FacebookTwitterGoogle+RedditEmail

Is Capitalism Preparing to Bury Itself?

by MURRAY DOBBIN

Where is Henry Ford when you need him?

You may remember Henry — the ruthless industrialist who nonetheless refused to be hobbled by suicidal ideology when it came to doing business. He realized as his workers cranked thousands of new cars off the assembly line that none of those workers would likely ever own one, because he didn’t pay them enough. So he dramatically increased their wages. It was such a good idea that most industrialists followed suit and his practical approach was dubbed Fordism. It was the foundation of a high-wage economy, it lasted a very long time and it produced incredible real wealth for decades.

Until something called neo-liberalism decided to kill the goose that laid the golden eggs. And the perpetrators of this ideology — and the catastrophic damage it has done to the global economy, nations, communities and workers — are so wedded to it that they seem determined to pursue its goals and accept its preposterous assumptions until the ship truly does go down.

The new set of goals and assumptions of neo-liberalism mandated that workers’ wages and salaries had to be constantly driven down in a new global system of competition for high share prices. Not a competition to achieve growing companies, or economic stability, or balanced growth, or even profits, but share prices.

Now, the vast majority of working people in Canada are up to their eyeballs in debt, hundreds of thousands have no jobs, families are hunkering down in survival mode and not buying much of anything beyond food and clothing, and everyone is waiting for the inevitable bursting of the housing bubble — the only thing keeping the rusting, rudderless hulk afloat. Someone should tell Canada’s finance ministers that consumers account for 60 per cent of our GDP. Choke the consumers (by choking their wages) and you choke the economy.

Last fall, the Canadian Payroll Association reported that 59 per cent of Canadians “said they would face financial difficulty if their pay cheque was delayed by even just one week.” Twenty-seven per cent of working Canadians aren’t saving at all.

The faux “financial economy” where nothing needs to be produced, has devastated the real economy but the same policies are still being pursued: fight wage increases, eliminate or down-size pensions, lay off workers to enhance.. you got it, the share price. Insanity: doing the same thing over and over again and expecting different results.

Today, the five-thousand-ton chickens are coming home to roost. Chicken number one is already home. Working people, whose real (after inflation) increase in pay between 1980 and 2005 was $51, maintained their middle class lifestyle (and corporate profits) by going into debt. In June, household debt hit a record $1.5 trillion. Averaging it out means a two-child household owes about $176,461, including mortgages.

Cheap goods produced by off-shoring manufacturing helped keep the working family afloat, too. But of course the trade-off was the loss of the best private sector jobs in the country. Now Canada boasts the second highest percentage of low paid jobs in the OECD. And with labor costs in China rising, those cheap goods will get more expensive.

Corporate Canada had a lot of help in keeping wages and salaries flat. Starting in earnest with Paul Martin’s finance regime, the federal government — followed by the provinces — has ruthlessly implemented what it euphemistically calls a “labor flexibility” policy. Vicious cuts to EI eligibility, the slashing of welfare rates, the virtual abandonment of labor standards enforcement — all in the service of corporations. Where working people once had an option of quitting a bad employer (one that, say, demands you work overtime for nothing to prove you want the job), that option has now all but disappeared. It’s an employer free-for-all in denying workers’ rights.

Too bad all the geniuses now occupying the dismal science haven’t figured out that a cheap labor economy ultimately means a low consumption economy.

Yet we are still burdened by the gross incompetence of Conservative Finance Minister Jim Flaherty. He wants to pursue a deficit reduction strategy, taking even more money out of the pockets of Canadians at exactly the time that the economy’s survival depends on a core of stable jobs. Just when the economy is desperately looking for demand, Flaherty will be taking $11 billion off the table.

Even worse, Flaherty insisted before and throughout the last election on moving ahead with another unconscionable round of corporate tax cuts — resulting in a $6 billion increase per year in the deficit. The rationale? It will stimulate investment.

Who will save us from this incompetence? In the first quarter of 2011, corporations were sitting on $471 billion of capital — awash in cash they have no idea what to do with. Why? Because they and their political flunkies in Ottawa and the provinces have screwed the worker/consumer so badly that demand has flatlined. No CEO in his right mind invests just on the basis of lower income taxes. There have to be customers with money to spend. Henry Ford would be shaking his head.

The Washington Consensus — the name given to neo-liberalism and its agenda of privatization, deregulation, free trade, cuts to social spending and huge tax cuts for the wealthy — was not just a call to moderate state intervention in the economy. It was determined to gut it, to return to that period where the economy (by which they always mean capital) was somehow hived off from society and government and allowed to run without regulation or direction. Thirty years of amazing growth and prosperity based on a complex system of mutual dependence between state and capital was tossed aside. It was a sort of revenge of the nerds — we’ll show those uppity workers.

But now the evidence is in. More chickens are coming, and they will be even more gargantuan. Still no one in authority or the business press gets it. No one is listening. But Will Hutton, writing in the Observer, said it succinctly in an article headlined “Our Capitalist System Is Near Meltdown.” “Markets are beset by mood swings and uncertainty which, if not offset by government action, lead to violent oscillations. Capitalism without responsibility or proportionality degrades into racketeering and exploitation. The prospect of limitless pay is an open invitation to bad, or even criminal, behavior. Good capitalism cannot happen without referees to blow the whistle or robust frameworks in which markets can function.”

