HIP HOP LIFESTYLE

Announcement

Collapse
No announcement yet.

The Capitalist System Faces a Crisis

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • The Capitalist System Faces a Crisis

    Long read, but I recommend reading it.

    EVENTS OF THE YEAR 1997 encapsulated the contradictions and maladies of the world capitalist system. The July collapse of the Bangkok Stock Exchange was the first in a series that continued for more than a year. The crisis expanded in the emerging South East Asian markets of Indonesia, South Korea and Malaysia; spreading to Latin America, it hit Brazil; finally, in August 1998, it reached its finale with the collapse of the Russian Stock Exchange.

    The financial crashes brought on political crises. A massive upheaval in Indonesia shattered the Suharto regime that had ruled the country for three decades. In Russia, revelations of corruption complicated the financial disaster. As the government of Boris Yeltsin faltered, the desperate president sought stability by replacing one prime minister after another. Anti-American feelings grew within the Russian public after it became clear that the United States had no intention of fulfilling its promises of economic aid.

    All these economic disasters developed from sharp drops in the exchange rates of specific currencies, which, in turn, arose largely from the speculative nature of the currency trade. The big players in the stock exchanges of the world are constantly moving their investments in foreign currency from one market to another in their competition for profit. Currency has changed its role: no longer simply a means to facilitate exchange of goods, it has itself become a commodity dealt by money traders. This development began when the peg to gold was abolished and the dollar lost its fixed exchange value. The free market in currencies led to the concentration of huge amounts of money in the hands of a few traders while leaving governments without the financial means to direct their economies for the benefit of their societies as a whole.

    "These markets trade more in two weeks than is needed for the world's trade and investment in a year: All the rest -- the other fifty weeks - is speculation. If total world trade and investment amount to about $6.7 trillion per year, this means useful speculation of about $20 trillion. Let's round these figures -- trade investment and hedging -- up to $30 trillion. All the rest, some $370 trillion, is gambling, a speculative economy that overweighs the real economy by 12 to 1." (Longworth, page 256)

    Why isn't this huge amount invested in creating production jobs that could employ millions of the unemployed? The answer is simple: gambling brings profits many times higher than does building new factories. The capitalist market is saturated: it has no room for new competitive industries. This is one of capitalism's biggest contradictions: while poor nations thirst for capital investment in industrialization, the big corporations thirst for profits without caring for the social consequences.

    The collapse of the financial markets in South East Asia resulted in the closing of many important industrial facilities and the loss of many workers' savings. Clearly, the fate of local citizens is of no importance to those in control. For these global gamblers, what counts is increasing their own wealth -- and it is they who ultimately decide the fate of the global economy.

    In his book "The Crisis of Global Capitalism: Open Society Endangered", George Soros warns sharply of a near-collapse of the global capitalist system caused by the unrestrained movement of capital. Soros' worries stem from the absence of any international body that could intervene to prevent an economic disaster. In his introduction he draws on recent history: "The nineteenth-century incarnation of the global capitalist system, in spite of its relative stability, was destroyed by the First World War. After the end of the war, there was a feeble attempt to reconstruct it, which came to a bad end in the crash of 1929 and the subsequent Great Depression. How much more likely is it, then, that the current version of global capitalism will also come to a bad end, given that the elements of stability that were present in the nineteenth century are now missing?"

    This rhetorical question comes from a multi-billionaire who amassed his fortune by speculating on currency values. Soros knows better than others that concern for the fate of millions of human beings plays no role in the speculation game. When he invests his money in the Thai Bath, the Indonesian Rupee or the Brazilian Cruzeiro, he is not really interested in the local economy. All he looks for is that the currencies rise and fall according to his expectations, regardless of the harm that his gambling does to the people of Thailand, Indonesia, or Brazil.

    The rush into the East Asian markets followed the 1987 slump of the U.S. stock market, when the gamblers went looking for new opportunities. Capital fled from New York into South East Asia, facilitating rapid industrial growth there. South East Asian countries started to compete with the big industrialized countries in areas of manufacturing that ranged from cars to petrochemicals. This development created a flow of cheap industrial products from Asia into the global markets, threatening the profitability of the multinational corporations.

    The incapacity of the markets to absorb the new products, added to the unplanned nature of development, made the collapse of the South East Asian economies a mere matter of time. The corruption and undemocratic practices of regimes in the area not only intensified the instability of the economies, but eventually led the big financial gamblers to pull out their money and retreat to the safer shores of New York.

