Sunday, January 13, 2008

Peak Capitalsim

A Commentary By Richard Moore

I came across a very intriguing article in the NY Times by Peter Goodman , Dec 30: "The Free Market: A False Idol After All?"

This headline really grabbed my attention. The free market has been the unquestioned economic story line ever since Reagan's day. What does it mean when the NY Times -- the flagship of US propaganda -- begins undermining that story line? My attention was grabbed even more by this quote I noticed in the article: "Untethered market forces lead to bad things", said Mr. Bernstein of the Economic Policy Institute. "You simply can't run an economy as complicated as ours on ideology alone". The Economic Policy Institute (EPI) is a well-known neo-conservative think tank-- from which one expects only neoliberal economic views. What's going on here?? Why are they implicitly but obviously calling for regulatory interventionism? This brings to mind as well the recent statements by the Federal Reserve, implying that new regulations were needed in the credit game.

Keep in mind that this shift from the Economic Policy Institute does not represent any new economic insight on their part. Everyone with any smarts, including them, always knew that the free market was destructive to national economies. Indeed, the purpose of the neoliberal project was to undermine national sovereignty in general.

This EPI statement is a propaganda shift, a shift in 'the story line'.

Also keep in mind that the US has never really observed the principles of neoliberalism. We forced other nations to open their markets, and drop their subsidies and tariffs -- by means of the WTO and IMF -- but we always reserved the right to ignore those principles in our own case, as for example with agricultural subsidies, and the time we prevented China from buying an American-owned oil company. We never have been running our economy "on ideology alone". Again, we see that this statement by the EPI is a change in the story line, not a new insight.

Certainly this EPI shift does not indicate that capitalism is being abandoned, but it does represent a significant turning point. As long as neoliberalism was the unquestioned story line, that meant capitalism was still on the upsurge, still the core of elite management strategy. If neoliberalism is beginning to fall from favor, and if this is going to be reflected in the story line, that suggests the tide of capitalism has passed its highest point, and is beginning to recede. In other words, capitalism may be past its peak as a clique tool, and this NY Times piece might be one of our first signals to that effect, along with the statements by the Federal Reserve.

And there are indeed good reasons why capitalism should be falling from favor in the eyes of our clique -- who always look at everything from a long-range perspective. Capitalism, as a fundamental economic model, no longer makes much sense for them. Growth for growth's sake has been a very powerful tool of wealth accumulation over the centuries; it's done its job well for those at the top of the financial pyramid. But that growth has now collided with an immovable barrier: the finiteness of the Earth and its resources.

Certainly our clique intends to continue exploiting and plundering, but the capitalist formula, objectively speaking, has now served its purpose -- and its dynamics no longer serve our clique as they have in the past. The evidence of this lies before us, as the hyper-inflated capitalist financial bubble is beginning to burst world wide, and the American economy is kaput. Purely from a management perspective, isn't it clear that it's time for a reorganization of the system?

Many of us have feared that an economic collapse was in the works -- there is certainly much evidence for that at the moment, with subprime mortgages, deficits, and all. That fear led us to the fear that martial law would be imposed, in order to control the resulting chaos -- and we saw the Patriot Act as being the preparation for that. That scenario was a core part of the neocon agenda, and that scenario too I think has now been abandoned, or at least postponed indefinitely. There are, given our assumptions, better ways to proceed.

From the clique's perspective, I'd want to set up the next administration to really turn things around -- to take bold steps to create a situation that would move Americans back into their comfort zone. The PNAC agenda was about outright fascism, which made sense if your plan includes a period of economic collapse combined with more aggressive warfare. But if the iron boot of fascism won't be available to control the masses, it makes sense to avoid economic collapse and 'bring the masses back onside' -- to restore American's faith in the system. While Bush gave us only fear and dissent, I'd want the new administration to cheer everyone up, put a smile on their faces. And nothing cheers folks up like a positive economic turn around. If capitalist ideology is no longer sacrosanct, that provides the flexibility needed in order to create such an economic turn around.

What we are likely to see, then, are a bevy of major government economic programs, quite different than those of the New Deal, but on a similar dramatic scale. It's like this time we're getting our New Deal just before an economic collapse was going to hit, without having to actually live through another Great Depression. And indeed, another Great Depression would be inevitable without economic interventions on the scale of the New Deal. Even the bankers are beginning to hint in this direction, as they contemplate their debt write-off nightmare.

According to capitalist economics the US is bankrupt, deeply in debt, and is hemorrhaging cash-flow losses. We have our fingers crossed that China won't dump it's deteriorating dollar holdings, but we certainly can't expect them to fund a New Deal for us by buying up massive new government security offerings. If capitalism is sacrosanct, a neo-New Deal is not feasible. If capitalism is no longer sacrosanct, then a neo-New Deal becomes feasible.

Full article here

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