Barry,
Capitalism is not in crisis. So long as man
retains his curiosity streak and wants to make
and do new things then, to bring them off, he has
to devote time, effort and (these days) money
beforehand. The first hunter-gatherer who
investigated his hunting weapon -- a crude piece
of stone -- and discovered that, with skill, it
could be fractured into sharp edges and points
was the first capitalist. The time and effort
spent was the first investment -- the first
capital -- before money was invented.
What's in crisis today is governmental and
banker-led capitalism. In previous times there
has been military-dominated capitalism, as also
religiously-led as also industrialism-led. Each
has the effect at their zenith of exploiting the
masses. But then they inevitably go too far and
lose their 'mandate from heaven' as the Chinese put it.
Today's crisis has been caused by (a)
governmental printing of money way beyond normal
productivity; (b) banks' inventions of all sorts
of credit schemes which have vastly enhanced the
existing money supply. In fact, governments and
banks in the advanced countries are synergistic.
It's revolving doors for the chief players.
Senior politicians hardly fail to become rich
when retired; senior bankers hardly fail in being
able to influence legislation.
If it's of any consolation there are clear signs
that both banks and governments have bitten off
far more than they can chew. Having grown from
something like 5% of GDP to something like 15% in
the last 100 years, banks are now contracting,
both in personnel and schemes. Having grown from
something like 10% of GDP to something
approaching 50% (in some of the most advanced
countries) in the last 100 years, governments are
already contracting, both in personnel and scope.
This hasn't reached America yet but it will do.
In this increasingly specialist world new power
groups will arise in due course as the whole pack
of cards is reshuffled. Don't ask me what the
next specific power centre(s) will be. For
example, it could be education or medicine (and
perhaps one particular specialization within this
such as neuroscience for happiness purposes or
genetics for breeding purposes). Both education
and medicine already have the appearance of being
much larger economic growth sectors in the coming
years. Both of them have the potential of gaining
power over the personal lives of politicians,
bankers and their children. Or it could be
something quite unexpected which might carry
great economic, and thus political, power with
it, such as quantum computing or particle physics perhaps.
Unless you happen to think that mankind is about
to fall into chaos or oblivion or both, then
capitalism will survive. The real point is -- in whose hands?
Keith
At 23:56 07/08/2011, you wrote:
<http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html>http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html
I think the following quote summarizes much of
my current thinking about economics.
Barry
"At bottom, capitalism is as much a moral
enterprise as it is an economic one. If those
lucky enough to become successful ignore the
virtues of thrift, self-discipline and sobriety,
as well as the moral imperative to look after
the weak, then capitalism degenerates into cronyism and self-interest."
Article to follow....
Capitalism in crisis, a warning from history:
Eighty years ago, a banking collapse devastated
Europe, triggering war. Today, faith in the free markets is faltering again
Last updated at 6:03 PM on 6th August 2011
Exactly 80 years ago, international capitalism
stood on the verge of meltdown.
The collapse of the banking system in the summer
of 1931 sent shockwaves through Europe, bringing
governments to their knees and thousands out onto the streets.
In the United States, an increasingly careworn
president and his congressional critics fought a
bitter battle over government spending and tax rises.
The collapse of the banking system in the summer of 1931 brough
The collapse of the banking system in the summer
of 1931 brought governments to their knees and
thousands out onto the streets (Pictured: the Jarrow March)
And in Britain, with the Labour government
broken by the economic crisis, a
Conservative-dominated coalition imposed the
deepest spending cuts in a generation, slashing
benefits in an attempt to restore confidence in the nationâs finances.
With the banks refusing to lend, and millions of
people thrown out of work, capitalism itself seemed utterly discredited.
In other countries, many turned to the far
Right, swelling the ranks of the Nazis and their allies.
In Britain, a generation of intellectuals turned
their backs on capitalism, placing their faith
in the utopian idealism of Soviet Communism and
closing their eyes to the horrors of Stalinâs barbaric regime.
For decades afterwards this extraordinary
historical moment when capitalism itself
appeared to have failed was forgotten, and
looked like the stuff of ancient history.
But in the summer of 2011, with the eurozone
in chaos, the British economy stagnant and the
U.S. crippled by debt, with social mobility at
a standstill and millions of ordinary families
squeezed until they can barely breathe, it feels disturbingly familiar.
In the past two days alone, stock markets have
been in free-fall across the capitalist world.
With investors manifestly losing confidence in
Spain and Italy, two of Europeâs biggest
economies, a second devastating world recession cannot be ruled out.
Although the share-price plunge does not yet
come close to the infamous Wall Street Crash of
1929, this weekâs market mayhem is a chilling
reminder of the sheer fragility of the capitalist system.
If the worst happens, if Spain and Italy go down
and the euro crumbles, then the world economy really will be in trouble.
