It’s only right that I follow the last series of posts on what is Wrong with a post that asks the above question.
BECAUSE ITS MONEY THAT IS AT THE HEART OF THE PROBLEM.
I guess the answer to the question “What is wrong with capitalism today?” is dependent on who you ask.
Capitalism works for capitalists.
The Problem is 90 percent of us are not capitalists, we are employees.
Without us noticing, we are entering the post capitalist era.
We need to reexamine the models that have gotten us to this point.
Complete change will not happen overnight. Nor will it be built on the back of one investor or one innovative entrepreneur.
It will be something that business owners, investors, political leaders, consumers and entrepreneurs must all work together toward.
Currently, our planet is on track to fly past the 2 degrees Celsius warming that scientist have repeatedly warned marks the safe range for humans on this planet, but at the heart of further change to come is information technology, new ways of working and the sharing economy.
The old ways will take a long while to disappear but millions of people are beginning to realise they have been sold a dream at odds with what reality can deliver.
The democracy of riot squads, corrupt politicians, magnate-controlled newspapers and the surveillance state looks as phoney and fragile as East Germany did 30 years ago.
Why should we not form a picture of the ideal life, built out of abundant information, non-hierarchical work and the dissociation of work from wages?
So are we witnessing the first stage of an economy beyond capitalism?
Is technology creating a new route out or is it consolidating power into the hands of a few like Google, Microsoft and Apple?
Will its future be shaped by the emergence of a new kind of human being, reshaping the economy around new values and behaviours?
Will Capitalism as we know it be abolished by creating something more dynamic that exists, at first, almost unseen within the old system, but which will break through because of what Information technology has brought about in the past 25 years.
It is blurring the edges between work and free time and loosened the relationship between work and wages?
Or is the current wave of automation, currently stalled because our social infrastructure cannot bear the consequences, will hugely diminish the amount of work needed – not just to subsist but to provide a decent life for all.
These are all questions to be answered before we see what I call post capitalism.
The Questions are numerous, and there have been hundreds of books, papers, and talks on the subject few however with any positive suggestions.
Before I put the only suggestion that is viable lets start with what is wrong with the present state of Capitalism.
Here is way I see what is wrong;
Today capitalism isn’t about real markets and commodities with the price mechanism being fixed by competing supply and demand, now today it is about casino economics. You throw the dice and when you loose … all that global connectivity means you lose globally. We are all in this together – that is why we call it a global economy – oh apart from the 0.1% – they are the ones throwing the dice. We are just the ones picking up the tab when the bets don’t come off.
Although economics likes to think of itself as a science in reality it ignores the fundamental laws that govern science – the first two laws of thermodynamics. This isn’t a smart thing to do. There actually are limits to growth.
They told us wealth creation was a trickle down theory but in reality it is a trickle up theory. The rich really do get richer and richer and it is not down to merit. The question is what is going to stop them: war or politics?
The big problem is humans are human, both doing bad things and good things. Capitalism only works if enough of us do the right thing.
The price mechanism is faulty unless it includes the environmental cost now and in the future of our consumption. This it doesn’t done at present and we are free-loading off nature.
Often we think it is the only way to do things. It is not the only way to even do capitalism! Alternatives exist, other brands are available. There are even other ways of thinking about economics that we don’t even call capitalism; they may be a bit racy for us right now so lets start with re-imagining what a good effective form of capitalism could be like if humanity fully realized its role and impact upon the planet that sustains it.
Modern capitalism is so big and complex that who can say that really understand it.
But I do understand by building business models and share valuations based on the capture and privatisation of all socially produced information, Google and such firms are constructing a fragile corporate edifice at odds with the most basic need of humanity, which is to use ideas freely.
Never has humanity been better fed, lived longer, used more energy and had more stuff than today so what is wrong.
One of the fundamental faults of capitalism is the basic axiom that if everybody tries to accumulate as much property as possible the general interest of the people will be served.
All this seems to do is create exploitation.
The problem with capitalism is that it isn’t very good as what it says it is good at, spreading wealth, enabling good technological progress and helping us become more human, more free.
