault mentality that accounts for the plutocrats’ profound sense of victimization in the Obama era. You might expect that American elites—and particularly those in the financial sector—would be feeling pretty good, and more than a little grateful, right now. Thanks to a $700 billion TARP bailout and hundreds of billions of dollars lent nearly free of charge by the Federal Reserve (a policy Soros himself told me was a “hidden gift” to the banks), Wall Street has surged back to pre-crisis levels of compensation even as Main Street continues to struggle. Yet many of America’s financial giants consider themselves under siege from the Obama administration—in some cases almost literally. Last summer, for example, Blackstone’s Schwarzman caused an uproar when he said an Obama proposal to raise taxes on private-equity-firm compensation—by treating “carried interest” as ordinary income—was “like when Hitler invaded Poland in 1939.”

However histrionic his imagery, Schwarzman (who subsequently apologized for the remark) is a Republican, so his antipathy toward the current administration is no surprise. What is more striking is the degree to which even former Obama supporters in the financial industry have turned against the president and his party. A Wall Street investor who is a passionate Democrat recounted to me his bitter exchange with a Democratic leader in Congress who is involved in the tax-reform effort. “Screw you,” he told the lawmaker. “Even if you change the legislation, the government won’t get a single penny more from me in taxes. I’ll put my money into my foundation and spend it on good causes. My money isn’t going to be wasted in your deficit sinkhole.”

He is not alone in his fury. In a much-quoted newsletter to investors last summer, the hedge-fund manager—and 2008 Obama fund-raiser—Dan Loeb fumed, “So long as our leaders tell us that we must trust them to regulate and redistribute our way back to prosperity, we will not break out of this economic quagmire.” Two other former Obama backers on Wall Street—both claim to have been on Rahm Emanuel’s speed-dial list—told me that the president is “anti-business”; one went so far as to worry that Obama is “a socialist.”

Much of this pique stems from simple self-interest: in addition to the proposed tax hikes, the financial reforms that Obama signed into law last summer have made regulations on American finance more stringent. But as the Democratic investor’s angry references to his philanthropic work suggest, the rage in the C-suites is driven not merely by greed but by a perceived affront to the plutocrats’ amour propre, a wounded incredulity that anyone could think of them as villains rather than heroes. Aren’t they, after all, the ones whose financial and technological innovations represent the future of the American economy? Aren’t they “doing God’s work”?

This plutocratic fantasy is, of course, just that: no matter how smart and innovative and industrious the super-elite may be, they can’t exist without the wider community. Even setting aside the financial bailouts recently supplied by the governments of the world, the rich need the rest of us as workers, clients, and consumers. Yet, as a metaphor, Galt’s Gulch has an ominous ring at a time when the business elite view themselves increasingly as a global community, distinguished by their unique talents and above such parochial concerns as national identity, or devoting “their” taxes to paying down “our” budget deficit. They may not be isolating themselves geographically, as Rand fantasized. But they appear to be isolating themselves ideologically, which in the end may be of greater consequence.

You might say that the American plutocracy is experiencing its John Galt moment. Libertarians (and run-of-the-mill high-school nerds) will recall that Galt is the plutocratic hero of Ayn Rand’s 1957 novel, Atlas Shrugged. Tired of being dragged down by the parasitic, envious, and less talented lower classes, Galt and his fellow capitalists revolted, retreating to “Galt’s Gulch,” a refuge in the Rocky Mountains. There, they passed their days in secluded natural splendor, while the rest of the world, bereft of their genius and hard work, collapsed. (G. K. Chesterton suggested a similar idea, though more gently, in his novel The Man Who Was Thursday: “The poor man really has a stake in the country. The rich man hasn’t; he can go away to New Guinea in a yacht.”)

...

The Rise of the New Global Elite

 

Overall, a pretty good article; however a reader makes a few good points/suggestions:

In your concluding section you say:
"And, ultimately, that is the dilemma: America really does need many of its plutocrats. We benefit from the goods they produce and the jobs they create. And even if a growing portion of those jobs are overseas, it is better to be the home of these innovators—native and immigrant alike—than not. In today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever."