Only 20 years ago, the capitalist West was
congratulating itself on victory in the Cold
War. The Berlin Wall had come down, the Soviet
Empire had broken up, and American intellectuals
were even proclaiming the âend of historyâ.
Marxism was dead and capitalism triumphant, or
so we were told. Having lifted millions in the
West out of poverty, having showered them with
goods and opportunities, the free-market system could do no wrong.
Today, the picture is very different. For
although the Left has never recovered from the
fall of the Soviet Union, capitalism has rarely
seemed in a more desperate condition.
Last year Barclays boss Bob Diamond pocketed an incredible £6.
Last year Barclays boss Bob Diamond pocketed an
incredible £6.5 million - and that's on top of
his £8 million-plus annual pay package
And with bankers still pocketing gigantic
bonuses and Europe swept by a wave of austerity,
even the Right are beginning to wonder whether
the system is intolerably loaded in favour of rich metropolitan elites.
Only last week, for example, the Tory MP Douglas
Carswell suggested that âthe free market all
too often turns out not to be a free market at
all, but a corporatist racket for the fewâ.
Modern Conservatives, he said, should be âas
suspicious of Big Business and Corporatism as we
have been of Big Governmentâ.
On the surface, this may sound shocking. Yet
when you dig a little deeper, it is not hard to
see why so many people have lost faith in the free market.
The entire premise of the capitalist system,
after all, is that in a free market, hard work
will produce its own reward. For capitalists,
the important thing is equality of opportunity.
If you put in the effort, then you can be
whatever you want to be, regardless of your background.
So when Margaret Thatcher, one of capitalismâs
most passionate champions, ran for the Tory
leadership in 1975, she defined her values as
âthe encouragement of variety and individual
choice, the provision of fair incentives and
rewards for skill and hard work, and a belief in
the wide distribution of individual private propertyâ.
And when she walked into Downing Street four
years later, she promised to ensure that âhard work paysâ.
But you do not have to be a card-carrying
Left-winger to see why millions of people not
just in Britain but across the world feel completely cheated.
When most of us contemplate the results of the
bankersâ greed, for example, talk of âfair
incentives and rewardsâ seems a sick joke.
In every corner of Europe, ordinary families,
through absolutely no fault of their own, are
paying an intolerable price for the outrageous avarice of the financial elite.
Recent figures show that City bonuses came to a
staggering £14âbillion last year, with one
executive, Barclays boss Bob Diamond, pocketing
an incredible £6.5âmillion â and thatâs
on top of his £8âmillion-plus annual pay package.
When she walked into Downing Street, Margaret Thatcher promised
When she walked into Downing Street, Margaret
Thatcher promised to ensure that 'hard work pays'
Yet at the same time, banks are refusing to lend
to ordinary families and small businesses.
Indeed, last month the banks actually took in as
deposits £3âbillion more than they lent,
which goes a long way to explaining why growth is virtually non-existent.
âNo wonder economic growth is barely visible
to the naked eye,â remarked the Coalitionâs
former Treasury spokesman, Lord Oakeshott,
âwhen the banks keep sucking billions out of the economy.â
These are, incidentally, the same banks, such as
RBS and HBOS, that British taxpayers had to save
from the consequences of their own reckless gluttony.
Three years ago, the Government spent
£500âbillion to bail out the collapsing
banking system. And now, while the bankers toast
themselves with vintage champagne, the rest of us are picking up the bills.
But the bankersâ greed is only one symptom of
a wider malaise. The stark truth is that
millions of ordinary families feel the system gives them no chance of success.
The facts are simply unanswerable. A child born
in 1971 has less chance of moving up the social ladder than one born in 1951.
On top of that, the gap between rich and poor
has grown steadily since the 1970s, with some of
the biggest increases coming during the 13-year New Labour regime.
Half a century ago, during the Fifties and
Sixties, grammar schools, job opportunities in
manufacturing and the death of deference meant
that working-class children felt they had a decent chance of getting on.
And in their different ways, state-school
educated prime ministers such as Harold Wilson,
Ted Heath, Jim Callaghan, Margaret Thatcher and
John Major gave the impression that anybody
could make it, regardless of their background.
Even in 1931, during the last great crisis of
capitalism, Britain was run by a prime minister,
Ramsay MacDonald, who was the illegitimate son
of a Scottish labourer and a poor housemaid. At
a time when it would have been easy to imagine
that power belonged exclusively to the rich,
MacDonald was a shining example of social mobility.
Nobody could possibly look at our leaders and draw the same conclusion today.
From Cameron, Clegg and Osborne respectively
the son of a millionaire stockbroker, a banker
and the heir to a baronetcy to Ed Miliband
and Ed Balls, one the son of a North London
intellectual, the other the privately educated
son of a professor, British politics has become
the plaything of a tiny self-regarding elite,
totally out of touch with ordinary families.
Looking at our political class, you begin to
suspect that modern capitalism is loaded in
favour of those who already enjoy wealth and
power. It has become a closed system, impossible
to penetrate unless you are incredibly lucky.
