Capitalism has failed

By   /   November 4, 2017  /   10 Comments

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The capitalist economic system is also based on endless growth. On average, the system has grown about three percent a year for 200 years. But today, that perpetual growth machine is suffocating the planet and as it does so it will destroy humanity’s ability to coexist with the planet for their own survival.

There is a growing recognition that capitalism is at least a part of the problem we face in this society.

First, we had Winston Peters comment when he announced he was forming a government with the Labour Party. He said:

“Far too many New Zealanders have come to view today’s capitalism, not as their friend, but as their foe. And they are not all wrong. That is why we believe that capitalism must regain its responsible – its human face.”

Then the new Prime Minister and Labour Party leader Jacinda Adern was asked directly if capitalism had failed low-income Kiwis she was unequivocal that it had.

“If you have hundreds of thousands of children living in homes without enough to survive, that’s a blatant failure. What else could you describe it as?” she said.

Her alternative was to “acknowledge where the market has failed and where intervention is required.”

Then a Newshub poll found that two-thirds of New Zealanders agreed with their new Prime Minister and Deputy Prime Minister that capitalism had failed New Zealanders.

Given the dominant views being propagated in the media by government leaders, political and economic commentators, and big business-owned media has been the opposite of that view for decades, this has been a resounding failure for the orthodox view.

The truth is that inequality has been growing, along with widespread poverty in the most advanced capitalist nations on earth in Europe, North America, Japan and Australasia.

The UBS/PwC Billionaires Report has found that the wealth of 1542 billionaires in the world rose another 17% last year to $6 trillion, or six thousand billion dollars (that’s $US6,000,000,000,000)!

Joeseph Stadler, the lead author of the report is worried there will be a backlash against this concentration of wealth as has occurred in the past. He told the UK Guardian that:

“Wealth concentration is as high as in 1905; this is something billionaires are concerned about. The problem is the power of interest on interest—that makes big money bigger—and the question is to what extent is that sustainable, and at what point will society intervene and strike back?”

The international aid agency Oxfam has found that: “The global inequality crisis is reaching new extremes. The richest 1% now have more wealth than the rest of the world combined. Power and privilege is being used to skew the economic system to increase the gap between the richest and the rest. A global network of tax havens further enables the richest individuals to hide $7.6 trillion. The fight against poverty will not be won until the inequality crisis is tackled.”

Millions of working people have felt the harsh truth of that reality, but it has not often found a political voice.

The system’s defenders have always argued that inequality and poverty that has been central to the reality of the capitalist system was some sort of mistake caused by interfering with the market, rather than caused by its natural laws. Just a few months ago, UK prime Minister Theresa May was arguing that “A free market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created” She added that this system was “the only sustainable way of increasing the living standards of everyone in the country.”

Those comments are religious dogma not science. Millions of citizens of the UK used the election that was held there recently to repudiate her lies by voting for an opposition Labour Party led by someone who speaks openly for a socialist alternative.

Even big bosses in the UK are getting worried at the failure of their own system. The Financial Times in the UK is a leading mouthpiece of big business. Talking among themselves they let slip the worries they have. On October 22 they printed the views of a number of business leaders also concerned at the failures of capitalism.

Baroness Shriti Vadera of Santander UK contradicts the assertion of Theresa May and says that “The underlying promise of western capitalist economies — that a rising tide lifts all boats — has been broken.” She then adds that “A better model” is now needed.

The problem with all these commentators from Winston Peters to Baroness Vadera is that capitalism has no “lost its way” or its “human face”.

Capitalism is actually showing us the inevitable outcome of its nature and its true face.

Capitalism has been the dominant economic system on the planet for at least 150 years. It has produced extraordinary economic growth. For many decades one generation was generally better off than the next. But that has ceased to be true other than for China and possibly India today (for reasons we will discuss at another time).

Today working people in the most advanced capitalist countries are going backwards from one generation to the next.

The capitalist economic system is also based on endless growth. On average, the system has grown about three percent a year for 200 years. But today, that perpetual growth machine is suffocating the planet and as it does so it will destroy humanity’s ability to coexist with the planet for their own survival.

This is a life and death struggle. Capitalism exists as a competitive system. It produces winners and losers. Capital is concentrated and centralised. That is the source of monopolisation and the domination of the 1%.

This system cannot be regulated or controlled. It needs to be overthrown and a new system of production and distribution that is not based on the profit motive brought in to replace it.

We have a name for that system. It is called socialism. And this system, at least in theory, is becoming more and more popular around the world. Even in the United States where being a socialist is almost unlawful, some four out of ten people say they prefer socialism to capitalism.

