Capitalisms Self-inflicted Apocalypse
- Capitalism's Self-inflicted Apocalypse
11 02 2009
By Michael Parenti
February 10, 2009 "Information Clearinghouse" 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
jailingsapplied 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
statewith its police, militia, courts, and lawswas
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
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
Worldmore 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
workfor 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
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
tendencyas we are seeing todaytoward overproduction of private
sector goods and services and underconsumption of necessities by the
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 latewas 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
interestsgroaning under an immense accumulation of capital that
needs to be invested somewhereto 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
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
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
oversightnot 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
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
environmentand 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 received his Ph.D. in political science from Yale
University. He has taught at a number of colleges and universities, in
the United States and abroad. He is the author of twenty books: Please
visit his website http://michaelparenti.org <http://michaelparenti.org>
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