Celebrating Capitalism's Death? Not so Fast...
Welcome to our brave new post-Capitalistic world.
Today our leaders in Washington announced (all the details to come later) that the Federal Government is going to rescue the financial system from total collapse.
You can read the story as reported by The New York Times here and, of course, more details of this plan will come out in the hours and days ahead. But I want to address the very first part of The New York Times' report: the reaction of the markets around the world...
Stocks shot wildly upward Friday morning after the federal government moved to try to restore confidence in the financial markets.The Dow Jones industrial average rose more than 400 points only moments after the opening, and later settled up more than 300 points. The broader Standard & Poor's 500 was up nearly 3.5 percent. Markets in Europe and Asia also traded significantly higher, with stocks in London and Paris up more than 8 percent.
There is a celebration going on. This doesn't surprise me. But I'd like to raise the following point from the world of Systems Thinking:
Just because you stop something old that is bad, doesn't mean you will automatically start something new that's good.
Our government has stopped something it considers to be bad. It saw the collapse of the economic system coming. The action it has taken has -- and this is me talking, not our government, of course -- ended Capitalism here in America.
Actually, its not just me talking. Here's a report from The New York Times on what financial leaders in the rest of the world think about what we are doing here. They know America is no longer a Capitalistic society either. From this September 18th report...
"I fear the government has passed the point of no return," said Ron Chernow, a leading American financial historian. "We have the irony of a free-market administration doing things that the most liberal Democratic administration would never have been doing in its wildest dreams."The bailout package for A.I.G., on top of earlier government support for Bear Stearns, Fannie Mae and Freddie Mac, has stunned even European policy makers accustomed to government intervention -- even as they acknowledge the shock of the collapse of Lehman Brothers.
"For opponents of free markets in Europe and elsewhere, this is a wonderful opportunity to invoke the American example," said Mario Monti, the former antitrust chief at the European Commission. "They will say that even the standard-bearer of the market economy, the United States, negates its fundamental principles in its behavior."
Mr. Monti said that past financial crises in Asia, Russia and Mexico brought government to the fore, "but this is the first time it's in the heart of capitalism, which is enormously more damaging in terms of the credibility of the market economy."
We no longer have a "market economy" here in America. Capitalism is dead.
But what are the people on Wall Street and other financial centers celebrating? The end of something bad. But -- I assert -- not the start of something new that is good.
Our government literally sees that the Titanic is sinking. And it is using its extraordinary power to raise the Titanic out of the ocean, shake all the water out of it (literally bailing it out), and place it back in the ocean hoping it will then sail on.
But the Titanic cannot sail on.
That's because the Titanic that is our global economic system is fundamentally flawed. It is based on a belief that we are still sailing in a zero-sum world, a world of scarcity, a world where there will always be too many people chasing too few resources. The sustainability scientists... and those schooled in advance social and managerial sciences as well... know this is no longer true. They know an abundance-based world is what we live in now, from an objective reality point of view. They know that the only thing in the way of that becoming the reality we all live in is the design of our political-economic system.. because it is still a scarcity-based design.
The American government's effort is very impressive in scope... but not in sophistication. It is an 800 pound gorilla approach, involving a huge willingness to throw money at the problem. But, intellectually speaking, it is "the blind leading the blind". It is "experts in the past" attempting to solve a problem whose root cause they cannot see. None of them has ever even heard of - as best I can tell - that scarcity is an objectively obsolete way to view the world. None of them has ever seen what is at the foundation of the work of people such as William McDonough, Amory Lovins, or the late Buckminster Fuller.
It is a tragedy in the making, because they are missing a huge opportunity to truly do the right thing... to take a sophisticated -- rather than 800 pound gorilla -- approach to this crisis.
A sophisticated approach.... one led by people who know how to work with the fact that the present is different from the past -- i.e. designers -- would address the fundamental fact that our economy is based on a zero-sum mental model in a global reality that is actually an abundance-based world waiting to be born.
As a designer myself, I saw this situation when there was a smaller -- but still very visible -- challenge to the stability of the global economic system. This was in October of 1998. At that time, BusinessWeek published an editorial called "The Age of Uncertainty". In that October 26, 1998 editorial, BusinessWeek said:
In the blink of a summer's eye, the psychology in America has changed totally. People suddenly don't know what to think about the economy, their investments, or their future. Before July, the U.S. had economic nirvana. Now confusion reigns. Volatility dominates markets. Hedge funds blow up. Deflation looms. The Asian contagion spreads. Russia defaults. The dollar plummets. CEOs worry. And Washington fiddles with impeachment. Yet the economy still feels pretty strong. So what is really going on out there?