Capitalists have controlled most businesses that exist in the world and they operate according to its laws. Capitalists own most of the newspapers which churn our daily propaganda defending the eternal nature of the system. They have entire professions devoted to furthering their needs and interests.

Yet two out of three people in New Zealand thinks this system has failed. That is extraordinary.

We need to transform that “anti-capitalist” sentiment into a pro-socialist one. This can be done by developing a series of demands that seem reasonable and sensible but which lead to the transformation of society rather than trying to make the system work. The system does work. The problem for the system – capitalism – is that we don’t like it. We need a new system.

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About the author

Mike Treen

National Director of Unite Union


  1. David Stone says:

    To completely irradiate “capitalism” someone has to come up with a system , perhaps called socialism, that no one has identified yet. If there is no free enterprise at all, who decides what everyone does ? How are the people who decide this selected? Do people have cash to make individual choices about buying Speights or Heineken? Or is there only one state produced label, and a weekly allocation?
    Capitalism certainly exhibits the potential problems identified here, and we are well on in an historical period exemplifying the excess of it’s unregulated potential. But it served this country well in the post war years when we had perhaps the best mix of a social democracy based on managed capitalism that there has been anywhere at any time.
    In the present environment when there is so much poverty and deprivation amongst gross excess , a movement to reject capitalism altogether could catch on, but advocates of eradication would need to present a comprehensive model of the alternative they have in mind to offer the electorate that a majority would vote for. We don’t want a military dictatorship to replace it.
    The top tax rates used to even things out once. In the UK top rates of income tax were once over 90%.
    A hell of a lot can be done to make capitalism work for everyone but it needs the clear will of an elected government to do so. The government needs to be clear that it is governing in the interests of all of society not just the elite. And for New Zealand not for foreign countries. And not necessarily for the max of GDP.
    Don’t throw the baby out with the bathwater.
    D J S

    • Historian Pete says:

      “Don’t throw the baby out with the bathwater”. Unfortunately under capitalism the bathwater is inevitably becoming toxic.The baby is going to perish, or be nurtured under a new society.The capitalist system operated for a historical period without destroying its host, the people.Now ,this is all changing with the finite resources of the world rapidly running out.The wars that are racking the planet at an ever progressing rate are systematic of attempts to gain economic advantage by military means; the arch capitalist U.S. Empire leading the way, followed by the European vassals.All developed capitalist countries are showing an ever increasing inequality ,with the Oligarchs/One percent/Deep State gathering a larger share of all resources.We have no choice. It’s adapt to the new reality,or have our civilization collapse under the chaos created by our present masters of the universe.Herr Trump is the canary in the coal mine, the shape of things to come!

      • David Stone says:

        All too true, but though the world has changed in many ways in the meantime, capitalism has a cycle. It’s at an extreme now in it’s level of domination of society and it may take the murderous chaos being spread around the globe by the agents you identify, and the world’s eventual reaction to it before it is brought back under control again.
        But I repeat, What is the design of the acceptable alternative for organising our world?
        Your point about the worlds resources is pertinent . The present unfettered extreme of capitalist dominance is the most inappropriate system for managing a world of limited resources, both to supply raw materials and cope with the waste products that could be invented.
        Capitalism has to be made the servant instead of the master of society; Made to operate within the framework necessary to accommodate the planet and the people, but I can’t think of an acceptable alternative way of deciding who does what for whom. If you have a design in your head of a socio-economic system that could replace it entirely please let everyone know.
        Cheers D J S

        • Historian Pete says:

          I totally agree that a conversation needs to take place for the replacement of the present system.I have some ideas of a socio-economic system to replace our present model , but it is a problem that is only going to be solved after exhaustive discussion and collaboration . I don’t kid myself that I have all the answers. But it is going to have to be more democratic than what we have at the moment.The authors of it are going to have to sell it to the population.So wild talk of revolution will only remind the population of unsavoury models that have gone on before.Having said that,and at a risk of making myself unpopular with people on both the right and the left,there are some obvious reforms that can be made.Like the ownership of certain means of production;the exploitation of which has a detrimental effect on society.Thus the renationalisation of rail,public transport, airports,water services,electric power etc.A limit placed on the income that can be earned by any individual ie $300,000 per annum, the surplus to be utilized by the state on behalf of the people.There will be still differences in income, but they will range from a guaranteed liveable income of say $30,000 per person to the maximum stated, thus keeping a differential incentive for entrepreneurship.Death duties will be re-established to prevent family dynasties.Individuals will only be able to own complete assets of five million maximum.Gift duties will be re -implemented to prevent unreasonable concentrations of wealth.Controls on Corporate behaviour will be introduced to prevent them controlling our political system and to force them to be responsible entities that are beneficial to society as a whole, rather than just their shareholders.These policies will I imagine create a far more equal society . The aforementioned are talking points.There are no doubt serious and credible objections to this prescription.Please let me know what they are!!

