I think we can all agree that economics is at the center of all the various crises humanity is facing today. In addition to the collapse itself, and the growing recession, economics is behind the conflicts in Iraq and Afghanistan, and economics is intimately related to all of our environmental problems, and our domestic social problems.
In a very real sense, we can see all of our crises as coming from a crisis of capitalism. The ecological crisis, for example, represents a collision between capitalism’s need for growth, and the finiteness of Earth’s resources. The crisis of global poverty arises from the way capitalism exploits and distributes diminishing resources.
And is not only the ‘victims’ of this crisis of capitalism that have worries. The so-called Masters of the Universe, the Wall Street folks, know that you can’t really keep selling an increasing amount stuff year after year forever, and they’ve run out of ponzi schemes as well. They are facing a crisis of paradigm, a crisis of direction, if they don’t want civilization to collapse entirely.
This posting is about economics, but I’m hoping you don’t think of it as being about a ‘specialized topic’, one among many. It’s a posting that tries to get to the heart our predicament as a species, to shed light on the primary forces guiding our destiny.
I’d like to begin by inviting you to look at a very special video. It’s a public talk given by Michel Chossudovsky last January. Nobody understands what’s going on better, or in more depth, than Chossudovsky. And few are so good at demystifying economic and political jargon, and making things clear in a homey, humorous way. His presentation is rich with specific examples, and with insider stories about the actions and policies of the various players. Here’s the blurb I posted to newslog. More to come after that…
Public Lecture organized by the
Centre for Research on Globalization (CRG)
( 78 min )
Montreal, Centre St-Pierre, January 14, 2009
THE GLOBAL FINANCIAL CRISIS
The Great Depression of the 21st Century
with Michel Chossudovsky
Causes and consequences of the financial meltdown;
The speculative onslaught;
Financial fraud and the “bank bailouts”;
Bankruptcy of the real economy;
Impacts on employment, wages and social services;
Towards a spiralling public debt;
The economic crisis and its relationship to the Middle East war;
The centralization of corporate power;
The concentration of wealth;
The globalization of poverty.
What are the policy alternatives?
What I’d like to do next is share with you an article I just wrote, intended for an Irish audience. It expresses my own perspective, which is quite in harmony with Chossudovsky’s, but comes at things from a different angle. Some of this is specific to the Irish context, but even that is relevant to the general global dynamics at work. Finally, below the article, are some relevant and highly recommended references. If I were to give my own article a title, it might be, What I’d like to say to the Irish People.
Growth in the global real economy stagnated decades ago, c. 1971 when the US went off the gold standard. But in the capitalist system, there must be adequate investment opportunities, or else the system grinds to a halt. So since then, there have been a whole series of schemes deployed so that investors could achieve adequate capital growth, even while real economic growth continued to decline on a total global basis.
For example — moving manufacturing from hi-wage countries to low-wage countries. That doesn’t increase the amount of global production or consumption, but it increases the profits to the manufacturer via lower wages. Thus offshore investments provided capital growth, without the need of real growth.
Globalization amounted to a whole package of such schemes. Privatization, lower taxes, deregulation — these were all ways for investors to siphon off a greater fraction of the real economy, providing capital growth — without any need to increase real economic activity.
But these siphoning schemes are just the tip of the iceberg. By far most of the global investment growth over the past 10-15 years has been through various kinds of ponzi schemes — speculation, market manipulations, derivative instruments, housing bubbles, looting operations like S&L, Enron and Madoff, raids on currencies, and the list goes on. It’s been one ponzi scheme after another, and finally last year the whole overall ponzi approach came tumbling down.
You’ve seen all of this play out in microcosm right here in Ireland. Your real economy stagnated, leading to emigration in search of jobs. Then you got hit by a wave of offshore investment, giving you the Celtic Tiger. Then as the investment wave moved further eastward, you got hit with a bubble scheme in construction & housing, which was cutely coordinated to collapse along with the rest of the global ponzi schemes.
For a couple of centuries we had industrial growth, for a few decades we had ponzi growth, and now both have run their course. The era of growth-based economics is now well and truly over, and the folks who came up with all these schemes are well aware of that. We can read about it in their 1971 Club of Rome report, The Limits to Growth.
Their latest scheme is the bailout scheme, and it is not about growth. It’s about establishing a certain kind of post-growth economics, based on perpetual debt servitude and austerity. The bailout obligations create debts that can never be repaid, and Lenihan made it very clear in his speech that the austerity measures will be increasing in future years. People in Australia, America, and throughout Europe — particularly in Iceland — have been hearing the same grim message, with different localized spins.
Lenihan tells us, and so does Obama and Gordon Brown and all the others, that this path will eventually lead to renewed growth. It won’t, and they know it. It’s not a temporary belt-tightening, it’s the installation of a new economic order. Structurally, we’re returning to tenant farmer days, with scrooge-minded bankers as the estate owners. We’re going back to the very circumstances that led to the Republican movement and eventually to Irish independence.
Theoretically, Ireland is still a sovereign state. If the political will existed, Ireland could re-declare its independence, take back its fishing rights, repudiate the debts from all the fraudulent schemes, and make a much better future for itself.
You’ve got people who want to work, you’ve got the full range of technical, professional, and manufacturing skills, you can easily be self-sufficient in food, and you’ve even got natural gas. Places like Cuba, Venezuela, and Bolivia, have taken this kind of independent path, taken control of their own destinies, and their lives are improving as a result. They are developing functional real economies that aren’t dependent on foreign investment or perpetual growth.
A Celtic arm of the Bolivarian Revolution would be very welcome — everyone loves the Irish. You’d get a good deal on petrol from Venezuela, lots of friendly assistance with the transition process, and plenty of mutual-benefit trading opportunities.
Ireland has alternatives, as a republic, but you won’t get them from the politicians. If you don’t want to return to colonial days, Ireland will need to find its voice in some other way.
Why the bailout solutions make things much worse
Stephen Lendman: The New Age of Neo-feudal Debt Bondage
James Kunstler: No Recovery for America’s Economy
Chris Martenson: America is Being Looted
Barry Grey: The looting of America
Australian government prepares deep budget cuts
Federico Fuentes: Bolivia’s ‘communitarian socialism’
Luis Bilbao: Fifth Summit of the Americas, a crucial battle is to be waged
La revolucion energetica: Cuba’s energy revolution
Moderator: •••@••.••• (comments welcome)