Other facts tell a similar story.
As the Tory minister David Willetts showed in a
provocative book last year, Britainâs
youngsters are being cut adrift. Thanks partly
to ferocious competition from Eastern European
immigrants, workers in their 20s today earn far
less than their parents did at the same age.
And with house prices having soared and banks
refusing to lend, they find it impossible to get onto the property ladder.
As a result, the old Conservative dream of a
âproperty-owning democracyâ is increasingly
reserved for the silver-haired.
Most experts recognise that home-ownership is
one of the keys to a stable, prosperous,
hard-working society yet since 1997, home
ownership among people in their 20s has steadily fallen.
Of course there was a time when education
offered a leg-up: but those days are becoming a
fading memory. Thanks to the unforgivable
abolition of the grammar schools, the gap
between private and state education has become a chasm.
In a country that claims to value competition,
it is nothing less than a disgrace that just
four expensive private schools Eton,
Westminster, St Paulâs, St Paulâs Girls
send as many students to Oxford and Cambridge as
2,000 state schools put together.
Meanwhile, the Governmentâs education reforms
mean that working-class children face the
prospect of paying back £9,000 a year in
tuition fees if they choose to go to university.
And this, of course, comes at a time when
fat-cat vice chancellors, already rewarded with
grace-and-favour residences and boundless
expense accounts, are being paid an average of more than £220,000 each.
On holiday in Tuscany something well beyond
most British families perhaps David Cameron
should spend an afternoon with his great
predecessor Benjamin Disraeliâs book, Sybil.
In this work, first published in 1845, the
greatest Tory statesman of the Victorian era
warned that Britain had become âtwo nations
¦
who are as ignorant of each otherâs habits,
thoughts, and feelings as if they were dwellers
in different zones, or inhabitants of different
planets; who are formed by a different breeding,
are fed by a different food, are ordered by
different manners, and are not governed by the
same laws: the rich and the poorâ.
Disraeli was no socialist. But as an outsider
himself, born into a Jewish family, he
recognised that capitalism could only take root
in ordinary peopleâs hearts and minds if it gave them a stake of their own.
At bottom, capitalism is as much a moral
enterprise as it is an economic one. If those
lucky enough to become successful ignore the
virtues of thrift, self-discipline and sobriety,
as well as the moral imperative to look after
the weak, then capitalism degenerates into cronyism and self-interest.
At its best, the free market is a tremendous
liberating force. During the Fifties and
Sixties, it gave millions of people
opportunities their parents could barely have
imagined: happy childhoods, good schools,
well-paid jobs and contented retirements.
On holiday in Tuscany - something well beyond most British fami
On holiday in Tuscany - something well beyond
most British families - perhaps David Cameron
should spend an afternoon with his great
predecessor Benjamin Disraeli's book, Sybil
But when capitalism fails, as in the 1930s, then
it allows extremism to thrive.
During that unhappy decade, some were bewitched
by the false promise of Stalinist Russia; others
flocked to the blood-drenched banners of the Far Right.
Eighty years on, capitalism has once again lost
its way. With millions betrayed by their
under-performing schools, locked out of the job
market, forgotten by the banks and abandoned by
their politicians, Britain is in danger of becoming two nations again.
Modern capitalism is not beyond redemption. But
it badly needs to rediscover its moral
dimension, lost amid the scramble to protect the
privileges of a narrow metropolitan elite.
It is time that our politicians cracked down on
non-domiciled billionaires, and time they made
sure the rich elite paid their fair share of our national tax bill.
And if David Cameron really wants to rekindle
the British peopleâs faith in the capitalist
system, then he should go further. He should
force the banks to lend more money to
individuals and small businesses, getting our economy moving again.
He should restore a culture of competition and
excellence to our state schools, giving
working-class children a genuine sense that they
can climb the ladder. And he should make it a
priority to encourage real jobs in real
businesses, reinvigorating a manufacturing
sector that has been abandoned for far too long.
The stakes could not be higher. Unless
capitalism opens its arms to the common man,
then an entire generation will conclude that it
is no more than a fig leaf for the super-rich.
That would be a tragedy. For despite all
capitalismâs weakness despite the flaws,
inequalities and hypocrisies that are an
inevitable part of any human endeavour it
remains the only way to promote real and lasting opportunity.
Other systems have been tried, and they have
collapsed in bloodstained ruins. Only capitalism
the free exchange of goods, skills, services
and ideas has proved itself true to the instincts of human nature.
Today, we can only hope that capitalismâs
champions learn the lessons of history.
For if they fail, then the results could be too dreadful to contemplate.
Read more:
<http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html#ixzz1UO1xowqN>http://www.dailymail.co.uk/news/article-2022993/Capitalism-crisis-80-years-ago-banking-collapse-devastated-Europe-triggering-war.html#ixzz1UO1xowqN
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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