      • David Stone says:

        As a post script Capitalism has not failed, it has triumphed .
        Democracy has failed to provide governance of it. To make it work for the many.
        D J S

  2. Johnnybg says:

    To be brutally honest; We can blame anything that takes our fancy for our lot & the imperfections of today’s world, but we are after all, just a jumped up animal species driven by our primal instincts. We’re a mal-adapted species that have done our dash, it’s all downhill form here; unless of course a trans-mutational life force emerges to miraculously transform, the algorithms (nut & bolts) of our innermost nature. Our immediate future will be about finding ways to survive the destruction that increasing resource wars & environmental degradation, will bring to our planet. I believe the only people in our societies who’re equipped to take on such undertakings are our DREAMERS & ARTISTS. It’s high time such people put aside their individual aspirations & came together to form inspirational, localized colonies within which they can shape & model, a myriad of new life affirming worlds & new ways of life, for the smart among us too adopt & put into practice. With many thanks to Nietzsche et al, I’m already some way there. Viva Ayvangard!

  3. CLEANGREEN says:

    ‘Old America’ who ‘championed’ ‘capitalism’ was o/k when we had few corporations.

    In the 1890’s, most US citizens who were working then, were self employed the records showed.

    93% of working Americans at the beginning of the 1900’s owned a small bussiness or ‘worked for themselves’.

    Since then ‘cororatism’ has take hold and reduced the self employed to the lowest levels on record today.

  4. Marc says:

    We know all about the failures of the capitalist system, and how it has failed in areas in New Zealand. Child poverty was what Jacinda talked about, when saying capitalism had failed, and I think Winston was thinking about homelessness, working poor and the likes.

    But to get a change, we can hardly go this way, which I think is not going to solve the crisis. I have NO trust in Phil the Stoner Twyford:

    Ballots or ‘lottery’ to get an ‘affordable’ home, buying other properties from developers, and allowing homes to cost up to 600k is not much of a useful alternative to the failed capitalist system we have.

    Capacity problems will make it near impossible to deliver the 16 thousand homes that Labour plan to build with Kiwi Build, there are not the builders needed, the materials are too expensive, land is too expensive and scarce. There are endless challenges.

    More intervention would be needed, and some will have to bleed, i.e. property owners that already own land and homes, their homes will lose values, we need some land tax, controls on ownership and more.

    By the way Kiwi Build is asset sales by stealth also, as using Crown land to build on, and then sell the land and homes to private owners and developers, that is PRIVATISATION.

    The whole plans around Kiwi Build are flawed, we hear too little about state housing that also needs to be built, and I fear this whole policy will prove to become almost impossible to deliver on.

    And I am NOT an Nat loving troll, I am far from it, I am just suspicious about what is talked about and planned.

    So let us see what miracles Labour and NZ First will deliver us, I expect very little to be honest.

  5. Marc says:

    Shove it up their entitled noses, dear friends, do not spare for words and facts, we are taken for a damned ride, and diplomacy is ill placed:

    Destroy them all and fight in the streets that is if you have the guts to do it.

  6. Andrea says:

    There’s little adrift with the notion of many people putting in small amounts of money to have a stake in a venture they couldn’t afford on their own. A pooling of capital and other resources.

    And it can lift people out of poverty. It has.

    It’s when the money doesn’t get back to the investors. When managers and owners, corporations and impersonal pension funds get involved that the essential socialism of investing capital to make a good hits the soap on the top step.

    And the propagation of self-justifying myths: owners and entrepreneurs ‘risking’ their capital, being some sort of Higher Being with Rare Qualities who utterly deserves vast rewards, hobnobbing with some very peculiar people with aspirations that are not good for either the planet and its life, or the bulk of humanity.

    If that’s what we’re calling ‘capitalism’ – fine. And we’re all complicit because so many of us are wanting that Lotto win, that break into the big league, that power and lifestyle., that status and recognition. We allow. We approve – even while we bemoan the consequences. We hope – and aspire, as John Key knew well.

    Humility and service seem to be sadly out of fashion. Stupid lefty tree-huggers and enablers. We’ve all heard those slurs.

    If you want a new narrative – then it must be one that at least makes it unsocial to be a psychopath in a three piece suit, and answers the old WII-FM* question with rewards that please. And you have to start from the earliest ages.

    *What’s In It For Me?

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