[A-List] Capitalism's Self-inflicted Apocalypse

[Tony B.]

Date: Wed, 21 Jan 2009 12:10:24 -0800
From: mp at michaelparenti.org
To: clarity at lists.michaelparenti.org
Subject: [Clarity] my article, Capitalism's Self-inflicted Apocalypse

dear friends,
Attached and below is an article I recently wrote.
please feel free to circulate, translate, or post.


Capitalism’s Self-inflicted Apocalypse

by Michael Parenti


After the overthrow of communist governments in Eastern Europe, capitalism 
was paraded as the indomitable system that brings prosperity and democracy, 
the system that would prevail unto the end of history.

 The present economic crisis, however, has convinced even some prominent 
free-marketeers that something is gravely amiss. Truth be told, capitalism 
has yet to come to terms with several historical forces that cause it 
endless trouble: democracy, prosperity, and capitalism itself, the very 
entities that capitalist rulers claim to be fostering.

Plutocracy vs. Democracy
Let us consider democracy first. In the United States  we hear that 
capitalism is wedded to democracy, hence the phrase, “capitalist 
democracies.” In fact, throughout our history there has been a largely 
antagonistic relationship between democracy and capital concentration. Some 
eighty  years ago Supreme Court Justice Louis Brandeis commented, “We can 
have democracy in this country, or we can have great wealth concentrated in 
the hands of a few, but we can’t have both.” Moneyed interests have been 
opponents not proponents of democracy.

The Constitution itself was fashioned by affluent gentlemen who gathered in 
Philadelphia in 1787 to repeatedly warn of the baneful and dangerous 
leveling effects of democracy. The document they cobbled together was far 
from democratic, being shackled with checks, vetoes, and requirements for 
artificial super majorities, a system designed to blunt the impact of 
popular demands.

In the early days of the Republic the rich and well-born imposed property 
qualifications for voting and officeholding. They opposed the direct 
election of candidates (note, their Electoral College is still with us). And 
for decades they resisted extending the franchise to less favored groups 
such as propertyless working men, immigrants, racial minorities, and women.

Today conservative forces continue to reject more equitable electoral 
features such as proportional representation, instant runoff, and publicly 
funded campaigns. They continue to create barriers to voting, be it through 
overly severe registration requirements, voter roll purges, inadequate 
polling accommodations, and electronic voting machines that consistently 
“malfunction” to the benefit of the more conservative candidates.

At times ruling interests have suppressed radical publications and public 
protests, resorting to police raids, arrests, and jailings—applied most 
recently with full force against demonstrators in St. Paul, Minnesota, 
during the 2008 Republican National Convention.

The conservative plutocracy also seeks to rollback democracy’s social gains, 
such as public education, affordable housing, health care, collective 
bargaining, a living wage, safe work conditions, a non-toxic sustainable 
environment; the right to privacy, the separation of church and state, 
freedom from compulsory pregnancy, and the right to marry any consenting 
adult of one’s own choosing.

About a century ago, US labor leader Eugene Victor Debs was thrown into jail 
during a strike. Sitting in his cell he could not escape the conclusion that 
in disputes between two private interests, capital and labor, the state was 
not a neutral arbiter. The force of the state--with its police, militia, 
courts, and laws—was unequivocally on the side of the company bosses. From 
this, Debs concluded that capitalism was not just an economic system but an 
entire social order, one that rigged the rules of democracy to favor the 
moneybags.

Capitalist rulers continue to pose as the progenitors of democracy even as 
they subvert it, not only at home but throughout Latin America, Africa, 
Asia, and the Middle East. Any nation that is not “investor friendly,” that 
attempts to use its land, labor, capital, natural resources, and markets in 
a self-developing manner, outside  the dominion of transnational corporate 
hegemony, runs the risk of being demonized and targeted as “a threat to U.S. 
national security.”

Democracy becomes a problem for corporate America not when it fails to work 
but when it works too well, helping the populace move toward a more 
equitable and livable social order, narrowing the gap, however modestly, 
between the superrich and the rest of us.  So democracy must be diluted and 
subverted, smothered with disinformation, media puffery, and mountains of 
campaign costs; with rigged electoral contests and partially disfranchised 
publics, bringing faux victories to more or less politically safe 
major-party candidates.

