Monday, February 6, 2012

"Moral capitalism" and the rise of the "overclass"

A few days ago, English Prime Minister David Cameron made a speech on..."moral capitalism". There has been much talk about "reforming the system", and "doing something" about "the excesses" of the "golden boys" that led us where we are today. For the time being of course, all this talk is...just talk.

But, as history has proven, capitalism CAN make some "adjustments" - indeed, capitalism made some important reforms during the 1929 Great Crash (for example by breaking up the big banks, etc.).

But those reforms can only happen if the capitalists are pressured by the people. During the 1929 crisis, the worker's movement was much stronger than it is today, and communism was not a failed idea of the past. So, there was a lot more pressure by the people, and the capitalists had to make some concessions. And so they did.

What about today? Well, the capitalists don't really seem to be too bothered by the protests so far. But as the people become more and more aware of how their masters are bailing themselves out and leave nothing but scraps for the rest of us, they get more and more angry. So, the politicians of the ruling class start making promises to "do something" about the bonuses of the "golden boys" (who would have gone bankrupt if it wasn't for them). Of course, the only thing that the governments would have to do in order to punish the "golden boys" would be to stop the bailouts. But that's obviously “out of the question”, as the banks would all go bankrupt in an instant if that were to happen.

So, the theatrics begin in order to convince the masses that they are “doing something” to “fix the problem”:

-The politicians make speeches about "moral capitalism"
, and the "excesses" of the banks that led us here (when in fact those "excesses" (the huge loans that were handed out by the banks) were the substitute that the capitalists used in order to "mask" the industrial capital's flight to Asia for over 20 years now - the true "root cause" of the crisis, is capitalism's endless thirst for more and more profits at the expense of the workers).

-The “fat cats” promise to "behave themselves" from now on, and some of them actually do. But that doesn't last long, as history shows - for example, the big banks that were broken up during the 1929 crisis have now become bigger than ever. That’s what happens if your are successful at achieving your goal (more profits). You become bigger and bigger.

-Some bankers, financial speculators, politicians and industrial capitalists may even go to jail, or at least pay a big fine for breaking a few laws here and there, in order to maximize their profits. They will be used as a sacrificial lamb to appease an offended populace, while the system that produced them remains relatively intact.

And this vicious cycle will go on and on...
Unless the working class realizes that the world would be a much better place without those who exploit us. But in order to overthrow them, we, the workers, must have the ability to rule the world for ourselves, instead of being dependant on out masters. Are we ready to do that? Because if we are not, then our masters are quite content to keep doing what they do best: Being rich (and getting richer) at our expense.

The rise of the overclass
We’ve all heard of the 'underclass’: now its mirror image – a super-rich elite that is equally cut off from the rest of us – is defining the political debate.

When Labour leader Ed Miliband used his conference speech last September to call for a fairer and more humane type of capitalism, he was greeted with widespread derision and mockery. But four months on, every leading politician in Britain is desperately trying to follow Miliband’s lead. What constitutes a fair society is no longer just a matter for academic theorists. Suddenly it’s the hottest subject in politics.

The reason is simple: growing public revulsion at a new class of super-rich who seem to be immune from the restraints that govern the lives of ordinary people. Senior bankers, private equity moguls and hedge fund managers appear cut off from the rest of us. They often pay little or no tax, increasingly live in heavily guarded enclaves, and some have little or no real allegiance to Britain. The sources of their wealth are often mysterious, and appear unrelated to merit. These feral rich pose, in their way, every bit as much of a danger to society as the rioters who stole and pillaged London streets last August.

Taxpayers spent £60 billion bailing out City bankers to save them from bankruptcy. Yet, rather than displaying contrition or gratitude, these bankers continue to pay themselves multi-million pound salaries, unimaginable sums of money to most of us.

The injustice is glaring – all the more so in a time of grinding national austerity, when living standards are falling and unemployment is rising. No wonder that, this week, David Cameron – who loves to claim that “we’re all in this together” – entered the fray with a speech trying to define what he called “responsible capitalism”. He senses that this is an issue where the Right is hugely vulnerable

The New American Divide
America is coming apart. For most of our nation's history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway. "The more opulent citizens take great care not to stand aloof from the people," wrote Alexis de Tocqueville, the great chronicler of American democracy, in the 1830s. "On the contrary, they constantly keep on easy terms with the lower classes: They listen to them, they speak to them every day."

