JUAN GONZALEZ: Treasury Secretary Timothy Geithner has unveiled a sweeping new plan that calls on the United States and other nations to offer billions more to bail out economies in crisis around the world. The news comes days after the World Bank warned the world is falling into the first global recession since World War II. The economic crisis is projected to push around 46 million people into poverty this year. Geithner said the Obama administration will ask Congress to make $100 billion more available to the International Monetary Fund to aid struggling nations.
The debate over how to rescue the global economy is setting up a clash of ideas, as finance chiefs meet for international talks in London this weekend to work out a unified approach to the crisis.
AMY GOODMAN: Amidst the economic turmoil, Geithner appeared on the PBS Charlie Rose Show this week for an extensive interview. Near the end of the interview, Charlie Rose asked Geithner, “Will capitalism be different?”
CHARLIE ROSE: Will capitalism be different?
TIMOTHY GEITHNER: I think capitalism will be different, and the financial system will be dramatically different. It’s already dramatically different. Again, if you look at the scale of adjustment and restructuring in the financial, it’s already happened. It’s profound in scope already. So if you just look at the system today relative to what was true three years ago, in terms of the institutions that existed then, and their basic shape has changed dramatically. And there’s going to be more changes ahead. But I think it will emerge stronger. This will clean out a lot of the excesses and bad practices. And those that don’t get cleaned out just by experience and knowledge now, better regulation and oversight, better rules of the game, enforced more cleanly, we’ll fix.
AMY GOODMAN: That’s Treasury Secretary Tim Geithner.
Well, our next guest argues “free-market corporate capitalism is by its nature a disaster waiting to happen.” Michael Parenti is a longtime political analyst, author of twenty books, including Democracy for the Few and Superpatriotism. His latest article on the financial crisis, “Capitalism’s Self-inflicted Apocalypse.” He joins us now in our firehouse studio. He gave a talk last night at Fordham called “Wealth, Poverty, and Empire.”
Welcome to Democracy Now!
MICHAEL PARENTI: Hello, Amy. Hello, Juan.
AMY GOODMAN: What should we understand right now, Michael Parenti?
MICHAEL PARENTI: Well, we should understand that the problem we’re facing is one which has to do with equity and fairness, that when the foundation gets consumed, the apex gets bloated, it’s going to collapse. And that’s just what’s happened. We had eight years of a president telling us that the economy was doing very well, and for his guys, it was doing very well. But in those eight years, wages remained flat or actually declined. And what we had here is so much money and nowhere to put it anymore. But that’s because there were no people below able to consume and buy the things they were supposed to buy. The assumption was that the housing market would just continue to go up and up and up, so you can do all these finaglings, but there weren’t enough people to buy these new houses. You had, in 2006, five people doing the work. By 2007, four workers were doing the work that it took five to do in 2006. That was a 20 percent increase in productivity, but there wasn’t any 20 percent or ten or five or three percent increase in income to those workers. People are just working harder and harder for less and less.
And the goal really—the goal is really to bring America to a closer resemblance to Indonesia. The goal is to avoid Denmark and get Indonesia. I mean, they say things like that. In 1978, a number of these financiers came out and said, “This country is just heading for a social democracy, and we don’t want that.” I mean, they used the term “social democracy.” They’re aware of these things. A few months ago in The New Yorker, there was an article about how Republicans had a loss for issues, and one of them said, “Well, the reason we’re at a loss is because we’ve accomplished all we wanted to. We’ve destroyed the social democracy.” And that’s their goal.
And if you listen to them now, I mean, it’s fascinating and outrageous. They’re talking about doing nothing, just putting a cap on all spending, that the market is in a stage of correction. They use terms like “correction” or “adjustment.” They don’t mind recessions. Recessions are fine. It allows them to buy up smaller companies at bargain prices. It disciplines labor. It humiliates and beats back people. And this, I think, is what we’re facing. And I’m infuriated by the Republicans in the Congress and the way they’re going at this. The only passion they show is to protect the tax cuts for the super rich. That seems to be the only interest they have.
JUAN GONZALEZ: Michael Parenti, I’d like to ask you, in terms of this—we’re almost a year now into this—into the beginning of the unraveling of this crisis, yet there’s been no attempt so far to have any kind of reforms, of regulation. We still have a situation where a huge portion of the financial system is consumed with all of these derivatives and credit defaults, while it’s not even in your normal banking procedures. How do see this, in terms of your sense of a self-inflicted apocalypse of finance capital?
