It is tempting to place the blame for the U.S. economies deep woes at the feet of our corrupt, captured political system of governance and those who captured it via concentrated wealth and power. But that would avoid looking at the crises unfolding in global capitalism itself.

From the "progressive" ideology, the "problem" is inequality of income and wealth, and the "solution" is to take more of the wealth and income away from "the rich" (i.e. those who make more than I do) and redistribute to the "have-less" citizenry.

From the "conservative" ideology, the "problem" is that the Central State, in cahoots with public unions and Corporate Overlords, grabs an ever-larger share of the national income to redistribute to reward its cronies and favorites. In so doing, it mis-allocates the nation's capital away from productive investments and strangles free enterprise, the only real engine of wealth.

There is of course a grain of truth in each point of view. As I describe in Survival+, there is a positive feedback in the process of concentrating wealth and thus political power: the more wealth one acquires, themore political influence one can purchase, which then enables the accumulation of even more wealth as the State/Elite partnership showers benefits and monoplies on those who fund elections, i.e. the wealthy.

This process eventually leads to over-reach, when the nation's capital and income are so concentrated that the economy become precariously imbalanced and thus vulernerable to devolution and collapse. Returns on favoritism and capital become marginal, and it take more complexity and capital to wring ever-smaller profits and power from ever-greater investments.

It is also true that the State and the Power Elites mask their massive redistribution to the wealthy and powerful behind politically popular redistributions to the lower-income and/or unproductive citizenry, garnering their loyalty and complicity.

It is also true that as the State and its private-sector Elites channel an ever-larger percentage of the national income to the Central State and its fiefdoms, both public and private, then the productive class suffers a decline in energy, wealth and income. It is also true that the State makes its investment decisions based on favoritism (lobbies, political contributions, etc.) not rational calculations of return on investment, so the majority of State choices will be misallocations of scarce capital.

So both are paradoxically true: rising inequality is indeed a crisis of Neoliberal Global State Capitalism, and so is the rise of the supposed "solution," the insatiable plundering State in service to its fiefdoms and private Financial Power Elites (the Plutocracy). I describe this in the Survival+ chapter, Over-Reach and Inequality (PDF format).

Yet these critiques do not even scratch the surface of the deeper crises of Neoliberal Global State Capitalism, a.k.a. predatory Capitalism. These are:

1. Overcapacity. As Marx foresaw, capitalism's inherent drive to maximize profits and market reach (what I call windfall exploitation) leads to boom-bust cycles of rapid growth in production and the subsequent bust caused by too much capacity and saturated markets.

the auto market in China is a current example. After a decade of rapid growth in both capacity to manufacture autos and in sales, China now has the capacity to make more cars than its own domestic market can support. As a result, Chinese automakers are seeking export markets: even though globally, the world can already make 60 million vehicles and sales will never top 40 million vehicles. (Numbers are approximate.)

Inevitably, much of this glut of capacity will have to closed and written off. As Marx foresaw, this process leads to monopoly and cartels as a few strong players drive weaker ones out of business or acquire their assets for pennies on the dollar. It also creates cycles of unemployment as workers are shed by consolidating industries. Mechanization, globalization, software and the unparalleled benefits of robotics all work to shrink payrolls in every product cycle.

Thus overcapacity is a crisis not just for capital (destroyed as overcapacity leads to a bust in profits and valuation) but also for labor, which finds that the global supply chain can meet demand without hiring more workers.

2. The capture of financial governance by Elites. The market is of course never quite as free as ideologues like to think; cheating, fraud, misrepresentaion, sweetheart contracts, bribes, extortion, etc. are as old as the marketplace itself. But the rise of the Central State beholden to its fiefdoms (public unions, shadow Security State, military industrial complex, the sickcare cartels, etc.) has enabled the wholesale distortion not just of domestic markets but of the entire global economy.

In effect, the Central States attempt to manipulate and control the "free market economy" to avoid the boom and bust cycles which negatively affect the Power Elites which the State serves and protects. But in so doing, the State is only exacerbating the distortions in what remains of the private (quasi-free) economy.

