Capitalism's inherent contradictions

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Wahome, Kimamo (WAHOMEK@uwec.edu)
Mon, 26 Jan 2009 10:12:25 -0600



From: "Wahome, Kimamo" <WAHOMEK@uwec.edu>
Date: Mon, 26 Jan 2009 10:12:25 -0600
Subject: Capitalism's inherent contradictions
Message-ID: <E3F0E607B3CF71418CE725F002B5F6047A4A61C382@CHERRYPEPSI.uwec.edu>

Capitalism's Self-inflicted Apocalypse

January, 19 2009By Parenti, Michael Michael Parenti's ZSpace Page<http://www.zmag.org/zspace/michaelparenti> Join ZSpace<https://www.zcommunications.org/zsustainers/signup>

After the overthrow of communist governments in Eastern Europe, capitalism was paraded as the indomitable system that brings prosperity and democracy,
 the system that would prevail unto the end of history.

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

Plutocracy vs. Democracy

Let us consider democracy first. In the United States we hear that capital ism is wedded to democracy, hence the phrase, "capitalist democracies." In fact, throughout our history there has been a largely antagonistic relation ship between democracy and capital concentration. Some eighty years ago Su preme Court Justice Louis Brandeis commented, "We can have democracy in thi s country, or we can have great wealth concentrated in the hands of a few, but we can't have both." Moneyed interests have been opponents not proponen ts of democracy.

The Constitution itself was fashioned by affluent gentlemen who gathered in
 Philadelphia in 1787 to repeatedly warn of the baneful and dangerous level ing effects of democracy. The document they cobbled together was far from d emocratic, being shackled with checks, vetoes, and requirements for artific ial super majorities, a system designed to blunt the impact of popular dema nds.

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

Today conservative forces continue to reject more equitable electoral featu res such as proportional representation, instant runoff, and publicly funde d campaigns. They continue to create barriers to voting, be it through over ly severe registration requirements, voter roll purges, inadequate polling accommodations, and electronic voting machines that consistently "malfuncti on" to the benefit of the more conservative candidates.

At times ruling interests have suppressed radical publications and public p rotests, resorting to police raids, arrests, and jailings-applied most rece ntly with full force against demonstrators in St. Paul, Minnesota, during t he 2008 Republican National Convention.

The conservative plutocracy also seeks to rollback democracy's social gains
, such as public education, affordable housing, health care, collective bar gaining, a living wage, safe work conditions, a non-toxic sustainable envir onment; the right to privacy, the separation of church and state, freedom f rom compulsory pregnancy, and the right to marry any consenting adult of on e's own choosing.

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

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

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

Capitalism vs. Prosperity

The corporate capitalists no more encourage prosperity than do they propaga te democracy. Most of the world is capitalist, and most of the world is nei ther prosperous nor particularly democratic. One need only think of capital ist Nigeria, capitalist Indonesia, capitalist Thailand, capitalist Haiti, c apitalist Colombia, capitalist Pakistan, capitalist South Africa, capitalis t Latvia, and various other members of the Free World--more accurately, the
 Free Market World.

A prosperous, politically literate populace with high expectations about it s standard of living and a keen sense of entitlement, pushing for continual ly better social conditions, is not the plutocracy's notion of an ideal wor kforce and a properly pliant polity. Corporate investors prefer poor popula tions. The poorer you are, the harder you will work-for less. The poorer yo u are, the less equipped you are to defend yourself against the abuses of w ealth.

In the corporate world of "free-trade," the number of billionaires is incre asing faster than ever while the number of people living in poverty is grow ing at a faster rate than the world's population. Poverty spreads as wealth
 accumulates.

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

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

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

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

A Self-devouring Beast

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

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

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

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

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

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

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

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

In the midst of the meltdown, at an October 2008 congressional hearing, for mer chair of the Federal Reserve and orthodox free-market devotee Alan Gree nspan confessed that he had been mistaken to expect moneyed interests--groa ning under an immense accumulation of capital that needs to be invested som ewhere--to suddenly exercise self-restraint.

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

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

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

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

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

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

In sum, free-market corporate capitalism is by its nature a disaster waitin g to happen. Its essence is the transformation of living nature into mounta ins of commodities and commodities into heaps of dead capital. When left e ntirely to its own devices, capitalism foists its diseconomies and toxicity
 upon the general public and upon the natural environment--and eventually b egins to devour itself.

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

If the paladins of Corporate America want to know what really threatens "ou r way of life," it is their way of life, their boundless way of pilfering t heir own system, destroying the very foundation on which they stand, the ve ry community on which they so lavishly feed.

Michael Parenti's recent books include: Contrary Notions: The Michael Paren ti Reader (City Lights); Democracy for the Few, 8th ed. (Wadsworth); and Go d and His Demons (forthcoming). For further information, visit his website
: www.michaelparenti.org<http://www.michaelparenti.org>.



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