Limits of Capitalism

Blind adherence to free market ideology may no longer serve our economy


Limits of Capitalism
by varjavand

The market system that has been credited for the economic opulence of the global economy especially the Western world in recent decades is now on trial. People are losing their faith and have started questioning the fair operation of this system since the advent of current economic crisis. Free enterprise system has been placed under stringent scrutiny by thousands of inquisitive observers who want to know what went wrong and why the system did not work the way it was supposed to? The “invisible hands” of the market economy that are supposed to coordinate the independent decisions of millions of individuals and guide the entrepreneurial activities along the path of prosperity are now reaching deep into our pockets, not so invisibly, taking away our wealth, our jobs, our healthcare, our pensions, and our income. Now we have more broke in this country than brave.

The U.S. government which was expected to use its means and its power to fine-tune the economy did nothing for many years but to frighten us of psychological enemies and the axis of evils. We have been worried more about the gay and lesbians marriages, the octo-mom, and the suspected activities of the illegal immigrants as if they were the culprit who stole the Ks from our 401ks. We have spent more time and resources debating the incident in Minneapolis airport men’s room than the decisions made in the board room of the big corporations. We arrested the poor old lady who deposited coins in the expired parking meters; however, let perpetrates of financial crimes enjoy the luxury amenities in their penthouse apartments.

Our politicians, as well as many economists, assured us that things were ok and Ginny is secured in the bottle. They tried to avoid using the frightening terms such as depression for fear that it may stir up public panic and disrupt the good-life people, especially the rich, were enjoying. It was only after the market succumbed to the destructive forces in mid 2008 that we finally start using the terms; crisis, depression, turmoil, meltdown, etc. Our obliviousness to the realities has been based on our prevailing culture that America is the strongest nation on the face of the earth; things are always fine and go our way, plus our love affairs with free enterprise system and the philosophy that capitalism is a self-perpetuating system that always generate creativity, wealth, income, and sustainable growth.

It is true that market ideology has led to affluence, innovation, and dazzling array of differentiated products that have augmented our worldly living standard for a few decades after WWII. The ingenious risk taking industrialists of production sector have been rewarded handsomely for their creativity, adventurousness and of course building better and more appealing products. Likewise, entrepreneurs have been motivated by the forces of competition and keeping up with the rivals. We have been able to afford the extravagant functioning of our economic system with impunity simply because consumers have been demanding and willing and able to pay for fancy products under the illusion that real pleasure results from conspicuous consumption. Having been immersed into persistent irrational exuberance, they have felt like soldiers who were guaranteed of everlasting peace. They have thrown money at everything they can get their hands on like Muslim pilgrims throwing rocks at Satan while performing Hajj rituals. They felt, and still feel, fulfilled driving a luxury automobile, living in spacious houses, taking pictures using fancy digital cameras, using state of the art cell phone for everything but making a call, using internet to monitor every motion in their house while thousands of miles away, etc.

Product differentiation, however, is good so long as it leads to productivity-enhancing contest that ultimately generate economic growth and enhanced consumer’s satisfaction. A costly distortion will ensue, however, if such a healthy pursuit is forced into asinine direction; case in point, the imitators in financial sectors who tried to apply the concept of product differentiation to financial products thus creating risky assets that are blamed as the root cause of the lingering economic disarray. Such financial products are complicated and often obscured with no definable market value. They are merely speculative and do not result in exchange, or production of any real goods or services in the economy. Often speculative gains in transactions of such assets are at the expense of loss of real production. In other words, illusionary wealth created as a result of exchanges of financial assets may entails losing real wealth. It is like the situation where everyone tries to cover himself/herself by pulling a small blanket to his/her side instead of buying a bigger one.

It is time, I believe, to divert all the efforts devoted to speculative activities, and snatching a bigger slice of pie, into real productive endeavors creating a bigger pie, building a better mouse trap so to speak. Speculative transactions are like a zero-sum game. In which for every winner is a loser, there is no net gain. They are like the game of music chairs played by kids. Because there are not enough chairs for everyone to sit on, after the music stops, someone will definitely end up with no place to sit hence declared a loser. And, that someone is the one who is not as fast as the other kids, or simply not lucky enough to be at the right place right time.

