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Thursday, June 5, 2008

The inherent contradictions of capitalism?

The inherent contradictions of capitalism!


I was in the John Rylands Library at UOM one day when I thought I had found the secret understanding of the inherent contradictions of capitalism. I suddenly reminded myself that I am a foremost genius. Anyways, I am not Marxist or Communist, mind you, as a brief look at my bourgeois website should immediately tell you. (What with Google Adsense and all.) I was supposed to be studying for Economics and History, but ended up reading a book on American Imperialism and how the USA actually imposes its political and economic system on the world. Then I fell asleep. And when I woke up in the cold dank library, I finally managed to link all the pieces together and came up with a great theory and a great understanding...

Only to find a few days later that other people had already thought about that long before me.

Damn.

Heck it. Here's my blog, and here's my understanding and theory of the inherent contradictions of capitalism.

The logical and rational outcome of letting a free market operate is that ultimately market imperfections set in. Monopolies and oligopolies arise and as we all know, these are not good for competition. Traditional economic theory suggests that government should take care of these problems and others, but the problem is that in the postmodern world, the real governments effectively go into cahoots with the largest corporations. They do not obey economic theory and regulate them; the state joins them. There are actually two ways of looking at this. One is that governments (states) go into cahoots with these MNCs willingly, and the other is that if governments do not go into cahoots with these MNCs, they can literally pull the government down. Hence a symbiotic relationship results rapidly.

Those who say that globalisation calls for the end of the state fail to realise that this is not always true. The state has now taken on a corporate form, and it is so obvious that Wal Mart screams USA and that Deutsche Bank screams Germany.

To press on with my case, with the rise of globalisation and the rapid spread of MNCs all around the globe, which is the rise of big business, the outcome is an inherent contradiction in capitalism. Capitalism is about the free market, but what happens when the free market is not properly regulated or when the firms in that free market join forces with the government is that capitalism's contradictions destroy it.

To put it simply, free market leads to oligopolies and monpolies who then take over governments and then imperfect markets arise and the free market is destroyed, which ironically created all these. That's the contradiction. That's the rub.

I thought I was a bloody genius. I thought of all that while sitting in the library reading a few books.

Then later I saw Stiglitz's new book, and watched his lecture on TV, and he had nailed it too. The same theory as me. I was flabbergasted... no, I mean dismayed.

If you think this inherent contradiction is just a diatribe against globalisation, and that Stiglitz and I are loonies, consider this:

After 1980, when the USA and the World Bank intervened in Brazil, the growth rate went from 5% to less than 2%.

Every day millions protest against SAP (Structural Adjustment Policies), which are "SAPping" the power of the poor.

The poor give more money to the rich than the rich give to the poor.

To maintain this economic superiority comes a whole host and plethora of economic, political sanctions and cultural dominance from the MNCs, not the USA government.

Inequality has been on the rise worldwide, not just in Singapore.

The point is that globalisation has its merits but the problem is that all the benefits and merits go to a select few who benefit like crazy, at the expense of the rest of the world. I happen actually to be someone who benefits, coming as I do from a privileged and rich family, speaking three languages (and now learning French, so that's four) and being a government scholar. I win in this new globalised world.

I am not complaining about my share, but it's the poor that I worry about, that I worry for. Capitalism must help them too!

Capitalism is about making people better off, but as it is, this is making people worse off and only some better off. It cannot last and something has to be done. I understand that Stiglitz has lots of good advice and suggestions, so I am going to read his book to find out.

Communism may have failed but sometimes you can see why so many believed in the Communist Utopia. For all its promises that it did not live up to, it was a great belief. Now we need something practical to handle this rising problem. The poor of the world are in chains, and we must release them ourselves with kindness and charity before they forcefully release themselves, and do something untoward. Charity and our self interest go hand in hand.

Stay tuned! More to come in future posts, when it interests me...

Anything that interests me!