Adam Smith – you know him graces the back of the £20 note – founding father of modern capitalism back in the 18th century – hero of Margaret Thatcher. When he famously asserted:
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”
What Smith was talking about was the idea that self-interest – the rational underpinning of economic man – was not only good for you but for everybody else – society.
Unfortunately the line between self-interest and greed is always fine – and we are human man not economic man and we find it very easy to cross that line – or certainly some of us do – lets call them the 0.1% – the 700,000 of us who have a lot – somewhere north of $5 million each.
The consequence of this trend as it unwinds over time is that wealth progressively becomes concentrated in fewer and fewer hands.
The rich get richer – that’s that 0.1% again. Or to put it another way wealth stays with those that are born to it and the idea that merit – how good you are at something – determining your economical price in the market place, or wages as most of would say, becomes far less important than we thought.
In fact there are plenty of things wrong with capitalism.
Those that shout this apparent self-evident reality the loudest own the media, the means of communication, they own your stability through the derivative bets they hold and they are telling you don’t blink – this is the natural way of things , capitalism the way we see it, the way the 0.1% see it.
So the more we have of everything, food, power, stuff, the more energy we must use (even if we get more energy-efficient in doing things).
The nitty-gritty of it is we have fucked up the world with Capitalism idealism.
I don’t approve of Communism or Socialism either, the truth is that every system is flawed.
I think a system which is based on an assumption that man is basically piggish and therefore only fit to look after his own needs; such system impedes rather than promotes the good within each person.
Geographers have away of describing this situation it is called the IPAT equation.
Impact = population x affluence x technology. You note there is no Money in the equation.
Physicists would call it entropy, biologists pollution and economists externalities – is of an order defined by how many of us are using how much however efficiently.
If you want impact in a nutshell it is climate change, it is salinization of soil, it is depleting geological resources , it is reducing biodiversity.
There really are limits to growth.
Capitalism is a perpetual motion machine, striving for more and more growth makes us in the long run weaker not stronger. Well, if only we were all-knowing, rational and optimal in our behavior maybe it would be so. But we are not.
In the past the trend towards greater and growing inequality has been neutered by war – nothing equalizes society more effectively than war – we do tend to be all in it together at such moments.
Today in our global economy is held together with a digital architecture that enables the reduction of wealth to so much digital code life has become one big transaction.
The most spectacular aspect of this transactional world is the derivatives markets.
(A derivative is a bet on a price changing within a market – say interest rates, or currency exchange values or a commodity price such as that for coffee. The value of all derivatives worldwide in 2013 is thought to be about $1.2 quadrillion although nobody knows exactly as, a like a lot ordinary betting the betters don’t want necessarily want to admit to it.)
So that is $1,200,000 billion laid out in bets about what may or may not happen.
Billions of transactions.
Let’s quickly remind ourselves. The global economy – the real economy – is worth about $85 trillion – that is about 7% of the notional sum bet on what that economy will do.
Now, take a deep breath and think about it.
If you don’t now believe that we could have another global economic crash in the style of 2008 – a massive bursting asset bubble – you need to think again and cast your eyes to Asia – you might be wondering where much of that quantitative easing – free money that the US and the UK created ended up. Try property speculation in Asia.
We are quickly reaching the tipping point where growth in GDP in any particular country comes at the expense of growth in GDP of another.
We do not have global organizations capable of managing these tension points nor are societies willing to curb growth and consumerism.
Capitalism as currently practiced is simply not sustainable.
Modern market capitalism has shifted recently with the emerging supremacy of money markets and the financial system over the actual trade of goods. Under this, you’ll make more money trading in derivatives than actually physically trading in commodities.
Capitalism, or the recent move into financial market dominated capitalism.
The “new capitalism” is based on mathematics rather than trade; credit default swaps over goods and services; when odds are stacked in the favor of big banks because of hedging, derivatives and CDS’s; when there is little to no penalty for market manipulation by investment banks, power brokers, Ponzi schemers … these inefficiencies in the market cause redistribution of wealth to the people in power who design the system.
