Capitalism's Stunning Contradiction

A good discussion on how capitalism & capitalists keep exploiting the general public. Of course, politicians are in their pockets, too, which means that these capitalists also control the government, which is supposed to look after the general public in a democracy.

Capitalism is only going to concentrate the wealth in a few hands & make the general public poorer & poorer. After all, there's no limit to the human greed. Greedy capitalists will keep taking money from the public, & keep making it poorer & poorer, without any regard to general living standards to their workers. At the same time, I am not defending the communism because we have seen its problems in Russia & China; far too much inefficiency & control when everything is handed over to the government.

The root cause of world's modern problems with resource depletion, poverty, & mass unemployment is this continual & increasing greed of capitalism. It is an unstoppable train, which will continue on, until & unless, the world put back religion & ethics in its economic system.

This Earth can definitely support a lot more people compared to current population, but it cannot support people when the resources are being depleted to make a few people on the top of the pyramid richer & richer. This world cannot support more people when those rich people keep hoarding cash & splurging on expensive, but useless, items, like buying football clubs, billion-$$$ mansions, whole islands, etc. With religion (any religion for that matter) & ethics, instead of throwing away their money on these useless materialistic things, they could invest in improving people's lives by investing in medicine, food, agriculture, & alleviating poverty.

Essentially, the world has not changed in the past millennia or so. Brutal monarchs, then, used to forcibly take their public's money & spend on themselves. Monarchs of current times are these super-rich elites (the "one-percenters") who keep hoarding money by drip-feeding their workers & spending that money on themselves. Instead of spending the money on charities, it would be better to not cut costs so much that the general public suffers cuts in paycheques & unemployment, in the first place. Those monarchs were the government themselves & current "monarchs" control the government.

The world is only going to get worse & worse, unless & until, people start involving religion & ethics in their daily lives & businesses, instead of a weekly attendance in a place of worship. Religion & ethics will help putting the fear of death & answering to a higher authority in the people's hearts, & let them think hard before brutally cutting down jobs, & costs, to ultimately make themselves even more super richer, & spend money frivolously on completely unnecessary items in their lives.

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https://www.youtube.com/watch?v=xglK2rdPmg4

PAUL JAY, SENIOR EDITOR, TRNN: I think it's getting clear to a lot of people that capitalism is out of solutions within its own framework. I mean, first of all, in terms of financial reform, there's been nothing serious enough. It's pretty clear there are still enormous financial institutions that are still speculating wildly, and the same stuff that happened in '07 and '08 is likely to happen again. It's kind of a question of when rather than if.

RICHARD WOLFF, PROF. EMERITUS OF ECONOMICS, UMASS AMHERST: That's right.

JAY: The issue of demand in the economy, low wages and such, nothing's changed. And climate change, capitalism, so far, at least, does not consider it a threat to capitalism to have global warming, and they're not really getting serious about it. So, I mean, are you finding that there's this sense of that, that there aren't solutions here anymore?

WOLFF: I think two things are happening. The one that's most important is that as the crisis since 2007 lingers and lingers, this crisis that was not supposed to happen, that was not supposed to cut so deep, continues to do all of that and to last and last and resist government efforts to change it, that people are shifting and beginning to want to look beyond the crisis years since 2007 and ask the question whether maybe we're not in a bigger, longer-term dilemma for capitalism. And I think we are. And if I could sketch it for a moment, think it would help people to see this as a momentary downturn within a longer crisis.

And here's how I would summarize it. For the first 200, 250 years of capitalism, which begins in England, goes to Western Europe, and then to North America and Japan, the capitalist system, it concentrated in those countries, concentrated its factories, its offices, and stores there where it began. And it turned the rest of the world--Asia, Africa, Latin America--into a hinterland to provide the people, to provide the food, to provide the raw materials. And that was how the world was globally organized.

Then in the 1970s something radically changed. With a jet engine, you could get anywhere in the world in a matter of hours. With modern telecommunications and the computer, you could monitor a factory in Shanghai from Cincinnati as easily as you could manage a factory down the street in Cincinnati. And so capitalists--and I want this really to be driven home if I can--capitalists in the 1970s in Western Europe, North America, and Japan have basically said to the United States and Western Europe and Japan, goodbye, we're leaving, we are abandoning you. You are not where the profit is. The profit is in those places we can now go to where we pay a small fraction of those wages, where we can operate with impunity, where the poverty of these societies, itself a product of all of this, makes them desperate to have the jobs that we can provide. It's a perfect scenario. We made a lot of money for 200 years in the West, and now we're leaving.

And I think the emblematic city that kind of shows this is Detroit, a place that was the apogee, the peak of capitalist efficiency in the 1960s, sustaining 2 million people population, today 700,000, a city that has been literally ripped apart and destroyed because three corporations decided, for profit, to leave that place and say goodbye and leave behind the desolation, the unemployment, the collapsed housing, and all the rest of a city and now has to be the largest bankruptcy of any American urban area in our history.

I think the capitalists of the world are saying to Western Europe, North America, and Japan, we were willing to give you higher wages because we were able to reorganize the planet for 200 years. Now our future is in the areas that are cheap for us--the rest of the world--and we're abandoning you.
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... So basically they're saying to the West, we're leaving. Now, of course, if you make it worth our while not to leave by bringing the wages and the costs, well, we might reconsider. But then what they're saying to the American people is, you can have a choice of a slow decline as we leave or a rapid decline to slow our departure. This is an unbelievable proposition to present to Western Europe, Japan, and the United States and I think will shape the basic political struggles in all these places for years to come.

JAY: But it's so self-destructive even for capitalism, because now you've taken a market that was the consumer of last resort for the world and turning people into increasingly low-wage workers. You're going to sell your profits where? The places that are already low-wage workers? I mean, it's really completely--.

WOLFF: You know, it's wonderful, 'cause as you introduced me as a Marxist, Marx was fond of saying that capitalists are caught in a stunning contradiction. Every capitalist tries to lower the wage costs, reduce the workers, substitute a machine, cut the wages, never wanting to face the fact that if all capitalists are trapped in a system where they're systematically reducing the wages, then they won't be able to sell what those wage workers are producing. And if you don't face that, you're caught in the contradiction that what the system makes you do undoes you by the absence of anyone to buy this stuff. And there we are, back to the naked, basic contradiction of a system that doesn't want to face that it has these kinds of internal problems.

