copyright © 2009 Betsy L. Angert. BeThink.org
For but a moment, whilst the Group of 20 [G20] met in London’s ancient financial capital, ,”The City,” the roars of remorse, could be heard. Words of woe had been whispered in hushed tones for quite some time. Scholars spoke of various possibilities on occasion. Whether Senior Economic Fellows from various think-tanks thought a system to be dead, alive, or near doomed, there was perhaps a bit of agreement. “I see what you mean. It is broken,” Economist Mark Thoma mused more than a year ago.
The public screamed out in pain for decades; however, few cared about the cries of countless common folks. Those who argued against principles that place profits before people were easily ignored for they had no power and less influence. Much to the chagrin of corporate titans, even Economists warned; this could be the end of Capitalism. Yet, until early in the day, only weeks ago, no one paid much attention to what has become a customary declaration for everyday workers. Morning has broken, and Capitalism is shattered as well.
America adopted and advanced a system that was unsustainable.. More than once, “systemic failures” revealed the folly of free enterprise principles. Nonetheless, worldwide people were convinced to purchase damaged goods and premises. Yet, as Journalist Professor, Robert Jensen contends, “most notably those in the business world and their functionaries and apologists in the schools, universities, mass media, and mainstream politics” do not want to admit that this is so.
Wanted; Dead or Alive
The evidence is everywhere. What was a question rarely uttered, “Is Capitalism Dead?” has become a statement, or perhaps the dream of those who have been severely affected by this most devastating downturn.
Wealthy watch breathlessly as stock markets crash. Banks fail. Blue Chip companies crumble. Foreclosures flourish, and people, those once thought prosperous, pour out onto the avenue in search of a job, or some sense of stability.
Perhaps, that is why, average citizens felt a need to break the silence, to speak of the broken Capitalist system. In the shadow of powerful and prosperous Presidents and Prime Ministers, who gathered together for the G20 Conference, 4,000 demonstrators pleaded, not for pity, but for relief from a fiscal system that requires poverty.
Frustrated and forlorn by an attitude that fosters further advancement of free market principles, at least in the United Kingdom, dissenters shouted in disgust. It would not be wise to work within an economic structure that changed the global culture in ways that ultimately brought international institutions down.
On a fateful day, early in April a young girl in the crowd, Aeyla Windridge pleaded. I want “the death of Capitalism.” The twelve-year-old spoke to what Heads of State had not for centuries. “Capitalism isn’t in crisis, capitalism is the crisis,” so said another activist.
Recovery, Reinvestment, and Rescue
Few of the principal players, those who represented the twenty participant countries were willing, or able to acknowledge the free market theory is flawed. Most of the prominent Heads of State were, and continue to be, content with sanguine assessments. Up to 85 percent of global gross national product comes from the shores of but a score of countries. Eighty  percent of world trade comes from these territories. Americans, who might be thought of as the authors of Capitalism, saw and see no reason to change the status quo, at least not substantially.
Borrow and spend had worked well in the past for the superpower, or so the US government attempted to advocate. While the President poses this philosophy cannot stand, America must move away “from an era of borrow-and-spend to one where we save and invest,” in the same breath, the Chief Executive who represents the country that gave birth to free enterprise, endorses the framework, just as those who preceded him did. (Please peruse the text What Ever Happened to Free Enterprise, By Ronald Reagan)
Capitalism, the Obama Administration states, was not the cause of the planet-wide monetary collapse. Only greed, excesses, and a lack of regulations brought about the demise of the dollar, and the rate of exchange. As he addressed other world leaders in attendance at the G20 Conference President Obama conceded, “the crisis began in the United States. I take responsibility even if I wasn’t even president at the time.” However, Mister Obama contends all countries must be accountable for this massive macro-breakdown. America’s Chief Executive proposes plans intended to strengthen a Capitalist structure.
In his April 4, 2009 Action to Address to the Global Economic Downturn, President Obama encouraged more regulations in an attempt to expand a consumer-based Capitalist theory. With little regard for how the American way of life, which the President does not apologize for, cripples common, people throughout the world, Mister Obama declared.
“(W)e know that the success of America’s economy is inextricably linked to that of the global economy. If people in other countries cannot spend, that means they cannot buy the goods we produce here in America, . . . if we continue to let banks and other financial institutions around the world act recklessly and irresponsibly, that affects institutions here at home as credit dries up, and people can’t get loans to buy a home or car, to run a small business or pay for college.
Ultimately, the only way out of a recession that is global in scope is with a response that is global in coordination.”
One is reminded of why, in earlier years, no one spoke vociferously of the crisis that is Capitalism. Ordinary people were busy. For centuries, regular folks worked day and night only to bring home a nominal paycheck. Even in prosperous nations, people could barely afford to put food on the table. People took trivial jobs just to secure shelter. Millions felt forced to pursue professional paths that offer few rewards. The only goal for the average Joe and Jane was to stay afloat. Few have had the time or energy to protest their circumstances, or what the powers-that-be had and have imposed internationally. Today, and in the past, worldwide economic slavery has sufficed. That is until now.
