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Socialist Solution to Capitalism

Socialist Solution to Capitalism

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Published by roldanalex
If the American government agrees to intervene, this would mean that the defenders of capitalism agrees to the thought, that soon the government will have direct control over the much touted free market economy
If the American government agrees to intervene, this would mean that the defenders of capitalism agrees to the thought, that soon the government will have direct control over the much touted free market economy

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Published by: roldanalex on Jun 16, 2009
Copyright:Attribution Non-commercial


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Socialist solution to Capitalism?
The crisis suffered by the world’s economy today showed the inherent flaws of thecapitalist system. The imbalance of productivity between countries, and the predator instinct of the capitalists are the main causes of system contradictions that usher extremeeconomic gaps in the social structure of many countries.I know that capitalism is still far from perfect, but governments should have learned fromthe several incidents of economic crisis in many countries during the past 3 decades.These were signs that the system’s flaws were taking over from what many thought as thenatural process in the golden age of capitalism.The great depression of 1926 that ended before the Second World War was a failure toadjust to the systemic flaws of capitalism. Capital from speculative source such as sharesof stocks and government bonds are too risky for a system that is influenced by voraciouscompanies who wanted to control every inch of all free trade. The system was never reformed and instead reinforced after the war. The concept of “market is good andgovernment is bad,” freed the market further that detests government interventions.The system’s failure was highlighted by the malfunction of globalization as a strategy toeven the market. Instead, globalization heightened the contradiction of the system whocontinually strives for sustained increase of demand of products produced from cheaplabor. This in itself is a contradiction – for how could you increase demand if wages arelow? Wage earners that compose the majority of consumers have very limited purchasingcapabilities. Instead, inequality gap between the few very rich and the many poor increased. Moreover, there is a wide gap in terms of productivity among rich anddeveloping countries.Many large companies from rich nations transferred their factories to countries that offer cheap labor in order to compete. Yet their main markets are the rich nations whose population incomes are shrinking. Greed and lack of government intervention, thecapitalists in these rich nations continue to accept financial investments that are excess of other countries such as financial capitals from China, Taiwan, South Korea, Japan andmany other investors from other countries to support their insatiable need for profits.Housing loans in the US suck up more than 111 trillion dollars of capital from all sources.The loans were offered at low rates with very relaxed terms. The availability of moneymade the low income earners borrow beyond their capacity, and many are engaged inunproductive speculation – such as investing in stock markets. Suddenly, the feast ended.The system exploded! Stock values of companies worldwide collapsed, and investedcapital including company equities melted.In the United States of America, the end of Lehman Brothers and Merrill Lynch, two of the largest Wall Street investment banks, one week after the government takeover of themortgage finance giants Fannie Mae and Freddie Mac, marks a new stage in theconvulsive crisis of capitalism.

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