A War on Society by Capitalism and Government
By I. Langalibalele
Two contending views exist concerning how the financial meltdown happened. Neither one is entirely incorrect, yet whichever view dominates will determine how society responds to the bail out. People must understand that their interpretation of events is based upon however themselves they perceive their relationship to the power structure and to the economic forces that run this country. Which in turn determines how democracy will operate thru the next period of political hegemony over the masses of Americans.
On the one hand, there is the belief that an over-extended practice of credit lending stretched thin the liquidity of US financial institutions. This view says that Americans lived on credit. They used credit to pay for everything from big ticket items like houses and autos and furniture and plasma screen televisions, to paying off utility, grocery and clothing bills. This view is not entirely wrong, but it is not at the root of the problem.
According to Milton Friedman, late architect of the cut and spend voodoo economics of every administration from 1981 to the present, economic crises stem from cash being regulated rather than distributed. In this scenario, the cash being regulated by the banks and corporate finance institutions have done what is characteristic under capitalism.
Wealth hoarded from society by financiers gets concentrated. They transform it into asset-backed commercial paper, which can be packed into briefcases, transported and negotiated anywhere. Sophisticated funds such as hedge funds, arbitrages, derivatives and other forms of capitalism are driven from the very credit market that the right-wing accuses Americans of having abused. Freidman was not wrong about cash being locked up, but he was the leading advocate of those responsible for concentrating wealth, a seeming paradox.
Liquidity is locked up in asset-backed commercial paper. Huge funds are driven by firms that bundle mortgages and sell them to investors; your home is only worth the down payment. Investors back their speculative investments such as oil futures on bundled real estate which has in part driven the price, not the cost, of gasoline over the last three years.
Wealth is locked up, Milton Friedman, by a handful of capitalists making war against society, assisted at the uppermost levels of the State.
Out of this current period, a massive shakeout of small investors has taken place, whereby people having their pensions tied up in stock options have taken another hit. From the S&L scandals of the Eighties and Nineties, to the DotCom shakeout and the stock option swindles — led by Tyco, Enron, Worldcom-MCI, and others — to the current financial crisis caused by the subprime housing market started during the Clinton era, the cycles of massive fraud and rip offs by corporate America seem to be building with increased frequency and viciousness.
Imperialism, international monopoly finance capitalism, has arrived at the point in history where it must cannibalize its base inside the world capitalist centers. For this, capitalism has less use for colonialism and racism. It no longer requires a theory of white supremacy as it shifts capital resources into China and India. Capitalism’s continuation as an economic force today depends upon reducing the conditions of all workers to the lowest possible state and keeping them divided.
Were that not the function of capitalism, workers would actually be paid for the value of their labor. Which underscores the logic that the crisis in social relations occurs at the point of production. This economic meltdown derives from the crisis in social relations created by capitalism, which takes place wherever the class struggle bumps heads. It is bumping heads right now where the banks are being bailed out to the tune of $700 billion. If the government directly bailed out mortgagees, that would reduce the amount to only $150 billion or so.
The Gubernatorial-Oppenheimer Party wiped out the biggest economic boom in history, That was like wrapping a show-room floor Maserati around a tree on a test drive, and walking away unfazed. The party of democracy thru Imperialism, using Imperialism to spread its limited democracy, has achieved its mission, waiting awhile to implement neo-fascist economic and political policies to eradicate unions, the Left, and civil society. It must wait for the Dems to lure the people back to sleep by working Imperialism thru democracy.
So, to say the credit system caused the financial meltdown is not completely true or even remotely accurate. The money locked up by banks derives from value produced by every worker in America and then lent back to them at exorbitant rates.
Working people build houses, thereby transforming raw land into real estate. And in America, land was never honestly purchased or traded; it was looted from the Turtle Islanders. American capitalism on free land built upon the slave labor of African people still cannot produce wealth without thievery, deception and misery.
This tendency adversely effects democracy and defines the next period of hegemony over working and poor people. Once the so-called government bail out of the banks gets finalized, new regulations and policies will go into effect.
As the corporate media defines democracy and flagellates the average American about having used too much credit, guilt becomes the new black. The supposed white guilt about racism that never was — because anti-racism never was about white guilt — will miraculously become transfigured into white guilt about finances. And the Democratic Party will implement the new regime under what will be, in the upshot, Imperialism thru democracy.