Capitalism´s Death Wish

M.A. Kevin Capuder

Chair of Business Administration Department

Many writers have asserted that capitalism must have a death wish. Most commonly, the argument put forward has to do with global
warming and future environmental disaster.

The self-interested eliteplayers in capitalism can’t seem to view self-interest beyond their own generation. You see, individuals can be rational and act in their ownself-interest but this produces overall irrational behavior for the system. So we will all die.

Another view, widely held today, is that the excesses of the financial industry have caused massive societal cost which we (politicians and financial institutions) are in herently unable to control. The Marxists always believed that this was systemic undercapitalism. Again, following rational self-interest, the system of capitalistfinance produces crises and disasters which drain the incomes and savings of the less privileged (and oppress the workers of the world). And the perpetrators are not only not jailed, they are today made whole. Further, they tighten their control of the political/economic system even after disaster.Witness the recent watering down of the Dodd-Frank financial reform bill in the U.S. While the original bill was not much in the way of true regulatory reform,it is now weaker. In December the U.S. Congress passed, and President Obamasigned, a spending bill with a provision specifically designed to weaken regulation on big banks – Citigroup, JP Morgan Chase, Goldman Sachs, Bank of America and Wells Fargo. The piece of the legislation involved was, in fact, written by Citigroup. Representative Alan Grayson (D-Florida) called the bill “a good example of capitalism’s death wish”. Less than a week later, the Federal Reserve granted a two year delay on the implementation of another related part of Dodd-Frank. The largest banks are today larger than they were in 2007and even more dominant in their own regulatory process. The five named above controlmore than 90% of the $700 trillion U.S. derivatives market. So we will all die poor.

A last view, most clearly expressed by Martin Wolf of the Financial Times, is that we are politically in capable of resolving the current Eurozone crisis with anything resembling speed. This arises fromself-interested delusion as well. Germany views the profligate southern Europeans as bad boys who must be made to suffer the consequences of their own behavior. Germany’s well-founded historical fear of inflation and its moralizing tone have paralyzed policy makers in Brussels and Frankfurt. They seem locked into an approach which ignores the potential for destabilizing political radicalism in Europe. How long can Greek democracy hold together (there are elections this month)? Or Spanish democracy? Soon to be followed by Italian democracy? All to guarantee that debt is properly serviced, bad behavior is punished, and money is not electronically printed to solve the debt problem. Its hould be apparent to all that without real debt relief, Greece has virtuallyno chance to revive its economy as long as it remains in the Eurozone. Mario Draghi, President of the European Central Bank, continues to talk about doing ‘whateverit takes’ to solve the Eurozone crisis. While this has a short term calming effect on markets, his words do nothing. As a worst case scenario, this may allend in disaster, bringing to power radical parties through the ballot box or on the street. So we will all die poor, perhaps in the flames of revolution.

More likely the prognosis is continued delay and stagnation. Our political leaders seem incapable of addressing the difficult issues we face. The least painful strategy for them is to kick the can down the road. So we will not all die, so much as wither.