Lest the President and Prime Ministers elsewhere forget, in the States, and abroad, people are out of work. The promise of an ownership society,where “people, from all walks of life,” would open the door of their private residence and say, “Welcome to my home” proved to be but a myth. The pledge of plump stock portfolios for everyone through Capitalism was a claim never substantiated. Contrary to the oft-voiced assurances, the American Dream could be achieved anywhere on Earth If people only invested in a free market economy, this current fiscal crisis has shown the world, words were but wishes promoted by the prosperous.
Regardless of how average people are punished by a fiscal formula that requires there be poor people, the current President intends to preserve the Capitalist principles that govern a global economy. While Mister Obama may not profess a commitment to an “ownership society,” he too wishes to encourage people to possess what they cannot afford.
Broken Beyond Benevolence
In contrast, more than a few Economists have begun to contemplate the wisdom of a system based on constant consumption. Experts in monetary movements examine, What went wrong and, rather more importantly for the future, what did not. Other statistician who study the social science of fiscal affairs suggest there is ““Good Capitalism, (and) Bad Capitalism.” Certainly, no matter the belief, with cause, “Capitalism is under fire.”
William Pfaff, the author of eight books on American foreign policy, international relations, and contemporary history has pondered the depths of a paradigm profoundly broken. Mister Pfaff offers a perspective less limited than the simpler theories often presented by Administrations and Academics. The observer of intercontinental issues writes . . .
The essential question is, what capitalism are we talking about? Since the 1970s, two fundamental changes have been made in the leading (American) model of capitalism.
The first is that the “stakeholder,” post-New Deal reformed version of capitalism (in America) that prevailed in the West after World War II was replaced by a new model of corporate purpose and responsibility.
The earlier model said that corporations had a duty to ensure the well-being of employees, and an obligation to the community (chiefly but not exclusively fulfilled through corporate tax payments).
That model has been replaced by one in which corporation managers are responsible for creating short-term “value” for owners, as measured by stock valuation and quarterly dividends.
The practical result has been constant pressure to reduce wages and worker benefits (leading in some cases to theft of pensions and other crimes), and political lobbying and public persuasion to lower the corporate tax contribution to government finance and the public interest.
In short, the system in the advanced countries has been rejigged since the 1960s to take wealth from workers, and from the funding of government, and transfer it to stockholders and corporate executives.
There is ample evidence to support the author’s contention. In 1970, the recipient of a Nobel Memorial Prize on Economic Sciences, Milton Friedman, encouraged an emphasis on corporate earnings. A culture that creates a vibrant community, Friedman insisted is counter to “The Social Responsibility of Business is to Increase its Profits”
Decades later, his disciples of sorts, Presidents Ronald Reagan, George Herbert Walker Bush, Bill Clinton, and George W. Bush, each implemented plans that increased earned income for the influential and decreased available dollars for the already disadvantaged. Policies designed to protect and promote an American entrepreneurial taxonomy, or Capitalistic interests, were proposed as a means to spread democracy. Planet-wide, people and economic practices were transformed.
The second change that has taken place is globalization. The crucial effect of this for society in the advanced countries is that it puts labor into competition with the poorest countries on earth.
We need go no further with what I realize is a very complex matter, other than to note the classical economist David Ricardo’s “iron law of wages,” which says that in conditions of wage competition and unlimited labor supply, wages will fall to just above subsistence.
There never before has been unlimited labor. There is now, thanks to globalization – and the process has only begun.
The variance is vast. Those who have possess so much. The portion of population that owns little, have far less than even an average individual might imagine. The wealthy cannot conceive of a life where food might be the most valuable commodity. A world in which water is worth more than gold seems unthinkable to those who thrive in “civilized” communities, Yet, this reality may come to towns in a Capitalist country. Indeed, in some American communities, this truth appears today.
Nonetheless, agreements secured at the G20 summit ensure the adoption of a debt-driven American-style “democracy.” An arrangement, in which all are not created equal, will continue to be the practiced and preferred economic system planet-wide. People will once again forget assessments presented less than a decade ago.
Many of the radicals leading the protests may be on the political fringe. But they have helped to kick-start a profound re-thinking about globalization among governments, mainstream economists, and corporations that, until recently, was carried on mostly in obscure think tanks and academic seminars.
The reassessment is badly overdue. In the late 20th century, global capitalism was pushed by leaps in technology, the failure of socialism, and East Asian’s seemingly miraculous success. Now, it’s time to get realistic. the plain truth is that market liberalization by itself does not lift all boats, and in some cases, it has caused damage to poor nations. What’s more, there’s no point denying that multi-nationals have contributed to labor, environmental, and human rights abuses as they pursue profits around the globe . . .
(After a ten-year expansion of market capitalism around the world, as of the year 2000) The World Bank figures the number of people living on a $1 a day increased to 1.3 billion, over the past decade.