I find this very confusing. Certainly people like Bill Gates have added to the wealth of the nation, to coin a phrase. But the the investment bankers who figured out how to work the credit default swap scam are doing nothing but hollowing out the economic vitality of the nation. I fail to see what value or merit they've brought to the table. And what good is it to us at home if the majority of the good jobs the elites create are outsourced? Please explain. I don't think many of the formerly middle class will get warm patriotic feelings because the super-rich who sent the jobs away are American rather than British or Russian.

Then you go on:
"There is also the simple fact that someone will have to pay for the improved public education and social safety net the American middle class will need in order to navigate the wrenching transformations of the global economy. (That’s not to mention the small matter of the budget deficit.) Inevitably, a lot of that money will have to come from the wealthy—after all, as the bank robbers say, that’s where the money is."

And that's the catch, isn't it? As you make clear in the rest of the article, and as the Republican spokespeople have made clear everywhere else, the rich have no intention of paying for any of these things. Instead, the tax cuts for the rich have been secured for the time being; all the Serious People in Washington are intoning about the need to cut Entitlements (that is, the social safety net for the middle class -- social security & Medicare), and the bankers on Wall Street are whimpering about how mean Obama has been to them. The problem, as many people have been writing lately, is that the gap between the extremely wealthy and everyone else has been growing very fast; poverty is increasing; and with a few notable exceptions (Bill Gates and Warren Buffett come to mind) most of the extremely rich simply demand MORE.

 

http://www.theatlantic.com/magazine/archive/2011/01/the-rise-of-the-new-...

 

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Re: The Future of Capitalism: What comes next?

There is a lot on this thread.  I don't think it is a question of what comes after capitalism because I don't think capitalism is going any where any time soon.  Whatever may be its faults, it is still the best economic system ever devised - it has brought more wealth to more people than any other system.  On the other hand, xraymike and others have a very solid point.  Our implementation of capitalism has malfunctioned.  People who have heard me prattle on around here will know that I am a renegade republican (renegade being key).  Something actually has gone wrong.  The distribution of wealth has gotten totally out of whack.  This is dangerous as it will eventually lead to social revolution if it is not corrected.  The problem is that it is tough to correct.  It looks to me like globalization caused the malfunction - the arbitrage of labor.

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Re: The Future of Capitalism: What comes next?

In regards to the article in post #13 and #14, this is why they call it the race to the bottom:

If you're like me, there's something that didn't quite sit right with you when you read that comparison of 1 middle class American versus one middle class Chinese. At first, I wondered: is this just my own unenlightened self-interest creeping up on me, causing me to feel uncomfortable? Then I realized it was much deeper than that. Are we really going to allow the wealthy elites, who have no comprehension of what poverty and struggle really mean, define for us the morality of globalization in such Robin Hood terms? And therein lies the problem: the 4-to-1 thing is not so much a cold hard truth as it is a rationalization, something to allow the wealthy to feel good at ease with their comforts even as they are fully aware that their exploits, their "labor arbitrage" or however you like to define it, is directly responsible for despoiling the true wealth of America.

Firstly, the conclusion that globalization and free trade are largely responsible for the widening rich-poor gap in developed countries is overly simplistic. The gulch could not have widened as it has without the active dismantling of progressive taxation, social welfare programs, and environmental protections. The Randian fantasy world we have gone about constructing that has now been disavowed by Greenspan, who was among its most vocal adherents, was abetted by politicians supposedly speaking for their constituents but who in fact answer to the very same plutocrats who have benefited. The libertarian, "pro-business" ideology espoused by these politicians was merely a way of casting this dismantling of the safety net in neutral or even positive terms to John Q. Public. In fact, the most recent incarnation of this ideology - the Tea Party - has even managed to roll the populist reaction to the accumulation of wealth into itself. It goes to show just how effective the spin doctors and master marketers hired by the plutocrats have been in turning the very same middle class they set about destroying into the useful idiots of the reactionary movement.

If four Chinese join the "middle class" as a result of one American dropping out of it, does that make the erosion of living standards in the U.S. a good deal for the world as a whole? In a word, NO.