In response to that editorial, I wrote a letter which BusinessWeek published on November 16, 1998. Here's what I wrote back then:
IN A GLOBAL ECONOMY, ALL PARTS NEED TO PROSPER"So, what is really going on out there?'' you ask, in ''The Age of Uncertainty'' (Editorials, Oct. 26). For a more complete answer, look to the principles of systems thinking. A ''confluence of events'' is not the only thing masking the true fundamentals of the global economy, creating this ''fog'' you refer to. The ''fog'' is being created by the tendency to see globalization from a perspective grounded in our history of living in a world of separate, independent nations. The world's economy has become one interdependent system, yet we continue to view it through independent eyes.
What's really going on, from a systems perspective, is that a new, single, global system is struggling to be seen for what it is -- a system that can prosper only if all of its parts prosper. It is a single system, one that innately knows that either all of it will make it or none of it will. That's the way healthy systems work. The business world will prosper beyond its wildest imagination once it cuts through this fog and stops viewing the future through ''past-focused eyes.''
I still believe everything I wrote almost ten years ago.
The business world will prosper beyond its wildest imagination once it sees the future for what it can be. Some businesses will have to change more than others to take advantage of this new opportunity, but that's what the best businesses do, right? (Weapons manufacturers will have to change the most, as war is finally seen as the obsolete "international development tool" that it is. But that's okay. The skills of those corporations can easily be used to study, analyze, and produce constructive solutions -- especially highly scientific ones -- to our sustainable development challenges.)
This business world mindset is why the business strategy book Blue Ocean Strategy has been a global best seller since its release in 2005... because business leaders are always looking for the "blue ocean" of "no competition"... the economic landscape where they can operate first.. offering new products and services that do and offer things that no other business is selling.
Well, there is a huge blue ocean available to all the world's businesses now. It is the post-scarcity, post-zero sum Capitalism world that is waiting out there.... just waiting for us to reach out for it.
I hope at least some of our business and political leaders are in enough of a shock that they will look for new ideas and new answers such as those I am talking about here.
We don't have to settle for 800 pound gorilla thinking. We can innovate our way out of this crisis, with our eyes completely open to the true nature of the challenge we face... open to understanding the root cause of the challenge we face. And by understanding the root cause of the crisis we are in - that we literally see fighting as the "first principle" of living when cooperation and collaboration should be the first principle -- we can design our way to a better future... to an economic system that will provide all businesses -- and all the people on Earth - with more prosperity than they ever believed possible.
We must not just stop something old that is bad. We must start something good that is new.
Addendum: Saturday the 20th, 8:45am
To give people hope that society can continue to evolve (mature), I invite you to watch the opening of this landmark TV series "The Day the Universe Changed", hosted by James Burke, which first ran in the late 1980's on PBS. Mr. Burke went on to host the similar series about this history of human progress, "Connections", "Connections2" and "Connections3". Mr. Burke's current work can be found here.
Follow Steven G. Brant on Twitter: www.twitter.com/SteveBrant
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Huge giveaways to the rich is exactly what capitalism is about.
Dear Steven
What we are seeing and a far cry from a repudiation of its basic principlesof capitalism.
Capitalism in this country is the private privilege of creating, and implicitly directing the use of, the nation's money,
- towards hedge funds, futures, derivatives, CDO's and CDS's, the exact manifestation of modern capitalism.
-directing the nation's money away from job creation, productive uses of resources and needed services is the other manifestation of modern capitalism.
So, the death of capitalism is clearly not yet on the page.
Transferring humongous unvalued debt interests to taxpayers does not reflect
the end of capitalism.
To the contrary, it represents capitalism's finest hour.
Capitalism's end, and the beginning of true free enterprise, will happen when the people rise up through their Congress and OVERTURN that private privilege of creating ALL of the nation's money as debt, payable to those bankers, and replace that power with a public debt-free money creation system.
The end of modern capitalism is obviously overdue.
The way to end the celebraton of the fat cat transfer of the financial malaise onto the backs of the American workers they have so long ignored is to implement monetary reform.
Bring back the Chicago Plan.
READ THIS, and be informed.
http://www
And this:
http://www
And capitalism's finest hour will fade into the past, rather than being the yoke around our collective necks.
apologies.
that should read, " what we are seeing is a far cry....."
that cut to 250 does me in every time.
