Destroying Capitalism to Save It

“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.

30 thoughts on “Destroying Capitalism to Save It

  1. $ (the financial artists formerly know as “Capitalists”), have forgotten the 1st rule of capitalism:
    You won’t keep making money if people can’t buy your sh*t because they don’t have enough money for it because they don’t have jobs, or jobs that don’t pay enough to buy your sh*t, and then you can’t make any money! And the credit card bubble/scam you perpetrated on everyone has just about run its course and blown up, too.
    Perhaps a refresher course on “Maslow’s Heirarchy of Needs” is in order:

    In other words:
    We can’t pay for your killer ‘app’ when we can’t afford a phone or computer because our our self-preservation makes us pay attention to the fact that our families falling apart because we don’t have a job and need to pay for shelter after we pay for food and buy bottled water since you corporations have polluted what most of us used to drink for free. And let’s not even get to when you’ll be selling us “Bottled O2) because you’ve fouled the air we breath to the point where it’ll be a death sentence to walk around without a breathing apparatus.

    Maybe at that point, you Galtians can trade your apps for O2 with one another, keeping ‘capitalism’ and ‘free markets’ alive, since you’ll have killed off the rest of us off through starvation, exposure, or pollution.

    But have fun selling that killer app that’s going to remind your fellow surviving Galtians to buy someone elses O2 when another party figures out a way to monopolize the O2.
    Then, you’re as dead as the rest of us.

    And of course, the fact that so many of us are unemployed and can’t afford to buy their sh*t is the reason to lay-off or fire people. And so, the merry-go-round turns into a faster and faster death spiral.
    And, short of an ecological disaster, or a monstrous epidemic, which will make “labor” more valuable to “capital,” I don’t see any way out of this disaster.

    Message to our Galtian Overlords:
    Some of us will not to quietly into that dark night!
    So, a word to the wise – you might want to pay attention to OWS, since it’s a lot better than the alternative – which is a whole bunch of us, you AND us that is, DOA.

  2. I would argue that “the destruction of capitalism” is really no such thing. What we’re seeing is the natural, inevitable consequence of unregulated capitalism. What we’ve experience is the destruction of regulation, not capitalism. If there are no rules, no effort to balance the playing field, then I argue that wealth inevitably flows to the strongest hands. The strongest hands can buy governments, instigate wars, create asset bubbles and pop them – basically anything to prey on the weaker hands and steal their wealth. I haven’t read The Shock Doctrine: The Rise of Disaster Capitalism, but I’d very disappointed if it didn’t rest on this theme.

    What we’re seeing instead, is the destruction of democracy, by unregulated capitalism. A more potent saying, which I first heard during the Bush years, was that capitalism destroyed both communism and now democracy.

    The result is a kind of feudalism, in which great wealth and power is in the hands of the few, but also, independent of this, is the promise that revolutionary technologies like the internet, can dramatically empower individuals. Sometimes these individuals – like Zuckerberg of Facebook (there are many others) – become instant zillionaires, and they can then join the handful of the very wealth and powerful. So change can happen a lot faster in this iteration than it did during the first medieval era, a few centuries ago, when kings and churches tried to maintain a status quo for decades if not centuries.

  3. In a recent conversation with my daughter (who just went off to college, works 2 part time jobs) about wages vs. expense:
    When your Mom and I were dating, back in ’73-’74, I was renting a small house with two other guys in Clearwater, Fl. The rent was $90.00 per month; the utility bills came to about $30.00. We split that 3 ways. Gas was between .25 and .35 per gallon; I had a Triumph 650 (motorcycle) for transportation, which burned a couple of gallons per week.
    When I took my girlfriend out for dinner, a steak or lobster tail at an average restaurant was 5 bucks; cocktail was .50, a beer was .25.
    We could go to a rock concert for $15.00.
    A visit to the doctor, with no insurance was $10.00.
    I’d buy a weeks supply of groceries for $10.00.
    I worked as a “rod buster”, tying reinforcing steel on high rise construction, earning $6.50 per hr (I was 18, just out of H.S.)Back then, people would say “that’s good money, for Florida.” Like Florida was part of the third world, or somethin’.
    I was able to actually put money in the bank every week.

    Today, my daughter has a part time job as a “model” in a well known “California surf” style clothing store. She is paid $7.50 per hr. , she gets no benefits.The store does not have full time employees, except for management. They make a bloody fortune.This is the trend in retail.
    It seems that corporate America has lost touch with reality. The share holders and executives take the lion’s share, while the serfs are left to scramble for the scraps.

    My wife works for a well known insurance company. Her boss is going ballistic because he is loosing clients like a hemophiliac bleeding with a sucking chest wound. He is used to living a very good life, and doesn’t understand how people could tell him to piss off when their home owner’s policy is going up 25%.
    Corporate says they need to make profit, yeah, well nobody is making profit these days. they claim insurance fraud is at an all time high; they are right. When people can’t make ends meet, they will resort to doing what they must.
    My wife’s boss has a bunch of photos in his office with he and Jeb Bush, Ric Kellar, and other Republican stars; he refers to liberals as “bleeding hearts”.
    Reality can be a real bitch……….