China may be nominally wealthier, in the sense that the average Chinese citizen can consume more stuff, but the country has paid a dear price for attracting the attentions of the plutocracy. China now contains seven of the world's ten most polluted cities, faces a water crisis of epic proportions, and has recently become the world's leading emitter of global warming pollution. Similarly, the implication of the "4 rising Chinese = 1 falling American" equation is that, contrary to the myths we have all been spoonfed re: the benefits of globalization, a rising tide does NOT lift all boats. In fact, the formerly poor citizens of the developing world and the formerly middle class citizens of the U.S., Canada and Europe are all becoming more equal, but in a way that is truly perverse: the vast majority of people worldwide will be expected to adopt a miserable quality of life, even if there is "net gain" in a pure (but again perverse) utilitarian sense. There's a reason you get that pit in your stomach when you realize how those doing "God's work" of spreading "equality" in this way actually think of the rest of us: to those at the top, our standards of living are reducible to mere statistics in a ledger sheet.

The bottom line is: all the money in the world amounts to zilch if it requires the destruction of the global commons that are necessary for anybody to live decently - including the super-rich. And any apparent comprehension of these most basic social and ecological principle is entirely absent from the author's analysis.

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Re: The Future of Capitalism: What comes next?
dshields wrote:

There is a lot on this thread.  I don't think it is a question of what comes after capitalism because I don't think capitalism is going any where any time soon.  Whatever may be its faults, it is still the best economic system ever devised - it has brought more wealth to more people than any other system.  On the other hand, xraymike and others have a very solid point.  Our implementation of capitalism has malfunctioned.  People who have heard me prattle on around here will know that I am a renegade republican (renegade being key).  Something actually has gone wrong.  The distribution of wealth has gotten totally out of whack.  This is dangerous as it will eventually lead to social revolution if it is not corrected.  The problem is that it is tough to correct.  It looks to me like globalization caused the malfunction - the arbitrage of labor.

So there is another view that might suggest that the failure is not in the implementation of capitalism, but is in fact due to intrinsic defects and contradictions within the capitalist mode of production that will always manifest.

Adam Smith’s call to arms in ‘Wealth of Nations’ was the promise that capitalism and the free markets would result in equality and opportunity for all, that free men would make decisions in their own interest that would also benefit society as a whole, that there were in fact congruent goals of self interest and societal benefit. This is important also in historical context, at the time of his proclamation, wealth was consolidated in the aristocracy and landed nobility, and his ideals pointed a way forward for the rising  mercantile class to share in the wealth that for centuries had been denied to the common man.

A look at todays' data regarding income inequality shows a very different story, in fact, the data shows that the promise has been not only broken, but shattered. Once again, we have clear evidence that there is divergence between the rising income of the top 1% of the US wage earners, and the declining income of the bottom 90%- precisely the opposite of the premise in ‘Wealth of Nations’.

As to whether or not capitalism is “going away” well, feudalism went away, and so did mercantilism, replaced by it’s capitalist successor. To better answer this speculative question, one might take the US income distribution data (which goes back almost 100 years) and consider the declining average income of the 90% fractile wage earning family, which is currently about $31,000/yr, and extrapolate this out some years in the future. Overlay this with the poverty level curve (currently at $22,500/yr for a family of 4) which is rising due to inflation,  and you will see very quickly a whole bunch of bad news.

The inevitable intersection of these two curves would mean that in the 90% fractile of the US wage earners, the average US family would be at the poverty level.

I’d call that the end of capitalism.

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Re: The Future of Capitalism: What comes next?
darbikrash wrote:

So there is another view that might suggest that the failure is not in the implementation of capitalism, but is in fact due to intrinsic defects and contradictions within the capitalist mode of production that will always manifest.

A look at todays' data regarding income inequality shows a very different story, in fact, the data shows that the promise has been not only broken, but shattered. Once again, we have clear evidence that there is divergence between the rising income of the top 1% of the US wage earners, and the declining income of the bottom 90%- precisely the opposite of the premise in ‘Wealth of Nations’.