JAY: So in terms of long-term decline, why isn't this cyclical? We've seen these things over the last century. Why is this any different?

WOLFF: Well, I think that we have the cyclicals, but the one thing that I find so interesting is that this one has certain unique characteristics. It was really out of the blue in the sense that almost nobody saw this kind of thing coming. Everyone assured us, not just the president and the politicians, but the economists, that it wouldn't last long. That was wrong. That it wouldn't cut deep. That was wrong.

But I think the thing that really strikes me is the kind of utter failure of anyone in this system to cope with this other than the 1 percent. The politicians can't figure out a solution. The bankers can't, as you rightly put it--for example, the banks that were too big to fail without exception are now bigger than they were then. Nobody is solving it. And even the mass of people are like deer caught in the headlights not knowing which way to go. In the '30s, after all, they joined unions, they joined socialist and communist parties, and that made a difference. At this point, there is the behavior of a system that kind of knows that this isn't just a temporary crisis, there's something fundamental shifting. And yet no one quite knows what to do.

JAY: ... I've always been struck that one of the things that Marx and Engels said that I think gets completely underestimated is that socialism isn't just some good idea. It's not a better policy that we could adopt. It's something that actually grows within capitalism. You get these massive enterprises, and they're fabulously well-planned. Like, you take Walmart, you get a toothpaste off of a shelf in Walmart, they know to get another toothpaste thing going somewhere in China. But the individual, as you say, the individual enterprises try to drive down wages, but they also get extremely efficient, and especially with computerization and digitization. Walmart is a planned economy.

But it's, like, the biggest private employer. I mean, Marx's whole point is this is actually--this is the seeds of socialism, except they're privately owned.

WOLFF: That's right. They're privately owned. They're driven by the maximization of profit for a tiny fraction of the population. And then you can't be surprised that the capacity, what they're capable of doing, which is a staggering saving of labor for the community, ends up not saving the labor for the community at all, because the whole point of it is to gather absurd wealth in the tiny number of hands. And Marx's point was this is an irrationality that even the best public relations cannot forever cover over.

And I think we're in a moment where, both in the short-run crisis and this longer-run decline, the irrationalities, the contradictions--. Look, basically capitalism is saying to particularly the American working class, for 200 years, we really exploited you on the job, but we gave you rising standard of living. Compensation of an awful day was that you could go someplace at the end of the day and have something called a happy hour to console you for the unhappy hours prior. Now capitalism is saying to you, we're going to exploit the hell out of you, but we're not giving you a rising standard of living. We're actually giving you a falling one. We're condemning your students to debt they can't handle. We're taking away the benefits. We're taking away all of the job prospects and hopes for the younger generation. We're going to work you on the job more hours than ever, and we're going to give you less for it. Whatever you think about the past, I'm not clear that the American working class will find that an acceptable offer.

Chris Hedges Interviews Noam Chomsky (Part 2 of 3)

Another interesting interview of Noam Chomsky by Chris Hedges. This one discusses how people around the world, & in the US, have been fed the idea that they are living in the most democratic country in the world. That the world should follow the lead of United States of America when it comes to democracy, liberty, & free speech. However, the reality is very very different.

As Chris Hedges says in the first paragraph that "we are the most monitored, watched, photographed, eavesdropped population in human history." The general public has been given the idea that if you don't concede to government's constant monitoring, then evil people will get you & ruin your life. Fear and hysteria is used to control the masses, & the ignorant masses follow along like a flock of sheep.

Continuing onwards, Chris Hedges puts out another question to Chomsky where he says that how our "liberal" political & legislative institutions have been actually "enslaved" within the power & money paradigm of modern politics. Power & money controls every aspect of modern politics. Those few at the top of social hierarchy who have amassed power & money, usually through illegal or immoral means, wield their significant influences to control the so-called "elected" officials to get what they want from the country.

As Chomsky says that "take a look at the literature, about 70% of the population, what they believe has no effect on policy at all. ... When you get to the top, which is probably, like, a tenth of one percent, they basically write the legislation." How is that even close to democracy? Does it really matter who the masses elect because at the end of the day, the masses will still get the same result, regardless of who is in the office. But, the ignorant & naive public of the West & around the world (US, Canada, Western Europe, Japan, India, Australia, Singapore etc.) still believe that democracy exists in developed countries & developing countries are not developed because of a lack of democracy & liberty. Do they even have an idea what democracy actually is because frankly, voting is not democracy. Voting also happens in Egypt & Zimbabwe, for instance, but the public masses won't recognize them as democratic countries.

Through fear & propaganda of false information, the West has made it seem to the world that it is democratic & the rest of the world must follow its lead. Powerful elites has redefined democracy, knowing fully well that the ignorant masses will accept the propaganda without giving it a second thought. How can the masses fight back & bring true democracy back when they are sound asleep? That's why, political activism is dead nowadays & the public is easily controlled & manipulated by a small minority of the powerful elites in North America & around the world.

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https://www.youtube.com/watch?v=UFyFzTq1Wws

CHRIS HEDGES, INVESTIGATIVE JOURNALIST: But that system, of course, is constant. But what's changed is that we don't produce anything anymore. So what we define as our working class is a service sector class working in places like Walmart. And the effective forms of resistance--the sitdown strikes, going back even further in the middle of the 19th century with the women in Lowell--the Wobblies were behind those textile strikes. What are the mechanisms now? And I know you have written, as many anarchists have done, about the importance of the working class controlling the means of production, taking control, and you have a great quote about how Lenin and the Bolsheviks are right-wing deviants, which is, of course, exactly right, because it was centralized control, destroying the Soviets. Given the fact that production has moved to places like Bangladesh or southern China, what is going to be the paradigm now? And given, as you point out, the powerful forces of propaganda--and you touched upon now the security and surveillance state. We are the most monitored, watched, photographed, eavesdropped population in human history. And you cannot even use the world liberty when you eviscerate privacy. That's what totalitarian is. What is the road we take now, given the paradigm that we have, which is somewhat different from what this country was, certainly, in the first half of the 20th century?

