Tuesday, July 17, 2018

Obama's Speech and the Possibility of "Inclusive" Capitalism



Former President Obama's speech today delivered in South Africa is worth reading in its entirety.

The speech contains many truths that i can agree with, but one fundamental contradiction emerges between (1) his valorization of inclusive capitalism and (2) acknowledged institutionalized power relations that erode true inclusiveness in addition to the rule of law:
Remarks by President Barack Obama at the 2018 Nelson Mandela Annual Lecture
July 17, 2018
Johannesburg, South Africa https://chicago.suntimes.com/columnists/transcript-obama-mandela-speech-strange-and-uncertain-times-that-we-are-in/

... So we have to start by admitting that whatever laws may have existed on the books, whatever wonderful pronouncements existed in constitutions, whatever nice words were spoken during these last several decades at international conferences or in the halls of the United Nations, the previous structures of privilege and power and injustice and exploitation never completely went away. They were never fully dislodged
Can capitalism be free of these corrosive power relations, or at least move in that direction?

One would have thought the 2007-2008 financial crisis, the worst since the Great Depression, would have prompted reforms necessary for the sustainable and value-laden capitalism Obama supports.

But, instead, we see today that the wealthiest and the poorest are increasingly polarized with financial profits controlled by a smaller and smaller slice of global firms, mostly (but not entirely) in the financial services arena and to a lesser extent in energy, high-technology and retail services.

Bank profits relative to household income are a good indicator of whether capitalist ownership is becoming more inclusive or more exclusive and the data support the latter interpretation as bank profits heat up while personal income stagnates:
Emily Glazer & Christina Rexrode (2018, July 14-15). Economy heats up profits at big banks. The Wall Street Journal A1, A2
•JP Morgan Chase & Co. and Citigroup Inc posted double-digit profit increases for the second quarter as businesses and consumers showed confidence in stronger economic growth by borrowing more…
•JPMorgan profits of $8.3 billion, up 18% from a year earlier
•Citigroup’s profit rose 16% to #$4.5 billion
Concerned that banks are not earning quite enough, the new Federal Reserve Chairman has launched a new set of tools to control interest rates by paying banks interest on the funds they deposit with the Fed:
N. Timaros (2018, July 14-15)Fed Defends its use of new tools. The Wall Street Journal A2
This is another tactic aimed at providing the banks free capital, allowing them to finance mergers and acquisitions, which are booming, and to purchase up capital in the economy. For example, several days ago I posted a discussion of how financial firms gobbled up real-estate, transforming former owners into renters and raising real-estate pricing out of bounds for many first-time homeowners.

Meanwhile, the average US citizen has not seen any increase in their real earnings over the last year:
Kiernan, Paul. (2018, July ). Surging Prices chip away at wage gains by workers. The Wall Street Journal, A1-2.
So, the type of inclusive and sustainable capitalism Obama elevates doesn't seem to be happening here.

I'm not recommending some alternative economic social organization per sec but rather pointing to fundamental contradictions in the promise and operations of a globalizing system whose operations are controlled by a relatively small number of firms for the benefit of a relatively small number of the world's populations.



3 comments:

  1. Apparently black South Africa has been threatening the white farmers and some have been killed. Now some have gone to Russia which needs some good farmers. The EU refused their request for asylum. Not being a fan of Obama hearing a few sentences of what sounded like another set of falsehood, I traveled elsewhere. His remarks aren't his really. They are airy idealistic coming through someone who has quite a keen eye for money and who got rich somehow by being president.

    Watching a recent video of South Africa and its dire water problems I also saw a place that would be dear to Maxine Waters heart as there she could foment some real trouble and be appreciated for it apparently.

    "[T}he previous structures of privilege and power and injustice and exploitation never completely went away" -- which is why Obama supported Hillary Clinton? Obama just flows along with the occasion. Whether Mandela was a great man or just a con man I do not know. Probably a mixture of the two. South Africa is no better now than it was during apartheid and perhaps will soon be worse.

    ReplyDelete
  2. https://www.counterpunch.org/2018/07/17/trump-kills-science-nature-strikes-back/

    ReplyDelete
  3. Bill Browder? 400 million? A credible source of news?

    ReplyDelete