The Guardian July 17, 2002


Editorial:

Capitalism a monumental failure

Two oil billionaires, currently under scrutiny for illegal business 
activities, are at the head of the biggest robber state in history. US 
President George W Bush and his Vice-President Dick Cheney are currently 
promoting a global terrorist war. But even as they are spilling blood in 
Afghanistan while bullying and threatening other nations, the system they 
are trying to shore up is breaking apart.

The glossy facade of the system is falling away as the crisis deepens, 
revealing governments and corporations intertwined in an incestuous bond of 
corruption, lies and international financial cover-up.

These things are a reflection of the monumental failure of capitalism, a 
system in such deep crisis that it sees war and domination as the only way 
out.

WorldCom overstated pre-tax profit by $6.7 billion. Enron hid $2 billion in 
losses from 1998-2001. Its shares lost $50 billion in value and the 
company then filed for bankruptcy protection. Its employees lost more than 
$1 billion in pension funds used for investment by the company. Xerox was 
forced to reclassify $12 billion in profits taken over five years. Bristol-
Myers, the world's fifth largest drug maker is under investigation for 
inflating sales by $2 billion.

The corrupt dealings of these companies constitute only the tip of the 
iceberg. The response from the managements of these corporations and from 
the Bush Government confirms that they have no intention of doing anything 
effective. They are bound by their class allegiances and commitments to not 
do anything to change course or to undermine their vested interests

This was no more evident than in a speech by Bush in New York last week to 
a gathering of corporate heads following WorldCom's collapse. While 
regurgitating some puerile bunk about "business ethics", Bush inadvertently 
summed up the inner workings of capitalism itself.

"We've learned of some business leaders obstructing justice and misleading 
clients, falsifying records  business executives breaching the trust and 
abusing power", said Bush.

"We've learned of CEOs earning tens of millions of dollars in bonuses just 
before their companies go bankrupt, leaving employees and retirees and 
investors to suffer."

By the term "We've learned", Bush does not mean he has just become aware of 
the day-to-day practices of capitalism. No, the problem to him is that 
these corrupt and criminal practices have been exposed for all to see.

"When abuses like this begin to surface, it is time to reaffirm the basic 
principles and rules that make capitalism work: truthful books and honest 
people", says Bush.

"Truthful books and honest people"! Investor confidence must be restored. 
Credibility must be restored.

Capitalism relies heavily on the retirement savings of workers to fund 
takeovers, snap up public assets and utilities, buy off governments, and to 
expand their investments around the globe. Investor confidence is critical 
to the capitalist casino economy.

Daily in the media the voices of capital echo this sentiment. "The crisis 
in confidence about corporate accounts is depressing prices", warns 
Principal Investment Management. "Investor faith must be restored, and 
President Bush, in both word and deed, has clearly shown that this is of 
paramount importance", declares NY Stock Exchange chairman Dick Grasso. "We 
fully share the President's belief that free and fair capital markets 
demand renewed commitment to a higher corporate ethic", says Nasdaq chief 
executive Wick Simmons.

As Henri de Castries, the head of the world's biggest insurance company, 
Axa, put it: "The last twenty years have been very happy for investors. 
There is a whole generation of people who were a little bit optimistic. 
They are now playing the game of learning what risk is."

Bush "talks up" the economic situation, as do more and more analysts, think 
tank mouthpieces and stock market spin doctors. Listen closely and you will 
detect a note of suppressed panic. You will also notice that none of them 
want to actually take serious measures to reduce the risks. The few limited 
suggestions are aimed at restoring confidence, not preventing corruption 
and crashes. The corporate failures will continue.

Bush and his henchmen will continue to push for more of the very 
deregulation and privatisation that fuelled the creation of Enron and 
WorldCom. They are committed to their disastrous course and are determined 
to make the world's people pay the price for it through unemployment, 
hardship, poverty and war.
Back to index page