You have an ethical obligation to reject neoliberalism. Utilitarian rationality cannot account for the degraded life chances of billions because capital makes its victims anonymous
Daly 2004 Glyn. Lecturer in International Studies at the University College Northampton. Conversations with Žižek. 14-19
For Žižek it is imperative that we cut through this Gordian knot of postmodern protocol and recognize that our ethico-political responsibility is to confront the constitutive violence of today's global capitalism and its obscene naturalization/anonymization of the millions who are subjugated by it throughout the world. Against the standardized positions of postmodern culture - with all its pieties concerning 'multiculturalist' etiquette - Žižek is arguing for a politics that might be called 'radically incorrect' in the sense that it breaks with these types of positions and focuses instead on the very organizing principles of today's social reality: the principles of global liberal capitalism. This requires some care and subtlety. For too long, Marxism has been bedevilled by an almost fetishistic economism that has tended towards political morbidity. With the likes of Hilferding and Gramsci, and more recently Laclau and Mouffe, crucial theoretical advances have been made that enable the trascendence of all forms of economism. In this new context, however, Žižek argues that the problem that now presents itself is almost that of the opposite fetish. That is to say, the prohibitive anxieties surrounding the taboo of economism can function as a way of not engaging with the economic reality and as a way of implicitly accepting the latter as a basic horizon of existence. In an ironic Freudian-Lacanian twist, the fear of economism can end up reinforcing a de facto economic necessity in respect of contemporary capitalism (i.e. the initial prohibition conjures up the very thing it fears). This is not to endorse any retrograde return to economism. Žižek's point is rather that in rejecting economism we should not lose sight of the systemic power of capital in shaping the lives and destinies of humanity and our very sense of the possible. In particular, we should not overlook Marx's central insight that in order to create a universal global system the forces of capitalism seek to conceal the politico-discursive violence of its construction through a kind of gentrification of that system. What is persistently denied by neo-liberals such as Rorty (1989) and Fukuyama (1992) is that the gentrification of global liberal capitalism is one whose 'universalism' fundamentally reproduces and depends upon a disavowed violence that excludes vast sectors of the world's population. In this way, neo-liberal ideology attempts to naturalize capitalism by presenting its outcomes of winning and losing as if they were simply a matter of chance and sound judgement in a neutral marketplace. Capitalism does indeed create a space for a certain diversity, at least for the central capitalist regions, but it is neither neutral nor ideal and its price in terms of social exclusion is exorbitant. That is to say, the human cost in terms of inherent global poverty and degraded 'life-chances' cannot be calculated within the existing economic rationale and, in consequence, social exclusion remains mystified and nameless (viz. the patronizing reference to the developing world). And Žižek's point is that this mystification is magnified through capitalism's profound capacity to ingest its own excesses and negativity; to redirect (or misdirect) social antagonisms and to absorb them within a culture of differential affirmation. Instead of Bolshevism, the tendency of today is towards a kind of political boutiquism that is readily sustained by postmodern forms of consumerism and lifestyle. Against this Žižek argues for a new universalism whose primary ethical directive is to confront the fact that our forms of social existence are founded on exclusion on a global scale. While it is perfectly true that universalism can never become Universal (it will always require a hegemonic-particular embodiment in order to have any meaning), what is novel about Žižek's universalism is that it would not attempt to conceal this fact or to reduce the status of the abject Other to that of a 'glitch' in an otherwise sound matrix. The response of the left to global capitalism cannot be one of retreat into the nation-state or into organicist forms of community’ and popular identities that currently abound in Europe and elsewhere. For Žižek it is, rather, a question of working with the very excesses that, in a Lacanian sense, are in capitalism more than capitalism. It is a question, therefore, of transcending the provincial ‘universalism’ of capitalism. To illustrate the point, Žižek draws attention to the category of ‘intellectual property’ and the increasingly absurd attempts to establish restrictive dominion over technological advance – genetic codes, DNA structures, digital communications, pharmaceutical breakthroughs, computer programs and so on – that either affect us all and/or to which there is a sense of common human entitlement. Indeed, the modern conjuncture of capitalism is more and more characterized by a prohibitive culture: the widespread repression of those forms of research and development that have real emancipatory potential beyond exclusive profiteering; the restriction of information that has direct consequences for the future of humanity; the fundamental denial that social equality could be sustained by the abundance