NOAM CHOMSKY, LINGUIST AND POLITICAL COMMENTATOR: I think it's pretty much the same, frankly. The idea still should be that of the Knights of Labor: those who work in the mills should own them. And there's plenty of manufacturing going on in the country, and probably there will be more, for unpleasant reasons. One thing that's happening right now which is quite interesting is that energy prices are going down in the United States because of the massive exploitation of fossil fuels, which is going to destroy our grandchildren, but under the capitalist morality, the calculus is that profits tomorrow outweigh the existence of your grandchildren. It's institutionally-based, so, yes, we're getting lower energy prices. And if you look at the business press, they're very enthusiastic about the fact that we can undercut manufacturing in Europe because we'll have lower energy prices, and therefore manufacturing will come back here, and we can even undermine European efforts at developing sustainable energy because we'll have this advantage.

Britain is saying the same thing. I was just in England recently. As I left the airport, I read The Daily Telegraph newspaper. Big headline: England is going to begin fracking all of the country, even fracking under people's homes without their permission. And that'll allow us to destroy the environment even more quickly and will bring manufacturing back here.

The same is true with Asia. Manufacturing is moving back, to an extent, to Mexico, and even here, as wages increase in China, partly because of labor struggles. There's massive labor struggles in China, huge, all over the place, and since we're integrated with them, we can be supportive of them.

But manufacturing is coming back here. And both manufacturing and the service industries can move towards having those who do the work take over the management and ownership and control. In fact, it's happening. In the old Rust Belt-- Indiana, Ohio, and so on--there's a significant--not huge, but significant growth of worker-owned enterprises. They're not huge, but they're substantial around Cleveland and other places.

The background is interesting. In 1977, U.S. Steel, the multinational, decided to close down their mills in Youngstown, Ohio. Youngstown is a steel town, sort of built by the steelworkers, one of the main steel-producing areas. Well, the union tried to buy the plants from U.S. Steel. They objected--in my view, mostly on class lines. They might have even profited from it. But the idea of worker-owned industry doesn't have much appeal to corporate leaders, which means bankers and so on. It went to the courts. Finally, the union lost in the courts. But with enough popular support, they could have won.

Well, the working class and the community did not give up. They couldn't get the steel mills, but they began to develop small worker-owned enterprises. They've now spread throughout the region. They're substantial. And it can happen more and more.

And the same thing happened in Walmarts. I mean, there's massive efforts right now, significant ones, to organize the service workers--what they call associates--in the service industries. And these industries, remember, depend very heavily on taxpayer largess in all kinds of ways. I mean, for example, let's take, say, Walmarts. They import goods produced in China, which are brought here on container ships which were designed and developed by the U.S. Navy. And point after point where you look, you find that the way the system--the system that we now have is one which is radically anticapitalist, radically so.

I mean, I mentioned one thing, the powerful effort to try to undermine markets for consumers, but there's something much more striking. I mean, in a capitalist system, the basic principle is that, say, if you invest in something and, say, it's a risky investment, so you put money into it for a long time, maybe decades, and finally after a long time something comes out that's marketable for a profit, it's supposed to go back to you. That's not the way it works here. Take, say, computers, internet, lasers, microelectronics, containers, GPS, in fact the whole IT revolution. There was taxpayer investment in that for decades, literally decades, doing all the hard, creative, risky work. Does the taxpayer get any of the profit? None, because that's not the way our system works. It's radically anti-capitalist, just as it's radically anti-democratic, opposed to markets, in favor of concentrating wealth and power.
But that doesn't have to be accepted by the population. These are--all kinds of forms of resistance to this can be developed if people become aware of it.

HEDGES: Well, you could argue that in the election of 2008, Obama wasn't accepted by the population. But what we see repeatedly is that once elected officials achieve power through, of course, corporate financing, the consent of the governed is a kind of cruel joke. It doesn't, poll after poll. I mean, I sued Obama over the National Defense Authorization Act, in which you were coplaintiff, and the polling was 97% against this section of the NDAA. And yet the courts, which have become wholly owned subsidiaries of the corporate state, the elected officials, the executive branch, and the press, which largely ignored it--the only organ that responsibly covered the case was, ironically, The New York Times. We don't have--it doesn't matter what we want. It doesn't--I mean, and I think that's the question: how do we effect change when we have reached a point where we can no longer appeal to the traditional liberal institutions that, as Karl Popper said once, made incremental or piecemeal reform possible, to adjust the system--of course, to save capitalism? But now it can't even adjust the system. We see cutting welfare.

CHOMSKY: Yeah. I mean, it's perfectly true that the population is mostly disenfranchised. In fact, that's a leading theme even of academic political science. You take a look at the mainstream political science, so, for example, a recent paper that was just published out of Princeton by Martin Gilens and Benjamin Page, two of the leading analysts of these topics, what they point out is they went through a couple of thousand policy decisions and found what has long been known, that there was almost no--that the public attitudes had almost no effect. Public organizations that are--nonprofit organizations that are publicly based, no effect. The outcomes were determined by concentrated private power.

There's a long record of that going way back. Thomas Ferguson, a political scientist near here, has shown very convincingly that something as simple as campaign spending is a very good predictor of policy. That goes back into the late 19th century, right through the New Deal, right up till the present. And that's only one element of it. And you take a look at the literature, about 70% of the population, what they believe has no effect on policy at all. You get a little more influence as you go up. When you get to the top, which is probably, like, a tenth of one percent, they basically write the legislation.

I mean, you see this all over. I mean, take these huge so-called trade agreements that are being negotiated, Trans-Pacific and Transatlantic--enormous agreements, kind of NAFTA-style agreements. They're secret--almost. They're not secret from the hundreds of corporate lawyers and lobbyists who are writing them. They know about it, which means that their bosses know about it.

And the Obama administration and the press says, look, this has to be secret, otherwise we can't defend our interests. Yeah, our interests means the interests of the corporate lawyers and lobbyists who are writing the legislation. Take the few pieces that have been leaked and you see that's exactly what it is. Same with the others.

But it doesn't mean you have to accept it. And there have been changes. So take, say--in the 1920s, the labor movement had been practically destroyed. There's a famous book. One of the leading labor historians, David Montgomery, has a major book called something like The Fall of the House of Labor. He's talking about the 1920s. It was done. There had been a very militant labor movement, very effective, farmers movement as well. Crushed in the 1920s. Almost nothing left. Well, in the 1930s it changed, and it changed because of popular activism.

HEDGES: But it also changed because of the breakdown of capitalism.

CHOMSKY: There was a circumstance that led to the opportunity to do something, but we're living with that constantly. I mean, take the last 30 years. For the majority of the population it's been stagnation or worse. That's--it's not exactly the deep Depression, but it's kind of a permanent semi-depression for most of the population. That's--there's plenty of kindling out there which can be lighted.

