Is Capitalism in Trouble?

[wayneL]

This is an excellent article (IMO) from the Los Angeles Times.

It crystalizes a view that I have been coming to and thought it would be a worthwhile topic of discussion.

Is the article right? Does capitalism need to reinvent itself to survive? I think it might need to at some point.

http://www.latimes.com/news/opinion/commentary/la-oe-barber04apr04,0,5142063.story

Overselling capitalism
Why today's markets are headed for disaster unless there is a shift in focus.
By Benjamin R. Barber, BENJAMIN R. BARBER is a professor at the University of Maryland and is the author of many books, including "Jihad vs. McWorld." His latest book is "Consumed: How Markets Corrupt Children, Infantilize
April 4, 2007

THE CRISIS IN subprime mortgages betrays a deeper predicament facing consumer capitalism triumphant: The "Protestant ethos" of hard work and deferred gratification has been replaced by an infantilist ethos of easy credit and impulsive consumption that puts democracy and the market system at risk.

Capitalism's core virtue is that it marries altruism and self-interest. In producing goods and services that answer real consumer needs, it secures a profit for producers. Doing good for others turns out to entail doing well for yourself.

Capitalism's success, however, has meant that core wants in the developed world are now mostly met and that too many goods are now chasing too few needs. Yet capitalism requires us to "need" all that it produces in order to survive. So it busies itself manufacturing needs for the wealthy while ignoring the wants of the truly needy. Global inequality means that while the wealthy have too few needs, the needy have too little wealth.

Capitalism is stymied, courting long-term disaster. We still work hard, but only so that we can pay and play. In order to turn reluctant consumers with few unsatisfied core needs into permanent shoppers, producers must dumb down consumers, shape their wants, take over their life worlds, encourage impulse buying, cultivate shopoholism and invent new needs. At the same time, they empower kids as shoppers by legitimizing their unformed tastes and mercurial wants and detaching them from their gatekeeper mothers and fathers and teachers and pastors. The kids include toddlers who recognize brand logos before they can talk and commodity-minded baby Einsteins who learn to shop before they can walk.

Consumerism needs this infantilist ethos because it favors laxity and leisure over discipline and denial, values childish impetuosity and juvenile narcissism over adult order and enlightened self-interest, and prefers consumption-directed play to spontaneous recreation. The ethos feeds a private-market logic ("What I want is what society needs!") and combats the public logic fashioned by democracy ("What society needs is what I want to want!").

This is capitalism's all-too-logical way of solving the problem of too many goods chasing too few needs. It makes consuming ubiquitous and omnipresent, turning shopping into an addiction facilitated by easy credit.

Compare any traditional town square with a modern suburban mall. In the square, you'll find a school, town hall, library, general store, park, movie house, church, art gallery and homes ”” a true neighborhood exhibiting our human diversity as beings who do more than simply consume. But our new town malls are all shopping, all the time.

When we see politics permeate every sector of life, we call it totalitarianism. When religion rules all, we call it theocracy. But when commerce dominates everything, we call it liberty. Can we redirect capitalism to its proper end: the satisfaction of real human needs? Well, why not?

The world teems with elemental wants and is peopled by billions who are needy. They do not need iPods, but they do need potable water, not colas but inexpensive medicines, not MTV but their ABCs. They need mortgages they can afford, not funny-money easy credit.

To serve such needs, however, capitalism must once again learn to defer profits and empower the needy as customers. Entrepreneurs wanted! With micro-credit, villagers can construct hand pumps and water filters from the clay under their feet. Pharmaceutical companies ought to be thinking about how to sell inexpensive retro-virals to Africans with HIV instead of pushing Botox to the "forever young" customers they are trying to manufacture here. And parents can refuse to relinquish their gatekeeping roles and let marketers know they won't allow their kids to be targeted anymore.

To do this, we will require the assistance of democratic institutions and an adult ethos. Public citizens must be restored to their proper place as masters of their private choices. To sustain itself, capitalism will once again have to respond to real needs instead of trying to fabricate synthetic ones ”” or risk consuming itself.

 

[noirua]

Is capitalism in trouble? No!

 

[macca]

It is only "in trouble" because there hasn't been any bad times for 60 years or so and people have been able to purchase everything they want. Supply has also been excellent so there is no waiting list.

There are whole chunks of certain generations here in OZ that have never even lived through a recession, they have no concept of delayed gratification, or not being able to meet their repayments.

Life has been one long easy breeze for them and they simply cannot grasp that it may not always be thus.

The article is from USA and I do think that if they want to stimulate the economy all they need do is raise the basic wage to a living wage. If they made the minimum wage say $12 per hour, it would be a huge boost to the millions of poor over there.

Here in Oz we really have it good, a very egalitarian society.

 

[chops_a_must]

Short term no. Longer term definitely.

In my wayward teens, I was a pinko socialist with communist leanings. And although I'm much more realistic and rational now, I still hold a lot of opinions and continue to analyse social structures from that angle.

And what I see as the biggest problem going forward, is the lack of reward for people adding value to society. At the moment, we have a situation where the rewards are going to people adding nothing but short term wealth, and nothing to the overall benefit of society.

We can already see the problems developing. Not enough teachers replacing those retiring, same with nurses. And the AMA refuses to allow a larger intake for medicine students, and especially for specialist training. Way to deliberately create a shortage in an expanding population. Lol! But these occupations largely ensure the continued training, and add long term value to the economy, keep people in the workforce etc. etc.

Yet governments don't realise that you can't run the education system like a business. It is an INVESTMENT. It ensures a highly skilled workforce into the future (something you can see falling apart now).

But that is my 2 cents worth. Areas that keep society functioning will continue to deteriorate into the future.