The extremes of global capitalism are astonishing . . . If global capitalism’s flaws aren’t addressed, the backlash could grow more severe.
Indeed, the repercussions have been relentless. Near a century of consumption, solely for the sake of profits, has weakened the world. The current fiscal crisis reveals Capitalism was never the cure for what ails the people on this planet. Persistent poverty, and the threat of increased insolvency, born out of a free enterprise system is an expense few, if any, can afford. One need only look at Capitalism, and what it has wrought. Acquisitive individuals may acknowledge one reaps what one sows. Independently, or collectively, as a global community anyone might come to understand, “If my brother is poor, I/we too will suffer. Ultimately, I/we will pay for the poverty I/we accept.”
Without such a realization, and inspired by the spirit of an individualism that has flourished amongst free-marketers, people may, as President Obama proclaimed. Worldwide, or here at home, we “want a return to that sense of dynamism and entrepreneurship that [has] been missing.” However, it is not another glorious “morning in America.” Nor is it a beautiful day in most neighborhoods. Were the clouds to clear, globally people might avow, authentically, there need be an actual new dawn. It is time to dream of economic structures that have never been.
The majorities in the States, and throughout the globe, are no longer silent. Common folks have spoken. Capitalism is broken. It is not wanted, dead or alive.
Sources for economic and empathetic structures . . .
- Is Capitalism Dead? No. By William Galston. National Public Radio. March 11, 2009
- Is Capitalism Dead? Maybe. By J.D. Foster. National Public Radio. March 11, 2009
- Is Capitalism Dead? Yes. By Alan Reynolds. National Public Radio. March 11, 2009
- I See What You Mean, It Is Broken, By Mark Thoma. Economist View. January 24, 2008
- ‘The World As We Know It Is Going Down’, By Marc Pitzke. Spiegel International. September 18, 2008
- Systemic Failure: Capitalism “Lays An Egg,” By Stephen Lendman. SteveLendmanBlog. March 2, 2009
- Capitalism Under Fire, By William Pfaff. The International Herald Tribune. 30 March 2006
- Is Capitalism Dead? The Washington Post. October 20, 2008
- Recession Pain, Even in Palm Beach, By David Segal. The New York Times. April 12, 2009
- Blair: Global economic fallout is nation’s major threat. Cable News Network. February 12, 2009
- The Social Responsibility of Business is to Increase its Profits, By Milton Friedman. The New York Times Magazine. September 13, 1970. Copyright @ 1970 by The New York Times Company.
- Colorado bank biggest US bank failure of 2009. AFP. April 10, 2009
- Slump Humbling Blue-Chip Stocks, By Mark Healy. The New York Times March 6, 2009
- U.S. foreclosure filings rise in February, By Lynn Adler. Reuters. March 12, 2009
- In Defense of Income Inequality, By Peter Schwatrz. Capitalism Magazine. March 28, 2009
- Congressional Finance Chair Discusses U.S. Economy. NewsHour. September 3, 2007
- Disowned by the Ownership Society, By Naomi Klein. The Nation. January 31, 2008
- The End Of American Capitalism? By Anthony Faiola. The Washington Post. October 9, 2008
- The G-20 and the Future of Capitalism – Part I, By Jeffrey E. Garten. Yale Global. March 30, 2009
- President Obama’s News Conference; Transcript. The New York Times. March 24, 2009
- Century of Self.
- Story of Stuff. By Annie Leonard. The Sustainability Funders and Tides Foundation.
- Address by Governor Ronald Reagan, Installation of President Robert Hill, Chico State College. May 20, 1967
- What Ever Happened to Free Enterprise, By Ronald Reagan. Ludwig Von Mises Memorial Lecture at Hillsdale College. November 10, 1977
- 12-Year-Old Protester: ‘Death of Capitalism.’ By F. Brinley Bruton. MSNBC News. April 1, 2009
- Capitalism Under Fire, By William Pfaff. The International Herald Tribune. 30 March 2006
- Global Capitalism, Can it be made to work better? By Pete Engardio with Catherine Belton. Business Week. November 6, 2000
- Obama’s G-20 confession: “I take responsibility.” By Marc Hujer, Wolfgang Reuter, and Christoph Schwennicke. Salon. April 7, 2009
- Prepared Remarks of President Barack Obama Weekly Address, The White House. Saturday, April 4, 2009
- Globalization: A Reference Handbook, By Justin Ervin, Zachary A. Smith. 2008
- Capiatlism at bay, What went wrong and, rather more importantly for the future, what did not. The Economist. October 16, 2008
- “Good Capitalism, (and) Bad Capitalism,” By David Wessel. Wall Street Journal. Economist’s View. May 10, 2007
- Drinking water costs lots of dollars. MarketPlace. March 17, 2009
- Analysis: Obama takes ‘morning in America’ mantle. Cable News Network. February 25, 2009
- A Different Sort of Red America, By Tobin Harshaw. The New York Times. April 10, 2009