Fall of Capitalism – Wallace Articles

6/26/16

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The Impending Fall of Capitalism

The surprising vote by the masses for the UK to leave the EU has been explained by analysts as an act of frustration against the government’s failure to resolve the immigration issue. But there is a deeper cause involved — an underlying resentment toward the political establishment for no longer responding to their desires. What is more, this sentiment isn’t only in the UK, it’s manifesting worldwide. Hence, as more people recognize that an anti-establishment uprising has begun, it increases in momentum.

The political and financial elite have ignored for too long the smoldering anger of those they have exploited in their pursuit of personal gain. Politicians have long since stopped representing their constituents and only serve the corporations and the wealthy. Common people are treated as of ‘no consequence’, and their bitterness has reached the breaking point. Yet the establishments are so out of touch this has taken them by surprise.

The same situation exists in the US and is seen in the unexpected support for Donald Trump’s presidential campaign. Masses are supporting him because he is not part of the deeply distrusted political system.

He is gladly riding the wave of anti-politician sentiment and mistakenly thinks he’s leading it. But like any other surfer, he didn’t start the wave, he isn’t in control of its force or direction, and he won’t be able to stay atop it indefinitely. As soon as he fails to meet the people’s expectations, he’ll be swept away, because he too is distrusted. Although he’s not a professional politician, he is a member of the equally hated corporate world.

Those seeking to understand these events must identify the cause of this resentment among the vast majority of common people. If you were to ask them what they are mad at, few could give a clear answer since most are unaware of the underlying reason.

They too, as they feel their emotions in turmoil, search for an explanation. Current events provide many issues upon which to express one’s feelings. Yet as the weekly news reports turn from one issue to another, so too the explanation of people’s anger shifts from one issue to another.

Some identify racism, either for or against; some identify immigration, either for or against; for others it’s religious extremism; still others point to the increasing acts of terror, both foreign and domestic; some cite the corruption and injustice of ‘the system’. All of these are valid problems which must be fixed eventually. Still, the underlying anger remains because these things only represent where the attention is currently being focused, while the source of the feelings remains unaddressed.

Although most people can’t positively identify the true source of their frustration, part of their subconscious is able to recognize that their financial situation is increasingly insecure. The economic crises of the past ten years have left nearly everyone in an uncomfortable position.

The poorer classes were promised a chance to build some wealth by the government manipulating the financial sector to give them easy access to borrowed capital. Alas, the government plan backfired and caused a worldwide recession, with the result that the poor were left in an even worse condition than they were before. Further, national and international economies were pushed to near collapse as a result of the government’s tinkering.

World economies were only stabilized by additional manipulation of the financial markets through “bail outs” of banks and conglomerates. This action had two effects. First, it revealed to everyone the distressing and previously secret fact of just how precarious the capitalistic economic system really is; thus robbing them of their illusion of security. Second, it placed the burden of the recovery squarely on the middle class.

Thus the middle classes took a double hit to their finances. The fall in the economy wiped out substantial portions, and in many cases all, of their accumulated wealth. Then the increased taxes to pay off the government’s debt hampered their ability to begin rebuilding their losses.

The only ones to come out of the recession in a good position were the super-rich class. They had convinced the government that the only way the economy could recover was by reimbursing the rich for their losses through the financial bail out scheme.

Thus while the lower and middle classes were left in worse shape, the rich were patting each other on the back and giving themselves bonuses from the bail-out fund as a reward for their cleverness at rescuing their own jeopardized wealth at the expense of others. This then is the root of the general public resentment.

There has long been an understanding among the members of capitalist systems that the rich would be indulged to get richer so long as the middle and poor were enabled to get richer too. However, it is gradually being recognized of late that the rich have broken this agreement. They are taking all the wealth for themselves.

The foundation of a capitalistic system is that assets must constantly be flowing. From production of goods, to promoting consumerism, to reinvestment in production. The current form of Unlimited Capitalism has broken this chain. Rather than leaving the profits in the system to continue flowing through the circuit, the wealthy have been removing profits from the economic sector and transferring them to the financial sector in order to multiply their personal wealth. These holdings then become static and no longer of benefit to the economic system. [ This argument takes the position that there are distinctions between capital assets and wealth, and also between the economic/production sector and the financial/trading sector. ]

Without its profits remaining in flow, the only way for an economy to continue functioning is to develop new growth. Unfortunately, national and international economies cannot grow perpetually; there must be cycles of expansion and contraction.

