Capitalism in Crisis

In the end, the people in the streets will decide.

The streets of the world’s capital cities are war zones of hopelessness, but as people gather together, this despair transforms into a fierce determination, underlain by great expectations, like in 1848, when the only European-wide collapse of the status quo occurred in the Revolutions of 1848 also popularly known at the time as: The Spring of Nations. Similar to that challenge of authority over 150 years ago, as of today, an epic battle, an undeclared war, rages around the world, erupting every week in one capital city after another, challenging the legitimacy and credibility of capitalism. For example, July 9th, 2012, Qatif, Saudi Arabia, one of the country’s largest-ever demonstrations left two dead and 12 injured when security forces confronted street protestors after the shooting of Sheikh Nimr al-Nimr, a prominent anti-government activist and Shia cleric.

The Revolutions of 1848 ultimately involved 50 countries throughout Europe and Latin America. At the time, there was no coordination among dissenters, but widespread dissatisfaction with political leadership was infectious across borders and beyond ethnic differences. Citizens of the world wanted more participation in how their lives were determined, i.e., democracy. Tens of thousands lost their lives in a futile effort, a bloody affaire that ended as abruptly as it began, within one year, forever memorialized by the words of Pierre-Joseph Proudhon (French philosopher and economic theorist, 1809-1865), “We have been beaten and humiliated… scattered, imprisoned, disarmed and gagged. The fate of European democracy has slipped from our hands.”

Dissatisfaction with political leadership (and, by inference, the capitalist state) today is more ubiquitous than in 1848 because instantaneous communication knows no barriers. Furthermore, what is known is this: Capitalism has failed as an economic system for society at large. By disproportionately favoring an elite minority who have gamed their own system, thus, sealing their own fate, capitalism has become as pejorative a term today as aristocrat was in 1848. And, because history has demonstrated, time and again, that no socio-economic system is static, this brings to the forefront questions about the likely life cycle for modern-day capitalism. Is it an economic system that has outlived its usefulness? And, if so, then, where are the various impulses of dissent headed, pointed in what direction, if not capitalism? These are questions that would otherwise be deemed inappropriate, if not for the current state of world affaires, but the answers are yet to be formulated.

This grandiose worldwide dissatisfaction with the status quo is not business as usual like a normal business cycle, which ends with renewal of prosperity. No, by all appearances, this is a deep-seated disintegration of economic relationships, which have existed in a delicate balance of competing interests for 200 years.

Every war has a catalyst, and the capitalists themselves have brought on this one by depriving the bourgeoisie and proletariat a fair share of the bounty on a worldwide basis in places like the United States, Indonesia, South Korea, Chile and throughout Europe. Now that capitalism is universal, the population of the world sees its effects in unison rather than individually by nation-state, but the problem is not capitalism per se. The problem is abuse of the capitalist system by capitalists. What is the evidence of this abuse?

The evidence is tens and hundreds of thousands of people in the streets chanting, sloganeering, “End the Oligarchy” in NYC, “Democracy Not Corporatization” in Paris “Fraude Pobreza” or “Fraud and Poverty” in Madrid, “Hands Off Our Pensions” in Athens, tens of thousands demonstrating in front of Indonesia’s presidential palace in Jakarta demanding a decent living wage, tens of thousands of students in Santiago protesting the profiteering in the state educational system, hundreds of Malaysian lawyers staging street protests opposed to governmental plans to ban street rallies, and uppermost in the consciousness of this worldwide sloganeering is a profound repugnance of corporate greed, or crony capitalism, and a deep-seated hostility towards the chicanery behind Wall Street/banking practices as well as the ‘perceived’ embezzlement of valuable nation-state resources by the wealthy elite via political influence and subterfuge within taxation policies that favor only the rich. We know this is true because the sloganeering and the placards held up high within the masses of tens of thousands of people tell this story for the whole world to see.

The elites of capitalism have only themselves to blame for igniting the flames of dissent… for bringing on the “perfect storm” of protests from Montreal-to-Beijing-to-Mumbai-to-Moscow-to-Paris-to-Santiago-to-NYC.

