By Dr Stuart Jeanne Bramhall, OpEd News [Posted on Bear Market Issues]
This is the first of two articles exploring the likelihood that capitalism is on the verge of collapse and what a post-capitalistic world might look like.
Global Capitalism: a House of Cards
As the global recession and debt crisis worsens, even mainstream analysts are starting to speculate that global capitalism is on the verge of collapse. At the moment, most attention is focused on European "debt contagion." European Union economists are terrified that the Greek government will default on their debt. A Greek default makes it inevitable that Spain and Italy will also default. The mechanism here relates to the totally unregulated, speculative way in which "sovereign debt" (the money countries borrow from private banks to finance government operations) is financed.
Investment banks in France, Germany, London and New York have already jacked up the interest rates they charge Italy and Spain -- high risk investments always command higher interest rates. Higher debt repayments will make Italian and Spanish default inevitable, which will increase interest rates on Japanese, British and US debt -- as all three countries have very high debt levels. Owing to the size of their economies, default in Japan or the US is very likely to crash the global economy.
The Endgame
There are three schools of thought as to how the capitalist endgame is likely to play out. The first predicts a scenario in which the Asian tiger economies (China and India) collapse when the US, Japan and UK do -- given that national economies are hopelessly intertwined as a result of globalization. This school also predicts that any serious global instability will pop the Chinese real estate (debt) bubble. When this happens, the Chinese economy will crash, like the US economy did when the subprime derivatives bubble burst in 2008. The creation of debt bubbles (the bubbles leading to the 1987 market crash and 2001 dot com collapse are examples), involves the creation of vast amounts of credit (i.e. wealth that only exists on paper), which are all wiped out simultaneously when the bubble bursts. This sudden loss of economic wealth inevitably bankrupts large numbers of businesses and causes massive job loss.
The second school believes that only the US, Europe and Japan will collapse, while the economies of China, India and its Asian and non-Asian trading partners (for example, Australia and New Zealand) will continue to prosper. In this scenario the coming debt crisis and crash will merely accelerate the gradual role reversal of the past two decades -- with China rising to the status of economic superpower and the US, Europe and Japan becoming third world nations.
The third school supports the scenario I believe Wall Street and the Pentagon have in mind, in which the US and its NATO allies confront China militarily to prevent it from replacing the US as the world superpower. Evidence that the Pentagon has already chosen this tact is seen in the strategic alliances it has formed around Middle East and North African oil resources. Many foreign analysts believe that the US wars in the Middle East and Libya are really proxy wars with China over oil resources. They worry that these proxy wars have the potential to degenerate into a full scale war between the US and China -- which would surely destroy both economies.
The third school supports the scenario I believe Wall Street and the Pentagon have in mind, in which the US and its NATO allies confront China militarily to prevent it from replacing the US as the world superpower. Evidence that the Pentagon has already chosen this tact is seen in the strategic alliances it has formed around Middle East and North African oil resources. Many foreign analysts believe that the US wars in the Middle East and Libya are really proxy wars with China over oil resources. They worry that these proxy wars have the potential to degenerate into a full scale war between the US and China -- which would surely destroy both economies.
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Bottom-Up Government
Unlike the Bolshevik Revolution, which had the immense resources of the Tsarist empire at its disposal, most of the small, regional units that emerge following the collapse of global capitalism will be forced to rebuild themselves from the ground-up. They all have the potential to be built according to democratic and egalitarian principles, though this is by no means guaranteed.
A study of early New England efforts to govern via "town hall" direct democracy reveals that self-governance is always more effective in small groups and communities. Early colonists found that once authority shifted from the town to state and eventually federal government, ordinary people lost the ability to have input into decision making. They could only elect representatives, without any ability to ensure the individuals they chose would actually represent their interests.
Reclaiming the Commons
"The Commons" is a historical concept present in all cultures that views certain property, material goods and intangibles (such as the air people breathe and the public airwaves used to transmit radio and TV) as belonging to the community as a whole to be managed in a way benefiting the public interest, rather than that of a particular individual group. The eighteenth century (British) Enclosure Act is considered the watershed event enabling individual and corporate interests to take precedence over the pubic good. Under the Enclosure Act, the landed gentry banned peasant farmers from raising crops or grazing on the "village commons," which now became "enclosed" as the gentry's private property. Subsequent enclosure laws enabled early capitalists to drive even more farmers off communal land to build factories.
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