OPINION

The Fall of Capitalism

September 26, 2008
Blokesablogin

When the USSR fell, all the headlines screamed the Fall of Communism. Today, after a week into the mess that is Wall Street, the high priest of Western-style capitalism aka globalization, there is not a single headline that says so: Fall of Capitalism. Interesting observation, don't you agree?

Last month, a friend of mine emailed me a talk given by a Chartered Accountant (CPA, US style) and I promptly emailed him wishing that he wrote a book on the subject. He promptly emailed me a copy of his book published more than a year ago titled Global Imbalances and the Impending Dollar Crisis, published August 2007.

His premise was simple enough. He shows the ridiculous consumption of the US (consumer debt) factored with huge trade deficits. He explains the "Savings Glut" as described by Ben Bernanke and how Asian savings have fueled capital markets in the US as many Asians believed that they would get better returns from a "solid" bet like the US than their own countries. This prevented improved infrastructure in their own countries, rather supported US to improve Uncle Sam's. Uncle Sam built more homes than actually improve his bridges and roads.

My friend temporal from Desicritics referred us to a blog by Spengler; using the imagery of America being a huge casino. As much as that is quite valid, he errs in believing that the "locals" fund the casino. The Asians and others have funded it thus far. However, these very Asians saw the wastefulness of Wall Street and slowly removed their money from there. This has led to a severe crunch in available credit for the MBAs to play with and we are now seeing this "Crash".

The Japanese were happily buying homes, especially here in California, Southern California to be more specific and for the past few years, even they have stopped "investing" in the US housing markets.

Let us face it, capitalism promises a "higher quality" of lifestyle that is the greatest myth perpetrated in the world. Yes, it is true that more people are "enjoying" consumer benefits like Televisions and Computers today than ever before in human history.

However, when we see this "material prosperity" against the background of ecological stress and global warming, we need to revisit the "idea" of "higher quality" of life. Yes, the Ambanis of the world can afford to build multilevel fortresses and import their water supply from the Alpine region, but they still have to deal with the filth and squalor lining the streets of Mumbai when they go to their parties.

As for the outright swindling that was legitimized as salaries and bonuses in Wall Street for decades, much of it will be found safe in a Swiss account, no questions asked. Do check out the website www.transparency.org for greater details on how much of national wealth have been stashed away in tax havens around the globe.

The dumb taxpayer, is left with getting double whammed- once for "investing" and once again for "bailout". It does not matter where he or she is from. All these "international" investors have ensured that there is no "caste system" where money is concerned.

I am beginning to believe in a people's economy, aka black money.

Blokes aka Meenakshi enjoys writing along with being a mom, a school teacher, a musician and an Art of Living teacher (of meditation and breathing)
eXTReMe Tracker
Keep reading for comments on this article and add some feedback of your own!

Comments! Feedback! Speak and be heard!

Comment on this article or leave feedback for the author

#1
Lexiss
September 26, 2008
02:38 PM


USSR was a country, and the largest and among the most powerful one. Lehman brothers is just one company, its not the USA. You just cannot compare the two.

Capitalism doesn't just promise a high quality of life, it delivers as well. There are proofs all around. The filth in Mumbai has nothing to do with capitalism.

Capitalism has its pitfalls, but its still much better than the communism alternative. Ask the Russians themselves.

#2
smallsquirrel
September 26, 2008
02:46 PM

I felt like this was way too oversimplified to make any sense at all. And the title? Seriously.. this is not the fall of capitalism, Meenakshi. This is the fall of the ABUSE of capitalism.

#3
kerty
September 26, 2008
03:34 PM

BB

You will love this quote from Malcolm X:

"It is impossible for capitalism to survive, primarily because the system of capitalism needs some blood to suck. Capitalism used to be like an eagle, but now it's more like a vulture. It used to be strong enough to go and suck anybody's blood whether they were strong or not. But now it has become more cowardly, like the vulture, and it can only suck the blood of the helpless. As the nations of the world free themselves, the capitalism has less victims, less to suck, and it
becomes weaker and weaker. It's only a matter of time in my opinion before it will collapse completely." Malcolm X

Any capitalist would tell you rumors of premature death of capitalism are highly exaggerated. I do not think capitalism is on death-bed or sick. It is just transitioning. And this would be a healthy development for capitalism - as it would force it to become multi-polar. World has become too much dependent on American economy so much so when America sneezes, rest of the world gets flu. World needs to create multi-polar economy that is not dependent on any one power center. Europe, China and Asia are in good position to carve independent economic centers of powers that are independent from American economy - it is in America's own interests so that capitalism can be reinforced even when American economy has to go thru lean phases during typical economic cycles. Capitalism can not afford to put all its eggs in one basket and hope to survive.

