AndreSurfer

Beyond the News

The reinvention of capitalism in a failing economy

Protest in Dublin, Ireland, in 2010 against cuts as a bail-out: capitalism in crisis

Protest in Dublin, Ireland, in 2010 against cuts as a bail-out: capitalism in crisis Photo Credit: William Murphy infomatique via photopin cc

Fact 1

For the last 2 weeks I have been following an online discussion on Global Gurus group on LinkedIn. Titled as “Why are capitalistic systems now failing after all the years of success in democratic Western countries?”, this discussion has the participation of people from different nationalities including USA, Australia, New Zealand, European, African and Asian countries, as well as UK.

Nevertheless, the question itself is based on American grounds, rather than take in consideration a more globalized political environment. Before we say that capitalism is failing (a feeling that became stronger after the recent financial crisis that kicked-off in the US), we need to consider that nations which a few decades ago were purely communists are more and more moving into capitalism. A good example of it is China, which is governed by the Communist Party but has one of strongest economies in the world and has recently seen a significant economical growth of its middle class.

In South America for example, Brazil overtook UK in the IMF ranking of top economies and became the 6th on this list with a strong capitalistic approach to political, social and economical strategies. South Africa, Russia and India also grew significantly to a point that we now have the BRICS well positioned in the global economy and respected by the most developed countries. Also, Australia and New Zealand seem to be doing well, although their economies highly depend on international investments.

Moreover, after the fall of communism in Eastern Europe in the beginning of 90’s, communist and socialist systems started to face difficulties to maintain the path. Cuba became demoralized and South Korea isolated to some extension that may be now considered by the West as a country managed by a dictatorship system. Venezuela is not far from that either! In other words, most nations that are known as “communist” are now facing downturns in terms of international relations.

Hence, to say that capitalism is failing is perhaps a mistake. It is a myopic view of the entire political and financial environment that the world is facing. That happens because we (members of a specific society) rather blame the features of capitalism for its potential fall than the system itself; and this online discussion on LinkedIn makes it very clear. Topics like balance sheets, IT development, self interest, greed, checks and liability have some overall responsibility for the instability seen in some countries at moment; however, they forget to mention (or are not aware of) the way how capitalism actually stands on its feet, which is based on constant changes. It brings to light the reasons for capitalism to be related to modernization and democracy, but also explains why we often see in this system such unstable financial and political environments.

On the other hand, we need to keep in mind that those participants pull up their views based on their personal experiences, rather than taking in consideration more complex perspectives drawn by economists, politicians, sociologists and philosophers. This means that they do what most of us do on daily basis: talk about their own problems as these were global challenges. Personally, I do not see anything wrong with this behavior. It is actually interesting to see people coming forward with their point of view, but this attitude does not take us too far in this discussion because, eventually, we only toss around the consequences and not the reasons for a potential fall of capitalism.

Actually, in my point of view, capitalism continues to lead the world in this millennium, but it is also going through a moment of reinvention and self analysis that is crucial for the future. Capitalists started to realize that the main driving force of capitalism, the stock market, is also a huge Russian Roulette that may kill businesses at any moment. And the last financial crisis erupted in September 2008 is a good example of it. We discovered that the world is in debt and it is nearly impossible to find out how we got that far! And it is even harder to identify the creditor in this story, although China seems to own a major part of the cake.

Fact 2

I studied Social Communications and got my bachelor with specialization in Journalism in the beginning of last decade when the world was facing a transformation in terms of media and the way how people communicate with each other. The Internet was still a scratch of what was about to become a phenomenon, a life style! Mobile phones were already vastly used but only to make calls, although the WAP technology was already in place and enabling information to be provided to mobile phones, an extension to what was done with pagers in the 90’s.

In this context, I studied, lived and worked with people from a great variety of backgrounds and with different political views. Some of them defended capitalism by saying that it is a system of social freedom and that without it the advancements in technology could not be possible. Others had what at that stage could be considered a reactionary point of view and citing communism as a way forward to fight, for example, the consumerism which, recently, has been criticized and pointed out as a potential feeder of current world financial crisis.

