Redefining Capitalism After the Fall

[cenacle]

Redefining Capitalism After the Fall
By Richard W. Stevenson

Published April 19, 2009 by the New York Times
http://tiny.cc/qgR3f

THE recession will end. No one is marking the calendar, least of all President Obama, but the president is hinting at an audacious ambition as he waits for that inevitable if distant day: a redefining of American capitalism.

In a series of comments in recent weeks, Mr. Obama has begun to sketch a vision of where he would like to drive the economy once this crisis is past. His goals include diminishing the consumerism that has long been the main source of growth in the United States, and encouraging more savings and investment. He would redistribute wealth toward the middle class and make the rest of the world less dependent on the American market for its prosperity. And he would seek a consensus recognizing that an activist government is an acceptable and necessary partner for a stable, market-based economy.

"We cannot rebuild this economy on the same pile of sand," he said last week.

In beginning to articulate a long-term approach, the president is putting an early stamp on a debate of historic importance — and ideological underpinnings — just getting under way in the United States and around the world.

For the better part of half a century after World War II, democratic capitalism built its modern framework against the backdrop of its death match with totalitarian Communism. In the two decades since the fall of the Berlin Wall, the American model of capitalism, largely unchallenged by ideological alternatives and increasingly dominant around the world, drifted toward what conservatives viewed as a more pure form of economic liberty and what liberals came to view as misguided free-market fundamentalism.

But now, as the United States and other nations look for lessons in the wreckage from the excesses of that period, political leaders are confronting uncertainty about what economic structures and values should define capitalism's next chapter. Even before the current crisis, there were calls to rethink basic assumptions about the economy. Growth during the Bush presidency was slower than in any decade since before World War II, and incomes for most families have been growing slowly for much of the last three decades.

Mr. Obama is stepping into the debate characteristically intent on avoiding polarizing labels, and his advisers describe his philosophy in terms of pragmatism rather than ideology.

They said that the president's approach is based on a belief that recent economic cycles were driven too much by financial engineering; reserved most of the fruits of good times for the wealthy; relied excessively on foreign capital to finance domestic debt; and ultimately gave way to painful busts. Mr. Obama, they said, simply wants a more stable economic model.

"It's a strategy directed at having a somewhat different and healthier expansion than we've had in the past, driven by a sense that the expansion is likely to be more secure and its benefits more widely shared," said Lawrence H. Summers, the director of the White House's National Economic Council.

But economic policy is never just technocratic, especially not when times are tough.

Conservative activists whipped up emotional anti-tax, anti-Obama "tea parties" around the country to mark tax-filing day last week, saying the White House was headed down a path of fiscal profligacy that would ultimately require broad tax increases. And the prospect of a Democratic administration pushing the United States to the left is seen by many conservatives as a political rallying cry.

Arthur C. Brooks, president of the American Enterprise Institute, the conservative research organization, said of the administration, "They want much more of a European-style social democracy in which people are far less exposed to the vicissitudes of a market economy, and they want to have much easier access to manipulating the private-market economy."

Mr. Brooks said it was "overheated and silly" to suggest that Mr. Obama was leading the United States into socialism, but that even an effort by the administration to "file off the rough edges of capitalism" would no doubt prompt a continued strong backlash from people who object to the direction the president is heading. "Of course conservatives are overstating the case against him because they want to win again, just like the left massively overstated the case against Bush," he said.

Those on the left who have criticized Mr. Obama for being too timid in addressing the immediate crisis are similarly concerned that he will miss an opportunity to reshape American capitalism more fundamentally once the economy recovers. And even liberals allied with him suggest that the risk is that his ambition will prove too limited rather than too expansive.

"Again and again, Obamanomics, as well as his instincts in other areas of domestic policy, has been animated by a bold vision of what we need to do but has been quite cautious in practice," said Robert Reich, who was labor secretary under President Bill Clinton and advised Mr. Obama in the campaign.

"The benefit is that he can feel his way," Mr. Reich said. "The downside is that none of the initiatives may be quite bold enough to solve the problems at the scale they present themselves."

The economic philosophy that Mr. Obama developed during the presidential campaign drew from across the ideological spectrum even as it remained rooted on the center-left. As that philosophy has been tested in practice through his early months in office, the president has if anything become more comfortable with an occasionally intrusive government as a counterweight to market forces that are now so powerful and fast-moving that they cannot be counted on to be self-correcting when things go wrong. He regularly rebuts conservative criticism on that score by pointing out that it was George W. Bush, just before he left the White House, who put the government in the business of deciding which financial institutions would fail and which would be allowed to survive.