And what happened in the '30s is primarily CIO organizing, the militant actions like sit-down strikes. A sit-down strike's very frightening. It's a step before taking over the institution and saying, we don't need the bosses. And that--there was a cooperative administration, Roosevelt administration, so there was some interaction. And significant legislation was passed--not radical, but significant, underestimated. And it happened again in the '60s. It can happen again today. So I don't think that one should abandon hope in chipping away at the more oppressive aspects of the society within the electoral system. But it's only going to happen if there's massive popular organization, which doesn't have to stop at that. It can also be building the institutions of the future within the present society.

HEDGES: Would you say that the--you spoke about propaganda earlier and the Creel Commission and the rise of the public relations industry. The capacity to disseminate propaganda is something that now you virtually can't escape it. I mean, it's there in some electronic form, even in a hand-held device. Does that make that propaganda more effective?

CHOMSKY: Well, and it's kind of an interesting question. Like a lot of people, I've written a lot about media and intellectual propaganda, but there's another question which isn't studied much: how effective is it? And that's--when you brought up the polls, it's a striking illustration. The propaganda is--you can see from the poll results that the propaganda has only limited effectiveness. I mean, it can drive a population into terror and fear and war hysteria, like before the Iraq invasion or 1917 and so on, but over time, public attitudes remain quite different. In fact, studies even of what's called the right-wing, people who say, get the government off my back, that kind of sector, they turn out to be kind of social democratic. They want more spending on health, more spending on education, more spending on, say, women with dependent children, but not welfare, no spending on welfare, because Reagan, who was an extreme racist, succeeded in demonizing the notion of welfare. So in people's minds welfare means a rich black woman driving in her limousine to the welfare office to steal your money. Well, nobody wants that. But they want what welfare does.

Foreign aid is an interesting case. There's an enormous propaganda against foreign aid, 'cause we're giving everything to the undeserving people out there. You take a look at public attitudes. A lot of opposition to foreign aid. Very high. On the other hand, when you ask people, how much do we give in foreign aid? Way beyond what we give. When you ask what we should give in foreign aid, far above what we give.

And this runs across the board. Take, say taxes. There've been studies of attitudes towards taxes for 40 years. Overwhelmingly the population says taxes are much too low for the rich and the corporate sector. You've got to raise it. What happens? Well, the opposite.

This endless quest for growth will see Greece self-destruct

Although, this article is focused on Greece & its financial & economic woes, I really liked the author's view on how there is an "inherent contradiction of capitalism". I, myself, don't have a problem with capitalism, but the modern capitalism in itself does have a problem of continuously trying to make profits (which are essentially, surpluses -- gross revenue less costs = profits), which are not being re-invested in the economy but are being filtered up to few wealthiest individuals. Profit then stops there & more profits have to made for the other 99% to survive. Of course, since, the other 99% are making minimum wage or barely scraping by in life, the economy will eventually grind to a halt. Paragraphs 6 & 7, in the opinion piece below, very succinctly summarize this.

Think of it like a machine (for example, your car engine). If you keep driving your car for longer & longer distances & keep trying to extract as many kilometers (or miles) you can extract out of it before you need to service your car, or try to slowly reduce your frequency of regular car maintenance, you will eventually destroy your car engine & its related machinery, because your car's machinery is working harder for fewer servicing. It's the same case for human labour.

Anyway, so then the government is faced with only 2 choices (kind of being stuck between rock & a hard place) that it either try to juice up the "dead" economy through stimulus (like US did) or try to save billions through harsh austerity programs like Southern European nations did or are still doing. These two solutions are interlinked & become sort of a catch-22 problem. Government's primary source of revenue is taxes, but it can't really tax the public which in itself is not earning enough to survive. So tax revenue falls off the cliff. If tax revenue is insufficient for the government to institute stimulus programs, then it's only option is to bring more money from outside; either print more or borrow more. Either of these options will reduce the value of the national currency (assuming it's not part of a regional monetary bloc), & the price of everything essential in the marketplace for the public will rise, which will cause the general public to save more, instead of spend, which is required to revive the dead economy. Hence, we are back at the start of the problem, where the economy is still dead, & neither austerity nor stimulus is working to their full potential.

However, while the government is either cutting social spending or reducing the value of the currency, few individuals in its country are still becoming wealthier by the minute. That's why, the recession didn't hit the hardest all those wealthy 1-percenters. Heck, in their own little world, they didn't even feel it. Their wealth actually grew multiple folds during the recent recession.

Problem is that this inherent problem of modern capitalism & the social inequality it causes is only going to grow until there's chaos & anarchy on the national & global levels. There's no way to resolve this problem since the governments are now controlled by those same wealthy individuals who love this "inherent contradiction of capitalism," since it makes them wealthier & wealthier, & frankly, why would they care if a few millions of the general public suffers because of inequality. Prepare yourself for much more pain & suffering if you are one of those 99%.
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http://www.theguardian.com/sustainable-business/2015/jul/07/this-endless-quest-for-growth-will-see-greece-self-destruct

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For many following the crisis for ... months, it has become clear that it is not just about Greek debt. Beneath the cultural tensions & ugly stereotypes, an ideological war is taking place. This battle is happening because the current economic system has only 2 answers to debt crises, recessions & slow economic growth: stimulus & austerity.

Stimulus is about the government pumping money into the economy to encourage consumer spending, which will theoretically lead to economic growth. In recent times, stimulus efforts have taken the form of the government spending money on infrastructure & other socially beneficial projects (think the New Deal) & quantitative easing. Austerity is a set of measures that aim to cut government spending & shrink the public sector to make the economy less dependent on it, which in theory should make room for & encourage a burgeoning free market (ie neo-liberalism).

The argument against government-led stimulus asks how the economy can grow if the government has to keep expanding its debt &/or money supply in order to start new projects & stimulate the economy. Surely the stimulation it provides will never compensate for growing levels of debt? Anti-austerity advocates, on the other hand, ask how the economy can grow if people make less money & taxes are higher – people will save, not spend, & economic growth is based on consumer spending.

The issue of austerity versus stimulus is often framed as the entire debate – if you don’t support one, you must support the other, because there are no alternatives. This is the same binary debate that has been going on for more than 100 years between the state versus the market. Yet, these dichotomies distract people from thinking about what’s really important – the goal of these policies, which is to grow the economy.