And here I am going to be honest: back in the days I did not have a specific point of view on this matter. I understood the arguments brought up by the ones so-called “communists” in relation to consumerism, but I also believed that without freedom we could not move forward and the only way to do so was through capitalism; hence, I closed my mind to any communist idea. For many years I refused to read Karl Marx and had a very poor view of him. Back in 2000, the German philosopher was for me a reactionary who wanted to see everyone living in a black and white world with their houses built and furnished by only one brand of products and wearing the same type of clothes. Just like ignorant homophobic people who do not even want to watch Brokeback Mountain because are afraid to become homosexual, I did not want to read Marx due to the fact that I could become a communist, a revolutionary, reactionary…

However, I have recently studied Karl Marx (better late than never). To do so, I had to put on the side all the pre conception that I had about him and his ideas, so I could dive into a clearer and fairer analysis of his papers. Eventually, I found a different Karl Marx to what I had in mind! He is still a communist, but also a very realistic philosopher. His arguments are much more “down to earth” than the ones spit out by most financial analysts nowadays. He also demonstrates a great knowledge of capitalism and hence, although it might sound a bit no sense to several people, I believe that we could improve capitalism by reading the “old man” more often.

In fact, Marx was not totally against business, social and economical development but, instead, against the way how development was reached. He was against the price paid by the proletarians to fill up the pockets of bourgeons. Also, he severally criticized how people were exploited by the freaked economy that pushes people and companies to reach higher and higher profits far beyond their needs, causing negative collateral effects in the society as a whole. If we bring it into our current reality we may understand how the financial crisis, which was born from an unsustainable economy and greedy middle class, turned the world upside down!

In the first part of his book “The German Ideology”, which was written in 1845 but only published in 1932, Marx mentioned on the third paragraph the following:

“The industrialists of philosophy, who till then had lived on the exploitation of the absolute spirit, now seized upon the new combinations. Each with all possible zeal set about retailing his apportioned share. This naturally gave rise to competition, which, to start with, was carried on in moderately staid bourgeois fashion. Later when the German market was glutted, and the commodity in spite of all efforts found no response in the world market, the business was spoiled in the usual German manner by fabricated and fictitious production, deterioration in quality, adulteration of the raw materials, falsification of labels, fictitious purchases, bill-jobbing and a credit system devoid of any real basis”.

Any similarity with our days is not a mere coincidence. It happened in the 19th Century, in the 20th Century (Great Depression in the 30’s) and already happened in the 21st Century with the recent financial crisis. And instead of having a strong evaluation of these cases to avoid future downturns, we continue to explore the stock market and believe that consumerism will increase profit, which will enable the opening of new jobs and, eventually, will improve people’s living standards.

In other words, capitalism is not failing, but simply going through another moment of recession that characterizes the system, and if purists of capitalism would not be so egoist and had the humility to look at Marx statements, perhaps we could create a successful modern capitalism, and not necessarily become communists (or Marxists, or whatever). Capitalism has the power to reinvent itself and modernize its features, but eventually, end up in the same way as ever been in history: in crisis. This, perhaps, explains the current poverty worldwide and answers the question: “why are capitalistic systems now failing after all the years of success in democratic Western countries?”. It is not about one single (or many) issue(s). It is about the whole structure of the system in place!

Nevertheless, as part of its transformation, capitalism has been using several communist principals to survive. Take as example the involvement of multinationals in the fight against famine, or Bill Gates work to improve vaccines worldwide. How about companies becoming environment friendly? How about the McHappy Day to assist kids with cancer? It is all part of the idea that we need to help each other and try to diminish the differences. Recently, the World Bank was celebrating the increase of equality in countries like China and has worked intensely with the objective to improve living conditions and share prosperity. This is one of main goals of communism that now plays well in capitalism. The “global citizenship” speech published on web sites of major corporations shows that capitalism has already changed. What is missing to succeed? Well, there is not only one factor here, but if capitalists did not concern that much about profit and left the stock market results as secondary in their business goals, then we would be moving rapidly to a more stable economy and fairer society!

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This entry was posted on August 20, 2013 by in English, General.
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