"Capitalism cannot reform itself; it is doomed to self destruction.
No universal selfishness can bring social good to all."
-- W.E.B. Du Bois

Gordon Gekko

Crisis is built into capitalism. The capitalist economic system was never invented to meet the needs of society. It intends to meet the needs of the class who replaced the royal lords of serfdom, but itt doesn’t even consistently meet the capitalists’ needs. Despite all attempts to portray capitalism as a sane system, it remains and will always be, irrational.

That doesn’t mean that it’s evil. In fact, capitalism was a miraculous improvement over its predecessors, barbarism and slavery. Barbarism was better than slavery, and socialism will be better than capitalism.

Capitalism doesn’t even look good on paper

“Socialism,” the wise guys say, “may look good on paper, but it will never work in the real world.” They never looked seriously at capitalism on paper.

In this little educational module, we will not penetrate into the workings of capitalism, but some of its outward manifestations are known to all. They include periodic economic crises, unemployment, poverty, wars, genocide, famine, and constantly destroying our planet.

Theories of crisis:

Overproduction/underconsumption
Even in a capitalist-approved course in college economics, the wise teachers will talk about “business cycles.” Capitalism is really good at raising production, lowering unit costs, innovating new methods, and utilizing new technologies. It doesn’t, however, know when to quit. A downturn in activity results when there are too many commodities for sale. Consumers stop buying, then employers lay off more people, which causes even less consumption, more layoffs... well, you can see where this is going.

Automation
Underconsumption is related to overproduction. It may come about because competing capitalists have to keep on innovating with new methods of production and, especially, new automatic machines. As they put in new methods and machinery, they make more products with fewer employees. The contradiction is this: Who’s going to buy them?

Interimperialist rivalry
Capitalists don’t just compete with other industries in their own country, but with other capitalists all over the world. Once their home market is saturated with products, they have to find ways to exploit other nations. They resolve their differences with constant warfare, and even world wars. Capitalism has continued to “buy time” long past its usefulness to humanity, but at the cost of untold destruction and millions of workers’ lives.

Why don’t they just stop the fighting? Because the system that grips them is fundamentally irrational. In his monumental work, Imperialism, Lenin explained that capitalist nations are by nature unable to cooperate over any period of time.


Theories of crisis: Regulation/deregulation
The crisis that became clear to all Americans in 2008 was blamed on a failure to regulate financial markets. The Obama Administration promised to re-regulate banks and other financial institutions. But why were they deregulated in the 1980s to begin with? See “inter-imperialist rivalry” above.

Most of the people alive in the United States as this is written (2009) have lived their lives in a peculiar epoch of United States domination. The U.S. was the only industrial power to come through World War II without being bombed flat. We had the only real productive power in the world, and U.S. capitalists took advantage of it to take firm hold of the world economy to their own benefit. By the mid-1970s, when Asian and European automobiles were taking over Main Street, that hold was shaken. In the Reagan years, 1980-88, they attempted to re-assert world control by fair means or foul. One method was deregulation, even though they must have known it could only help in the short run. It was sure to bring about a financial crisis, as it has many times before.

Theories of crisis:The class struggle
Don, one of our partners in building this school, suggests that we add the class struggle itself as a source of crisis. When employers beat their employees into submission, they exacerbate the problems listed above. If workers are not able to earn enough to buy the products they make, then overproduction occurs. Similarly, when capitalists force people in other countries into their profit-gouging schemes, they only help themselves temporarily. The more successful the capitalists are in fighting their side of the class struggle, the more obvious their long-term problems become.

What’s next?

Will the capitalists finally provoke another world war, destroy millions of lives, most commodities, and a great deal of their productive ability, then start over again? Will they find some new places to exploit, or some way to increase their exploitation of the places they already dominate?

Will the capitalists continue to erode our planet's ability to support life, until ecological disaster accomplishes the same horrors as a world war, and another chance for capitalists to start over?

Will a reregulated capitalist economy begin to act in a rational way to meet human needs? Will inter-imperialist rivalries be overcome by a new era of international cooperation? Will capitalists begin planning their production to meet consumption needs instead of greedily racing into the next crisis? Or will the need for socialism and a planned economy become even more acute?

To some extent, it depends on us. Me and you.

 

Further study: I really liked the movie "Inside Job" as it pointed fingers at the culprits of the 2007-8 financial crisis, but it doesn't talk about capitalism's intrinsic problems.


Richard Wolff has a lecture on YouTube called "Capitalism hits the fan! {part 1}." It's just a lecture by a professor, but at least he doesn't think the 2007-8 crisis is just an anomaly. He.begins by explaining that this crisis is not just a “financial crisis.” He says it is the second major breakdown of capitalism in 75 years. He is a fairly animated lecturer so not as hard to listen to as a mere talking head. His analysis of the cause of the 2007- crisis seems a lot better than the usual ones.

 

British economist David Harvey says that a new economic system is necessary in a short lecture enlivened by RSA Animate.


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Further study: Greed as an Explanation of Crisis By Prabhat Patnaik
Not only explains the fundamental capitalist assertion that "greed is good" but also explains that the recent (2008) greed in buying and selling "derivatives" was no more greedier than usual, and just part of the capitalist system.


The Paradox of Capitalism By Prabhat Patnaik
Original source: People's Democracy (India). Capitalist economics teachers would have us believe that John Maynard Keynes, who was born the year that Marx died, was much more advanced and better capable of advising us. In fact, Keynes was an idealist whose contributions may have been useful to capitalists, but may mislead the rest of us.