Capitalism is in crisis, but why?

Aversion toward the rich has had strong roots in Zionism since its early leaders embraced Marxist practices.

Athens protest 311 R (photo credit: REUTERS/John Kolesidis)
Athens protest 311 R
(photo credit: REUTERS/John Kolesidis)
Is capitalism in crisis? Of course.
Masses of youngsters and students are rebelling against it, often for good cause, considering the abuses committed in its name.
But blaming capitalism for the recent crisis is like blaming cars for road accidents.
Those responsible for crises or accidents are people, not capitalism or cars. The recent crisis on Wall Street was due to the rapacious rascals who abused our trust, not to the capitalist system.
Capitalism is the best system we have for producing goods and services, but it is not a moral system. Its moral value is in the freedom from want it gives us, the time and the means to exercise choice, for better or for worse.
Freedom encourages creativity, in economics as in the sciences or the arts. But freedom can be abused.
Without a moral compass, freedom can degenerate into license and chaos, as it did recently on Wall Street.
Many consider the Wall Street crisis to be the ultimate proof of the failure of capitalism. However, the crisis did was not the result of “market failures,” but rather of market distortion by government.
This was the result of two massive government interventions. The first occurred after the crash, when the Federal Reserve flooded the US economy with cheap credit. The second happened when the Clinton appointees who headed the semi-governmental mortgage lenders Fanny May and Freddie Mac created trillions of dollars of worthless mortgages to enable Americans to “own” homes, despite the fact that they lacked the means to pay for them.
These worthless mortgages were used as a basis for the speculation in derivatives that eventually toppled Wall Street’s investment banks and the banking industry generally.
GREED CERTAINLY played a part in the speculative frenzy, but bankers were also forced to pursue unethical practices to stay ahead in a distorted market.
That few resisted the temptation is indeed a moral blot on Wall Street.
But we must also remember that without government intervention the denizens of Wall Street would have not have faced the temptations that led to their transgressions.
As is the case in Israel today, it was the subjection of markets to political manipulation that corrupted both the US economy and politics.
But the haters of capitalism, especially intellectuals, who have been historically envious of money-making “illiterates,” are not impressed by facts.
Aversion toward the rich has had strong roots in Zionism since its early leaders embraced Marxist practices that almost bankrupted the Zionist enterprise. Marxists consider any profit making as exploitative because, according to Marx (and his discredited “labor theory of value”) profit derives only from exploiting someone’s labor. Therefore they consider capitalism the root of all evil and want it destroyed.
They care not that capitalism delivered the world from grinding poverty.
They dismiss as meaningless the spectacular achievements of capitalism in every parameter of human life, from longevity and health to enhancing the status of women and children to increasing knowledge and better education.
They ignore the fact that marketoriented regimes have enabled the lower-income strata, especially the poorest (as in India and China today) an incomparably better standard of living in absolute terms than socialist states, even if in relative terms large gaps still remain within capitalist economies.
Many of those defined as poor in America own their own cars and homes, which are stocked with many electrical appliances. It was not so long ago that those things were the exclusive privilege of the very rich.
Anti-capitalists are obsessed with envy and therefore demand absolute equality of results. It is a unattainable goal since humans are born with such different attributes that only brutal coercion can make them “equal.” The call for “social justice” is therefore often a mask for hatred of the rich.
In Israel the hatred for the rich is justified by the fact that our oligarchs make huge profits through monopolistic practices that plunder the public.
Worse, by creating a non-competitive economy these monopolies reduce efficiency and productivity.
They lower workers wages and lessen the prospects of university graduates landing a well-paying job.
There is also justified anxiety among the young that the revolutionary dislocations created by the information age may leave them jobless.
There are millions of embittered university graduates in the world who invested huge sums of money in worthless degrees in the social “sciences” and such.
Radical leftist professors, protected by spineless university boards, stuffed their students’ minds with moldy 18th-century notions like class warfare, and with debilitating “post modernist” nihilism, instead of giving them the broad knowledge and the useful skills necessary for coping with a changing world. No wonder they are so desperate and angry.
Their anger and confusion are exploited by such groups as the American “Occupy Wall Street” movement, and the “National Left” in other countries (soon in Israel too?).
The abuses by so-called “capitalists” make it easy to channel their rage against capitalism. There are also huge sums of money available to underwrite these “spontaneous” demonstrations (one wonders from what sources). There are networks of anarchists and radical leftists helping organize “protests” even in despised Israel.
What is happening in Greece can teach us that anti-capitalist rage, coupled to a bankrupt welfare state can easily turn such “social protests” violent.
Compared to the disaster such violent protests and strikes can wreak, even the most serious problems plaguing capitalism may seem like child’s play.
The writer is director of the Israel Center for Social and Economic Progress