So-called “good” capitalism was bad enough and only marginally good to the extent that organized resistance forced it to be. That resistance, in combination with the specter of Soviet communism, kept capitalism a bit circumspect regarding notions of social responsibility. It is no coincidence that “bad” capitalism really took off with the collapse of the USSR. With the communist “competitor” out of play, all restraints were off. Former Soviet premier Nikita Khrushchev famously predicted that communism would bury capitalism. But instead, that job is now in the hands of capitalists themselves — in the hands of madmen who, insanely, keep doing the same thing over and over even though the same grim results accrue. I would happily cheer the demise of that capitalism. But it would be a really ugly death. And we need to be talking about what would replace it.

MURRAY DOBBIN, now living in B.C., has been a journalist, broadcaster, author and social activist for over forty years. He d now writes a bi-weekly column for the on-line journals the Tyee and rabble.ca. andcontributes guest editorials to Canadian dailies anHe is a board member of the Canadian Centre for Policy Alternatives. See  www.murraydobbin.ca He can be reached at mdobbin@telus.net

MURRAY DOBBIN, now living in Powell River, BC has been a journalist, broadcaster, author and social activist for over forty years.  He now writes a bi-weekly column for the on-line journals the Tyee and rabble.ca. He can be reached at murraydobbin@shaw.ca

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

February 21, 2017
Sharmini Peries - Michael Hudson
Finance as Warfare: the IMF Lent to Greece Knowing It Could Never Pay Back Debt
CJ Hopkins
Goose-stepping Our Way Toward Pink Revolution
John Wight
Firestarter: the Unwelcome Return of Tony Blair
Roger Harris
Lenin Wins: Pink Tide Surges in Ecuador…For Now
Shepherd Bliss
Japanese American Internment Remembered, as Trump Rounds Up Immigrants
Boris Kagarlitsky
Trump and the Contradictions of Capitalism
Robert Fisk
The Perils of Trump Addiction
Deepak Tripathi
Theresa May: Walking the Kingdom Down a Dark Alley
Sarah Anderson
To Save Main Street, Tax Wall Street
Howard Lisnoff
Those Who Plan and Enjoy Murder
Franklin Lamb
The Life and Death Struggle of the Children of Syria
Binoy Kampmark
A Tale of Two Realities: Trump and Israel
Kim C. Domenico
Body and Soul: Becoming Men & Women in a Post-Gender Age
Mel Gurtov
Trump, Europe, and Chaos
Stephen Cooper
Steinbeck’s Road Map For Resisting Donald Trump
February 20, 2017
Bruce E. Levine
Humiliation Porn: Trump’s Gift to His Faithful…and Now the Blowback
Melvin Goodman
“Wag the Dog,” Revisited
Robert Hunziker
Fukushima: a Lurking Global Catastrophe?
David Smith-Ferri
Resistance and Resolve in Russia: Memorial HRC
Kenneth Surin
Global India?
Norman Pollack
Fascistization Crashing Down: Driving the Cleaver into Social Welfare
Patrick Cockburn
Trump v. the Media: a Fight to the Death
Susan Babbitt
Shooting Arrows at Heaven: Why is There Debate About Battle Imagery in Health?
Matt Peppe
New York Times Openly Promotes Formal Apartheid Regime By Israel
David Swanson
Understanding Robert E. Lee Supporters
Michael Brenner
The Narcissism of Donald Trump
Martin Billheimer
Capital of Pain
Thomas Knapp
Florida’s Shenanigans Make a Great Case for (Re-)Separation of Ballot and State
Jordan Flaherty
Best Films of 2016: Black Excellence Versus White Mediocrity
Weekend Edition
February 17, 2017
Friday - Sunday
David Price
Rogue Elephant Rising: The CIA as Kingslayer
Matthew Stevenson
Is Trump the Worst President Ever?
Jeffrey St. Clair
Roaming Charges: Tinker, Tailor, Soldier, Flynn?
John Wight
Brexit and Trump: Why Right is Not the New Left
Diana Johnstone
France: Another Ghastly Presidential Election Campaign; the Deep State Rises to the Surface
Neve Gordon
Trump’s One-State Option
Roger Harris
Emperor Trump Has No Clothes: Time to Organize!
Joan Roelofs
What Else is Wrong with Globalization
Andrew Levine
Why Trump’s Muslim Travel Ban?
Mike Whitney
Blood in the Water: the Trump Revolution Ends in a Whimper
Vijay Prashad
Trump, Turmoil and Resistance
Ron Jacobs
U.S. Imperial War Personified
David Swanson
Can the Climate Survive Adherence to War and Partisanship?
Andre Vltchek
Governor of Jakarta: Get Re-elected or Die!
Patrick Cockburn
The Coming Destruction of Mosul
Norman Pollack
Self-Devouring Reaction: Governmental Impasse
FacebookTwitterGoogle+RedditEmail