Let’s not forget, that the mission of a business entity is to make profit using legitimate means shaped and regulated by competition and other legitimate market forces, competition that is fair and constructive and the competitors that are playing on a level playing field, and the stick to ethical norms. If there is anything useful about the current economic crisis is the lesson we should learn from it. It should persuade us that despite our historical faith on capitalism, it is not without its limits if left to its own devices. Our infallible adherence to free trade doctrine may not serve us favorably? People may no longer fall for the idea that government should keep its hands off the economy. While government is not a nirvana, we need it occasionally to play a bigger and deeper role to get us out of the mess we push ourselves into once in a while.


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Ali A Parsa

In support of Dr. Varjavand

by Ali A Parsa on


Obama's War: Why is the Largest Military Machine on the Planet Unable to Defeat the Resistance in Afghanistan

By Sara Flounders

URL of this article:

Global Research, December 2, 2009 Workers World - 2009-11-15

Just how powerful is the U.S. military today?


is the largest military machine on the planet unable to defeat the
resistance in Afghanistan , in a war that has lasted longer than World
War II or Vietnam ?


ranks among the poorest and most underdeveloped countries in the world
today. It has one of the shortest life expectancy rates, highest infant
mortality rates and lowest rates of literacy.


total U.S. military budget has more than doubled from the beginning of
this war in 2001 to the $680 billion budget signed by President Barack
Obama Oct. 28. The U.S. military budget today is larger than the
military budgets of the rest of the world combined. The U.S. arsenal
has the most advanced high-tech weapons.


funds and troop commitment to Afghanistan have grown with every year of
occupation. Last January another 20,000 troops were sent; now there is
intense pressure on President Obama to add an additional 40,000 troops.
But that is only the tip of the iceberg. More than three times as many
forces are currently in Afghanistan when NATO forces and military
contractors are counted.


years ago, after an initial massive air bombardment and a quick, brutal
invasion, every voice in the media was effusive with assurances that
Afghanistan would be quickly transformed and modernized, and the women
of Afghanistan liberated. There were assurances of schools, roads,
potable water, health care, thriving industry and Western-style
“democracy.” A new Marshall Plan was in store.


Was it only due to racist and callous disregard that none of this happened?


Iraq , how could conditions be worse than during the 13 years of
starvation sanctions the U.S. imposed after the 1991 war? Today more
than a third of the population has died, is disabled, internally
displaced and/or refugees. Fear, violence against women and sectarian
divisions have shredded the fabric of society.


a broad current in Pakistan looked to the West for development funds
and modernization. Now they are embittered and outraged at U.S.
arrogance after whole provinces were forcibly evacuated and bombarded
in the hunt for Al Qaeda.


occupation forces are actually incapable of carrying out a
modernization program. They are capable only of massive destruction,
daily insults and atrocities. That is why the U.S. is unable to win
“hearts and minds” in Afghanistan or Iraq . That is what fuels the


every effort meant to demonstrate the power and strength of U.S.
imperialism instead confirms its growing weakness and its systemic
inability to be a force for human progress on any level.


Collaborators and warlords


of U.S. imperialism’s problem is that its occupation forces are
required to rely on the most corrupt, venal and discredited warlords.
The only interest these competing military thugs have is in pocketing
funds for reconstruction and development. Entire government ministries,
their payrolls and their projects have been found to be total fiction.
Billions allocated for schools, water and road construction have gone
directly into the warlords’ pockets. Hundreds of news articles,
congressional inquiries and U.N. reports have exposed just how
all-pervasive corruption is.


