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Communism, Capitalism, Unions & Rumors of Another Global Meltdown.

June 5, 2012

Market Collapse, Redux. Well this kind of rumor can get things going in a hurry. #FFS

A great lament on the Wisconsin recall election and what it really means to people. I need to write about this in more detail, but for now I want to just jot down some quick notes…

  • The general Reagonomics perspective is that unions have shielded workers from the pressures that drive up productivity.
  • After WWII America was the only industrial nation up and running; a creditor nation when people were in need of loans; a military powerhouse; a major oil EXPORTER; in a financial position as relates to the Dollar that bestowed trade advantages…
  • Corporate profits were high and easy. Sharing with the workers was a no-brainer, especially if it kept a large and well organized labor market invested in the system. (Strikes had teeth back then)
  • Communism seemed like a real economic threat, so anything that could be done to prevent workers from going down that road – anything that could show the comparative advantage of capitalism had to be pursued. (Kind of like dumping unsustainably cheap goods on a market until the competition collapses?)
  • These advantages and incentives have been eroded, as has union membership and power.
  • Globalization has reminded capital that there are better ways to exploit workers – even if we have to go to faraway places and talk about “comparative advantage” or “efficiency” and “development.”
  • The cultural, intellectual and economic backlash against unions, redistributive policies and social welfare in favor of deregulated, unrestrained free markets (in the name of “growth,” usually) means that there is little to no room to talk of alternative strategies for capitalism without being called a pinko-liberal-commie and summarily dismissed as “unserious.”
  • The engine of growth, it would appear, has historically been tied to cheap energy. That is over.
  • There is a global glut of savings circling the planet looking for investments – but the world has seen a decrease in demand for real goods and services and a shift towards very short time horizon returns on investment. This, coupled with easy credit, virtually unrestrained leverage and lax to non-existent financial regulation has given us a series of fantastic bubbles.
  • Derivatives and exotic insurance policies meant to mitigate and assign risk more advantageously were poorly understood and completely unregulated (or near enough). Outstanding claims against casino like speculative positions now reach into the hundreds of trillions of dollars.
  • The growth model has failed or is up against its natural limits. The financial world is so interconnected and meshed together and frankly it is so incompetent and unregulated that we really don’t quite know which default or devaluation or failure to hit some targeted interest rate is going to set off a giant collapse of the economy.
  • When governments (federal, state or local) don’t have the revenue to continue as before, those with power tend to set the agenda for cutting. Screwing those with the least power is almost always the first power move.

I guess what I am saying is that I fully agree with that article. I hope there is some kind of upset here and unions claw back some small shred of dignity and power. I don’t imagine it will happen. Capitalism is a system of exploitation. That is really all there ever was to it. But for a time, with cheap enough energy and little enough competition, and some semblance of workers rights, gains could be made and people could feel good about the system… A rising tide and boats or something. But that was a brief moment in time. Not the trajectory or the history of capitalism. And even during this golden age, we have been offshoring the abject poverty and slave like working conditions that are central to capitalism, albeit in sometimes creative financial ways.

Only now there is no alternative. Now we don’t have to pretend, bargain or make concessions. Now it is too late. I love how maligned Keynes is now in most right-wing circles, like he is the great socialist plague upon capitalism. Keynes saved capitalism at a time when the global recession looked so bad in capitalist countries that the increasingly likely (perhaps only) options were Fascism, Socialism or Communism… All things Keynes desperately wanted to prevent from overtaking capitalism. My how things change and people forget and just spout vitriol at anything approaching a deviation from their pre-programmed mythology.



From → Economics, WTF?

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