Western Economy on Suicide Watch?
Is it a case of murder, or has the Western economy deliberately, if unwittingly, attempted suicide and nearly succeeded?
John Maynard Keynes was not just talking about defunct economists when he wrote that the world is commonly ruled by dead ideas, its leaders the slaves of the past. He said, "Indeed the world is ruled by little else." If he were alive today, he could name management consultants and business gurus among those responsible for the economic crisis of the present day.
As 2011 begins, people still talk about the crisis of the Western economy as though we have been the victims of a blight from nowhere, like Haitians in a hurricane or blackbirds in
Thus my suicide argument. Once the Western nations professed belief in a stakeholder capitalism, which was supposed to benefit nations as a whole, and whose principal actors -- managers, employees, labor forces, bankers and customers -- were regarded as a community possessing common interests.
This was the "enlightened capitalism" of the post-Second World War years in
It bestowed upon Americans and Western Europeans 30 postwar years that, today, are looked back upon as a kind of golden age of individual prosperity and enrichment, universal education and social achievement.
Mine obviously is the opinion of a sympathizer, but many conservatives in Western countries might in retrospect concede the economic and social accomplishments of the West during those years.
Certainly it was this democratic social order that defeated Communism. The so-called socialist system installed in
Many factors since then have contributed to the destruction of the Western version of capitalism, but the most important for the U.S. was the theoreticians' rejection of manufacturing -- in its fundamental meaning: the making of things. In the 1960s it became common to argue that manufacturing, with its associated physical labor and consumption of raw materials, was inappropriate to a modern society, whose distinctive and determining advantage was its possession and use of knowledge and its capacity to innovate.
The new theory held that an advanced economy should supply thought, innovation and largely intellectual services to the world economy, leaving manufacturing to more backward societies, which then would exploit the resources of primitive economies. This also eliminated the onerous demand to pay wages to American workers.
Part of the transformation of this period was the acquired conviction -- influenced by the example of despotism in wartime societies -- that the state should divest itself of direct economic intervention. Economies should be privatized; the alternative would be the road to serfdom. Prime Minister
This was a denial of state infrastructure responsibilities, and the influence of this idea is apparent in the present day display of infrastructure dilapidation and disintegration in the U.S. as well as
This is one element in the national suicide attempt. Another was the
Today the U.S., to take the obvious example, suffers from weak consumer consumption. The lack of consumption is due to the export of high-wage manufacturing employment in the U.S. and
It continues to innovate, but the result is exploited by foreign low-cost labor, which then buys consumer goods. This should be no surprise, yet the reality of a virtual economy, producing only low-employment (even if high individual-value added) intellectual services seem not to have been foreseen. One current result is national and state government impoverishment.
Think of offshore investment funds and kindred innovations in finance that generate great wealth for a narrow elite with practically no employment for the population.
Practically no corporate taxes are paid to
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Western Economy on Suicide Watch? | Politics
(c) 2011 William Pfaff