This, of course, will not fly on the face of America's unwavering creed of American Exceptionalism which is another way of saying that USA is a chosen nation, specially endowed by God, and chosen specifically for God's mission. So there can only be good guys and bad guys, axis of good and axis of evil, and no room for any other world view. Such creed reduces capitalism to a stepping stone to bring about world under one power center. Socialism is reduced to a stepping stone to centralize and vest all powers in such power center. And political parties, like a tag team, vying to empower such capitalism and socialism. So America has to make a clean break from its politics. It is a critical phase for America - if it does not play its cards right, it will see its political as well as economic clout diminish dramatically and consequences for the world would be equally dramatic. World is not ready to be its own, as so many wolves would be ready to pounce on it. The anarchy would be tragic.

#4
blokesablogin
September 26, 2008
06:59 PM

Lexiss- I am surprised just how many people are holding on tightly to the "idea' that the US is a grand economic success. Excuse me, it is successful for those CEOs who left a year or two ago with millions in their pockets.
All that moola belongs to the foolish investors who gave their money without question, without demanding how come any person is worthy of making $100,000 per day in salaries and bonuses?

Most of us fools who invested, did so on a salary that made less than $100 to $200 per day and paid their taxes on top of it. A lot of the "investment" were also made by seniors who had worked hard for years and retired to "enjoy" the fruits of their labor only to see it go "down" the tube.

The only "outcome" of capitalism I have seen is global ecological degradation and a few select people made hyper rich at the cost of many people, countries and other non-human species.

That does not mean that communism was a great idea either. As humans, we need to learn how to share and "hoard" what is essential. Of course, it may sound utopian, but heck, we cannot eat "gold" nor can we carry our "wealth" with us to the hereafter!

#5
blokesablogin
September 26, 2008
07:05 PM

ss- you are ABSOLUTELY right! This IS a highly Simplified article. Let us get to the core of it- capitalism by its very design, as we have understood it over the 18th, 19th and 20th centuries, has greed written into it. For it to be successful, it becomes socialism. Unfortunately, just as communism failed as the people who "signed the contract" were not egalitarian in thought and deed, so too the participants of capitalism- there is no altruism inbuilt into the system. So, yes, as far as this article is concerned, Capitalism as we have defined and experienced the past 3 centuries HAS failed- not the "abuse" of it.

#6
blokesablogin
September 26, 2008
07:08 PM

Kerty- I see this "transition" too- thanks to global warming. The new "green" initiatives of governments across the planet should, I hope, result in more sustainable economic growth without depletion of precious resources such as clean water, clean air and sufficient forests.

#7
shanky
September 27, 2008
02:04 AM

communism is dead - long live communism in the USA. you have the government spending public money to clean up the mess left behind by "CASINO ROYALE" playing in all markets for the past decade. neither is communism dead nor is capitalism dead both are alive and well - communism in USA and capitalism in RUSSIA/CHINA. a gambler looks for liquidity and the markets today are looking for the same. GOD SAVE AMERICA because my retirement is dependent on them continuing to spend as in the past. if the services and products of the companies i have invested in dont get sold in the americas i have to go look for a job all over again!! capitalism is dead - long live capitalism.

#8
Lexiss
September 27, 2008
04:30 AM

blokesablogin - I'm not saying that US is a grand success or a role model.

But along with the CEOs, also look at the waiters and other unskilled labour who earn $10 an hour, and have a much higher standard of living compared to unskilled labour in any other non-capitalist country.

There are always non-equity areas to invest in, for people who want safety and security of their money. Those who invested their retirement fund and savings into equity are equally at fault.

Ecological degradation is fueled by consumerism, you can argue that its a result of capitalism, but its not exactly the same. The people were sleeping all these years and suddenly realized that the environment is getting damaged. I don't think it is the result of capitalism.

#9
kerty
September 27, 2008
12:14 PM

#8

Can you imagine Capitalism without consumerism? Consumerism is what Capitalism specializes in - expanding demand and expanding supply to meet the demand. Its spending that keeps capitalism going. Growth of capitalism depend on growth of consumerism. It places huge onus on small band of citizenary to carry the load of consumerism in order to sustain the capitalist economy, and in the process saturating the society with hedonism and disposability as necessary evils. That is what creates imperative for capitalism to spread out its consumerism globally so that evils associated with over saturation of consumerism in 'degeloped' countries can be mitigated.

