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a new model

February 5, 2009

As an interesting side note that happens to parallel current events, I have started reading Karl Kautsky’s The Class Struggle, which was given to me as a Christmas present. So far I have found some of Kautsky’s concerns regarding the drawbacks and weak points of the capitalist system amazingly prescient, especially in regard to commerce and credit, although the fact that he was decidedly biased against it seems to have blinded him to the potential ability of future generations to solve some of these problems. Nevertheless, I have found many his arguments against the capitalist method of production to be rather strong, even eye-opening.

The beginning of chapter three, for example, provides a simple yet excellent overview of the main causes contributing to the current world-wide economic crisis. In regard to credit, he notes that, “Credit is … much more sensitive than commerce to any disturbance. Every shock it receives is felt throughout the economic organization” (47). Besides making a strong argument for why this type of system makes it increasingly more difficult for small production (e.g., small farmers, small business owners, etc.) to succeed, he stresses that this credit based system ultimately renders modern industry “more and more complicated and liable to disturbance, to carry the feeling of uncertainty into the ranks of the capitalists themselves and to make the ground upon which they move ever more uncertain” (48).

But the type of careful direction that is needed to insure the uninterrupted operation of this modern system of production is hindered by the very institution of private property on which it is founded. As Kautsky summarizes: “While the several industries become, in point of fact, more and more dependent upon one another, in point of law, they remain wholly independent. The means of production in every single industry are private property; their owner can do with them as he pleases” (50-1).

It has become increasingly apparent to me that to be able to effectively manage a world-wide, credit based economy, a certain amount of outside interference is unavoidable. In the United States, however, this leaves us with quite a dilemma. On the one hand, “socialism” is often distrusted and seen as an enemy of capitalism and democracy. The word itself usually invokes authoritarian and oppressive examples of institutionalized socialism such as the Communist Party of the Soviet Union, Socialist Unity Party of Germany, etc. But as we have seen, without a certain amount of intervention, whether in the form of stricter regulations and oversight or outright nationalization, the system is extremely vulnerable to abuse, disruption, etc.

Every day I am becoming more and more convinced that the United States must adopt an economic model similar to those that have taken shape in Europe — with a mixture of capitalist and socialist aspects — out of sheer pragmatism. I truly believe that we have to do something drastic about this growing economic crisis or else our economy may very well crash even harder than it did in the 1930s. And even though I realize this is not a perfect system either, I not only think that it will be more flexible and pragmatic when faced with such economic difficulties, but I think this is where we are already headed. I am just afraid that we will make it unnecessarily complicated in order to disguise this fact from ourselves, thereby making it less efficient and, ultimately, ineffective.

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