Breaking it Down: Industrial Capitalism vs. Financial Capitalism (or, Why We’re F*cked)

Michael Hudson asks: “In light of the enormous productivity gains since the end of World War II – and especially since 1980 – why isn’t everyone rich and enjoying the leisure economy that was promised?”

The answer (per Hudson) is painfully obvious, but bears repeating (ad infinitum):

What was applauded as a post-industrial economy has turned into a financialized economy. The reason you have to work so much harder than before, even when wages rise, is to carry your debt overhead. You’re unable to buy the goods you produce because you need to pay your bankers. And the only way that you can barely maintain your living standards is to borrow even more. This means having to pay back even more in years to come.

That is the Eurozone plan in a nutshell for its economic future. It is a financial plan that is replacing industrial capitalism – with finance capitalism.

Industrial capitalism was based on increasing production and expanding markets. Industrialists were supposed to use their profits to build more factories, buy more machinery and hire more labor. But this is not what happens under finance capitalism. Banks lend out their receipt of interest, fees and penalties (which now yield credit card companies as much as interest) in new loans.

The problem is that income used to pay debts cannot simultaneously be used to buy the goods and services that labor produces. So when wages and living standards do not rise, how are producers to sell – unless they find new markets abroad? The gains have been siphoned off by finance. And the financial dynamic ends up in austerity.

And to make matters worse, it is not the fat that is cut. The fat is the financial sector. What is cut is the bone: the industrial sector. So when writers refer to a post-industrial economy led by the banks, they imply deindustrialization. And for you it means unemployment and lower wages.

As they say, read the whole damn thing.

And weep.

h/t

(Image: jesse.millan, Flickr)

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Joe Biden: Republican Silence on Economy is “Deafening” (Literally!)

by matttbastard

h/t Jed and Kyle Moore (via IM) for the vid

Heckuva job: The NY Times reports that the US unemployment rate hit a 5 year high this week, and is now on par with Canada’s for the first time since 1982 (ppsh, that’s nice — hey, check out McCain’s prime time numbers!):

The August jobs report seemed to suggest that the deterioration in the economy is accelerating. The unemployment rate has risen 1.4 percentage points over the last year and is now at its highest level since September 2003, when the economy was just beginning to emerge from a jobless recovery.

What’s more, those who swelled the unemployment rolls last month were adults, many over the age of 45, and not teen-agers, who were the main contributors to the jump in unemployment in May, when the rate rose to 5.5 percent from 5 percent in April. The nearly 600,000 people added to the unemployment roles in August included almost as many college graduates as those with only a high school degree.

Manufacturing companies shed the most jobs last month, 61,000, mostly at auto plants and in housing-related industries. There were also sharp cutbacks in the use of temporary workers, and across most of the work force hourly and weekly wages once again failed to keep pace with inflation.

The McCain campaign’s thoughtful strategic response to this latest economic body blow?

Piss on the legs of the working and middle classes and call it rain:

Hoping for a poll bounce out of the Republican convention at St Paul, Mr McCain, accompanied by Governor Sarah Palin, his vice-presidential running mate, hit the campaign trail in Cedarburg, Wisconsin, with a populist message.

“John McCain doesn’t run with the Washington herd,” Mrs Palin said, introducing the Republican nominee.

Mr McCain declared: “It’s over. It’s over. It’s over for the special interests. We’re going to start working for the people of this country.

He mentioned the jobless figures and said that these were “tough times” for Americans and promised to “stand on your side and fight for you”, cutting government spending and opening up new markets abroad. He vowed to “shake up Washington and get things done for you”.

The McCain campaign has dubbed their new tour, through many economically deprived areas, as the “Change is Coming” tour.

Yep, nothing boosts voter confidence and stirs the soul quite like hollow rhetoric (“Shake up Washington!” “We’re going to start working for the people of this country!”) from shameless political shills cynically and contemptuously treating the whining electorate like dolts unable to read between the lines of their monthly credit card statements.

“Change is coming”?

My angry black ass.

Charles Krauthammer (!) nails it:

The Republican brand is deeply tarnished. The opposition is running on “change” in a change election. So McCain gambled that he could steal the change issue for himself — a crazy brave, characteristically reckless, inconceivably difficult maneuver — by picking an authentically independent, tough-minded reformer. With Palin, he doubles down on change.

The problem is the inherent oddity of the incumbent party running on change. Here were Republicans — the party that controlled the White House for eight years and both houses of Congress for five — wildly cheering the promise to take on Washington. I don’t mean to be impolite, but who’s controlled Washington this decade?

Gee, damn good thing this election isn’t about the issues (nor, apparently, accountability).

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