Guest Post: 9 Plagues That Are Collapsing Capitalism

Tyler Durden's picture




 

Via Jim Quinn's Burning Platform blog (authored by Paul Rosenberg of FreemansPerspective blog),

Let me be blunt: Our capitalist system is approaching failure.

Or, perhaps better said: Our marginally capitalist, partly-free market systems are approaching a massive collapse.

Not because of what capitalism is, mind you, but because the powers that be have bastardized it.

Capitalism can bear many distortions and abuses, but it is not indestructible.

And, make no mistake, the ‘capitalist’ system we have today has been massively corrupted, so much so that it’s sagging under the load... and will continue to do so until the proverbial straw breaks its back.

The 9 Plagues

1. The average producer is being stripped bare. In the US, for example, the total take of taxes has not risen dramatically, but fewer and fewer people actually pay them. There was a big uproar during the last election cycle over the fact that 47% of working-aged Americans paid no income tax. That means that the half who do work (read suckers) are paying the whole. And more than that, they are also paying for the many millions who are on food stamps and disability. Producers are being punished and abused, made into chumps.

 

2. Thrift is essentially impossible. I’ve explained this in detail previously, but a hundred years ago, it was possible for an average person to accumulate money. Mechanics, carpenters, and shop owners slowly filled their bank accounts with gold and silver. It was common for them to make business loans and to retire comfortably. But now, all of our surplus is drained away to capital cities, where it is poured down the drains of welfare, warfare, and political lunacy. Money has been removed from the hands that made it, and moved into the hands of non-producers, liars, and destroyers.

 

3. In 2008, US federal government regulations cost an estimated $1.75 trillion, an amount equal to 14 percent of US national income. Let me restate: Simply complying with regulations costs American businesses more than $1,750,000,000,000 (that’s $1.75 Trillion) every year. This, again, is money taken out of production and wasted on political lunacy.

 

4. Small businesses are being squeezed out. Take a look at the two graphs below, and understand that as small businesses are squeezed out, only the large corporations remain. These days, only the largest and best-connected entities are able to get their concerns dealt with (by the politicians they fund). Small operations are cut off from the redress of their grievances and are crushed by taxes and regulation. And don’t forget the comments of Mussolini:

 

Fascism should more properly be called corporatism, since it is the merger of state and corporate power.

 

While there may be no dictator, state/corporate partnerships are taking over commerce in the West.

Freeman's Perspective
Freeman's Perspective

 

5. The military industrial complex is out of control. Their lobbying, fear-mongering, and spending can only be characterized as obscene. Dwight Eisenhower was right when he warned us about this in 1960. It is sad beyond measure that so few Americans took him seriously. Trillions of dollars and millions of productive lives are being spent on the war machines of the West. Never forget that wars destroy massively and produce nothing.

 

6. All the Western nations now feature large enforcer classes, composed of bureaucrats, law enforcement units, inspectors, and so on. In the US alone this amounts to several million people – none of whom produce anything, and all of whom restrain producers from producing. Millions of people are paid to restrain commerce.

 

7. We now have a very large financial class in which blindly aggressive people make millions of dollars. The problem is that finance is not productive. It may allocate money in beneficial ways (though it often allocates mainly to itself), but it doesn’t actually produce anything. At present, the allocators get the big bucks, and the producers get scraps.

 

8. The modern business ethic has become about acquisition only. In more enlightened times, it was also about creating benefit in the world, or at least creating newer and better things. Mere grasping is an insufficient philosophy for capitalism; it leads to dark places.

 

9. Every nation on the planet is using play money and forcing their inhabitants to use their play money. Moreover, they have super-empowered a small class of Central Banking Elites, who make fortunes on their currency monopolies, and who are entirely unknown to the producers who unwillingly (and unknowingly) purchase jets and yachts for them. Our money systems have brought back aristocracies; a class that is both hidden and immensely powerful.

 

So What’s Next?

That’s up to the producers. Everything hinges upon them. The game, as it is, depends entirely on them being willing to accept abuse.

All that is necessary to fix this is for the producers to stop being willing victims. Simple, I know, but there is a problem with such a sensible idea:

The producers are convinced that their role in life is only to struggle and obey.