    • erinyes — my parents paid off their first mortgage (post WWII, obtained through VA) in less than five years. He was a machinist (union shop), and Ma was a nurse.

      One of the “lessons” of the failure of communism was supposed to be that people needed an incentive to work, and if the government controlled wages and production it took away the incentive. Now the overlords are squeezing the Middle Class so much it’s getting harder and harder to get ahead. Well, through legal means.
      I think most people will work and play by the rules if they see some reward for it. Take away the reward, and what’s the incentive?

  4. Quick O/T, but important — Oakland cops nearly killed yet another Iraq war vet, just because he was… well, who knows why? Apparently he was too near the protests and they felt like nearly beating someone to death:

    So if like most humans one considers broken flesh, spleens and brains more serious than broken windows, the Oakland cops now are back on top in the Bigger Asshole Tournament, despite the stupidest efforts of the black bloc clowns in Oakland.

    • Phoenix — I’m afraid more people are going to see this story. The best to be hoped for is that Oakland will be a wash.

      In U.S. history there are all kinds of incidents of police or troops or federal agents beating up, even murdering, civilians, in which public opinion sided with the police. I remember after the Kent State massacre, public opinion sided with the Guard. You could try to tell people that some of the students who died were just changing classes, and they wouldn’t listen. You can’t count on police brutality to earn points for your side unless your side already has some public sympathy.

  5. Phoenix Woman,
    Everyone knows that broken glass on the street is more important, and much more visible, than a broken human being!
    You can see the glass broken from the street!
    The broken human is hidden in a hospital, then with his/her family if lucky, and then a care facility.

  6. Moonbat: that’s definitely a big part of Shock Doctrine. If you get a chance, read it. The premise being that right-wingers will use catastrophic situations to push through legislation or changes that they would not be able to do in normal situations. Think Paul Ryan and changes to Medicare, changes to Social Security and the like. In normal economic times there is no chance those ideas could catch on, these days the talk is austerity and everyone paying their share (except the ‘job makers’, of course). It all results in a concentration of wealth, which we already have, and less rights/opportunity by the masses.

    I think we will get socialism eventually, but the 1% is too stupid to see that what they have created will make it inevitable. It may be a hell of a decade to get there, however.

  7. In the second half of the 1960s, I was teaching at Boston University. There was a huge protest around Harvard (there were always protests going on in Boston and Cambridge but I think this one was related to a national election). Some of my students went to this protest, and got an eye opener. When things got really tough, they ran towards the police for safety, and got shoved around and yelled at. They were children of the 50s, and they were shocked: they thought that when in danger, one should go towards the police. I think that myth ended in the protests of the 60s. Like the young people in the Park across from the hotel the democrats were staying in in Chicago — Humphrey looking down on the young people being pushed around and hit by the police in the park as he watched.

    Was this the way police had always treated protests in the streets, and was it because there had not been a whole lot of protests since before WWII that young people in the 60s did not realize that they could get hurt in the streets around the universities?

    There certainly were protests: against racism, against the war in Vietnam, and much much more. And I am sure many learned, as my students did, that if you were going to protest, you needed to be wary and not run to the police when you felt you were in danger.

  8. You get a lot of play, so maybe you don’t need compliments from me. But posts like this, and blogs like this one, have real value and I appreciate your efforts. Thanks for spreading the word.

  9. “Destroying Capitalism to Save It”

    Frankly Maha, I’m a little surprised. You seem to have bitten into a big negative shit sandwich of “destruction of capitalism as we know it might not be all that collapses”. Ok will it be that bad? Doubtful, we are in dire need of an economic reset, at present we as a nation need to decide if we can or can’t, we surely need reform, but phases so dire as “destruction of capitalism”, a bit over the top don’t you think?

    • I’m a little surprised. You seem to have bitten into a big negative shit sandwich of “destruction of capitalism as we know it might not be all that collapses”.

      The post notes that we’re losing democracy, too. You wouldn’t mind if the current meltdown resulted in corporatist dictatorship? I would be a tad irritated, I can tell you. And I’m not saying that democracy depends on capitalism; I’m saying the corporatist interests that are strangling capitalism in an effort to save it are killing democracy along with it.

      we surely need reform, but phases so dire as “destruction of capitalism”, a bit over the top don’t you think?

      Note the qualifier “as we know it,” and no, I don’t think it’s over the top. What we’ve got going on now is unsustainable. We either have to dial it down or it’s going to collapse.

  10. Republicans gripe about the government but it’s big business that for the last twenty years has been taking more and more of my money. My insurance is out of sight. I keep paying more for cable, electricity, gas, gasoline, etc. I’m also very tired of paying money for name brand products that either don’t last long or don’t work very well. There are exceptions, far too few of them.

    In an effort to turn every American into a convenient cash cow, capitalism has lost it’s paradigm.

    For two hundred years, capitalism gave us more and more for less money. Now it’s the reverse. Capitalists now give us less and less for more money. Big error.

  11. I agree with moonbat. What we’re seeing is a corporate neo feudalism that’s finding it’s place through the removal of regulation.

