Letter at length, July 14

The stagnation of capitalism

In his July 2 guest opinion, "The financial fiasco in a nutshell," Harry Cook nicely describes some of the frauds that have brought the American and, indeed, the global economy to the brink of collapse.

What Cook describes, however, are only symptoms of the sickness of the global capitalist system. For decades, capitalism has been faced with stagnation in the rate of growth of production. This growth, based on the exploitation of labor and of nature, is the basis of capitalist profits. Overcapacity of productive mechanisms, the condition spawned by capitalist globalization, has driven the radical repression and deeper exploitation of labor all over the world, including in America where workers' wages have been stagnant for three decades. And, despite the clear and growing threat of anthropogenic global warming, the suicidal capitalist exploitation of Mother Earth has only accelerated.

In this context the "financialization" of the economy has occurred over the past 30 years. The need for profits in the face of stagnation in production has led to "an intensification of the failed neo-liberal phase of capitalist development: economic stagnation accompanied by a state-sponsored redistribution of income to the top (the only way profits can increase if the economic pie is not growing), resulting in vastly increased exploitation, inequality, unemployment and poverty" (J. B. Foster).

The contradiction between ruinous productive overcapacity and the impoverishment of the workers cannot be overcome by conjuring up illusory digital profits that soon vanish into a toxic void.

"Financialization" of the economy, as Cook describes it, is a snare and a delusion, a profession of faith in the delusion that profits can be made off information that is somehow separated from actual physical production. Enabled by those in power, in ways that Cook describes, the ENRONS and banksters may for a while look like sorcerers spinning gold out of nothing, but in the short run it all collapses. Just look around.

Hint: We need an economic system that is democratically controlled, ecologically sane and designed to provide for the use and needs of humanity. That is, by the way, one definition of socialism.

Gerald Cavanaugh


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