user preferences

The Periodic Crises of Market Economies

category north america / mexico | economy | opinion / analysis author Sunday October 12, 2008 04:13author by Randy (personal capacity) - supporter of the Captal Terminus Collective, NEFAC Report this post to the editors

The US economy is in crisis. Construction has halted and credit is scarce. Companies remaining in business slash their workforces. The stock market is turbulent, even as Congress bails out the bankers. (Meanwhile, working homeowners and renters are left to fend for ourselves, indeed to finance the bailout of the banks.)

How serious is the damage? Will this turmoil prove temporary, or do hard times stretch before us to the horizon? Opinions vary, but the careful reader more attuned to human psychology than economics* might get a clue from the pages of mainstream news reports...

Depression era billboard
Depression era billboard

Corporate news outlets are careful to avoid alarmist tones when reporting on economics, lest they cause panic in the marketplace. Yet, for the first time in memory, parallels are being drawn between current events and those that preceded the Great Depression of the 1930's.

What caused this most recent crisis? At the risk of oversimplification, we may say there are three broad schools of thought. The most common view, what we will call the liberal view, is that the "free market" is mostly a good thing, but government intervention is necessary to dampen the extremes of the inevitable ups and downs of the business cycle, to offset the more brutal consequences thereof, and pacify the necessary layer of the unemployed.

Conversely, laissez-faire economists claim that markets are infallible, and government intervention the enemy. This view is most common among the wealthy, who employ the ideology to justify such policies as cutting social services. (However, such types are quick to jettison "free market" ideology when convenient. See the previously mentioned bailout of the banks, which, after some posturing, is being supported by the very politicians who delight in bashing Big Government.)

And finally, there is the view that while the worst extremes of the business cycle may in fact be damped out or even delayed by various policies, the nature of the market is such that periodic collapses will occur, regardless.

Which of these views does history lend credence to? Laissez-faire theory is easiest to debunk. Again, its own proponents don't consistently accept its tenets! Witness President Bush, who preaches free market religion to China and the world, even as he scrambles to secure government assistance for his cronies in the banking and energy businesses. Aside from such blatant hypocrisy, US history prior to the regulated market is a tale of boom and bust, of one period of unbridled expansion followed by yet another recession or depression, ad infinitum.

Until recently, the liberal position appeared more tenable. A reasonable person might be forgiven for believing that society had indeed arrived at the end of history, that practitioners of the dismal science, economics, had succeeded in taming the business cycle. After all, there had been no calamity to rival the Great Depression since the 1930's. The late 70's saw a severe recession, and many folks lost their savings when the tech bubble of the 90's burst, but these circumstances paled against the soup lines of yesteryear. Extremists of both left and right were thought discredited, irrelevant within the new social order, throwbacks to an era dead and gone.

But as the mortgage crisis becomes the market crash, and as the current recession threatens to deepen into a depression, one can only conclude that the savage nature of market economics has not changed significantly. Market economies, local and global, with or without government intervention, have proven as great a failure as the so-called Communism of the former Soviet Union. So long as we live in a society that worships at the altar of exchange, that allows one class to purchase the hours of the lives of another, that values profit above the well-being of humans and humanity, for just so long will these crises periodically recur. In the best of times, the rule of the wealthy is cruel and degrading. In times such as these, it is intolerable.

In the coming months and years, we may expect an increase in the scapegoating of immigrants, religious fundamentalism, perhaps even a resurgent fascist movement in new clothing, financed by the right wing of our rulers. Meanwhile, people of conscience will turn to the left, in search of a sane, humane structure for a new society. Which side will you take?

For several years now, the Capital Terminus Collective has argued for an end to government and market economies, and in their place a global federation of self-managed communities, with fields and industries belonging to all. We are not pleased to see the current chaos and impending misery. But we think it inevitable under capitalism. The need for a new social order has never been greater.

*- An excellent economic analysis examining derivatives in the post-Keynesian world is Paul Bowman's *Financial Weapons of Mass Destruction* on at

Related Link:
author by Ilan S - AAtW ainfospublication date Sun Oct 12, 2008 19:44author address Tel AvivReport this post to the editors

Long long years ago capitalists owned the capital they apply for their businesses. As results of the concentration of capital, and change in the structure of the capitalist class, more and more capital is managed by smaller and smaller number of businesses. As result - the financial system mediate between the owners of savings and small capitalists and the big firms.

As the power of the two sides is not equal, we see smaller percent of profits to the smaller holder of capital.

The huge increase of profits resulting from the neo-capitalism and globalization, increase immensely the load and role of the international financial system.

