CounterPunch
January 7, 2003
Why is Capitalism in Crisis?
By AHMAD FARUQUI
Since the fall of the Berlin Wall, much ink has been spilled on the virtues
of capitalism. Last year, Andrew Bernstein of Pace University capitalized
on this momentum by issuing a declaration "On the Principles and
Possibilities of Capitalism." Written to rebut the Marx-Engels Communist
Manifesto, the Bernstein Declaration asserts, "Capitalism is the only
social system in which individuals are free to pursue their rational
self-interest, to own property and to profit from their actions."
In the Bernstein construct, capitalism is synonymous with free markets
where a large number of sellers and buyers interact, and none has any
influence over the price at which goods and services are bought and sold.
Such a situation constitutes the case of "perfect competition," which is
found in textbooks on economics, and nowhere else. In most modern
economies, a few large firms dominate major industries. There is limited
freedom of entry, and these large firms often have the power to set prices.
In his seminal work on Capitalism, Socialism and Democracy, the late
economist Joseph Schumpeter wrote that capitalism couldn't survive, because
"its very success undermines the social institutions which protect it, and
'inevitably' creates conditions in which it will not be able to live." A
notable failing of capitalistic societies is that they promote an unequal
distribution of income, in which the rich get richer and the poor get poorer.
The ideologues of capitalism only dwell on its virtues, and ignore its
problems. Thus, they do not talk about the problems of "crony capitalism"
that brought about the Asian financial crisis of 1997. Nor do they discuss
Japan's decade-long spell of economic stagnation. They look past the
dot-com bubble that burst in the US in the spring of 2000 and the wave of
corporate scandals that began with Enron and WorldCom and ultimately
touched dozens of American companies. None of these events register with them.
full: http://www.counterpunch.org/faruqui01072003.html
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