I don't believe your simplistic look at the income inequality being directly due to capitalism is valid.  You leave out all the non-capitalistic factors: increased regulation/government interference, corrupt money supply via the Fed, large increase in social programs (SSN, Medicaid, Medicare) - all of these and many others are major factors.

darbikrash wrote:

I’d call that the end of capitalism.

I would call it an end to the "Socialist", "Central Planned Economy", "Progressive" experiment that has been going on for the last 100 years. Smile

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Re: The Future of Capitalism: What comes next?
rhare wrote:

I don't believe your simplistic look at the income inequality being directly due to capitalism is valid.  You leave out all the non-capitalistic factors: increased regulation/government interference, corrupt money supply via the Fed, large increase in social programs (SSN, Medicaid, Medicare) - all of these and many others are major factors.

Well, I beg to differ. This data and associated conclusion is not at all simplistic, it is data. Real data. You can choose to ignore it, or explain it away as you see fit.

And what a surprise.

You would appear to present a thesis that it is government intervention and social programs that have placed us squarely in the maw of disaster. A thesis that has been advanced by capitalists for over 200 years. Marx showed in ‘Capital’ that these effects would take place in any pristine, unadulterated market subject to the capitalist mode of production, even without external contributors. Marx predicted income inequality, and he showed it would occur even in Adam Smith’s utopian vision of free market capitalism. However, despite the rampant disagreement, the point of this thread (as I understand it) and certainly as I have presented, looks to the intrinsic faults and internal contradictions that capitalism presents. 

So how about you address these, and when we’re done, let’s talk some more about external social programs.

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Re: The Future of Capitalism: What comes next?
darbikrash wrote:

You would appear to present a thesis that it is government intervention and social programs that have placed us squarely in the maw of disaster. A thesis that has been advanced by capitalists for over 200 years. Marx showed in ‘Capital’ that these effects would take place in any pristine, unadulterated market subject to the capitalist mode of production, even without external contributors. Marx predicted income inequality, and he showed it would occur even in Adam Smith’s utopian vision of free market capitalism. However, despite the rampant disagreement, the point of this thread (as I understand it) and certainly as I have presented, looks to the intrinsic faults and internal contradictions that capitalism presents.

Back at you, please explain how the Fed, Fannie & Freddie, SSN, Medicare, Medicaid, FDA, FDIC, ... all are capitalistic?  All of these institutions have had massive impact on where we are today, yet you ignore them.

darbikrash wrote:

Marx showed ...and he showed it would occur even in

No he theorized - there is a difference.

darbikrash wrote:

looks to the intrinsic faults and internal contradictions that capitalism presents

Exactly how can you examine the faults of capitalism when you don't acknowledge the non capitalistic government manipulation? Claiming that our current system is capitalism when it clearly has a largely socialist aspect doesn't make it so and  I "believe" we are seeing the disastrous impacts of those components:

  • Federal Reserve - artificially manipulated money supply - definitely not capitalistic has created massive distortions favoring those closer to the money.
  • Fannie, Freddie, Sally - guarantees of loans to individuals who can't repay them - definitely not capitalistic - no capitalist would willingly throw away their money.
  • SSN, Medicare, Medicaid - a Ponzi scheme that will fail.  This is just theft - the only difference is that we have a government that is forcing it's citizens to be victims. 

Do you disagree that any of the above are not large problems we are currently facing?  Would any of these have been an issue in a true capitalistic system?

 

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Re: The Future of Capitalism: What comes next?
Carl Veritas wrote:

If you won't trade citizenship with a Cuban, your own answer is my critique.    I don't have a scholarly piece to share but we can both make an observation to see how many people prefer to live in the capitalistic West by foreign immigrants trying to enter as opposed to the other way around.

Wether they are making a mistake is open to debate but they all disagree with the system they're trying to leave behind, whatever they're called.

Having followed the thread "why aren't more of you Americans leaving" (or similar wording) it is obvious why few Americans would "trade citizenship with a Cuban".

As much as I can categorically say I would live in Cuba well before I'd move to the US.......  I just wouldn't because I'm happy with my lot HERE.  I would move to NZ (and still might) because climate change has me shaking in my boots.  But let's not go there.....

