For those of you who don't attend my college. I've decided to share with everyone my argument for why western capitalism has failed from the debate on "Has western capitalism failed?". The version I read at the time was a somewhat condensed version of this. There was some uncertainty in what the title was, while at the time of agreeing the topic it was "Has western capitalism failed?" the title on the poster changed the end bit to "...has finished" so essentailly the oposition argued against a different point. It was still a pretty well matched debate, the opposition did nobly in the face of complete logic. We still won 12 votes to 9. Enjoy!
Has western capitalism failed? Yes, yes it has. Capitalism as an economic system has adverse political effects which lead to unfair leverage from people who have large amounts of money. Ideally government would be the main deciding political ministry. But realistically the logical extent of capitalism causes corporations to have an unnecessarily large influence on the economy & therefore the power to dictate the market.
For instance, in the U.S.A. one of the leading capitalist economies of the world, their politics is rife with corporate corruption. For example Michael Taylor former Monsanto Senior Lobbyist was appointed as a senior advisor to the FDA commissioner. Monsanto are the company responsible for Bovine Growth Hormone which is illegal in the EU due to its potential side effects. They are also responsible for countless other untested genetic engineering which has caused hazards to public health. Another example of this is Climate change skeptic senator James Inhofe who received around one million dollars between 2005 & 2010 from major oil & gas companies.
Some of you may have come across the term military-industrial complex in your reading which describes the suspicious number of shared current & ex-staff members of leading weapons manufacturers & U.S. government bodies involved in military decision making. Just to give you some perspective on that, the U.S.A. holds ¾ of the global arms market & their military budget this year so far has been 295 thousand million dollars.
Although monopoly is technically illegal, in certain industries there are only a few notable companies which practically run the game. This contradicts the ideology of a free market economy because capitalist style acquisition of wealth naturally equates to a few extremely wealthy & economically globally dominant organizations in each field of the market.
One of the big problems with this is that companies are legally obliged to grow & produce profit for their shareholders. In most cases organizations will disregard public & environmental welfare in the area’s from which they recruit labor & harvest resources in order to meet their profit quotas. While there is much exploitation of workers in this country, the law is fairly effective in protecting workers. But this often causes multinational corporations to move overseas bringing with them the disregard for local health & the environment. Another effect of this importation of labor & materials is that it effectively re-routs the money flow away from our national economy causing degradation in working class wealth & national productivity.
Which brings me to my next point; the 4 fastest growing economies in the world are; Brazil, Russia, India & China. These are collectively known as the BRIC countries. They are significant because it is speculated that their economies will eventually grow to surpass the main economies of today by 2025. It is also pertinent to note at this point that none of these economies are based on western capitalist ideals.
An underlying relevant fact is that our much beloved western dream of unlimited growth is simply not feasible because the resources on the planet although vast aren’t infinite.
The 2008 recession of the western world was a result of the government’s inability to regulate the banking system. Years of boom were replaced with a fore sighting of many years of bust. This has meant;
· The implementation of austerity measures as can be seen in the recent cuts to spending.
· High unemployment coupled with
· A reduction in benefits
· Leading to a cycle of poverty
One of the main causes of the recession & indeed flaws to the capitalist system is the result of banks; Lending more & then when people spend more, people borrow more which leads to more defaults. Then the banks panic & lend less which in effect causes the money supply to shrink. This penultimately leads to less spending and after that a recession.
Banks have come to have a huge impact on the money supply. Storing & lending money now has become an essential part of our financial system. The Federal Reserve in the U.S. & the Bank of England are both privately owned banks responsible for the printing of money in their respective nations. Most of you will probably be surprised to hear that 3% of the money in circulation in the U.K. is in notes & coins the other 97% is in digital storage. I would also like to add that when a bank lends money it digitally increases the value of that persons account.
In effect banking largely depends on lending money which the banks may or may not have; this is known as fractional reserve banking. The consolidation of market control that I was talking about earlier also applies here: the 5 largest banks represent 85% of the international market & they have 78 board members between them.
An unfair side effect of capitalist politics is that the rich portion of the population has continued to be richer & more concentrated. And inflation becomes more disproportionate to the increase in wages. This means it becomes much harder to support a family in Britain.
Just to give you an idea of this in America the richest 1% have a third of the net worth of the country & the richest 20% own 85% of the wealth. In this country 10% of the population is more than 100 times as wealthy as the poorest 10%.
In the 1920’s there was a big push in America to improve the standard of living. However this influx of spending led to the great depression. After this president F.D.Roosevelt introduced the “new deal”, which where a series of reforms that created more jobs through the injection of money into the economy via the government. This style of nationalized economics has proved to be quite successful. For example in this country we have the National Health Service that improves our standard of living vastly. The alternative, privatization of public services for example the case of the transport system has further restricted our freedoms in those area’s & allowed private businesses unnecessary control in things which are part of the public domain.
In America the ideal of a capitalist system has been branded an essential element of national identity. This was evident in the cold war, when political propagandists cast communism as seemingly satanic politics (which was true for Russia in some respects). But more to the point it has glorified capitalism as the best & most moral style of living which as I said earlier is not the case. This type of political supremacy results in further international division, which at the end of the day is an illusion because of course we are all human. None of us should be considered greater than anyone else. Inequality continues to be furthered in the name of capitalist economics.