Sunday, February 24, 2008

The Trouble With Capitalism blogging

Note: To get this blog off to a start, I'm copying my recent entries on economics from my more political blog, Liberal Hyperbole. Henceforth, the Trouble With Capitalism blogging will continue here, for the most part.

So, since I've gotten myself an old new book from the library, The Trouble With Capitalism: An Enquiry into the Causes of Global Economic Failure by Harry Shutt, and I'm reading it now, I thought I'd share some of the choicer excerpts as I go along. Some, I'll just post without comment; others, I might point out things that have come to pass since then, or how it relates to my own beliefs in the area, or even where I feel it might be in the wrong. Keep in mind, it is a 1998 book, so some of it is a bit dated. I might even pick on it a bit in places, for instance where it says the Interwebs don't seem to be really taking off. But it'll be good-natured; in that example, his thoughts seem to have been born out eventually by the bursting of the New Economy dot-com bubble.

A choice bit from the very first page of the introduction, to start off with:

The rapid advances of this new consensus [the superiority of laissez-faire capitalism] to near universal acceptance owes much to the recent conspicuous failure of economic models based on extensive state intervention to deliver adequate levels of prosperity or security — most spectacularly in the fallen Soviet empire. Yet despite this apparently compelling logic, anyone endowed with a reasonable capacity for impartial observation of everyday realities — and for treating official propaganda with due scepticism — might recognise that such claims of a triumph for the free market and of its supposedly magical powers are profoundly perverse, for at least three reasons.

Further on in the introduction (added 2-28):

This book is an attempt to expose the realities of the contemporary evolution of the global capitalist economy, and thereby to dispel the illusions which lie behind the neo-laissez-faire prospectus. By viewing it in the context of the longer-term development of the world economy it also seeks to demonstrate that the reason for the aggressive and irrational dogmatism of the Western political establishment in trying to forge this new consensus is a growing sense of the increasing fragility of capitalism rather than of its enduring strength. Indeed the reader may well conclude that only acute awareness of a genuine threat to the survival of the dominant vested interests could explain such systematic distortion of reality.

In some respects, it may be noted, the analysis presented here of the chronic weakness of profit-maximising capitalism is traditional, in that it emphasises the distorting and destabilising effects of the recurrent excess supply of capital in relation to the demand for it. What is perhaps less familiar is the revelation that technological change is leading to a long-term relative decline in the demand for fixed capital, thereby rendering traditional capitalist structures obsolete — much as the new technology of steam power made inevitable the replacement of feudal structures and cottage industries by capitalist enterprise some two hundred years ago.

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