Being happy with your lot is the crux of everything really....  why do people live at the base of active volcanoes?  Or Tornado Alley?  Aren't THEY crazy??

I consider that the people who "escaped" Cuba to live in Florida are just greedy.  Greedyness is a common trait in humans, and why we are currently at these crossroads discussed ad nauseam on this site.....  Some people NEVER have enough.  That's why we have executives on multi million dollar a year wages...  I mean to say, what the hell do you do with $10,000,000 a year??

One thing you notice when you view the "Power of Communities" film XR Mike pointed to in another post.....  everybody in Cuba SMILES.....! The foreign immigrants you refer to are 99% Mexicans, are they not?  Maybe Mexicans should look to Cuba to see how one can live sustainably.  I think Mexicans are leaving their country because it's overpopulated to buggery, and who wants to live in a slum..?  I didn't see "slums" in Cuba. I consider Cuba to be a model of sustainability, and a model of how the future will be.....

Mike

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Re: The Future of Capitalism: What comes next?

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2011/01/03/now_the_rich_get_richer_quicker/

Now the rich get richer quicker

By James Carroll January 3, 2011
 
THE NEW year requires an inventory of the old. Mostly, this is an individual impulse, leading to resolutions and renewal. Such reckoning can seem an intensely private exercise. But what of a whole society? Can we assess the year just past with an eye on the entire land? Morally, how fares the United States of America?

If a just society is defined by the relationship between the well off and the very poor, we have big trouble. US Census data for 2010 show the widest rich-poor income gap on record. In 1968, the top 20 percent of Americans had about 7 times the income of those living below the poverty line. By 2008, that disparity had grown to about 13. By 2010, it had grown even further, to more than 14. The poverty level in 2010 was put at $21,954 for a family of four. In 2010, the percentage of Americans living below half of the poverty line (or about $11,000) had grown from 5.7 percent in 2008 to 6.3 percent. That the rich get richer while the poor get poorer can seem a timeless cliche, yet something is steadily corroding America. The mythic land of equality has the largest income disparity of any Western nation. How can that be?

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Re: The Future of Capitalism: What comes next?
Post Carbon Institute
It's A Post Carbon Movie Date!

Connect Locally & Enjoy The Economics of Happiness

"Going local" is a powerful strategy to help repair our fractured world -
our ecosystems, our societies and our selves. Far from the old institutions
of power, people are starting to forge a very different future....

 

Economics of Happiness imageThe path to a different future is captured vividly by our friends at International Society for Ecology & Culture, who have crafted “The Economics of Happiness,” a beautiful new film featuring PCI Fellows Rob Hopkins, Richard Heinberg, Michael Shuman, and Bill McKibben (among many others). 

Rather than read our description of the film, simply watch the trailer here. We see “The Economics of Happiness” as a bracing way to kick off the new year, and encourage you to check out the first round of screenings, listed below. We also suggest that you use the screenings to meet fellow PCI supporters. Watch the film and grab a coffee, tea, or whiskey to discuss what you saw, your thoughts on the challenges ahead, and the best ways to address them.

How to connect/organize in your area:
1. Join Post Carbon Institute’s Facebook page.
2. Post a quick “Hey, fellow New Yorkers/Portlanders/Londoners! Want to meet up?”

Yes, it’s really that easy. Many of us spend a lot of time in front of computers and books (maybe it’s just us at PCI?). Make “engaging in the real world” one of your New Year's Resolutions! You’ll see more of this push for socialization from Post Carbon Institute in the coming year. We hope you’re up for it—we are!

ECONOMICS OF HAPPINESS SCREENING DATES (see you there!)
January 11: Seattle, WA (Seattle Town Hall w/ David & Fran Korten)
January 13: Berkeley, CA (David Brower Center – w/ Richard Heinberg, Jenny Kassan & Asher Miller)
January 21: Portland, OR (First Unitarian Church – w/ Daniel Lerch)
January 24: Toronto, ON (William Doo Auditorium)
January 26: Garrison, NY (The Garrison Institute)
January 27: New York, NY (Cooper Union Great Hall – w/ Gloria Steinem)
February 1: Cork, Ireland (University of Cork)
February 2: Dublin, Ireland (Sugar Club – w/ Richard Douthwaite)
February 3: Oslo, Norway (Chateau Neuf)
February 8: London, England (Royal Geographical Society)
(view additional dates)