MICHAEL PARENTI: Well, I argue that one of the functions of a capitalist state is to defend capitalism from itself, to defend capitalism from the capitalists. It was Marx—dare we mention him? I hear he’s coming back in style. It was Marx who said one capitalist will kill many other capitalists, that the system begins to consume itself. We see that with Bernard Madoff and the like.
And it’s not merely because of a number of wicked personalities, because these personalities are brought to the fore. Those are the people who get the rewards. Those are the people who—yes, and what we need are drastic sets of regulations, and there hasn’t been enough talk. We just got a vague reference to it here, Geithner referencing and saying, well, it’s going to be a little bit of a different camp, a little more responsible, accountable maybe. But as far as actual regulations, we haven’t seen it.
The free market does not work. It’s not free. It’s not really a market; it’s a plunder. And it has to be done away with.
AMY GOODMAN: Talk about the Democrats and Republicans. You said you’re infuriated by the Republican response, because they just want tax cuts for the rich. But what about the Democrats—I mean, just now we were playing for you Tim Geithner, the Treasury secretary—and the approach to this crisis?
MICHAEL PARENTI: Oh, it’s insufficient. I mean, that’s what’s coming out with your questions. It’s insufficient. They’re not dealing with systemic questions. There’s all this debate about the stimulus package. Hardly a word has come out about the Federal Reserve giving away two-and-a-half trillion dollars, just giving it away unaccountably.
AMY GOODMAN: Explain that.
MICHAEL PARENTI: The Federal Reserve just went—while we had this $750 billion stimulus package, which was passed by Congress, the Federal Reserve printed up—it can print up money and create money—and handed out over $2 trillion to the financial community in America, with no accountability, no debate in Congress and very little notice.
AMY GOODMAN: So, what’s the significance of that?
MICHAEL PARENTI: Well, the significance is that we’re going to—I mean, that’s our money, that it becomes real money when it becomes debt, and we’ve got to pay it.
You see, the Republicans were never against debt; they were the biggest debt spenders there ever was. When Ronald Reagan came into office, the national debt was $800 billion. When he left office, it was $2.5 trillion. I mean, it was OK with him to spend. He also put in the biggest tax program that ever was, but it was a regressive tax. It was a Social Security tax on tens of millions of people. When George Bush, Sr. came in, the national debt went from $2.5 to $5 trillion. Clinton—I’ll give him credit for that one thing—he did try to go for solvency. But when you got to George Bush, Jr., for eight years, the debt has gone from $5 trillion to $10 trillion. And these Republicans were voting for that all along. All these spending bills were theirs. So, you see, they don’t mind debt, because debt is really a way of upward distribution. You tax the common people, and you give the money to rich creditors. It’s a very regressive way of redistributing wealth upward. So debt is fine with them.
JUAN GONZALEZ: I’d like to ask you, given the increasingly global connections of our banks and other multinational corporations, the issue of how you remedy a crisis in one country. For instance, I heard last night on C-SPAN the hearing that Congressman Kucinich had of the bailout. He had an oversight hearing yesterday. And he questioned the Treasury Department over the fact that the bailout money has been going to banks that, in some cases, are then using the bailout money to invest overseas, a $6 billion—
MICHAEL PARENTI: Right.
JUAN GONZALEZ: —investment in Dubai, an $8 billion investment in a company in China—
MICHAEL PARENTI: China, I was just going to say, right.
JUAN GONZALEZ: —I think by Bank of America, so that—and Kucinich was asking, what are we doing giving money to bailing out banks who say they can’t lend in the United States, but then they use the money in investments abroad? How do you reconcile the global connections of these companies with the need in one particular country to stem the financial crisis?
MICHAEL PARENTI: Well, I mean, you’ve got to stop these kinds of examples that you’re giving, that the money should be spent where it has to be, and the money should come with lots of strings attached to it. And actually, it should be the government making direct investments. The government should go directly into production. It should be the government that’s building housing. It should be the government that gives healthcare.
Healthcare is a perfect example of that, where you—health coverage is terrible. So to give everybody health coverage will put us all still fighting these private insurance companies for money and not getting it and such. And the insurance companies get nothing—give nothing, do nothing. They just are toll. They just get billions of dollars that comes through and perform nothing. If you had single payer, it would just come right from the government, like Medicare does or something like VA Hospital, and that would be it.
