The current financial crisis has been running riot on global markets now for more than a year. After many bank collapses, desperate central bank attempts to save the financial market and seemingly forever dropping stock prices, it’s so bad now that we don’t even hear anymore that the worst might be over (even though just today Obama spun some light at the end of the tunnel) – we actually are getting softened up by governments and economic pundits for worse to come. This crisis is the worst capitalism has experienced since the Great Depression in the 1930s. And it is not just a financial crisis – we actually moved towards the centre of a deep social and environmental crisis, which again shows that the capitalist system is not just unrulable but also impotent to cater for our welfare and survival needs.
This disaster is not a natural catastrophe. Ostensibly it seems the result of the bursting of the US housing bubble and the collapse of the credit pyramid built by the shadow banking system in recent years. But in reality this crisis is systemic, the product of a system in which capital as a form of a society’s wealth circulates around the world on the hunt for huge financial returns for a few individuals. It is the result of global imbalances that have been increasingly exacerbated over the last few years, and it is rooted in policies that deliberately expedited deregulation and liberalisation of financial markets and in the process eliminated the industrial production capacities of countries like the UK and the US. This crisis is also the result of a bottom-to-top wealth redistribution, which primarily made the concentration of fortunes possible in the hands of such few and dramatically widened the gap between the haves and have-nots.
Banks worldwide so far had to write off trillions of dollars, investment banks have basically disappeared, and the rest of the banking system has been deeply shaken. Stock prices have more than halved and despite a recent respite might decline further. But the really afflicted aren’t the financial managers and stockholders; they are for example those millions of Americans who have lost their homes and pensions. They and millions more worldwide who will lose their jobs over the next year or two are the ones who are bearing the brunt of capitalism’s systemic failure. Let’s also not forget the people in the so-called developing world who have been and will be particularly hard hit by the expanding world economic crisis; they had very little to begin with and will sink even deeper into poverty or simply die. And what about the general populations in societies all over the world who have to bankroll the gigantic bank bailouts with their taxes while sacrificing public service deliveries such as in health, education and social welfare in the process?
The final extent of this economic and social disaster still can’t be determined. But one thing is clear: if there ever was one, the time has come for a systemic change. We should not allow our politicians to simply re-arrange the chairs on the ‘free financial marke’t and start the game afresh. We don’t need the kind of technical fixes that Obama, Brown, Merkel, Sarkozy, Rudd and other heads of government are currently cobbling together. The time has come for a new turn.
The problem though is: while people aren’t any longer willing to bear the insanity of an economic system that produces increased wealth on the back of destructive crises, will they have the will and commitment to collaboratively bury the free financial market capitalism? Do they have a collective vision for an alternative system? Or are they at least willing to investigate the alternative models that have been developed and/or tried?
If there is a willingness, then activism of all kinds can play a very important role in a process leading to change. After all: we are not just confronted by an economic crisis but also the intersecting of a dawning ecological disaster. Any new economic model therefore has to be sustainable not only within its own parameters but also in environmental and social terms. And a broad movement of social, environmental and economic activists might be able to create a multitude of intervention points that slowly could form a web as a new structure for a sustainable life on this planet.
In this context, the following off-the cuff suggestions could form the basis for strategies to address the current economic, environmental and social crises in a more systemic way:
1. Rather than continuing to save ‘free markets’, their actors and institutions, governments have to be forced to focus on the people they represent and on the global natural environment we all depend on and will be profoundly challenged by over the next few decades.
- Immediately help those who are most affected by the current crisis through a variety of material support options that maintain people’s dignity and help them to take their individual, family and community welfare again into their own hands.
- More structurally, governments need to be forced to heavily invest in education, health and social welfare; all three areas have to be fully returned into public hands (nationalised) and offer their services for free in return for the tax revenue collected by governments.
- People need to travel and communicate. Instead of throwing money at an old system that doesn’t work, governments have to be forced to stop and undo privatisation and instead nationalise transport and communications infrastructure and services. Heavy public investment in these areas will create employment and benefit the natural environment (for example by giving public transport an advantage over private and individual transport).
- In terms of us in relation to our environment, we need to force our governments to move away from supporting polluting industries in the energy, mining and goods production sectors and through discriminatory incentives foster the creation of fully sustainable industries. Emphasis here needs to be on the local over the regional, the regional over the national, and the national over the global.
2. In terms of changing our economic system, governments have to be forced to:
- Destroy the financial market and destroy shadow banking by making illegal all exotic financial instruments such as collateralised debt obligations (CDOs) and other structured asset-backed security (ABS) and derivatives that have been developed over the last few decades and that have no basis in the material productive capacity of a society. Governments need to withdraw any legal foundation for organisations like hedge funds, special purpose entities, monolines, investment banks, structured investment vehicles (SIVs) and other non-bank financial institutions.
- Wherever possible, prosecute for fraud and other criminal activities those who were involved in setting up highly risky financial schemes that only enriched individuals creating and trading them and duped the innocent, naive and economically uneducated into investing their life savings or their material futures.
- Close all access to tax havens and other tax loopholes, and regulate capital transfer across borders.
- Break the power of large multi-national corporations by abolishing international trade agreements such as FTAs and GATT, disempowering global economic institutions like the IMF, the World Bank, the WTO, and, if not nationalising industries, then at least protecting local, regional and national ones through tariffs and tax advantages.
- Break up large banking corporations and replace them with a decentralised regional and local banking system that is cooperatively owned by the members of its communities. This banking system has to be regulated according to cooperative principles.
- Make the originators of both, the financial and ecological destruction of people’s and the planet’s life pay. They have enriched themselves by exploiting and ruining people’s lives and nature, and they have a responsibility to repay their debts, a moral responsibility that need to be converted into a legal obligation.
It may seem an idealistic agenda given the power distribution in our societies. But profound change can only arise from the power of dreams and the passion to make them reality. The bigger we dream and the stronger our commitment to collectively bring them to life, the bigger the change we’ll achieve.
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