Is a complete collapse imminent?

[MarkSB]

Capitalism’s fatal flaw is apparent only in its later stages. As capitalism matures, its inherent systemic instability manifests. The very expansion of capitalism sets in motion its demise. The Achilles heel of capitalism is its perpetual need to expand.

Only perpetual capital expansion can create sufficient capital flows to service and retire previously created debts, the amounts of which are always increasing because of the accruing compound interest being charged. While any slowdown is cause for worry, a contraction bodes far worse.

Great article:
http://www.financialsense.com/fsu/editorials/schoon/2009/0213.html

It makes sense - constant economic expansion cannot be permanently sustained. And while the government spends billions trying to fix the problem, one wonders what will be the outcome? Will our economy have one last gasp before the big fall? Will the stimulus work at all? Or are these all just alarmist 'theories', and our economy will recover after a prolonged recession?

I say buckle your seatbelts and get ready, the coming years look like they're going to be a rough ride.

 

[LUColt27]

Capitalism itself could probably expand indefinitely, provided that there is something to sustain it. Government spending, however, will at most delay any collapse of a broken system, which we currently possess. What the government is doing now is making the actual collapse, which I firmly believe is going to happen, probably in the next 5 years at the latest, worse when it does happen.

You are correct, the ride will be exceptionally rough over the next few years. I just hope that the government will figure out that it's making the problem worse, and step back to let the system reset itself.

 

[CCGirl]

Marx had it right after all!

 

[LUColt27]

Marx had it right after all!

Yeah, that's doubtful. I'd rather be in a place where my success or failure depends on my work habits rather than on what the government thinks I should be making.

 

[platzapS]

I'm skeptical of the "infinite growth" people who think that our current growth and waste is sustainable, but also the people who think the breakdown of civilization is around the corner. In the 1970s they thought we'd have global breakdown within a decade or so, and they were wrong because we found new resources to replace old ones, or better methods of extracting those resources.

But you can't grow exponentially forever on a planet with finite resources, especially at the level of consumption in the first world today. If we want our species to survive, without keeping billions in poverty or drastically reducing population, we'll need to think big. We need to make major changes in transportation, food production and diet, and energy production. There's a lot of low-hanging fruit to start out with, like jacking up car mileage standards and putting way more money into public transport systems, designing or redesigning buildings to be more energy-efficient, reducing our meat consumption (and especially reforming the way we produce meat), and switching as quickly as possible to clean renewable fuels, to start.

 

[c71clark]

Don't forget that as a species, our numbers are always growing. Births outnumber deaths globally. As more and more of the so-called Third World populations get into gear, the demand for virtually everything will just explode.

So, globally, I think we have quite some time to go yet. Locally, I think there is a self-sustaining cycle. There are both Bear and Bull market definitions to show that the our economic system does go up and down. We're certainly die some down time.

 

[rambot]

Capitalism itself could probably expand indefinitely, provided that there is something to sustain it.

Unfortunately, planet earth and the resources we use are finite. Therefore, any system that relies on expansion is bound to fail.
What will be curious is the extent and who would be least affected by the collapse of capitalism.

I look forward to the day when humanity realizes that unbridled progress is not possible and ultimately destructive. What happened to contentment?

 

[LUColt27]

Unfortunately, planet earth and the resources we use are finite. Therefore, any system that relies on expansion is bound to fail.
What will be curious is the extent and who would be least affected by the collapse of capitalism.

I look forward to the day when humanity realizes that unbridled progress is not possible and ultimately destructive. What happened to contentment?

The something that sustains capitalism doesn't have to remain constant. it could be lumber moving to iron as resources, something of that nature.

But while I can easily be content with what I have, humanity has gshown an amazing propensity for being insatiably greedy.

 

[CCGirl]

Yeah, that's doubtful. I'd rather be in a place where my success or failure depends on my work habits rather than on what the government thinks I should be making.

Where is that in the manifesto?

 

[LUColt27]

Where is that in the manifesto?

You tell me. I will have nothing to do with communism in any of its forms. I simply see the example it left, and decide that I'd rather die than live under communism.

 

[Avatar]

You tell me. I will have nothing to do with communism in any of its forms. I simply see the example it left, and decide that I'd rather die than live under communism.

That's a bit extreme.

 

[Suomipoika]

I'd rather die than live under communism.

Hmmm... I see your "Christian" faith icon, but don't know anything more exact about your beliefs. The first question that pops to my mind based on your statement of conviction above would be: would Apostle Paul have rather died a physical death than lived and preached the Gospel under an earthly regime defined as "communism" (even if in prison - assuming that preaching the Christian Gospel would automatically be forbidden by law under any kind of communistic regime, which I guess is doubtful), and would he have encouraged other Christians to do so? After all, they were all living under the regime of emperor Nero at that time.

 

[drGiaus]

Marx had it right after all!