Why is it that, when dealing with technology (most notably, - weapons), we are making progressive strides as a society we would have never have previously thought possible but when it comes to economics, we can't seem to evolve from continually debunked 18th century "Free Market" theory? The guys that designed this economic system wore wigs and used ink-wells but academic echo-chambers, public figures and so-called "Think-Tanks" never dare to challenge it for fear of being labelled as "Socialist" and socially crucified like a grade-school kid caught with a Neil Diamond CD.
Isn't time to bring critical thought back to mainstream?? Am I alone out here?....H
Both present.
And, with you.
Over the weekend a group of us pondered how the blogs enable us to speak, on the one hand, but only allow us to "appear" as a collective of opinions.
There are a number of HUFFPO bloggers I would like to be communicating with on a regular basis and I do not mean only joebhed's fans, though they are an excellent core.
This comment will soon disappear into the page-rolling forward.
I think we can do better as a proper form of dialogue on some progressive ideas for solving today's problems.
I am not sure how to do so - the undying, far left , progressive HUFFPO bloggers chat room, coming soon to a keyboard near you.
but, how.
yes, we're out here.
"...the post-scarcity, post-zero sum Capitalism world that is waiting out there.... just waiting for us to reach out for it."
Sure, that's the ideal. But in terms of resources, the Earth is finite and so are we. A world population of over 6 billion and growing perpetuates scarcity, not capitalism. Fresh water, fresh air, health care, education are all scarce resources.
When the hurricanes are headed for Cuba, the loss of life is a handful. When they hit our shores, we get New Orleans or Galveston tragedies. Dylan sang it as "A hard rain's gonna fall."
Short of a plan for population control ala China, the ideal you propose is no more realistic than the free market dream. We have a whole lot more suffering to endure before we see even the inkling of a change.
See Steven G. Brant's Profile
Hi January,
"The Earth in finite" is only true if you don't consider the fact that the Earth is part of a larger system which includes the Sun. The real truth is, the Earth has been receiving energy from the Sun since the beginning; and that energy has been used by plants and has been a major cause of weather patterns. The Earth receives more energy from the Sun in a day than all the people on Earth could ever use.
All that is missing is an organized, global effort to capture more of the Sun's energy to power a greener version of our lifestyles
So, please... while the Earth - as a planet - may be finite in size, it is part of an Earth - Sun system which contains far more energy than we could ever use.
A fair pipedream, but you are glossing over the hard aspects of January's assertions. Your forward thinking is admirable, but from what I've read so far you are mostly offering blanket platitudes that avoid hard questions and political realities.
Steven,
I think you are really right on target. The Bush administration might have just killed capitalism. It took Nixon to go to China. It took the incompetence of the Bush Administration to kill capitalism.
I work as a design engineer for gas turbine engines.
The technology exists today to "close loop" a complete system so no C02 enters the atmosphere. The entire cycle is "zero emissions" as the combustion gases do not enter the atmosphere. The oxygen that is burned in the combustion cycle is replaced by "biological scrubbers" which use the C02 that the turbine produces. My company does not promote this as there is "no market" for the technology. That is there is no penalty to produce C02.
The "waste heat" of a gas turbine is about 900 degrees F, which is plenty hot to produce steam (from sea water if desired ). This could run a smaller steam turbine before being turned into fresh water. The salts could be bonded into a form of concrete that we could use for bike paths and such.
None of this is happening today because there is "no market", yet it is clearly what America and the rest of the world needs. This "crisis" may expedite the solutions both of us want. I am very disappointed that my generation left the world in worst shape than we found it, but I am optimistic that this may be the "darkest hour before dawn".
Representative democracy is an anachronism that allows the powerful to use the power of government to further their interests at the expense of everyone else.
The current situation is just an outgrowth of that.
I think Steven is saying the same thing from a slightly different perspective.
What is very clear looking at the Treasury proposal is that a solution crafted by those who created the problem in the first place, is not going to solve the problem for the commonweal and probably not even for the powerful who are trying to use the coercive power of the government to transfer a lot of wealth to themselves at our expense.
Maybe we actually need a full blown crash to get us to recognize that our form of government is not working, here in the US or anywhere else in the world.
Okay, a few basic items...
Whatever you many think of “capitalism,” the U.S. has not been a “capitalist” nation since 1913 when its economy was hijacked by a private bank monopoly cum Ponzi scheme better known as the “Federal Reserve” Corp (not federal, no reserves). And Gilded Age brand Fascism made the west a parody of "capitalism" well before that.
