[Nyclocal] Has capitalism reached it's limits?

Thu Jun 12 13:58:10 MDT 2008

Has capitalism reached its limits?
	By Akahata

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	6-12-08, 9:32 am

Editor's Note: Japanese Communist Party Chair Shii Kazuo was
interviewed on an Asahi Newstar Communication Satellite TV program
broadcast on June 6. The interviewer was Hoshi Hiroshi, a senior
political writer of the daily Asahi Shimbun. This is an excerpt of the
transcription as provided by Akahata, the national daily newspaper of
the Japanese Communist Party.

Hoshi: The upcoming G8 Toyako Summit will be a crucial moment for
it. The main issues will include the environment, the economy, energy,
and food. In this context, you and the JCP are using various occasions
to argue about “capitalism reaching its limits.” Could you tell us what
is meant by this?

Shii: It is interesting to note that the argument about “capitalism
reaching its limits” comes from not only the JCP. In fact, it has been
arising from various quarters. For example, in the wake of the
widespread U.S. sub-prime mortgage crisis, speculative funds began to
flow into the oil and grains markets, pushing up their prices. The
trend is so powerful that it is very difficult to keep these moves
under control. Observing this situation, some economic analysts are
saying, “Capitalism is reaching its limits.”

Look at the world in the 21st century in a broader perspective.
Under the present form of capitalism that puts profit making before
anything else, poverty and economic inequalities are increasing at an
alarming rate worldwide. The population facing hunger is increasing by
4 million each year. The rampage of speculative money is destroying
people’s living conditions in many countries, in particular developing
countries. The destruction of the global environment has emerged as a
major critical issue.

The profit-first principle of capitalism is causing many to wonder
whether the world can survive along with it. In a broader perspective,
the world is facing a major question whether capitalism is a viable
economic system.

Poverty, speculative investment, and environmental disruption can only be solved in a system that can overcome capitalism

Hoshi: The upcoming G8 Toyako Summit is expected to take up such
issues as the need to control speculative investment. European
countries are putting forward various anti-pollution measures. How do
you evaluate these moves?

Shii: On every one of the three issues that I mentioned, we must
not lose time in making efforts to solve them even within the present
framework of capitalism.

For example, the effort to regulate speculative money will require
international cooperation. All information on the activities of hedge
funds must be made public. It is said that there are about 9,000 hedge
funds in the world at present managing assets worth 180 trillion yen,
but their real status remains unknown.

George Soros says that that the financial system needs a global
sheriff. The question is whether the world can set out to control
speculative money flows.

Take the “Tobin Tax,” a proposed tax on currency speculation, for
example. This is aimed at controlling short-term currency speculation
so that repeated transactions will be taxed fairly. This tax revenue
could be used as a fund for official development assistance to
developing countries. I think this is a noteworthy proposal and should
be seriously studied.

It will also be important to establish a new international mechanism that will disallow speculative investments in food and oil.

The same applies to environmental issues. Concerning the mid-term
target for greenhouse gas emission cuts, the EU calls for a 30 percent
cut by 2020 (and a 80 percent cut by 2050) by the developed countries.
This is also a matter that the world must address without delay even
within the framework of capitalism.

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However, a question remains unsolved: can these two
problems be solved through the efforts being made within the framework
of capitalism? I would say they cannot be completely solved under
capitalism, which is, after all, based on “profit-first” principle.
This point will be made clearer in the course of attempting to
implement structural changes. In that respect, the 21st century will be
an era in which conditions for creating a new future society replacing
capitalism will increasingly emerge.

Capitalism is seen adrift in the historical context

Hoshi: In the 20th century, capitalism has tried to overcome its
crisis incorporating a Keynesian economic model, as I referred to in
another TV program (TV Asahi’s Sunday Project broadcast on May 18). Do
you find any similarities and differences?

Shii: Historically, capitalism up to the 19th century was
classical liberalism, under which the state basically refrained from
meddling into business activities. In those days, people regarded only
postal services and law enforcement as part of state power. At best,
the state established a 10-hour-a-day work system under the factory
law.

However, the laissez-faire policy could not prevent depressions
from taking place frequently. The Great Depression of 1929 was a major
worldwide depression causing a crisis for world capitalism. The Great
Depression marked a turning point in capitalism, and the so-called
Keynesian model began to be adopted. Keynesianism means state
intervention in the economy through various fiscal and financial
measures of regulation, ostensibly with the aim of overcoming and
preventing future economic depressions. In the 1970s, the Keynesian
approach began to be seen as a failure.

Since the 1980s, so-called neo-liberal approaches began to take the
place of Keynesianism. Neo-liberalism is an approach that leaves
everything to market forces. Of course, the state will gladly support
the large corporations, but the people’s living conditions are left to
the law of the jungle. Neo-liberalism spread to major capitalist
countries, starting from the Thatcher Cabinet of Britain and the U.S.
Reagan administration along with the Japanese Nakasone Cabinet.

In Japan, the Koizumi and Abe governments promoted neo-liberalism
to the extreme and turned the country into a testing ground for
neo-liberalism, though with some twists and turns. This led to
increasing poverty and widening economic inequalities. Today, Japanese
society is seriously suffering from the spiraling increase of the
“working-poor.”

Neo-liberalism is failing in Japan, but it has already failed in
many other parts of the world. For example, the International Monetary
Fund (IMF) and the World Bank tried to arrogantly impose neo-liberal
economic policies, particularly on countries in Latin America. The
contradictions sharpened, and as a result, democratic governments and
leftist governments have emerged in many Latin American countries.

The IMF imposed neo-liberal prescriptions on Southeast Asian
countries in 1998, when a currency crisis occurred, undermining living
conditions in those countries. Determined not to repeat the same
mistake, people in this region have begun to seek an independent and
democratic economic order.

Neo-liberalism has failed worldwide, and in Japan, too. What
guiding principle for economic policy should capitalism count on
hereafter? Keynesianism failed, and neo-liberalism failed. There is no
way to returning to Keynesianism today. First of all, the JCP is
calling for promoting economic democracy to establish an economy in
which economic activities should come under certain rules with a view
to defending people’s living conditions, even within the framework of
capitalism. This is the only way forward. In fact, European countries
are making efforts to a certain extent in this direction.

I must say that world capitalism as a whole has gone astray, so to
speak. It has lost its guiding principles and is now adrift with no
place to go. From a broad point of view, capitalism has no way out of
the current impasse.

Hoshi: To make the matter worse, hedge funds and other speculative investors are running rampant throughout the world.

Shii: They are indeed running rampant to make extraordinary
short-term profits. At present, the world financial asset is said to
stand at about 150 trillion dollars. As world GDP (gross domestic
product) stands at approximately 50 trillion dollars, there is a
difference of about 100 trillion dollars. Of this amount, several tens
of trillions of dollars or so in excess is being used as speculative
money in the global market. It is extraordinary that the size of
finance economy is three times the size of the productive economy.

Even under capitalism, making investments and producing goods or
providing services and thereby earning profits is a sound activity to a
certain extent. Irrelevant of such substantial economic activity, money
making short-term moves in the hunt for quick profits from foreign
exchange and other trading schemes will cause serious corruption. Such
corruption is now advancing worldwide.

Excerpted from Akahata interview with Japanese Communist Party Chair Shii Kazuo.

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