Posts Tagged ‘Crisis of capitalism’

The USA’s coming perfect storm of crises

January 14, 2021

New York’s Times Square during lockdown

It is said that the Chinese character for “crisis” is a combination of the characters for “danger” and “opportunity.”

I don’t know whether that is literally true or not.  I do believe that the USA faces a historical turning point—a perfect storm of crises out of which something better just possibly may come.

The crisis is economic, political and cultural.

The economic crisis is the high rates of unemployment, bankruptcies and evictions.

Revolutions are typically led by unemployed intellectuals.  Nationalist rebellions are typically led by unemployed war veterans.  The USA has plenty of both.

Many of us Americans hate each other based on our political affiiation.

Neither party is trying to win over members of the other side.  Partisan Democrats regard Republicans as bigots; partisan Republicans regard Democrats as immoral.  These are character judgements, not policy judgments.

Both sides have factions willing to resort to armed force.

In some of last year’s Black Lives Matter protests, factions invaded municipal and federal government buildings and burned police stations.

In the recent pro-Trump election protests, an armed faction invaded the Capitol and tried to prevent the certification of the winner in the 2020 elections.

I don’t make light of any of this, but the actual number of deaths—an estimated 25 in protests during 2020 and five in the Capitol invasion—could have been a lot higher than they were.  There is potential for things to get a lot worse.

Ammunition and firearms sales are at record levels.  I don’t think these sales are limited to hunters, sportsmen and people who want guns for home protection, nor do I think they are limited to right-wing Republicans.

Only a small number of Americans are actually ready to engage in organized armed violence.  But there are millions who think that violence by one side is excusable and violence by the other side is inexcusable. 

It is interesting that all the armed factions, with few if any exceptions, consist of white men.  That includes those who embed themselves in the Black Lives Matter protests. There is a certain number of individual hoodlums and looters, including whites as well as blacks, but there is as yet no armed black organization equivalent to the Black Panthers of the late 1960s.

The stage is set for a continuing low-level war.  I don’t predict such a conflict will happen.  I do say there is nothing in place that guarantees it won’t happen.

President-elect Biden, who has taken credit for the USA Patriot Act, is talking about new laws against “domestic terrorism.”  Silicon Valley is moving to silence Trump supporters

The result of this will be to convince the hard-core MAGA Republicans that the political system is so stacked against them that they cannot work within it.  The populist radical left is also being squeezed out of the political system and may come to the same conclusion.

There’s long been a vast repressive apparatus in place to deal with any uprising. It is almost as if the powers that be have long expected an uprising and have made advance preparations to prevent it from succeeding.

We also have a crisis of governmental administration, revealed by the ineffective response to the coronavirus pandemic and climate-related weather disasters.

All these crises are coming together and reinforcing each other.

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Questions to be answered

March 16, 2016

I think that the United States and other Western countries are in a political and economic crisis.

I think that political leaders in the Western world must answer these questions.

authoritarianism9fd18cDoes the economic and political crisis mean that the system has failed?

If the system has failed, is this a failure of capitalism, a failure of democracy or both?

If the failure is a failure of capitalism, can the capitalistic system be fixed, or must it be replaced?

If the failure is a failure of democracy, can the democratic system be fixed, or is it doomed?

I don’t expect these questions to be addressed this year or the next, but I don’t think they can be evaded indefinitely.  I think there will be some sort of resolution, for good or for ill, within the next 10 years.

Nouriel Roubini asks: Is capitalism doomed?

August 23, 2011

Nouriel Roubini is a professor of economics at New York University’s Stern School of Business, and chair of Roubini Global Economics, a financial consulting firm.  He was nicknamed “Dr. Doom” for his predictions that the booming financial and real estate markets were going to crash.  But he proved to be right.  Now he is saying that the capitalist system itself is in crisis.  Here is what he wrote last week in his syndicated newspaper column.

Nouriel Roubini

Karl Marx, it seems, was partly right in arguing that globalization, financial intermediation run amok, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct (though his view that socialism would be better has proved wrong).  Firms are cutting jobs because there is not enough final demand.  But cutting jobs reduces labor income, increases inequality, and reduces final demand.

Recent popular demonstrations, from the Middle East to Israel to the United Kingdom, and rising popular anger in China—and soon enough in other advanced economies and emerging markets—are all driven by the same issues and tensions: growing inequality, poverty, unemployment, and hopelessness.  Even the world’s middle classes are feeling the squeeze of falling incomes and opportunities.

Unless governments act, he wrote, the world could be on the brink of another depression as bad as the Great Depression of the 1930s.

Over time, advanced economies will need to invest in human capital, skills, and social safety nets to increase productivity and enable workers to compete, be flexible, and thrive in a globalized economy.  The alternative is—like in the 1930s—unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability.

via Slate Magazine.

All this seems obvious to me.  Why is it not obvious to our political and business leaders?  It is partly because of the excessive power and influence of the wealthy elite, but I think it is also because of the excessive power and influence of financial institutions compared to goods-producing companies.

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