generated by capitalism. Capitalism typically endeavours to constrain the very dimensions of the universal that are enabled by it and simultaneously to resist all those developments that disclose its specificity-artificially as merely one possible mode of being. The left, therefore, must seek to subvert these ungovernable excesses in the direction of a political and politicizing universalism; or what Balibar would call égaliberté. This means that the left should demand more globalization not less. Where neo-liberals speak the language of freedom – either in terms of individual liberty or the free movement of goods and capital – the left should use this language to combat today’s racist obsessions with ‘economic refugees’, ‘immigrants’ and so on, and insist that freedoms are meaningless without the social resources to participate in those freedoms. Where there is talk of universal rights, the left must affirm a responsibility to the universal, one that emphasizes real human solidarity and does not lose sight of the abject within differential discourses. Reversing the well-known environmentalists’ slogan, we must say that the left has to involve itself in thinking locally and acting globally. That is to say, it should attend to the specificity of today’s political identities within the context of their global (capitalist) conditions of possibility precisely in order to challenge those conditions. Yet here I would venture that, despite clearly stated differences (Butler et al., 2000), the political perspective of Žižek is not necessarily opposed to that of Laclau and Mouffe and that a combined approach is fully possible. While Žižek is right to stress the susceptibility of today’s ‘alternative’ forms of hegemonic engagement to deradicalization within a postmodern-p.c. imaginary – a kind of hegemonization of the very terrain (the politico-cultural conditions of possibility) that produces and predisposes the contemporary logics of hegemony – it is equally true to say that the type of political challenge that Žižek has in mind is one that can only advance through the type of hegemonic subversion that Laclau and Mouffe have consistently stressed in their work. The very possibility of a political universalism is one that depends on a certain hegemonic breaking out of the existing conventions/grammar of hegemonic engagement. It is along these lines that Žižek affirms the need for a more radical intervention in the political imagination. The modern (Machiavellian) view of politics is presented in terms of a basic tension between (potentially) unlimited demands/appetites and limited resources; a view which is implicit in the predominant ‘risk society’ perspective where the central (almost Habermasian) concern is with more and better scientific information. The political truth of today’s world, however, is the opposite of this view. That is to say, the demands of the official left (especially the various incarnations of the Third Way left) tend to articulate extremely modest demands in the face of a virtually unlimited capitalism that is more than capable of providing every person on this planet with a civilized standard of living. For Žižek, a confrontation with the obscenities of abundance capitalism also requires a transformation of the ethico-political imagination. It is no longer a question of developing ethical guidelines within the existing political framework (the various institutional and corporate ‘ethical committees’) but of developing a politicization of ethics; an ethics of the Real.8 The starting point here is an insistence on the unconditional autonomy of the subject; of accepting that as human beings we are ultimately responsible for our actions and being-in-the-world up to and including the constructions of the capitalist system itself. Far from simple norm-breaking or refining/reinforcing existing social protocol, an ethics of the Real tends to emerge through norm-breaking and in finding new directions that, by definition, involve traumatic changes: i.e. the Real in genuine ethical challenge. An ethics of the Real does not simply defer to the impossible (or infinite Otherness) as an unsurpassable horizon that already marks every act as a failure, incomplete and so on. Rather, such an ethics is one that fully accepts contingency but which is nonetheless prepared to risk the impossible in the sense of breaking out of standardized positions. We might say that it is an ethics which is not only politically motivated but which also draws its strength from the political itself. For Žižek an ethics of the Real (or Real ethics) means that we cannot rely on any form of symbolic Other that would endorse our (in)decisions and (in)actions: for example, the ‘neutral’ financial data of the stockmarkets; the expert knowledge of Beck’s ‘new modernity’ scientists, the economic and military councils of the New World Order; the various (formal and informal) tribunals of political correctness; or any of the mysterious laws of God, nature or the market. What Žižek affirms is a radical culture of ethical identification for the left in which the alternative forms of militancy must first of all be militant with themselves. That is to say, they must be militant in the fundamental ethical sense of not relying on any external/higher authority and in the de velopment of a political imagination that, like Žižek’s own thought, exhorts us to risk the impossible.
Impact – Nuclear War
Capitalism results in a never-ending war on the poor and inter-state competition—impact is nuclear annihilation.