    Thus, ten years after their original departure, the currency gamblers returned to Wall Street, leaving weak Asian and South American economies behind them in shambles. They brought with them huge amounts of money; with it they created a new bubble. Through speculation they heightened demand for stocks of virtual and actual companies alike.
    The end of the "American Dream"
    The return of the big capitalists to New York was not accidental. During their ten-year absence, the United States had become a paradise for corporations and investors. Many laws and regulations that formerly protected workers' rights and the public welfare had been abolished. The state had lowered the tax rate paid by corporations; the resulting drastic cuts in the public budget drained resources from many programs in welfare, education, housing, and health. The American worker had learned to be careful about his or her job; the returning capitalists were careful about nothing.

    The roots of these transformations go back to the 1970s, when a social counter-revolution put an end to the "American Dream". The dream had been founded through close cooperation between three main partners: the state, the private companies, and the unions. This teamwork had made possible consistent growth in the standard of living, to the extent that 80 percent of the American people considered themselves members of the middle class. The secret of this prosperity lay in the U.S. economy's superior capacity at the end of World War II, when the German and Japanese production and distribution systems were in shambles. This relative superiority came to an end when Japanese products of better quality and lower price invaded the U.S. and world markets.

    In order to understand the nature of the crisis, we must recognize the importance of the "middle class" for the stability of the capitalist system. The middle class forms the basis of the Western democratic regime. Its nature is basically conservative; it dislikes revolt. And, as both Marx and Engels explained, it is not a natural offspring of the capitalist system. In times of economic crisis, the system tends to disperse the middle class into the two social classes that are primary in capitalism: the bourgeois minority and the proletarian majority. In times of economic abundance, however, the existence of the middle class prevents decisive confrontation between the two main contending classes; thus it preserves the stability of the capitalist regime. The middle class also helps to conceal the oppressive nature of the capitalist state, providing a cover of apparent tolerance and democracy.

    To prevent the dispersal of the middle class, capitalist governments need a mechanism to restrain the laws of the free market and the freedom of capital. The United States and Western Europe assigned this task to a tax-funded "welfare state", whose main duties were to take care of citizens' basic needs and to impose a social pact. The social pact required companies to provide minimum economic security, while the unions agreed not to challenge the bourgeoisie's right to profit.

    During the presidency of Ronald Reagan, the social pact in the United States crumbled. Efficient Japanese enterprises with relatively low labor costs had begun giving U.S. manufacturers stiff competition. U.S. firms could no longer keep up their side of the social pact if they were to maintain their profits. The big bourgeoisie simply balked at continuing to pay its share toward the welfare state and withdrew its commitment to the unions. The U.S. working class then paid a high price for its long honeymoon with the bosses. Wages went down compared with wages in Europe and Japan, while corporate profits rose sharply.

    This is how Longworth describes the new reality: "Welfare states are financed by taxes. The global economy, as we have seen, is permitting the biggest taxpayers -- corporations and the wealthiest citizens -- to escape taxes or to move their tax paying to countries were rates are lowest and evasion easiest. The results are dramatic. Before World War II, corporations paid one-third of all U.S. federal taxes; now they pay only 12 percent, as the government cuts corporate taxes to keep companies from fleeing. But if the social contract is to be kept, the money must come from somewhere. Guess where? Taxes on wages -- that is taxes on workers - that have taken up the slack. Income taxes now account for nearly 50 percent of all U.S. federal revenue, four times as much as corporate taxes." (p. 61)

    A clear sign of the decline of union power is the fact that the average wage is no higher than it was when Reagan was elected in 1980, and its international standing has fallen sharply. In 1984 it ranked first in the world; today it has dropped to twelfth position. Similarly, the hourly minimum wage in the United States is $5.75; in Germany, it is $12.38. (Longworth, p. 204)

    This difference in wages arises from the policy of creating a "flexible" labor market, one in which bosses can move or lay off workers without restriction and can readily exploit non-unionized labor. Between 1980 and 2000, 40 million American jobs were destroyed. Formerly unionized, well-paid workers were forced to accept low paid jobs and give up union rights. The loss of members, in turn, weakened the unions.

    While delivering a severe shock to millions of Americans who considered themselves "middle class", this development emphasized anew the contradictions between the two classes whose contention shapes the economy -- the bourgeoisie and the working class. While 20 percent of the American people enjoy the benefits of the "global village", 26 million -- nearly 10 percent -- of their compatriots receive food stamps. (Longworth, pp. 107, 190). The difference between the pay of an American CEO and a worker has reached proportions that far outstrip the differences in other industrial centers. The American CEO gets 209 times as much as an average worker; in Japan the difference does not exceed nine times. The average Japanese CEO is paid a million dollars a year; his American counterpart takes in between forty and a hundred million dollars. (Longworth, p. 191)

    "The Institute for Policy Studies looked at the twenty-two American firms that announced layoff of at least 3000 workers in 1995 and found that their CEO's, on the average, got a 13.6 percent raise the following year, compared to 10.4 percent for chief executives overall." (Longworth, p. 194) All said, globalization represents a real revolution in the relationship among the state, the bosses, and the workers. Staged to facilitate maximum corporate profit, this revolution strips the state of its social role and its responsibility to care for citizens' well-being. This change in relationship is the essence of the new economy.
    America presses for changes in Japan's economy
    The new economic conditions resulting from the amalgamation of the world market have led the United States to put pressure on its two main capitalist partners -- Germany and Japan -- to make changes that will accord with those adopted by U.S. companies.