$1,240,000
Paulson and Beranke are actually defending an over QUADRILLION dollar ($1,24 Quadrillion or over $1000 TRILLIONS) derivates casino style Wall Street bubble in what amounts to almost 20 times the entire earth’s global GDP (Bank of International Settlements figure).
This is garden-variety Fascism at the merger of state under corporate monopoly power for another Crash @ the Kool-Aid State:
http://www
What this has always been about is not just corporate welfare but organized corporate crime where insiders take easy profits at the bubbles and socialize the losses at the crash of boom-crash cycles through extortion and control of a Washington-MSM axis.
Well, I must say, you've given me something to consider and research. I've never thought of the situation in those terms before, but judging by your brief synopsis, the basic premise seems plausible.
Capitalism in America has been dead for 80 years, ever since the socialist FDR came to power. We have had 80 years of socialism. Every single administration since FDR has made the system more and more socialist.
The current crisis has also been created primarily by the Government.
By forcing banks to make loans to unqualified people to meet racial quotas, they destroyed long held lending norms in the industry. The banking industry was reckless because it knew that its cronies in the Government would bail it out if it screwed up. If the Government had kept its nose out of the banking industry, none of this would have happened.
Why don't you compare the expenditures for social programs to those of military programs over the same 80 years and see what new ideas might pop into your head?
Have a look at Government expenditure as a percentage of the GDP over the last 60 years or so. Clearly, Government is spending more and more of our money and taking away more and more of our freedom with regulation.
What utter nonsense.
We had a good 75 years of growth and prosperity as a result of government regulation of the economy and we now face the mother of all crashes as the result of the undoing of those regulations over the past 30 years.
See you in the free market breadline JuggerNaught.
What we had was 10 years of misery followed by 65 years of growth and prosperity despite increasing Government regulation
We have had increasing regulations and increasing cronyism (which caused the regulations to be less strongly enforced for the cronies of the people in power)... and guess what, both the republicans and the democrats are guilty of promoting cronyism.
I totally agree!! It was FDR's fault all this happened. It's about time, as a nation, that accountability be placed where it belongs. Therefore, I've already started a petition to demand Carol Burnett be investigated for her negligent role in Global Warming.
Please, join me in my crusade.
While I loathe the wasting of time to respond here, please see
http://www
already done this.
"We must not just stop something old that is bad. We must start something good that is new."
Let's not be too ambitious Steve. I would be glad if we even started something mediocre that is new.
It would be nice to save the whole world by a new sensitive capitalism. I would call "mediocre" figuring out where we actually are with the current crisis before we make any further trillion dollar commitments
on the Secretary of the Treasury's barely supported word. Evidently actually knowing merely what is going on and why would be new to the entire staff of Lehman Brothers, AIG and many other bands of financial geniuses. They and we would then be in a whole new place together.
Let's get to that point.
Then we can save the world.
Once we do figure out where we actually are, or should i say if we ever figure out where we actually are then we do desperately need to take this approach. The rapid advancement of technology paired with our human ingenuity gives us an opportunity to create a system that works for all of us. It is not a pipe dream.
Steven, thank you for another provocative article!
I suggest socialism and capitalism as two aspects of "bureaucratism", where greed and power accelerate toward the top and undermine just application of any "ism".
We need new design which integrates the most beneficial of the old with imagination and inspiration guiding us into a future which fairly benefits all mankind.
I suggest Open Source models as one component. Linus Torvalds and Bill Gates represent two aspects of the old. Bill became the richest American while bringing Windows to the world. Linus became famous and admired by freely gifting the world Linux. Long after Bill is forgotten as a shadow in the dark corridors of time Linus will heralded as a pioneer of altruism and benefit to all mankind.
Bill has my money. Linus has my love and several of my computers past, present, and future.
Economic/Political Open Source! What are the ramifications?
Since you go back to 1998, we should also talk about LTCM. The fact people are running around now saying, "How could we have known what would happen?" is pretty disingenuous in light of the fact the same thing happened 10 years ago, albeit on a smaller scale--and the fact that Glass-Steagal was lifted AFTER LTCM is mind boggling. Some people back then worried about the moral hazard the Fed was creating when stepping in 10 years ago, and they got that right in spades. These finance companies didn't look at LTCM as a warning sign but as the MODEL: Make lots of money on crazed derivatives and when the system breaks, call on Uncle Sam.