Callinicos 2004 Alex, Director of the Centre for European Studies at King’s College, The Revolutionary Ideas of Karl Marx, 2004 pg. 196-197
Capitalism has not changed its spots. It is still based on the exploitation of the working class, and liable to constant crises. The conclusion that Marx drew from this analysis, that the working class must overthrow the system and replace it with a classless society, is even more urgent now than in his day. For the military rivalries which are the form increasingly assumed by competition between capitals now threaten the very survival of the planet. As Marx’s centenary approached, the fires of war flickered across the globe—in Lebanon, Iran and Iraq, Kampuchea, southern Africa, the Horn of Africa, Afghanistan and the South Atlantic. The accumulation of vast armouries of nuclear destruction by the superpowers, missilerattling in the Kremlin, talk of ‘limited’ and ‘protracted’ nuclear war in Washington—these cast a shadow over the whole of humanity. Socialist revolution is an imperative if we are to change a world in the grip of economic depression and war fever, a world where 30 million rot on Western dole queues and 800 million go hungry in the Third World. To that extent, Marx’s ideas are more relevant today than they were 100 years ago. Capitalism has tightened its grip of iron on every portion of the planet since 1883, and is rotten-ripe for destruction, whether at its own hands through nuclear war, or at the hands of the working class. The choice is between workers’ power or the ‘common ruination of the contending classes’—between socialism or barbarism. Many people who genuinely wish to do something to remedy the present state of the world believe that this stress on the working class is much too narrow. The existence of nuclear weapons threatens everyone, whether workers or capitalists or whatever. Should not all classes be involved in remedying a problem which affects them all? What this ignores is that what Edward Thompson has called ‘exterminism’— the vast and competing military apparatuses which control the arms race—is an essential part of the working of capitalism today. No sane capitalist desires a nuclear war (although some insane ones who believe that such a war would be the prelude to the Second Coming now hold positions of influence in Washington). But sane or insane, every capitalist is part of an economic system which is bound up with military competition between nation-states. Only a class with the interest and power to do away with capitalism can halt the march to Armageddon. Marx always conceived of the working class as the class whose own self-emancipation would also be the liberation of the rest of humanity. The socialist revolution to whose cause he devoted his life can only be, at one and the same time, the emancipation of the working class and the liberation of all the oppressed and exploited sections of society. Those who accept the truth of Marx’s views cannot rest content with a mere intellectual commitment. There are all too many of this sort around, Marxists content to live off the intellectual credit of Capital, as Trotsky described them. We cannot simply observe the world but must throw ourselves, as Marx did, into the practical task of building a revolutionary party amid the life and struggles of the working class. ‘The philosophers have interpreted the world,’ wrote Marx, ‘the point, however, is to change it.’ If Marxism is correct, then we must act on it.
Impact – War on Terror
The War on Terror is only the latest item on the neoliberal agenda to quash labor solidarity
Lafer ‘4 [George, political economist and is an Associate Professor at the University of Oregon's Labor Education and Research Center, “Neoliberalism by other means: the “war on terror” at home and abroad”, New Political Science Volume 26, Issue 3, 2004]
If the war in Iraq is really about something other than weapons, what is the domestic “war on terror” about? At first glance, the war at home appears to be more straightforward: a genuine if heavy‐handed effort to prevent a repeat of anything like the attacks of September 11, 2001. But here too, the administration's actions point to motives that are mixed at best. On the one hand, genuine security measures are often treated with a surprising degree of laxity. Whistleblowers within the federal intelligence community complain that problems identified two years ago have remained unresolved. The multicolored national security alerts have produced great public drama but, as far as the public has been told, have never had any relationship to major terrorist attacks either committed or deterred. Critical needs such as preparing the public health system to cope with potential bioterrorist attacks, or supporting the anti‐terrorism work of state and local police, have gone unfunded as the monies were diverted to tax cuts.34 At the same time, a wide range of initiatives apparently unrelated to anything to do with terrorism—including the tax cuts, “fast track” authority, and deunionization of federal jobs, have all been advanced as critical components of the war on terror.35 I assume that the government is genuinely interested in preventing terrorism. Nevertheless, these facts suggest that the administration's agenda is more complex, and much more ambitious than simply that of protecting the population from future attacks. And while any one of these items may be viewed as an individual case of cronyism or opportunism, the broader pattern points to the need for a deeper theory of what is driving the regime's domestic agenda. I believe that the domestic agenda, too, can only be understood in the context of neoliberal globalization. One of the axioms of globalization is that capital accumulation has become disconnected from the nation‐state. Before “global city” became the mantra of Chamber of Commerce boosters everywhere, it was geographer Saskia Sassen's term for the locales that are home to the administrative headquarters of far‐flung corporate empires.36 As corporate production, distribution and services have grown into complex, worldwide networks, those at the top need ever greater capacity at central headquarters in order to coordinate these global empires. A handful of cities have come to serve as the central hubs of financial, legal, accounting, marketing and telecommunications