"It is good news indeed to find so persuasive an explanation of our ailing world as The Economics of Happiness. This film connects the dots between climate chaos, economic meltdown, and our own personal suffering--stress, loneliness, and depression. It presents the localization movement as a systemic alternative to corporate globalization, as well as a strategy that brings community and meaning to our lives."
– Joanna Macy, author,
World as Lover, World as Self

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Re: The Future of Capitalism: What comes next?
rhare wrote:

 

Back at you, please explain how the Fed, Fannie & Freddie, SSN, Medicare, Medicaid, FDA, FDIC, ... all are capitalistic?  All of these institutions have had massive impact on where we are today, yet you ignore them.

Exactly how can you examine the faults of capitalism when you don't acknowledge the non capitalistic government manipulation? Claiming that our current system is capitalism when it clearly has a largely socialist aspect doesn't make it so and  I "believe" we are seeing the disastrous impacts of those components:

  • Federal Reserve - artificially manipulated money supply - definitely not capitalistic has created massive distortions favoring those closer to the money.
  • Fannie, Freddie, Sally - guarantees of loans to individuals who can't repay them - definitely not capitalistic - no capitalist would willingly throw away their money.
  • SSN, Medicare, Medicaid - a Ponzi scheme that will fail.  This is just theft - the only difference is that we have a government that is forcing it's citizens to be victims. 

Do you disagree that any of the above are not large problems we are currently facing?  Would any of these have been an issue in a true capitalistic system?

Perhaps we’re a little off topic here Rhare.

This thread is titled ‘The future of capitalism’ and more than a little discussion is made of whether any future variants can make due with just combating Neoliberalism, or whether the internal contradictions of capitalism are too severe and manifold to overcome.

There are more than enough threads on this forum to comment on SS, the Federal Reserve, new systems of currency, debt based money creation, entitlement programs ad nauseum. Characterizing these programs as capitalistic, or any other  label is of little interest to me in the context of this thread, so I reject the notion that these subjects have to be discussed here at all. Not saying they are not valid, not saying they do not have an affect, just saying that we are substantially out of sequence bringing these external factors into play at this stage of the discussion.

What is being discussed is the a priori argument that capitalism, defined as the capitalist mode of production, inherently, and of its own internal contradictions and structural defects, will either collapse or result in dramatic income disparities which lead to a violent revolt. This frame of reference assumes that there is no external intervention at all, no socialized programs, in fact no socialism of any kind. Pure, unadulterated free market capitalism as defined in ‘Wealth of Nations’.

I’d also make a surprising comment that the principles of the three E’s are quite prominent in ‘Capital’, particularly the notion that our economy is unsustainable and requires constant growth to keep from crashing. Also, that the environment will eventually act as constraint on growth resulting in devastating consequences. And much discussion about population growth, and how certain types of populations will attract capital and what will happen to those populations. Discussion about interest bearing loans. Usury. Predictions of the financier class and it’s corrosive influence on economics. And surprisingly, very little talk at all about politics of any kind, socialistic or otherwise. If Marx were alive today, it would be very interesting to hear his thoughts on Peak Oil. In fact the predictions in ‘Capital’ are so vividly accurate to what we can observe it is really quite alarming.

It would seem that you make an assumption that free market capitalism as defined will operate satisfactorily as Adam Smith described. That is an assumption I would challenge you to consider very carefully, as there is a substantial body of work that concludes otherwise.

In the remote chance that you have not actually read the book ,Surprised below is a link to an excellent series of video lectures that cover the entire Volume 1 of Capital. It will require 13 hours of your time to go through it, a formidable investment, but hey, money back if not delighted. (It’s free) You may decide to reject some or all of the material, but you simply cannot go forward in these types of discussions without at least hearing and considering the conclusions of this work.

