Foreclosure Crisis is a Lesson in Basic Change of Concept of Capitalism
Posted on January 8, 2009
Filed Under Foreclosure Homes | Leave a Comment
The recent financial crisis triggered by the foreclosure drama has a lesson to teach – there has been a dramatic change in the basic concept of capitalism.
About seventy years ago historian Karl Polanvi in his work The Great Transformation depicted the great change since the emergence of capitalism. It comprised of two separate movements – one overlapping another repeatedly. The first one has been described as unstoppable surge in unchained, free markets having no regulations or checks. Poet Eduardo Galeano described it as man being enslaved so that prices could have a free sway. Such markets and those who gain from it have no interest in the constancy of communities in which they function. Thus money-motivate agents competing with each other have no other way but to go ahead with the tearing up of socio-economic conditions. The first result is the suffering of the weakest.
The contradiction is that it is the capitalists who hate competition in the markets because they want to change or hijack everything into oligopolies that will be to their advantage – irrespective of the price others have to pay for it.
Polanyi then goes on to note that the increasing damage like unemployment, unrest and bubble bursting that these market tsars purposefully inflict upon society spurs on the emergence of a counter movement with a reformist nature. It tries to rein the markets in and make it do what is best for the entire community.
Jumbo markets operate smoothly when they are under reins and are regulated after a period of letting them run free. This is the foreclosure saga of today. These two trends swing to and fro.
It is now clear as daylight to even cursory enquirers that the financial giants sat tight knowing that the meltdown was coming. The rescue worked well for the villains of the piece who have forced politicians to shell out massive amounts from the taxpayer’s kitty for those very people who allowed this to happen. The bailouts are without conditions or overseeing.
The counter movement will expect introduction of regulation in key economic departments, redistribution of benefits among the ordinary toiling Americans and more democratic policy enforcement in home and foreign affairs.
The people are pinning their hopes in Barack Obama but he will be able to act only if the pressure is maintained. The moot question is – are the people meant to serve the economy or is the economy for the betterment of the people?