functions for global capital. These cities are “global” because their dominant industries participate in an economy that is increasingly disconnected from the fortunes of any particular nation. The functional colleagues of New York lawyers and stockbrokers are London lawyers and brokers. By contrast, both have increasingly little economic connection to normal manufacturing and service workers. The latter are stuck in a parallel economy that, while sharing the same physical and political space, has no means of participating in the growing fortunes of corporate empires. It may never have been true that what was good for GM was good for America, but over the past 20 years the connection between the success of “American” companies and the prosperity of Americans has grown threadbare. This denationalized economy has produced increased inequality both within the United States and around the world. But it has also rearranged the geography of inequality. When capital accumulation was nationally based, the corporate titans of one country battled those of another for market domination, and developed nations exploited the undeveloped for raw materials and captive customers. In this world order, it made sense to think in terms of “rich countries” and “poor countries.” Because we inhabit a world that is still largely a product of this previous system, there is still plenty of truth to these categories. But the logic of neoliberal globalization is clearly pulling in a different direction. The corollary to “global cities” must be something like “global wastelands.” In the future, the distribution of wealth and poverty will not map onto the borders of nation‐states. What does all this mean for the United States? Simply put, if we continue to follow the logic of capitalist globalization, the fate of most Americans is to become much poorer, until we balance out at the level of typical of middle‐ and working‐class people in the rest of the world, i.e. in the third world. Because this is a slow process, this conclusion may seem counterintuitive. But all the signs are there. Over the past 30 years, real wages have fallen in 80% of American jobs.37 During the same period, our hours of work have increased while health and pension coverage and public services of all manner have shrunk.38 While the years from 1946 to 1973 saw the country growing slightly more equal, the past 30 years have brought dramatic increases in inequality, culminating in the recent series of “jobless recoveries,” in which the financial markets improve while employment and wages stagnate.39 We are witnessing what may be the first generation of Americans characterized by downward mobility.40 And economists cannot point to any industry that promises to reverse this decline. For the Bush administration and its corporate backers, the question of the day is how to continue advancing the neoliberal agenda while managing the politics of decline for the majority. The administration clearly has multiple goals for the “war on terror” at home. But among the central ones is the repression of labor and the prevention of potential political alliances that might challenge the prerogatives of American capital. In the period immediately preceding the Bush presidency, the American labor movement had enjoyed a period of success unprecedented in at least 25 years. After decades of decline under the guidance of a moribund leadership, the ascendance of John Sweeney to presidency of the AFL‐CIO brought renewed vigor to organized labor. In the second half of the 1990s, the AFL‐CIO arrested the long‐term decline in national union density; in 1998 the number of union members grew for the first time in five years, and in 1999 union density held steady, rather than declining, for the first time in decades.41 Moreover, union campaigns began to capture the imagination and support of millions of Americans who were not union members but who experienced the same economic distress that drove others to organize. The campus anti‐sweatshop movement; living wage movements in hundreds of cities across the country; and the 1997 UPS strike highlighting the problem of part‐time jobs all galvanized broad public backing in support of workers and in opposition to big business and economic “rationalization.” Likewise, the new labor movement succeeded in dramatically increasing the political clout of organized workers. Throughout the course of the 1990s, the AFL‐CIO mobilized growing numbers of union workers to participate in electoral politics. By the 2002 elections, while organized workers represented only 13% of the labor force, union households accounted for over 25% of all voters.42 As in workplace organizing, the labor movement's political program succeeded in reaching beyond its own members to form critical coalitions with allied groups, most importantly including immigrant communities. Under the Sweeney leadership, the AFL‐CIO reversed its long‐term stance opposing immigrant labor as stealing American jobs, and became the most powerful proponent of blanket amnesty for undocumented workers. Simultaneously, as service‐sector unions organized more immigrant workers and launched more campaigns in concert with these workers' churches and community organizations, the union movement started to be seen as a natural and integral part of immigrant workers' drive to make it in America. Emblematic of this emerging alliance is the coalition of labor unions and Latino community organizations that, in a relatively short timespan, flipped Los Angeles from a bedrock Republican to bedrock Democratic constituency. When ultraconservative Representative Bob Dornan lost his Orange County Congressional seat to a Latina woman backed by progressive unions, the changing of the guard was undeniable. The nation's largest state, so recently under Republican control, had become so solidly Democrat that it is no longer considered in contention for Republican presidential candidates. Beyond the impact of California itself, the prospect of a Labor–Latino coalition spreading to other states with large Hispanic communities posed a grave danger for Republican and corporate strategists. Finally, the “global justice” movement that came together in the Seattle 1999 protests against the WTO marked the potential birth of a massive and powerful new movement challenging corporate