And so, with the banks, perhaps we should start nationalizing banks. We should start bringing a closer link between the financial system and what’s called—very revealingly called the “real economy,” where people still need to work and consume and live. And that might be a way.
What do we do internationally? I don’t know. You’ve had some good people on. You’ll have to ask them next time.
AMY GOODMAN: What do you see is the future of capitalism, Michael Parenti?
MICHAEL PARENTI: I see it as a future in which there’s going to be a lot of suffering. I see it—the goal is to have more and more Indonesias and fewer Denmarks and such.
AMY GOODMAN: And that means?
MICHAEL PARENTI: That means that even in the social democracies in Western Europe, there are going to be cutbacks, there’s going to be privatization, deregulation, greater—growth of inequities, rollbacks of human services and such, in countries that were pretty decent, countries where capitalism was reined in and held in line, to some degree, anyway.
AMY GOODMAN: And aside from the brutality of Indonesia, what it means when you say “and more Indonesias”?
MICHAEL PARENTI: Well, Indonesia, I mean it’s a free market paradise. They talk about free market. In Indonesia, there are no consumer protections, there are no regulations, there is no public medical care, there’s no public education. People just die younger.
AMY GOODMAN: Do you see mass riots happening?
MICHAEL PARENTI: No. Well, one thing is that people can become so demoralized and such, and it’s a pretty repressive state, so it’s not that easy.
AMY GOODMAN: Michael Parenti, we want to thank you for being with us. His latest article on the global economic meltdown,
“Capitalism’s Self-Inflicted Apocalypse.”
MICHAEL PARENTI: I hope next time I’ll have better news for you, we’ll have a nicer subject to be discussing.
http://www.democracynow.org/2009/3/12/parenti
Capitalism’s Self-inflicted Apocalypse
By Michael Parenti
11 February, 2009
Countercurrents.org
After the overthrow of communist governments in Eastern Europe, capitalism was paraded as the indomitable system that brings prosperity and democracy, the system that would prevail unto the end of history.
The present economic crisis, however, has convinced even some prominent free-marketeers that something is gravely amiss. Truth be told, capitalism has yet to come to terms with several historical forces that cause it endless trouble: democracy, prosperity, and capitalism itself, the very entities that capitalist rulers claim to be fostering.
Plutocracy vs. Democracy
Let us consider democracy first. In the United States we hear that capitalism is wedded to democracy, hence the phrase, “capitalist democracies.” In fact, throughout our history there has been a largely antagonistic relationship between democracy and capital concentration. Some eighty years ago Supreme Court Justice Louis Brandeis commented, “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.” Moneyed interests have been opponents not proponents of democracy.
The Constitution itself was fashioned by affluent gentlemen who gathered in Philadelphia in 1787 to repeatedly warn of the baneful and dangerous leveling effects of democracy. The document they cobbled together was far from democratic, being shackled with checks, vetoes, and requirements for artificial super majorities, a system designed to blunt the impact of popular demands.
In the early days of the Republic the rich and well-born imposed property qualifications for voting and officeholding. They opposed the direct election of candidates (note, their Electoral College is still with us). And for decades they resisted extending the franchise to less favored groups such as propertyless working men, immigrants, racial minorities, and women.
Today conservative forces continue to reject more equitable electoral features such as proportional representation, instant runoff, and publicly funded campaigns. They continue to create barriers to voting, be it through overly severe registration requirements, voter roll purges, inadequate polling accommodations, and electronic voting machines that consistently “malfunction” to the benefit of the more conservative candidates.
At times ruling interests have suppressed radical publications and public protests, resorting to police raids, arrests, and jailings—applied most recently with full force against demonstrators in St. Paul, Minnesota, during the 2008 Republican National Convention.
The conservative plutocracy also seeks to rollback democracy’s social gains, such as public education, affordable housing, health care, collective bargaining, a living wage, safe work conditions, a non-toxic sustainable environment; the right to privacy, the separation of church and state, freedom from compulsory pregnancy, and the right to marry any consenting adult of one’s own choosing.
About a century ago, US labor leader Eugene Victor Debs was thrown into jail during a strike. Sitting in his cell he could not escape the conclusion that in disputes between two private interests, capital and labor, the state was not a neutral arbiter. The force of the state--with its police, militia, courts, and laws—was unequivocally on the side of the company bosses. From this, Debs concluded that capitalism was not just an economic system but an entire social order, one that rigged the rules of democracy to favor the moneybags.