Capitalism vs. Prosperity
The corporate capitalists no more encourage prosperity than do they 
propagate democracy. Most of the world is capitalist, and most of the world 
is neither prosperous nor particularly democratic. One need only think of 
capitalist Nigeria, capitalist Indonesia, capitalist Thailand, capitalist 
Haiti, capitalist Colombia, capitalist Pakistan, capitalist South Africa, 
capitalist Latvia, and various other members of the Free World--more 
accurately, the Free Market World.

A prosperous, politically literate populace with high expectations about its 
standard of living and a keen sense of entitlement, pushing for continually 
better social conditions, is not the plutocracy’s notion of an ideal 
workforce and a properly pliant polity. Corporate investors prefer poor 
populations. The poorer you are, the harder you will work—for less. The 
poorer you are, the less equipped you are to defend yourself against the 
abuses of wealth.

In the corporate world of “free-trade,” the number of billionaires is 
increasing faster than ever while the number of people living in poverty is 
growing at a faster rate than the world’s population. Poverty spreads as 
wealth accumulates.

Consider the United States. In the last eight years alone, while vast 
fortunes accrued at record rates, an additional six million Americans sank 
below the poverty level; median family income declined by over $2,000; 
consumer debt more than doubled; over seven million Americans lost their 
health insurance, and more than four million lost their pensions; meanwhile 
homelessness increased and housing foreclosures reached pandemic levels.

It is only in countries where capitalism has been reined in to some degree 
by social democracy that the populace has been able to secure a measure of 
prosperity; northern European nations such as Sweden, Norway, Finland, and 
Denmark come to mind. But even in these social democracies popular gains are 
always at risk of being rolled back.

It is ironic to credit capitalism with the genius of economic prosperity 
when most attempts at material betterment  have been vehemently and 
sometimes violently resisted by the capitalist class. The history of labor 
struggle provides endless illustration of this.

To the extent that life is bearable under the present U.S. economic order, 
it is because millions of people have waged bitter class struggles to 
advance their living standards and their rights as citizens, bringing  some 
measure of humanity to an otherwise heartless politico-economic order.

A Self-devouring Beast
The capitalist state has two roles long recognized by political thinkers. 
First, like any state it must provide services that cannot be reliably 
developed through private means, such as public safety and orderly traffic. 
Second, the capitalist state protects the haves from the have-nots, securing 
the process of capital accumulation to benefit the moneyed interests, while 
heavily circumscribing the demands of the working populace, as Debs observed 
from his jail cell.

There is a third function of the capitalist state seldom mentioned. It 
consists of preventing the capitalist system from devouring itself. 
Consider the core contradiction Karl Marx pointed to: the tendency toward 
overproduction and market crisis. An economy dedicated to speedups and wage 
cuts, to making workers produce more and more for less and less, is always 
in danger of a crash. To maximize profits, wages must be kept down. But 
someone has to buy the goods and services being produced. For that, wages 
must be kept up. There is a chronic tendency—as we are seeing today—toward 
overproduction of private sector goods and services and underconsumption of 
necessities by the working populace.

In addition, there is the frequently overlooked self-destruction created by 
the moneyed players themselves. If left completely unsupervised, the more 
active command component of the financial system begins to devour less 
organized sources of wealth.

 Instead of trying to make money by the arduous task of producing and 
marketing goods and services, the marauders tap directly into the money 
streams of the economy itself. During the 1990s we witnessed the collapse of 
an entire economy in Argentina when unchecked free marketeers stripped 
enterprises, pocketed vast sums, and left the country’s productive capacity 
in shambles. The Argentine state, gorged on a heavy diet of free-market 
ideology, faltered in its function of saving capitalism from the 
capitalists.

Some years later, in the United States, came the multi-billion-dollar 
plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin, 
Adelphia, and a dozen other major companies. Inside players like Ken Lay 
turned successful corporate enterprises into sheer wreckage, wiping out the 
jobs and life savings of thousands of employees in order to pocket billions.

These thieves were caught and convicted. Does that not show capitalism’s 
self-correcting capacity? Not really. The prosecution of such malfeasance— 
in any case coming too late—was a product of democracy’s accountability and 
transparency, not capitalism’s. Of itself the free market is an amoral 
system, with no strictures save “caveat emptor.”

