Index
1. Overview
2. Historical antecedents
3. Effects of the financial crisis 2008
4. Why does capitalism has survived and communism no?
5. Consequences of the big economic crisis
6. Is the world in the door of a new revolution of global influence?
7. Can the protesters creating a new political reference in the United States?
8. The Marx’s prophecy
9. The Catholic Church position regarding the global crisis
10. Conclusion
1.
Introduction
First of all I want to say that I am making this analysis objectively and strictly since the academic standpoint.
The intensity and magnitude of the protests against the banks and the economic system has caused a big surprise for the majority of people. It seems unbelievable that a movement of those characteristics might arise in the most important capitalist’s nations, especially in the United States and England, cradle of the modern capitalism.
The politicians and the bankers could not foresee the attitude of the people because, in the past, the population accepted with resignation the effects of previous economic and financial crisis; but in this opportunity no. The first spark appeared on May 17 2011 in Madrid, where thousands of citizens coming from the most important cities of Spain occupied the emblematic Puerta del Sol and other places of the capital during days, protesting against the unemployment, the abuses of capitalism, politicians that do not represents at the citizens, corruption and the economic policy of the government which reduced the public spending in essential activities like health and education provoking more jobless. The movement expanded its example to the United States, Europe, Middle East, Asia and Australia, in different grades of intensity. The common complaint has been toward the banker’s attitude and the economic system injustice.
2.
Historical Antecedents
Some time ago I read that the Great Depression of the 20s and 30s years settled the North American capitalism at the brink of the collapse, because the common people, millions of unemployed, began to ask which the benefits of that system were. Fortunately, President Franklyn D. Roosevelt (1933-1945) understood the reality of that historic moment and adopted the ideas of the brilliant economist John Maynard Keynes. Those ideas saved the capitalism in the United States and in the rest of the world. While the orthodox economists promoted the austerity, Keynes defended the opposite thesis: the employ of the public spending for reanimate the economy, creating jobs and increasing production; the formula of Keynes was successful for the following 30 years, until the decade of the seventy years of the 20th century; as a matter of fact, those 30 years are named the Age of Keynes. (1)
That period of stability and progress between the years 40s and 70s was broken in the middle of the 70s years, as a consequence of the unlimited desires of enrichment of some bankers; in the seventy years they provoked a monetary and financial crisis to favor the German economy and its currency, the marc. Big amounts of money flowed toward Germany attracted by best interest rates; in that moment, the United States dollar suffered its first devaluation (1971); it was in the times of President Richard Nixon. Later, the oil crisis came and the oil price multiplied by 10 for the year 1974. This fact changed for ever the economic international relations. (2)
The ghost of inflation appeared again in the world scenario and the orthodox economical recipes began to gain space once more. First, were the Chicago Boys and Milton Friedman, who resurrected the Quantitative Theory of Money. Two words arose then: Neo Liberalism and Globalization. These ideas were accepted and applied by the Prime Minister on England, Margaret Thatcher and after by the President of the United States, Ronald Regan. The model was imposed to the rest of countries through the International Monetary Fund and the World Bank. The threat was very simple: if you do not accept the conditions you cannot access to new loan neither to refinance your previous debt. The majority of the developing countries had ---and currently has--- big debts. Obviously, they were forced to accept the new policy imposed by the international agencies previously mentioned and in that moment began a new Calvary for the developing countries. The medicine was worse than the illness and the results were reduction of the public spending in health, education and other essential activities, more unemployment, more concentration of wealth in too few hands, more inflation, usury interest rates, privatization of the public services and of the most profitable public enterprises; this is the same formula that is being applied now to Greece, Spain, Portugal and Italy.
In Latin America, the effects of the Neo Liberal policy and Globalization ---developed in the 80s and 90s years--- were disastrous. As a consequence of those policies, the left-wing parties won the elections in the biggest countries of the continent: Argentina, Brazil, Uruguay, Bolivia, Paraguay, Ecuador, Venezuela, Dominica, Honduras, El Salvador and Nicaragua while in Mexico they became an important political force.
