It seems that economists take to heart the famous phrase of Queen Elizabeth II. In November of 2008. British monarch visited the renowned London School of Economics. This happened at a time when the financial crisis began already shed on the real economy, and the prospects look very bad. The queen – who is famous for the fact that never takes a stand on political issues – this time broke and even called the crisis “terrible”. She asked also collected at the LSE cream of the Anglo-Saxon economics child’s seemingly simple question: “Why do none of you foresaw this?”.
Well, it started. What? I did not warn you? And my lecture? And my book? And my article? Today we have so many economists are making a name for itself in the fact that the predicted collapse long before there was. Nouriel Roubini, called by US journalists “Cassandra” or “Doctor of the Holocaust”? Of course I predicted! They tease even claim that wywróżył seven of the last three economic crashes. Nassim Taleb? He warned! But even invented and popularized the metaphor of the black swan, that figure extremely unpredictable events. A Raghuram Rajan of the University of Chicago currently standing at the head of the Central bank of India? He sounded the alarm. What skwasił issued in 2005. Exclusive meeting of leading financiers in honor of Alan Greenspan. Nobel Prize winner Robert Shiller? Since 2003. He led the unique index of real estate prices, which even the blind could read that this market is a classic bubble. But those who have not had the data to predict the crisis, also do not reflect the field. Do not ceasing in proving that the next crisis is just around the next bend. And it will likely straszliwszy than what happened so far. Crash had already bring quantitative easing in the United States. And now it certainly will bring it very similar action taken by the European Central Bank. The inevitable disaster awaits us also because of the growing level of debt (and public and private) that between 2008 and 2014. Increased globally by 38 per cent. Not to mention the rolling demographic crisis (in almost every developed country is born too few children) or a rapid decrease in the level of innovation (some economists say that I just broke up has all the lowest-hanging fruit of the industrial revolution). Wherever you look, there’s also reportedly growing bubble. In short: it is bad, and it will get worse. And how can you not be afraid?
cartoon-like scenario
Well, the good news is that it can be done. You just need to break away from a false way of thinking about the economy. What will not be easy, because I think it is very pictorial. And a bit like Disney’s cartoon. His characters – Donald Duck say with Daisy Duck – flowing quietly by canoe. There is a nice, sunny day. Suddenly, our heroes see that lovely little river at any moment turn into a big waterfall. Donald sweaty doubles and triples to turn around and cover him angry Daisy umbrella. Boat does nothing but wants to listen. In the most dramatic moment of the film so canoe hangs over foaming at the bottom water masses. And then – miraculously – branch, which they capture the ducks, their bursts of momentum in the opposite direction. They soaked, but happy heroes end up on dry land. Cut. Subtitles end.
I kind we all know that it was just a cartoon. The problem is that when it comes to thinking about the economy, we begin to think about her almost exactly in those terms. When a crisis erupts, the public – and for her instigation often and decision-makers themselves – focuses on one of the most obvious threat. Followed by a dramatic rescue operation according to the principle “all hands on deck”. He then announced the victory. Usually in tone: we were able to escape from the brink at the last moment. How many times I have heard. Polish transformation? With a bold stroke in the market managed to avoid disaster! Krach 2008? If no bailout for the largest US banks, there would be a most serious crisis in history! The first rescue plan for Greece in 2010.? Well, fortunately, we managed to avoid a domino effect. The problem lies in the fact that all of these examples are both true and untrue. Take the Balcerowicz plan. Actually helped passing great political transformation Poland regain the confidence of financial markets. But at the same time for years stifled domestic demand and spauperyzował a large part of society. A US bank bailout of 2008? Sure, that saved the US banking sector against a dramatic spiral of bankruptcies and losses. But at the same time he confirmed the risk of moral hazard and implemented a destructive of the democratic spirit of the principle that profits are like most private, but the losses it please be passed on to all taxpayers. And finally, the adoption of the restructuring plan of the Greek public debt in 2010. What was a way to postponement of painful losses on Greek creditors (ie mainly the financial sector), but for the price spread in Europe destructive philosophy of budgetary savings. Whose consequence is progressive erosion of faith in a united Europe and not less than five years stagnation of the EU economy.
Fight working capital
All these examples are intended to realize one simple the truth. The economy is not a cartoon with Donald Duck. There is never a fundamental hazard to simply eliminated, and the system automatically returns to a state of equilibrium. Why? Because a sustainable balance of state capitalism is simply impossible to achieve. The market economy is a system of vibrating nature and full of internal contradictions. Here in the crash you can already see the first seeds of a future boom. And vice versa. Each boom is nothing but a chain element leading straight towards limbo. If this – taken from Joseph Schumpeter – the principle of “creative destruction” of the ruling capitalism seems too abstract, you can look at the issue more systematically. And capitalism is a system of deeply unstable probably three fundamental reasons.
