Re: Is capitalism reformable [Riesz]

1/29/2001, Paul Riesz wrote:
    > I am pleasantly surprised, that you are willing to listen
    to arguments that are contrary to some of the views, you
    have been promoting very actively during a long time.


I've been trying to practice harmonization. (:>)

Here are your primary principles:
    1. Reduce the influence of wealth on decision making.
    2. An increased role of government in the economy.
    3. Elect representatives to international organizations...
       who understand that globalization must distribute the 
       benefits fairly.

These sound very attractive indeed.  Let's suppose that
these kinds of ideas gain wide acceptance, and that
eventually in every nation candidates and parties come
forward, Green/Nader style, supporting these principles. 
Further, let's suppose that all of these candidates and
parties are voted into office on the same day in each of
their nations.  In other words, let's suppose you 'get your
wish'.  What do you suppose would happen next?  A global
champagne party?  Perhaps not.  Consider...

As I'm sure you are aware, only 10% of today's global
wealth is related to the productive economy - production,
trade, etc.  90% of the world's monetary wealth exists in an
electronic world of leveraged speculative transactions. 
Even if many investors would be satisfied with more modest
returns on their investments, the markets as a whole have a
built-in structural requirement for ongoing expansion of the
kind hyper-capitalism has been providing.  If that rate of
expasion is seriously threatened, for whatever reason,
speculative investments will plummet in value, and sell
orders will flood the electronic international markets.  A
universal 'Nader outcome', of the determined nature you
describe, would be _very threatening to hyper-capitalism
(that is your purpose, right?), and the collapse of these
leveraged markets would follow inevitably.  

90% of the world's wealth would be wiped out in that way,
and sell orders would then flood all other markets as
investors sought to salvage something from the wreckage.
Banks would begin to fail, for the same reasons they did in
Great Depression, and this would have a domino effect
causing the insovency of other banks, and finally of central
banks.  Orders would be cancelled, factories would close,
bankruptcies would loom... we'd be threatened with massive
unemployment, unharvested crops, and total economic
collapse.  Obviously our newly elected leaders would need to
take prompt and drastic action.

We could recover from such a collapse - societies have done
that before.  Let's say we do.  If you the propose to retain
capitalism, there would presumably be a lot of flexibility
in how you accomplish that.  At one extreme, we might use
government to get corporations and the economy running
again, and then leave the corporations in the hands of their
stockholders, thus saving the fortunes of our current
wealthy elite.  That was FDR's program, when he faced a
similar reconstruction project.  At another extreme, we
could make all the corporate plants into locally-owned
independent enterprises, competing for profits but under new
enlightened regulations.  We could reimburse stockholders
in some way, but without rebuilding their transnational
corporate empires.

I thank you for this dialog, Paul, and I beg your indulgence
to ask you another question.  If you choose to dispute my
collapse scenario, please explain how the current global
financial system, with its dominant speculative component,
could structurally survive a threat to ongoing high growth
rates.  If on the other hand you are willing to entertain
this scenario, I ask you for your prescription for
reconstruction - summarized in the way you so eloquently did
in your current posting.  Given the kinds of options I have
suggested, what reconstruction program do you think would
start the new society off in the direction you prefer.

regards,
rkm