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Chapter 1

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Philosophy 3810F/G
Steve D' Arcy

CALLINICOS CHAPTER ONE CAPITALISM AGAINST THE PLANET WHAT’S THE PROBLEM  Liberalization of trade and investment of the past two decades has generated rapid economic growth  Relentless widening of global inequality that has occurred in the heyday of the Washington Consensus  Growth: the fall in economic growth rates was most pronounced and across the board for all groups or countries  Life Expectancy: Progress in life expectancy was also reduced  Education and Literacy: progress in education also slowed during the period of globalization  Output growth per head actually fell during a period when free-market orthodoxy would predict the opposite  Economy has yet to return to the growth rates it achieved during the Golden Age  Adopt radical free-market reforms that would allow them more closely to approximate the Anglo-American model of laissez-faire capitalism  Trouble comes, not from capitalism itself but from a particular set of misguided policies being pursued by Western governments and the international financial institutions  These concentrate in the first instance on the workings of capitalism as an economic system  Rebellion against the process of commodification that has been accelerating since the neo-liberal hegemony was established  Wholesale privatization of public assets and services that has spread like a cancer around the world  Washington Consensus profits from the rundown of the state sector FINANCIAL FOLLIES  Asian financial markets has greatly increased global economic instability  Size of globally integrated financial markets  National governments have become much more vulnerable to the international bond- market  The increasing dominance of investment decisions by stock markets  The rapid growth of speculation in increasingly complex financial derivatives  The US boom of the late 1990s  The representation of financial markets is one factor in undermining resistance to their negative consequences  Defenders of the Washington Consensus tend to represent these crises as consequences of the cultural and institutional defects of the afflicted societies  Bankers tend to denounce as moral hazard by encouraging investors to undertake even more risky ventures in future  Efficient Market Hypothesis: when shares become publicly known in an open market, the value which they acquire may be regarded as the judgement of the best intelligence concerning them  Financial markets are not self-correcting funding historically high levels of welfare spending helped to perform this stabilizing function – it was the very high level of arms expenditure that was mainly responsible for the long period of economic growth that Western capitalism enjoyed after the Second world war THE PERPETUAL MOTION MACHINE  Marx claims that capitalism has two fundamental features  The exploitation of wage-labor and the competitive accumulation of capital 1. Marx insists that class antagonism defines capitalisms very nature 2. Profits sought by capital derive from the labour workers they employ 3. Marx’s theory of surplus value historically situates capitalism with respect to earlier class-based modes of production 4. Workers who are the source of creativity under capitalism 5. The theory of capitalist exploitation indicates the limits of the system  Marx offers a structural theory of capital accumulation: the impulse to accumulate  Seeing capitalism as a system of competitive accumulation helps to explain its trajectory  Productivity-enhancing investments expand the productive powers of humankind  The development of the productive forces makes capitalism constitutively liable to crises  Profit causes capitalists to stop investing and thereby precipitates the economy into a recession
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