We also see long term investments of capital based on shorter term credit (which is cheaper).

In addition, special to the present crisis, we see the haphazard credit for homes in US mainly in procedures that were sure to make a short live bobble with imminent disaster under the nous of the central authorities.

As result of the exploding of the "subframe mortgages" bobble, on the back ground of US chronic budget deficits and speculative mounting of prices of oil, and other commodities, the flow of capital through the financial system was abruptly slowed down.

It will take lot of efforts to make the flow of capital (and credit) to return to normal. It will involve lot of adjustments as well as significant increase in the concentration of capital, and change in balance of power among holders of big capital inside and outside US.

author by Anarchopublication date Thu Oct 16, 2008 16:40Report this post to the editors

I've been writing articles on the crisis which people may find of interest. They can be found here:

Latest post is on Paul Krugman getting the so-called Nobel prize for economics, but there are plenty of others of the credit crunch and related developments (plus lots of other things).

Related Link:

This page has not been translated into Català yet.

This page can be viewed in
English Italiano Deutsch

Front page

(Bielorrusia) ¡Libertad inmediata a nuestro compañero Mikola Dziadok!

DAF’ın Referandum Üzerine Birinci Bildirisi:

Cajamarca, Tolima: consulta popular y disputa por el territorio

Statement on the Schmidt Case and Proposed Commission of Inquiry

Aodhan Ó Ríordáin: Playing The Big Man in America

Nós anarquistas saudamos o 8 de março: dia internacional de luta e resistência das mulheres!

Özgürlüğümüz Mücadelemizdedir

IWD 2017: Celebrating a new revolution

Solidarité avec Théo et toutes les victimes des violences policières ! Non à la loi « Sécurité Publique » !

Solidaridad y Defensa de las Comunidades Frente al Avance del Paramilitarismo en el Cauca

A Conservative Threat Offers New Opportunities for Working Class Feminism

De las colectivizaciones al 15M: 80 años de lucha por la autogestión en España

False hope, broken promises: Obama’s belligerent legacy

Primer encuentro feminista Solidaridad – Federación Comunista Libertaria

Devrimci Anarşist Tutsak Umut Fırat Süvarioğulları Açlık Grevinin 39 Gününde

The Fall of Aleppo

Italia - Ricostruire opposizione sociale organizzata dal basso. Costruire un progetto collettivo per l’alternativa libertaria.

Recordando a César Roa, luchador de la caña

Prison Sentence to Managing Editor of Anarchist Meydan Newspaper in Turkey

Liberación de la Uma Kiwe, autonomía y territorio: una mirada libertaria para la comprensión de la lucha nasa

Misunderstanding syndicalism

American Anarchist and Wobbly killed by Turkey while fighting ISIS in Rojava

Devlet Tecavüzdür

Attaque fasciste sur la Croix Rousse et contre la librairie libertaire la Plume Noire

North America / Mexico | Economy | en

Wed 26 Apr, 02:24

browse text browse image

120917124939chicagoteachersstrike02horizontalgallery.jpg imageThe Chicago Teachers Strike and the Privatization of a Generation 06:42 Wed 26 Sep by John Jacobsen 0 comments

John Jacobsen reports on developements in the contract negotiations between Chicago Public Schools and the Chicago Teachers Union in the context of public school closings and the rise of charter schools. [Italiano]

g20clac.jpg imageResisting the G20 18:15 Wed 07 Jul by Secrétariat externe UCL 0 comments

The UCL wishes to salute the courage of all those people, radical or not, who dared to challenge the climate of terror created by the State and who took part in the protests against the G20 Summit in Toronto. [Français]

manif1eravril.jpg image15 000 people against the budget in Montreal 11:25 Sun 04 Apr by Secrétariat aux relations extérieures 0 comments

On 1 April 2010 some 15,000 people filled the business district in Montreal at the invitation of more than 95 organizations of unions, feminists and students. Was this was the first stage of a unified response against the Liberal budget ? Only time will tell. In any case, it was a beautiful demonstration of the great popular procession type, very diverse , unified and combative (at least at the level of rhetoric...).


poster.jpg imageWorkers Without Bosses - Ontario/Quebec Speaking Tour 10:08 Thu 21 Jan by Common Cause 0 comments

We are going through one of the worst economic crises in the history of capitalism and the answers provided by the state and its lackeys are illusory. In addition, faced with this impasse, our leaders are trying to shift the entire burden of the crisis to workers and their communities.