Yet if Mr. Obama's position brings the United States full circle from Ronald Reagan's nostrum that government is the problem, it also stresses continuity and a commitment to the most basic conservative tenets: the power of markets as an engine of innovation and prosperity, and the necessity of economic growth for improving incomes and living standards.

"There is a vibrancy to our economic model, a durability to our political model and a set of ideals that has sustained us through even the most difficult times," Mr. Obama said on his recent trip to Europe when asked about the decline of the American version of capitalism.

He would be willing to use the usual liberal policy tools to redistribute wealth after a recent period in which the gains have gone primarily to a relative few at the top of the income scale. But he would stress personal responsibility rather than entitlement. He would promote trade, but codify the Democratic push of the last 15 years for more labor and environmental protections in trade agreements.

If more activist government is the most controversial aspect of his long-term approach, the most ambitious might be his aspiration to reduce the degree to which the United States is a consumer-driven economy — or at least to develop policies that recognize the likelihood that consumer demand cannot grow at the rates it has been without being accompanied by a growing and destabilizing mountain of debt.

"We must lay a new foundation for growth and prosperity — a foundation that will move us from an era of borrow and spend to one where we save and invest, where we consume less at home and send more exports abroad," Mr. Obama said in his economic speech last week.

Embedded in that approach is a far-reaching implication: that the rest of the world should no longer count on the United States to snap up imported goods or run up large trade deficits.

It is by no means clear that Mr. Obama has the policy tools needed to bring about that kind of change; we are, after all, fundamentally a consumer society. His advisers point to his support for innovative ways of increasing personal savings.

To drive economic growth in the place of debt-fueled consumption, Mr. Obama is banking on the emergence of alternative fuels, pollution-limiting technology, health care technology and other new industries linked to broader policy goals.

But the viability and scale of those opportunities is open to debate. And some of the administration's own policies suggest that there are limits to Mr. Obama's willingness to bolster investment in new production capacity at home. His unwillingness so far to confront China aggressively over its currency and trade practices, for examples, leaves many American manufacturers at a disadvantage.

Even with the economy and the financial markets showing a few tentative signs of improvement, which may be deceptive, it will be some time before Mr. Obama has the luxury of focusing on the long run. Still, in his first three months in office he has not been reluctant to think big — and there may be no better time to start redirecting an economy as huge and complex as this one than when it is in flux.

[cenacle]

I thought this was a good article to post here, gives a sense of where we are now, along the way to some kind of economic recovery. But not returning to where things were. Bush ended those times of easy prosperity, at least for some. Personally, I was never rich but at least I wasn't getting laid off three times in a year like 2008-2009. Anyway, this piece observes the uncertainty of what will come. I'm hopeful, despite everything, that better days are coming.

[Amomynous]

In a series of comments in recent weeks, Mr. Obama has begun to sketch a vision of where he would like to drive the economy once this crisis is past. His goals include diminishing the consumerism that has long been the main source of growth in the United States...

Well then, perhaps he should consider not referring to us all as "consumers" in his speeches. Me thinks his vocabulary belies his fundamental assumptions. No longer are we citizens; we're purchasers.

Not to speak in an uncharacteristically frank and indelicate manner, but our politicians are fucking pigs, and it's really starting to bother me.

If politicians really want to end consumerism, they will have to end the current monetary system, which contains exponential growth as a mathematical certainty by its very definition. Money is created through the process of lending at interest, which presupposes an increase in money for it to be repaid. This is an arithmetic certainty, the same as "2+2=4."

AnD when a quantity that is defined to grow exponentially is assigned value by tying it to other things -- "goods" and "services" -- it has increased consumption at its ontological core. Spiraling consumption is irrefutable and inevitable, as it the monetization of everything, citizens... er, consumers included.

Other monetary systems can be created -- in fact they have been in the past. The "emergency currencies" that were created in the wake of the depression worked quite well. So well, in fact, that they were immediately declared illegal, for they conflicted with the centralized control of the New Deal. We opted for control over emergence, as we always do. This is a bad decision, by the way.

New currencies -- such as local-exchange transaction systems and demmurage-based economies -- have different fundamental assumptions and would do a lot to end this asinine cycle. But they probably won't be implemented until the financial collapse is total. And any politician that glosses over this is, to coin a phrase, a fucking pig (see above). Maybe the "recession" will "end." Maybe we can limp along for a while longer. But eventually the piper must be paid.

