End of History Economics Essay

The set of short essays in question–compiled into a single essay by Foreign Policy–states the facts correctly about the current economic depression (they refuse to call it that, they opt for the less alarmist term of â€Å"recession†). But merely stating the facts correctly completely misses the point. Most couch-potato news junkies already know everything that is present in this essay. But that’s exactly the point: the essays in question here cover up more than they reveal. Their job–or so it seems–is to calm a public that might begin to ask fundamental questions about capitalism and globalization. The facts are clear: the structures and attitudes behind the facts are not. This is the purpose of this review. The facts are the following: that the economic depression will continue. Due to globalization, a depression or recession is not merely American or western, but it is global. Many economies in the developing world, through pressure from the US and the IMF, have linked their economies to the US market, which means, as a result, to the US dollar. These economies are talking given the fall in American consumer spending. The dollar has been wildly overvalued in recent years, but, in a recession of global proportions, running to the dollar for protection seems to be a popular–albeit irrational–option. The increase in the value of the US dollar means several things. On top of the already deep depression, food prices will begin to go up. This is social disaster, and not just for the US. Rises in food and transport mean that millions of economically marginal families will go into permanent decline and default. It means that the families that have already seen their homes foreclosed and dreams dashed will not be able to recover. As banks no longer lend as much, investment and spending are choked off, making recovery that much harder. The conclusion of all this is that the depression is here to stay. But the very last thing the writers in this essay want to deal with are the structural reasons for this decline and its global scope. The objections to the approach of this essay will now follow: 1. Not a single one of these writers mentions the word â€Å"gold. † For a long time, prices of gold have skyrocketed. The reason is not hard to see: gold is stable, it retains its value, it is a universal signal that something is not right with the globalist economy. God is a safe investment, far more safe than the dollar. But apparently, this is invisible to the authors. 2. The above authors have adeptly avoided the basic structural issues at work. a. First, that the basic contradiction in American capitalism is that excess production needs to be continually mopped up by wild consumption. As a result, American capital has gone insane in hiring PR firms and advertising agencies to create demand. b. The global economy is dependent on this artificially expanded and inflated demand, since these economies are export oriented, and that is economic code for â€Å"dumb Americans need to go into debt. † Without constant and deepening debt, the production not merely of American firms, but also the economies of the development world (largely shaped by American financial and political power), cannot sell their wares to the US and EU markets. c. Therefore, the basic contradiction is clear: debt drives the economy, but debt cannot last forever or get infinitely deeper. Therefore, global depressions and radical structural â€Å"re-adjustments† are a â€Å"normal† part of economic life. Put more succinctly, the entire artificial creation of demand is a scam designed to make a handful wealthy, while the remainder of the population drown in debt. Such a situation can only but deepen the already outrageous distinctions among classes in American and European life, as the majority default, while the liquidity becomes more and more monopolized by an oligarchy. The money here is not â€Å"lost, it merely changes hands. Well then, who now has it? The question is not even brought up, let alone answered. Money in these things is never â€Å"lost,† gone down some financial black hole: it changes hands. But the political and social implications of such a question cannot be realistically dealt with by major establishment publications such as FP. 3. But it gets worse: the contradiction in the relations between consumption and debt at the root of the economy is also related to the US dollar and its foreign holdings. Stephen Roach reminds American readers that home construction and personal consumption make up a whopping 80% of the US GDP. This means that no amount of â€Å"restructuring† can deal with the contradiction above. The contradiction lies at the very heart of the US economy and the global system, itself fashioned by the US. But its relation to the dollar is another matter. Most major trading states with the US such as China, South Korea or Saudi Arabia have been stocking dollars for decades for the purpose of facilitating trade with the US as well as maintaining a safe investment. But this is a major crisis that is closely connected to the credit contradiction, and the fact that it is avoided in the article mentioned cannot be an accident. The major trading partners of the US have trillions of liquid dollars in its banks. If the dollar weakens, or is replaced by the Euro for global trade, or that financial markets become regionalized (e. g. locally dependent on the Yuan or ruble), that liquid remains relatively worthless in foreign banks. Therefore, if the American economy is no longer the market of choice, due to the fact that credit cannot be extended any farther, then those now useless dollars will be ejected. That ejection, even by the most optimistic economist, can only means not merely the collapse of the US economy, but the collapse of the globalized economy as well. The notion, common to all the above authors, that the economy will eventually â€Å"recover† is a matter of dogma: it is not argued, merely assumed. But this is an assumption with a strong base. It is assumed because the alternative in unthinkable: a restructuring of the global economy based on regional or national lines, based around local production and occasional import substitution. Most economists are not even trained to handle such contingencies, and it is just not part of their vocabularies. But it is a necessity if the global recession turns into a major depression, and national states and regions begin being forced to protect their own populations instead of being part of the IMF/US led global economic system, where the irrationality of the American consumer and the amoral manipulation of the American elites mean the destruction of families and societies across the globe. They assume that globalization is â€Å"inevitable† and morally correct, and hence, that there is no other option. Theirs is the infamous â€Å"end of history† thesis of the official American ideologies at George Mason University: American empire is providential and has been crated by the â€Å"forces of history. † All moral problems have been solved and liberal democracy, anti-nationalism and globalism are here to stay. The subconscious acceptance of this fantastic view of history and American life colors all establishment writing on this subject. There is no real connection between university based economics and the average American. The former does not write for the latter, but for the system as a unit, more and more isolated from the average American family. Therefore, the question here is not merely an economic one, but a political one: there are now two Americas: the wealthy elite, university professors and TV talking heads on the one side, and the vast bulk of the (globe’s) population, on the other. They live two different lives: one suffers for the enrichment of the other. The global economy will not â€Å"bounce back,† as the nature of the current recession is built right into its assumptions and maxims. The job of modern economics, or so it seems, it to make sure that the average American consumer does not know that.