usinessanspatron.gif imageFactories without bosses (Take 2): 12:58 Sun 03 Jan by Secrétariat 0 comments

We are going through one of the worst economic crises in the history of capitalism and the answers provided by the state and its lackeys are illusory. In addition, faced with this impasse, our leaders are trying to shift the entire burden of the crisis to the workers.


secutiry.jpg imageCanada gears up for SPP protests 06:11 Fri 17 Aug by Andrew 0 comments

On August 20-21 Canada's Prime Minister Stephen Harper meets in secret with George Bush and President Felipe Calderon of Mexico at Montebello, Quebec as part of the Security and Prosperity Partnership (SPP). The SPP has as a goal the elimination of differences on standards between the USA, Canada and Mexico. Under this process Canada is already raising the quantities of pesticide residues that are allowed to be on food

textUSA minimum wage at seventy year low! 18:38 Fri 04 Nov by Anarcho 4 comments

During the Great Depression of the 1930s, unskilled and non-unionised workers got $7.89 per hour in today's money. In other words, the Republican politicians have decided that America's workers should get a minimum wage 35% lower than workers 70 years ago

imageCrisis and Revolt Sep 28 by Wayne Price 0 comments

Liberals and progressive forces support the Democratic Party in elections, even though humanity is facing a number of interconnected threats and nightmarish catastrophes: economic, ecological/climate, and others. Democratic liberals, while perhaps the "lesser evil" to the Republican reactionaries, have no solutions to the objective dangers which threaten society with great suffering and destruction. The only real alternative is popular mass struggle or defeat--socialist-anarchism or catastrophes.

imageThere’s No Hope Above Us, Only Amongst Us Nov 22 by Thomas 0 comments

With the recent re-election of Barack Obama as President of the United States, many are rejoicing and breathing a sigh of relief. There’s a widespread belief amongst those who elected him that he is looking out for us and will fight for us. Unfortunately, besides a few token gestures that may occur during the next four years, his tenure in office is likely to be both a disappointment and one in which the interests of the elite classes are served at the expense of the popular classes. As described below, this has to do with structural, historical and social factors that have been ensuring, and continue to ensure, that this is the case regardless of who is in office. However, there is hope; we’re just looking for it in the wrong places.

image[US] Of Budget Cuts and Union Officials Jun 14 by John E Jacobsen 0 comments

The official business union strategy of supporting the Democratic Party falls flat on its ass... again. [Italiano]

textReflections on Stiglitz article: "Of the 1%, by the 1%, for the 1%" Jun 03 by Thomas 0 comments

A family member of mine recently sent me an article from Vanity Fair by economist Joseph Stiglitz about the problem of elite control within the United States.  While it's refreshing that the article is talking about the problem to a mainstream audience, it stops short of delving deep enough the problem at a systemic level, and perhaps more importantly: doesn't address the need for complete systemic change.  The broader points that Stiglitz brings up are also supported by the Economic Policy Institute - an economics resource that has some great research reports on the topic of how government policy has favored the elite - including: a report showing how the budget cuts proposed in comparison to the tax cuts given and another showing how recently all economic gains have gone to the top 10% (with over 75% of those gains going to the top 1%). 

imageWall Street Already Finding Loopholes in Financial Reform Legislation Nov 17 by John E Jacobsen 0 comments

Continuing in the tradition of watered down, pro-corporate legislation that the Obama administration is becoming infamous for, new reports are surfacing that banks and financial institutions may continue to get away with the same risky trading and investment practices that landed us in a recession.

Like the watered down health care reforms, or the pathetic Credit Card Act, the recent Dodd-Frank financial regulations signed into law by Obama are quickly showing themselves to be more or less useless for American workers.

more >>

imageResisting the G20 Jul 07 Union Communiste Libertaire 0 comments

The UCL wishes to salute the courage of all those people, radical or not, who dared to challenge the climate of terror created by the State and who took part in the protests against the G20 Summit in Toronto. [Français]

imageWorkers Without Bosses - Ontario/Quebec Speaking Tour Jan 21 0 comments

We are going through one of the worst economic crises in the history of capitalism and the answers provided by the state and its lackeys are illusory. In addition, faced with this impasse, our leaders are trying to shift the entire burden of the crisis to workers and their communities.


imageFactories without bosses (Take 2): Jan 03 Union communiste libertaire 0 comments

We are going through one of the worst economic crises in the history of capitalism and the answers provided by the state and its lackeys are illusory. In addition, faced with this impasse, our leaders are trying to shift the entire burden of the crisis to the workers.


© 2005-2017 Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by [ Disclaimer | Privacy ]