Cheers,
Chops.

 

[Lucky]

Capitalism is not in trouble, it's humanity that will have the problem.

 

[Smurf1976]

There are whole chunks of certain generations here in OZ that have never even lived through a recession, they have no concept of delayed gratification, or not being able to meet their repayments.

Life has been one long easy breeze for them and they simply cannot grasp that it may not always be thus.

The article is from USA and I do think that if they want to stimulate the economy all they need do is raise the basic wage to a living wage. If they made the minimum wage say $12 per hour, it would be a huge boost to the millions of poor over there.

Here in Oz we really have it good, a very egalitarian society.

Agreed with the first part but not the last. Lots of people have no concept not being able to afford essentials and actually having to go without. They've never been without 3 or more meals a day, phone, housing or even a car.

But as for the minimum wage bit, I'll put it this way. The woman at the local video store told me her pay has been cut to $11 per hour and lost sick pay etc too. It was either that or loss of job. And this is from a company that's clearly done VERY well over the years paying higher wages. No doubt the manager's pay hasn't been similarly reduced...

And don't get me started on the catalogue delivery people getting paid 33% less now than they were 25 years ago. That's ridiculous to say the least.

Capitalism fails miserably if people can't afford to consume. At this rate it would seem to be ensuring its own demise through outright greed on the part of those with power.

 

[Rafa]

That’s a very good point you make smurf...

It was one of my arguments ages ago against the work choices legislations and the reducing in wages, increasing worker uncertainty...

The more people that have more money, AND are happy to spend it, the better off for the corporations...
Driving wages down and turning people back into slaves will actually reduce the amount they can spend on the corporations products, 99% of which are simply 'wants' not needs...

Unfortunately, when it comes to the environment, its actually better for the 99% of the people to be poor!

Just look at the average plebs who now can travel all over the place and the pollution that is causing! Not the mention the level of consumption and the pollution that is causing. When the poor start living like the rich, the Earth is in big big trouble.

Like all systems, capitalism works best when there are say 20% haves, 80% have nots, when there was plenty of resources, and new lands to conquer to get those resources, plenty of cheap labour and all was good...

Could it be we are reaching the tipping point of this system that has survived the centuries... Is capitalism in trouble?

This is a very interesting, fascinating topic... I look forward to other people thoughts on this matter.

 

[Sean K]

Good thread Wayne. I do not think the system is perfect, but it's the best we have at the moment. I need to think about it a bit more to test my own ideas and will be back at you.

A question I do have at the moment is 'has Capitalism had time to work yet?'

 

[macca]

Hi Smurf,

I was of the impression that a basic wage was still set by the gov't and that was the minimum.

I am surprised and disappointed if it is $11 an hour for an adult person.

Can we find out, I shall Google

 

[numbercruncher]

Minimum adult wage is 25188 p/a or 429 p/w after tax, they'll eventually have people living third world here (close already)! US Minimum is 5.15 an hour!

429 a week lets see what that will get you .....

Rent 300
Tank of Petrol 60
Water and Vegemite, Bread for family for a week 69
----------------------------------------------------------
429 (wage gone) Put power and emergencies on credit card ......


Seriously I dont see how the system is working. Our grocery bill is 300 before we start on anything else! How are people doing it?

I have a feeling folks are waking up and Johnny and Co are gone this election.

 

[constable]

Minimum adult wage is 25188 p/a or 429 p/w after tax, they'll eventually have people living third world here (close already)! US Minimum is 5.15 an hour!

429 a week lets see what that will get you .....

Rent 300
Tank of Petrol 60
Water and Vegemite,Bread for family for a week 69
----------------------------------------------------------
429 (wage gone) Put power and emergencies on credit card ......


Seriously I dont see how the system is working. Our grocery bill is 300 before we start on anything else! How are people doing it?

I have a feeling folks are waking up and Johnny and Co are gone this election.

Great points ......there is no point trying to compete with third world wages while we are trying to provide the high life.

 

[Kimosabi]

Minimum adult wage is 25188 p/a or 429 p/w after tax, they'll eventually have people living third world here (close already)! US Minimum is 5.15 an hour!

429 a week lets see what that will get you .....

Rent 300
Tank of Petrol 60
Water and Vegimite,Bread for family for a week 69
----------------------------------------------------------
429 (wage gone) Put power and emergencies on credit card ......


Seriously I dont see how the system is working. Our grocery bill is 300 before we start on anything else! How are people doing it?

I have a feeling folks are waking up and Johnny and Co are gone this election.

$429/week

Thats just over 4 hours work for me.

 

[numbercruncher]

$429/week

Thats just over 4 hours work for me.

I want your job!

 

[Kimosabi]

I want your job!

Any good at computers?

 

[numbercruncher]

Any good at computers?

Not bad but i seriously doubt anyone would be willing to pay me 800 a day for my level of computer expertise

 

[Mousie]

There're always unsolved problems in society, and capitalism is the best way to solve it in the hands of the right people; in the hands of the wrong ones.....

 

[Sean K]

I think that before we can answer this question we need to actually understand what the goal of Capitalism is?

So, what is the goal of any political/financial/social system?

 

[Julia]

I think that before we can answer this question we need to actually understand what the goal of Capitalism is?

So, what is the goal of any political/financial/social system?

I suppose a naive, innocent, trusting person would say that it's to act on the wishes of the people for the benefit of the people.

Such delicious simplicity seems rather silly in view of how our society actually does function, doesn't it!
(Maybe I should have said "fail to function".)

 

[GreatPig]

Read about it here.

GP

 

[chops_a_must]

I suppose a naive, innocent, trusting person would say that it's to act on the wishes of the people for the benefit of the people.

That's democracy I would have thought.