Americans love to see themselves this way. But there's a problem: It's not true anymore, and it has been progressively less true since the 1960s.
Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America's core cultural institutions.
The primary indicator of the erosion of industriousness in the working class is the increase of prime-age males with no more than a high school education who say they are not available for work—they are "out of the labor force." That percentage went from a low of 3% in 1968 to 12% in 2008. Twelve percent may not sound like much until you think about the men we're talking about: in the prime of their working lives, their 30s and 40s, when, according to hallowed American tradition, every American man is working or looking for work. Almost one out of eight now aren't. Meanwhile, not much has changed among males with college educations. Only 3% were out of the labor force in 2008. 
 The Remarkable Political Stupidity of the Street
The Street’s biggest lobbying groups have just filed a lawsuit against the Commodities Futures Trading Commission, seeking to overturn its new rule limiting speculative trading.

For years Wall Street has speculated like mad in futures markets – food, oil, other commodities – causing prices to fluctuate wildly. The Street makes bundles from these gyrations, but they have raised costs for consumers.

In other words, a small portion of what you and I pay for food and energy has been going into the pockets of Wall Street. It’s just another hidden redistribution from the middle class and poor to the rich.

The new Dodd-Frank law authorizes the Commodity Futures Trading Commission to limit such speculative trading. The commission considered 15,000 comments, largely from the Street. It did numerous economic and policy analyses, carefully weighing the benefits to the public of the new regulation against its costs to the Street. It even agreed to delay enforcement of the new rule for at least a year.

But this wasn’t enough for the Street. The new regulation would still put a crimp in Wall Street’s profits.

So the Street is going to court. What’s its argument? The commission’s cost-benefit analysis wasn’t adequate. 

Revealed: bankers' secret meetings with ministers
The full scale of big banks' lobbying of the Chancellor, George Osborne, to get him to water down banking reforms can be revealed today. Senior bank executives met or called Treasury ministers nine times in the weeks after Sir John Vickers published his landmark proposals on how to prevent another banking crisis, The Independent can reveal.

Bank bosses are fighting furiously behind the scenes to limit any changes to the way they do business. Fears are growing – articulated by Sir John himself – that the banks are successfully thwarting the Government's plans to overhaul the British banking system and the Treasury is weakening some of the key reforms as a result of intense lobbying.

Revolving Door: From Top Futures Regulator to Top Futures Lobbyist
While America focused on New Hampshire, a classic example of revolving-door politics took place in Washington, going almost completely unnoticed. It’s a move that ranks up there with the hire of Louisiana congressman Billy Tauzin to head the pharmaceutical lobbying conglomerate PhRMA -- at a salary of over $2 million a year -- immediately after Tauzin helped ram through the Medicare Prescription Drug Bill, a huge handout to the pharmaceutical industry.

In this case, the hire involves Walter Lukken, who toward the end of the Bush years was the acting head of the Commodity Futures Trading Commission. As the chief regulator of the commodities markets, it was Lukken’s job to spot and combat speculative abuses and manipulations that might have led to artificial price hikes and other disruptions. 

HUSSMAN: 'Wall Street Is Little More Than A Glorified Crack House'
Frankly, I am concerned that Wall Street is becoming little more than a glorified crack house. Day after day, the sole focus of Wall Street is on more sugar, stronger sugar, Big Bazookas of sugar, unlimited sugar, and anything that will get somebody to deliver the sugar faster. This is like offering a lollipop to quiet down a 2-year old throwing a tantrum, and expecting that the result will be fewer tantrums.

What we have increasingly observed over the past decade is nothing but the gradual destruction of the ability of the financial markets to allocate capital for the benefit of future growth.

Nietzsche famously said "What does not kill me makes me stronger." The corollary is "What constantly rescues me makes me weaker." The world will only stop looking for bailouts when policy makers stop handing them out.

“And the great owners, who must lose their land in an upheaval, the great owners with access to history, with eyes to read history and to know the great fact: when property accumulates in too few hands it is taken away. And that companion fact: when a majority of the people are hungry and cold they will take by force what they need. And the little screaming fact that sounds through all history: repression works only to strengthen and knit the repressed.”
-John Steinbeck
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Paul Lafargue - The Bankruptcy of Capitalism

Paul Lafargue - The Bankruptcy of Capitalism (1900)
 The nineteenth century was the century of capitalism. Capitalism filled that century to overflowing with its commerce, its industry, its manners, its fashions, its literature, its art, its science, its philosophy, its religion, its politics and its civil code, more universal than the laws imposed by Rome upon the nations of the ancient world. The capitalist movement, starting from England, the United States and France, has shaken the foundations of Europe and of the world. It has forced the old feudal monarchies of Austria and Germany and the barbaric despotism of Russia to put themselves in line; and in these last days it has gone into the extreme East, into Japan, where it has overthrown the feudal system and implanted the industry and the politics of capitalism.

