Archive for February 13, 2010

the life cycle of capitalism

February 13, 2010 10 comments

By Staff
EarthBlog News©
TinyURL for this article []

This discussion about capitalism will argue that the economic law of economies of scale MUST result in ever fewer, ever larger corporations over time. Furthermore it will be argued that this is in fact what has happened in America over the course of the past 200 years.

Capitalism, has a natural cycle due to economies of scale.

We are told today by the people in charge, that the success of America is due to the long term embrace of laissez-faire free market capitalism.   The phrase is French, and it literally means to “let do” and more broadly it implies “let it be” or “leave it alone”.  According to the origins of the words, it means “allowing industry to be free from state intervention”.  M. Le Gendre famously replied when the mercantilist minister asked how the French state could be of service to the merchants,  “Laissez-nous faire” (‘Leave us be’, lit. ‘Let us do’).

Yet today, the US government owns the majority of the housing in the United States through the ownership of the largest mortgage institutions. The Government is the largest US employer. The Government owns the automakers.  It bails out large so called “too big to fail” corporate entities with the citizens money. So this is not “hands off” or “let it be”, this is the exact opposite of that which is direct ownership or financial interest while being financed by the taxpaying citizens.

“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.” – Senator Dick Durbin 2009

According to the literal definitions of words, what has happened over the course of the past 200 years in America is that the United States used to be laissez-faire free market capitalism, but it has moved far from that, almost to the other extreme which is in this case fascism or a corporate/government merger. A very few, very large corporations, banking interests and powerful special interest groups are in control. It is however still being called today what it used to be, in a convolution of  terms.

People in America today all shop at the same mega retailers, they consume their media from a handful of corporations,  satellite radio beams from coast to coast instead of local programming, shopping malls look exactly the same anywhere in the US,  mega global restaurant chains span the globe.

This mincing of words has left a lot of people confused.  Capitalism means competition but more importantly it means hands off. It means letting large bankrupt entities fail.  Many US citizens would gasp at the notion that the US has decayed into Fascism and yet do not understand the fundamental definitions and concepts behind the words.  Recent polls have shown that when the public et al is asked how they feel about capitalism, they say they don’t like it. What they are really saying however is that they don’t like what this is. What this is, is fascism. It is exactly the opposite of what it is called using the definitions of the words, and the definitions of words are the only thing we have to go by.

What a mess.

So how did we arrive at this point? The economic law of economies of scale states that if you are a larger entity, and if you can buy and produce in larger quantities, then your marginal cost of production will be lower.  Simply stated it means the larger you are, the lower your cost of production and the more competitive you are.

Because of this economic law, what happens over time is that competition favors the larger entity. You didn’t see mom and pop hardware stores invading the landscape in the US and putting out of business Home Depot and Lowes, did you? In fact,  it was quite the opposite, wasn’t it? The fact is that in every avenue of competition, there have become ever fewer, ever larger players over time.  As they have grown in size, they have bought increasing influence and political power and have erected barriers to entry to new competition. The banking institutions have  become so large and powerful that they are immune from failure. They now have the ability to draw on the people’s future labor to meet their margin calls from speculation. The corporations have bought so much power that the US Supreme court ruled in 2010 US corporations can now make unlimited political contributions. Now the few large remaining corporations have nearly unlimited power because they fund and control the political body directly.

So the fact is that what started out in America as laissez-faire free market capitalism and is still called that today by the people in charge,has  slowly and continusouly decayed into something else.  The larger corporations have consumed the smaller corporations because of the law of economies of scale. They have bought more power and influence and thrown up new barriers against smaller competition and new market entrants.  Now, we are at such an advanced stage in this process that in many areas of competiion there are only two or three players left. In some there are only one.  The government, the ultimate corporation, has become the largest.

So, the point of this essay is to say that because of the economic law of economies of scale, capitalism has a natural cycle. It goes from capitalism to fascism. In fact, this was known to be the case over 100 years ago.

“Fascism is capitalism in decay” – Vladimir Lenin – Founder of the Russian Communist Party

To conclude this set of words, stated as a theorem: “Capitalism has a natural cycle and continuously decays into Fascism due to the economic law of economies of scale.”  – Craig Harris

Monopolies Everywhere
By James Kwak
Thomas Frank has a review in the Wall Street Journal (behind a paywall, but Mark Thoma has an excerpt) of Barry Lynn’s new book Cornered, which apparently documents the prevalence and power of monopolies and oligopolies in lots and lots of industries, not just finance.

the republic is dead

February 13, 2010 21 comments

By Thomas Jefferson Apparition
EarthBlog News©
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Editors Note: This article represents a fact based analytical analysis regarding the current state of the republic in the USA along with an opinion why it is beyond the point of self correction.

The people’s representatives no longer represent the people

In order for a democracy or a republic to function, the citizens must have a voice. This essay will argue that the people have lost their voice, and will be fundamentally unable to regain that voice regardless of who is sitting in the political seats. Even the president is powerless to affect change, and is wholly subservient to the money interests who put him there.

Over the past decade, polling has shown that the American public is extremely dissatisfied with their representation in Washington. During the 8 year dominion of the self proclaimed “great decider”, public approval of congress ranged from 20% down to 12% by the end of his reign. Arguably, the approval ratings could not under any circumstances fall much lower. In fact, even among the most miserable and totalitarian regimes across the world and at any time in history, public approval ratings of the leadership were higher than in the US over the past decade.