In the meltdown of 2008-09 the mounting financial surplus created a problem 
for the moneyed class: there were not enough opportunities to invest. With 
more money than they knew what to do with, big investors poured immense sums 
into nonexistent housing markets and other dodgy ventures, a legerdemain of 
hedge funds, derivatives, high leveraging, credit default swaps, predatory 
lending, and whatever else.

Among the victims were other capitalists, small investors, and the many 
workers who lost billions of dollars in savings and pensions. Perhaps the 
premiere brigand was Bernard Madoff. Described as “a longstanding leader in 
the financial services industry,” Madoff ran a fraudulent fund that raked in 
$50 billion from wealthy investors, paying them back “with money that wasn’t 
there,” as he himself put it. The plutocracy devours its own children.

In the midst of the meltdown, at an October 2008 congressional hearing, 
former chair of the Federal Reserve and orthodox free-market devotee Alan 
Greenspan confessed that he had been mistaken to expect moneyed 
interests--groaning under an immense accumulation of capital that needs to 
be invested somewhere--to suddenly exercise self-restraint.

The classic laissez-faire theory is even more preposterous than Greenspan 
made it.  In fact, the theory claims that everyone should pursue their own 
selfish interests without restraint. This unbridled competition supposedly 
will produce maximum benefits for all because the free market is governed by 
a miraculously benign “invisible hand” that optimizes collective outputs. 
(“Greed is good.”)

Is the crisis of 2008-09 caused by a chronic tendency toward overproduction 
and hyper-financial accumulation, as Marx would have it? Or is it the 
outcome of the personal avarice of people like Bernard Madoff? In other 
words, is the problem systemic or individual?  In fact, the two are not 
mutually exclusive. Capitalism breeds the venal perpetrators, and rewards 
the most unscrupulous among them.  The crimes and crises are not irrational 
departures from a rational system, but the converse: they are the rational 
outcomes of a basically irrational and amoral system.

Worse still, the ensuing multi-billion dollar government bailouts are 
themselves being turned into an opportunity for pillage. Not only does the 
state fail to regulate, it becomes itself a source of plunder, pulling vast 
sums from the federal money machine, leaving the taxpayers to bleed.

Those who scold us for “running to the government for a handout” are 
themselves running to the government for a handout. Corporate America has 
always enjoyed grants-in-aid, loan guarantees, and other state and federal 
subventions. But the 2008-09 “rescue operation” offered a record feed at the 
public trough. More than $350 billion was dished out by a right-wing 
lame-duck Secretary of the Treasury to the biggest banks and financial 
houses without oversight--not to mention the more than $4 trillion that has 
come from the Federal Reserve.  Most of the banks, including JPMorgan Chase 
and Bank of New York Mellon, stated that they had no intention of letting 
anyone know where the money was going.

The big bankers used some of the bailout, we do know, to buy up smaller 
banks and prop up banks overseas. CEOs and other top banking executives are 
spending bailout funds on fabulous bonuses and lavish corporate spa 
retreats. Meanwhile, big bailout beneficiaries like Citigroup and Bank of 
America laid off tens of thousands of employees, inviting the question: why 
were they given all that money in the first place?

While hundreds of billions were being doled out to the very people who had 
caused the catastrophe, the housing market continued to wilt, credit 
remained paralyzed, unemployment worsened, and consumer spending sank to 
record lows.

In sum, free-market corporate capitalism is by its nature a disaster waiting 
to happen. Its essence is the transformation of living nature into mountains 
of commodities and commodities into heaps of dead capital.  When left 
entirely to its own devices, capitalism foists its diseconomies and toxicity 
upon the general public and upon the natural environment--and eventually 
begins to devour itself.

The immense inequality in economic power that exists in our capitalist 
society translates into a formidable inequality of political power, which 
makes it all the more difficult to impose democratic regulations.

If the paladins of Corporate America want to know what really threatens “our 
way of life,” it is their way of life, their boundless way of pilfering 
their own system, destroying the very foundation on which they stand, the 
very community on which they so lavishly feed.

Michael Parenti’s recent books include: Contrary Notions: The Michael 
Parenti Reader (City Lights); Democracy for the Few, 8th ed. (Wadsworth); 
and God and His Demons (forthcoming).  For further information, visit his 
website: www.michaelparenti.org.




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