One of the readers of this Blog, has written to me:
“Olgi, tudom Te sokkal inteligensebb vagy, hogy meghajolj ezelott a “leftist” garbage-hez. Just look at the guy before Orban: comunist—terrorist Gyurcsany. Who should be in jail for the rest of his life. There can NOT be true democracy in Hungary, until these old-time communists/actually “vulture” capitalists die out, and disappear from the face of the hungarian political scene. “
And he is definitely right. Viktor Orban has been given one month to straighten out his act.
So, let’s bring our focus home, to the United States economy. Today we are going to deal with weather capitalism is in crisis, or not.
Here is the opinion of Support FPIF, a think tank of researchers on Foreign Policy:
Gingrich’s indulgence in the rhetoric of class warfare – which goes well beyond anything that President Obama has dared – reflects the political insurgency that is taking place within both major parties. The populists are lining up against the plutocrats, with the tea party and the Occupy movement providing the shock troops. Such rebellions against the elite take place on an almost cyclical basis – progressives against the Gilded Age wealthy, New Dealers against the financiers, Reaganauts against the Republican blue bloods. If the U.S. economy improves and the threat of another major global downturn recedes, then perhaps both the tea party and Occupy will melt away. Obama will go back to his Wall Street-friendly rhetoric and the Republicans will deem Gingrich’s neo-Marxist tactics a failed experiment.
But with the U.S. economy still stagnant and the House of Euro collapsing in on itself, capitalism is indeed facing a crisis of confidence. For the Financial Times, which is running a series on the current challenges facing capitalism, the problem boils down to how much business executives get paid. Capitalism needs adult supervision because a few bad eggs have bent the rules to their own benefit, and this supervision best comes from, drum roll please, the state.
“Capitalism needs the state,” the FT editorializes, “not to run the economy but to regulate how individuals run it and have them face the consequences of their actions.” The state, in other words, has to step in to save capitalism from itself, but only in the limited fashion of a schoolmarm disciplining the disruptive elements. The FT provides space for Occupy London’s somewhat more radical critique, but the overall message of the series is one of irritated reproach: The super-wealthy have been making it increasingly difficult for the conventionally wealthy to go about their business of racking up profits according to the traditionally skewed rules of the game.
The Economist has a somewhat different take on the matter. Capitalism in general isn’t in crisis, just the Western, laissez-faire variety. Asian-style capitalism has recovered rather quickly from the financial crisis. “State capitalism is on the march, overflowing with cash and emboldened by the crisis in the West. State companies make up 80% of the value of the stock market in China, 62% in Russia and 38% in Brazil,” the magazine points out. “They accounted for one-third of the emerging world’s foreign direct investment between 2003 and 2010 and an even higher proportion of its most spectacular acquisitions, as well as a growing proportion of the very largest firms.”
But where the Financial Times practically begs the state to pay more attention to the economy, The Economist is leery of the state capitalism that has guided the economic success in China, South Korea, Singapore, and elsewhere. The magazine raises doubts about “the system’s ability to capitalise on its successes when it wants to innovate rather than just catch up, and to correct itself if it takes a wrong turn. Managing the system’s contradictions when the economy is growing rapidly is one thing; doing so when it hits a rough patch quite another. And state capitalism is plagued by cronyism and corruption.”
The Economist and the Financial Times have squared off on the issue of where to strike a balance between the guiding hand of the state and the invisible hand of the market, an age-old debate. They both recognize that the go-go days are over. Reasonable capitalists can disagree about the proper mix, but their goal is the same. They’ll tweak the original recipe but won’t fundamentally alter the ingredients or the final product.
Which brings us to Francis Fukuyama. In its special anniversary issue devoted to the last 90 years of thinking on global issues, Foreign Affairs invited the big-picture guy behind the “end of history” thesis to reflect on “the future of history.” More than 20 years ago, Fukuyama predicted that the triumph of liberal democracy would spell the end of serious ideological debate and thus the end of history. He has since revised his argument considerably, since many ideological challenges to liberal democracy have persisted—nationalism, religion, militarism—and history, red in tooth and claw, soldiers on. The two key challenges he identifies in his Foreign Affairs essay are China’s state capitalism and widening inequality. To Fukuyama’s dismay, the Left has not fashioned a plausible alternative to the unregulated market that has so palpably failed.
