Modern Day Capitalism: A Crisis, a Tragedy and a Farce.

Below I have posted two videos regarding modern day capitalism and the issues that have developed from its evolution:

Renowned philosopher Slavoj Zizek investigates the surprising ethical implications of charitable giving:

TRI Highlights:
I would like to start with the future of so-called cultural capitalism, today’s form of capitalism, and then develop how the same thing applies also to economy in the narrower sense of the term.

-before this ’68 transformation of capitalism into, as we usually call it, more cultural capitalism, post modern caring for ecology and all that.

-But I claim in today’s capitalism more and more the tendency is to bring the two dimensions together in one and the same cluster. So that when you buy something it is your anti-consumerist duty to do something for others for environment and so on, is already included into it.

– Starbucks Coffee: “It’s not just what you are buying; it’s what you are buying into” and then they describe it to you. Listen, “When you buy Starbucks whether you realise it or not you are buying into something bigger than a cup of coffee, you are buying into a coffee ethic. Through our Starbucks Shared Plant Programme we purchase more fair trade coffee than any company in the world, ensuring that the farmers who grow the beans receive a fair price for their hard work. And we invest in an improved coffee growing practices and communities around the globe.”

You see this is what I call cultural capitalism at its purest. You don’t just buy a coffee you buy in the very consumerist act – you buy your redemption from being only a consumerist.

-like the almost absurd example of this is so-called Toms Shoes – an American company who’s formula is one for one. They claim for every pair of shoes you buy with them they give a pair of shoes to some African nation and so on and so on so that you know one for one. One act of consumerism but included in it you pay for being redeemed of it for doing something for the environment and so on and so on.

-And again this logic I think is today almost universalised like let’s be frank – when you go to a store probably you prefer buying organic apples. Why? Look deep into yourself. I don’t think you really believe that those apples which cost double than the good old genetically modified apples which we all like, that they are really any better. I claim we are cynics they are sceptics. But you know it makes you feel warm that I’m doing something for our mother earth, I’m doing something for our planet and so on and so on. You get all that.

So my point is that this very interesting short circuit where the very, as it were, act of egotist consumption and so on already includes the price for its opposite.

-Oscar Wilde who provided the best formulation against this logic of charity: “It is much more easy to have sympathy with suffering than it is to have sympathy with thought.”

But the remedies do not cure the disease they merely prolong it; indeed the remedies are part of the disease. They try to solve the problem of poverty, for instance, by keeping the poor alive. Or in the case of a very advanced school by amusing the poor. But this is not a solution it is an aggravation of the difficulty.

-The proper aim is to try and reconstruct society on such a basis that poverty will be impossible and the altruistic virtues have really prevented the carrying out of this aim.

Charity degrades and demoralises. It is immoral to use private property in order to alleviate the horrible evils that result from the institution of private property.

-I don’t think that in any moment in human history did such a relatively large percentage of population live in such relative freedom, welfare, security and so on. I see this gradually but, nonetheless, seriously threatened.

-You know what I’m saying? I’m not against charity. My god in an abstract sense of course it’s better than nothing, just let’s be aware that there is an element of hypocrisy there, that in a way you know like my argument and I don’t doubt people who met him and told me that Soros is an honest guy. But there is a paradox, you know he’s repairing with the right hand what he ruined with the left hand, how should I put it, no? That’s all I’m saying. For example, of course we should help the children, it’s horrible to see a child whose life is ruined because of an operation which costs twenty dollars. But in the long term you know as Oscar Wilde would have said, “If you just operate the child then they live a little bit better but in the same situation which produced them.”

Radical sociologist David Harvey asks if it is time to look beyond capitalism, towards a new social order that would allow us to live within a system that could be responsible, just and humane.

TRI Highlights:

-One genre is that it’s all about human frailty. Alan Greenspan took refuge in the fact “It’s human nature” he said, “and you can’t do anything about that.” But there’s a whole world of explanations that kind of say it’s the predatory instincts, it’s the instincts, the mastery, it’s the delusions of investors, and the greed and all the rest of it.

-The second genre is that there’s institutional failures; regulators were asleep at the switch; the shadow banking system innovated outside of their purview etc, etc, etc and, therefore, institutions have to be reconfigured and it has to be a global effort by the G20s something of that kind. So we look at the institutional level and say that has failed and that has to be reconfigured.

-The third genre is to say everybody was obsessed with a false theory, they read too much ((0:01:20.4?)) and believed in the efficiency of markets and it’s time we actually got back to something like Keynes or we took seriously Hyman Minsky’s theory inherent instability of financial activities.

