To What Extent Is Global Capitalism In Crisis - Essay Example

Number Subject Name Lecturer’s Name To what extent is global capitalism in crisis? Due date Date Submitted To what extent is global capitalism in crisis? Introduction Capitalism is an economic system whereby a country allows freedom of its trade and industry to be owned privately rather than by the state. When freedom applied to the sphere of production, it results in the free market. The global economies form the web in which national boundaries are increasingly irrelevant to trade, investment, and other economic activities. The global crisis is, as a result, the collapse of the financial systems globally. Between the years 2008-2009, the capitalist system in Europe and the United States suffered a shock that shook the foundations of its financial institutions and threatened to bankrupt its systems. The present find the causes of global crisis, relate the global capitalism with other economic models, and to respond to the theory whether, capitalism is the better ideology in the economic systems, its advantages and disadvantages over the other types of economic ideas. Theory of global capitalism It starts with the global capital mobility that allows capital to reorganize production all over the world, allowing maximization of profit-making opportunities. This means that the systems of production are fragmented into the global circuits of accumulation. Production is moved to different countries where production is cheaper (Foley, 2012). However, this global decentralization has taken place alongside the centralization of command and control of the world economy (Pabst, 2012). Economic organizations merge with political counterparts, and the leaders start to think of themselves and how to live in new ways these leaders for a new ruling class of global elites regardless of their nationality (Shinjiro et al., 2012). The unifying of the world into a single mode of production forms globalization (Hope, 2011). However, the new form global capitalism operates with difficulty, with conflicts arising between the rich and the poor, conflicts of control between the elite group and the global poor and the marginalized (Pabst, 2012). Global crisis Global crisis during the 2008 financial crisis was the beginning of the systematic breakdown of the system of capitalism (Hope, 2011). Governments are forced to borrow large amounts to bail out banks. The policy of capitalism governments has made the working class to pay for the poor decisions taken by the financial elite. Greece has debt default and with the daily threat of a financial meltdown, the world my plunge into depression and mass unemployment. The economic crisis has led to the profound political crisis; governments have lost popular support in many countries. In Australian for instance, the labor party has spent large sums of money to bail out banks, this has resulted in the government opting for a program of slashing public spending in order to meet the demands of these bans restoring budget surplus (Shinjiro et al., 2012). Global failure of capitalism threatens to drag the world into economic abyss and conflict. Due to global financial crisis, political and military conflicts are starting between the major powers to control the resources and markets (Foley, 2012). Policies made by the governments concerning the public have led to resistance, strikes and demonstrations. For instance, the strikes by the Greek workers are an example of the anticipated global resistance. Works need to make a political break with capitalist parties that sacrifice their living standards. Global imperialism is favoring the elite nations. Global capitalism by the United States is on the rise discrediting the neoliberal Washington consensus and the revulsion against Washington’s arrogant militarism (Hope, 2011). The ruling class has seen international trade and financial systems favoring the elite nations like the United States. Capitalist growth is characterized by its wasteful nature of resources. This has led to the fear of a growing crisis in the availability and distribution of critical resources like food, oil, and water. Wealthy countries have the lion’s share of the world’s resources while the developing countries, whose population suffers more deaths due to malnutrition and other environment diseases, suffer from limited resources. Is capitalism the best economic system? The question of whether or not, Capitalism is the best economic system has been debatable for a long time. Even though, there are other ideologies that to some extent challenge the ideologies of capitalism. Socialist economic system, for instance, is based on social ownership of means of production. The system seeks to redistribute wealth equitably by communal ownership of resources. They nationalize monopolies for the greater benefits of the masses. However, the small enterprises can be privately owned (Dunn, 2014). Under socialism, however, a class of a few ruling class intellectuals and social planners are bestowed with the power to decide what people want and what is good for the society. The power of the state is then used to regulate, tax, and redistribute the wealth. This involves the sacrifice of those working and with wealth since their wealth has to be leveled with the rest (Foley, 2012). Morally, socialism does not score against capitalism. This is because, although it has the myth of “greed is good” producing bankrupt systems despite the prosperity created, capitalism is best on pragmatic grounds, in that, it can be tolerated. Capitalism stands out as a moral system because it requires individuals to deal with one another in a free market trade, trading for goods and services on the basis of mutual consent (Foley, 2012). Communism is another system of economic ideology whereby, the government owns the factors of production and allocates resources according to the products and service that are required (Hope, 2011). It is commonly referred to as a command system, and the doctrine originated from Karl Marx. Capitalism has a core myth of greed; it is believed that greed is the prime human motivator. Whereby, the wealth created will find its way down to the majority. This myth exists even if there are substantial levels of poverty even in the wealthy countries. In communism, there is no greed. The state owns the resources (Foley, 2012). Thus, nobody can greed for anything. The government decides on the prices of goods and services in the market since there is no entrepreneur, hence no competition or products (Rosenbloom, 2015). To some extent, communism proves to have an edge over capitalism since, with communism; the problem of unemployment does not exist. The unemployment problem is taken care of by the government that is the owner of the means of production. The state owns factories and stores, making it easy for the government to determine what is good for the society and produce it. Individual behavior causes poverty, but a look at the economic system of capitalism. It’s quite clear, the role of capitalism in creating poverty. The system allows a small group of elite individuals to control a large percentage of the wealth produced by the people. Distribution of wealth I not equal to the population, leading to extreme cases of poverty levels even in wealthy countries like the United States. Benefits of capitalism Although many regarding its “man-eat-man” society have criticized capitalism, it is without a doubt the best economic system, following the collapse of the Soviet Union, which promoted communism system (Dunn, 2014). Economic freedom in the capitalist regime of the economy has helped in creating political freedom. By awarding hard work, people are motivated to work towards owning the factors of production; this has resulted in a massive output of goods and services to the market. With free markets, the forces of demand and supply control the forces in the market, this leads to competition in the market and the government only plays the role of regulation (Foley, 2012). Competition results in high productivity, which in turn translates to great economic growths. Efficiency, in that, firms face incentives to produce efficiently goods and services. This is in contrast to the state-owned companies, which often tend to be inefficient due to the unwillingness to get rid of surplus workers and the fewer incentives (Dunn, 2014). Governments in capitalist systems tend to be more democratic (Hope, 2011). Since more wealth is generated, the public is not engaged in battling the government for social needs. But instead every individual is busy trying to accumulate wealth. Conclusion The world capitalist system is experiencing a crisis through globalization over the past few decades. Similarly, the current crisis has characteristics from the previous crises, including poverty, inequality in the distribution of resources, and widespread change in the social, political and cultural ideologies. Global financial crisis has led to widespread loss of jobs in the financial services industry is attributed to the failure another capitalistic system (Walter, 2015). Fear of the global system plunging into economic meltdown has led to widespread resistance from the people, workers demonstrating and striking for the fear of losing their jobs. Even though the system of capitalism has many failures, it can be argued that it is still one of the best systems o economic ideology; taking into consideration the benefits capitalism has over communism and socialism. While we might want to believe that communism wipes out poverty, it is true that the rich in these communist systems are forced to give their wealth to the government, which then redistributes it to the people. Freedom in the production of goods and services promotes a democratic government. With a democratic system, everyone has the confidence in making it out of poverty. This struggle to get out of poverty is which drives productivity. It is, therefore, logical to have capitalism as a lesser evil in the economic system. References Dunn, B 2014, The Political Economy Of Global Capitalism And Crisis, Abington, Oxon: Routledge, Discovery eBooks, EBSCOhost, viewed 22 September 2015. Harris, J 2015, 'Global Capitalism and the Crisis of Humanity', Race And Class, 4, p. 95, Academic OneFile, EBSCOhost, viewed 22 September 2015. Foley, D. K. 2012. ‘The political economy of postcrisis global capitalism’. South Atlantic Quarterly, 111(2), 251-263 Hope, W. 2011. ‘Crisis of temporalities: Global capitalism after the 2007–08 financial collapse’. Time & Society, 20(1), 94-118. Pabst, A 2012, The Crisis Of Global Capitalism : Pope Benedict XVI's Social Encyclical And The Future Of Political Economy, Cambridge, U.K.: James Clarke & Co, Discovery eBooks, EBSCOhost, viewed 22 September 2015. Rosenbloom, J 2015, 'Screpanti, Ernesto. Global imperialism and the great crisis: the uncertain future of capitalism', CHOICE: Current Reviews for Academic Libraries, 5, p. 862, Literature Resource Center, EBSCOhost, viewed 22 September 2015. Shinjiro, H, Dymski, G, Yagi, K, & Yokokawa, N 2012, Crises Of Global Economies And The Future Of Capitalism : Reviving Marxian Crisis Theory, Hoboken: Routledge, Discovery eBooks, EBSCOhost, viewed 22 September 2015 Walter, I 2015, 'Robinson, William I.: Global capitalism and the crisis of humanity', CHOICE: Current Reviews for Academic Libraries, 7, p. 1200, Literature Resource Center, EBSCOhost, viewed 22 September 2015. Read More