The Financial Times: Capitalism Has Failed

[Joanne98]

Yes, that is the underlying message delivered today by one of the world's leading financial publications. For many of us, this is no surprise: you had to be truly ignorant to pretend like the economic system was a success just based on the growing divide between rich and poor over the past decade, and the three-decade long decline in wages in the country. Still, to see the FT pronounce the obvious is refreshing.

The article in written by Martin Wolf, one of the FT's main economic gurus who I don't always agree with but who always writes something sophisticated. His piece kicks off a new FT series dubbed "The future of capitalism". His first paragraph:



Another ideological god has failed. The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism.


And this is precisely what many people have argued for many years--many people who were laughed at, ignored by the media talking heads and policymakers, and scoffed at as just people who were not willing to get with the new, great global economy. There were some voices who pointed out, amid the noise of the nonsense of the "Dow 35,000" (can we hang those people?) and the stupid nonsense about the "free market" and "free trade, that something was gravely amiss...as in, the actual vast majority of people were not having such a great time.

Wolf continues:


How did the world arrive here? A big part of the answer is that the era of liberalisation contained seeds of its own downfall: this was also a period of massive growth in the scale and profitability of the financial sector, of frenetic financial innovation, of growing global macroeconomic imbalances, of huge household borrowing and of bubbles in asset prices.

And...


Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard argue that the era of liberalisation was also a time of exceptionally frequent financial crises, surpassed, since 1900, only by the 1930s. It was also an era of massive asset price bubbles.


Indeed, we saw these asset bubbles, under Democratic and Republican Administrations, but, no matter how many times they popped, no one really wanted to say, "stop, this isn't a way for our economy to run". Why? For a combination of reasons: some people got very rich, a lot of politicians continued to get paid off in campaign contributions by people who did not want to see fundamental change and, frankly, dumb, incompetent economic managers who were still, for some reason, given worldly seer status (Robert Rubin and Alan Greenspan come to mind).

How many times, in the past three decades, do you remember hearing about how wonderful our economy was? The noise obscured this fact:



Continued>>>
http://www.huffingtonpost.com/jonathan-tasini/the-financial-times-capit_b_173005.html

And this is what really happened. The investor class made it's money off the back of labor. Now the financial class is stealing the money from the investor class that was stolen from labor.

They only way to rebuild the economy is from the ground up. Give the money to labor and the parasites will steal it sooner or later.

[OHdem10]

1. I would say FREE MARKET CAPITALISM (the GOP Interpretation

of Capitalism). Tax cuts( to point they hurt country)
Deregulation, Trade Policy with no enforcement of rules.
Trade Policy which encourages Money, People, Jobs and
Goods to be swirled around the world with essentially no
oversight. Actually calling this Free Trade is wrong.\
Totally disregarding Comparative Advantage as First Free
Trade Principle.

Capitalism failed in '29--World Wide Depression. FDR
taught us there has to be a balance between the Market and
Regulation.

Capitalism is by its nature a Competetitve System and the best
we have. It produces Winners and Losers by its nature. The
only way it works effectively is with wise and fair regualtions.
Otherwise it produces a society of great wealth gap. Few VERY RIOH
at the top and masses of poor.

FDR saved Capitazism and saved Democracy.

IMO, we have a Globalization Crisis as well as Banking Crisis.
C

[Peace Patriot]

2. "...suddenly look as outdated as revolutionary socialism." ???

"Another ideological god has failed. The assumptions that ruled policy and politics over three decades suddenly look as outdated as revolutionary socialism."

I'm thinking "revolutionary socialism" is looking pretty damn good these days. Consider Venezuela, where the socialist government renegotiated the oil contracts from a 10/90 split of the profits favoring multinational corporations, to a 60/40 split, favoring Venezuela and its social programs, and is thus providing universal health care, education for the poor/working class through university, land reform for food security and--very importantly--massive efforts toward diversifying the economy with new manufacturing enterprises, and local and regional infrastructure development. The Chavez government has overseen a remarkable nearly 10% growth rate, over the last five years, with the most growth in the private sector, not including oil. And they have furthermore socked away $42 billion in international cash reserves, giving them great financial flexibility in the present Bushwhack meltdown. A mix of socialism and business/capitalism, with strong social justice goals, seems the best way to go. The Chavez government also encourages maximum citizen participation in politics and economic decisions, and runs the cleanest elections in the western hemisphere.

Chavez also helped his neighbors out of ruinous World Bank debt, by inspiring the Bank of the South (regional control of finance and development), created ALBA (barter trade group) and is one of the inspirers of the South American Common Market--UNASUR--formalized last summer. I predict that South America is going to land on its feet, due to the socialist leadership of Chavez and other leftist presidents (most especially Bolivia, Ecuador, Argentina, Paraguay, Uruguay and Brazil).

Martin Wolf's whack at "revolutionary socialism" puzzles me. Why does he dis the one thing that seems to work for the good of all--"New Deal"-type socialist programs, and a strong, "New Deal"-like progressive, pro-labor, compassionate, socialist outlook?