In this interview with Guillermo Sullings, he explains how a lack of income distribution got us into this economic mess we are in and how a radical overhaul of the economic system is required, hand in hand with a change in the values of society. "The problem is that the current capitalist system no longer works."
Guillermo Alejandro Sullings is an Argentine economist and author of the book [inglês] Beyond Capitalism, Mixed Economics; and current General Secretary of the International Humanist Party
The interview was made by Olivier Turquet from Pressenza August 11, 2011.
Question: They say there is a crisis. What crisis are we talking about?
Answer: We’re talking about crisis because situational crises are news and they must be talked about, and we must be worried about them, according to what is proposed by the opinion formers in the media. But very rarely do they talk about the underlying problems of the capitalist economy, because this isn’t news. And in reality these successive crises are none other than the visible eruption of a big underlying problem. Of course if we start to talk about all the contradictions of capitalism it would take ages. But let’s take one which is central: the unequal distribution of income. From that are derived many of our current ills; in the first place, for obvious reasons, because of the marginalisation and inequality it generates, a growing suffering is produced in the population. But moreover, because a decrease in purchasing power of the population is an attack on the continuation of the consumer system, the only way of being able to maintain the levels of consumption has been through increased borrowing: personal debt, business debt and government debt. And when debt reaches unmanageable levels, financial crises erupt. And then begins the hypocritical pantomime of those who sustain this perverse system, accusing some governments of irresponsible borrowing, and people of having consumed with credit beyond their means to repay. And of course there’s something true in this, but what they don’t tell us is that the same sustainers of this system are those who promote borrowing so that their banks can do business, and they are the ones who promote consumerism so that big businesses can do business. And then the cuts come, unemployment, recession, impoverishment; but this is not because of the crisis; what the crisis has done is to destroy the illusion that the system was working well. In other words, really we’re talking about a fundamental crisis of the capitalist system, a terminal crisis that is leading irrevocably to its collapse if the great contradiction of the distribution of income is not resolved and its financial correlate, which is the growing and exponential channelling of financial resources towards speculation and usury.
Question: What is the relationship between speculative and productive capital?
Answer: Difficult and unhelpful to quantify it as volatility, and sometimes the clandestine nature, of speculative financial resources makes them immeasurable. Suffice to say that speculative resources are vastly more than productive ones. Because we can count the number of cows in the field, or the number of factories; but if those cows or those factories then become the guarantee for a loan, and this loan is used to purchase a piece of land and this loan secures another loan and so on, we have no idea where we are. And if all of this is listed on the stock market and shares are bought and sold by gamblers, or positions are taken and then the Hedge Funds or another speculator come along, the nominal value of all of this can end up totally variable, not to mention the fiction of its real value. And so the financial bubbles burst, one after the other, bubbles that are increasingly big and globalised. And in reality it isn’t interesting to understand this complex financial alchemy, what is interesting is the basis of the question: in the current capitalist system, it is more profitable to speculate than to produce. It is more profitable to lend and borrow, than to generate employment. Don’t let the hypocrites confuse us, the problem here isn’t if such-and-such a country is too much in debt and must make cuts which sacrifice their people; here the problem is that the current capitalist system no longer works.
Question: Who are you referring to when you talk about hypocrites? And, what should Europe do? What should governments do?