3.
Effects of the financial crisis 2008
The United States could dominate the financial crisis of the past applying severe governmental plans of control on the economy. For example, that was the road employed to overcome the Great Depression and later the crisis of devaluation of the year 1971. At the end of the Second World War, in 1945, England followed a similar policy and adopted severe measures of control over prices, salaries, international commerce and currency, among others, with the objective of avoiding the inflation and recovering the economy. (3)
In the year 2008 the United States government controlled a good part of the financial system. The government gave bailout to many banks and insurance companies that not always used the public resources in a right form. For example, some bankers employed the public funds for their own benefit and not to honoring the commitments with the population. Billons of dollars were given to the financial institutions and this contributed to enhance the fiscal deficit of the nation. But the worse is that for resolving the problem of deficit the President Obama’s government was compelled by the Congress to apply a program of restrictions of the public spending. These restrictions have provoked an angry protest in the country. The unemployment grew and thousands of families lost their homes, while the bankers keep their fortunes and privileges. This kind of facts provoked the movement Occupy Wall Street birth, which seems to be expanding by the United States and the rest of the world. The common people cannot understand the bailout for the bankers and the restrictions imposed to the middle class and the poor’s. In their banners they say that the common people are 99 percent of population.
In Europe the protests are more intense, especially in Greece that began to drink the bitter part of the medicine. Italy, Portugal and Spain go by the same road and it is very likely that the governments of those countries might not continue in the power at short or mid term, because of the pressure of the population.
4.
Why does capitalism has survived and communism no?
The answer is very simple: because capitalism was able of adopting measures proper of its conceptual and historical opponent, the socialism, to overcome the crisis and later come back to the normality. I will explain more: for example, the political measures adopted by the President Franklyn D. Roosevelt in its New Deal, were interventionists measures, proper of the socialist system. The President ---the state--- assumed temporarily the control of the real economy and, especially, of the financial economy. In previous publications I have made a detailed relation of those measures. So that the capitalism has been able of understanding and adapting to the changes of each historical moment and therefore has survived until now.
In change, communism employed an orthodox and inflexible manner of to approach the economy and hence the Soviet Union disappeared. The Soviet communist leaders were not able of giving a minimum of freedom and a minimum of free market at the population and that was the main cause of the communism end. On the contrary, the Chinese communist leaders have applied measures proper of its conceptual and historic antagonist system, capitalism, and therefore the Chinese communist regime has survived. Today, in China coexists the communism and the capitalism, something contradictory and unbelievable hardly two decades ago. This fact reveals that the economic reality and the economic interests of the owners of the power are over the ideologies.
In a work on this theme published a time ago, I wrote that a vaccine is obtained from the illness germs, and the vaccine for avoiding the communism and/or the extreme socialism is a little dose of socialism. The democratic and capitalist societies should apply a little dose of socialism if they want preserving its political and economic system. For example, the system of mixed economy is the system that exists in the most advanced societies of the world: the Nordic countries. Too few months ago, Ben Bernanke, chief of the Federal Reserve of the United States recognized that the state should have a most intervention and control on the financial system for avoiding big catastrophes like the occurred in the year 2008, which effects are still present.
5.