Good article Steve. Our government is using tax money to prop up bankers that lent money at incredibly steep rates -- and paid themselves staggering amount in their restless pursuit of greed -- and is now begging for handouts.
These people sold mortgages at 12-percent APR and credit-card debt at 30-percent, and when anybody raised an issue of morality they self righteously proclaimed "let the free market reign." But when the defaults predictably came in, and their own lifestyles were all the sudden threatened, those same free-market principles gave way "for the common good."
A Blue Ocean Strategy approach to all this might be dis-intermediation of these financial parasites. Let people who want to give loans pool their money and lend it at reasonable rates to others. Let others insure it, much like they buy and sell stock options.
Steven, there is much in our psyche that underlays these systems--hard wired genetic drives that science still struggles to understand, regional environmental imperatives that drive our technological evolution while molding our thinking in narrow and rigid ways, cultural and religious myths attempting to explain the unexplainable, failing miserably. The one part of the human system that affects each of us on the planet is economics.
The brutal repetition of history, is that money and the power for those who have it, is part of an economic system that was never intended to succeed as you and I would view success. That market manipulations we are now seeing are meant to further enrich the very few at the expense of the rest. That "failure" in this system IS success; the transfer of wealth and the continued reign of the few are its only goals.
Far from being broken, the system works perfectly for those whose hands are on the levers. That freedom from the needs and wants and desires we are trained to aspire toward from birth, would be the greatest threat this system could ever see. The 60's cultural upheaval was a threat which only the heaviest of boots could stamp out. Whatever this money system that we have is called--and the names are there only to add another layer of deceit, it is a chameleon with nine lives. Innovation is the last thing it wants unless there is a way to make it pay!
See Steven G. Brant's Profile
All good points, ROL, (what's your real first name?).. but the key to all that you know need changing is to think in terms of what exists that is driven by objective reality and what exists that is driven by cultural norms. Many things that were once acceptable aspects of human behavior have changed throughout history... after something better came along. The streets of NYC used to be filled with horse manure, until the automobile and electric powered street car were invented. Spitting in public was once acceptable behavior (and "spitoons" (sp?) were located everywhere). Smoking in public too. And then there are bigger cultural norms like slavery...
Time and time again, humanity has evolved. I highly recommend the landmark TV series "The Day the Universe Changed" (first broadcast in the 1980's) hosted by historian James Burke. (You can find it on YouTube. I'll add a video at the end of my essay... rather than in this comment)
We can gain control over whether or not humanity continues to evolve (mature) or not. It is possible. All that's required is for true progressives (not "left vs. right" progressives) keep pushing society forward.
Yes, culture can and should evolve. Not grow--as in the economic imperative that capitalism thinks it requires--but change as the world around us demands and make accommodations with it that serves both our best interests.
In reading Buddhist philosophy or the Dalai lama's books, I'm struck by how much personal responsibility they invest each of us with. That change really does come from within. And their hope for a spiritual leap in evolution that will propel humanity to a higher state. When I see how many people are ready to vote Republican again in spite of the pain they've created, I feel that the Buddhist have really picked an uphill battle for themselves. We don't change easily.
As for Burke, I have both his Connections and The Day the Universe changed series on DVD and recommend them to all. He is a genius at establishing the links between seemingly random events and their eventual culmination in history changing inventions or social movements. He makes systems easy to understand!
Shon
Capitalism not only lives but lives stronger, America will never be a socialist country like Cuba.
Populist concessions of mortgages based on a socialist vision of the economy died for the benefit of real capitalism.
Never again we will see socialists house representatives destroying our economy doing this kind of populism.
This kind of socialism died for the sake of America.Th
The Democratic Party will never be a socialist Party and America will never be socialist!
You use "socialist" like it's a bad thing. Seems to be good enough for Wall Street.
I think we'd all be closer to the truth if we could just call it Fascism--the collaboration between Government and Business that Mussolini made famous by having the trains run on time. The Bush family's history is one of overt support for Fascists, and overthrow of America.
what does this even mean? "Capilalism not only lives but lives stronger."
Your response of ten years ago brought to mind the old adage... a chain is only as strong as it's weakest link. Now we are too self oriented..
Literally, the Titanic sank in 1912.
See Steven G. Brant's Profile
Yes, and the US government is acting like "the hand of God" in raising today's Titanic out of the water, thinking that that will make things better.
My analogy would be closer to "Pet Cemetary"
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