The consumer confidence has dropped again for the second straight month according to AFP. As if this was some sort of anomaly. And at World Economic Forum in Davos the movers and shakers are try to figure out what to do next with the current economic down turn, as if they had any clue. They don’t but that’s OK, they’ll still party like there is no tomorrow. There just might not be.
The problem is that everyone thinks we are experiencing some odd deviation from the norm. That there is some problem with the world economy that needs to be fixed and if only the correct solution could be found, everything would right itself and start humming along. Nothing could be further from the truth.
Economic downturns and financial crisis are all part of capitalism. They are in fact capitalism itself. Marx was quite clear on this.
Capitalism is an economic system that is inherently crisis-prone. It is driven by forces which cause it to be unstable, anarchic and self-destructive. This is as true today as it was over 150 years ago, when Karl Marx and his collaborator Frederick Engels described capitalism in the Communist Manifesto as “a society that has conjured up such gigantic means of production and of exchange, [that it] is like the sorcerer, who is no longer able to control the powers of the nether world whom he has called up by his spells.”1
Indeed, today’s world of wild stock market booms and slumps, recurring layoffs and long-term unemployment, corporate scandals and power blackouts, seems to fit their description better than ever before. The present economic downturn is no exception. The United States is currently in the middle of the longest period of job losses since the Great Depression of the 1930s. In fact, the U.S. economy today has 2.6 million fewer jobs that it did two years ago. Meanwhile, over two million people have lost health insurance coverage and personal bankruptcies hit a record of over 1.5 million households in 2002.2 In short, economic crises–recessions and depressions–were a part of capitalism at its birth and, despite promises to the contrary, continue to plague the system to this day.
Indeed. On need only to review the history of capitalism and the lists of financial crisis to see it is just one crisis and downturn after another with brief periods of stability followed by some economic bubble or boom followed by another crisis. Beginning ironically enough with tulips.
Tulip mania (1637)
South Sea Bubble (1720)
Crisis of 1772
Panic of 1792
Panic of 1796-1797
Danish state bankruptcy of 1813
Panic of 1819, a U.S. recession with bank failures; culmination of U.S.’s first boom-to-bust economic cycle
Panic of 1825, a pervasive British recession in which many banks failed, nearly including the Bank of England
Panic of 1837, a U.S. recession with bank failures, followed by a 5-year depression
Panic of 1847
Panic of 1857, a U.S. recession with bank failures
Panic of 1866
Long Depression (1873–1896)
Panic of 1873, a US recession with bank failures, followed by a four-year depression
Panic of 1884
Panic of 1890
Panic of 1893, a US recession with bank failures
Australian banking crisis of 1893
Panic of 1907, a U.S. economic recession with bank failures
Wall Street Crash of 1929 and Great Depression (1929–1939) the worst depression of modern history
OPEC oil price shock
Secondary banking crisis of 1973–1975 in the UK
Japanese asset price bubble (1986–2003)
Bank stock crisis (Israel 1983)
Black Monday (1987)
Savings and loan crisis of the 1980s and 1990s in the U.S.
1991 India economic crisis
Finnish banking crisis (1990s)
Swedish banking crisis (1990s)
1994 economic crisis in Mexico
1997 Asian financial crisis
1998 Russian financial crisis
Argentine economic crisis (1999–2002)
Quite a list. And these are just the biggies. There is a separate list of banking crisis that is nearly as long. We love to blame each of these on who ever is the leader at the time as if he or she was responsible for it, when financial crisis and downturns are part of the capitalistic system. There is also some belief that eliminating empires would fix it it as well, when empire is part of capitalism. In fact it’s a requirement since capitalism requires continued growth to exist and continued growth requires empire.
As you can see the mean time between failure is horrible and an engineer worth his or her salt would get rid of the system. And it can no more be regulated that an avalanche.
This is normal. The lousy jobs and lousy education and lousy outlook. Until the next bubble or final crash or until we replace it.