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Saturday, May 08, 2010

Capitalism or Socialism?

In the early postwar period, the leading U.S. companies had little to fear from international competitors, then only beginning to emerge from the ruin of the Second World War. U.S. political and military power, meanwhile, helped secure sources of cheap raw materials and energy. The U.S. government propped up friendly dictators whom it could count on to “fight communism,” maintain the security of U.S. companies’ investments, and quash efforts at labor organization. When this strategy failed, as when socialist or nationalist governments came to power and threatened U.S. companies’ property or access to cheap labor, the U.S. government engineered coups or intervened militarily.

The existence of unions and the steady increase in real wages helped to fuel booming demand for the products churned out by growing mass-production industries.

In the 1970s, the United States’ position as the unchallenged colossus of the capitalist world was suddenly threatened from multiple directions: rising international competition, spiking energy prices, declining productivity and profitability, and soaring inflation and unemployment.

In 1973-1974, the first of two major “oil shocks” increased the price of petroleum four-fold, dramatically raising energy costs for both consumers and businesses. Workers’ wage demands outpaced the rate of productivity growth, driving up unit labor costs for businesses. The annual inflation rate spiked to over 10% in 1974 and again in each of the three years from 1979 to 1981. The annual unemployment rate topped 8% in 1975 and would reach nearly 10% in 1982.

When facing a recession, policymakers could lower interest rates, increase government spending, or lower taxes to stimulate demand and bring down the unemployment rate, at the cost of some increase in the inflation rate.

The U.S. government had encouraged the reconstruction of the economies of Western Europe and Japan, both to undermine the appeal of communism in those countries and to demonstrate the superiority of capitalism to the rest of the world. The revival of manufacturing in Europe and Japan, however, also meant increased competition for U.S. firms in “core” manufacturing industries like steel and auto.

Capitalists are more able to resist demands for wage increases (or even to impose wage cuts) if there are many unemployed people seeking work, and the employers can credibly threaten to replace current workers with unemployed job-seekers. Capitalists’ ability to enforce a high pace of work also depends on the existence of substantial unemployment. The threat of firing, a key means for disciplining workers, is more credible if employers can easily replace fired workers and if workers losing their jobs would likely face a long and costly period of unemployment. Long periods of very low unemployment threaten capitalist profitability for both these reasons.

If capitalists do not expect to make a profit, they will not invest (purchase buildings, machinery, etc.) or hire workers.

The crisis of the 1970s marked the end of the “Golden Age” framework and the advent of “neoliberal” capitalism.

Like the New Deal in the 1930s, the Reagan era laid the groundwork of a new set of relatively stable framework institutions. The so-called neoliberal social structure of accumulation, monstrous though it was, functioned as a framework for capital accumulation and economic growth for nearly three decades. Now it has fallen into crisis.

Few people outside the rabid right believe that capitalism faces imminent abolition in the United States.
Alejandro Reuss, Dollars and Sense.

If this would happen, it is hard to think of something that could replace it.
"a society based on workers’ control of their own workplaces, democratic control over the economy-wide allocation of resources, " has been already proved as bankruptcy as Capitalism.
What doesn’t work is not the ideology or the society organization, while one, the capitalistic would in the end provide rich an poor and be the mirror of human diversity, the second would try to equalize humans on the base of equal rights, both work as long as they stick to ideology.
When ideas become reality they lose their purpose and "ideality", they very often become a tool in the hands of the "strong" to take advantage of the "weak", the weak being the one who strongly believes in them.
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