-The next genre is it has cultural origins. Now we don’t hear that much in the United States but if you were in Germany and France there are many people there who would say this is an Anglo Saxon disease and it’s nothing to do with us.

-So there was a way of which it became cultural and you can see that by the way in which this whole Greek thing is being handled. The way the German press is saying, “Well it’s the Greek character, it’s defects in the Greek character.”

For instance, the US fascination with home ownership which is supposedly a deep cultural value; so 67%/68% of US households are home owners. It’s only 22% in Switzerland. Of course it’s a cultural value in the United States of being supported by the mortgage interest tax deduction which is a huge subsidy. It’s been promoted since the 1930s, very explicitly in the 1930 it was built up because the theory was that debt encumbered homeowners don’t go on strike.

-And then there’s the kind of notion that it’s a failure of policy and that policy has actually intervened.

-So there are all of these ways and all of them have a certain truth.

-And it was absolutely astonishing, it said, “Well many dedicated people, intelligent, smart, spend their lives working on aspects of this thing very, very seriously, but the one thing we missed was systemic risk” and you say, “What!” And then it went on to talk about the politics of denial and all the rest of it so I thought well systemic risk I can translate it into the Marxian thing, you’re talking about the internal contradictions of capital accumulation. And maybe I should write a thing about the internal contradictions of capital accumulation and try to figure out the role of crisis in the whole history of capitalism and what’s specific and special about the crisis this time around.

-The problem back in the 1970s was excessive power of labour in relationship to capital. That, therefore, the way out of a crisis last time was to discipline labour, and we know how that was done. It was done by off shoring, it was done by Thatcher and Regan and it was done by neo-liberal doctrine, it was done all kinds of different ways. But by 1985 or ’86 the labour question had essentially been solved ((0:05:35.6?)) capital; it had access to all the world’s labour supplies, nobody in this particular instance has cited greedy unions as the root of the crisis. Nobody in this instance is saying it’s ever anything to do with excessive power of labour. If anything it’s the excessive power of capital and in particular the excessive power of finance capital, which is the root of the problem.

-Now how did that happen? Well we’ve been since the 1970s in a phase of what we call wage repression, that wages have remained stagnant, the share of wage as a national income right throughout the OECD countries has steadily fallen. It’s even steadily fallen in China of all places. So that there are less and less being paid out in wages. Well wages turn out to be also the money which buys goods, so if you diminish wages then you’ve got a problem with where’s your demand going to come from. And the answer was well get out your credit cards, we’ll give everybody credit cards. So we’ll overcome, if you like, the problem of effective demand by actually pumping up the credit economy. And American households and British households have all roughly tripled their debt over the last 20/30 years. And a vast amount of that debt, of course, has been within the housing market.

-And out of this comes a theory which is very, very important that capitalism never solves its crisis problems, it moves them around geographically.

-And it’s interesting you had a finance crisis in the financial system, you’ve sort of half solved that but at the expense of a sovereign debt crisis.

capital can’t abide a limit, it has to turn it into a barrier which it then circumvents or transcends.

-a typical circulation process of accumulation goes like this. You start with some money, you go into the market and you buy labour, power and means of production, and you put that then to work with a given technology and organisational form, you create a commodity which you then sell for the original money plus a profit. Now you then take part of the profit and you recapitalise it into an expansion for very interesting reasons.

-So the whole history of capitalism has been about financial innovation. And financial innovation has the effect of also empowering the financiers, and the excessive power of the financiers can sometimes… they do get greedy, no question about it. And if you look at financial profits in the United States they were soaring after 1990, they were going up like this. Profits in manufacturing were coming down like this. And you could see the imbalance.

-You’ve actually screwed industry in order to keep financiers happy. Any sensible person right now would join an anti-capitalist organisation. And you have to because otherwise we’re going to have the continuation, and notice it’s the continuation of all sorts of negative aspects. For instance, the racking up of wealth you would have thought the crisis would have stopped that. Actually more billionaires emerged in India last year than ever – they doubled last year. The wealth of the rich – and I just read something this morning – in this country has accelerated just last year.

What happened was the leading hedge fund owners got personal remunerations of three billion dollars each in one year! Now I thought it was obscene and insane a few years ago when they got two hundred and fifty million, but they’re now hauling in three billion.

-I think I know what the nature of the problem is, and unless we’re prepared to have a very broad based discussion that gets away from the normal ((0:10:11.6?)) you get in the political campaign and everything’s going to be okay here next year if you vote for me – it’s crap. You should know it’s crap and say it is. And we have a duty, it seems to me those of us who are academics and seriously involved in the world, to actually change our mode of thinking.

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