“For the past generation, the ideological high ground on economic issues has been held by a libertarian right,” Fukuyama writes. “The left has not been able to make a plausible case for an agenda other than a return to an unaffordable form of old-fashioned social democracy. This absence of a plausible progressive counter–narrative is unhealthy, because competition is good for intellectual –debate just as it is for economic activity. And serious intellectual debate is urgently needed, since the current form of globalized capitalism is eroding the middle-class social base on which liberal democracy rests.”
Fukuyama and the Right are taking the challenge of Occupy in some ways more seriously than traditional liberals. They understand that widening inequality challenges the very underpinnings of capitalism (much as the Right understands that climate change, as Naomi Klein points out in a Nation article last year, challenges the essential logic of capitalism). What Fukuyama really wants is for the “responsible” Left to come up with a middle-class-friendly alternative to what he considers a more dangerous populism. He fails to recognize that the standard of living of the U.S. middle class depends in large part on the global inequality sustained by our current economic system.
Despite his misunderstanding of the sustainability of the middle class—and his naïve commitment to a marketplace of ideas already tilted in favor of the wealthy—Fukuyama does raise an important point about the lack of compelling synthesis coming from the Left. We await a modern Marx who can shake up the Left just as surely as the Right with a trenchant critique of the current economic orthodoxy and a game plan for transformation. The Left, after all, has long been committed to a similarly unrestrained growth paradigm, from the industrial model of communism to the stimulus packages of progressive economists.
This Marx will produce not a manifesto for the middle class. Rather, the new synthesis will fuse economics and environmentalism in a way that fundamentally reorients both disciplines. Marx pioneered political economy; Marx 2.0 will pioneer planetary economy. It’s not just about greening capitalism, as if enough solar cells and Prii will save the world. Our current economic system has reached its planetary limit.
The confusions of our political classification system suggest that we stand at the verge of a new era. The task is not, as The Economist, the Financial Times, Francis Fukuyama, and Newt Gingrich all believe, to save capitalism or the middle class. The stakes are much higher than that. The rising waters will overwhelm Left and Right both. The future might be “storm socialism,” as Christian Parenti argues in TomDispatch, with big government expanding to deal with big weather. Or, if the next Marx is out there somewhere scribbling away, the future might be an entirely different economic system altogether.
All Over the Map
We’ve just published a new collection of World Beat columns. All Over the Map: The Best of World Beat is available as an e-book for $4.99. It contains more than 125 columns, so you can have all your favorites in one place and catch up on the issues that you might have missed. Remember the column about the Qosbi Show? The one about the politics of overseas adoption? Obama’s Nobel Prize? The Yes Men? Wild and crazy Albanian politics? The first electoral win of the Occupy movement? The foreign policy of the Republican presidential candidates in verse? The geopolitics of Facebook? The art of torture?
You can get all this and more for one low, low price.
And if you’re a faithful reader and haven’t missed an issue, please consider giving All Over the Map as a gift to friends and family. Let’s spread progressive foreign policy to e-book readers and tablets all over the map!
Drug Wars, Egypt, Iran
Egyptians recently celebrated the one-year anniversary of their Tahrir Square uprising. But the folks who are celebrating in earnest after their electoral victory are the Islamists. Some worry that Egypt will go the way of Saudi Arabia and theocracy. Foreign Policy In Focus contributor Ahmed Souaiaia disagrees. “By rejecting democracy, the Salafists attempted to discredit the representative governance model,” he writes in Egypt and the Islamists. “Now, the participation of more than one Islamist group in local and national elections takes religious absolutism out of the equation and empowers the people to determine their political leaders and institutions.”
Tensions continue to rise between the United States and Iran. President Barack Obama made reassurances during his State of the Union address that the United States is pursuing diplomatic options. But this is not really true.