prerogatives. It is easy to overestimate the importance of the Seattle protests. The few days of unity did not undo the many differences between the various protest groups. And the months following Seattle were filled with “where do we go from here?” discussions that never achieved a satisfactory answer. It is not clear that the coalition that assembled in Seattle deserves to be called a “movement.” However, even as a first step with an uncertain future, the import of these protests was potentially earth‐shaking. Essentially, the anti‐WTO protests undid fissures that had fractured progressive organizations for at least four decades. At least since the Vietnam war, the history of whatever might be called the American “left” has been primarily characterized by fragmentation. In place of the Old Left's unity around class, the New Left led to multiple and often conflicting agendas organized around various forms of identity politics. While feminist, civil rights and labor organizations might come together around specific political issues, the alliances were generally short‐lived and superficial. Most important from an economic point of view, the labor movement throughout the 1970s and 1980s was largely alienated from the most energetic social change movements. The incredible accomplishment of Seattle was to forge a coalition that overcame these differences in opposition to a common enemy. For union members, Seattle was possible because 20 years of jobs going overseas and management invoking the threat to relocate as a strategy for slashing wages had made “globalization” a gut‐level rank and file issue. Thus the process of neoliberalism finally created its own antithesis in a labor movement that was ready to join with youth, environmentalists and immigrant organizations in fighting the power. From a corporate viewpoint, the divisions that for 30 years had so effectively kept the various parts of the “left” from coming together were threatening to dissolve. The “war on terror” aims, in large part, at undoing all of these challenges to corporate authority:undoing workers' power in the workplace; pushing back against labor's growing political clout; and breaking apart the labor–community coalitions that threatened to exercise too much democratic control over capital. The “war on terror” is not something the Bush administration could have instituted on its own were it not for the September 2001 attacks. But the administration's choice to respond as it has is based on an agenda that predated the attacks. It is not a mistake that the terror of McCarthyism followed immediately after the labor movement had achieved its peak of militance in the 1930s and 1940s. Nor is it a mistake that Bush's war at home came in response to a decade of renewed promise for American workers. The economic agenda being enacted under the rubric of the “war on terror” is far more profound than merely a collection of isolated opportunities for expanding the return to capital at the expense of workers. In the eyes of the Bush administration and its corporate sponsors, the post‐9/11 period presents a historic opportunity to permanently restructure both workers' leverage in the labor market and the public's expectations of government. Unsurprisingly, the first target of the president's post‐9/11 labor agenda was the public sector. This is partly because public sector workers are easier to attack—the government has direct control over their contracts, and in hard times it is easy to rally others against images of greedy civil servants living high off our hard‐earned tax dollars. But public sector workers are not only an easy target; they are also a strategic target. Beginning in the 1970s, public employees organized at a pace far above that of the private sector. Because private sector labor law is so weak, allowing employers to intimidate or fire union supporters with more or less impunity, it is much more difficult for workers in the private sector to win recognition for their unions. Over the years, this imbalance became increasingly pronounced. Thus by the year 2003, nearly 40% of public employees had unions, compared with less than 10% in the private sector.43 For the Bush administration, an attack against public sector unions hit at a key source of strength for the national labor movement. Destroying these unions would significantly shrink the movement as a whole, and deny significant dues money to national efforts at both workplace and political organizing. Bush's attack on public employees was threefold. Within the federal government itself, the president declared hundreds of thousands of employees ineligible for union representation due to “national security” concerns. One of the president's first labor initiatives after 9/11 was to deny unionization rights to baggage screeners at the nation's airports. According to representatives of the newly formed Transportation Security Administration, “collective bargaining would be incompatible with the nation's safety” because “fighting terrorism demands a flexible workforce that [is] … not compatible with the duty to bargain with labor unions.”44 Similarly, in creating the new Department of Homeland Security, the president insisted on giving incoming Secretary Ridge the authority to unilaterally waive civil service, anti‐discrimination, whistleblower and union protections to these 170,000 workers who had previously enjoyed all these rights while performing the same jobs under previous management.45 The administration has never identified a single instance where union protections have restricted national security effectiveness. On the contrary, police and fire unions around the country routinely include contract clauses that waive work rules in emergency situations, and federal union leaders publicly stated their commitment to honoring similar standards.46 Moreover, many of the lessons we have learned about what went wrong in the leadup to 9/11, and what has to be improved in future intelligence operations, was made possible only because intelligence employees had exactly the type of whistleblower protections that the Bush administration declared incompatible with national security. So too, in January 2002, the president issued an executive order unilaterally revoking union representation for workers in five divisions of the Justice Department.
