FacebookTwitterGoogle+RedditEmail

How Capitalism Flopped

by DEEPAK TRIPATHI

In the struggle against global laissez faire capitalism that has brought the current economic collapse, protesters won an important victory last week in Britain, while stalemate continued in Greece. The alliance between the church, the main financial district called the City of London and Mayor Boris Johnson against the Occupy London protest crumbled. They had threatened legal action to remove peaceful demonstrators occupying an area near the London Stock Exchange for several weeks.

Legal moves against the protesters might lead to police action and violence. In particular, the readiness of St Paul’s Cathedral, the seat of the Bishop of London, to go to High Court split the church. Senior priests began to resign, signaling a crisis for the British establishment. Facing a growing sense of disquiet over possible use of force to remove peaceful demonstrators, the Corporation of London and St Paul’s Cathedral dropped the threat of immediate legal action.

In Greece, Prime Minister George Papandreou threw down the gauntlet to the two most powerful member-states of the European Union––Germany and France. To salvage the Greek economy and the European currency, they had agreed to finance a huge rescue plan, involving the International Monetary Fund and other sources, only days before. In the face of widespread demonstrations against draconian cuts in wages and public services, and rumors of a possible military coup, the Greek prime minister announced a referendum on the European Union rescue package.

Initially, the Greek cabinet gave its backing to the referendum plan, but the leaders of other EU member-states were furious. Deep political splits began to appear in Greece’s body politic. Germany and France have a lot to lose if Greece should default on its massive debt. Any government in Athens must have the people’s mandate to implement draconian austerity measures. Already, Greek people have started to take matters in own their hands.

Timing was of essence for Prime Minister Papandreou. First he agreed on a mega rescue deal with other European partners. When such a deal looked certain, he returned home and announced his referendum plan. European leaders, opposition politicians in Greece, even in his own Socialist Party, were surprised and angry. What might have been a straightforward move to secure a people’s mandate, if the timing was right, seemed to be an opportunistic attempt to save his government.

Chancellor Angela Merkel of Germany, leading paymaster of the euro bailout package, bluntly told Papandreou to accept the rescue deal with all conditions attached––or get out. Such warnings were bound to cause widespread offense in Greece, not least because the country had been under German occupation during the Second War. At the G20 summit in the French Mediterranean city of Cannes, European leaders waited to welcome the Chinese leader, Hu Jintao, hoping that China would contribute to the euro bailout.

Hu’s response: “To resolve the eurozone’s debt crisis, Europe still needs to rely on itself.” The Chinese are shrewd investors.

How did we get to this point? The question is posed frequently, though rarely answered truthfully.

The current globalization phase, beginning at the end of the Cold War around 1990, extended the markets across state boundaries. The movement of money, goods and services on a massive scale across national boundaries required regulations, but they also had to be relaxed in ways not seen before, to facilitate the ease of transfer. The Nobel Prize winning Columbia University economist Joseph Stiglitz points out that the ‘driver’ behind this phase of globalization is corporate interests.

Many transnational corporations are bigger than most national economies. Powerful corporations export not only goods and services, but also a certain culture of borrowing, cheap labor and money. Corporate interests are fundamentally linked to consumption, for profits are driven by consumption.

Corporate investments have flown to destinations of cheap labor and weak unions––China and Southeast Asia, India, Turkey, Southern European countries and South America. Factories in the United States and Western Europe have closed, new plants have spread in Asia and South America. Acceleration in this phenomenon in the last two decades has resulted in massive job losses in the industrialized world. Most products bought by Western consumers now come from the emerging economies.

Corporate profits have steadily grown, but the overall purchasing power of Western consumers has declined to alarming levels, caused by rising unemployment and shrinking incomes of those still in work. Government revenues, too, have been declining in the West, which has demonstrated a propensity to spend enormous sums of money on wars abroad and to cut public services at home.

For too long, consumers and governments tried to maintain the status quo by borrowing money at artificially low interest rates and cheap goods manufactured abroad. Loans secured on the real state to finance the lifestyle in the West sent property prices sky high. The crash had to come.

The case of the Greek tragedy is stark, but Greece is not alone. For a long time, its people have not been paying taxes they should have been paying. The country has been borrowing to maintain living standards, pay wages of government employees, to hold events like the Athens Olympics in 2004. The party had to be over one day–and that day has come. Less than a quarter century after long celebrations of victory over communism began in the West, capitalism has flopped.

