"Karl Marx said it right, at some point capitalism can self-destroy itself, because you cannot keep shifting income from labour to capital without not having an excess capacity and a lack of aggregate demand. And that's what's happening - we thought that markets work and they are not working...every firm wants to survive and thrive and thus slashing labour costs even more. My labour costs are somebody else's income and consumption. That's why it's a self-destructive process."- Dr. Nouriel Roubini
"We are creating zombie households, zombie banks and zombie governments"...
I highly recommend watching the entire interview (click on image above). He goes on to say that this (current) situation is very similar to what happened during the second leg of the Great Depression i.e. there was an initial crash in 1929 and then a bounce in 1930, so policy-makers kicked the can down the road which led to the ultimate 90% collapse in the stock market. He also says that it's not feasible to save or grow or inflate your way out of the current situation which points to the need for debt restructuring (aka. liquidation). Of course, this interview was two years ago so there has only been more time wasted, more jobs shipped and more debt accumulated in the meantime.
And those apologists who would argue that the current model is not true capitalism, will have to explain why profit margins are at their highest level in the past 80 years and why wages (% of GDP) are at their lowest level in 80 years. Am I to believe that if the model were in the hands of the "true capitalists" (aka. Ayn Randists), that profits would be lower? Sure whatever...this was only ever about excessive out of control greed now in final self-destruct mode. You would think that the corporate dumbfucks of today would have figured out that they can't all keep cutting jobs without leading to a revenue recession, but apparently four years later they still haven't figured it out yet...
[Original Post: July 14th, 2013]
Continuing the recent discussion on Zombie Capitalism, we now delve into how the globalized ponzi economy turned average citizens into mindless zombified dumbfucks. Whereas (fair) competition between businesses leads to better products and services, excessive competition for material accumulation has turned the masses into conformist morons, ironically culminating in cultural and economic stagnation...
The basis of competition is imitation. Without replication, there would be no basis for comparison, hence no competition. Sport is the ultimate example. Everyone is doing the same thing at the same time, attempting to eke out a marginal advantage over the competitor. It's the ultimate form of conformity.
Greed: The Ultimate Sport
On a societal basis, the drive for more everything led to a similar single dimensional mindset. Unfortunately, most people still haven't figured out that having more "stuff" will never lead to happiness, whereas, on the other hand, being bankrupt at the end of all this will lead to major emotional depression. The globalized ponzi economy itself was never more than the ultimate sport, to see who could aggregate the most wealth. Only a handful of people were winners and amassed enormous fortunes. The vast majority who "played the game" are the bankrupt losers, whether they realize it yet or not...
Human Robots
For most people, having more, meant being better at one thing. This of course turned human beings into assembly line robots - mindless unquestioning dumbfucks with barely enough energy to make it through the day. It was inevitable that human beings would be commoditized and homogenized, along with every other factor of production. The over-specialization of skills and labour commoditization of course culminated in the ease of automation and ease of outsourcing that is now in overdrive. Apologists would argue that the increase in labour specialization and economies of scale, were the basis of the industrial revolution. Perhaps so, however, taken to its logical conclusion, over-automation was destined to also lead to mass unemployment. Machines don't have incomes and don't contribute to demand. The same can be said for low paid wage slaves in the Third World, they don't contribute to global economic demand. They are producers, but not consumers. As profits grew to displace wages, then it was inevitable that debts would accumulate to artificially maintain lifestyles. The resulting gap between developed world incomes and debt obligations has grown inexorably over past decades. 2008 saw the debt baton handed from private household borrowing to sovereign (public) borrowing in order to keep the ponzi scheme alive for a few more years, as we await the Minsky Moment...
Beggar Thy Neighbour and Thyself...
Much criticism has been leveled at the developed world and multinational companies for their exploitative roles in globalization. How about these leaders of the emerging markets nations? These are the most corrupt people on the entire planet. They have somehow bought in to a scheme that has no chance of improving the standard of living of their entire country. At best it has made a relatively small cadre of people very wealthy on a temporary basis. At worst it exploited and enslaved the vast majority of their fellow citizens as well as causing massive environmental degradation. The Western nations didn't just outsource the jobs and industries, they also outsourced the pollution. And haven't the Chinese figured out that their foreign financial assets are ultimately worthless? Do they not realize that the only way they get paid interest is if they continue to lend? And what about all of these thousands of new factories - what will happen when those are eventually shutdown due to lack of developed world demand. It's one thing to put someone else out of business, it's another thing to put yourself out of business.
Stag-Nation
The other aspect of this fiasco that is completely overlooked is that the developed world conveniently outsourced all of the dirty work but none of the profits. This is the most amazing chart on the internet, showing Apple's 30% profit margins v.s. Foxconn's 1.5% margins. That's all well and good for Apple shareholders, however, it means of course abject poverty for Foxconn's workers. In addition, all of this leads to yet more conformity and less innovation. Foxconn may now have the manufacturing capability, but its puny margins don't allow it to invest in R&D. So extrapolating this out to all of the other Asian manufacturers and we get a globalized economy based on cloning existing products with minimal improvement. All of which has led to global economic stagnation, as the developing world has no surplus available for consumption or R&D. All surplus is hoovered back to the Multinational mothership for disbursement to offshore bank accounts. Do economists really believe that all of the Third World countries are going to grow their economies by making still more disk drives? Each successive nation that attempts to compete by duplicating existing low-wage producers, will have yet lower wages and more environmental degradation. That's the nature of excessive competition based on conformity versus innovation. It's not a path to prosperity, it's a path to exploitation.
