Friday, May 15, 2009

(TALKZIMBABWE) Beware of naked capitalism!

Beware of naked capitalism!
Obert Gutu - Opinion
Thu, 14 May 2009 03:18:00 +0000

GLOBALLY, the inevitable demise of capitalism has been witnessed. It is not an accident that capitalism collapsed. Capitalism had fatal and life-threatening defects right from its birth as a refined version of feudalism. Its collapse, therefore, was a matter of when and not whether it would come tumbling down.

Any mode of production that slavishly advocates the maximisation of profit at whatever cost is inherently primitive, immoral and not sustainable in the long run. Put differently, the fanatical pursuit of profit as an end in itself became the greatest Achilles’ heel of naked capitalism.

Thus, for relatively new and emerging nation states such as Zimbabwe there are a number of valuable lessons to be learnt from the recent collapse of capitalism.

Capitalism was essentially put in place in order to benefit very few people at the perpetual expense of the majority.

This is the main reason why naked capitalism will invariably create a few super-rich billionaires amidst millions of toiling and struggling working class people.

Even in those countries where naked capitalism held sway; such as in North America and large parts of Europe, the majority of the people are destined to remain as workers whose whole lives revolve around the incurring of debts and the payment of bills.

Though apparently comfortable from the outside, the lives of these people are in reality a misery because they are eternally burdened to serving both long-term and short-term financial obligations such as house mortgages, utility bills and credit card debts.

No doubt, millions of the inhabitants of the so-called First World are virtual slaves to the system called naked capitalism.

They are mercilessly caught up in a system whereby only very few of them can liberate themselves from the agony of debt during the greater part of their productive lives.

This is the main fallacy of capitalism.

It will exude a semblance of affluence and prosperity from the outside but if one cares to look more closely, you will realise that this is fake because naked capitalism actually produces very few genuinely wealthy people and millions of patently poor people who are misled into believing that they are affluent because capitalism gives them access to loans, and in the process enslaves them for life.

Zimbabwe abounds with both natural and human resources.

I am reliably informed that we have, around the Bikita area, the world's second largest reserves of lithium; a very strategic natural resource especially taken into account the need for the world to look for renewable and more sustainable energy resources.

We have platinum that is currently worth more than gold in terms of value.

We have gold, diamonds and several other very strategic minerals. We have excellent soils suitable for agriculture combined with a beautiful tropical climate.

If we efficiently harness all our resources, ensure good governance and respect for private property rights, Zimbabwe will no doubt scale dizzy heights in the next decade or two.

But then we have to learn some very tough lessons from the demise of capitalism.

We should not structure our economic policies in a manner that will give rise to the emergence of a few billionaires in a sea of indigent peasants and workers.

In other words, Zimbabwe should not seek to re-invent capitalism in the sense that we knew it prior to its global collapse.

It is not in dispute that the United States of America epitomised capitalism in its most robust form.

For all its rabid demonisation of communism and socialism, America has not yet publicly acknowledged that capitalism has also collapsed.

We have also not been given a concise and honest explanation as to what exactly caused the collapse of naked capitalism.

The symptoms of the collapse of capitalism in the United States are chilling.

So far this year alone, more than 500 000 workers have lost their jobs.

Thousands of laid-off workers have failed to service their mortgages and as a result, many mortgages have been foreclosed rendering thousands of people homeless.

Long-awaited results of the US government’s stress test of 19 major banks show that nearly all of them are not in very good financial health. In fact, some of these banks are on the verge of collapse. Most of these banks will require additional capital in order for them to remain afloat. And we are talking of big banks here.

Although Bank of America and Wells Fargo do not need more money, they will be required to strengthen their reserves by converting tens of billions of dollars of other forms of capital to common equity.

Bank of America will need to increase these capital holdings by about US$34 billion and Wells Fargo by US$15 billion. Citigroup is the weakest of America’s banking giants and it requires US$5 billion in new capital. The only financially healthy bank so far in the United States is JP Morgan Chase; who will not require additional capital, thus paving the way for the bank to repay the government’s investment.

This clearly proves that even in America, the world’s largest economy worth about US$15 trillion dollars, naked capitalism has been fatally wounded.

It is worth noting that the world’s second largest economy, Japan, with a net worth of about $5 trillion, has also not been spared by the collapse of capitalism.

The American economy is in severe recession.

On Wednesday May 6, 2009, the American Senate approved a Housing Bill aimed at addressing the country’s growing foreclosure problem, including revamping a troubled government programme to prevent foreclosures.

The motor vehicle manufacturing industry is also in turmoil.

General Motors is on the verge of filing for bankruptcy although it has borrowed US$15,4 billion from the US government in the past six months.

Besides presently operating on a tax-payer funded lifeline, General Motors says it still needs up to US$30 billion to prevent collapse.

Such are the chilling statistics of the collapse of capitalism in corporate America.

But then some die-hard capitalists never learn.

Amidst all this financial mayhem and the laying off of thousands of workers in the US automobile manufacturing industry, General Motors, Chrysler and Ford executives flew on private jets to Washington to ask for government aid last year! And as if this was not enough, General Motors entertained 500 of its biggest customers at a luxury spa and golf course in Arizona last week.

General Motors shipped 150 cars and trucks to the event at the Sheraton Wild Horse Pass Resort & Spa and paid for airfare and hotel lodging for 90 percent of the guests.

This just goes to show that die-hard capitalists do not particularly care about the suffering of the majority of the retrenched workers.

Zimbabwe should avoid adopting an economic blue-print that will inevitably create two classes of people; a few super-rich individuals and a majority of indigent and debt-cripplled citizens.

After perusing the Short-term Emergency Recovery Programme document, I was left convinced that the Minister of Finance and his team have started on a correct footing and here is hoping that the long-term economic blueprint will also take note of the vagaries of pursuing naked capitalism.

I am not anti-business. All I am stating is that business without a sense of morality, humanity and fairness is inherently unsustainable.

I am not mourning the death of naked capitalism.

Obert Gutu is the Senator for Chisipite, Harare.

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