Deepak Tripathi is the author of Breeding Ground: Afghanistan and the Origins of Islamist Terrorism (Potomac Books, Incorporated, Washington, D.C., 2011) and Overcoming the Bush Legacy in Iraq and Afghanistan (also Potomac, 2010). His works can be found at:http://deepaktripathi.wordpress.com and he can be reached at:dandatripathi@gmail.com.

Deepak Tripathi is a Fellow of the Royal Historical Society and the Royal Asiatic Society of Great Britain and Ireland. His works can be found at: http://deepaktripathi.wordpress.com and he can be reached at deepak.tripathi.writer@gmail.com.

May 03, 2016
Gary Leupp
Hillary Clinton’s Foreign Policy Resumé: What the Record Shows
Michèle Brand – Arun Gupta
What is the “Nuit Debout”?
Chuck Churchill
The Failures of Capitalism, Donald Trump and Right Wing Terror
Dave Marsh
Bernie and the Greens
John Wight
Zionism Should be on Trial, Not Ken Livingstone
Rev. John Dear
A Dweller in Peace: the Life and Times of Daniel Berrigan
Patrick Cockburn
Saudi Arabia’s Great Leap Forward: What Would Mao Think?
Doug Johnson Hatlem
Electoral Votes Matter: Hillary Clinton or Bernie Sanders vs Donald Trump
Chris Gilbert
Venezuela Today: This Must Be Progress
Pepe Escobar
The Calm Before the Coming Global Storm
Ruth Fowler
Intersecting with the Identity Police (Or Why I Stopped Writing Op-Eds)
Victor Lasa
The Battle Rages on in Spain: the Country Prepares for Repeat Elections in June
Jack Rasmus
Is the US Economy Heading for Recession?
Dean Baker
Time for an Accountable Federal Reserve
Ted Rall
Working for US Gov Means Never Saying Sorry
Dave Welsh
Hunger Strikers at Mission Police Station: “Stop the execution of our people”
John Eskow
The Death of Prince and the Death of Lonnie Mack
May 02, 2016
Michael Hudson – Gordon Long
Wall Street Has Taken Over the Economy and is Draining It
Paul Street
The Bernie Fade Begins
Ron Jacobs
On the Frontlines of Peace: the Life of Daniel Berrigan
Louis Yako
Dubai Transit
Bill Quigley
Teacher, Union Leader, Labor Lawyer: Profile of Chris Williams Social Justice Advocate
Patrick Cockburn
Into the Green Zone: Iraq’s Disintegrating Political System
Lawrence Ware
Trump is the Presidential Candidate the Republicans Deserve
Ron Forthofer
Just Say No to Corporate Rule
Ralph Nader
The Long-Distance Rebound of Bernie Sanders
Ken Butigan
Remembering Daniel Berrigan, with Gratitude
Nicolas J S Davies
Escalating U.S. Air Strikes Kill Hundreds of Civilians in Mosul, Iraq
Binoy Kampmark
Class, Football, and Blame: the Hillsborough Disaster Inquest
George Wuerthner
The Economic Value of Yellowstone National Park
Rivera Sun
Celebrating Mother Jones
Nyla Ali Khan
Kashmir and Postcolonialism
Mairead Maguire
Drop the Just War Theory
Weekend Edition
April 29, 2016
Friday - Sunday
Andrew Levine
What is the Democratic Party Good For? Absolutely Nothing
Roberto J. González – David Price
Anthropologists Marshalling History: the American Anthropological Association’s Vote on the Academic Boycott of Israeli Institutions
Robert Jacobs
Hanford, Not Fukushima, is the Big Radiological Threat to the West Coast
Ismael Hossein-Zadeh
US Presidential Election: Beyond Lesser Evilism
Dave Lindorff
The Push to Make Sanders the Green Party’s Candidate
Peter Linebaugh
Marymount, Haymarket, Marikana: a Brief Note Towards ‘Completing’ May Day
Ian Fairlie
Chernobyl’s Ongoing Toll: 40,000 More Cancer Deaths?
Pete Dolack
Verizon Sticks it to its Workers Because $45 Billion isn’t Enough
Moshe Adler
May Day: a Trade Agreement to Unite Third World and American Workers
Margaret Kimberley
Dishonoring Harriet Tubman
Deepak Tripathi
The United States, Britain and the European Union
Eva Golinger
My Country, My Love: a Conversation with Gerardo and Adriana of the Cuban Five
FacebookTwitterGoogle+RedditEmail