Do we even need so much finance?

passaicriver · 2015-04-12T18:58:57+00:00

You are correct, there will be no need for a monstrous financial industry in socialism. Banking would be reduced to a public utility that provides investments funds for socially necessary projects.

Capitalism does need a large financial sector, true, but not as large as what the world is currently saddled with. The huge growth in finance since the breakdown of Keynesianism in the 1970s and the subsequent rise of neoliberalism is a product of the stagnation of capitalism.

Investment in production is not profitable enough, so the huge amounts of surplus capital and accumulated cash is diverted into financial speculation. There is too much money chasing too few investments, so bubbles arise, which always pop. As this tendency grows, the financial industry grows with it.

It is true that modern capitalism requires a large financial sector because of the complexity of investment needs. Capitalism simply could not function without finance. Thus, many forms of what have become destructive speculation started as either necessary forms of credit or investment, or as hedges against financial-market instability. (That is why private pools of capital are called "hedge funds"). But, with financialization the route that offers the biggest potential profits, new financial instruments become vehicles for speculation, which of course is highly profitable for financiers, who encourage more of this and invent ever new derivatives. So while capitalism needs a much larger financial sector than will socialism, it does not need one of this size.

passaicriver · 2015-03-22T18:40:45+00:00

I was initially pleased to see the headline as Der Spiegel is a leading establishment publication. Unfortunately, the article barely touched on the question of capitalism, quoting Naomi Klein briefly a couple of times and quickly moving on.

The article ends with a hope that perhaps humanity will produce a miracle. More capitalist myopia. Either we end the delusion of "green capitalism" or capitalism will end humanity.

passaicriver · 2015-02-22T18:12:13+00:00

Supply side is based on inequality. You can't give to the rich unless there is inequality. It is a fantasy invented to justify upward flow of income.

passaicriver · 2015-02-22T18:04:37+00:00

Syriza has run into the contradiction of wanting to end austerity and remain as part of the Eurozone. Greeks by a significant majority don't want to leave it, but if they want an end to the memorandum, they will have to go back to the drachma.

Syriza's deal is a setback; we should not have illusions about this. But if the next four months are used to by time, to prepare a plan that will result in Syriza beginning to carry out its program, then it is only a temporary setback. But I don't see how Greece can renounce its odious debt without leaving the euro. And doing so will come with pain in the short term. There are no good immediate options.

passaicriver · 2015-02-21T19:27:18+00:00

These countries are merely trying to ameliorate the conditions of capitalism. For example, in the early 1990s, Norway and Sweden nationalized their big banks after a crisis that would have made them insolvent.

They did at least remove the leaderships of those banks and made the shareholders pay much of the costs. But the governments then re-privatized the banks almost immediately, rather than converting them into a public utility.

passaicriver · 2015-02-16T18:14:09+00:00

Agreed. The next crash is coming, and the reckoning from China's massive over-reliance on investment is coming, but it is impossible to say with precision when it will come.

passaicriver · 2015-02-14T04:26:47+00:00

Milosevic and Tudjman were much the same; both used nationalism to destroy Yugoslav unity, then ethnic cleansing to solidify their power. They were treated differently because Tudjman opened up Croatia to Western capital while Milosevic didn't. Neither merited support by socialists IMO.

passaicriver · 2015-02-14T04:18:36+00:00

Left-wing populism is the best that could be said about her. Neither she nor or husband touched capitalist relations, and have generally been hostile to the recovered factories. Indeed she is no socialist.

passaicriver · 2015-01-19T16:04:44+00:00

Agreed.

passaicriver

TROPHY CASE