The State essentially guarantees by its (mis)management and manipulation, the ensuing collapse will not be limited to certain sectors of the private economy but will cause massive contraction in the entire economy--including the State's share of the national income.

Having crippled the private economy with distortions, favoritism (via regulations, rules, special tax breaks, etc.) and high taxes, the Central State now finds its own income diminished. Rather than deprive its fiefdoms, Elites and passive dependents of their swag, the State fills the gap between the demands of its fiefdoms and its income by borrowing stupendous sums of money from the private capital markets ($1.5 trillion a year borrowed by the Federal government, and billions more borrowed by local government)-- capital markets which are also distorted and controlled by proxy State intrusions and a State-enabled "shadow banking system" which serves the Power Elites' needs.

In a short time, the Central State has borrowed sums so staggering that it has no choice but to either inflate the debt away, thereby destroying the savings and income of its remaining productive citizenry, or by taxing these same productive citizens to the point of penury. The last choice is to default on the debt--a perfectly acceptable alternative if the State's favorites and Power Elites have already exited the Government debt market and moved their assets to a protected refuge.

3. Debt rises even as incomes and wealth decline. Concurrent with this orgy of public debt, the State encourages massive expansion of private credit via fractional lending, low bank reserves, and other forms of leverage, in a vain attempt to stimulate demand in an economy burdened with overcapacity, declining employment, marginal return on capital and saturated markets.

The explosion of "free money" gooses demand briefly, but then debt, even at low interest rates, never declines; and as another bust inevitably follows this latest debt-fueled boom, then the debt becomes increasingly burdensome as income and wealth both plummet.

4. Resource depletion. Though many are drawn to appealing fantasies of endless oil (abiotic or otherwise), breeder nuclear reactors burning plutonium, etc., the awkward reality is that the world does not contain enough oil, gas, lithium, uranium, etc. etc. for another 1.5 billion middle-class consumers, never mind an additional 3 billion.

Capitalism is based on the idea that The Invisible Hand of self-interest will drive markets to benefit all participants. This means that when one resource becomes scarce and thus costly, then an alternative will be found, manufactured or exploited. This has played out satisfactorily in the procession from wood to whale oil to coal to oil and natural gas, but the concept that no real substitute is available runs counter to capitalist ideals.

The notion that there will only be shortages and no substitutions seamlessly appearing via the magic of free markets is alien. Like the person falling from a tall cliff, the fact that they we haven't slammed into any hard limit yet provides a false faith in the magic of the markets to provide a technological alternative.

Thus mini-nuclear reactors, algae-based fuels, and various other exciting schemes are routinely trotted out as the "source of unlimited energy in the near future," always with the implicit faith that the process can be scaled up from the laboratory to a global scale with only modest difficulties.

The idea that these grand concepts cannot be scaled up cheaply or quickly due to physics or other severe limitations of Nature is anathema to a faith in the unconquerable power of human ingenuity and open markets.

Maybe algae will scale up from a few thousand gallons a month to billions of gallons a day, or solar energy can be converted to hydrogen, which will then power the planet's 600 million vehicles via fuel cells; but the market has no way to price the possibility than essential resources will enter permanent depletion declines and that no cheap, scalable substitute exists.

5. The market is intrinsically incapable of pricing extinction and other social/shared costs of global production and consumption. As I often note, the last wild tuna will fetch a handsome price when it's auctioned off in the Tokyo Fish Market. Was the value of a wild species calculated by the market? No. the "market" has no mechanism for pricing in the "value" of a species, or of the social costs of poisoned air and water--the Commons we all depend on.

It also is intrinsically incapable of pricing control of resources or assets; the free market presumes that an unfilled demand will be met by someone, somewhere. That ignores the potential for political control of assets and resources which are immune to market pricing.

Risk, future value, control--all of these critical elements are reduced to a "futures bid" which has no inputs for the value of a wild species, the "value" of clean air, the costs of polluted air borne by the tax-paying citizenry, the difficult-to-assess cost of a floating "island" of plastic garbage in the Pacific 2,000 kilometers in diameter, etc.

These crises of Neoliberal Global State (predatory) Capitalism overlap and reinforce each other; none are tractable or easily resolved without structural changes at the most profound levels.


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