Sunday, September 30, 2007

Stagflation and the Prosperity Illusion

Good grief. I'm quoting Socialism Today and actually agreeing with most of it.

Credit crunch threatens global downturn
The expansion of credit – or the accumulation of debt – prolonged the post-2001 recovery cycle, even amazing the most optimistic capitalists. There has been record global economic growth of around 5% a year for five years. However, this has not led to generalised prosperity, even in the fastest growing economies. On the contrary, inequalities have grown, especially in countries like the US and China, and the huge imbalances between the deficit and surplus countries has become even greater. It is completely unsustainable and will at some point be corrected, quite likely provoking convulsions throughout world capitalism.


Every economic crisis is also a political crisis for capitalism. As shown by the Northern Rock episode in Britain, the failure of banks and other financial institutions shakes public confidence, not only in financial institutions but also in the governments responsible for their regulation. In the next few years, the unfolding of economic crises will shatter the idea that capitalism is a ‘successful’ system, the only way of organising the economy and society.

This was recognised by Greenspan in his recently published memoirs, The Age of Turbulence. According to the Financial Times (17 September), "He endorses the view that stagnation in average worker incomes in the US poses a threat to the political sustainability of deregulated markets". He also asks: "Why, for all capitalism’s material success, have we not been able to rediscover the 19th century optimism that free markets and free societies will bring a broader measure of human progress".

When stagnation gives way to real cuts in workers’ living standards, there will undoubtedly be mass movements against the brutal effects of ‘deregulated markets’, in reality unfettered, ultra-free market capitalism. As in other regions of the world recently, there will be tremendous struggles against the effects of globalisation and neo-liberal policies. The capitalist system will be called into question, shaken to its roots, and there will be an intensified search among the advanced layers of workers for an alternative which, in our view, means a socialist planned economy and workers’ democracy.

Capitalism is being tested just like our freedoms are being tested. I'm starting to wonder if either will pass the test.

Joke: If this were a dictatorship, it'd be a heck of a lot easier, just so long as I'm the dictator.

Reality: Bush To Be Dictator In A Catastrophic Emergency

You will note that the definition of said emergency includes the "economy" word.

See Also: Romney Plan Would Eliminate Some Taxes

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