  • #2
    Until the 1990's, Japan's economy escaped U.S. hegemony. Then, as U.S. firms arranged the necessary adjustments in their labor and tax costs, the United States returned to its leading position in the world economy. The Japanese economy fell into the longest recession since World War II. Its difficulties threaten to destroy the Japanese dream of full employment and the tradition of "a job for life".

    Japan historically applied a very strict policy of tariffs to keep imports out of its markets. This protection allowed Japanese companies to sell their products at home for very high prices. In this way they subsidized their exports so as to conquer foreign markets through low prices. Japanese companies have thus been able to provide jobs for their workers without risking their profits.
    The social contract involving the state, the big corporations, and the workers gives Japan's government plenty of support in enforcing regulations that protect the national industries. The close relationship among the government, the banks, and the big conglomerates, with the involvement of the workers, guarantees full employment and maintains social stability.

    Japan is understandably wary of accepting the rules of globalization, which will eventually destroy its tariff policy. The resulting inflow of cheap imports will dissolve its social cohesion. If Japan accepts the new economic way that the Americans have conceived, it will enter a period of social convulsion and political crisis.

    But Japan has no choice. Its aggressive export policy and closed-market protectionism contravene the rules of the global economy. During the Cold War, the United States maintained a policy of tolerance towards Japanese protectionism. Japan was an invaluable ally, containing the influence of Communist China in East Asia. At the end of the 1980s, the collapse of the Soviet Union ended America's need to tolerate the "Japanese way of doing business".

    Yet outside pressure on Japan has so far been limited, because of the country's financial power. "Altogether the world owes Japan a net $700 billion, with all the power and leverage that implies. Japan financed no less than 60 percent of all loans in 1995 to cover the deficits of the United States, Canada, and Mexico. This is one potent reason why President Clinton, a respectful student of global bond markets, has avoided trade confrontations with Japan. Japanese banks and other financial institutions hold more than $250 billion in U.S. government bonds. If they stopped buying these bonds, the U.S. government would go broke." (Longworth, pp. 139-142).
    Europe's own economic way
    The economic trend in Europe, especially in Germany, differs from those in the United States and Japan. Europe is plagued with unemployment: in all, 18 million Europeans are out of work. The economic system is characterized by high wages and unemployment benefits. The average manufacturing wage in Germany, including benefits, is $30 an hour, compared to $20 in the United States. (Longworth, p.177)

    To compete with the United States for world markets, Europe would have to make substantial changes in its economic system. It would have to change labor regulations to weaken its unions and open the way for labor subcontractors. Above all, it would have to reduce corporate taxes and cut the welfare programs that guarantee social stability.

    The European governments are well aware that any return to an unregulated capitalist system will end in anarchy. In Germany, Europe's most powerful national economy, mergers between U.S. and domestic corporations are already leading to changes in the social and economic system. However, the European countries have not yet made up their minds. Are they going to surrender their social stability to the capitalists in order to improve competitiveness with the United States? Or will they retain the high unemployment and expensive welfare programs that prevent their corporations from enjoying the new opportunities offered by the global economy?

    The Maastricht agreement, which created the Euro as a general European currency, is an attempt to unify the European Common Market and improve its competitiveness with the United States. Germany's demand that the budget deficit of European Union members not exceed 3 percent of their GDP is an obvious attempt to set Europe on the American path. This measure contravenes the will of the European public, which has begun once again to replace conservative with social democratic governments (for example, in Germany and the United Kingdom) so as to return to a more moderate version of capitalism.

    The globalization of the world market is subjecting the world's three economic giants -- the United States, Japan, and Germany -- to deep and fateful economic and social transformations. The era of political stability is coming to an end. We are witnesses to heightening antagonism between the working classes and the bosses on the one hand, and conflicts among the distinct economic and political systems of the three main economic powers on the other.

    source: http://www.odaction.org/book/chap7.html

    I think that is a pretty good analysis that covers what needs to be covered. The situation has actually got worse since this was written in 1997.

    Comment


    • #3
      You can sum up capitalism as the biggest fucking pyramind scheme ever imagined and now there are very few people or natural resources left to exploit. The balance has been tipped in their favor and mother Earth has reached her maximum saturation point. We live and feed on a dying planet. I think I will go read The Fountainhead and The Origin of the Species.

      "If everyone demanded peace instead of another television set, then there'd be peace."


