Yes, you’ve read correctly. You may not know who Rana Foroohar is, so let me inform you that she is a highly respected business and economic journalist working for TIME magazine, who has just published a book called Makers and Takers, published in May (Crown publishers), in which she makes this (to some startling) announcement. But let me quote her, from the summary article in TIME (“Saving Capitalism”; TIME, 23 May, p. 22-28) in which she sets out her reasons for claiming this, so that you can judge for yourself. After listing the “prescriptions” for resolving the economic crisis, advanced by the candidates in the presidential election – from Trump’s desire to tax hedge fund managers more, through Sanders’s intention, to break up the big banks, to Clinton’s aim, to reinforce financial regulation (p. 24) – Foroohar states (p. 24):

“All of them are missing the point. America’s economic problems go far beyond rich bankers, too-big-to-fail financial institutions, hedge-fund billionaires, offshore tax avoidance or any particular outrage of the moment. In fact, each of these is symptomatic of a more nefarious condition that threatens, in equal measure, the very well-off and the very poor, the red and the blue. The US system of market capitalism itself is broken …

“To understand how we got here, you have to understand the relationship between capital markets – meaning the financial system – and businesses.”

In the rest of this long article this is what Foroohar does – explain this relationship – and the end result is a fairly clear indication that, as she puts it (p. 25): “America’s economic illness has a name: financialisation. It’s an academic term for the trend by which Wall Street and its methods have come to reign supreme in America, permeating not just the financial industry but also much of American business. It includes everything from the growth in size and scope of finance and financial activity in the economy, to the rise of debt-fueled speculation over productive lending, to the ascendancy of shareholder value as the sole model for corporate governance, to the proliferation of risky, selfish thinking in both the private and public sectors, to the increasing political power of financiers and the CEOs they enrich, to the way in which a “markets know best” ideology remains the status quo. Financialisation is a big, unfriendly word with broad, disconcerting implications.”

Part of the reason why it is disconcerting is the fact that this “illness” is, as she points out, not restricted to America, but extends to all the market economies in the world, which would include South Africa’s. And she makes no bones about market capitalism being “under fire” (p. 24) globally. Foroohar lists an impressive number of academics, economists and other researchers to substantiate her argument, so that even the most dyed-in-the-wool defender of market capitalism has to sit up and take notice.

The awareness that capitalism “ain’t what it used to be” is not something that is restricted to intellectuals either. Foroohar provides telling statistics about ordinary people’s perceptions of the economic situation (p. 24): According to the Harvard Institute of Politics, a recent poll shows that a mere 19% of Americans between 18 and 29 years old thought of themselves as “capitalists”, and among older people the number only rises to 26%. Furthermore, only 42% of the younger group said they “supported capitalism”, while just over half of the older group said so. Foroohar does not hesitate to draw the obvious conclusion, namely, that the majority of citizens in what is known as the most market-based capitalist country in the world no longer trust the system – and in my view this is a wake-up call, not just to Americans, but to South Africans too.

Foroohar reconstructs the historical path that has led to the present state of affairs, from the gradual abandonment of the regulation of banks (which “had served America so well” [p. 25] after the Depression; something which was notably also induced by financial speculation) during the slowing of the economy in the 1970s when, instead of making difficult decisions about ways of boosting the economy, this responsibility was neatly shifted to the financial markets by politicians. This, together with more “Reaganomic” deregulation that eventually resulted in “loose monetary policy”, she shows, had “unintended consequences” (p. 25), so that today the US economy is “chronically dependent on near-zero interest rates to keep from falling back into recession” (p. 25).

