Most economists in the Western World and their local disciples are almost unanimous in saying that the man who made the scientific analysis of capitalism was wrong, and failed in his prediction that the system was bound to fail. Maybe some will concede that indeed he failed. First, when he thought of that, he based it on his observation about the inherent contradiction within the system. In fact, he never anticipated the rise of Marxist socialism, which did not come about during his lifetime, but only to come as a fleeting moment in the “epoch” of man’s civilization.
The thought of Marxism interchangeably called “communism” to collapse from its own weight was far from the mind of those who fiercely advocated for it. In the first place, Marx himself never saw the realization of what he termed the “specter that was haunting Europe” to liberate the workers from the fetters of exploitation. Instead, Marxist socialism came into being in rural Russia, and in just over thirty years in China, contrary to his prodigious prediction that capitalism would collapse in the industrialized countries of Europe such as Germany.
Second, Marx failed to foresee that capitalism, despite the dark clouds of revolution that hovers in most states energized by the founding of the first Marxist socialist state in Russia in 1917, has yet to reach its finest refinement as a system. Maybe imperialism as observed by James A Hobson, who wrote Imperialism: A Study, and Vladimir I. Lenin, in his analysis of Imperialism: the Highest Stage of Capitalism saw the ferocious nature of exploitation culminating in the eruption of wars among industrialized states seeking to divide world’s resources and capital, but they never thought that imperialism would come out with its own antidote to save itself from extinction.
Aside from giving itself a new name called globalism guided by an ideology its faithful would called neo liberalism, lifted from a demagogic economic theory called Reaganomics, the transnational exploitation of the world continues to intensify with many fearing could be a prelude to global conflict. Instead of an uprising from the exploited masses now bearing the brunt of losing much of their economic gains extended as a concession to save capitalism from collapsing after the 1920 Great Depression. Globalism today is reeking from its own contradiction with most of the so-called industrialized countries suffering from economic bankruptcy. The capitalists themselves formulated the very poison that could paralyze their system when they tampered the nature of capitalism.
The traditionalist Marxists who always hankered on the exploitative nature of capitalism to make viable the prospects of a revolutionary class struggle failed to analyze that the era of globalism virtually open the gates of hell by the all-out implementation of deregulation, privatization and free trade or globalization. They clung on to their stereotype Marxist theory about the accumulation of capital by the exploitation of labor with the cycle ending in the creation of surplus capital to demarcate the wealthy capitalist class from the workers who could only sell their brawn and brain for their physical existence.
Labor and capital was indivisible to their thought; that capital appropriated the means of production for which labor itself was reduced to commodity. Thus, as the owners of the means of production churns out commodities excessively beyond the needs of man, that became what Marx called “surplus value.” Nonetheless, many failed to foresee that capital itself could generate capital, not in the classical sense of producing wealth through production, but in the trading of capital in various forms of stocks and credit certificates to create more capital.
Modern day capitalists, represented by the bankers, syndicated finance capital, stocks traders, hedge funds managers, and those engaged in that legalized Ponzi scheme called collateralized debt obligation (CDO), all collaborated in detaching capital from production of which labor remains an indivisible component. Today, the wealthy class or modern day oligarchy are almost operating outside the system of production, yet raking in more profit, and unaffected by the nuances in production cycle due to unabated inflation accompanied by shrinking employment prospects.
That inglorious economic transition began in 1973 when US President Richard Nixon detached the US dollar from the gold standard. On that basis, the US dollar unilaterally vouched to the world its might in valuing commodities. Nobody then questioned that because the US stood as the leading economic powerhouse coming out to nearly 47 percent of the world’s total productive output, and backed up by a strong middle class which allowed a healthy circulation of its economy. But underneath that decision, was the growing pain that the US economy was incurring hemorrhagic trade deficit as a result of its costly but bloody war of aggression in Vietnam. So, as it continues to police the world, its two former enemies in World War II were slowly eclipsing its economic dominance.
As Asia and the rest of Europe continues to rely on the old method of production and in lowering their value to accelerate exports, US trade deficit continues to deepen, thereby increasingly relying on imports to offset their high production cost principally due to the high cost of domestic labor. To de-accelerate the growing economic imbalance, it had to deregulate its economy, and that of other countries like the Philippines. Here, that policy was most traumatic for it saw the deregulation in the value of the peso, and the easing in the entry of foreign capital, including the remittance of profit.
Its first casualty was the abrogation of the Usury Law.
Next came was the election of Ronald Reagan. Reaganomics came like trance to most Americans for it seems many of them got tired of the regulatory safety valves that were installed by President Franklin Roosevelt to resuscitate the US economy from the catastrophic effect of the Great Depression. Big business joined the politicians in preaching demagoguery even accusing their own government as the problem to their economic growth, forgetting that it was those economic safety valves that brought to the US the era of prosperity.
So, for want of any historical hindsight, most Americans failed to realize that demagoguery, like the followers of orthodox Marxism, was already pulling them down to their graveyard.
Since big corporations and the oligarchy in the US were already raking in more profit despite signs of an alarmingly decreasing productive output, the US refused to expand and upgrade its productive output with an eye of restoring its competitive lead. The proponent of the Reagan economic doctrine continued to defend the empty can theory. As the author of the book “What Went Wrong,” George R. Tyler wrote, “Reaganomics has been an enormous gift to corporations and the wealthy Americans …Weary of stagflation, they accepted the assurance of President Reagan and his team in 1980 that Reaganomics could lead to prosperity.”
(rpkapunan@gmail.com)
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