      John Lennon

      Comment


      • #4
        Excellent read. Interesting days ahead.
        "Nationalism is an infantile sickness. It is the measles of the human race."

        -Albert Einstein

        Comment


        • #5
          Very interesting, yeah. Things I didnt know, regarding wages and such.
          Originally posted by ethan20
          There's a correlation between cervixal cancer in women and un-circumsized penises. Not to mention it almost cuts your bacteria count on the penis in half.
          Originally posted by reservoirGod
          Ethan sure does know alot about dicks

          Comment


          • #6
            Well timed. I proudly claim ignorance in matters related to the "rightness" of communist figures of the past, but I will easily concede that IF communism were practiced the way it is ideally framed, it would be far better than what we have.

            Yes, there is no question that world economies are teetering on the edge of a sheer drop. A world economic collapse is likely imminent, within the next few decades maximum. The world will likely reduce to New Orleans standards within 50-70 years.

            Let's pray I am wrong. But most likely, we're in for something that the more hopeful among us is praying against......
            Would you let the system sit (shit) down on your head again? NO, DREAD, NO.
            Would you let the system
            make you kill your brother man? NO, DREAD, NO
            .

            Comment


            • #7
              wow,a very good read,but at the same time you don't need to know all of that to know that the world is going to hell
              if you give me a rep PLZ LEAVE YOUR NAME so i can know who you are,especially if you leave me a bad one,have the damn guts to leave ur damn name!

              Comment


              • #8
                Originally posted by Rainstorm
                Well timed. I proudly claim ignorance in matters related to the "rightness" of communist figures of the past, but I will easily concede that IF communism were practiced the way it is ideally framed, it would be far better than what we have.

                Yes, there is no question that world economies are teetering on the edge of a sheer drop. A world economic collapse is likely imminent, within the next few decades maximum. The world will likely reduce to New Orleans standards within 50-70 years.

                Let's pray I am wrong. But most likely, we're in for something that the more hopeful among us is praying against......
                Alot of social scientists believe the world capitalist system will collapse within 25-50 years. U.S. hegemony, which as this article briefly covered, has been declining since the 1970's and will completely collapse within 10 years I believe.

                As Frederick Engels once said when describing life after capitalism: there is only two paths humanity can go after the complete collapse of the capitalist system; that is either progessively to socialism (and then onwards to communism), or backwards into barbarism.

                Comment


                • #9
                  Originally posted by | K Y L E |
                  Alot of social scientists believe the world capitalist system will collapse within 25-50 years. U.S. hegemony, which as this article briefly covered, has been declining since the 1970's and will completely collapse within 10 years I believe.

                  As Frederick Engels once said when describing life after capitalism: there is only two paths humanity can go after the complete collapse of the capitalist system; that is either progessively to socialism (and then onwards to communism), or backwards into barbarism.
                  that's a good quote by Engels!
                  if you give me a rep PLZ LEAVE YOUR NAME so i can know who you are,especially if you leave me a bad one,have the damn guts to leave ur damn name!

                  Comment

                  Post ad widget 300x250

                  Collapse

                  LATEST POSTS

                  Collapse

                  Topics Statistics Last Post
                  Started by Madeline, Today, 02:50 AM
                  1 response
                  5 views
                  0 likes
                  Last Post JanetteLee  
                  Started by sqhjnpo, Today, 06:36 AM
                  0 responses
                  3 views
                  0 likes
                  Last Post sqhjnpo
                  by sqhjnpo
                   
                  Started by Effuel, Today, 05:53 AM
                  0 responses
                  2 views
                  0 likes
                  Last Post Effuel
                  by Effuel
                   
                  Started by Effuel, Today, 05:45 AM
                  0 responses
                  2 views
                  0 likes
                  Last Post Effuel
                  by Effuel
                   
                  Started by WesleyDrake, Yesterday, 06:54 AM
                  1 response
                  8 views
                  0 likes
                  Last Post Bynarden  
                  Started by kbuqmophudbh, Yesterday, 11:28 PM
                  0 responses
                  3 views
                  0 likes
                  Last Post kbuqmophudbh  
                  Started by Deborahlanker, Yesterday, 10:00 AM
                  0 responses
                  3 views
                  0 likes
                  Last Post Deborahlanker  
                  Started by Deborahlanker, Yesterday, 08:25 AM
                  0 responses
                  3 views
                  0 likes
                  Last Post Deborahlanker  
                  Started by Dave Dirty, 02-02-2016, 02:29 AM
                  5 responses
                  123 views
                  0 likes
                  Last Post | K Y L E |  
                  Started by Deborahlanker, 10-31-2020, 07:43 AM
                  5 responses
                  23 views
                  0 likes
                  Last Post Rapsodia  
                  Working...
                  X