The mass media is becoming more and more an opiate, an aid for living the unexamined life. replace it (capitalism)?”
Through the millions spent in lobbing reasonable controls upon business have been removed. The desire for economic success and the influence of the powerful elite have ruined the mass media.
Our political problems have deepened with the demise of unions as an effective political force, the continued growth in the belief in the desirability of pyramid economics and class structure (which has been sold by a media controlled by those at the top of the pyramid), and the dependence of our two-party system upon those at the top of the pyramid for funds to cover their election expenses.
Around the world the gains of increased productivity are wasted by this pyramid structure.
For over 40 years I have watched the gradual drift in the minds of the average person from an understanding of our political economic reality and the need for corrective actions.
Those who dominate the means for the production of ideas have served their class well.
This endless cycle of production and consumption for profit is suicide and profit is pretty pointless when we run out of things to burn and things to eat.
I would suggest a world government dedicated to seeing that: (a) everybody was properly fed, clothed, and housed; (b) everyone worked and received a fair return for their work with none receiving too much; (c) intellectual development for all to be encouraged; (d) businesses are the servant to man; (e) the production of war materials end; (f) the ending of all exploitation, including one region by another or one class by another; (g) and the ending of a press which is controlled by those who make up the ruling class.
We is needed is a project based on reason, evidence and testable designs, that cuts with the grain of history and is sustainable by the planet.
Capitalism is not and has never been designed to work in an environment dominated by market controls, regulations, artificial barriers to entry, monetary manipulation and a myriad of other government interventions.
It is Profit at any cost and having taxpayers bail it out when it goes wrong simply means the risk has shifted from corporation to state, or you and me.
Many would say that means a broken model.
Has a new model started. It all depends on what kind of capitalism we are talking about and what force will be applied either at the ballot box or on the barricades or by the Smart Phone or the Gun.
Another question raised about the proposed strategy is whether it actually adds up to the defeat of capitalism.
Do the numerous tactics described above, most of which focus on what not to do, really do the job? How will capitalism actually be defeated? It’s true that many of these recommendations are about what not to do.
this strategy calls for pulling time, energy, and resources out of capitalist civilization and putting them into building a new civilization. The image, then, is one of emptying out capitalist structures, hollowing them out, by draining wealth, power, and meaning from them until there is nothing left but shells.
To think that we could create a whole new world of decent social arrangements overnight, in the midst of a crisis, during a so-called revolution or the collapse of capitalism, is foolhardy.
Our new social world must grow within the old, and in opposition to it, until it is strong enough to dismantle and abolish capitalist relations.
Such a revolution will never happen automatically, blindly, determinable, because of the inexorable materialist laws of history.
It will happen, and only happen, because we want it to, and because we know what we’re doing and how we want to live, what obstacles have to be overcome before we can live that way, and how to distinguish between our social patterns and theirs.
To achieve change we need unlimited finance. Where can we find this? We don’t have to look far.
If a new socialist democratic system is to emerge:
We must place an World Aid Commission on all High Frequency Trading, on all Foreign Exchange Transactions over $ 20,000, on all Sovereign Wealth Funds Acquisitions. This will created a perpetual funded Fund to address the damage Greed and Profit for profit sake has done. ( See Previous Posts)
Who do we achieve this.
Our lives have been shaped by developments which most of us couldn’t have imagined a decade ago.
In effect, they are nine distinct psychological orientations toward the world that structure our perceptions, expectations, and demands whenever and wherever other human beings may be involved. These instincts represent our most basic assumptions about how the social world works, and that includes how the political world works.
With the power of our Smart phones the new political weapon of the future.
In the next decade upwards of 100 billion objects from smartphones to street lamps and our cars will be connected together via a vast ‘internet of everything’. This will impact every aspect of our lives.
The interfaces to all our devices from phones to computers, cars and home appliances will be highly intelligent and adaptive – learning from our behaviours and choices and anticipating our needs.
The all-seeing eye is your own.