No analysis I’ve read thus far has questioned the damaging role that the endless quest for economic growth plays. Neither austerity nor government stimulus will ever be able to address the debt crises & recessions of the twenty-first century because what we’re dealing with here is an inherent contradiction of capitalism.

This contradiction comes from the surplus of the system (profit) being taken out of the real economy (the economy of physical goods and services) and put into the financial sector to generate more wealth for people who are already wealthy. This requires the economy to continually grow to compensate for the extraction of profit, which is essentially the extraction of the economy’s surplus.

However, this extraction of profit is the same mechanism at the root of soaring levels of inequality. A recent Oxfam report estimates that, by 2016, the richest 1% of the world’s population will own more than the other 99%. If the average person is making relatively less every year, or struggling just to maintain the same financial state, they can’t afford to buy ever more products & services, so the economy can’t grow as it did when we had more financial equality. Thus capitalism has always carried the seed of its own demise.

We are seeing this self-destruction in Greece. The ... Syriza government wants to go back to the negotiating table & create a new bailout agreement that will cut the debt to a more manageable size & reform the public sector in ways that won’t affect the most vulnerable. This would still be austerity, albeit a much milder version than that of the past 5 years. ...

If an agreement can’t be reached, Greece might well go back to the drachma. However, the government has no clear plan for this & an unplanned exit from the euro would be painful, with the poorest hit the hardest.

In all of these scenarios, the government’s goal would still be to re-start economic growth, even at the cost of creating more inequality. None of these options gets to the roots of capitalism’s inherent contradiction. There’s no way to grow ourselves out of this crisis; not for Greece, not for the rest of the world. What we are witnessing is the beginning of the collapse of capitalism.

So what is a sustainable path forward for Greece? If the Greek government could see that it won’t be able to re-start growth, and that GDP growth is a means to an end, not an end in itself, there are steps it could take to start paving a new path to prosperity for its people.

In addition to the basics – restructuring the Greek debt, deep reforms in the public sector to make it more transparent & accountable, & the strengthening of the solidarity economy – I suggest the following:
...

2.The government should nationalise the banks & encourage people to start credit unions. This will re-align the banking sector with the needs of citizens & make the banks more resilient. Credit unions would empower people to take financial matters into their own hands.

3.Greece should keep for-profit interests from buying up its common wealth. This could be done via land trusts, not-for-profits & amending the constitution to make it unconstitutional for the government to sell off the commons.

4.The Greek government should start using a wellbeing or happiness index to measure success, as Bhutan does. In this age of inequality, working class people & the unemployed can easily slip through the cracks of GDP growth.

5.Businesses & the government should shorten the working week & encourage job-sharing, so more people can have part-time employment. This would counter the current problem of some having no work while others work 50 hours a week.

6.Finally, the government should create legislation & encourage not-for-profit enterprise in every sector to prevent the extraction of profits from the real economy & encourage social entrepreneurs & innovators to start up their own not-for-profits. These enterprises would help alleviate the humanitarian crisis in Greece, create a more stable economy & keep the financial surplus in the real economy. By building an economy around social purpose, Greece could usher in the post-capitalist era, rather than fall victim to the unavoidable collapse of capitalism we are witnessing.


Jennifer Hinton is the co-author of How on Earth: Flourishing in a Not-for-Profit World by 2050, which will be published in October 2015.

Why do people wrestle over cheap food? Because we’re desperate !!

The video in this article & the article itself is common in urban cities in all the so-called Western developed world, but we don't normally see it. The world sees the tall shiny business towers of downtown cities of New York, Paris, London, Toronto, & Chicago etc. The world doesn't see how the general public is making much more frequent rounds to the food bank & trying to get cheap food, which is also unhealthy, from supermarkets.

Although, I have personally never seen people scrambling & grabbing cut-price food in supermarkets, I do believe that day is not far. The way capitalism has gone greedy & thanks of continued automation of jobs, people are forced to work for minimum wages, which of course, will force you to fight your neighbour for that last piece of meat & fish.
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http://www.theguardian.com/commentisfree/2015/jun/22/cheap-food-desperate-supermarket-bargains-tesco

People in Britain are battling each other for cut-price food. This is what desperation & poverty does. Video has emerged of customers at a Tesco store in Weston Favell, Northampton, scrabbling around on the floor to reach discounted essential groceries – indicative of increasing & entrenched food poverty.

It might come as a shock to anyone who imagines that writers fly to work in their own helicopter with truffle sandwiches for lunch, but I survive on food found in the supermarket reduced aisle. Occasionally dealings around the cut-price food can turn ugly.

Every day, I see shoppers who desperately need these bargains, since for many, it’s the only possibility of eating properly. After all, a huge pack of reduced mince or chicken is a good source of protein lasting across several days if cooked & eked-out properly. But this level of thriftiness is exhausting, which might explain the frayed tempers of the Northampton food-scrum.

I order my day around the rhythms of the discount hour, which is different at each of the three shops on my circuit. Food is first reduced mid-morning, then again later in the day. Bargain hunters benefit from holding their nerve, as the real reductions are made later on.

There can be a sense of camaraderie, & my fellow bargain seekers acknowledge each other with wry smiles. We even share recipes – I hear familiar voices discussing how to turn slabs of cheap smoked fish into a nutritious & inexpensive chowder. We sometimes help each other out – I reach food for shorter or older customers & in return, they help me read the labels (I have some sight problems).

The Northampton all-in, food wrestle-mania occurred, I suspect, when informal protocols which bring order to the demeaning experience of hanging around trying to look busy while waiting for the soup to be reduced, were ignored. Personally, one vital guideline, & a rule which makes me furious whenever I see it being ignored, is don’t be greedy. If you see massive packs of organic vintage cheddar for 20p (this has happened) please don’t hog them all. I’ve witnessed people loading stacks of gourmet pizzas into the boot of a new BMW, which if owned by the loader seemed to me a little unfair.

The etiquette of poverty-induced budget food-hunting decrees that you don’t barge in & grab stuff over the heads of those too polite to let go of their manners. Around the appointed hour of food reduction, a vague, straggly queue forms. When it’s just one remaining pack of prime steak, then who dares wins, but don’t knock other people over.
...

The main (unwritten) rule of food-bargain club is this: be nice to supermarket workers – they are your friend, & will occasionally give you a sly nod to indicate when they will brandish their supermarket price label guns. Besides, they are doing a hard job for low pay. Some are even on work-for-benefits schemes & privately admit they would appreciate the chance to buy cheap food themselves. So be kind not just to them, but all your fellow bargain hunters.

