Capitalism in Crisis?

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As the Euro crisis, high unemployment and recessions seem to continue in the Western world, six years after the start of the financial crisis, some experts wonder whether this is truly a financial crisis or a sign of capitalism itself in crisis. Before showing you what the "experts" say, let's first describe capitalism, and what its proponents and opponents believe- according to Wikipedia -:
 
"Capitalism is an economic system characterized by private or corporate ownership of capital assets and goods. In a capitalist economy, investors are free to buy, sell, produce, and distribute goods and services with at most limited government control, at prices determined primarily by a competition for profit in a free market.Central elements of capitalism include capital accumulation, competitive markets, and a price system.....

.......Many theorists and policymakers in predominantly capitalist nations have emphasized capitalism's ability to promote economic growth, as measured by GDP.....Proponents argue that increasing GDP (per capita) is empirically shown to bring about improved standards of living, such as better availability of food, housing, clothing, and health care.The decrease in the number of hours worked per week and the decreased participation of children and the elderly in the workforce have been attributed to capitalism. Proponents also believe that a capitalist economy offers far more opportunities for individuals to raise their income through new professions or business ventures than do other economic forms. To their thinking, this potential is much greater than in either traditional feudal or tribal societies or in socialist societies......

......Critics of capitalism associate it with


social inequality and unfair distribution of wealth and power; a tendency toward market monopoly or oligopoly (and government by oligarchy); imperialism, counter-revolutionary wars and various forms of economic and cultural exploitation; materialism; repression of workers and trade unionists; social alienation; economic inequality; unemployment and; and economic instability. ..Notable critics of capitalism have included:socialists, anarchists, communists, national socialists, social democrats, technocrats, some type of conservatives, Luddites, Narodniks, Shakers, and some types of nationalists.......Many aspects of capitalism have come under attack from the anti-globalization movement, which is primarily opposed to corporate capitalism. Environmentalists have argued that capitalism requires continual economic growth, and that it will inevitably deplete the finite natural resources of the Earth. Many religions have criticized or opposed specific elements of capitalism. Traditional Judaism, Christianity, and Islam forbid lending money at interest although alternative methods of banking have been developed. Some Christians have criticized capitalism for its materialist aspects and its inability to account for the wellbeing of all people. Many of Jesus's parables deal with clearly economic concerns: farming, shepherding, being in debt, doing hard labor, being excluded from banquets and the houses of the rich, and have implications for wealth and power distribution."

So against this backdrop, let's first listen to a panel of speakers last month at the St. Petersburg International Economic Forum. Their topic was: Is Capitalism in Crisis? The panel was moderated by Peter Lavelle, and the speakers were:Ronnie Goldberg (chief policy officer for the United States Council for International Business), Olga Golodets (a Russian economist and the deputy prime minister for social affairs of the Russian Federation), Angel Gurria (is a Mexican economist and the current secretary general of the OECD), Vladimir Mau (Russian economist), Hans-Joerg Rudloff (Chairman of Barclays Capital), Armen Sarkissian (founding President of Eurasia House International) and Andy Xie (an independent economist based in Shanghai.)

Let's now move to a well-regarded critic of capitalism, the economist Richard Wolff in his recent article "Pure Capitalism is Pure Fantasy", in Truthout, where he argues that those experts who criticize the current capitalist system because it's not pure capitalism are wrong. Wolff says:

"By celebrating pure capitalism, such arguments can criticize the economic crisis without sounding anticapitalist. They reaffirm their loyalty to capitalism in the abstract even as they attack its concrete here and now. The trick is to identify the present system and its enduring, deep crisis as anything but capitalist. This is fantasy. Impure capitalism is the only kind we have ever had. For example, government always accompanied capitalism. Government often served a rising capitalist class to undermine, defeat and destroy other classes. In the French Revolution, the rising class of merchants, bankers and small capitalists captured state power and used it to undermine French feudalism. American revolutionaries took over government from Britain and used it to facilitate the growth of capitalism in the United States in countless ways. Those include the wars on native people and the taking of their land; the enabling and often also building of crucial infrastructure (harbors, canals, railways, roadways and airports); the Civil War and its aftermath; the postal system; the judicial system (police and courts to adjudicate disputes); modern public education and so on. Capitalism without government is a fantasy....

...Yet such fantasies, delusions and imaginary scenarios serve ideologically. Beliefs in the possibility and desirability of a "return to pure capitalism" divert people from considering or supporting social change going forward beyond capitalism. Instead they work to reduce or destroy government, monopolies, the Federal Reserve, tax systems (and agencies like the Internal Revenue Service), welfare and unions. Even when libertarians and others partially achieved such goals, they never thereby solved capitalism's problems. The capitalism that generated those institutions always responded to their partial destruction by regenerating them or variations of them.  The economic crisis and decline most of us are now living through will not be overcome by fantasies of return to some golden age of pure capitalism. We need to push forward, to do better than actually existing capitalism. For the first time in a long time, we can now ally with the fast-growing number of people reaching that same conclusion."

For a longer expose of Wolff's views on capitalism and the economic crisis, view the following lengthy (over an hour and half) talk from 1999, but still relevant.

In conclusion, I wasn't impressed with the panel discussion at the St. Petersburg International Economic Forum. Clearly there are many different faces of capitalism, from crony capitalism in China and Russia, to casino capitalism in the U.S. and UK, and to stagnating social-democratic forms of capitalism in Europe. Unfortunately, these experts didn't address those differences clearly, let alone could argue whether capitalism as a whole or these different parts are in crisis. With some slight differences, the panel members seemed to indicate that things would work out well (as mr. Gurria of the OECD (!) stated quite naively.) I think there is no denying that each of these forms of capitalism have achieved from very negative to moderately negative results for many citizens inside and outside their respective countries, which in itself would indicate at least a dysfunctional system. Professor Wolff, on the other hand dismisses those various kinds of capitalism, states that they always have been part of capitalism in some shape or form, and that capitalism, by definition, will create crises and needs to be adjusted to avoid the negative consequences of capitalism. It's too bad that Wolff doesn't delve deeper into some of the Western-European (Scandinavian, Dutch and German) economies and analyzes whether they are doing a reasonable job in providing their citizens with a well functioning economic system. Modern history would show that they have done so - in a social-democratic capitalist form - for quite a number of years. So, maybe pure capitalism has too many side effects, but in moderation is not a system in crisis.