Capitalism does improve standard of living as consumers are so integral for health of capitalism, and it has to make sure people are able to remain as avid consumers. It has to raise wage levels so people can spend and keep consumerism vibrant.

In India, our planners went for different economic model. They tried to keep the cost of living very low so poorest of poor can survive, and that meant keeping the wages level low so cost structure in economy can remain low. So naturally, our economy was not geared for consumerism. It was non existent. So low cost structure of the economy, coupled with massive pool of coolie-type workforce, combined with huge untapped potential for upward growth of consumerism has made India a magnet for attracting the heavy weights of capitalism seeking new frontiers to conquer. If ecological degradation is grave enough at present, imagine its condition when India and china take to consumerist lifestyles to maintain their respective capitalist economies.

#10
blokesablogin
September 27, 2008
02:03 PM

Lexiss: I don't know which nook of the planet you are living in- IF a "waiter" or someone is able to "live" in the US on $10 per hour, he is certainly ain't living in California! The reason why someone like him can "afford" a "higher" standard of life that includes clean water and uninterrupted supply of electricity is the sheer "richness of resources" exploited in this country.

If this guy has a family to take care of, he will get food stamps and other social security help to ensure that his children qualify for free meals or reduced meals at school. He may also be eligible for low cost housing, similar to the "LIG flats" concept in India. All in all, rather than have slums, we, in America "hide" our poor. They certainly do NOT have a "great" life as you think they do! Many of them have to have a car but cannot afford insurance. The problem goes on....

You don't THINK that consumerism stoked by capitalism is NOT the cause for Global Warming!WOW!

#11
Morris
September 27, 2008
03:20 PM

There is no alternative. Greed is not good. But without greed, there no growth. Growth is essential to capitalism. It is not the capitalism that has failed. It is the concept of deregulation that has failed. Without adequate regulations to safeguard interest of consumers and investors, the greed which is essential part of the capitalism works against it.

America is not the only example of capitalism. EU countries are doing well. So no need to write an obittuary of capitalism as yet because there is nothing else to take its place. Sure it will continue to evolve but it is there to stay. May be lot of environmental problems are due to consumerism. But once leadership is given by politicians, the capitalism will rise to the challange. Problem is not the captalism. It is the lack of political will.

#12
blokesablogin
September 27, 2008
03:45 PM

Morris: There ARE alternatives to capitalism but the majority in this forum would refuse to even acknowledge that such an option is "Possible" let alone want to KNOW what it is! hence, I shall hold my words. After all, a very powerful medium created by capitalism, the internet, has created this very forum! How can we negate our very medium of communication?!

#13
kerty
September 27, 2008
04:32 PM

Morris

I agree that capitalism is an engine of growth and wealth-creation. But if capitalism is left to its own devices, it would fall off the cliff, and take rest of humanity with it. It has to be counter-balanced, moderated, made purpose-driven, made humanity-centric, nay, made environment-centric of which humanity is just one component. The problem is capitalism is a supremacist and exclusionary ideology - it does not want to co-exist with or work under any other power centers. So it always remain mired in adversarial and confrontational crusade against rival ideologies.

Socialism has been used as a checkmate, giving capitalism a humane face, helping bridge the gaps and pitfalls created by capitalism. Unfortunately, socialism too is a totalitarian and exclusionary statist ideology - it too can not co-exist with or work under any other power centers. It demands absolute hegemony and gods of capitalism must submit to it. Thus, even though capitalism and socialism need each other and can compliment each other, they always remain at loggerheads (ideologically) with each other. So they can not be trusted to maintain the complimentary dynamics all the time - we are going thru one of those patches when neither of them can see eye to eye and each is trying to sabotage the other. There is a good chance that next president would usher a new era where both ideologies work as a composite rather than mortal enemies. Much would depend on if the parent theology(xianity) of these isms is willing to bring about their truce - it will happen if xian right and xian left make their truce, and stop fueling radicalization of both isms against each other. This has to happen for capitalism and socialism to remain healthy.

However healthy socialism and capitalism may be, it will not help the cause of ecological empowerment. It will make it even more precarious. For capitalism will remain a narrowly focussed ideology fixated on translating environment into wealth for consumption, while socialism will remain fixated on fairness and justice confined to humanism - one is fixated with how to loot more efficiently and extensively while the other one is fixated on how to distribute the loot among the thugs more equitably and fairly. Any injection of ethics of wealth creation or environmentalism would disturb the theological glue that holds together both socialism and capitalism. Perhaps global warming and energy crisis will force them to evolve ideologically and theologically - but so far, they are outright rejected by votaries of capitalism and xian-right. Instead, they want to move even more to the right of fundamentalist theology by embracing creationism. Not a hopeful sign.

