There would seem to be little reason indeed to be optimistic. For some time now, OECD capitalism has been kept going by liberal injections of fiat money, under a policy of monetary expansion whose architects know better than anyone else that it cannot continue forever. In fact, several attempts were made in 2013 to kick the habit, in Japan as well as in the US, but when stock prices plunged in response, ‘tapering’, as it came to be called, was postponed for the time being. In mid-June, the Bank for International Settlements (BIS) in Basel—the mother of all central banks—declared that ‘quantitative easing’ must come to an end. In its Annual Report, the Bank pointed out that central banks had, in reaction to the crisis and the slow recovery, expanded their balance sheets, ‘which are now collectively at roughly three times their pre-crisis level—and rising’.[5] While this had been necessary to ‘prevent financial collapse’, now the goal had to be ‘to return still-sluggish economies to strong and sustainable growth’. This, however, was beyond the capacities of central banks, which: cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect. What central-bank accommodation has done during the recovery is to borrow time . . . But the time has not been well used, as continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system. After all, cheap money makes it easier to borrow than to save, easier to spend than to tax, easier to remain the same than to change. [ ... ] Capitalism without opposition is left to its own devices, which do not include self-restraint. The capitalist pursuit of profit is open-ended, and cannot be otherwise. The idea that less could be more is not a principle a capitalist society could honour; it must be imposed upon it, or else there will be no end to its progress, self-consuming as it may ultimately be. At present, I claim, we are already in a position to observe capitalism passing away as a result of having destroyed its opposition—dying, as it were, from an overdose of itself. philosophersforchange.org/2014/08/19/how-will-capitalism-end/
Posted on: Tue, 26 Aug 2014 04:16:16 +0000
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