Edit: By the way cent: I'm not lashing out at you.

[laughingwillow]

We have collectively become the proverbial monkey with hand stuck in a cookie jar, unwilling to let go of the coveted item inside the jar and so stock.

lw

[Amomynous]

We have collectively become the proverbial monkey with hand stuck in a cookie jar, unwilling to let go of the coveted item inside the jar and so stock.

Yes, we have.

And one of the frustrating things about this is that the way things are put together, it's all cookie jars. If you want to eat you have to stick your hand in.

There is noting wrong with consumption; all life needs to consume to continue. But I think at this point just about everyone who has thought about it (including those who are very non-psychedelic) realize that ever increasing levels of consumption -- systems that require growth for viability -- can't continue forever. At some point the system must collapse or change, because growth cannot continue unabated.  

What bothers me is the disconnect between the politician's words and actions. Of course we've come to expect hypocrisy from politicians, but it's still annoying.  Maybe that's why Obama is starting to bug me so much. Bush seemed like nothing more that an idiot who was acting like an idiot. But Obama doesn't seem like an idiot, so his actions may actually be more annoying. With him you get the feeling that he should know better.

His economic stimulus package with nothing but a huge Ponzi scheme, borrowing trillions of dollars -- at interest, again -- to be paid back when the notes come due. How can that money (with its interest)  be paid back? There are only two ways, as far as I can figure out. In the first we all become explicit slaves of the state. In the second it comes through -- you guessed it -- economic growth, which is just a euphemism for increased consumption. I think that's one of the most frustrating parts of the public discussion, the fact that people favor this nebulous thing called "growth" while paying lip services to decreasing consumption. In the current system this is a logical impossibility. Again, it is simple arithmetic, as irrefutable as addition.

Here is a simple, evident fact that no politician in the world (or at least the US) is willing to admit: the economy is too large already. We already don't have enough room in our depressingly spacious "houses" to hold all of our crap: we have to throw it out every few years to make room for the new, creating new landfills as we go and fucking raping what is left of the earth (we don't even talk of nature any more. That terms has been replaced with "natural resources" in another telling play of language.)

The trend is clear: people work increasingly longer and harder at increasingly menial and unfulfilling "jobs" so that they're lives can be filling with increasingly meaningless junk in an economy that already produces too much.

Excuse me if I have a hard time seeing the upside to this

What would happen if the economy shrank so much that households had to go back to "one earner" who only had perhaps 20 hours or work per week? Would people starve? Of course not: they would still lead opulent lives. And I'm not even talking about tightening the belts and leading a subsistence or deprived life. Sure, they may have to go back to one car, a generic MP3 player instead of an iPod, and houses without "Great Rooms." What would they do with all the extra time? How about make music with their friends; tend a garden; smoke dope; go fishing; get to know their families again? But this is not easily possible now, even if someone wanted it. When every household has two earners working 60 hours a week, the economic bar is pretty high. Yes, people can enter into more voluntary simplicity, but when the mathematical basis for the economic system directly conflicts with that desire, it is extremely hard. And even if they do it won't matter too much, because as long as the system encourages "growth," such acts will be a heroic act in an insane world, not a sane act in a sane one.

The reason I rarely get in discussion like this is because such discussions are too often remedial. They don't take the analysis deep enough. People all to often just point to vague boogeyman (like "Capitalism") without really going deeper to the roots. Capitalism didn't create uncontrolled growth.  If anything, a desire for uncontrolled growth created capitalism. One must look deeply within to see the origin of that which manifests on the outside. When you do that you at least start to understand why things like environmental destruction are invariant of political leanings. (The US, former Soviet Union, and China are pretty much indistinguishable from geosynchronous orbit. They only trade places while jockeying for number 1.)

[laughingwillow]

Btw, I don't think capitalism needs to be redefined. It is what it is: an economic system with money at the bottom line.

Its our collective expectations in life which need to change, imo. However, Americans have been programmed from an early age to strive to climb the socio-economic ladder that we currently use to measure success.

Who wants to be a millionaire?

lw

[laughingwillow]

Which leads me to the cosmic question of the day.......

Studying the articles concerning the U$ economy and politics, I get the impression that most folks are perfectly content buying into a closed system that offers little choice past A/B, black or white. Yet, somehow, most of us around these parts have managed to free our minds from the constraints embraced by many if not most of our population.