Consequences of the big economic crisis
The great economist and Nobel Prize Paul Anthony Samuelson, (1915-2009), in his Course of Modern Economy, wrote that the Second World War was a direct consequence of the economic crisis that in those years affected the world and specifically of the high level of unemployment, because these phenomenons helped men like Benito Mussolini and Adolph Hitler to get the power. (4)
Poor’s and rich’s exist and will exist for ever. The problem arise when the governments affect the basic needs of the people; for example, if you reduce the salaries or pensions, if you reduce the coverage of the health services, education, transport, among others essential issues, if you give all the benefits to the banks but the people cannot buy a house or lose its house because of the high interest rates, well, in those cases the population reacts very angry. History teaches us that the injustice is the cause of the revolutions. The two big political revolutions of the modern world, the French Revolution and the Bolsheviq Revolution, were caused by the unfair distribution of wealth and the abuse of the monarchies; those facts changed the history of humanity. As a consequence of the French Revolution the concepts of liberty, democracy and economic freedom reached an important place in the world; and as a consequence of the Bolsheviq Revolution the communism dominated the world half since the year 1917 until 1989, with the dissolution of the Soviet Union and the Berlin Wall fall.
6.
Is the world in the door of a new revolution of global influence?
Nobody can predict what will happen. We only can observe the signs and the symptoms of the present and thinking in hypothesis and scenarios that might occur or not. One fact is truth: the protests in the United States against the economic system and against the financial system are something unprecedented; cities like Washington, New York, Chicago, Oakland has been scenario of recurrent manifestations. The same happen in Israel during September and October 2011, where the people occupied the streets for weeks protesting against the banks, the inflation and the lack of houses. That is, simply, unbelievable. But similar protests occurred in London, Brussels, Paris, Cannes, Rome, Madrid and other cities of Spain, in Frankfurt, around the European Central Bank, in Japan and Australia; the list of other places in the world is very long.
The orthodoxies politicians influenced by the orthodoxies economists will determine the future of the world; but the politicians will pronounce the final word because they have the political power in their hands. If they insist in orthodox programs of austerity like the developed in Latin America in the 80s and 90s years, program that they want to apply now to Europe, it is very likely a deep political and economical change in the world, because the population will not resist those restrictions. The program of austerity is simply unsustainable since the political point of view. The governments that insist in that program do not have real possibilities of staying in the power. This already happened in Latin America during the 80s and 90s decades. In Europe the situation will be more radical. We can suppose that the riots in London, Athens and Rome in October 2011 were hardly the beginning.
Meanwhile, on Monday October 31 2011, the Prime Minister of Greece, Giorgos Papandreou announced a change in the form that until that day had followed the Greek government regarding the debt and the impositions of the European Central Bank, the International Monetary Fund and the European Community. Papandreou said that he will call to a referendum in which the population will express its approval or rejection to the policies regarding the debt. This referendum might represent the current Greek government end and also a hard hit against the euro.
The politician leaders of the European Community, especially of Germany and France, perhaps might realize this truth and therefore perhaps might soften (?) their initial pretensions regarding the debt of Greece, Spain, Portugal and Italy; the facts are demonstrating that the program of austerity imposed to those countries might provoke the end of their governments and also of the euro zone.
Worldwide, this year 2011, has been a period of important political and economical changes; the Arab Spring is a clear example in that sense; it has been a period of revolution in unsuspected nations that had strong and non democratic governments like Egypt, Tunisia, Yemen, Algeria, Libya, Jordan, Mauritian, Sudan, Oman, Saudi Arabia, Syria, Lebanon, Morocco, Iraq, Somalia, Bahrain, Iran and Kuwait. In all those countries have occurred intense protests.
7.
Can the protesters creating a new political reference in the United States?
In the United States the situation is different and most difficult. Until now the authorities of New York has tolerated the presence of the protesters in a park near Wall Street; they know that will come the day when the protest conclude as an effect of the tiredness. In other states like California the police used the violence against the protesters. But if the movement does not find a new channel of political expression inside of the proper political parties of that country, Republicans or Democrats, and/or if the movement is not able of creating a third political option different to the existent political parties, it is very likely the disappearance of the protest.
Is the North American society prepared for creating a new political movement, a third option based in the aspirations expressed by the protesters?
That is the key question.
If the answer is yes, then that country might be in the beginning of an important political, social and economic change; if the answer is no, then the status quo will remain unalterable.
8.
