“Capitalism Is Devouring Its Own Tail”

Dr. Michael LaitmanIn the News (inosmi.ru): “The world may soon enter an era in which it will be possible to be rich only because of one’s birth. Modern capitalism is increasingly resembling feudalism. 

“According to the calculations of the British charity Oxfam, in the next year 1% of the richest people on earth are to amass more money than the remaining 99%. 

” If the average growth of world production is 1-1.5%, while income from capital investment comes to 4-5%. Speculating on the market, you can earn much more than producing something useful for the economy. The greatest chance of enrichment are for those who have sufficient capital and can afford to indulge in financial speculation. So they accumulate more and more money and are more and more alienated in property terms from the rest of society and its problems.

“‘Therefore, the circumstances of birth are more important than talent and effort,’ – wrote American economist and Nobel laureate, Paul Krugman.

“The new aristocracy – is not so much the aristocracy of industry, as it is a circle of people holding money. Many economists have long pointed to financial speculation as a source of growing stratification.

“Much of this paper wealth can evaporate as a result of the financial turmoil, just as in a few weeks in June and July 2015 2.8 trillion (the amount is close to the nominal GDP of France) evaporated with the Chinese exchanges. The problem is that the large financial speculators did not become poor from the collapse. It is the small punters who, losing their life savings in the markets, can not count on any support. Banks in these situations also can count on assistance from the state.

“Increased stratification also leads to a decrease in social mobility, limited access to education. In the long term, the less ‘equal’ economy also suffers from the greater likelihood of senior positions being taken by not really talented people, but by those who compensate for the lack of talent by birth in a rich family or acquaintances in high places.

“Growth of the disparity in income in the long term may also lead to dire political consequences. On the one hand, it leads to oligarchic mode, on the other hand, increases sympathy for the radical movements that seek to eliminate the existing socio-political order.

“It is possible to observe a harbinger of countries lying in the periphery of the eurozone. There is growing a generation that has never had a chance at a normal job. “The level of financial stratification in Europe have threatened social equilibrium. When the unemployment rate, which among youth in Greece and Spain, more than 50% of the younger generation has no prospects,” – indicates Janusz Shevchak.

“‘Piketty writes in his book that if the level of return on capital will consistently exceed the level of economic growth (which he predicts in his works), this can lead to the destruction of the foundations on which to build democratic capitalism, that is, the idea that work allows one to get rich, and its material effect depends on individual skills and effort. As a result, a phenomenon exacerbated delegitimization of capital and that this is followed, activated movement “angry” and start coming to power of populist parties (both left and right), cleverly finding access to public discontent, “- recalls Sobochinsky.

“…in Europe support formed for radical formation during the Great Depression of the 30’s: the Communist Party, the German Nazi Party, fascist, radical socialist and national-radical movements. History shows that the radicalization of society can be accelerated if an economic crisis imposed an identity crisis of the nation and the immigration crisis.

“‘The response to the crisis 30s was the introduction of very high taxes in the framework of the policy New Deal, so that in the post-war period managed to establish relative balance between labor and capital, as a result, income inequality decreased significantly.'”

My Comment: Capitalists are not brave enough to raise their own taxes. Today there is no longer a clear and accurate correlation between hard work and the outcome of labor. Countries are not locked within their borders and business has become global.

Therefore, people don’t feel that they depend on capital within their country and international corporations don’t feel that they depend on it. In order to feel it, they have to feel the environment, the attitude towards others. The world has come to an economic dead end and the only way out is through new social relationships. See “The Last Generation.”

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