Capitalism Breaking Down
Since the Great Recession of 2008-2009, confidence has been shaken in the financially dominated form of capitalism as seen in the USA and EU. Economic crisis spawned by financial bubbles appear to be an acccepted component of the notorious instability of the capitalist system in its pure forms. Howeever, given other grievances pile up, such as burgeoning inequality (and accompanying loss of support, especially generational) and the inability to acknowledge and address carbon externalities (sort of concern with the environment --- a misnomer that I will tackle later). So, I will break down these flaws and vulnerabilities (not all the cause of capitalism) into several categories that I will then explain more fully.
- Slowing economic growth (stagnation) can be anticipated as the workforce and its productivity faces long-term decline. A compelling argument is made by Robert J. Gordon on this significant trend. Since WWII, a global regime dedicated to monetized material growth (GDP)has dominated policy virtuallly worldwide. The rewards appear broadly shared until the mid-1970s, but has skewed toward the ultra-rich since, with the accompanying grasp of political power. Eventually, profits will shrink and capital accumulation with declining profit and, as we willl see below, much higher interest rates. Capitalism contains its own macro-economic dynamics. What goes up can go down, and probably will. Watch closely.
- World population levels off, approaching zero population growth (ZPG) in the richer nations of the northern hemisphere (OECD in the jargon of the United Nations). This means that fewer workers will be available (and may not be needed as technology advances) but that aggregate consumption may also level off --- and revenues for firms.
- Meanwhile, inequality within nations soars, excluding large portions of the citizenry from the gains of GDP and accumulation of wealth. Now, reactionary forces gather discontent, channeling resentmment toward such scapegoats as dispossessed refugees, the multitude of people seeking refuge as they travel from south to north --- an ugly spectacle. However, lower GDP nations and regions expand monetized economic activity and population faster than mature economies, so a worldwide convergence of GDP per capita is underway (Pikkety). The resulting "ecology of rich and poor" has the potential to intensify environmental justice concerns as the planet heats up and equitorial regions become uninhabitable.
- As governments, especially in the capitalist north (as opposed to mixed economies elsewhere) practice the political expedience of deficit spending of the Keynesian model along with largely hidden expansions of military forces and imported arsenals. Such deficit spending creates national debt surges, especially since the low-interest rates since 2008. Inextricably, fiscal crises will propel austerity on deprived citizenry. Neglected roads, airports, bridges and other civil engineering infrastructure will fester and decay. The rich, gathering in armored enclaves, will separate from the Others, creating a need to suppress democracy and control restless populations. The rising interest rates and potential for inflation will not contribute to GDP growth or business invesment, thus gains in productivity.
- Then along comes climate change, its largely unknown global and regional impacts, and the stiffening resistance to prevention thrown up by the ideology of denial backed by the Dark Money that benefits from what Naomi Klein dubs Disaster Capitalism. Demands for "armoring" cities and regions with dikes and walls will intensify as will calls for assistance with the damage of other "natural" disasters such as floods, tornadoes, fires, drought, crop losses, pest infestation, etc. Patropnage and pork will have another facet --- witness Puerto Rico. In a fiscal crisis, such luxuries can only go to the Social Darwinists who, ironically, created the havoc. More control, more military, more repression can be applied, for a while. The seminal Stern Report anticipates a decline of 5% to 8% of global GDP to respond to lost productivity and social overhead capital.
- Geopolitics will resemble earth's crust shifting on tectonic plates. The USA will be hard hit, with the fuller realization that despite high, but stagnating and inequitable, per capita income, its dashboard of indicators of well being, including longevity, infant and maternal mortality, happiness, and environmental stress put the USA behind most industrialized countries and even behind some developing nations (see Costa Rica and Cuba). Meanwhile, rising superpower China shifts awkwardly to a consumer-based economy despite its mounting piles of debt, and expands its influence through its Belt and Road colonization, along with the debt service and resource grabs it imposes on its client states. The EU stagnates. Southeast Asia, a mixed group, sees its denser and poorer nations (Bangladesh, Pakistan) deteriorate with climate damage. India, like China, a population and land mass giant, strains to control its internal ethnic, class, and regional disputes. Little cooperation on global warming or economic globalization can be anticipated.
- Despite all of this, the status of women will improve, but not necessarily within capitalisms, however practiced. In effect, the sheer potential and subjective will of this largely disvalued majority of humanity will surface as a force for participation, self-improvement, and justice. This trend is happening around us today, often hidden from view, crying out for disclosure, emulation, and sharing.