Economic Crisis the Inevitable Result of â€œCapitalismâ€™s Self-Inflicted Apocalypseâ€
JUAN GONZALEZ: Treasury Secretary Timothy Geithner has unveiled a sweeping new plan that calls on the
The debate over how to rescue the global economy is setting up a clash of ideas, as finance chiefs meet for international talks in
AMY GOODMAN: Amidst the economic turmoil, Geithner appeared on the PBS Charlie Rose Show this week for an extensive interview. Near the end of the interview, Charlie Rose asked Geithner, “Will capitalism be different?”
CHARLIE ROSE: Will capitalism be different?
TIMOTHY GEITHNER: I think capitalism will be different, and the financial system will be dramatically different. It’s already dramatically different. Again, if you look at the scale of adjustment and restructuring in the financial, it’s already happened. It’s profound in scope already. So if you just look at the system today relative to what was true three years ago, in terms of the institutions that existed then, and their basic shape has changed dramatically. And there’s going to be more changes ahead. But I think it will emerge stronger. This will clean out a lot of the excesses and bad practices. And those that don’t get cleaned out just by experience and knowledge now, better regulation and oversight, better rules of the game, enforced more cleanly, we’ll fix.
AMY GOODMAN: That’s Treasury Secretary Tim Geithner.
Well, our next guest argues “free-market corporate capitalism is by its nature a disaster waiting to happen.” Michael Parenti is a longtime political analyst, author of twenty books, including Democracy for the Few and Superpatriotism. His latest article on the financial crisis, “Capitalism’s Self-inflicted Apocalypse.” He joins us now in our firehouse studio. He gave a talk last night at Fordham called “Wealth, Poverty, and Empire.”
Welcome to Democracy Now!
MICHAEL PARENTI: Hello, Amy. Hello, Juan.
AMY GOODMAN: What should we understand right now, Michael Parenti?
MICHAEL PARENTI: Well, we should understand that the problem we’re facing is one which has to do with equity and fairness, that when the foundation gets consumed, the apex gets bloated, it’s going to collapse. And that’s just what’s happened. We had eight years of a president telling us that the economy was doing very well, and for his guys, it was doing very well. But in those eight years, wages remained flat or actually declined. And what we had here is so much money and nowhere to put it anymore. But that’s because there were no people below able to consume and buy the things they were supposed to buy. The assumption was that the housing market would just continue to go up and up and up, so you can do all these finaglings, but there weren’t enough people to buy these new houses. You had, in 2006, five people doing the work. By 2007, four workers were doing the work that it took five to do in 2006. That was a 20 percent increase in productivity, but there wasn’t any 20 percent or ten or five or three percent increase in income to those workers. People are just working harder and harder for less and less.
And the goal really—the goal is really to bring
And if you listen to them now, I mean, it’s fascinating and outrageous. They’re talking about doing nothing, just putting a cap on all spending, that the market is in a stage of correction. They use terms like “correction” or “adjustment.” They don’t mind recessions. Recessions are fine. It allows them to buy up smaller companies at bargain prices. It disciplines labor. It humiliates and beats back people. And this, I think, is what we’re facing. And I’m infuriated by the Republicans in the Congress and the way they’re going at this. The only passion they show is to protect the tax cuts for the super rich. That seems to be the only interest they have.
JUAN GONZALEZ: Michael Parenti, I’d like to ask you, in terms of this—we’re almost a year now into this—into the beginning of the unraveling of this crisis, yet there’s been no attempt so far to have any kind of reforms, of regulation. We still have a situation where a huge portion of the financial system is consumed with all of these derivatives and credit defaults, while it’s not even in your normal banking procedures. How do see this, in terms of your sense of a self-inflicted apocalypse of finance capital?
MICHAEL PARENTI: Well, I argue that one of the functions of a capitalist state is to defend capitalism from itself, to defend capitalism from the capitalists. It was Marx—dare we mention him? I hear he’s coming back in style. It was Marx who said one capitalist will kill many other capitalists, that the system begins to consume itself. We see that with Bernard Madoff and the like.
And it’s not merely because of a number of wicked personalities, because these personalities are brought to the fore. Those are the people who get the rewards. Those are the people who—yes, and what we need are drastic sets of regulations, and there hasn’t been enough talk. We just got a vague reference to it here, Geithner referencing and saying, well, it’s going to be a little bit of a different camp, a little more responsible, accountable maybe. But as far as actual regulations, we haven’t seen it.
The free market does not work. It’s not free. It’s not really a market; it’s a plunder. And it has to be done away with.
AMY GOODMAN: Talk about the Democrats and Republicans. You said you’re infuriated by the Republican response, because they just want tax cuts for the rich. But what about the Democrats—I mean, just now we were playing for you Tim Geithner, the Treasury secretary—and the approach to this crisis?