No, he was wrong. Communism didn't even last as long as we have.

 

[chaz345]

Imminent? Probably not.
Inevitable unless major changes are made? Absolutely.

Our current model of spending/expansion is unsustainable. The fact that we've always had such drastic cycles in the "health" of our economy should have been a clue to that a long time ago.

IF(and that's a big huge fat hairy if) we can completely change our spending habits, and completely redefine what a healthy economy looks like, with the key factor being a MUCH lower rate of economic growth, there might be some hope that the whole thing doesn't completely disintigrate. The problem is, people, and the government like what they like. They are pretty well set in their spending ways and it's going to take a pretty major "bump" to get them to change. I firmly believe that it would have been far smarter to pass a much smaller stimulus bill with the goal not of turing things aroung but of lessening the severity of the crash, and then we'd have more available to help with the major dip that's likely comming anyway.

 

[CCGirl]

No, he was wrong. Communism didn't even last as long as we have.

Ummm.......wehavent seen communism yet! If you were to read the manifesto, you would see that after the fall of capitalism, which may be what we are witnessing now, socialism will be adopted (nationalizing banks, anyone?), which will lead to communism. This can only happen in industrialized nations, and can not be localized.

 

[CCGirl]

You tell me. I will have nothing to do with communism in any of its forms. I simply see the example it left, and decide that I'd rather die than live under communism.

What example? Why would you prefer to speak of which you know nothing about, than educate yourself? It is a very short, easy read.

 

[ACougar]

About 60 years ago fedral debt as a percentage of gdp peaked at a little over 120% and we are currently around 70%. Japan is currently running at about 175% of GDP, so I suspect the max the system can handle would be at least 200% of GDP.

Of course the US would be buying it's own debt at that point, however I don't see how that would cause everything to fold. It will be at least 5-8 years before another currency is ready to assume the role of the worlds reserve currency. Most likely the dollar will be replaced by a basket of currencies and the dollar will still be a major player in that basket.

Great article:
http://www.financialsense.com/fsu/editorials/schoon/2009/0213.html

It makes sense - constant economic expansion cannot be permanently sustained. And while the government spends billions trying to fix the problem, one wonders what will be the outcome? Will our economy have one last gasp before the big fall? Will the stimulus work at all? Or are these all just alarmist 'theories', and our economy will recover after a prolonged recession?

I say buckle your seatbelts and get ready, the coming years look like they're going to be a rough ride.

 

[TheNewWorldMan]

I think the anti-communism argument is a bit of a red herring.

Here in America, after the 1930s, to make a long story short, we met Marx halfway. We decided that, while private enterprise was the way to go for most economic activity, there were SOME activities and functions the State could play a role in. Note the Social Security system, Medicare, public education, and so on.

One of the fears the Right has is that Obama will raise taxes on the wealthy and kill the economy. This is a great boogeyman to spook Joe and Jane Q. Public with, but it doesn't stand up to scrutiny. If you look at America in the late 1950s and 1960s, we had the world's highest standard of living AND high marginal tax rates on the rich. Impossible? Well, don't take my world for it:

So as you can see, during some of the best years America ever had, we had (by today's standards) VERY high taxes on the elite, and yet we prospered.

One of the the most glaring symptoms of the current decline in the standard of living is that, while productivity has steadily increased (meaning American workers produce more and more wealth) wages have been flat for the better part of a decade now:

As you can see, we in the working class are overdue for a 20 to 25% pay hike...and that's just if you count from 2000 on. If you go back to 1973, you would see we're actually due for a 60% pay hike.

http://www.countdownnet.info/archivio/dati_statistici/387.pdf

 

[rambot]

One of the the most glaring symptoms of the current decline in the standard of living is that, while productivity has steadily increased (meaning American workers produce more and more wealth) wages have been flat for the better part of a decade now:

Interesting graph but wouldn't you also have to compare the value of American products to know which direction wages should go? I don't see that in the graph.

 

[TheNewWorldMan]

Interesting graph but wouldn't you also have to compare the value of American products to know which direction wages should go? I don't see that in the graph.

Already factored in, as productivity measures the dollar value of economic output per hour of labor.

And this statistic, by the way, is why America probably will turn Left economically. Most Left-ward shifts are preceded by a widening of income disparity between rich and poor.

The fact that wages pretty much moved in lock-step with productivity in the post-WWII era explains why communism and socialism were scorned and never managed to gain traction as political movements in the United States during the postwar period of the 20th century. The fruits of labor were, for much of the last two-thirds of the 20th century, equitably distributed. A rising tide did indeed lift all boats. But that was then. Now, the rich get richer while the rest of us stagnate.

As I said before, the Right only regards redistributing the wealth as a no-no when wealth is distributed from rich to poor. When it's the other way 'round, hey, one hand washes the other. That's one of the reasons the GOP lost. But for better or worse, we've only seen the beginning of the political realignment coming to America.