The Turmoil that is America: Why US ails?


What’s happening in America?

For most Americans, the United States is an experiment about liberal capitalism. The main idea is this: individuals may do whatever they want provided that acts do not transgress established laws and regulations. This dogma defines the American experiment and created the American dream. What most believers of liberal capitalism failed to grasp is that the very economic system by which they put their strong faith on, is an imperfect system, prone to systemic ebbs and flows. Like any other system, capitalism is bound by the laws of time and space. Adam Smith recognized this early on and Karl Marx alongside others including Vladimir Lenin wrote disparaging tracts about the system due to its pervasive effects on social life. While the system itself follows natural laws, the dehumanizing aspect of capitalism affects millions if not billions of people. The feature of the system that allows this, if I may simplify, is the undeniable fact that capitalism encourages winners and losers in the economic game. While others profit, many suffer. Capitalists win, consumers and workers lose. What is created is a social environment with a fiction of prosperity amidst inequality. As the system persists, this scourge of inequality floats above surface level, and turns into a social crisis that governments are unable quite often, to solve.

When the American Republic rose from the ashes of a bloody civil war, those who won it configured the Republic into a hybrid system wherein political autonomy was given to each state under one consolidated economic system, that is, capitalism. A federal Republic, they called their experiment and this model has been replicated more often in other areas in the Western and Asian worlds. Democracy is the main engine that propels capitalism, as production cannot happen under a tight and strict quota-based production system. People were given rights to produce as much as they like under a liberal democratic based regulatory environment that encourages production at levels without its limit. Meaning, it is the right of individuals to do what they want, do business and exploit resources as much as want, provided that their acts do not transgress others and within the bounds set by law.

In a liberal democratic state such as the United States, government is just there to ensure that a liberal economic environment exists. Obviously, under such liberal environment, interests will definitely clash among economic players. What government is there for is to ensure that equilibrium exists between big and small economic players and between capitalists and the production force.

Policies are created to enable the full exercise of human capacity to produce. In reality, governmental policies address three (3) key concerns in capitalism: the major economic environment, the micro economy and the individual or productive forces. Government thru its functionaries namely the trade, banking and finance departments ensure that capital is being managed effectively by big business conglomerates without necessarily clashing with the interests of the whole, that is the people. Government’s main focus is to allow investments to flow into the national economy so that players in the micro economy will likewise benefit from it thru loans and other support mechanisms the government established. Government benefits from all these thru revenues generated from production of services and products. Ideally, these revenues are to ensure that living standards are okey for the productive forces to thrive and live.

I will not belabor the fact that several studies already pointed out the fundamental flaw of this capitalist system. Schumpeter and others had written several books pointing to the main crisis of capitalism, that is, over production or technically called the over accumulation of capital. As businesses are allowed to produce without certain limits, eventually there will be over accumulation of capital. This is inevitable because every system is bound by the universal law of time and space.

When capital turns to waste because it cannot replicate or reproduce itself within a certain period of time and it is not distributed or used to develop a space, this affects the capitalist’s production capabilities, reflected in his financial sheets. Capitalists need to produce every single day to satisfy the demands of the market. The minute a capitalist stops production, he loses because he still needs to cover his operating and personnel costs whatever happens.

The brilliant minds of the capitalist world tried to solve this first, by the obvious route of imperialism. Acutely aware of the system bound by time and space, the first big capitalist thought that by occupying territories and dumping their produce there, they solve the problem of over accumulation. The thing about imperialism is that it arouses nationalist dissent that affects government’s ability to create a liberal democratic regulatory environment that encourages production. Economic disruptions ensue as indigenous or occupied peoples assert their original rights over their own economy to the consternation of the imperialist. Bad publicity affected the imperialist expansion plans, as the very act of occupation runs anathema to the liberal democratic dogma. By the turn of the 19th century, capitalists lost interests on investing on war as a weapon of imperialist expansion.

Instead of imperialism, capitalists devised a devious way of giving big economic players a profitable exit out of their systemic dilemma, by re-imagining capital and reconfiguring it into several forms most of them controlled by banks. However, such schemes initially created major shocks in the system. The lessons from the 1935, 1998, and 2008-2009 financial crashes remind capitalists of the risks involved in creating capital out of capital, especially futures.

Quite often, many perceive the crisis in America as brought about by the resurgence of China as an economic giant. No. China has nothing to do with the morass Americans find themselves in.

America is in deep shit because of the choices made by capitalists dictated upon them by profit. Profit depends on price. Price is determined by many factors including managing costs of production.

China became the leading economy because it remains an underdeveloped frontier with a huge market and large worker base. Obviously, Chinese capitalists had the power to dictate price. The Chinese capitalists fully understands the system. He understands that to make a profit in a highly competitive environment, he needs to temper his appetite for accumulating wealth for a period of time. His Confucianist mindset affects his production behavior and over accumulation, therefore, is being avoided temporarily.

The Chinese and Japanese mindsets differ with Americans because Americans were exposed early on with this mindless tendency to stretch what’s profitably possible. Likewise, the relative yet brief prosperity brought about by post-war and Cold-war eras created an impression among Americans that their economy is the most powerful and the most stable in the world, that they forgot that such abundance depends much on preparing for possible future shocks the system encounters as a regular and natural feature of the system itself. The confusing and intertwining links of the world capitalist system with America at its core create bifurcations that are naturally occurring over time. Likewise, the system depends much on production that create profits for the capitalist. No capitalist would bank on an economy that has a huge production force yet demands more compares with a production force that cost less, because everything affects the bottom-line, that is, profits. The desire for more profits is anchored on the desire to accumulate wealth, immediately.

What prevails in the mindsets of Americans is that every one of them is entitled to wealth and abundance because that is what the system promises to them. Frustration sets in when the system is unable to provide them what they think are services or opportunities based on their God-given rights. They are entitled to three square meals a day. They have the right to enjoy vacation days without them spending a dollar.

When the very system is unable to provide them the means that constitutes the American dream, frustrations are sure to follow. When Americans see other Americans flouting their wealth and are able to buy expensive Gucci and Versace while most wallow in extreme poverty, evidently, these feelings of relative deprivation make most Americans vulnerable to conspiratorial stories that blame government for the social depravity they find themselves in.

We can’t blame Americans for feeling this way, for looking for messiahs due to the consistent failings of their government to provide them with what they want because the system promised all of the American dream. Americans feel that they are doing their fair share—they go and work tirelessly, pay their taxes and swallow every shit that politicians dish them every single time. Most Americans follow the law, to the letter. Doing so, as what they were taught by the educational system, entitles them to social services. How do you feel if no such services are given to you?

The first thing you do is demand. The second, you express yourself in public. The third, you protest by writing. Eventually, there would come a day when you would be unable to contain your feelings anymore and would consider other overt acts of dissent.

Americans must bond together and change the economic system. The thing is, there is simply no other alternative economic system in place that encourages free liberties with economic production. Production, by itself, connotes regimentation. There must be a middle ground. Yet, this middle ground, that some economists are now studying, require the implementation of what capitalist defenders term as “universal basic income.”

The concept is simple—tax the rich more and revenues from this goes to the segment of the economy that is affected by capitalist over accumulation. This can be undertaken by applying more technologies into the system.

The goal of UBI is simple: eradicate or at least lower poverty incidence since those who need assistance are already losers of the economic game, and therefore, since they are already considered an unproductive segment of the economy, they do not generate taxes or public revenues anymore, anyway. And since those who will be taxed more are those who benefit from the economic game, UBI is a rational solution to the thing that threatens the whole system.


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