Sunday, 4 December 2011

Is this the best capitalism can offer us ?

We are repeatably told there is no better system than capitalism and that all other systems have been found wanting. But today where we live in a ever declining level of living standards is what we have today the best capitalism can offer us all ?

A Mori poll out today shows 64% believed its unlikely that today's youth would have better life than their parents.

Against the background of the worst crisis "ever" (according to Mervyn King, governor of the Bank of England) the claim that 'there is no alternative' is a difficult argument, to say the least, to sustain today. Yet all three main parties insist on it.

The real situation is revealed in the army of unemployed, the colossal wastage arising from the 'great recession', which threatens to topple into outright depression.

One million young people alongside one million women are part of what is likely to become a permanent 2.75 million minimum army of unemployed in Britain.

And this is just part of the legions of at least 200 million unemployed in the world who increasingly form a substratum of the poor, homeless and dispossessed.

Of this figure 81 million is composed of young people - who are condemned to a life of worklessness. There is almost a 50% rate of unemployed young people in Spain and 40% in Greece.

Added to this are the seven million in Britain and 1.6 billion worldwide in part-time 'precarious' jobs.

They are a 'precariat', a modern manifestation of the "reserve army of the unemployed", as written about by Karl Marx, who analysed capitalism.

This is a pool of cheap, sometimes almost slave labour - including young people working as 'interns' for nothing.

They may be drawn into work when needed and then conveniently tossed aside like an old boot when the economic cycle of capitalism deems they are 'surplus to requirements'.

Yet, argue the defenders of capitalism, this system is the best conceivable one for delivering goods and services to the peoples of Britain and the world.

It is true that capitalism, in its progressive phase, furnished the basis for the first time in history to abolish want and privation.

Now, however, it has turned into its opposite and become an absolute fetter to the further development of industry and society.

By its own admission, it is now a machine for destroying wealth and the lives of working people rather than creating it.

It is also destroying the environment. The majority of humankind will have to challenge this system and replace it with socialism in order to stop the decline of the planet.

A hallowed institution of capitalism, the International Monetary Fund admitted that $50 trillion, equal to the total production of the world in a year, was lost in 2008 alone because of the world crisis of capitalism.

In Britain, a minimum of £200 billion has been lost in GDP since the first quarter of 2008 due to the recession. This would be more than enough - two and half times - to cover the £81 billion cuts.

Moreover, economist Gavyn Davies in his blog for the Financial Times - house journal of the financial plutocrats who control the credit system, the nerve centre of capitalism - admits that growth remains far below the potential built up by the previous development of industry and will remain so for "several more years".

This means "there will be a massive further wastage of economic resources". Davies estimates that if the recession continues until 2016 - at least another five years of economic agony for working people - this will "amount to a loss of $5,900 billion, of which $2,200 billion is still to come in the next five years".

Added to this is the huge wastage on 'defence' spending and arms production, a total of $1.7 trillion a year.

Then there is the obscene $3 trillion already spent on the failed wars of Afghanistan and Iraq.

There is also the scandalous example of the 3,000 BAE workers thrown out of their jobs because of 'defence cuts'. How easy it would be to plan, for instance, to switch them with their accumulated technical expertise, into green technology and other necessary useful products?

But mention of the 'planning' of industry and society is anathema to the capitalists and their representatives.

However, the speed and depth of the present crisis of capitalism and its devastating effect on the lives of millions of workers in Britain and worldwide, poses sharply the issue not just of immediate measures that offer some relief for working people, but of more profound solutions, of 'system change'. This means outlining and fighting for a democratic socialist alternative.

The powerful and inspirational mass movements of the Greek workers have heroically battered away at the foundations of rotten Greek capitalism.

Their counterparts in Spain, Portugal, Italy and here in Britain, in this decisive movement of 30 November, seek to emulate them.


  1. I agree that there are alternatives, but it first is worth evaluating whether our existing economic problems are inherent in capitalism (meaning, the private ownership and control of the means of production) itself or are these problems the result of particular government policies that have intervened into the operation of the ownership and control of the means of production.

    That would be fair, right?

  2. hi there yes i'd say it is inherent in the capitalist system, as marxists we are taught in the theories of karl marx that in capitalism there is inherent contradictions that at certain stages there becomes a crisis in capitalism and a over production where the people who make the products can no longer afford to buy back their products leading to many contradictions and crisis's

  3. Hi Mark,

    Thanks for posting my comment, and I will conclude with this comment.

    With regard to general overproduction, I can see where you are coming from, but it is somewhat mistaken.

    Why? There still exists money in the economy and businesses can lower their prices to clear their inventories. If they choose not to lower prices, they do so because they are forecasting that their products will rise in price in the future. If that is the case, businesses would want to increase their production to reap higher profits.

    If it so happens that businesses in general have overbid for the factors of production, the only theory that can explain why the prices for particular goods (the factors of production) have increased disproportionately relative to the price of consumer goods is the Austrian theory of credit expansion. By artificially lowing borrowing costs, credit expansion makes higher order goods appear more profitable, thereby diverting resources away from lower order goods (like consumer goods). The result is that credit expansion creates overproduction of capital-intensive goods and underproduction of lower order goods. Empirical pricing data seems to confirm this.

    Incidentally, Marx's point about laborers not having enough money to buy back the products they produce is his theory of underconsumption, not overproduction. Underconsumption on behalf of laborers is sort of irrelevant since the owners of capital also consume and their savings are invested in producer's goods. I would contend underconsumption (saving) is vital for a growing economy, since savings are used to maintain and expand the capital structure. Furthermore, increases in capital means that businesses decrease their costs of production to a greater extent than the prices of their goods would fall.* Businesses are thereby able to maintain profitability at lower prices. The resulting increased purchasing power of consumers (as a result of lower prices) provides for the missing demand.

    The happy consequence of falling prices is that a greater number of people are able to afford the goods that were previously considered luxuries. Credit expansion and other government policies that destroy capital accumulation inflict great harm on those consumers most in need of cheaper and better goods.


    * It is a rather technical explanation why production costs fall greater than the price of consumer goods. The basic idea is that, as capital become more available, the capital-intensive stages of production expand at the expense of less capital-intense ones, allowing for the factors of production for each stage of production to fall to a greater extent that their outputs do.