Seeing the truth of capitalism became much easier with the Granddaddy of All Financial Ineptitude and Corruption, the biggest-ever corporate heist, resulting in the 2007-08 worldwide financial meltdown, connecting huge dots for all to see, glaringly exposing the whole enchilada, other than the mystery of why nobody has gone to jail (Google: Coup of the Elites or The Elite Coup is Complete, June 26-27, 2012.) Arguably, this monumental debacle has served as the catalyst for capitalism’s boundless war. At the end of the day, this brutal take down of the entire world economy may be the demise of capitalism because it is breaking down the financial/economic system like never before. Otherwise, the final arbiters of financial order and stability, the world’s Central Bankers, would not be scrambling month-after-month, injecting trillions into banking liquidity, buying sovereign debt, propping up this monstrous on-going disaster, like the Lernaean Hydra of Greek mythology, as soon as one head is lopped off, another two appears, as one country is poisoned by insolvency followed by another. And, it is the average taxpayer who supports, and pays for, the errors and malfeasance of the elite who profited so handsomely on the backs of innocent citizenry from Sydney westward to Fairbanks.

The Great Heist of 2007-08 is the culmination of corporate hubris, previewed a decade earlier, when Enron, a company with significant ties to George Bush’s political career and few tangible assets, learned how to ‘cook the books’ because of political liberalization (and contacts in the right places). The deregulation gospel allowed companies to operate in countries previously forbidden thus adding to the complexity of their operations, and they were able to use financial derivatives to manage risk and to obscure corrupted financial results. This is a continuing problem to this day. For example, JPMorgan Chase recently reported loses of $2 billion, but oops… no wait a minute, maybe it’s $30 billion. Even the bankers are not sure of their true gains or losses with the complexity of modern-day financial instruments. Isn’t it obvious that incalculable financial manias should not be part of commercial banking, the reservoirs of public savings? Unfortunately, these are only a portion of the games elites play with the public’s money. What is the hapless public to think when a former governor and a former U.S. Senator, a figure of public trust, like Jon Corzine of MF Global testifies before Congress, Dec. 2011, he does not know where the hundreds of millions of customer’s money in MF Global disappeared to… huh… he was the CEO?

One after another, whenever or wherever an opening occurs to ‘game the system’ the elite have jumped at the opportunity, including paid-for political influence to skew tax laws in favor of the rich at the expense of average taxpayers who shoulder the burden of a national debt that is overly inflated because of fancy tax laws the allow leading figureheads in society, like Mitt Romney, to pay a tax of only 15%, a lower rate than paid by his garbage collector.

It is always the average person, the average taxpayer who shoulders the burden whenever corporate malfeasance surfaces to trash national economies, as in Europe today where public employee and general worker benefits have been crucified by austerity measures (dictated by the IMF, World Bank, and EU) to heal battered national treasuries as if an epidemic of old, like the Black Death, swept across the countryside, ravaging lives. It is no wonder people of all stripes, like doctors, lawyers, truck drivers, and teachers take to the streets. They are being sacrificed on an altar of corporate malfeasance and corruption whilst accumulation of wealth is seen as an exclusive club reserved for only those who are already rich, similar to Louis XVI’s reign in 18th century France.

The world is getting a taste of history, of what it was like in the late 18th century, a few years before the French Revolution burst lose, beheading one aristocrat after another, as quickly as they could gather them up, simply because they were rich… but there were obviously deeper meanings behind this slaughter. For example, France’s national treasury was empty as a result of empire building and foreign wars, and this was aggravated by nasty disagreement over reform of the taxation system, which was grossly inequitable, leading to paralysis, and an agrarian crisis with food shortages, an ambitious bourgeoisie allied with aggrieved peasants and wage-earners influenced by enlightenment ideals, and years of pent-up resentment of a dying seigniorial system.

In the end, it was the people in the streets of Paris that served as the spark that led to outright rebellion and death at the hand of dreadful black-hooded executioners in the public square, the Place de la Révolution. The guillotine was most active during the “Reign of Terror”, in the summer of 1794, when, in a single month, more than 1,300 people (over 40 daily) were executed.

The lesson of history, which bewilderingly continues to repeat itself, is: The people in the streets ultimately determine the fate of incorrigible governments that are embedded with unscrupulous sources of financial power. These scenarios never end on a sanguine note but often times end in a sanguinary manner.

Robert Hunziker earned an MA in economic history at DePaul University. He lives in Los Angeles.