“It became necessary to destroy the town to save it.” — American officer in Vietnam, 1968

Conservatives like to portray the history of the late 20th century as the triumph of capitalism over communism. However, it’s looking like capitalism could be about to collapse, also. And, ironically, the chief agents of its destruction are its most ardent supporters.

However, I fear we’re going to be in for a very rough time before the dust settles. And the destruction of capitalism as we know it might not be all that collapses.

We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only. — Paul Krugman

Democracy in America already has been seriously compromised, although I’d like to think it’s not beyond hope of revival. The Plutocracy has done a masterful job of keeping us proles divided against ourselves, however. The truth could set us free, if only we could hear it above the noise.

… we’ve conjured up images of very sensible highly educated wonky people doing the right thing, even as they destroy the world.– Atrios

Paul Krugman has written one blog post after another explaining why response of the Very Serious People to the financial crisis has been entirely wrong and based on ideology rather than data; on faith rather than facts. Here’s his most recent one.

The Very Serious People keep talking about austerity, by which they mean forcing deprivation on everyone but them in an attempt to put things back they way they were before Bear Stearns went belly up. The Actual Economists, meaning the ones not taking money from any right-wing think tank, keep saying this is nuts, and that things are going to get worse, and that restricting the flow of money is exactly the worse thing to do right now.

So, basically, the Very Serious People are destroying capitalism to save it.

There’s an interesting article at Salon that argues capitalism’s failures are systemic, not political.

The systemic problem is obvious. While using very different rhetoric, progressives like former Labor Secretary Robert Reich and Marxists like Richard Wolff agree, first, that the economy is failing for lack of demand — and, second and most important, that this failure is now “built in” to the system. Labor unions once were powerful enough to raise wages and stabilize the system (and consumer demand). Those days are over: Union membership peaked at 35.4 percent of the labor force at the end of World War II; it is now at 11.9 percent, and falling (a mere 6.9 percent of private sector workers are now union members).

The banks and Wall Street are an appropriate first target. But the deeper reality is that the economic “system” that defined a particular brand of corporate capitalism held (weakly) in check by labor is fading before our eyes. Moreover, the same labor base gave liberalism sufficient power to enact modest reforms — including regulations to try to keep the bankers in line. That “system” is decaying too. It is further complicated by global competition, which continues to weaken the entire structure, undermining both labor and communities, even as major corporations flee the country for global markets.

I don’t know that I agree with the author’s recommendations for remedies, but I think his diagnosis of the disease is spot on. Ironically, for the past few decades capitalism has been dismantled by capitalists. The push against labor unions, deregulation of financial markets, etc. etc., all the stuff the capitalists wanted to happen, has destabilized capitalism. It will not necessarily collapse, but the longer the Very Serious People continue to steer the wrong course, the more likely collapse becomes.

The parable of the goose that laid golden eggs, or the mallard with golden feathers, applies.

Until the late 1950s, academic economics remained one of the social sciences, like anthropology, sociology and political science.. After it became the chief ideological counterweights to Marxism-Leninism during the Cold War, its practitioners tried to extract it from the social sciences and re-create it as a hard science…[and] terms like “resources”..,”markets” [were] transformed into abstractions.. Economics no longer studied the economy; it spoke ex cathedra about what was orthodox and what was heresy. — Chalmers Johnson, 2000

At some point, the virtues of capitalism became part of our national religion. And we’ve replaced the old divine right of kings with the divine right of corporations. The moneyed elite are the ruling aristocracy. And a lot of Americans seem to think that if Exxon Mobil were forced to pay taxes, the gods will curse us with barren sheep and failed harvests.

People get attached to fixed views about the way the world is supposed to be, and are afraid of change, even when the change is for their benefit. It’s like horses running into a burning barn, because that’s where they feel safe. The aristocrats are so afraid of change they can’t bring themselves to make the kind of adjustments that might actually save their asses. So they cling to the fiction that they can hang on to their way of life by squeezing the peasants.