A different economic system.

[Dear readers,

I am still currently ill and as such will be holding back the This Week in Conflict Reports until I feel better.

In the meantime, I have been having the great pleasure of taking a course at Transcend Peace University and as such I am currently reading Johan Galtung's new Peace Economics: From Killing to Life-Enhancing Economy that is due to be released later this year (please be sure to buy it when it comes out-- it's awesome and well worth the read!). This short essay was one of my assignments from class where I summarized many of the concepts from Part 1 of the book. The book discusses some of the causes of the current economic crisis, and discusses paths to alternatives systems that would be more life-sustaining and peaceful.

Peace!
-- Rebecca]

The economic crisis is far more long-running and far more complex than the simple narrative widely splashed across the media would have us believe. The dominant global economic system, hypercapitalism, is focused towards capital and growth, often at the expense of the welfare of human beings. In this system, there is a necessity for people to have a minimum level of purchasing power simply to satisfy their basic needs. Some live well below this level, others have such great wealth that they can’t possibly spend all they have within the real economy (made up of cycles of production-distribution-consumption). Instead they invest their surplus into the finance economy (made up of the buying-selling cycles of financial objects—with no end consumption), essentially betting with other people’s money, pocketing the gains and letting others take any losses that occur. This allows for magnificent growth in an economy that is based upon pure speculation and non-material products. As the finance economy has grown wildly, it has created a large gap between the growth of the real economy and the growth of the finance economy, increasing with it, the likelihood of an eventual crash as the two widen even further apart.

The inequality within this system goes farther than simply the difference in wealth. It encompasses inequality in military force, political power, and cultural values that are based upon attributes, actor interactions and the structure of the system itself. The cultural values of society legitimize the political power, that authorizes the military force, to protect the wealth of the super rich, who reinforce the cultural values; completing the vicious cycle that keeps the poor poor and the rich rich. Equalizing the system creates a better chance of dialogue among the population, creating better opportunities to find real solutions and increasing the likelihood that those solutions will be more equitable.

Essentially the economic crisis can be broken down into four separate crises. For those at the bottom of the wealth spectrum, the crisis manifests as the (1) under financing and the (2) undersupply of affordable necessities. For those at the top of the wealth spectrum, the crisis manifests as the (3) overfinancing and the (4) oversupply of normalities and luxuries. The crises all feed upon each other, with a crisis at the top creating a crisis for the bottom, and a crisis at the bottom, in turn creating a crisis for the top. The media has directed almost all of its attention to the crisis of only those at the top of the wealth spectrum to the detriment of real dialogue on the overall system, since discussion upon the financing of unprofitable goods is somehow an absurdity, but a system that allows people to starve is not.

A system with a floor for economic activity that ensures that basic human needs are met and a ceiling for economic growth, ensures that excess wealth is redistributed to where it is necessary, lessening the gap between rich and poor, between the real economy and the finance economy, and hopefully stop some people from starving while others live in lavish hedonism. An economy based not upon individual self-benefit, but rather upon ensuring that needs are met, and supply of basic needs is sufficient before enriching ourselves with normalities and luxuries.

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