    • What we’re seeing is a corporate neo feudalism that’s finding it’s place through the removal of regulation.

      Of course. But the capitalists are kicking the props out from under capitalism in order to establish their neo-feudalism. A healthy capitalist economy cannot co-exist with feudalism. A healthy capitalist economy requires a robust and stable working and middle class that buys a lot of stuff. So, they’re destroying capitalism in the name of capitalism.

  12. Great summary. Most of the comments resonate too.

    I’ve come across a group online who formed a political party, the Neo Feudal Party. There are a few political scientists, history profs and professors of classics. It’s all tongue in cheek but done quite well with the approach being to highlight parallels between now and feudal times. Member experts help to keep it historically accurate. The logo portrays priest, soldier and peasant with latin for “those who pray, those who fight and those who work.” There’s no shortage of such images from these times depicting a society with limited opportunity and roles assigned at birth. The TIC mission statement is “The Neo-Feudal Party is dedicated to the glorious neo-feudal transformation, in which all “public” functions are restored to private hands, to the enrichment of the rich, the impoverishment of the poor, and the everlasting glory of God.” The NFP’s stalwart heros include Newt Gingrich, Michelle Bachmann and others known to everyone.

    I’m part way into a book, The Fourth Turning which attempts to distill that which is common to recurring cycles — an upbeat era or high of sterngthening instituations and weakening individualism by which a new civic order appears and old values decay, an “awakening” characterized by spiritual upheaval as the civic order comes under attack, an “unraveling” which is a low during which individualism strengthens and and institutions weaken…leading to crisis which is an era of upheval when a new order does replace the old.

    Authors cite 3 theories of time — chaotic, cyclical and linear — suggesting that modern culture has overindulged in the idea of linear time by which we are steadily progressing towards some end state as evidenced by “the war to end all wars” and more. They lament the collective loss of understanding of cyclical time which recognizes the seasonality of history and endowed classical societies with a prescribed moral dimension by which lessons of the past carried more weight and garnered a deep regard. The authors convincingly demonstrate how our culture (religion, government etc) reinforces the idea that we are on the path of continual scientific, economic and political improvement.

    I do agree with them in that presumed immunity from the cycles (of which we’re instruments, not mere observers) is at the root of a defiant denial of nature and that the rejection of the lessons of history and their applicability to present circumstances hasten “unraveling”. Likewise, overindulging the concept of “chaotic time” by which events are happenstance and beyond our control leads to nihilism and

    dissolves society’s connective tissue. If cause and effect have no linkage in time, people cannot be held morally accountable for their choices. Nothing would legitimize the obligations or parents to children or neighbors to community.

    Here in America, Mark Twain has summed it up quite nicely saying that “nothing is older than our habit of calling everything new.”

  13. …there’s the Neo-Feudal Party mother figure Michelle Bachmann and this recent article, a segue leading from remarks about feudalism. Good ol’ Michelle forever advance the glory of the realm. God save us all.

  14. A healthy capitalist economy requires a robust and stable working and middle class that buys a lot of stuff. So, they’re destroying capitalism in the name of capitalism.

    That’s where we differ. Capitalism still exists in feudal or plantation societies. The powers that be, have decided they prefer that arrangement – with whatever style of capitalism that goes with it to support their lives – and to hell with the middle class. Capitalism isn’t going away, just the shape of it is changing.

    • moonbat — well, OK, a form of capitalism could exist in an essentially feudal society, although historically capitalism was what replaced feudalism. But I can’t see a true market economy, which is what the Randbots say they want, co-existing with feudalism. And with feudalism, there is no meaningful separation between government and aristocracy, so you’re really talking about “government” control of capital.

  15. Capitalism isn’t destroying itself. It’d doing exactly what it’s supposed to. What did they think would happened when they opened up America to the foreign markets and to workers that would work at a fraction of the price?

    • Capitalism isn’t destroying itself. It’d doing exactly what it’s supposed to.

      What it’s “supposed” to do is a subjective notion, but it is destroying itself. The trends of the last 30 years cannot be sustained. When the masses are completely sucked dry, it has to collapse. Maybe not right away, but it cannot continue indefinitely.

  16. Bank of America owns my ass, and will own it until the day of my blessed departure… It sure feels feudal/futile to me..

  17. “What it’s “supposed” to do is a subjective notion, but it is destroying itself. The trends of the last 30 years cannot be sustained. When the masses are completely sucked dry, it has to collapse. Maybe not right away, but it cannot continue indefinitely.”

    That’s what worries me… that with the global market the “masses” just got a lot more plentiful. American corporations are not dependent upon American workers anymore and thus no social contract, no motivation to re-invest in the other 98% of America.

    The middle class has become irrelevant.

    • American corporations are not dependent upon American workers anymore and thus no social contract, no motivation to re-invest in the other 98% of America.

      So if the whole world becomes populated by poor exploited workers and captains of capitalism, and the captains of capitalism are hoarding all the money, who are the captains of capitalism going to sell stuff to? They’ll be reduced to scamming and ripping off each other, because ain’t no use scamming and ripping off those with nothing to rip off.

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