- ‘Has capitalism been dead? We didn’t know that…’
- ‘When and how did capitalism die? And why has there been no formal annoucement about it? Is there some one desperately trying to hide the facts towards some (vested) objectives?’
- ‘Is capitalism indeed dead? I can’t believe it! Well, itÂ has beenÂ due sinceÂ the happenings in the name of ‘cult-of-Wall-St.’ capitalism…’
- ‘The greed-driven, Wall St. cultural capitalism has been dead. It has not yet been announced as policy-makers are clue-less on how to take the economy forward. However newer and better forms of capitalism would emerge. Long live capitalism.’
- ‘A good riddance. RIP’.
- ‘Well, we need to find new ways to make money. Forget about the millions…that era is dead with the death of capitalism. Can we do anything that creates value for society and help us earn asÂ much as mostÂ of the other professionals earn in society, a decent salary? I doubt it.’ Heard from an old and veteran Wall Street Professional.
You may be thinking about the possibilities of one or more of above from current economic turmoil. Or you may belong to the group of deniers that believe present style capitalism can never be dead in the U.S.
Let’s try and understand all of these better.
- Yes. Capitalism has indeed been dead in the U.S. for some time. It’s an assumption you have been making that you would come to know about the death of capitalism as if it’s another living body that can be declared dead by a ‘DC’ of a doctor. It is a belief, a concept, an economic idea, a form of society. And don’t tell me that although you haven’t heard the death of capitalism, you can’t feel that it’s been dead in the U.S. The answer is indeed blowing in the wind.
- AsÂ capitalism is not a living body, no one can for sure state when and how it had its death. However it’s been dead for quite some time now. The players who caused its death are the Federal Reserves, the U.S. Govt., BOJ and Japanese Govt, partly Europe, along with most other national governments and their central bankers. You and I and most of us have also been involved in its death as we all became greedy and wanted toÂ live like theÂ rich.Â Capitalism couldn’t take this burden of expectation and experiments that policy-makers followed to make all of us rich and all nations’ GDP to growÂ more and moreÂ year after year, and passed away silently sometime during 2008-2010 period.
There’s been no formal announcement yetÂ on death of capitalism because
i.Â Policy-makers in charge of making such an announcementÂ are clueless on understanding the implications of it. They never knew theÂ implications, locally and globally,Â if capitalism cease to exist ever in the U.S.; they could only feelÂ the vitality of capitalism in its peakÂ as we now sense capitalismÂ has beenÂ dead for some time.
ii. Few of the policy-makers and economists have been so much in obsession with capitalism that they can never acceptÂ the death of a format/an avatarÂ of it. It’s something what you come across in news that there are people in society who have been living with a dead-body for years as they can’t think about their existence without the presence of the departed. Think for example – Ben Bernanke. Can you ever make him understand it? He would always be on the denial or would hope against hopes, in a Pollyannish manner, to revive capitalism with even more dollarsÂ – in its same old format.
The ‘denial’ group also believes accepting the death of capitalism would hurt the interests of the U.S., the broader western powers and its allies; more in the context of a rapidly rising China, with its allies. Call it vested or misled – this group doesn’t see how citizens of the same nations which have been in the constant denial of death of capitalism have been suffering. More money than ever is now being spent in preserving the dead body of capitalism which is the living epitome of the Wall Street, unfortunately that does not benefit the citizens.
3. Well, you got it right.
4. You are right, and most of us agree with you; from the viewpoint of innovation. Capitalism is about private ownership of means of production to downstream activities seeking better returnsÂ on capital. However since last ten years or more, one can make better capital by taking calls in forex markets as the currency war in a race to the bottom continues. The death-knell came from gold over the lastÂ few years. Gold does not produce anything, but have been generating consistently better returns on capital over lastÂ several years. At the same time, central bankers have abused capital by bringing down the cost of capital to zero, or in real sense to negative territories.
5. Well, we never miss an opportunity to missÂ the opportunities that could have rectified the health of capitalism. In 2008, it presented a great opportunity where taking down most other investment banks along with Lehman could have revived capitalism in its true form by now. We were misled to believe that investment bankersÂ of the Wall St. is sameÂ as capitalism. As long as that believe remains, there’s scarce hope of revival ofÂ capitalism again inÂ the U.S..Â So unlike Marx, who hasÂ beenÂ in peace in the last few years as he laughs in his tomb with the death ofÂ the last version ofÂ capitalism in its citadel in the U.S.; capitalism in its true spirit would like to resurrect with the least of opportunities anywhere else where there exist an enterprising environment of the people, and supporting atmosphere.