India now has all the components to integrate them - it has capitalism, socialism, humanism, environmentalism, and most non-fundamentalist and environment-friendly theology. I think leadership on these issues in the next century will come from India and china, not usa.

#14
Morris
September 27, 2008
10:57 PM

kerty

Vey interesting. You can articulate very well. I do not disagree with what you are saying although some part is a bit beyond me and I fail to understand what christian right has do with capitalism. You are quite right all those components you outlined have to be integrated into the sytsem. I think western liberal democracies will be able to do that. Some EU contries are already doing that to some extent. I think we are too hung up on the US. There is a lot more world there beyond the US and cpitalism will outlive the present turmoil. I must admit leadership is not likely to come from the US. But I am not sure about India or China as well.




















#15
Ledzius
September 27, 2008
11:21 PM

The US has many problems, but I don't think capitalism is one of them. There have been major financial shakeouts in the past, and the present crisis is nothing new. There's been the Great Depression, S&L crisis, black Thursday, Asian Crisis, dot com bust and so on, but the general economy has moved on in spite of these. And Americans still enjoy a higher standard of living in spite of all these, compared with their counterparts in most socialist countries.

And what makes you think socialist countries manage their economy any better? You remember the collapse of the rouble and how Russians had to wait in line for hours for just a loaf of bread? Or how our own govt stepped in and prevented the financial disaster of the govt run UTI less than a decade ago?

Yes, no one denies there are alternatives to capitalism. The question is, are they inherently better as they are made out to be?

It should be noted that there are successful Western countries which are highly socialistic, like Sweden, for instance. But this works only because their average productivity is very high compared to most other nations. I think their model would fail in India with a very low per capita productivity.

#16
kerty
September 27, 2008
11:41 PM

Morris

"I fail to understand what christian right has do with capitalism."

Republican party's conservatism is a synthesis of xian right and capitalism. Democratic party's liberalism is a synthesis of xian left and socialism.

#17
Ayan Roy
September 28, 2008
09:00 AM

Maybe it's time for everybody in the world to sit up, understand and follow 'Green Party' values and Gandhian economics.

I am not an expert in these two fields, but from what I have read so far, Green Party and Gandhian economic theories focus on preservation of nature and local ecology, development of villages and small local communities and co-operatives amongst themselves, and de-centralization.
The final goal is to make people economically independent, self-sufficient and content wherever they are, without having to depend too much on either the STATE (socialism) or on PRIVATE ENTERPRISES(capitalism), without causing large scale degradation of the ecology and the environment, without causing large scale migrations to cities, social upheavals and inequalities, and without causing one to lose one's individuality and uniqueness.

Love and peace to all,
Ayan

#18
Morris
September 28, 2008
01:51 PM

kerty #16

But I still fail to understand. You are not suggesting that either one of these approaches is giving up on capitalism. I think the right will be a much more free market oriented and the left will be much more regulated with a blend of socialism when it comes to health care, education, environment etc. Whether they reject evolution in favour of creationism will have nothing to do with the economic system. Even China is moving towards capitalism. So capitalism, in one form or another, is there to stay no matter how their battle goes.
Honest question, am I missing some thing?

#19
kerty
September 28, 2008
02:47 PM

Morris

In order to make economic model eco-friendly, it has to break away from fundamentalist brand of theology ie xian right, and break way from fundamentalist brand of economic ideology ie free/pure capitalism. Currently, they have formed an ideological nexus ie conservatism. Their ideological nexus will not allow economic model to stray into green zone. That means anytime socialism tries to go eco-friendly, there will be strong conservative backlash. Green Parties and Nadar have tried but failed to make any dent in America. Going green does not fit into theological world view of xian right or ideological world view of free-market capitalism. That is what symbolism of rejection of creationism implies - a counter movement against earth-friendly movement. The implications are that america will continue to remain bog down its anti-earth capitalism and it will not be able to transform economic model towards greener model.

You are right that China and others are moving towards capitalism because that is the only system that makes economic sense, though it is environmentally fatal in the long run. Rest of the world will move towards greener capitalism if America lets greener capitalism evolve.

Add your comment

(Or ping: http://desicritics.org/tb/8256)

Personal attacks are not allowed. Please read our comment policy.






Remember Name/URL?

Please preview your comment!