Millions more have a bank account, but what is the impact on global poverty?

Primary problem is that poverty is not going to end by some poor people, in developing countries, opening a bank account. If merely opening a bank account would alleviate poverty, then there would be no poverty in the developed world at all. But, as you may know already, that's not the case. A walk in urban areas of any metropolitan city of the developed world; Paris, London, New York, Toronto, Vancouver, Los Angeles, Chicago, Frankfurt etc., will show poor people, & the rising poverty, out in the open.

Alleviating poverty requires a much deeper, multi-faceted, radical approach. It will not happen overnight. It may take a generation or two. Social inequality requires a lot more work & participation of other social classes than merely opening a bank account.

For instance, cost of living in the developed world is constantly rising. Affordable housing in major cities from Paris & Frankfurt to Toronto & Vancouver to New York & Los Angeles is reaching out of hand of poor people. All of their other living expenses, i.e. food & utilities, keep rising, too. But, their salaries or wages are not keeping pace. Many are working in low-wage jobs, i.e. in service industry (restaurants, hotels) or retail industry, where minimum wages are way below to a level, which is understood to be required to sustain a living.

So those people are falling below the poverty line & are being classified as poor. They all have the bank accounts, & are actively using those accounts, too, but they are no use against the forces forcing these people pushing them in poverty. Capitalism, without any ethics or morals, are letting the rich get richer, at the brutal expense of making the masses further poor.

Rich keep finding ingenious ways to keep their money in their hands, for instance, loopholes in tax dodging & labour market, or greasing the political wheels with thick wads of cash, while, downloading all the expenses of government social services, infrastructure, education, healthcare etc. on to the poor masses. When the poor masses are getting a meagre salary, from which, they also have to pay rising taxes, education fees, medical bills, rising rents, increasing food prices etc., then how will they ever rise out of poverty?

Opening a bank account may help an abject poor farmer in Uganda to, perhaps, become more effective & efficient in conducting financial transactions, but it won't help alleviate poverty or eliminate social & financial inequality for billions around the world.
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http://www.theguardian.com/global-development-professionals-network/2015/may/28/millions-more-have-a-bank-account-but-what-is-the-impact-on-global-poverty

Chabruma Luhwavi, a Tanzanian merchant, used to end his working day fearing thieves would rob him of his earnings as he drove home through Dar Es Salaam’s dark streets. But that fear vanished once he opened a bank account for his business, which he accesses through his mobile phone.
...

Chabruma’s story is one example of how hundreds of millions of people around the globe are joining the financial system. Put simply, they are getting some type of account in which they can deposit, manage & save their hard-earned money.

Why is that important? Access to banking services – called “financial inclusion” – is increasingly held up as a key tool for pulling the world’s poor from poverty. Without an account, it’s a lot harder to save money, pay bills, receive wages, or operate a business.

In 2014, in partnership with the Bill & Melinda Gates Foundation & Gallup, we set off on a year-long journey to the heart of the debate on banking & poverty reduction.

We had a long list of questions. How many people around the world own a bank account? How does account ownership vary across gender & income groups? And, perhaps most importantly, are people actually using their accounts – &, if so, how?

Which brings us to today: we recently announced our findings with the Global Findex database, based on interviews with 150,000 adults in more than 140 economies – & there’s plenty to celebrate.

Worldwide, 62% of adults now have an account at a formal financial institution (such as a bank) or a mobile money account, up from 51% in 2011, when we launched the Global Findex. The number of adults struggling to get by without an account fell by 20%, to 2 billion.

Yet we found account ownership doesn’t easily lead to use. Look at India. Under an ambitious new programme, we discovered 125 million new bank account owners there. Account ownership has nearly doubled since 2011; but 43% of them have gone unused for a year. The same is true for one-fifth of all accounts in the emerging world.

Our journey taught us that the poverty-reduction potential of account ownership flourishes when people use their account to save money or send & receive payments. Your account can’t pull you out of poverty – unless you put it to work.

For women, owning an account is doubly important. It means privacy & control over their money & how it is spent. Research shows that giving women their own account increases household spending on food, education, & other necessities – which also means less money squandered by irresponsible family members.

To pay school fees, women, especially, often must travel to the school & take time off from work, thereby losing wages. Children can be barred from class until their mother pays up. Digital payments from an account eliminate these costs. But in developing nations, more than 500 million adults with an account pay school fees in cash.

Using an account to save can also help people weather an emergency such as a job loss or health crisis. In China, more than 40% of adults & in Indonesia, 70%, save at a bank or another financial institution. But fewer than 20% of adults in other developing regions save at a bank or financial institutions – instead, storing their money in their home for the future or for emergencies or as assets, such as gold or livestock, that can be lost or stolen.

The benefits from account ownership are reflected in instances of high account use across emerging economies. In Latin America, 40% of accounts are used to receive wages or government social benefits. More than a quarter of farmers in Kenya & Tanzania receive payment for the sale of their agricultural products directly to an account. Individuals are also using accounts to share money. In Sub-Saharan Africa, more than half of account holders use their accounts to send or receive funds to friends or relatives who live far away. Keeping funds in an account is safer than keeping the money under a mattress.

Our Global Findex database points to a number of opportunities for businesses & governments to help people get more out of their accounts. As financial inclusion takes centre stage in the poverty reduction agenda, international development agencies should focus not only on expanding account ownership, but on improving account use as well.


Leora Klapper is a lead economist at the Development Research Group, World Bank, & one of the authors of the Global Findex 2014.

"Shrinking Middle Class income" by Bob Englehart

"Shrinking Middle Class income" - Bob Englehart, Hartford Courant, Hartford, Connecticut, US

"Where Apple makes its money" by Martyn Turner

"Where Apple makes its money" - Martyn Turner, The Irish Times, Dublin, Ireland

"1 Percenter want more" by Steve Sack

"1 Percenter want more" - Steve Sack, Minneapolis Star Tribune, Minneapolis, Minnesota, US

"Trickle Down Theory" by Martyn Turner

"Trickle Down Theory" - Martyn Turner, UK

Australia to probe foreign labour

There have been stories of "slave-labour" being used in American agriculture sector. There have been stories of migrant workers being used as slaves in the European agriculture sector (fruits & vegetables grown on Spanish & Portuguese farms were being sold in British supermarkets). Then, we also have stories of slaves working in Thai's fishing industry, which ultimately supplies seafood products all over North America & Europe. Now, we have "slave labour" on Australian farms.