MICHAEL PARENTI: Oh, it’s insufficient. I mean, that’s what’s coming out with your questions. It’s insufficient. They’re not dealing with systemic questions. There’s all this debate about the stimulus package. Hardly a word has come out about the Federal Reserve giving away two-and-a-half trillion dollars, just giving it away unaccountably.
AMY GOODMAN: Explain that.
MICHAEL PARENTI: The Federal Reserve just went—while we had this $750 billion stimulus package, which was passed by Congress, the Federal Reserve printed up—it can print up money and create money—and handed out over $2 trillion to the financial community in America, with no accountability, no debate in Congress and very little notice.
AMY GOODMAN: So, what’s the significance of that?
MICHAEL PARENTI: Well, the significance is that we’re going to—I mean, that’s our money, that it becomes real money when it becomes debt, and we’ve got to pay it.
You see, the Republicans were never against debt; they were the biggest debt spenders there ever was. When Ronald Reagan came into office, the national debt was $800 billion. When he left office, it was $2.5 trillion. I mean, it was OK with him to spend. He also put in the biggest tax program that ever was, but it was a regressive tax. It was a Social Security tax on tens of millions of people. When George Bush, Sr. came in, the national debt went from $2.5 to $5 trillion. Clinton—I’ll give him credit for that one thing—he did try to go for solvency. But when you got to George Bush, Jr., for eight years, the debt has gone from $5 trillion to $10 trillion. And these Republicans were voting for that all along. All these spending bills were theirs. So, you see, they don’t mind debt, because debt is really a way of upward distribution. You tax the common people, and you give the money to rich creditors. It’s a very regressive way of redistributing wealth upward. So debt is fine with them.
JUAN GONZALEZ: I’d like to ask you, given the increasingly global connections of our banks and other multinational corporations, the issue of how you remedy a crisis in one country. For instance, I heard last night on C-SPAN the hearing that Congressman Kucinich had of the bailout. He had an oversight hearing yesterday. And he questioned the Treasury Department over the fact that the bailout money has been going to banks that, in some cases, are then using the bailout money to invest overseas, a $6 billion—
MICHAEL PARENTI: Right.
JUAN GONZALEZ: —investment in Dubai, an $8 billion investment in a company in China—
MICHAEL PARENTI: China, I was just going to say, right.
JUAN GONZALEZ: —I think by Bank of America, so that—and Kucinich was asking, what are we doing giving money to bailing out banks who say they can’t lend in the United States, but then they use the money in investments abroad? How do you reconcile the global connections of these companies with the need in one particular country to stem the financial crisis?
MICHAEL PARENTI: Well, I mean, you’ve got to stop these kinds of examples that you’re giving, that the money should be spent where it has to be, and the money should come with lots of strings attached to it. And actually, it should be the government making direct investments. The government should go directly into production. It should be the government that’s building housing. It should be the government that gives healthcare.
Healthcare is a perfect example of that, where you—health coverage is terrible. So to give everybody health coverage will put us all still fighting these private insurance companies for money and not getting it and such. And the insurance companies get nothing—give nothing, do nothing. They just are toll. They just get billions of dollars that comes through and perform nothing. If you had single payer, it would just come right from the government, like Medicare does or something like VA Hospital, and that would be it.
And so, with the banks, perhaps we should start nationalizing banks. We should start bringing a closer link between the financial system and what’s called—very revealingly called the “real economy,” where people still need to work and consume and live. And that might be a way.
What do we do internationally? I don’t know. You’ve had some good people on. You’ll have to ask them next time.
AMY GOODMAN: What do you see is the future of capitalism, Michael Parenti?
MICHAEL PARENTI: I see it as a future in which there’s going to be a lot of suffering. I see it—the goal is to have more and more Indonesias and fewer Denmarks and such.
AMY GOODMAN: And that means?
MICHAEL PARENTI: That means that even in the social democracies in Western Europe, there are going to be cutbacks, there’s going to be privatization, deregulation, greater—growth of inequities, rollbacks of human services and such, in countries that were pretty decent, countries where capitalism was reined in and held in line, to some degree, anyway.
AMY GOODMAN: And aside from the brutality of Indonesia, what it means when you say “and more Indonesias”?
MICHAEL PARENTI: Well, Indonesia, I mean it’s a free market paradise. They talk about free market. In Indonesia, there are no consumer protections, there are no regulations, there is no public medical care, there’s no public education. People just die younger.
AMY GOODMAN: Do you see mass riots happening?
MICHAEL PARENTI: No. Well, one thing is that people can become so demoralized and such, and it’s a pretty repressive state, so it’s not that easy.
AMY GOODMAN: Michael Parenti, we want to thank you for being with us. His latest article on the global economic meltdown, “Capitalism’s Self-Inflicted Apocalypse.”
MICHAEL PARENTI: I hope next time I’ll have better news for you, we’ll have a nicer subject to be discussing.