The Marx’s prophecy
Marx said that capitalism contains the germs of its own destruction. But he could not foresee the capacity of renewal of the political systems; its capacity of adaptation to new circumstances. For example, Marx never could think that communism and capitalism might coexist, like they coexist today in China.
Nevertheless, the most important lesson is a lesson created by the same Marxist system of thought about the permanent evolution; indeed, the reality has demonstrated that the things change constantly and that in the political, economic and social processes nothing is eternal.
By other hand, it is necessary to highlight that in the last decades some politicians and the capitalist leaders have made something absolutely contradictory for the capitalism stability: because of its stubbornness they have made important efforts to finish the capitalist system. The most effective effort in that sense has been its decision of imposing the Neo Liberal program of austerity and globalization to the nations of the world. Notwithstanding, the capitalist regimen has survived until now.
If the orthodox politicians and the capitalist leaders, especially the bankers, are not able of understanding the new reality of the world perhaps they might suffer the same fate of the Soviet leaders, which in its time could not see the deep change that was occurring in the Soviet Union. Therefore the Soviet Union disappeared. Contradictions: Marx predicted the end of capitalism, that however is alive, but he could not foresee the disappearance of the communism, like effectively occurred in the Soviet Union.
9.
The Catholic Church position
On Tuesday November 1 2011, at Vatican City, the Pontifical Council for Justice and Peace published the document entitled “Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority.” Among other concepts the documents assures the following:
“What has driven the world in such a problematic direction for its economy and also for peace?
First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism” that purports to derive laws for how markets function from theory, these being laws of capitalistic development, while exaggerating certain aspects of markets. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage.
The inequalities and distortions of capitalist development are often an expression not only of economic liberalism but also of utilitarian thinking: that is, theoretical and practical approaches according to which what is useful for the individual leads to the good of the community. This saying has a core of truth, but it cannot be ignored that individual utility – even where it is legitimate – does not always favour the common good. In many cases a spirit of solidarity is called for that transcends personal utility for the good of the community.
In the 1920s, some economists had already warned about giving too much weight, in the absence of regulations and controls, to theories which have since become prevailing ideologies and practices on the international level.
One devastating effect of these ideologies, especially in the last decades of the past century and the first years of the current one, has been the outbreak of the crisis in which the world is still immersed.”
In the same spirit of Pacem in Terris, Benedict XVI himself expressed the need to create a world political authority.
A supranational Authority of this kind should have a realistic structure and be set up gradually. It should be favourable to the existence of efficient and effective monetary and financial systems; that is, free and stable markets overseen by a suitable legal framework, well-functioning in support of sustainable development and social progress of all, and inspired by the values of charity and truth. It is a matter of an Authority with a global reach that cannot be imposed by force, coercion or violence, but should be the outcome of a free and shared agreement and a reflection of the permanent and historic needs of the world common good." End of the quotes.
10.
Conclusion
The current protests are signs of the population awakening worldwide; something unprecedented for the big capitalist nations. The process perhaps yes, perhaps no, might cause a reflection in the elites that have the power in their hands. But, anyway, the facts demonstrate a new reality: a most conscience of the population regarding the economic situation and the paper that each one, individual and socially, can play to improve its quality of life and changing the politics and economic reality. That is one of the most important advances of the world population and a hope for the construction of a better world.
Capitalism, as system, is facing its most severe crisis: the model of permanent accumulation of capital in too few hands is collapsing; the most people is reacting against that model and this might provoke deep political and economic changes in the world.
(1) (2)(3), Pablo Rafael González. Apreciación Crítica de la Política Monetaria, el Bolívar Oro. Monte Ávila Editores Latinoamericana. Caracas, 2007, Pages 31-35, 52, 124-127.
(4), Pablo Rafael González. Una Idea Concreta para Combatir la Desocupación, la Doble Jornada y la Media Jornada. Segunda Edición. Book Surge Publishing, South Carolina. USA, 2006. Page 8.
Entradas