Who says slavery is no more in this "modern" world?

Is it surprising that slavery still exists? (not to me, at least). Heck, that's why, immigration exists.

On one end, we have big supermarkets like WalMart, Costco, Aldi, Lidl etc which demand low-cost supplies of produce from their suppliers, because after all, they need to sell those at a low cost, too, to their customers (who are themselves are earning meagre wages, thanks to automation of their jobs).

Anyway, so, if the suppliers need to reduce their costs, then, after automating whatever processes they can automate, they will start hiring migrants & using them as "slave labour", which only means long hours of work at meagre wages with no benefits, whatsoever.

So, you can decide for yourself, where's the problem lies in this whole supply chain?
- Customers are always looking for the cheapest produce they can get their hands on.
- Retailers are looking for cheapest produce they can get their hands on.
- Distributors are looking for cheapest produce they can get their hands on.
- Producer is pressured to produce at as low a cost as possible.

Problem actually lies at the top; the business persons & owners of companies who are always looking to cut costs, & the biggest component of their costs, is always going to be their labour costs. It also includes all those shareholders / stockholders, esp. the large institutional ones, who pressure companies to lower their costs (to maximize their profits & ultimately, dividends to shareholders).

Companies have only one way to reduce labour costs, by automating whatever they can automate & reduce the workforce to as few a people as they can, to the point that the labour public has a choice to either accept working at meagre wages with no benefits or no job at all. So, that public will obviously go for the cheapest produce it can find in the supermarket, because, after all, that labour public needs to eat.

So, can we really blame the agriculture producer / farmer to hire migrant workers & use them like a "slave labour" when owners, like, Sam Walton's family (WalMart owners) are becoming billionaires?
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http://www.bbc.com/news/world-australia-32586779

Allegations of unethical treatment & underpayment will be investigated by the state government of Victoria.
 
Victoria will also push for a national inquiry into what it has described as "a national shame".
 
Claims Australia has an underclass of foreign workers treated like "slave labour" were made by ABC TV ... .
 
The report by ABC's Four Corners programme detailed widespread abuses of Australia's 417 visa.
 
The visa is for people aged 18 to 30 years of age who want a working holiday of up to 12 months in Australia.
 
The investigation uncovered abuses of the popular visa, including what were described as "slave-like conditions" at farms & factories across Australia.
 
"No employee should ever be exploited, harassed or deprived of their basic liberties", said Victoria's Minister for Industrial Relations Natalie Hutchins.
 
"This is not just about the underpayment of wages; this is about creating an underclass of foreign workers," said Ms Hutchins in a statement.
 
Foreign underclass
 
"It's clear that Victoria needs a better system in place when it comes to regulating labour hire practices," she said.
 
The food being picked & processed by exploited workers was reportedly sold to consumers across the country by major supermarket chains & fast food outlets.
 
Queensland MP Keith Pitt last month called for an investigation of exploitation of foreign workers in the horticultural sector.
 
He said many farmers were at risk of prosecution because they were using labour hire companies that underpaid backpacker workers.
 
Migrant workers are essential to Australia's agriculture sector, according to the National Farmers' Federation (NFF).
 
"Without them, there would be a chronic labour shortage at peak harvest times of the year," said NFF President Brent Finlay.
 
But he said all farmers had a responsibility to adopt employment practices & use labour contractors that did not exploit workers.
 
"And it's not just farmers, this is a whole of supply chain issue," he said.

To move beyond boom & bust, we need a new theory of capitalism

Although, this op-ed piece is a good one, posing an important question to think about in regards to the economic policy of a country & for countries, worldwide, my own view says, regardless of which economic policy we come up with, we will still have these booms & busts.

 

The idea of free markets, capitalism, democracy, social democracy etc are all good & noble, but the problem in them lie in the proper implementation of these ideas. We cannot ever properly implement it ... without religion.

 

Now, people will groan, what religion has to do with free markets or democracy or capitalism?

 

I can't talk about this from other religions since I don't know what other religions say or don't say about the problems the whole world is having by adhering to these ideals. I can, though, talk about economic policy & capitalism from Islamic perspective.

 

Since, this is a very long & deep topic to discuss even from a religious perspective, so I'll talk at a high-level. I will say here that Islam doesn't forbid capitalism. Today's problems are not with Capitalism itself; it's other factors making problems for Capitalism. What are those problems?

 

1. Greed: Islam abhors greed. Even Christianity has greed as one of its 7 deadly sins. One of the 10 commandments, "thou shall not steal," includes greed (when one is greedy, they will steal to satisfy their need).

 

Problem is greed is actually considered good in secular or atheist world. For instance, entrepreneurs are told to be hungry & greedy to achieve greatness or whatever they are trying to achieve. So, if Facebook takes your personal data & sell it to third parties for profits, then you can't complain, because it's part & parcel of free markets. Nothing is right or wrong in free markets.

 

After the 2008 crisis, there was, & still is, a lot of noise about market regulations in US & Europe. Well, the government agencies were made. Regulations were enacted (after they were heavily watered down, thanks to the heavy lobbying efforts from the Wall Street crowd). But, the implementation of those regulations are nowhere near to their initial objective. Why?

 

Because, for every law a human makes, an "anti-law" a human finds. What's an "anti-law"? A loop hole. We can see all around us that for every law, there are loop holes available.

 

We humans, regardless of how hard we try to make the strongest possible law, there will always be a loop hole. That's why, religion stopped it at the spiritual level; no greed. So, if bankers or executives or government leaders turn all devout Muslims, or Christians, or Jews or religious people tomorrow, they can't steal from the public to line up their own pockets. They have to shun greed for the public good.

 

What's that has to do with Capitalism? Capitalism says a society should have private enterprises. That's good & ok. But then, businessmen take that concept & open private companies & then to always earn more money (nobody can satisfy greed), they commit abuses (labour abuses, market abuses, corruption, lies, bribery etc etc) to fatten up their accounts. Of course, the result ends up being a major part of the populations keep becoming poorer & poorer. Inequality & injustice take the rein of society. A few elites take control of the liquidity in the market (money) & start controlling government so it makes policies favouring them (government leaders are paid handsomely). All because of few people became greedy.