Captial

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goes211
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Re: The Future of Capitalism: What comes next?
darbikrash wrote:

In the remote chance that you have not actually read the book ,Surprised below is a link to an excellent series of video lectures that cover the entire Volume 1 of Capital. It will require 13 hours of your time to go through it, a formidable investment, but hey, money back if not delighted. (It’s free) You may decide to reject some or all of the material, but you simply cannot go forward in these types of discussions without at least hearing and considering the conclusions of this work.

Captial

Seriously?  This is how you think a bunch of near strangers that are meeting for a discussion online should act.   You basically say go read books X,Y,Z or go watch 13 hours of lectures so we can have an intelligent on my topic.

I have watched the David Harvey's "The Crisis of Capital" video before and I think I will pass on listening to 13 additional hours of it.

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Re: The Future of Capitalism: What comes next?
goes211 wrote:

Seriously?  This is how you think a bunch of near strangers that are meeting for a discussion online should act.   You basically say go read books X,Y,Z or go watch 13 hours of lectures so we can have an intelligent on my topic.

Joel,

Aren't we here at this forum because the Crash Course series steered debate? That's over three hours.

This is a link to Chris Martensons essential books list. I've read them.

~ VF ~

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goes211
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Re: The Future of Capitalism: What comes next?
Vanityfox451 wrote:

Aren't we here at this forum because the Crash Course series steered debate? That's over three hours.

If we were at DavidHarvey.org and he suggested we spend 13 hours watching David Harvey lectures so we could have an intelligent discussion about David Harvey's ideas, then he would not be out of line.  However we are not at DavidHarvey.org, we are at PeakProsperity.com, so I don't think it is a stretch to assume we have all spent 3 hours watching the Crash Course.

Don't you see the difference?

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Re: The Future of Capitalism: What comes next?

Agreed, its much more fun to argue points raised in books you've never read. The sky's the limit.

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Re: The Future of Capitalism: What comes next?
darbikrash wrote:

...

As to whether or not capitalism is “going away” well, feudalism went away, and so did mercantilism, replaced by it’s capitalist successor. To better answer this speculative question, one might take the US income distribution data (which goes back almost 100 years) and consider the declining average income of the 90% fractile wage earning family, which is currently about $31,000/yr, and extrapolate this out some years in the future. Overlay this with the poverty level curve (currently at $22,500/yr for a family of 4) which is rising due to inflation,  and you will see very quickly a whole bunch of bad news.

The inevitable intersection of these two curves would mean that in the 90% fractile of the US wage earners, the average US family would be at the poverty level.

I’d call that the end of capitalism.

 

DK,

     I did a quick google search to look into this.

Data from the U.S. Department of Labor shows that if income inequality continues to rise at the current rate, the income gap in the United States “will resemble that of Mexico by year 2043.”


The U.S. Department of Labor publishes the annual Gini Coefficient with the nation's tabulated income statistics. Graph 1, shown below is derived from those data and illustrates the upward Gini trend from 1967 to 2001 as a black line. The red line is a projected continuation of that trend to the year when the U.S. Gini Coefficient will be as high as Mexico's was in year 2000.

Historical Income Tables - Income Equality

 

For various reasons including resource depletion and the collapse of capitalism, things will come quicker than 2043.

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Re: The Future of Capitalism: What comes next?

All my life I've heard Latin America described as a failed society (or collection of failed societies) because of its grotesque maldistribution of wealth. Peasants in rags beg for food outside the high walls of opulent villas, and so on. But according to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic.

Introducing the Great Divergence

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Re: The Future of Capitalism: What comes next?
goes211 wrote:

I have watched the David Harvey's "The Crisis of Capital" video before and I think I will pass on listening to 13 additional hours of it.

Thanks for posting that goes211.  Geez, what a load!  Just as the comments from darbikrash, David Harvey appears to focuses on the "failure of capitalism" while completely ignoring the impact of a manipulated fiat currency on everything. Manipulation of the money supply for "social reasons" (just look at the feds mandates) is the root cause.  All the other problems are either greatly exaggerated or directly caused by currency manipulations and ignoring them and using our current situation as an example of "capitalism failure" seems rather hollow.

I was going to go watch the videos Darbikrash pointed too, but after that short video, I think I will pass.

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