Foroohar identifies a number of symptoms of this lamentable state of affairs (p. 25): “This sickness, not so much the product of venal interests as of a complex and long-term web of changes in government and private industry, now manifests itself in myriad ways: a housing market that is bifurcated and dependent on government life support, a retirement system that has left millions insecure in their old age, a tax code that favours debt over equity. Debt is the lifeblood of finance; with the rise of the securities-and-trading portion of the industry came a rise in debt of all kinds, public and private. That’s bad news, since a wide range of academic research shows that rising debt and credit levels stoke financial instability. And yet, as finance has captured a greater and greater piece of the national pie, it has, perversely, all but ensured that debt is indispensable in maintaining any growth at all in an advanced economy like the US, where 70% of output is consumer spending. Debt-fueled finance has become a saccharine substitute for the real thing, an addiction that just gets worse.”

The “real thing” that Foroohar is talking about here is, of course, the productive part of the economy, which, for her and many other prominent people (including Warren Buffet), means that banking finance has to return to its initial role, namely to serve companies, consumers and workers, instead of “suck[ing] the economic air out of the room” (p. 24) by becoming a speculative law unto itself. Small wonder that she quotes Pope Francis’ merciless criticism of financial capitalism as the (p. 25): “Idolatry of money and the dictatorship of an impersonal economy.” For the Pope, this has resulted in people being “reduced to one of … [their] needs alone: consumption”.

Foroohar admits that this is not the only cause of America’s economic woes; she mentions others, such as job loss through technological innovation. “But”, she points out (p. 26), “the single biggest unexplored reason for long-term slower growth is that the financial system has stopped serving the real economy and now serves mainly itself”. And politicians’ inability (or unwillingness?) to take decisions that would lead to “fiscal action” has led to a massive $4.5 trillion financial injection into the economy by the US Fed since 2008. “This shows just how broken the model is … ”, she says (p. 26).

Among the signs of the financial sector only really serving itself there is the sharp decline in banks’ lending to small business, as well as the reprehensible practice of “share buybacks” (p. 27) – where companies buy their own shares, “often as a way of artificially bolstering share prices in order to enrich investors and executives paid largely in stock options”. This trend has increased to the point where the top 500 S & P companies now spend $1 trillion annually on dividends and buybacks (about 95% of their earnings), “rather than investing that money back into research, product development or anything that could contribute to long-term company growth” (p. 27).

What Foroohar’s research tells me is that, although they believe otherwise, economists and people generally don’t really understand the “enigma” that capital is (David Harvey’s description). At a recent conference in Madrid on posthumanism, Rosanne Stone described it as a “metabody” that simply uses people to grow itself – a metaphor that is chillingly demonstrated when, in a space like Dubai’s international airport (a gigantic shopping mall, really), one witnesses passengers in transit shopping feverishly: every time they buy something, they inject capital into the global system, and with every injection the “metabody” that capital is grows stronger. People should take back their ability to control it, which has grown weak because of finance capital’s excesses.


  • As an undergraduate student, Bert Olivier discovered Philosophy more or less by accident, but has never regretted it. Because Bert knew very little, Philosophy turned out to be right up his alley, as it were, because of Socrates's teaching, that the only thing we know with certainty, is how little we know. Armed with this 'docta ignorantia', Bert set out to teach students the value of questioning, and even found out that one could write cogently about it, which he did during the 1980s and '90s on a variety of subjects, including an opposition to apartheid. In addition to Philosophy, he has been teaching and writing on his other great loves, namely, nature, culture, the arts, architecture and literature. In the face of the many irrational actions on the part of people, and wanting to understand these, later on he branched out into Psychoanalysis and Social Theory as well, and because Philosophy cultivates in one a strong sense of justice, he has more recently been harnessing what little knowledge he has in intellectual opposition to the injustices brought about by the dominant economic system today, to wit, neoliberal capitalism. His motto is taken from Immanuel Kant's work: 'Sapere aude!' ('Dare to think for yourself!') In 2012 Nelson Mandela Metropolitan University conferred a Distinguished Professorship on him. Bert is attached to the University of the Free State as Honorary Professor of Philosophy.


Bert Olivier

As an undergraduate student, Bert Olivier discovered Philosophy more or less by accident, but has never regretted it. Because Bert knew very little, Philosophy turned out to be right up his alley, as it...

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