The alt solves case but not vice versa – The War on Terror is only a secondary contradiction of capitalist economic interest – it co-opts their integrationist strategy
Güney & Gökcan ’10 (Aylin, Dept. of PoliSci @ Bilkent U., Ankara, and Fulya, “The ‘Greater Middle East’ as a ‘Modern’ Geopolitical Imagination in American Foreign Policy” Geopolitics, Vol. 15, pp. 26-28)
Another influential pretext was the new US strategic vision that can be termed ‘integration’ into a Western and American set of values and modus operandi. Falah and Flint refer to this integrative power of ‘prime modernity’. 45 According to this view, state and inter-state political institutions that can support the hegemonic power's global project of an open economic space are repackaged as the necessary foundations for a way of life that has been defined as modern and therefore should be wanted by most states. 46 They further argue that prime modernity is used to construct a prime morality. 47 Thus “faltering states” are identified as those whose economic practices, political institutions, and civil society do not meet the preferred definition imposed by the USA. Next, such states are equated with terrorism, with terrorism against the USA being portrayed as a crime against the ‘basic’ moral values of humanity. 48 This integration strategy in turn creates its own set of exclusions, with forms of violence awaiting those who are either unwilling or unable to be incorporated. 49 Although geopolitical actions under the guise of world leadership provide material benefits for the United States, this self-interest becomes equated instead with benefits for the whole world. Such benefits are presented and defined through values. 50 Flint further argues that if the calculations of war are traceable back to material interests, such as access to oil, then governments must usually emphasise values and ideas in justifying their foreign policy, especially when it involves invading another country. The world leader must therefore convince its international as well as domestic audience, that the actions are for the benefit of all rather than its own interests. In this respect, the GMEI represents a US search for allies. Flint also argues that the power of the world leader rests not on its military strength alone, but rather on a package of innovations that it claims will benefit the whole world. The central ingredients of this package are national self-determination and democracy, or the rule of law. Together, these “innovations” combine to form the integrative power of the world leader: the collection of ideas, values, and institutions designed to bring order and stability to the world. Regarding GMEI, this theory of integrative power of prime modernity contextualised the positions, objectives and problems of the region. It also facilitated the opportunity to establish alliances guaranteeing US world leadership and regional interests. That is why this theory constituted a solid ground for justification for the US extra-territorial activities.
