(to be published in Arabic for Arabi21)
When a drug dealer starts telling you that you have an addiction problem, it is probably time to seriously assess your habits. The Capitalist system is heading for imminent collapse; the greed and unprecedented accumulation of wealth by a tiny minority is unsustainable. Money doesn’t work like the water cycle; it doesn’t float up, form clouds, and then rain back down over the land. It floats up, forms clouds, and stays there…there is no “trickle down”.
People like me, and radical leftist economists have been saying that for years. But now, even the Capitalists are saying it.
In a recent interview with Business Insider, former CEO of the Pacific Investment Management Company (PIMCO), Mohamed El Arian, who oversaw the management of nearly $2 trillion worth of assets, says that the end is nigh. It is worth quoting his prediction in its entirety from the article:
“Within the next three years, the global economy will hit a ‘T-junction.’
Policymakers will either watch helplessly as the world sinks into a mire of financial volatility and political collapse, or they’ll find a way to unlock the piles of corporate cash sitting on the sidelines, reinvigorating growth.”
Read that again. What he is saying here is that the whole system, which is designed to maximize profit and funnel wealth out of circulation and into private corporate vaults, is dysfunctional and self-destructive. He is saying that income disparity is a formula for disaster; for “financial volatility and political collapse”; and he’s right. The high concentration of wealth in fewer and fewer hands, the inevitable trajectory of Capitalist policy, ultimately undermines the viability of the system itself. The rich do not contribute to the economy, even though they have ensured that they are the only ones who can contribute, because they are the only ones with the money to do so. They don’t create jobs, they don’t consume in proportion to their disposable incomes, they don’t invest to develop companies, and they don’t grow the economy; they hoard cash. El Arian has just obliterated the Neoliberal myth. Even the 1% is acknowledging the madness of their system.
“The road we’re on is coming to an end,” El Arian said. When he says that the massive wealth held by corporations needs to be unlocked, whether he would call it this or not, he is talking about re-distribution of wealth. In other words, corporations have to be forced, by one way or another, to utilize that money for economic growth; which means, creating jobs, supporting entrepreneurship, raising wages, and letting the wealth flow back into circulation. That is the only way the game can continue, otherwise, it is like a football match in which only two or three players on the same team kick the ball back and forth between each other.
The way that governments dealt with the financial crisis of 2008 was basically to cover corporate losses, bail them out, insulate them from the consequences of their corruption and greed. They pumped money into their accounts, ostensibly to encourage them to invest and distribute that money in society through job creation and responsible lending to small and medium sized businesses. But this money just went into their pockets, because, well, that is what they are programmed to do with money whenever they see it.
The CEOs of America’s largest banks made about $400,000 per week last year, up from 2014 by about 10%. That is where “Quantitative Easing” went; not to individual or small business loan applicants; it went to executive pay packages.
What is clear is that the corporations are not equipped to make the decision of wealth re-distribution without coercion. It is a decision which simply does not compute according to their internal logic.
Unlocking those corporate vaults should be the fundamental goal of any revolution anywhere in the world today