Tuesday, December 09, 2008

The Curse of Global Capitalism

By Jon Ronnquist | Information Clearing House, Dec 8, 2008

Many have quite rightly argued that the forces which drive the sink-or-swim free market economy are beyond any conventional means of containment. Like a cancer which fights for its own survival at all costs, including eventually the host itself, so does the free market economy feed without consideration for the clear boundaries of sustainability, tolerance and fairness.

This is exacerbated by the universal debt based system of finance, which narrows considerations of profit into ever shorter time spans, thus creating antipathy towards long term visions and factors beyond profit, such as negative impact and future repercussions. For those who have understood this all along, the current economic implosion is not only understandable, but inevitable. Any parasite which draws more from its host than the host can sustain, will eventually kill it, and so we have what we have today. In this case the host is the working man, upon whom the burden of debt has been allowed to grow beyond his ability to manage, thus forcing a collapse at the very base of the pyramid.

Continuing this analogy of disease, we can see something of considerable interest with regard to our current situation. Any disease could be said to be parasitic, in so far as it can only live and grow within the infected host. And all disease is ultimately terminated in one of two ways. Either the host, through its own agents or with the help of medicine or surgery, is expelled or killed. Or when such efforts fail, the host dies and the disease with it. Looking at the economy this way, we can quite easily compare it to a life threatening illness, a cancer of the nation so to speak. And here we are at the end of the cycle. Prudence, oversight, consideration and even public solidarity, could all be said to have failed. And now we find ourselves at a cross roads, which I for one, do not believe is anywhere near as clear cut as our trusted men of office might have us believe. Looking at the current course being taken by governments across the world, we seem to be racing to rebuild the very thing which brought about this disaster. And they are right in a limited sense. If we want to start the process all over again, credit must be made available again at all costs.

But is that what we really need? Even if a large majority of existing debt were simply wiped out, which it theoretically could be when you consider that the money borrowed never existed in the first place, it would not guarantee against a repetition of the cycle now coming to an end. If we start borrowing again, we will simply buy ourselves a little more time. Borrowing is as short sighted a solution as the desperate profit frenzy it predisposes us to. The fact that borrowing has been institutionalised among working people in the last few decades, does not mean it is either wise or prudent. Very few of the millions whose lives have been ruined by the burden of debt will insist they are better of for it. And as that number begins to increase dramatically, the true nature, and perhaps even intent, of large scale money lending is revealed. Debt is a trap, and like any trap, it was set in place by those who would profit to see it walked into. It is no coincidence that there isn’t anywhere near enough money, or even arbitrary value, in the world to pay all existing debts. And with the collapse of Wall Street and the billions in false value they have created over the years now disappearing like the smoke and mirrors it has always been, there is even less. A vast majority of those who owe, are stuck with their debt as a mathematical fact. And many more must rely on the continued borrowing of their debtors and clientèle to pay their own debts.

The idea that an object or institution can sky rocket in value without fundamentally changing, is a fallacy, albeit one which has made many people rich in the years of false optimism leading up to the current crisis. And the proof of that fallacy is the equally illogical way in which that value has now disappeared. How can the worth of a single stake in GM go from over $90 in 2000, to just under $4 in 2008, while the quantity, quality, usefulness, dependability and economy of its product remains effectively the same? The answer is that it can’t. At least not in reality. But as has been proven, cut throat capitalism and reality have very little in common. I myself have never bought stock for this simple reason, I find the gloating optimism of those who see their shares increase in value just as annoying as their mind numbing whimpering when it crashes. People who bought their house in the eighties love to brag about the difference between what it cost them and what it’s now worth, and seem oblivious to the fact that the house is no better or worse than it was and people who were unlucky enough to be born in the twenty first century have to sell their souls to get a home of their own. What we do see is home owners gambling with their new magically created “wealth” by borrowing against it while their incomes remain the same.

Continued >>

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