Modern producers believe that the ruling classes have a legitimate right to tell them how much of their money they are entitled to keep, which charity causes they’ll be forced to contribute to, which features their car is required to have, and much, much more. Why? Simply because those other people are in “high positions,” and they (the producers) are in “low positions.” An evil assumption has been planted in their minds:

It is right for important people to order me around.

The productive class holds all the real power, but they are nearly devoid of moral confidence. So, they are abused without end.

Right now, a parasitic ethic rules the West and will continue to rule so long as producers play the part of the suckers. If this continues, what remains of capitalism will grind to a halt and will be overrun by a Neo-Fascist arrangement – not the dictator and swastika variety – but one where the state and powerful business interests merge into one unstoppable and insatiable force.

On the other hand, if ever the producers wake up from their moral coma and reject the role of doormat, they will build a society embodying the ethics of production. It almost sounds impossible, I know. But it is has happened before and could happen again.

It’s up to us.

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Wed, 07/10/2013 - 18:33 | 3739288 zorba THE GREEK
zorba THE GREEK's picture

So we will go back to a black market/barter system which will eventually morph back to capitalism. 

Wed, 07/10/2013 - 18:44 | 3739333 Winston of Oceania
Winston of Oceania's picture

You see, the Greeks know, they have another economy besides the one the leaches control. Black markets are truly capitalist and they are springing up everywhere.

Wed, 07/10/2013 - 18:59 | 3739394 RockyRacoon
RockyRacoon's picture

All that is necessary to fix this is for the producers to stop being willing victims.

So, Ayn Rand was onto something it seems.  Wait for it.....

Wed, 07/10/2013 - 21:40 | 3739953 James_Cole
James_Cole's picture

Or, perhaps better said: Our marginally capitalist, partly-free market systems are approaching a massive collapse.

Partly free-market? Is that like sort-of pregnant?

Wed, 07/10/2013 - 23:27 | 3740316 markmotive
markmotive's picture

I am not so sure that at least a few of these 9 things have not always existed.

Thu, 07/11/2013 - 02:38 | 3740596 Rubicon
Rubicon's picture

The Road to Serfdom

Thu, 07/11/2013 - 03:30 | 3740623 Colonel Klink
Colonel Klink's picture

I think the author is correct in his assessment of there being a "parasitic ethnic".

Thu, 07/11/2013 - 00:12 | 3740414 A Nanny Moose
A Nanny Moose's picture

Who is John Galt?

Thu, 07/11/2013 - 07:32 | 3740766 kralizec
kralizec's picture

Indeed, who?  Should be all of us...time to end the machine of the world.

Wed, 07/10/2013 - 19:02 | 3739404 Lost My Shorts
Lost My Shorts's picture

Black markets might be truly free (aside from occasional police raids) but they are not very capitalist.  In black markets, most participants work solo, and own their own means of production.  Black markets are pre-capitalist in a way.

Capitalism in any meaningful sense only arises when capital starts to be concentrated in the hands of a few, and most are forced to do wage labor to survive.

Wed, 07/10/2013 - 19:49 | 3739609 CH1
CH1's picture

Capitalism is NOT about concentration. It's about free commerce.

Wed, 07/10/2013 - 21:46 | 3739970 James_Cole
James_Cole's picture

Capitalism is NOT about concentration. It's about free commerce.

It's actually about both, when humans invent systems the systems don't necessarily make any sense. Free-market (similar to 'free commerce') is itself a paradox and is defined in a multitude of ways, but details details...

Wed, 07/10/2013 - 22:39 | 3740154 Lost My Shorts
Lost My Shorts's picture

To most people here, capitalism is just a holy word, with about as much meaning as om mani padme hum.

But you have a better discussion if words actually have meaning.  Socialism means that the means of production are collectively owned.  Capitalism means that the means of production are privately owned.  That is what the words mean.

When capitalism is embraced as an organizing principle, capital will always begin to concentrate, and some people will have none.  Those with none will be required to work for wages to survive.  The concentration of capital will always increase, and at some point, owners of capital will have the resources to buy off the government and do down all opposing institutions, which results in accelerating concentration, which results in rampant corruption and inefficiency, which results in collapse.  That cycle is not what might happen or what could happen, but what always happens.  Europe is already on its second cycle.