“By all appearances, the Western approach is solely designed to achieve Iranian capitulation to Western demands that it dismantle its nuclear research program,” writes FPIF contributor Richard Silverstein in An Alternative to War with Iran. “It is not designed as an open-ended negotiation in which both sides are open to compromise to achieve a mutually agreed-on objective. The United States and Israel are little interested in acknowledging Iran’s perceived interests or compromising over its nuclear program so that each side will end up with some of its key interests satisfied.”
Meanwhile, the civilian death toll in Mexico’s drug war remains staggering. Much of the burden of this war falls on women. “It’s rare to hear the voices of the women who bear the brunt of the drug war,” reports FPIF columnist Laura Carlsen from a recent Nobel Women’s Initiative conference in Mexico City. “Their pain doesn’t make headlines. Some need anonymity to remain alive. Many have been granted protective measures by the government or international human rights organizations because of the extreme threats they face.”
Finally, in our Focal Points blog, we look at the foreign policy elements of the State of the Union address, Scotland’s secessionist ambitions, and more on Boko Haram in Nigeria.
We’re America and We’ll Breach Whatever Perimeter We Want
By Russ Wellen
January 31, 2012
It’s just other countries’ tough luck that they’re not separated from potential threats by two oceans like we are.
A Year after Tahrir
Foreign Policy In Focus is a network for research, analysis and action that brings together more than 700 scholars, advocates and activists who strive to make the United States a more responsible global partner. It is a project of the Institute for Policy Studies (IPS) in Washington. http://www.fpif.org
The Institute for Policy Studies is a community of public scholars and organizers linking peace, justice and the environment in the U.S. and globally. It works with social movements to promote democracy and challenge concentrated wealth, corporate and military power. http://www.ips-dc.org
AND Leon Levy’s view point in Financial Times:
Is capitalism at a tipping point
by RICHARD LAMBERT, nov.23, 2011 FT
Its camp is gone, but the Occupy movement will grow
The Occupy Wall Street movement is a symptom of a growing public disquiet about the workings of market capitalism. As such, Monday night’s decision to close down the camp in New York City is unlikely to check the protests: if anything, the reverse may be true.
Public support for free markets is based on two broad arguments. The first is that they deliver more efficient outcomes than the alternatives. The second is that over time they create increased prosperity for society at large. Both these assumptions have taken a severe jolt in the past few years.
We now know that the efficient market theory is for the birds, and that market failures can have devastating consequences for wide sectors of the public. We also know that the fruits of economic success have become increasingly unevenly distributed. In the US, all the growth – and more – in recent years has flowed to those at the very top. The upper one per cent of Americans are now taking in nearly a quarter of the nation’s income every year, double the proportion 25 years ago. Those in the middle have seen their real incomes fall over the same period, precipitously so in the case of those with only high school qualifications.
Rising income inequality. Very slow economic growth. High unemployment. It’s no wonder that even a number of politicians on the right have started to express a degree of sympathy for those who have been demonstrating around the world in recent weeks. The fact that the protesters have no clear agenda is irrelevant. They represent concerns that many people can relate to, and they are unlikely to go away.
So it may be that capitalism is approaching some kind of tipping point, away from the winner takes all culture of the past three decades. If left unchecked, public disquiet will sooner or later bring a political response, maybe in the form of much more aggressive regulations and progressive tax systems. These could be at least as damaging as the free market fundamentalism that they would seek to replace.
Much better for business itself to recognise that it has a real economic interest in the well-being of the societies in which it operates; that success or failure is not just determined by earnings per share or profits per partner; and that a successful market economy has to be built on a degree of trust and mutual respect. Capitalism has adapted to changing political and social pressures in the past, and now is time for it to do so again.
The writer was director-general of the CBI and is a former editor of the FT
Post your own comment
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1. Report jzampolin | November 15 2:42pm | Permalink
And where is there free market capitalism? In the U.S? Is that the assertion?
2. Report Alex Benavente | November 15 2:45pm | Permalink
Excellent, short note. Changes are needed.