First, the dynamics gives it ongoing conflict between capital and labor. Obviously, that created a product capable of producing a profit, and one is needed both. And when profit already appears, you will need to take some kind of his division. And then the trouble begins. Great describes them even Beverly Silver, a sociologist at John Hopkins University and author of the book published in Polish “The global proletariat”. Silver for example, the birthplace of the American automobile industry (at the turn of the century) shows that we are dealing here with a clear diagram. To produce the car, the capitalists have to hire new employees. New employees gradually carried out activities that their work has become much more than just a commodity. From their point of view, it was a deeply justified. In the end, they saw that their work brings to the owner of capital (today we would say “the employer”) quantifiable benefits. They demanded so at first very fundamental issues: social security, improve working conditions, reduce its size. Over time they were able to better organize, forming unions, initiating strikes, and even forming political parties (the latter process was even more pronounced in Europe). Finally, after long struggles, which often brought not take effect until the next generation, the workers led to the expansion of their rights. From the point of view of the holders of capital, however, resulted in a decline in profit margin. In the long run producers they defended themselves against this phenomenon using several strategies. For example, moving production to where it was cheaper. Or inventing new forms of organization. So building a core of well-paid and loyal employees, and the rest outside the commissioning needs. Another strategy was to shift product. And so the search for new markets and new products. On the one described by Beverly Silver process you can look two ways. I see it as positive elements (continuous search for innovation that pushed capitalism forward). But it is hard not to see also the trap negatives.
And here we come to the second cause of continuous capitalism devouring its own tail. Any attempt to flee the capital with the need to share profits with employees must end with the loss of the latter. For example, if the plant escapes from a region in search of cheaper labor in the region disappears however many good jobs. And it can be assumed that this escape will not be an isolated case and immediately find imitators. Competitors do not yet want to be the last nerds. Until and unless we treat employees only as workforce (and therefore means of production), there is no problem with it yet. But in the modern economy employee it is also a consumer. And if the consumer does not have what you consume, the trouble is not the only one. If the phenomenon is broader, it also issues fall into manufacture. Who do not have nowhere to realize their profits. Bo hit his head on the barrier demand. And this is not some contrived story of economic syllabus. Such things are happening here and now. Take the data from the years 1980-2008 show that the share of wages in national income has been steadily declining. It’s a trend seen throughout the world the rich West. For example, in Ireland, the decline was 15 per cent., In Austria 10 percent., Greece, Japan and France approx. 6 per cent., Germany 4 percent. If the thing related to just one or two countries, one could speak about the case. It is, however, very clear trend broader nature.
So running is a third mechanism, which effectively prevents a return to equilibrium. Because insufficient consumption is nothing like overproduction. To put it more graphically, the holders of capital have become the equivalent of the mythical King Midas. Gradually being around them more and more gold, but this gold can not be productive in any way exploit. It is like a vicious circle. The reluctance of the holders of capital to a more active redistribution policy of the government or the fear of losing competitiveness (freezing wages) makes them towards the barriers they demand. So, simply put, not enough people willing to buy their goods. And by is a huge part of the economy of production capacity not used (existing car plant today could easily produce three times as many goods as at present). They have in turn impact on the lack of investment. Because companies are generally not willing to invest in industries where a large part of existing capacity remains idle. The declining utilization of production capacity is accompanied by what some scholars call the stagnation of employment. And this further aggravates the demand barrier. As a result, the more corporations earn, the more decreases their willingness to reinvest the funds collected. And so it goes. There is no question of self-regulation. It’s more like convulsions person removed a terrible disease that expels from wall to wall. Yes, sometimes comes some relief. This is the moment when the financial meltdown capital begins to look for new areas of production so that begins to dismantle the next cycle. But as this cycle happens, inevitably it will take its natural trajectory. New forms of capitalist production will arise demand for labor, thus strengthening the position of employees against employers. The latter persist, to the detriment of the profitability of firms. Once aware of the situation, they begin to search for new areas of expansion. It was then followed by an outflow of capital from the sphere of production for the financial sphere. However, it is sterile and unproductive way. Thus it leads to the inevitable crash. Escape from this circle simply do not have.
There is no need to be afraid
These arguments are not new. Economists are struggling with them since the nineteenth century. In a sense, we have but harder. Because in the past, many believed that they managed to find a way out of this entanglement self-destructive capitalism. The most ambitious and comprehensive proposal developed by Karl Marx and his successors. By changing a few baseline characteristics they wanted to rid capitalism of its original sin. So make so senselessly not have to chase profit. The Communists believed that this can be achieved, for example, eliminating private property. Or organizing production in a more rational way. That is to say one that does not allow to overproduction crises. In practice, however, it did not succeed. Because the eradication of properties destroyed the system of individual incentives for economic action. And with ambition reasonable solution to the problem of overproduction went shortage economy. Which in turn led to many political crises, and those shook the system much stronger than the economic crises in capitalism. Leading a socialist alternative to bankruptcy. But the Marxists were not the only ones. At attempt to make capitalism more stable teeth also broke their Keynesians, when in the 70s in the West appeared stagflation (inflation and a deadly mix of economic stagnation). And then the neoliberals, which ensure the “final harnessing the economic cycle” lay in ruins in 2008.
What of it all flows science? Unless such that the crises will be. At least as long as there is capitalism. And because so far there’s no sign of his overthrow, this is contrary to appearances, the message quite positive. Because is not it true that when you have really reconcile that something is imminent, it might just not be longer need to worry about this so much? And maybe they would no longer bother us so much all these words scarecrows in the style of “crash”, “bubble”, “crisis”. And in their place will come back calm. And a place for sober reflection: as in this zakichanym function capitalism more humane and dignified.
In the past, many economists believed that they managed to find a way out of this entanglement self-destructive capitalism. But only seemingly
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