Could this evolution of human consciousness be partially due to the consumption of active sacrament?

Personally, growing up in a rural area on the prairie, I bought in to most of what I was fed concerning expected behavior and the norms of society as a child. However, I vividly remember my first psychedelic experiences while studying business/spanish in college. It was my second year of college. One day I was gung-ho about entering the bidness world and a dose or two later, I was questioning that career path.....

lw

[Amomynous]

I've wondered about the entheogens too. There seems to be an unquestioned assumption in ehtneogenic places that the takers of entheogens are more open-minded and perceptive than the "average joe." This may be true, but I've been thinking about this a bit lately, and I've come up with something that may be a little controversial, but I think has some grain of truth in it anyway.  

The main cognitive breakthrough comes from  putting the darn thing into one's mouth, not from the swallowing.

Even if the actual sacrament were inactive or a placebo,  transformation comes from the willingness to find out for yourself that it's all about, a willingness to go against legal, social, and cultural taboos.  I don't mean to downplay the content of the experience -- it's important, especially from a personal perspective. But from the cultural perspective, much of the entheogen's power comes from the user's willingness to eat it.

[laughingwillow]

Amom: I agree up to a point. It takes a certain type of individual to swim against the cultural norms.

However, simply registering for classes doesn't necessarily provide academic sustenance to a prospective student, imo.  

lw

[Amomynous]

However, simply registering for classes doesn't necessarily provide academic sustenance to a prospective student, imo.  

I agree, and perhaps I didn't give a big enough nod to the actual work involved after swallowing, but I don't think we should under-emphasize class registration either.

[laughingwillow]

I'm afraid we have yet to see the bottom of this economic downturn. Commercial developers are going to be the next to go belly up. And that will put negative pressure on banks when commercial loans start defaulting.

My brother-in-law holds a management position with a well established local commercial developer that he (privately) says is going to declare bankruptcy very soon. And this morning I've read rumblings on the inter-tubes of the same nasty development on a national level.

Anyway, I'm guessing any talk of us presently residing in a time "after the fall," might be a bit premature.

lw

[laughingwillow]

Here's a link to an interesting article concerning Obama's current relationship with corporate america.

http://apnews.myway.com/article/20090515/D986IJJ00.html

quote from the link above: .... Executives and trade groups that praised Obama's outreach during his post-election transition period say they have felt less welcome since he took office in January. More troubling, they say, are his populist-tinged, sometimes acid critiques of certain sectors, including large companies that keep some profits overseas to reduce their U.S. tax burden................................


Someone needs to reform the ties between big bidness and the U$ gubmit, imo. I'm guessing we will hear much howling and knashing of teeth from corporate interests through corporate controlled news media in the near future. At least as long as Obama continues pry the greedy corporate fingers from the neck of "we the people," and the gubmit created in our best interest.

No need to redefine capitalism, here, imo. Simply taking an honest look at the current situation and then studying a little history will suffice. Capitalism is what it always has been. A wonderful model for the market but not very people friendly. The dollar is, was, and always will be the bottom line. That's healthy for the market, but not necessarily an environment fostering human dignity and respect.

The bottom line, imo, is that a separation of corporation and state is just as relevant and important in this day and age as the separation between church and state was (and continues to be) in the days of our founding fathers.    

lw

[JRL]

No need to redefine capitalism, here, imo. Simply taking an honest look at the current situation and then studying a little history will suffice. Capitalism is what it always has been. A wonderful model for the market but not very people friendly. The dollar is, was, and always will be the bottom line. That's healthy for the market, but not necessarily an environment fostering human dignity and respect.

The bottom line, imo, is that a separation of corporation and state is just as relevant and important in this day and age as the separation between church and state was (and continues to be) in the days of our founding fathers.    

lw

Well put!

[dendro]

Our parents got the fed forced on them, then the income tax. As chattels of the "state" corporation, our income belongs to the fed. Our future labor is in hock to pay the interest. And we literally have a gun to our head.

How are we NOT already "explicit slaves" of the central bank?

[laughingwillow]

A portion of our income belongs to the feds and a portion goes to the state, imo. I'm not sure who would build and maintain infrastructure, law enforcement and various other services if not funded by some form of gubimt.

However, I'm appalled at the amount of money spent at the federal level on national defense and the amount both the state and feds pay to wage their war on drugs.  

lw