Capitalism has taken possession of our planet; its fleets bring together the continents which oceans had separated; its railroads, spanning mountains and deserts, furrow the earth; the electric wires, the nervous system of the globe, bind all nations together, and their palpitations reverberate in the great centers of population. Now for the first time there is a contemporary history of the world. Events in Australia, the Transvaal, China, are known in London, Paris, New York, at the moment they are brought about, precisely as if they happened in the outskirts of the city where the news is published.

Civilized nations live off the products of the whole earth. Egypt, India, Louisiana, furnish the cotton, Australia the wool. Japan the silk, China the tea, Brazil the coffee, New Zealand and the United States the meat and grain. The capitalist carries in his stomach and on his back the spoils of the universe.

The study of natural phenomena has undergone an unprecedented, an unheard-of, development. New sciences, geology, chemistry, physics, etc., have arisen. The industrial application of the forces of nature and of the discoveries of science has taken on a still more startling development; some of the geometrical discoveries of the scientists of Alexandria, two thousand years old, have for the first time been utilized.

The production of machine industry can provide for all demand and more. The mechanical application of the forces of nature has increased man’s productive forces tenfold, a hundredfold. A few hours’ daily labor, furnished by the able-bodied members of the nation, would produce enough to satisfy the material and intellectual needs of all.

But what has come of the colossal and wonderful development of science, industry and commerce in the nineteenth century? Has it made humanity stronger, healthier, happier? Has it given leisure to the producers? Has it brought comfort and contentment to the people?

Never has work been so prolonged, so exhausting, so injurious to man's body and so fatal to his intelligence. Never has the industrial labor which undermines health, shortens life and starves the intellect been so general, been imposed on such ever-growing masses of laborers. The men, women and children of the proletariat are bent under the iron yoke of machine industry. Poverty is their reward when they work, starvation when they lose their jobs.

In former stages of society, famine appeared only when the earth refused her harvests. In capitalist society, famine sits at the hearth of the working class when granaries and cellars burst with the fruits of the earth, and when the market is gorged with the products of industry.

All the toil, all the production, all the suffering of the working class has but served to heighten its physical and mental destitution, to drag it down from poverty into wretchedness.

Capitalism, controlling the means of production and directing the social and political life of a century of science and industry, has become bankrupt. The capitalists have not even proved competent, like the owners of chattel slaves, to guarantee to their toilers the work to provide their miserable livelihood; capitalism massacred them when they dared demand the right to work – a slave’s right.

The capitalist class has also made a failure of itself. It has seized upon the social wealth to enjoy it, and never was the ruling class more incapable of enjoyment. The newly rich, those who have built up their fortunes by accumulating the filchings from labor, live like strangers in the midst of luxury and artistic treasures, with which they surround themselves through a foolish vanity, to pay homage to their millions.

The leading capitalists, the millionaires and billionaires, are sad specimens of the human race, useless and hurtful. The mark of degeneracy is upon them. Their sickly offspring are old at birth. Their organs are sapped with diseases. Exquisite meats and wines load down their tables, but the stomach refuses to digest them; women expert in love perfume their couches with youth and beauty, but their senses are benumbed. They own palatial dwellings in enchanting sites, and they have no eyes, no feeling for joyful nature, with its eternal youth and change. Sated and disgusted with everything, they are followed everywhere by ennui as by their shadows. They yawn at rising and when they go to bed. They yawn at their fests and at their orgies. The began yawning in their mother’s womb.

The pessimism which, in the wake of capitalist property, made its appearance in ancient Greece six centuries before Jesus Christ, and which has since formed the foundation of the moral and religious philosophy of the capitalist class, became the leading characteristic of the philosophy of the second half of the nineteenth century. The pessimism of Theognis sprang from the uncertainties and vicissitudes of life in the Greek cities, torn by the perpetual wars between rich and poor; the pessimism of the capitalist is the bitter fruit of satiety, ennui and the impoverishment of the blood.

The capitalist class is falling into its second childhood; its decreptitude appears in its literature, now returning to its starting point. Romantic literature, the literary form proper to the capitalist class, which started out with the romantic Christianity of Chateaubriand, is returning to the same point, after passing through the historical novel and the character novel. Capitalism, which in its virile and combative youth in the eighteenth century had wished to emancipate itself from Christianity, resigns itself in its old age to practices of the grossest superstition.

The capitalist class, bankrupt, old, useless and hurtful, has finished its historic mission; it persists as ruling class only through its acquired momentum. The proletariat of the twentieth century will execute the decree of history; will drive it from its position of social control. Then the stupendous work in science and industry accomplished by civilized humanity, at the price of such toil and suffering, will engender peace and happiness; then will this vale of tears be transformed into an earthly paradise.
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