Of course, socialism (except in rare and very limited circumstances) also blows up.  The really interesting finding of our time is that both mass social systems invented in the 19th century, those two great -isms pitted against each other in the cold war, are both inherently unstable.  It's silly to miss that because you are too busy with religious chants.

There was a brief period at the end of the cold war, when Francis Fukayama declared the end of history, when it seemed that lightly regulated capitalism was an optimal, stable system.  (That was definitely not laissez faire, free-market capitalism; Glass Steagall was still in force and private capital was subject to many regulations.)  But the period was brief.  It could not stand the onslaught of Lee Atwater, Roger Ailes, Newt Gingrich, the Koch brothers, Alan Greenspan, Larry Summers, Robert Rubin, Jon Corzine, John Roberts, et al.  Now capitalism is back to running its inevitable course toward collapse.  It's not me who says that; the coming collapse is orthodox in the Zero Hedge comments section, no?

Wed, 07/10/2013 - 20:03 | 3739659 NoTTD
NoTTD's picture

Your first paragraph defines capitalism in it's purest form, the way it works best.  

Your second paragraph recounts the way socialists and communists view capitalism, the way it has been bastardized - mostly by the LEft itself.

Thu, 07/11/2013 - 02:21 | 3740565 scrappy
scrappy's picture

It has never been tried this way.

How do we divide the fruits of our labor?

Maybe beyond left and right?

A way to avoid civil strife and worse?

http://www.henrygeorge.org/isms.htm

Henry George and The Reconstruction Of Capitalism

http://schalkenbach.org/rsf-1/on-line-library/works-by-robert-v-andelson...

Marx hated it and so did the oligarchs.

Just might be part of the answer then.

At least some of todays gen are starting to get it. Thank God.

https://libertyrevival.wordpress.com/2011/01/09/ending-poverty-and-polit...

Wise Elders like Professor Mason Gafney have the best transitional Geoeconomic solutions we could really implement incrementally .

http://www.amazon.com/After-Crash-Designing-Depression-free-Economy/dp/1...

His take on the reason why this has occurred.

http://www.amazon.com/The-Corruption-Economics-Georgist-Paradigm/dp/0856...

 

The Professors website and extensive papers.

http://masongaffney.org/

 

 

 

 

 

 

Wed, 07/10/2013 - 22:08 | 3740040 Chuck Walla
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 When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you … you may know that your society is doomed. 

~ Ayn Rand

FORWARD SOVIET!

Thu, 07/11/2013 - 07:08 | 3740726 Burticus
Burticus's picture

"Black" market = (gubbermint-) Free market

Wed, 07/10/2013 - 19:05 | 3739420 kaiserhoff
kaiserhoff's picture

More of us are withdrawing from the system every day, in our own ways, on our own schedule.

Great piece, except that we do have a Dictator.   Look at Barry's executive orders, including the one hiding his past.

 

Wed, 07/10/2013 - 23:58 | 3740382 thestarl
thestarl's picture

Yep.

Wed, 07/10/2013 - 19:03 | 3739405 Singelguy
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It is already happening. The black market is estimated to be about 9% of the economy in the USA and about 12% in Europe and growing! As the cost of complying with all the regulations increases and taxes are increased at all levels of government, the black market will grow accordingly. Rather than take to the streets, people find a way to avoid the regulations and the taxes that they deem to be unfair.

Wed, 07/10/2013 - 19:23 | 3739506 Ban KKiller
Ban KKiller's picture

The black market will be the largest market in the world by 2020 with good reason. Fascists are destroying capitalism. 

Thu, 07/11/2013 - 16:07 | 3742635 Diogenes
Diogenes's picture

Some experts believe that if it had not been for their black market and gray market, the Soviet Union economy would have collapsed 30 or 40 years sooner. Many parts of the economy did not work at all but the system kept creaking along thanks to workarounds, under the table deals and ad hoc fixes the beaurocrats turned a blind eye to, or did not know existed.