Arrighi ‘4 [Giovanni, Professor of Sociology at Johns Hopkins University, “Capitalism, socialism and uneven development”, October 22]
As previously noted, the leading institutions of the capitalistic interpretation of the world have championed the view of a significant worldwide reduction of both absolute and relative deprivation.In addition, they have also championed the view that this reduction has been due to the adoption of the capitalist-friendly policies they have been advocating for the former Third and Second Worlds. This view flies in the face of the basic fact that, comparatively speaking, the three world regions that have experienced the greatest increase in both absolute and relative deprivation are also the regions that willy-nilly have been subjected more extensively or intensively to the structural adjustment or shock therapy advocated by the institutions in question. In light of this, asks James Galbraith, Is this the golden age of capitalism, really? Or is it something closer to a golden age of reformed socialism in two places (China and India)-alongside an age of disasters for those who followed the prescriptions favored by The Economist? In truth, countries that followed the IMF-World Bank prescriptions to the letter-Argentina, say, or Russia in the early 1990s-have seen catastrophe worse in every way than the Great Depression of the 1930s was for us. (Galbraith 2004) Ironically, socialists (especially radical socialists in the global North) have unwittingly facilitated the capitalistic appropriation of the Chinese success in reducing absolute and relative deprivation, by writing off economic reforms in the PRC as a straightforward transition to capitalism essentially indistinguishable from that occurring in the former USSR. The spread of capitalistic practices in the PRC has undoubtedly been rampant, and one of its main effects has been a rapid growth ofincome inequality within China-an inequality that is estimated to have become among the largest in the world (Riskin, Zhao and Li 2001). Closely related to this tendency, only a limited number of (predominantly coastal) provinces have contributed (and benefitted from) the reduction in global absolute and relative deprivation. By restraining the growth of the domestic market, increasing inequality within China reproduces the dependence of the Chinese economic expansion on the willingness and capacity of the United States and other wealthy countries to absorb ever increasing labor-intensive imports. More important, it is likely to engender social and political tensions that may jeopardize further growth and even wipe out whatever is left of China's socialist past (cf Perry and Selden 2000).
Capitalism’s economic growth is a ruse – the financial crisis proves its fundamentally unstable and speculative
IWAI ‘8 [Katsuhito , Professor of Economics, University of Tokyo, “Global Financial Crisis Shows Inherent Instability of Capitalism”, The Tokyo Foundation, October 17th, http://www.tokyofoundation.org/en/articles/global-financial-crisis-shows-inherent-instability]
Why is capitalism unstable? Because it is fundamentally based on speculation. Consider carmakers, for example. They build automobiles not for themselves but in the expectation that others will buy them to ride in. There is an element of speculation in this process. Milton Friedman and his followers in mainstream economics, however, claim that speculation leads to stability. Those investors who buy high and sell low, they argue, are irrational and will promptly fall by the wayside. Only the rational investors who buy low and sell high will survive; this will cause markets to be stable.What they assert may apply to an idyllic market where investors mediate between producers and consumers. But, the activity in financial markets, including markets for stocks, bonds, foreign currency and their derivatives, is of entirely different nature. It is professional investors and investment funds that dominate the markets and compete with each other. They buy and sell based not on their forecasts of long-term demand/supply conditions but on their observations of each other's movements and readings of each other's intentions. When a price is expected to rise or fall, it is not irrational to buy or sell more and move the price further up or down, leading to speculative bubbles and panics. The more fundamental reason I believe that capitalism as a whole is speculative and inherently unstable is that the money on which it is based is itself speculative. Money has made the economy much more efficient by making it possible to conduct transactions without the trouble of exchanging on a barter basis. But money has no intrinsic value. People are willing to hold it only because they expect other people to accept it in exchange for something else, with the people who accept it expecting that yet other people will accept it in turn. To hold money is, in other words, the purest form of speculation, and trust in it is based on circular, bootstrap logic: Everybody uses money as money merely because everybody believes everybody else uses it as money. In this light, we can see that money has two faces: It brings greater efficiency, but at the same time it has the potential of causing great instability. In a capitalist economy supported by money, it is impossible for efficiency and stability to coexist as claimed by the neoclassical economists. This bootstrap logic of money also underlies the present financial crisis. The subprime loans that set off the crisis are extremely risky loans to people with low creditworthiness. Because the risk of default on such loans is so high, a single subprime loan by itself is unattractive as a financial product. But bundling many such loans together and securitizing them made the risks seem diluted, and as a result of further bundling with numerous other financial instruments into big packages that were then dispersed around the globe, the risks became invisible from the surface. As the financial products created in this way were traded more and more steadily among numerous parties, they began to be considered readily convertible to cash and other safe assets. They came to be seen as being like the money in which people place supreme trust. Here again we see the workings of bootstrap logic: Everybody trusted the products as safe merely because everybody believed everybody else trusted them as safe. But when the subprime loans whose risks were concealed therein went bad, trust in all financial products toppled like a row of dominoes. This is the essence of the current financial crisis.