Almost like a New Year's gift, an article by one of my favorite economics writers, Marxist economist Richard Wolff, appeared at the Common Dreams website yesterday. Titled "2011: Calling Time on Capitalism," the article goes directly to the fundamental flaw at the heart of free-market fundamentalism and trickle-down economics: it doesn't work.
Half a century's worth of economic data have shown that shifting the tax burden from corporations and the wealthy and increasing wealth inequality have only led to lower growth. The fantasy of lower taxes on the wealthy creating jobs and economic growth--a fantasy most recently revived in the failed debate about extending tax cuts to the richest one percent--turns out to be just that: a fantasy, and one that has dragged us through one economic crisis after another.
Wolff says it's time to talk about the emperor's nakedness. Here's how he concludes his piece:
"Republican and Democratic politicians alike dare not link this crisis to an economic system that has never stopped producing those "downturns" that regularly cost so many millions of jobs, wasted resources, lost outputs and injured lives. For them, the economic system is beyond questioning. They bow before the unspoken taboo: never criticize the system upon which your careers depend.
Thus, this crisis and its burdens will continue until capitalists see sufficiently attractive opportunities for profit to resume investing and hiring people in the US as well as elsewhere. The freedoms of US capitalists to gain immense government supports as needed, and yet to invest only when, where and how they can maximize their private profits are paramount: the first obligations of government. The freedoms from want and insecurity for the US people remain a distant second priority – until mass political action changes that.
In good times, as in bad, capitalism is a system that places a small minority of people with one set of goals (profits, disproportionally high incomes, dominant political power, etc) in the positions to receive and distribute enormous wealth. Those people include the boards of directors that gather the net revenues of business into their hands and decide, together with the major shareholders in those businesses, how to distribute that wealth. Not surprisingly, they use it to achieve their goals and to make sure government secures their positions.
No Keynesian monetary or fiscal policies address, let alone change, how that system works and who uses its wealth to what ends. No reforms or regulations passed or even proposed under Obama would do that either. To avoid the instability of capitalism and its huge social costs requires changing the system. That remains the basic issue for a new year and a new generation. Will they break today's version of a dangerous old taboo: never question the existing system?"