Wed, 07/10/2013 - 20:35 | 3739763 game theory
game theory's picture

The US gov't appears to estimate how much economic activity is done outside of the reach of taxation and they run excess deficits as they receive less in taxes. Even if the black market became 100% of all activity, the gov't would simply run a massive deficit rather than shutting down.  Greece tried this last strategy and failed.  But the US gov't cannot be stopped via "financial revolt"...so they enjoy pensions and benefits, and sprinkle around some bonuses for the IRS, and some nice jobs at Goldman Sachs for the SEC people...etc. Try to expose any fraud in the US gov't and you may find your car booby-trapped. 

Thu, 07/11/2013 - 10:19 | 3741306 fallout11
fallout11's picture

Well said. Taxation of the "official" (non black market) economy is not even necessary, as Thomas Jefferson noted that inflation (in this case government-created inflation) is in fact a "hidden tax", one that affects all those who must use the currency for financial transactions, both black market and "official" economy alike. In effect, they can tax the black market even if it becomes 100% of economic activity via this hidden tax, inflation (currency debasement).

Wed, 07/10/2013 - 18:33 | 3739291 Flakmeister
Flakmeister's picture

Peak Oil will destroy many cherished notions about capitalism....

Moreover, capitalism is by definition doomed to devour its young, and when you run out of young...

Anyway, you get the idea...

Wed, 07/10/2013 - 18:35 | 3739299 maskone909
maskone909's picture

you mean corporatism

Wed, 07/10/2013 - 18:46 | 3739338 Poor Grogman
Poor Grogman's picture

Where has Calamitous Climate Change gone ?

Surely we will all suddenly fail to adapt to a couple of degrees temperature variation?

Why the sudden unlinking of the two?

Wed, 07/10/2013 - 19:37 | 3739564 Flakmeister
Flakmeister's picture

I'm sorry, did I hear a little pipsqueak making noise?

Wed, 07/10/2013 - 20:22 | 3739718 ClassicalLib17
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Hey flakmeister,  I'm guessing you have the obligatory ponytail, facial hair, round eye glasses, you wear a bike helmet when you ride, and you are now retired from your "profession",  which is what again?  You're such a fucking asshole.

Wed, 07/10/2013 - 20:29 | 3739742 Flakmeister
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Not even showing a hint of any ability to have a fact based scientific discussion of AGW...

Thu, 07/11/2013 - 00:19 | 3740426 A Nanny Moose
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Says the one presenting no facts on Capitalism eating itself and calling others pipsqueak.

Thu, 07/11/2013 - 08:31 | 3740942 Flakmeister
Flakmeister's picture

Exihibit A: Labor participation rate

Exhibit B: GINI Ratio

Exhibit C: Distribution of Income Gains since 1970

Now run along....

Thu, 07/11/2013 - 04:05 | 3740640 Poor Grogman
Poor Grogman's picture

You have the memory of a butterfly

Very colorful, flitting here and there, and totally gone in two days.

Priceless...

Thu, 07/11/2013 - 08:33 | 3740946 Flakmeister
Flakmeister's picture

How Zen of you, do you have anything of substance to add?

PS Whether you like it or not, I am one of the "senior statesmen" of the ZH boards...

Thu, 07/11/2013 - 19:48 | 3743344 Poor Grogman
Poor Grogman's picture

Ok now I know you are joking

Lol.

Thu, 07/11/2013 - 16:15 | 3742658 Diogenes
Diogenes's picture

"Where has Calamitous Climate Change gone ?"

 

Same place as Peak Oil, Acid Rain, the Red Menace, the Yellow Peril, Killer Bees and a million other calamities. They are "no longer operative" in the phrase made famous by Nixon's White House Press Secretary Ron Zeigler.

Wed, 07/10/2013 - 18:47 | 3739345 Dr. Engali
Dr. Engali's picture

You have a very poor understanding of capitalism.

Wed, 07/10/2013 - 18:59 | 3739388 Apeman
Apeman's picture

Perhaps he does, but I feel like there are many people who have blind faith in capitalism without understanding a rats ass about it. These people also oppose every other system without knowing a damn thing about those as well.