Lately governments and financiers have resorted to artificially stimulating their economies in order to keep them growing and to maintain the appearance of stability. But there are two things working against their efforts. First, artificial growth cannot be sustained indefinitely. Second, the extraction of profit from the system by the super-wealthy is sabotaging the intended growth.

These circumstances have brought us to the current situation wherein 1% of the people control 99% of the wealth. And it is impossible for a capitalistic system to sustain this ratio. Thus, no matter what governments and world bankers do to help, the structure will inevitably fail.

Just as 1989 saw the breakup of the Soviet Union and the reformation of Communism, so too 2016/2017 is witnessing the start of the collapse of Unlimited Capitalism. Once that earlier popular revolt had begun, the governments of the Communist Bloc fell like dominoes; likewise the countries of the Capitalist system are poised to fall in quick succession. Thus Capitalism ironically faces the same fate over which it gloated when Communism fell.

Once Communism as a world system fell in the mid-1980s, capitalism no longer had need to hold itself up as the ideal system. In the absence of its former opponent to provide a contrast to avoid, Capitalism degenerated into its worst form rather than its best. Its leaders resorted to increased greed and decreased ethics. They justified their actions with the argument that as the rich got richer, coincidental benefits would flow to the classes below. Yet time hos proven this theory to be false. The rich merely used the relaxed standards to build their own holdings, and very little moved downward.

Just as Communism promised the common people a better life but then failed to deliver, so too is Capitalism now failing its promise. Further, as Capitalism sees the masses resisting its actions, it has begun employing the very authoritarian totalitarianism it once condemned in its former opponent. The ‘point of criticality’ has been reached and now the other great edifice of the Twentieth Century is beginning to crumble. Once the economy breaks and enters a free-fall, it will continue to collapse until it is completely gone. A great depression will follow, and only from the ashes will a new system emerge.

The middle and lower classes may not understand the concepts of world economics, but their ‘gut instinct’ is telling them something is terribly wrong. It is this unidentified sense of impending doom which is generating their unfocused outbursts of anger and irrational actions.

What is more, this upheaval will not remain limited to just politics, it will spread to the religious world as well. Sincere religious believers, regardless of which religion they hold, recognize that greed and self-serving go against their faith. So they are willing to oppose the most blatant of the profiteering capitalists. Alas many believers are coming to realize that their own spiritual leaders privately engage in the same practices they publicly criticize. They encourage the faithful to rebel against political enemies, yet they are being deceptive and manipulative in order to carry out self-serving ends. As believers awaken to this jolting truth, the sense of betrayal will generate outrage. The major religious systems will then face revolt as well.

Thus as political, financial, and religious leaders come to be seen as dishonest and none trustworthy, no institution will be secure. Yet despite the resulting loss of social stability, the devastation will continue. For ultimately people will judge the cost of pulling down these institutions to be less than the cost of allowing them to remain.

As used here the ‘collapse’ of a system doesn’t mean its total disappearance. Although it’s generally recognized that the Soviet Union has broken up, there yet remain individual countries which continue to embrace Communism. Likewise, even after Capitalism falls as a world power there will continue to be countries which adhere to it as their economic system. But as with the other system, it will no longer represent a large bloc of nations working in concert to exert political influence.

The capitalist leaders aren’t yet aware of the true situation. They think the present string of political upheavals is just a temporary matter of “the peons blowing off steam” But the fact of the matter is that a revolt of the poor and middle classes has already begun. They no longer trust the upper class to play fair, and they absolutely despise the politicians.

The greed of the rich has been allowed to grow unchecked until now the entire system is out of balance. The only option left to the poor and middle class is to wrest control from the rich and the politicians in order to bring about a true change.

Once the upper class comes to understand their danger, they’ll try to put a patch on things; but it’s already too late — the genie is out of the bottle. Then as they see their system failing, they’ll get desperate.

We already see politicians bringing police power to bear against the poor. But instead of cowing them, this is only worsening the feelings. As the protests continue, the abuses will multiply. Then as the middle class becomes mobilized and stands alongside the poor to protest these abuses, the politicians will have no option but to engage the military as well in an attempt to restore order. That is when the poor and middle classes will see no option but to overthrow the politicians and take vengeance against the rich.

These events are no longer a hypothetical situation; they’ve already begun. This course must now continue until it has fully played out. What system may arise afterwards remains to be seen.