Capitalist rulers continue to pose as the progenitors of democracy even as they subvert it, not only at home but throughout Latin America, Africa, Asia, and the Middle East. Any nation that is not “investor friendly,” that attempts to use its land, labor, capital, natural resources, and markets in a self-developing manner, outside the dominion of transnational corporate hegemony, runs the risk of being demonized and targeted as “a threat to U.S. national security.”
Democracy becomes a problem for corporate America not when it fails to work but when it works too well, helping the populace move toward a more equitable and livable social order, narrowing the gap, however modestly, between the superrich and the rest of us. So democracy must be diluted and subverted, smothered with disinformation, media puffery, and mountains of campaign costs; with rigged electoral contests and partially disfranchised publics, bringing faux victories to more or less politically safe major-party candidates.
Capitalism vs. Prosperity
The corporate capitalists no more encourage prosperity than do they propagate democracy. Most of the world is capitalist, and most of the world is neither prosperous nor particularly democratic. One need only think of capitalist Nigeria, capitalist Indonesia, capitalist Thailand, capitalist Haiti, capitalist Colombia, capitalist Pakistan, capitalist South Africa, capitalist Latvia, and various other members of the Free World--more accurately, the Free Market World.
A prosperous, politically literate populace with high expectations about its standard of living and a keen sense of entitlement, pushing for continually better social conditions, is not the plutocracy’s notion of an ideal workforce and a properly pliant polity. Corporate investors prefer poor populations. The poorer you are, the harder you will work—for less. The poorer you are, the less equipped you are to defend yourself against the abuses of wealth.
In the corporate world of “free-trade,” the number of billionaires is increasing faster than ever while the number of people living in poverty is growing at a faster rate than the world’s population. Poverty spreads as wealth accumulates.
Consider the United States. In the last eight years alone, while vast fortunes accrued at record rates, an additional six million Americans sank below the poverty level; median family income declined by over $2,000; consumer debt more than doubled; over seven million Americans lost their health insurance, and more than four million lost their pensions; meanwhile homelessness increased and housing foreclosures reached pandemic levels.
It is only in countries where capitalism has been reined in to some degree by social democracy that the populace has been able to secure a measure of prosperity; northern European nations such as Sweden, Norway, Finland, and Denmark come to mind. But even in these social democracies popular gains are always at risk of being rolled back.
It is ironic to credit capitalism with the genius of economic prosperity when most attempts at material betterment have been vehemently and sometimes violently resisted by the capitalist class. The history of labor struggle provides endless illustration of this.
To the extent that life is bearable under the present U.S. economic order, it is because millions of people have waged bitter class struggles to advance their living standards and their rights as citizens, bringing some measure of humanity to an otherwise heartless politico-economic order.
A Self-devouring Beast
The capitalist state has two roles long recognized by political thinkers. First, like any state it must provide services that cannot be reliably developed through private means, such as public safety and orderly traffic. Second, the capitalist state protects the haves from the have-nots, securing the process of capital accumulation to benefit the moneyed interests, while heavily circumscribing the demands of the working populace, as Debs observed from his jail cell.
There is a third function of the capitalist state seldom mentioned. It consists of preventing the capitalist system from devouring itself. Consider the core contradiction Karl Marx pointed to: the tendency toward overproduction and market crisis. An economy dedicated to speedups and wage cuts, to making workers produce more and more for less and less, is always in danger of a crash. To maximize profits, wages must be kept down. But someone has to buy the goods and services being produced. For that, wages must be kept up. There is a chronic tendency—as we are seeing today—toward overproduction of private sector goods and services and underconsumption of necessities by the working populace.
In addition, there is the frequently overlooked self-destruction created by the moneyed players themselves. If left completely unsupervised, the more active command component of the financial system begins to devour less organized sources of wealth.
Instead of trying to make money by the arduous task of producing and marketing goods and services, the marauders tap directly into the money streams of the economy itself. During the 1990s we witnessed the collapse of an entire economy in Argentina when unchecked free marketeers stripped enterprises, pocketed vast sums, and left the country’s productive capacity in shambles. The Argentine state, gorged on a heavy diet of free-market ideology, faltered in its function of saving capitalism from the capitalists.