Capitalism is unlikely to be the "best" system. Every single one of us is simply too dumb to figure out what the best system is. I hate capitalism fanboys so incredibly much. I'm not talking about you btw... just in case...

Wed, 07/10/2013 - 19:38 | 3739434 prains
prains's picture

every system'ism' has a common denominator, personal self interest, as this self interest grows in both power and finance this self interest manifests itself in Oligarchical form. It doesn't matter the banner, the ism, the ist, you want to wave, it all becomes Oligarchical control.

 

Why waste your time trying to stick a feret in a tube and wrestle with which "system" is going to insert the tube in your ass. It's still the Oligarch doing the pushing.

 

 

Crickets........

Wed, 07/10/2013 - 19:40 | 3739572 Dr. Engali
Dr. Engali's picture

There is no "ism" that will ever work. There is only fascism. All systems are corrupted and driven by greed and will morph into a fascist state.

Wed, 07/10/2013 - 19:43 | 3739586 prains
prains's picture

AND

 

there will always be Applebee's

Wed, 07/10/2013 - 19:43 | 3739590 Flakmeister
Flakmeister's picture

Capitalism has evolved to the point where it no longer serves the useful function it once did...

And a fool who can only express ideologically pure ideas only displays their complete naivite about the human condition...

Even Adam Smith knew that a free market without regulation was chimerical....

If someone wants to have a serious discussion devoid of empty platitudes, I may join in. In the meantime I will simply monitor the circlejerk....

Wed, 07/10/2013 - 20:08 | 3739676 NoTTD
NoTTD's picture

Gee, that's white of you.

Wed, 07/10/2013 - 20:31 | 3739749 Flakmeister
Flakmeister's picture

...and lame of you.

Wed, 07/10/2013 - 21:40 | 3739956 nmewn
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Ok, is not capitalism an expression (in its essence) of the law of the jungle...where the strong survive and the weak adapt or perish?

In an economic/fiscal/financial sense, isn't that a preferable model...as opposed to propping up chia pet and buggy whip manufactuers for untold future generations to bear the burden of subsidy for?

Wed, 07/10/2013 - 22:02 | 3740023 Flakmeister
Flakmeister's picture

In a world without frontiers or limits, that might be case....

Call me when we find one...

Thu, 07/11/2013 - 00:27 | 3740408 Element
Element's picture

Flak, you want a political and policy renaissance (backed by state police force, of course, as you can't have one without the other) but that wondrous new-age, that great-sage-like turning point, it just isn't coming.

What humans are going to do though, is what we can do, and do most easily and economically, via trade, and the failure to trade economically. And that will sort itself out, without any further oversight - guaranteed. It's just not how your extreme-ideology desires (and yes bud, you are an extreme ideological puritan).

I don't mind if you think you could do it better, the fact is you can't. A 20-something mother with a child is never going to listen to what you demand they do, nor listen to what you say about how they should live. But they are going to do what they can do, and what they definitely can do is more of the same, with variations on the theme. You have no answers for them and you would be far worse for humanity than Joe-Stalin, if you could ever get your hands on any real policy or physical power of the statist meat-grinder you day-dream about.

Mentally-adjust, and get over it.

Thu, 07/11/2013 - 08:13 | 3740894 Flakmeister
Flakmeister's picture

Now there you go putting words in other peoples mouths...

My only agenda is to have a fact based discussions about AGW at Hedge. If an observed phenomena is anathema to your cherished ideals for the political-economy, maybe it is telling you that your ideology is lacking in some respect....

Denying science because it does not fit your world view is the height of narcissism...

Just sayin'...

Thu, 07/11/2013 - 19:21 | 3743270 nmewn
nmewn's picture

I don't see where Element broached the subject of "man-made global warming".

And a large part of the problem is we now have "political-economies" across the globe...politicians meddling in the economy and those politicians are invariably not real capitalists.

I've yet to find a true capitalist who gets in a bind and goes running to nanny.gov for a bailout.

Thu, 07/11/2013 - 00:21 | 3740432 A Nanny Moose
A Nanny Moose's picture

Capitalism economizes. Corrupted money devours.

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