6 Things You Must Do Immediately When Capitalism Hits the Fan

By Jed Diamond, Ph.D.

Contact Information: Jed@MenAlive.com

Web: www.MenAlive.com

More and more of us have the feeling that something is “hitting the fan” and it may just be our entire economic system. We listen to the President and hope for change, but are concerned that we may need a major overhaul, not just a fine-tuning of the system.

What’s going on in the world? University of Massachusetts Economics Professor Richard Wolff, author of the soon to be released book, When Capitalism Hits the Fan, breaks down the root causes of today's economic crisis, showing how it was decades in the making and in fact reflects seismic failures within the structures of American-style capitalism itself.

Wages and Productivity

"We need to see this crisis historically to get a sense of how serious this is,” says Wolff, “In every decade from 1820 to 1970, workers in the United States enjoyed a rising level of wages. Even during the Great Depression this was true. But since the 1970s, that history of the U.S. stopped. Real wages stopped rising in the 1970s and they have never resumed.

"Meanwhile, there has been a huge increase in productivity across the last hundred years. Most of it in the last 30 years -- the very period when wage increases stopped. What the workers get in those years stays flat. What they produce for their employers grows. This led to spectacular profits for U.S. corporations. After

the 1970s, unprecedented corporate profits fueled an unprecedented stock market boom. The results were a fast-growing inequality of wealth and income dividing Americans, a bubble that burst first in the stock market and then in the real-estate market, and now the worst downturn since the Great Depression.

A Few Get Rich

"What did the corporations do with that money? They paid salaries to executives no one had ever heard of before. They went on a binge of buying up other companies -- mergers and acquisitions -- bringing huge profits also to the financial sector that handled all the proliferating profits, bonds connected to mergers, initial stock offerings of new companies, and so on.

"And most importantly, banks and large companies discovered a very profitable way to use their new, huge profits: They would lend the money to the employees. The way the employees could raise their consumption when their wages didn't go up anymore was to borrow back from their employers a portion of the extra profits that their frozen wages made possible. Personal debt has zoomed up. So you have an economy built on a house of credit cards.

We Go Into Debt to Stay Afloat

"To understand the American economy in the last 30 years amounts to this: Employers no longer raised the wages of their workers. Instead, they lent them the money. 'Instead of raising the wages of my workers, I lend them the money, which they have to pay me back -- with interest! Isn't that better than paying them more wages?' In this way, the rich got much richer while the majority fell ever further behind, building toward today's economic crash.

"What the Obama administration as well as most of the Democrats and Republicans in Congress fear to admit is that this isn't just a crisis of Wall Street. We've run out of ways to keep this going, the wages are not going up and the credit is now tapped out. It's not a 'financial crisis' -- finance is just the symptom -- it's a crisis of the fundamental structure of the economy."

In his talk to Wall Street today, President Obama said “hear my words: We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.”

But there are many, like Wolff, who believe that the system needs a total overhaul, not quick fix. In his book, Agenda for a New Economy, David C. Korten tells us “Why Wall Street Can’t Be Fixed and How to Replace It.”

Here’s what you can do:

1. Stop confusing money with wealth.

Wall Street is all about making more and more money. Since the primary way to make more money is to create more debt, we create a system based on false needs. “Spending trillions of dollars trying to fix Wall Street,” says Korten, “is a fools errand.”

2. Understand that real wealth is about meeting our human needs.

Main Street is where real needs are met. Satisfaction of real needs involve such things as having healthy, happy children, loving families, caring communities, and healthy, beautiful, natural environments.

3. Bring human consumption into balance with Earth’s natural systems.

We can no longer continue to use up Earth’s resources—clean air, water, fish, soil, etc—and pretend that there are no limits. Continued consumption and growth on a finite planet is a cancer, not life.

4. Share our limited resources more equitably.

No society can sustain itself where there are great discrepancies between “haves” and have-nots.” Having a health-care system where the wealthy live, but poor people die is not sustainable. Having a world where rich countries take more than their share of the Earth’s resources while the poor countries get more than their share of pollution and waste is not sustainable.

5. Recognize that the free market offers false freedom.

The term free market is really a code word for a system that allows a few people rich people the freedom to consume and monopolize resources for personal gain free from accountability for the broader social and environmental consequences.

6. Join together in creating a new story for a new future.

We need to create a new story where we recognize that we are all partners on the planet and must live in balance with natures laws, not the artificial dictates of Wall Street. For more information:

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