Some years later, in the United States, came the multi-billion-dollar plunder perpetrated by corporate conspirators at Enron, WorldCom, Harkin, Adelphia, and a dozen other major companies. Inside players like Ken Lay turned successful corporate enterprises into sheer wreckage, wiping out the jobs and life savings of thousands of employees in order to pocket billions.
These thieves were caught and convicted. Does that not show capitalism’s self-correcting capacity? Not really. The prosecution of such malfeasance— in any case coming too late—was a product of democracy’s accountability and transparency, not capitalism’s. Of itself the free market is an amoral system, with no strictures save caveat emptor.
In the meltdown of 2008-09 the mounting financial surplus created a problem for the moneyed class: there were not enough opportunities to invest. With more money than they knew what to do with, big investors poured immense sums into nonexistent housing markets and other dodgy ventures, a legerdemain of hedge funds, derivatives, high leveraging, credit default swaps, predatory lending, and whatever else.
Among the victims were other capitalists, small investors, and the many workers who lost billions of dollars in savings and pensions. Perhaps the premiere brigand was Bernard Madoff. Described as “a longstanding leader in the financial services industry,” Madoff ran a fraudulent fund that raked in $50 billion from wealthy investors, paying them back “with money that wasn’t there,” as he himself put it. The plutocracy devours its own children.
In the midst of the meltdown, at an October 2008 congressional hearing, former chair of the Federal Reserve and orthodox free-market devotee Alan Greenspan confessed that he had been mistaken to expect moneyed interests--groaning under an immense accumulation of capital that needs to be invested somewhere--to suddenly exercise self-restraint.
The classic laissez-faire theory is even more preposterous than Greenspan made it. In fact, the theory claims that everyone should pursue their own selfish interests without restraint. This unbridled competition supposedly will produce maximum benefits for all because the free market is governed by a miraculously benign “invisible hand” that optimizes collective outputs. (“Greed is good.”)
Is the crisis of 2008-09 caused by a chronic tendency toward overproduction and hyper-financial accumulation, as Marx would have it? Or is it the outcome of the personal avarice of people like Bernard Madoff? In other words, is the problem systemic or individual? In fact, the two are not mutually exclusive. Capitalism breeds the venal perpetrators, and rewards the most unscrupulous among them. The crimes and crises are not irrational departures from a rational system, but the converse: they are the rational outcomes of a basically irrational and amoral system.
Worse still, the ensuing multi-billion dollar government bailouts are themselves being turned into an opportunity for pillage. Not only does the state fail to regulate, it becomes itself a source of plunder, pulling vast sums from the federal money machine, leaving the taxpayers to bleed.
Those who scold us for “running to the government for a handout” are themselves running to the government for a handout. Corporate America has always enjoyed grants-in-aid, loan guarantees, and other state and federal subventions. But the 2008-09 “rescue operation” offered a record feed at the public trough. More than $350 billion was dished out by a right-wing lame-duck Secretary of the Treasury to the biggest banks and financial houses without oversight--not to mention the more than $4 trillion that has come from the Federal Reserve. Most of the banks, including JPMorgan Chase and Bank of New York Mellon, stated that they had no intention of letting anyone know where the money was going.
The big bankers used some of the bailout, we do know, to buy up smaller banks and prop up banks overseas. CEOs and other top banking executives are spending bailout funds on fabulous bonuses and lavish corporate spa retreats. Meanwhile, big bailout beneficiaries like Citigroup and Bank of America laid off tens of thousands of employees, inviting the question: why were they given all that money in the first place?
While hundreds of billions were being doled out to the very people who had caused the catastrophe, the housing market continued to wilt, credit remained paralyzed, unemployment worsened, and consumer spending sank to record lows.
In sum, free-market corporate capitalism is by its nature a disaster waiting to happen. Its essence is the transformation of living nature into mountains of commodities and commodities into heaps of dead capital. When left entirely to its own devices, capitalism foists its diseconomies and toxicity upon the general public and upon the natural environment--and eventually begins to devour itself.
The immense inequality in economic power that exists in our capitalist society translates into a formidable inequality of political power, which makes it all the more difficult to impose democratic regulations.
If the paladins of Corporate America want to know what really threatens “our way of life,” it is their way of life, their boundless way of pilfering their own system, destroying the very foundation on which they stand, the very community on which they so lavishly feed.
Michael Parenti received his Ph.D. in political science from Yale University. He has taught at a number of colleges and universities, in the United States and abroad. He is the author of twenty books: Please visit his website
http://michaelparenti.org
