WMF Club Berlin on Thu, 17 Sep 1998 10:21:39 +0200 (MET DST)

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<nettime> Capitalism falling apart says Soros


"The flight of capital has now spread to Brazil and if Brazil goes,
Argentina will be endangered. There is general panic in Latin America" 

"So far our stock market has escaped relatively unscathed and our economy
has actually benefited from the global crisis, but make no mistake: unless
Congress is willing to support the IMF, the disintegration of the global
capitalist system will hurt our financial markets and our economy as well
because we are at the center of that system" 

Soros said that the world financial crisis meant it was urgently necessary
to rethink and reform the "global capitalist system". Regulators should
reconsider the structure of the banking system as well as look again at
swaps and derivatives. 



Mr Soros cautioned US policymakers against complacency just because most
of the trouble is occurring outside the US. He said the global capitalist
system involved not only free trade but, even more importantly, the free
movement of capital in a "gigantic circulatory system" in which capital
was sucked up by financial markets and institutions at the centre and
pumped out to the periphery. 

"The pain at the periphery has become so intense that individual countries
have begun to opt out of the capitalist system, or simply fall by the
wayside," he said. 
He said the programmes of the international monetary authorities had not
worked and those authorities had been unable to reassure the financial



Soros himself:

"Until recently the state's share of GNP in the industrialized countries
taken as a group was increasing; it had almost doubled since the end of
the Second World War. Although the ratio peaked in the 1980s, it has not
declined perceptibly. The Thatcher and Reagan governments embarked on a
program of reducing the state's role in the economy. What has happened
instead is that the taxes on capital have come down while the taxes on
labor have kept increasing. As the international economist Dani Rodrik has
argued, globalization increases the demands on the state to provide social
insurance while reducing its ability to do so. This carries the seeds of
social conflict. If social services are cut too far while instability is
on the rise, popular resentment could lead to a new wave of protectionism
both in the United States and in Europe, especially if (or when) the
current boom is followed by a bust of some severity. This could lead to a
breakdown in the global capitalist system, just as it did in the 1930s.
With the influence of the state declining, there is a greater need for
international cooperation. But such cooperation is contrary to the
prevailing ideas of laissez-faire on the one hand and nationalism and
fundamentalism on the other. 


Markets reduce everything, including human beings (labor) and nature
(land), to commodities. We can have a market economy but we cannot have a
market society. In addition to markets, society needs institutions to
serve such social goals as political freedom and social justice. There are
such institutions in individual countries, but not in the global society.
The development of a global society has lagged behind the growth of a
global economy. Unless the gap is closed, the global capitalist system
will not survive. When I speak of a global society, I do not mean a global
state. States are notoriously imperfect even at the national level. We
need to find new solutions for a novel situation, although this is not the
first time that a global capitalist system has come into being. Similar
conditions prevailed at the turn of the century. Then the global
capitalist system was held together by the imperial powers. Eventually, it
was destroyed by a conflict between those powers. But the days of the
empires are gone. For the current global capitalist system to survive, it
must satisfy the needs and aspirations of its participants." 


Let me summarize my own views on the specific requirements of our global
open society at this moment of history. We have a global economy that
suffers from some deficiencies, the most glaring of which are the
instability of financial markets, the asymmetry between center and
periphery, and the difficulty in taxing capital. Fortunately, we have some
international institutions to address these issues, but they will have to
be strengthened and perhaps some new ones created. The Basle Committee on
Banking Supervision has established capital-adequacy requirements for the
international banking system, but these did not prevent the current
banking crisis in Southeast Asia. There is no international regulatory
authority for financial markets, and there is not enough international
cooperation for the taxation of capital. 



International guarantee would make Soros' game of shorting (attacking) the
currencies of small countries almost riskless. And we get to pay for it. 

When you or I lose money in business or in a planned recession its too
bad. But when the elite lose money, they scream to Uncle Sam like some
loser at a casino trying to get himself even again. 



Hi,Longlong ,thanks for your e-mail. 

If you ask me who is Soros ,I have 3 Soros in my mind, 1st of the Soros,
you can have the answer in his website:  http://www.soros.org 2nd of the
Soros , he is the sorrows. He make Indonesia in sorrows , he make Korea
and Asia in sorrows! We sorrows because the stupid economics see Soros as
the hero of the market, they say , we must pay the cost of the leakage or
the broken structure of ours economies to him .this really the looters
theories! If my economic have any problems I can repair or correct it with
the cost of millions , why am I must pay trillions to Soros? 3th of Soros
, he is the super genius of the psyco-war , and I mean his way , so, when
democrats despite us as the anti-European , anti-auslander boxer, I retort
them , I said George Soros also the boxer ,because Soros beat the Europe
countries at 1994 , I success , because the Soros running dogs is shut
them mouth ! But, naturally, Soros is not the "boxer". 



Poor George Soros. He's lost a couple of dollars in Russia and tells
Congress today that the world capitalist system is coming apart, with a
global credit crunch is coming since banks are cutting back their risks.
Should we now start crying at his claims.......Is he talking about the
classical liberal concept of capitalism, or Big Finance Capitalism? Soros
wants an international lender of last resort like the FR system, but in
the meantime it is necessary to strengthen the IMF....... 

Poor George. Poor banks.......If a billionaire loses 100 million, do we
lose sleep about it? 


If anyone is interested, George *lost* 2 billion dollars the last couple
of weeks over the Russian economic debacle. 

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