Answer: The hypocrisy is in many places. Starting with those who rate risk such as Standard and Poor’s who now are creating a stampede in the market by downgrading US debt, whereas at the time they rated as excellent assets based on sub-prime mortgages which unleashed the crisis: a financial crisis that the USA, as much as other governments, responded to by saving the banks (increasing their public debt along the way, which has today generated the downgrade.) But this hypocrisy of the credit agencies is not a problem specific to them, as they are mere figureheads of speculative capital. And of course there is also government hypocrisy that has been largely complicit in the financial disaster, whether by their action or omission. And those who lent and those who borrow are complicit because they’ve all being doing business, knowing that at the end of the day it’s the people who pay for the cuts. And governments were complicit when they decided to save the banks, instead of looking after their people and nationalising the financial system. So it’s very difficult to say what European governments or the European Union as a whole should do because here people abound whose interests are very bound up with those of the economic power, more than with their people. And the same is happening in the USA and in a large part of the world. Formal democracy alternates political power between the representatives of the economic power. But if we were to imagine, and were to believe that for once governments would respond to the needs of their population, what they should produce is a profound transformation of the economic and financial system. Here the majority of the population and states find themselves in the red, because their counterparts are the spectacular profits of speculative capital, the bank, big business and their political associates. And while the red continues growing, borrowing will grow, the bubbles and bursts will be bigger and bigger until a collapse. This imbalance must be resolved and a redistribution of wealth must be mandatory. Productive investment of financial capital and productive reinvestment of business profits must be forced. The financial system must be managed by states and states must be managed through a real democracy and not a formal one. In other words, a revolution is needed—non-violent—but a revolution. And I don’t see European governments with this intention, and even less the US government whose congress didn’t even approve an increase in taxes on the richest to reduce the deficit. So it will be the people who will have to change their governments… and there’s no lack of desire judging by the waves of protest in the world.
Question: Do you consider that the popular demonstrations, above all of young people, are going in the direction of this revolution?
Answer: I believe that that is the fundamental aspiration in all the demonstrations that there have been: in Egypt, in Greece, in Spain, in Iceland, in Portugal… in a good part of Europe and many places around the world. In general they are non-violent demonstrations, and this is very good, despite what’s happening in Chile, where the police dress up as protesters to throw stones and confuse the people. The majority of people are backing non-violent demonstrations. And don’t let’s be confused by cases such as England, where the social catharsis is violent just as happened a while back in France; of course we don’t agree with that violence, but it must be seen clearly that the greater responsibility is with the governments and the system which marginalises people, generates desperation and resentment and this leads to outbreaks of violence. But it is totally possible and necessary to reach profound changes through the path of nonviolence, with imagination, with organisation, with conviction, with ideas, and above all with a new morality. Question: What do you mean by a new morality? Answer: Well, many things, from the meaning in live to the treatment that we must show to others. But this interview is about economic issues, I’d say that a lot has to be changed in our culture and our values if we want to change the system and this no longer depends on governments, but on the will of the people. Because the virus of individualism has permeated very deeply and many people don’t care what happens to others, and they only demonstrate when they see their own interests affected. And because the virus of consumerism has no anti-bodies in a greedy society of filling ones life with material things to refill their empty insides. And this is key because just as savage capitalism was based on the values of individualism, we are lacking a society with more solidarity if we want to set in motion a new economy. And because if we don’t vary the consumerist matrix, not only will we continue making fools of ourselves, but also mathematically it will be impossible to reach equitable distribution, because more than 6 billion people living the current consumerist model would need 5 more planets to be provided. And let’s not accuse the Chinese or Indians of pollution because they want to grow and develop with no less than 40% of the world population. Or accuse them of taking sources of employment away from the west because labour in these countries is cheaper than in Europe or the USA. Will we return to protectionism to guarantee the right to work within our borders? And the right to work for foreigners is worth less? It’s a mess, but we have to come through it advancing and not going backwards. And if with protectionism it wouldn’t be enough to ensure employment for citizens, what will we do? Expel the immigrants? Of course not, this is a global problem, and global responses must be given, advancing towards a Universal Human Nation, with a new morality, with less individualism, more solidarity, less consumerism, and then a new, more equitable economic system will be able to germinate. But for the latter to happen, the most urgent thing is to take away the financial system from the speculators and put it at the service of productive investment. And then we must ensure that this productive reinvestment generates jobs in which there is greater distribution of income and a productive matrix must be strengthened, designed for a different kind of consumption, sustainable and dignifying. All of this must be done, but firstly, before anything else, power must be taken away from the banks. No more, no less.