3. Report manuel gutierrez | November 15 2:49pm | Permalink
The failure we’ve seen recently is that of ‘crony’ capitalism, not market capitalism. For the most part, the latter has not been allowed to operate in the US, or most other countries in fact.
4. Report Apostle | November 15 3:01pm | Permalink
Accurate view of symptoms, incorrect diagnosis, bad prescription.
Symptoms: Very slow economic growth. High unemployment. Uncertain future.
Wrong diagnosis: Free market principles; Bad prescription: Lecture on morals + more regulations.
Right diagnosis: Excessive entitlements, govt spending and corruption, crony capitalism, inflexible labor market chaining the Prometheus of our times
November 18, 2011 2:18 am
Accede to Europe’s long-term direction of travel
From Mr James Brooke Turner.
Sir, Martin Wolf (“Saving the dream of centuries”, November 16) reminds us of the fate of the Roman and Han empires and makes his call for Germany to play its singular role in realising that dream of European unification. (As he says: “Power brings responsibility. Germany alone has the power.”) He could have added that building successful empires such as that of Rome is a long-term endeavour, rarely comfortable, and with few nations subscribing willingly. It is hard for new states to coalesce and assimilate their identity within a century, let alone a year. Nations such as the UK, France, Italy, even Germany and the US did not appear fully formed overnight, but took a tortured and usually bloody route to their present, relatively peaceful status quo.
Historians of the future may well look back on this economic crisis as part of the force majeure that prompted the formation of a new Europe. Of course there will be ebbs and flows from day to day and year to year, but the direction of travel over decades and even centuries is undeniable, and probably unstoppable. We should remember that nation-forming is best achieved with a proverbial, not literal, gun to the head. These are such times to accede to the inevitable.
Says James Brooke Turner, London SW2, UK “
By Robert Lenzner, Forbes Staff
11/17/2011 @ 2:31PM |3,063 views
“Capitalism At A Tipping Point”
This is the title of an FT op-ed piece by Richard Lambert, former FT editor as well as former director-general of CBI, the umbrella group for all British industry– and I am proud to say a very old and dear friend. Given the sovereign and bank crisis in Europe and the absolute need to institute severe fiscal cuts in the U.S. “tipping point” is not such a great exaggeration as you might expect. Can social unrest be the next step after more or less peaceful OWS, Occupy Wall Street. (Even the Council on Foreign Relations had an exploration of OWS’ significance this week.
There is no debate over the generally accepted finding that over the last 30 years “the fruits of economic success have become increasingly unevenly distributed in the U.S.” The latest figures show that there is “rising income inequality, very slow economic growth and high unemployment.” If 1% of Americans now take 25% of the nation’s income– double the amount of 25 years ago in the mid-1980s– then you can understand the rise of Occupy Wall Street and the depressing spectacle of 45 million people on food stamps and below the poverty cutoff line ( less than $22,000).
There are some greedy people who adore the winner take all philosophy of finance, and who don’t give much of a damn for poor people. Look at that idiot Herman Cain blasting the poor for not making a fortune from pizza.
When I studied business in the early 1960s at Columbia University, the concept of a successful and highly regarded corporation was one that balanced maximizing profits with keeping its many constituencies content– and by constituencies I mean the shareholders, who own the company, the employees who make it go, the customers that buy the products– and last but not least– the community that supports the company and in return gets help and contributions to remain vital.
All of this seems like quaint nostalgia. Yet, Lambert ends up preaching that “business itself (ought) recognize that it has a real economic interest in the well-being of the societies in which it operates: that success or failure is not just determined by earnings per share or profits per partner; and that a successful market economy has to be built on a degree of trust and mutual respect.”
I don’t know Richard; after witnessing the near collapse of civilization from the greed and short-sightedness of Wall Street– and witnessing the right’s attempt to foist it all off on government, I am more inclined to think the law of the jungle predominates. Everyone is trying to get the biggest piece of pie for themself, and to hell with their neighbor– just as I was told by one of my closest friends in the financial community, the late wise Leon Levy.
After posting 3 points of view, what is your opinion.
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