Only if policy-makers in the U.S. allow it for it to return in the U.S.. And regarding its resurrection, it already has done so in China.
6. We feel for you,Â just as you feel for the main street.
However in case you happen to be a die-hardnon-believer in the death of capitalism, you can remain so. However be ready for more ‘black magic’ type of witchcraft from the Federal Reserves, from the BOJ, from the ECB and from these respective governments.
These can be in the forms of more stimulus to quantitative easing (QE) to buying stocks in a covert manner to supportÂ the S&P indexÂ to intervening in forex markets in the form of a currency war to bailing out more banks to -ve (real) interest rates to denial of inflation toÂ anything. These can take the stock markets higher to create another bubble and gold even higher, however these actions would not revive the economic dynamism of making money from productive capacities, in a sustainable manner. Therefore these actions will not revive the much-needed employment generation in the U.S.
The release of the official post-mortem report of capitalism, to be signed by the U.S. policy-makers, isÂ likely to be significantly delayed, if it ever happens (they may do as China did with another ‘Dalai Lama’ in Tibet, with a different boy). It may make the economic situation only worse, over the longer term. However no one thinks beyond months now.
The main street believes thatÂ the cause of death of capitalism in the U.S. was due to mistaken identity of capitalism by segments of policy-makers, pretending to beÂ God. Powerful central bankers started thinking themselves as God due to the maddening worships they received from investment bankers of theÂ Wall Street. They started believing thatÂ they indeedÂ can create trillions of dollars of value by a mere decision of monetary policy.
They forgot thatÂ it has been the job ofÂ capitalism to create value.
Central bankers, influenced by Wall Street, forgot their role -Â which is to support the forces of capitalism.Â Central Bankers, in their faulty diagonosis, tought that with the help of the Wall Street, theyÂ canÂ create and sustain valueÂ than capitalism does or real private enterprises do.
And the Wall Street complied by dancing to the tunes of the Federal Reserves than toÂ the sufferings of the enterprises in the U.S. as revealedÂ by fundamental economic data.
These central bankers eventually forgot their own role and mistook Wall Street to be representative of capitalism. They killed capitalism to protect the Wall Street. However the death of capitalism would prove that Wall Street may improve, but not the fruits of economy that can be shared by every enterprising person in the main streets, as was the practice in the era of capitalism.
At the same time,Â aÂ more sustainable form of capitalism, with strong state intervention to control unbridled greed,Â has already resurrected in China after its painful death in the hands of the U.S. policy-makersÂ (and its allies). However neither Chinese policy-makers (or economists) nor that from the west would admit that, or baptise it as a better form of capitalism. The presence of true worshipper of capitalism like Warren Buffet in China in factories of BYD, that follows this better version of capitalism, lead to this belief. The interest of the Wall Street in keeping yuan valuation low follows the same logic.
Another round of QE is easy to do for the U.S., but admitting that the time has come to learn capitalism from China is difficult.Â Problem is: lately the U.S. has always taken the easy path that have consistently made things worse for the medium and long term health of the U.S. economy.
And here’sÂ a copy of theÂ ‘death certificate’ that Schumpeter issued to capitalism back in 1942, to be issued at a future date,Â without seeing the ‘success’ of capitalismÂ as we observed inÂ 2008. One can write the date ‘circa 2008-2010’.
â€œ Can capitalism survive? No. I do not think it can.â€ Thus opens Schumpeterâ€™s prologue to a section of his 1942 book, Capitalism, Socialism and Democracy. One might think, on the basis of the quote, that Schumpeter was a Marxist. But the analysis that led Schumpeter to his conclusion differed totally from Karl Marxâ€™s. Marx believed that capitalism would be destroyed by its enemies (the proletariat), whom capitalism had purportedly exploited, and he relished the prospect. Schumpeter believed that capitalism would be destroyed by its successes, that it would spawn a large intellectual class that made its living by attacking the very bourgeois system of private property and freedom so necessary for the intellectual classâ€™s existence. And unlike Marx, Schumpeter did not relish the destruction of capitalism. â€œIf a doctor predicts that his patient will die presently,â€ he wrote, â€œthis does not mean that he desires it.â€
China didn’t desire capitalism, but today China has been nurturing a form ofÂ capitalism as ChinaÂ understands the positive aspects of capitalism. The U.S. didn’t desire the death of capitalism, but as it nurtured the negatives ofÂ capitalism aloneÂ as foreseen by Schumpeter, it paid the price with theÂ murder ofÂ capitalism. Schumpeter saw a natural death, but the events of 2008Â makeÂ the deathÂ to be a murder.