Friday, May 30, 2014

Nick Beams — Financial Times’ attack on Piketty under fire

[Christine] Lagarde told the conference that progress in building a safer financial system was being held back because of “fierce industry pushback” against the introduction of new regulations. 
[Mark] Carney went much further, warning that the entire capitalist system is at risk. Unbridled faith in financial markets, corruption and rising inequality had damaged the “social fabric,” he said. Inequality was “demonstratively” growing and risked undermining what he called the “basic social contract” based on fairness.

“We simply cannot take the capitalist system, which produces such plenty and so many solutions, for granted,” he declared. “Prosperity requires not just investment in economic capital, but investment in social capitalism.”

Unchecked market fundamentalism, he warned, could “devour the social capital essential for the long-term dynamism of capitalism itself.”

In its editorial on Piketty, the Financial Times asserted that if there were problems in the accumulation of extraordinary wealth derived from “monopoly profits,” then “enlightened governments” should step in and “remove barriers to entry so that unfair rents disappear.”

In other words, let the “magic of the market” and competition do their work in lessening inequality.

The fundamental flaw in this analysis was exposed by Marx more than 160 years ago. As he explained, the very aim and logic of competition is not more competition, let alone fairness, but the creation of monopoly as “one capitalist kills many.” [economies of scale]

The present economic situation, in which a few dozen major banks and transnational corporations monopolise and dominate the world economy, providing ever greater wealth to the ruling corporate and financial elites and their hangers-on, is precisely the outcome of the “free market” and competition.

The FT’s attack on Piketty is an attempt to deal with social inequality and its explosive political consequences by denying it.

Carney has decided to follow a different course in an attempt to head off deepening opposition and hostility to the capitalist system.

He is calling on the very financial interests that have plundered the wealth of society for their own benefit to undergo a miraculous transformation and become more socially responsible, in order to prevent political and social upheaval. Both efforts are doomed to failure as social reality brings an intensification of the class struggle.
WSWS
Financial Times’ attack on Piketty under fire
Nick Beams

1 comment:

Dan Kervick said...

Worth pointing out that Piketty doesn't think the problem is just monopoly profits.