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

More articles by:

MURRAY DOBBIN, now living in Powell River, BC has been a journalist, broadcaster, author and social activist for over forty years.  He can be reached at murraydobbin@shaw.ca

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

Weekend Edition
June 23, 2017
Friday - Sunday
Jeffrey St. Clair
Democrats in the Dead Zone
Gary Leupp
Trump, Qatar and the Danger of Total Confusion
Andrew Levine
The “Democracies” We Deserve
Jeffrey St. Clair - Joshua Frank
The FBI’s “Operation Backfire” and the Case of Briana Waters
Rob Urie
Cannibal Corpse
Joseph G. Ramsey
Savage Calculations: On the Exoneration of Philando Castile’s Killer
John Wight
Trump’s Attack on Cuba
Dave Lindorff
We Need a Mass Movement to Demand Radical Progressive Change
Brian Cloughley
Moving Closer to Doom
David Rosen
The Sex Offender: the 21st Century Witch
John Feffer
All Signs Point to Trump’s Coming War With Iran
Jennifer L. Lieberman
What’s Really New About the Gig Economy?
Pete Dolack
Analyzing the Failures of Syriza
Vijay Prashad
The Russian Nexus
Mike Whitney
Putin Tries to Avoid a Wider War With the US
Gregory Barrett
“Realpolitik” in Berlin: Merkel Fawns Over Kissinger
Louis Yako
The Road to Understanding Syria Goes Through Iraq
Graham Peebles
Grenfell Tower: A Disaster Waiting to Happen
Ezra Rosser
The Poverty State of Mind and the State’s Obligations to the Poor
Ron Jacobs
Andrew Jackson and the American Psyche
Pepe Escobar
Fear and Loathing on the Afghan Silk Road
Andre Vltchek
Why I Reject Western Courts and Justice
Lawrence Davidson
On Hidden Cultural Corruptors
Christopher Brauchli
The Routinization of Mass Shootings in America
Missy Comley Beattie
The Poor Need Not Apply
Martin Billheimer
White Man’s Country and the Iron Room
Joseph Natoli
What to Wonder Now
Tom Clifford
Hong Kong: the Chinese Meant Business
Thomas Knapp
The Castile Doctrine: Cops Without Consequences
Nyla Ali Khan
Borders Versus Memory
Binoy Kampmark
Death on the Road: Memory in Tim Winton’s Shrine
Tony McKenna
The Oily Politics of Unity: Owen Smith as Northern Ireland Shadow Secretary
Nizar Visram
If North Korea Didn’t Exist US Would Create It
John Carroll Md
At St. Catherine’s Hospital, Cite Soleil, Haiti
Kenneth Surin
Brief Impressions of the Singaporean Conjucture
Paul C. Bermanzohn
Trump: the Birth of the Hero
Jill Richardson
Trump on Cuba: If Obama Did It, It’s Bad
Olivia Alperstein
Our President’s Word Wars
REZA FIYOUZAT
Useless Idiots or Useful Collaborators?
Clark T. Scott
Parallel in Significance
Louis Proyect
Hitler and the Lone Wolf Assassin
Julian Vigo
Theresa May Can’t Win for Losing
Richard Klin
Prog Rock: Pomp and Circumstance
Charles R. Larson
Review: Malin Persson Giolito’s “Quicksand”
David Yearsley
RIP: Pomp and Circumstance
FacebookTwitterGoogle+RedditEmail