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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Fun With Infographics (STILL Worst Preznit EVA)

by matttbastard

Michael Tomasky:

The Boston Globe ran a chart last Sunday that I’d buy billboard space to reproduce in every decent-size city in America, if I were running the Democratic National Committee. The premise of it was very simple: It showed how many trillions each president since Ronald Reagan has added to the nation’s debt. The debt was about $1 trillion when Reagan took office, and then: Reagan, $1.9 trillion; George H.W. Bush, $1.5 trillion (in just four years); Bill Clinton, $1.4 trillion; Obama, $2.4 trillion.

Oh, wait. I skipped someone. George W. Bush ran up $6.4 trillion. That’s nearly half—44.7 percent—of the $14.3 trillion total. We all know what did it—two massive tax cuts geared toward the rich (along with other similar measures, like slashing the capital gains and inheritance taxes), the off-the-books wars, the unfunded Medicare expansion, and so on. But the number is staggering and worth dwelling on. In a history covering 30 years, nearly half the debt was run up in eight. Even the allegedly socialist Obama at his most allegedly wanton doesn’t compare to Dubya; and Obama’s debt numbers, if he’s reelected, will surely not double or even come close as we gambol down Austerity Lane.

On a related note, if the allegedly socialist Obama is pretty much toast in 2012, as dnA argues, what happens if the GOP decides to double down on the Evangelical Jesus Juice and storm the White House with “George W. Bush on Steroids” at the point?

ON STEROIDS.

PS: WORST PREZNIT EVA.

Niall Ferguson: China, the U.S. and the Economic Crisis

by matttbastard

ForaTV:

Harvard historian Niall Ferguson warns that the greatest danger of the current financial crisis could be the possible collapse of economic relations between China and America.

Watch full video here.

Recommend this post at Progressive Bloggers

Greenwald: Right-Wing Hypocrisy is “healthy”

by matttbastard

After surveying some of the rightwing opposition to the $700 billion Paulson bail-out (and acidly noting that such sentiments from these quarters are unfortunately “vital for having any meaningful chance to stop [the Paulson plan]” thanks to the sorry record during the Bush years of craven Democrats in Congress), Glenn Greenwald explains how the sharp, self-interested reversals on display are actually indicative of democracy in action:

The blatant hypocrisy here, while extreme, craven and obvious, is also healthy. Hypocrisy of this sort is actually a vital part of how checks and balances are supposed to work. It is expected that political factions, when in charge of the government, will seek to obtain greater power for themselves, and the check against that is that the “opposition party” will battle and resist — not necessarily out of ideology or principle but due to raw power considerations and self-interest. That is what has been so tragically missing from our political process for the last eight years: while the GOP sought greater and greater government power, Democrats acquiesced almost completely when they weren’t complicitly enabling it. While the Executive was off the charts in terms of the power it seized, the Congress was off the charts in its passivity and eagerness to relinquish its Constitutionally assigned powers to the Bush White House. That’s what has caused the extreme imbalance, with a bloated Republican Party and virtually unlimited presidential power: the failure of Democrats and the Congress to serve as a check on any of that. As their newfound contempt for unlimited power makes conclusively clear, the executive-power-worshipping Republicans of the last eight years — if there is an Obama presidency — will quickly re-discover their limited government power “principles” and won’t be nearly as accommodating.

Related: Jim Johnson on how bipartisanship poses a threat to a healthy US democracy (h/t Crooked Timber):

In terms of consequences, why should we endorse bi-partisanship? That is a fundamentally anti-democratic response. Here I am persuaded by argument by political theorists who, following Joseph Schumpeter (whose conception of democracy is, despite common caricatures, neither a ‘realist’ nor ‘minimalist’), insist that robust competition is crucial to a healthy democracy. For instance, Ian Shapiro* suggests that competition has two salutary effects: (i) it allows voters to throw out incumbents (known more appropriately as ‘the bastards’) and (ii) it pressures the opposition to solicit as wide a range of constituencies as they are able. Given these effects, Shapiro suggests quite pointedly:

If competition for power is the lifeblood of democracy, then the search for bi-partisan consensus … is really anticompetitive collusion in restraint of democracy. Why is it that people do not challenge legislation that has bi-partisan backing, or other forms of bi-partisan agreement on these grounds? …

Among the crucial empirical observations about partisan polarization in the U.S. is that it reflects the economic bifurcation (in terms of wealth and income mal-distribution) among the population. Because the poor participate at relatively low levels, and because many recent immigrants remain unnaturalized (hence disenfranchised), the constituency for a real alternative to right-wing policies remains politically inchoate. The solution to political polarization is to attack economic inequality, to resist anti-immigration policies, and so forth. That might, in fact, require Democrats to stop their headlong rush to mimic Republicans and prompt them to seek to forge broader and deeper alliances between constituencies that do not now see one another as allies. But that would require the Dems to be political rather than play the bi-partisan game. What we need is more robust competition.

That sonic boom you heard was Johnson’s point swooping over David Broder’s shiny pate.

Update: Greenwald pwns the mother of all shameless partisan hacks, “Captain” Ed Morrissey.

Recommend this post at Progressive Bloggers