Voters demanded a change.

The problem is that there has been no change.  Mr Barak Obama, elected on a platform of change, is currently leading the effort in change=no change. At the present time Mr Obama is registering record low public approval ratings, and the latest polls are showing only 8 percent believe that Congress represents the interests of the people. Even more telling and worrisome is the data showing only 21 percent of the population feel the government has the authority to govern. So once again, we are back to great decider levels and arguably as low as possible.

Few Want Members of Congress Re-Elected, Poll Finds
By Jonathan D. Salant
Feb. 12 (Bloomberg) — Just 8 percent of Americans want the members of Congress re-elected, according to a CBS News-New York Times poll taken nine months before roughly one-third of the Senate and the entire House face voters. The Feb. 5-10 survey found 81 percent of respondents saying the lawmakers shouldn’t receive another term. By 80 percent to 13 percent, Americans said members of Congress are more interested in serving special interests than the people they represent.

Only 21% Say U.S. Government Has Consent of the Governed
Thursday, February 18, 2010
The founding document of the United States, the Declaration of Independence, states that governments derive “their just powers from the consent of the governed.” Today, however, just 21% of voters nationwide believe that the federal government enjoys the consent of the governed.

So think about that for a minute. For the past decade, under the leadership of both political parties, public dissatisfaction with their representation in congress is arguably as low as it could possibly be.  How is that possible?

Lobbyists didn’t suffer a slowdown in 2009
Health industry spent $544m
By Jonathan D. Salant
Bloomberg News / February 13, 2010

The obvious problem is that the politicians in Washington, regardless of whether they call themselves Democrats or Republicans, are all bought and paid for by lobbyists and special interests. Their hands are tied. While seeming powerful, their only power lies in determining which lobbyists and special interest groups are going to buy them first. When Mr Obama was campaigning, he made a point that if elected he would address this situation, and yet a year after he was elected, lobbyists and special interest groups are two of the only thriving industries amid 20% real unemployment among the general public.

What we have now is not a democracy and not a republic.

When the people have no representation, they have no voice. We have a government today whose policies are dictated by a small group of very powerful corporations and special interest groups represented by lobbyists who lavish gifts and cold hard cash for votes on issues. These corporations and special interests throw billions of dollars annually at approximately 500 people for the express purpose of buying  a vote.

It is bribery, and it is unfortunately all legal.

The reason it is legal is because these lobbyists and special interest groups are so powerful they made it legal. In a disgusting display here in 2010, these lobbyists are now so powerful they bought the Supreme Court with an unprecedented ruling that allows unlimited political contributions by corporations. Now the corporations can not only influence the vote, they can also pick the candidates.

“And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.” – Senator Dick Durbin 2009

Where is the press?

The media in the United States has undergone a rapid consolidation and transformation. Two decades ago there were thousands of independently owned media outlets, and guess what happened? The largest of these operators lobbied the people’s representatives to relax important rules regarding the media and monopoly behavior. As a result, instead of thousands of independent media outlets, in 2010 six mega corporations control 96% of what Americans, read, hear on the radio and see on Television. Journalists are the watchdog of a democracy. When media becomes one with the government, the people become disinformed and uninformed and a democracy cannot function.

While you were sleeping…

The people have lost their voice. The power has been transferred to the few. This is corporatism by the elite money interests. It’s not democracy. It’s not a republic. Using the correct definitions of words, it’s corporatism (fascism) or to be more correct in this case, a fascist oligarchy or plutocracy. The will of the people is of no consequence. The people are to be placated, manipulated, disinformed and entertained while less than 0.1 percent of the population make the rules and rule over them like kings. The government and big corporations are joined at the hip. The banking system controls the money and the power. The media is in their pocket. The people have lost their voice and they are not going to get it back.

The republic is dead.

I will now join good company with Thomas Jefferson, the primary architect of the US constitution who stated:

“When once a republic is corrupted, there is no possibility of remedying any of the growing evils but by removing the corruption and restoring its lost principles; every other correction is either useless or a new evil.” -Thomas Jefferson

The fundamental issue is that once power has been transferred to the few, they are not going to willingly relinquish that power. In the past decade, that has become painfully obvious and there is no one person who can stop the progression.

Tags:  Economy, Democracy, republic, capitalism, death of capitalism, corruption, fraud, banking, bankster, ponzi finance, fascist, fascism, oligarchy, plutocracy, NWO, New World Order
15 Years Ago, the Combined Assets of the 6 Biggest Banks Totaled 17% of GDP… By 2006, 55% … Now, 63%
Monday, March 1, 2010

Ron Paul: The US Government’s Debt Can Never Be Repaid

Rasmussen: Mere 4% Support Establishment Political Class
Rasmussen Reports
April 14, 2010
Sixty-five percent (65%) of voters nationwide now hold populist, or Mainstream, views of government. That’s up from 62% last September and 55% last March. Mainstream Americans tend to trust the wisdom of the crowd more than their political leaders and are skeptical of both big government and big business (see crosstabs). While Republicans and unaffiliated voters are more likely to hold Mainstream views than Democrats, a majority of those in the president’s party (51%) hold such views. Only four percent (4%) now support the Political Class. These voters tend to trust political leaders more than the public at large and are far less skeptical about government.

Radical Concentration of Wealth is Destroying Both Capitalism and Democracy

Sunday, April 11, 2010
George Washington’s Blog
Note: If you wish, feel free to substitute the word “republic” for “democracy”.