 

2. Interest economy: Islam forbade interest because an economy based on interest creates a rich class & a poor class. Since, the money the rich has is making him/her more money, he/she will always make money without putting in that much effort, whereas, the poor does not have enough money, he/she will have to borrow more money (& hence, pay interest to the rich) to survive.

 

Relation to capitalism? As I said earlier, nothing is wrong with Capitalism as an idea, but this is one of the many factors which create problems for a society & its people, & then we blame capitalism.

 

3. Consumerism: It's sort of part of greed; a greed of accumulating / buying more things for yourself. So, of course, Islam abhors consumerism. Modern marketing thrives on this notion. Economy measurement tools, e.g. GDP are dependent on it. The more people buy, the more GDP goes up, the more a country is shown to be developing or doing good, economically.

 

Relation to capitalism? Again, one of the factors adversely affecting capitalism. In the race to sell more, business people abandon all ethics & morals (lying to people to buy houses with ultra-cheap interest rates, even when they know these people can't afford these houses) & people getting greedy to become homeowners at any cost. Result is in front of you all. After the house mortgages, credit card debts are the next mountain of the world. With ultra cheap interest rates around the world, people are on the hunt to load up their houses with things, even at the cost of racking up huge credit card debts. When interest rates are going to increase, & then people unable to pay their credit card bills or even service interests, the market gonna crash.

 

We are ready to blame Capitalism for all our economics ills but capitalism has nothing to do with whatever problem we are having. Capitalism only says private  enterprises. It doesn't say anything about interest economy, consumerism, human greed, or economic measurement tools (e.g. GDP). But these, & other factors, affect how the economy performs, domestically & internationally. Most of these factors can be controlled only through religion.

 

Regardless of how much we think we are intelligent to make laws to control these factors, we can never completely eliminate them (there are always loop holes), & they will always win, & when these factors take over the society, the majority of human population suffers. This is not the first time we have seen human greed destroying the world; be it the Roman emperors pillaging other colonies (& for example, heavily taxing the public) to satisfy their greed or the 1 percenters of the current world keep amassing wealth, at the expense of the other 99%, to satisfy their greed.

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http://www.theguardian.com/commentisfree/2015/mar/22/to-move-beyond-boom-and-bust-need-new-theory-capitalism

 

 

This is the year that economics might, if we are lucky, turn a corner. There’s a deluge of calls for change in the way it is taught in universities. There’s a global conference at the Organisation for Economic Co-operation and Development in Paris, where the giants of radical economics ... will get their biggest ever mainstream platform. And there’s a film where a star of Monty Python talks to a puppet of Hyman Minsky.

 

Terry Jones’s documentary film Boom Bust Boom hits the cinemas this month. Using puppetry & talking heads (including mine), Jones is trying to popularise the work of Minsky, a US economist who died in 1996 but whose name has become for ever associated with the Lehman Brothers crash. Terrified analysts labelled it the “Minsky moment”.

 

Minsky’s genius was to show that financially complex capitalism is inherently unstable. Under conditions of stability, firms, banks & households will, over time, move from a position where their income pays off their debt, to one where it can only meet the interest payments on it. Finally, as instability rises, & central banks respond by expanding the supply of money, people end up borrowing just to pay back interest. The price of shares, homes & commodities rockets. Bust becomes inevitable.

 

This logical & coherent prediction was laughed at until it came true. Mainstream economics had convinced itself that capitalism tends towards equilibrium; & that any shocks must be external. It did so by reducing economic thought to the construction of abstract models, which perfectly describe the system 95% of the time, but break down during critical events.

 

In the aftermath of the crisis ... Minsky’s insight has been acknowledged. But his supporters face a problem. The mainstream has a model; the radicals do not. The mainstream theory is “good enough” to run a business, a finance ministry or a central bank – as long as you are prepared, in practice, to ignore that theory when faced with crises.

 

That, effectively, describes the situation among the policymaking elite today. They are trying to wrestle the economy back into a state where their models can cope with it again, using measures their theories say are not needed: quantitative easing, bank nationalisations, partial debt defaults & currency devaluations.

 

The radical, pro-Minsky faction is at a disadvantage because it does not possess a complete alternative model of capitalism. Some have generated computer programs showing how financial crises happen. But, by their own admission, they do not have a complete alternative model of how capitalism works.

They are, admits Dutch finance professor Theo Kocken, “roughly right” rather than “exactly wrong”. Kocken’s solution is to concentrate on why we misperceive risk. Behavioural economics has had a field day since 2008, identifying problems for the human brain when faced with complex risks: oversimplification, overconfidence & “confirmation bias”, where we ignore facts that challenge our existing beliefs. But adding behavioural insights to the Minsky model of financial mania does not turn it into a theory of capitalism.

 

Here, the parallels with events in physics are obvious. After Einstein’s big breakthrough, we were left with 2 competing – & mutually incompatible – accounts of the laws of physics. Einstein himself was dissatisfied with this, pursuing from the 1920s a “theory of everything”. It is a laudable aim in economics too. And this is where we come to the turning point. The defenders of orthodox economics & the Minsky rebels are, essentially, asking the same question: “What does capitalism normally look like?” The one answers “stable”; the other “unstable”. But it’s the wrong question. The right question is: Where are we in the long arc of capitalist development? Nearer the beginning, the middle or the end? But that question goes to the heart of darkness.

 

For the mainstream, their convictions about equilibrium & abstract models were always founded on the belief that capitalism is an eternal system: the social arrangement most completely reflecting human nature. Minsky’s followers, as with all followers of JM Keynes, assume that a better understanding of financial mania can stabilise an inherently unstable system. But even physicists, who study a universe that has lasted 13bn years, are prepared to countenance – indeed, are obsessed with modelling – its death.

 

So the pursuit of theory is obligatory in economics. The holy grail is not a new orthodoxy, cobbled together from Minsky & the remnants of mainstream thought so that bankers can construct trading models to iron out problems created by the way our brains work. The aim should be something bigger to model capitalism’s current crisis within an understanding of its destiny.

 

For me, the most fundamental question in economics still concerns the 2008 crisis. Was this event the last in a series of shocks needed to allow a third technological revolution to take off? Or was it evidence that capitalism’s tendency to adapt and reshape in response to technology has stalled, or is even finished? That is the shadow we have to jump over in economics. Amid a mania for “new economic thinking”, it is what we need to think hardest about.