THE PANGS OF PRESENT DAY CAPITALISM
Alex Tuscano
What a world we are living in now!
82 countries are staging demonstrations. The agitating masses are against the rich. 99% of the people are not at the root of the crisis the world is facing. 1% of the people get everything they want. In England 1 billion youth have no jobs. The whole world seems to be in crisis.
Inspired by the Occupy Wall Street movement the people all over Europe took to the street. In Rome the protesters clamoured, “At the global level, we can’t carry on any more with public debt that wasn’t created by us but thieving governments, corrupt banks and speculators who don’t give a damn about us.” Again, “they caused this international crisis and are still profiting from it, they should pay for it.”
Niall Ferguson has clearly brought out this contradiction in the introduction to his book, The Ascent of Money “In 2007 the income of the average American (just under $34,000) went up by around 5 per cent. But the cost of living rose by 3.5 per cent in the same period. So in real terms Mr Average actually became just 1.5 per cent better off. Allowing for inflation, the income of the median household in the United States has in fact scarcely changed since 1990, increasing by just 7 per cent in eighteen years.”
“Now compare Mr Average’s situation with that of Lloyd Blankfein, chief executive officer at Goldman Sachs, the investment bank. In 2007 he received $73.7 million in salary, bonus and stock awards, an increase of 25 per cent on the previous year, and roughly two thousand times more than Joe Public earned. That same year, Goldman Sachs's net revenues of $46 billion exceeded the entire gross domestic product (GDP) of more than a hundred countries, including Croatia, Serbia and Slovenia; Bolivia, Ecuador and Guatemala; Angola, Syria and Tunisia. The bank’s total assets for the first time passed the $1 trillion mark. Other Wall Street CEOs also made serious money, though not quite so much. ... Meanwhile, nearly a billion people around the world struggled to get by on just $1 a day.” (Niall Ferguson, The Ascent of Money.)
The crisis that hit the world in 2008 was obviously not just financial crisis. And the solution the capitalist world tried to find was bound to make the crisis last longer, if not aggravate. The capitalists had moved away from real economy to finance to make their profits. “Throughout the history of Western civilization, there has been a recurrent hostility to finance and financiers, rooted in the idea that those who make their living from lending money are somehow parasitical on the ‘real’ economic activities of agriculture and manufacturing” (Nial Ferguson).
What is important is not just to make profit at any cost but to ensure that the very essence of profit making should be taken care of. The world is divided between the haves and the have nots; those who own the productive assets and those who exert their labour to produce goods and services for human survival. The profit lies between what the capitalists pay the direct producers and the value the direct producers add to the capital. Profit, therefore lies only in the realm of production and depends only on the working population. Finally the capitalist will realise their profit only by selling their product to the consumers who happen to be the very same direct producers, labourers. The excessive greed for profit goes directly against the earning and well being of the toiling masses. This deflates demand and result in recession. When manufacturing capital fails to give profit and falls in to recession they move to finance to make their profits. But money does not produce goods and services and therefore it does not contribute to the profit of the capitalist. The role of finance ends where the role of the direct producers starts. It is in this dialectical relationship, called wage labour and capital that profit is generated. When the capitalists rely only on finance to draw all their profits they can do so only by robbing the working population. When an economy shifts itself from production of real wealth into finance then the economy finds itself into mythical wealth whose myth gets exploded when confronted with the question of living. It has been called busting of bubble economy. To make good the bubble economy the government resort to bailing out of the drowning capital. America paid tax payers money to bail out AIG and several banks. It is only the mismanagement of the capitalists caused by their greed that the governments have to resort to debts.
To solve the debt crisis the governments resort to austerity measures. These measures are not to control the capitalist class but to cut the benefits of the masses which they had earned through long struggles in the past. To solve the ‘nation’s’ debt crisis the wider society, the creators of the wealth are forced into penury. The labouring class is in fact a goose that lays golden eggs. When the capitalists become greedy and want to kill the goose to get all the golden eggs, they shoot themselves on the foot and endanger their very being. This sums up the debt crisis of Euro Zone. This crisis is not only of Euro zone but also of USA and the global economy.
Wall Street melt down precisely taught this lesson to humanity. But the humanity is so slow to learn. Joseph Stiglitz has aptly stated, “I was among those who hoped that, somehow, the financial crisis would teach Americans (and others) a lesson about the need for greater equality, stronger regulation, and a better balance between the market and government.” He further points out, “On the contrary, a resurgence of right wing economics driven, as always, by ideology and special interests, once again threatens the global economy – or at least the economies of Europe and America, where these ideas continue to flourish” (Economic Times, Bangalore 11 July 2011).
If one wants to solve the problem the world is facing with one has to realise that right wing capitalist methods have proved sterile. Unless they turn outward towards the vast majority of the people and their well being there is no future for any economy and society. Growth which the world aspires for and the west envies China and India so much, will not be sustainable unless we take into account the well being of all people and sustaining the earth. The earth and the majority of the population, the toiling masses were never considered important or indispensable to the good of the capitalist class. The G20 do not need to think of overcoming debt crisis between the governments and nations. Ultimately all nations are indebted to the earth and to the toiling masses. G20 should look outwardly to see how they can take care of the earth and the present generation.
The signs of the time are very clear. The mass movements in the Middle East have brought about some sort of political democracy in some nations. The political change in France has also been a pointer. Since that was not enough, now we have global level mass strikes, agitations and riots. The world is clamouring for economic democracy. The time has come to change the definition of “PROFIT”. We have to make a paradigm shift.
