Solving the crisis of capitalism

Manuel E. Yepe

05/08/2014

Opinión

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When socialist-oriented developing countries resort to market solutions to advance their progressive projects, propaganda against them from the capitalist countries --headed up by the United States-- invariably presents these purposes as confirmation of the failure of socialism which requires that they be forced through paths which will lead back to capitalism.

Yet universal experience indicates that, in the same way that centralized economies use market alternatives to address their problems, market-driven economies seek remedies based on centralized and non-market solutions for their internal contradictions.

The most recent demonstration of the overwhelming validity of this rule took place when the government of the United States, followed by other governments of developed capitalist countries around the world, spent millions of dollars to rescue giant privately-owned financial institutions from bankruptcy.

They massively subsidized those banks and were willing to rescue them again if it became necessary. However, no one used the same logic that some in the United States apply to China, Vietnam and Cuba, to claim that Washington was turning toward socialism

In his essay "Neoliberal Capitalism is Dead. Long Live Corporate Capitalism!”, published in Alai-Amlatina on 21/01/2013, the Argentine-Canadian journalist Alberto Rabilotta, an expert in economic issues, presents the assessment of several U.S. economists on the serious and persistent situation facing present-day economies in the so called "advanced capitalist" countries in the wake of the great recession of 2008 in the United States.

The well-known American economist Joseph Stiglitz has analyzed that this structural crisis, exacerbated by the crash, could not be corrected through market mechanisms because, being a crisis of global dimensions, it required structural transitions in which "governments need to play a more active role”.

According to his colleague Paul Krugman, there are two explanations for this phenomenon. One is that technology made a shift which has put wage labor at a disadvantage; the other is that it flows from a net increase in the power of monopolies.

Economy analyst William Greider reports that at a meeting held at the Peterson Institute (PI) in Washington D.C., home of American neo-liberalism, it was argued that if things do not change, there will be popular uprisings even in the U.S., because, having lost confidence in the promises of the free trade system, "many are turning to the government to save them from global capitalism."

Howard Rosen, a PI researcher, recommended reforms such as: a worldwide minimum wage, salary increases linked to productivity increases, unemployment insurance, adoption of international labor standards, promotion of unionization, and commitments between Wall Street and international financial institutions to refuse funding for nations which do not accept such reforms.

Economist David Branchflower, of Dartmouth University, warned at the same meeting that the working class in Europe is “on fire” and that there is risk of a potential rebellion which can also occur in the United States.

Adam Posen, a former economist at the Federal Reserve and the new president of PI, admitted that there are problems in the political foundation of globalization. He says that one of the alarming effects of the global financial crisis is a broad erosion of confidence in capitalism itself.

Harvard University economist Dani Rodrik contrasted the "economic liberalism" prevailing in advanced capitalist countries to the mercantilism implemented by “emerging” Asian countries. He concluded that “the end of this happy coexistence” has arrived. The liberal model has lost its luster, due to increased inequality and the plight of the middle class in the West."

For economist Anatole Kaletsky, "a new model of managed global capitalism is evolving and gradually will replace the market fundamentalism that dominated the world since the Reagan-Thatcher age until 2008."

Economist Daron Acemoglu and analyst James Robinson wonder if the time for updating economics textbooks has arrived and forms of “state capitalism” need to be explored.

It seems that capitalism will continue seeking -and imposing- new variants to preserve its hegemony until humanity manages to get rid of this system which, in the beginning, was progressive but today has become the worst enemy of peace, nature and the survival of the human species.

- Manuel E. Yepe

A CubaNews translation. Edited by Walter Lippmann.

http://www.walterlippmann.com/docs4142.html

https://www.alainet.org/en/articulo/102216