Iraq the U.S. occupation depends on the same type of corrupt
collaborators. For example, a BBC investigation reported that $23
billion had been lost, stolen or “not properly accounted for” in Iraq .
A U.S. gag order prevented discussion of the allegations. (June 10,


of the BBC search for the missing billions focused on Hazem Shalaan,
who lived in London until he was appointed minister of defense in 2004.
He and his associates siphoned an estimated $1.2 billion out of the
Iraqi defense ministry.


the deeper and more intractable problem is not the local corrupt
collaborators. It is the very structure of the Pentagon and the U.S.
government. It is a problem that Stanley McChrystal, the commanding
general in Afghanistan , or President Obama cannot change or solve.


It is the problem of an imperialist military built solely to serve the profit system.


Contractor industrial complex


U.S. aid, both military and what is labeled “civilian,” is funneled
through thousands and thousands of contractors, subcontractors and
sub-subcontractors. None of these U.S. corporate middlemen are even
slightly interested in the development of Afghanistan or Iraq . Their
only immediate aim is to turn a hefty superprofit as quickly as
possible, with as much skim and double billing as possible. For a fee
they will provide everything from hired guns, such as Blackwater
mercenaries, to food service workers, mechanics, maintenance workers
and long-distance truck drivers.


hired hands also do jobs not connected to servicing the occupation. All
reconstruction and infrastructure projects of water purification,
sewage treatment, electrical generation, health clinics and road
clearance are parceled out piecemeal. Whether these projects ever open
or function properly is of little interest or concern. Billing is all
that counts.


past wars, most of these jobs were carried out by the U.S. military.
The ratio of contractors to active-duty troops is now more than 1-to-1
in both Iraq and Afghanistan . During the Vietnam War it was 1-to-6.


2007 the Associated Press put the number in Iraq alone at 180,000: “The
United States has assembled an imposing industrial army in Iraq that’s
larger than its uniformed fighting force and is responsible for such a
broad swath of responsibilities that the military might not be able to
operate without its private-sector partners.” (Sept. 20, 2007)


The total was 190,000 by August 2008. (Christian Science Monitor, Aug. 18, 2008)


corporations have become synonymous with war profiteering, such as
Halliburton, Bechtel and Blackwater in Iraq , and Louis Berger Group,
BearingPoint and DynCorp International in Afghanistan .


part of the U.S. occupation has been contracted out at the highest rate
of profit, with no coordination, no oversight, almost no public bids.
Few of the desperately needed supplies reach the dislocated population
traumatized by the occupation.


are now so many pigs at the trough that U.S. forces are no longer able
to carry out the broader policy objectives of the U.S. ruling class.
The U.S military has even lost count, by tens of thousands, of the
numbers of contractors, where they are or what they are doing—except
being paid.


Losing count of the mercenaries


danger of an empire becoming dependent on mercenary forces to fight
unpopular wars has been understood since the days of the Roman Empire
2,000 years ago.


bipartisan Congressional Commission on Wartime Contracting was created
last year to examine government contracting for reconstruction,
logistics and security operations and to recommend reforms. However,
Michael Thibault, co-chair of the commission, explained at a Nov. 2
hearing that “there is no single source for a clear, complete and
accurate picture of contractor numbers, locations, contracts and cost.”
(AFP, Nov. 2)


said] the Pentagon in April counted about 160,000 contractors mainly in
Iraq, Afghanistan and Kuwait, but Central Command recorded more than
242,000 contractors a month earlier.” The stunning difference of 82,000
contractors was based on very different counts in Afghanistan . The
difference alone is far greater than the 60,000 U.S. troops in
Afghanistan .


continued: “How can contractors be properly managed if we aren’t sure
how many there are, where they are and what are they doing?” The lack
of an accurate count “invites waste, fraud and abuse of taxpayer money
and undermines the achievement of U.S. mission objectives.” The Nov. 2
Federal Times reported that Tibault also asked: “How can we assure
taxpayers that they aren’t paying for ‘ghost’ employees?”


has become an unsolvable contradiction in imperialist wars for profit,
markets and imperialist domination. Bourgeois academics, think tanks
and policy analysts are becoming increasingly concerned.


