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April 25, 2013


Capitalism is not necessarily the exclusive preserve of so-called “free enterprise.” Such a system can be a form of state capitalism as well. (China is a current example of state capitalism.) Monarchies, dictators and  other such authoritarian regimes also typically have or take control of their economies as well as their militaries and proceed to maintain or set up new systems of production and distribution of goods and services, perhaps on a capitalist model, perhaps not. Successful revolutionaries often make radical changes as well in an old failed state’s economic structure (see Lenin’s Russia in the early twentieth century). Sometimes there is disagreement among the reformers on the nuances of reform as well (see Lenin v. Trotsky). There are winners and losers – Trotsky was assassinated in Mexico City in 1940.

Whatever ultimate market structure comes out of revolution or even radical change short of revolution is always up for grabs. Current Republican ideology may fit the “radical change short of revolution” ideological stance, though little about it is novel. We have lived through a “Gilded Age” before, and survived the Rockefeller-railroad baron’s excesses of greedy behavior. As Yogi noted, this may be “deju vu” all over again. I have blogged on this before, equating a return to the Gilded Age to new feudalism.

China’s controlled capitalist society, lacking democracy that elections provide, has a built-in Keynesian component. The party leaders can do most anything they want to do, and up until recently, such state capitalists (aka communist party politboro) have been building infrastructure at breakneck speed. They have just concluded the greatest construction boom in recorded history. Rice paddies of a decade ago are now gleaming cities with super highways and millions of cars and trucks in evidence.

That building boom is slowing as the growth of the Chinese economy recedes. The slowing Chinese economy has had other effects, too, like the slowdown of their need for copper and other such commodities (as noted in the falling prices of stock on Wall Street in such companies that produce them).

Their workers are increasingly militant; they want a bigger piece of the economic pie that goes to Beijing for distribution at the whim of party leaders, and they are succeeding. Wages for Chinese workers have gone up dramatically, which presumably means less money for Beijing (and thus less money for the breakneck pace of infrastructure building and rebuilding) unless they can wheedle higher prices from their customers in the West (welcome to inflation – inflation we cannot control). Other means for Beijing to even out increased labor costs might include playing with their currency values, subsidizing costs for goods destined for export, dumping and other such anti-WTO tactics. It would be nothing new; China has been ignoring WTO rules since Clinton approved its petition for membership (his second worst mistake on his watch behind the repeal of Glass-Steagall).

Republicans by ignoring economic history may not even understand how radical their stance is in the order of things. They are so wed to the financial fates of modern-day Rockefellers and railroad barons (i.e., Wall Street banks, equity and debt markets and multinational corporations of today) that they haven’t fully considered the implication of how such a view plays out in a democracy. They don’t seem to understand that they are not favoring a laissez faire form of capitalism; that they are rather inviting Social Darwinism, oligarchy, and the political disenfranchisement and economic impoverishment of the great majority of the people, including, finally, themselves, because when the predators they have helped to totally take over do so, they themselves will become prey.

I had hoped that, in time, the Republican party would turn its back on a system that has turned the economy into a betting parlor that nearly imploded in 2008; that its leadership would see from the consequent destruction of millions of jobs, devastation of household incomes and trillions of dollars in the loss of home equities that it was time to change course. I have been disappointed to date.

Apparently the party’s leadership wants to stay with a system that continues to outlandishly reward the Wall Street and corporate elite, private equity managers and hedge fund moguls – at the expense of the rest of us.

I had finally hoped that the Republican leadership would at least favor laissez faire capitalism of the Adam Smith/Ricardo variety as a counterbalance to a socializing influence on the economy. My hope was in vain. In their enthusiasm to return to a form of new feudalism (rich-poor, greed etc.), their leadership has rejected that as well.

I have concluded that the leadership of the Republican party as now constituted is in favor of a new economic system heretofore unknown to the lexicon: Casino Capitalism. Republicans are crap shooters, Wall Street provides the “pit bosses,” and they are playing with OUR money.

Democracy? What’s that?  GERALD  E


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