Friedman, syndicated columnist and multimillionaire who is deeply
committed to the long-term interests of U.S. imperialism, describes the
dangers of a “contractor-industrial-complex in Washington that has an
economic interest in foreign expeditions.” (New York Times, Nov. 3)


Outsourcing war


hastens to explain that he is not against outsourcing. His concern is
the pattern of outsourcing key tasks, with money and instructions
changing hands multiple times in a foreign country. That only invites
abuse and corruption. Friedman quoted Allison Stanger, author of “One
Nation Under Contract: The Outsourcing of American Power and the Future
of Foreign Policy,” who told him: “Contractors provide security for key
personnel and sites, including our embassies; feed, clothe and house
our troops; train army and police units; and even oversee other
contractors. Without a multinational contractor force to fill the gap,
we would need a draft to execute these twin interventions.”


is the real reason for the contracted military forces. The Pentagon
does not have enough soldiers, and they don’t have enough collaborators
or “allies” to fight their wars.


to the Congressional Research Service, contractors in 2009 account for
48 percent of the Department of Defense workforce in Iraq and 57
percent in Afghanistan . Thousands of other contractors work for
corporate-funded “charities” and numerous government agencies. The U.S.
State Department and the U.S. Agency for International Development make
even more extensive use of them; 80 percent of the State Department
budget is for contractors and grants.


are supposedly not combat troops, although almost 1,800 U.S.
contractors have been killed since 9/11. (U.S. News & World Report,
Oct. 30) Of course there are no records on the thousands of Afghans and
Iraqis killed working for U.S. corporate contractors, or the many
thousands of peoples from other oppressed nations who are shipped in to
handle the most dangerous jobs.


is a way of hiding not only the casualties, but also the actual size of
the U.S. occupation force. Fearful of domestic opposition, the
government intentionally lists the figures for the total number of
forces in Afghanistan and Iraq as far less than the real numbers.


A system run on cost overruns


overruns and war profiteering are hardly limited to Iraq , Afghanistan
or active theaters of war. They are the very fabric of the U.S. war
machine and the underpinning of the U.S. economy.


President Obama signed the largest military budget in history Oct. 28
he stated: “The Government Accountability Office, the GAO, has looked
into 96 major defense projects from the last year, and found cost
overruns that totaled $296 billion.” This was on a total 2009 military
budget of $651 billion. So almost half of the billions of dollars
handed over to military corporations are cost overruns!


This is at a time when millions of workers face long-term systemic unemployment and massive foreclosures.


wars in Afghanistan and Iraq have now cost more than $1 trillion. The
feeble health care reform bill that squeaked through the House, and
might not survive Senate revisions next year, is scheduled to cost $1.1
trillion over a 10-year period.


bloated, increasingly dysfunctional, for-profit U.S. military machine
is unable to solve the problems or rebuild the infrastructure in
Afghanistan or Iraq , and it is unable to rebuild the crumbling
infrastructure in the U.S. It is unable to meet the needs of people


is absorbing the greatest share of the planet’s resources and a
majority of the U.S. national budget. This unsustainable combination
will sooner or later give rise to new resistance here and around the


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Dr. Ala

by varjavand on


As the National Debt Clock shows we as a nation and as consumers have reached a dangerously high level of debt. We have exhausted our debt capacity perhaps a long time ago and the party will soon be over, if it is not already. The unsupervised operation of the market, I believe, has lured us to this impasse. Therefore, we can no longer rely on free operation of the market which has been vulnerable to misuse and manipulation by economic crooks.


We have to learn how to live within our means. As we say in Farsi, dool (bucket) hamishe as chah dorost biroon na-miaad.

Cheer, Reza


Mohammad Ala

There is trouble in the air . . .

by Mohammad Ala on

You mean to tell us people cannot have beautiful homes and/or cars with easy credit and funny mortgages?  Part of the problem is not the high cost of living these days; it is the cost of high living!  Check this out  I hope there is not another war in the making to cover up all the mess.