From the article of 'Petrel'
No.693 / September 13, 1998

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Is "Bad Capitalism" to Blame?
The Cause of the Global Economic Crisis


Frightened by the world crisis, and with the failure of the capitalist economy staring them in the face, the bourgeoisie persist in saying that this is not the failure of capitalism, but rather the failure of "bad capitalism". They sound exactly like the Communist Party of Japan, which rejects "bad capitalism" in favor of "capitalism with rules".

An article which appeared in the September 6th edition of the Japan Economic Newspaper is representative of this sort of argument. In the article, Kimura, of the editorial board, asserts that it is premature to judge the global economic crisis as a "failure of the market". According to his view, the essence of the crisis is not the market economy, but rather inefficient or irrational market economies. Thus, the reason for the deepening crisis and nervousness is that the Japanese economy is "shoddy".

He writes, "The economic situation (the bad credit problem) is in a fog, and at the root is a distrust of government and management who carry out impromptu measures which temporarily push the problem aside, instead of finding a fundamental solution. If the solution process and the future goal is unclear in the current cloudy conditions, then it becomes impossible to make evaluations, and judge the appropriate prices. The problem is that the clearly indicated information to judge an investment is lacking, and there is not confidence in such information."

In other words, in order for capitalism to function well, the price mechanism must be in splendid working order, which necessitates the availability of correct information, and transparency. Since Japanese capitalism doesn't have this, the market and price mechanisms don't function well-the gears are out of whack.

This ignorant man carts out Say's 200 year old dogma which says that since demand is supply, and supply is demand, depressions, panics and economic crisis occur because the market economy is distorted rather than correct. Therefore, the only solution that he can he propose is the curious one of "improving the quality of the market". The quality of the Japanese market is terrible, and this has brought about the crisis.

"In this regard, the markets of Asia and Russia, as well as Japan are shoddy. Stock and land prices are decided by supply and demand. The stock market in which most of the stocks have been owned mutually by groups of companies in which banks play central role, and the land market in which private rights have not been in harmony with the public interests because of the poor city planning, have been very shoddy markets which have distorted the distribution of resources through fluctuations in prices, and thus have not been rational systems.

In the United States, by contrast, " power has accumulated to improve the quality of the market", which (according to this view) is precisely the secret of the current prosperity in America. Now, even the condition of the U.S. economy have become worse, but this is said to be the fault of the other bad economies which the U.S. "supports", rather than any fault of the U.S. economy itself. Kimura has a childish faith in the U.S. economy. He doesn't realize that in the near future this faith will be shaken at its foundation.

This man insists obstinately that some types of capitalism are not "shoddy". However, for him the market economy itself, that is production for the market, is ordinary and to be expected. Mr. Kimura praises regulation according to price. In other words, production which corresponds to the price. If this differs from what is expected, great losses, overproduction, and bankruptcies may occur-this is the market economy.

Kimura says that if information were to be open and clear to the public market productions and speculation would not be possible. However, what does it mean for "information" to be completely made public without any concealment? Further, if it were possible to correctly and completely know the movement of prices according to this "perfect" information (of course, this is only for the sake of argument), how would this be capitalism, the market economy or equilibrium through prices. What Mr. Kimura is saying is fundamentally contradictory, and nonsensical, and completely lacks consistency.

If banks were to clarify all of their own management under the current conditions of recessions, one bank would fail after another. Isn't it precisely because this can't be done, that the bourgeoisie are fervently concealing the actual state of business conditions, while frantically trying to introduce public funds. Can Mr. Kimura take some responsibility and declare, or guarantee that there would be no financial crisis, and it would be safe, if the actual condition of the banks was to be revealed (without government's support, that is, by putting the principle of "self-responsibility" into practice thoroughly).

In a market economy, production is for the market, and is effected by the trends in prices (i.e. anarchistic production), and this is precisely why it is called a market economy. In a capitalist economy, the equilibrium between supply and demand is merely chance. Without fixed conditions, supply and demand are in contradiction and opposition. In other words, if the produced commodity cannot find a market, then it will not be actualized.

For this reason, mountains of inventory, mountains of unsold commodities, and mountains of bad credit appear. Capital becomes overabundant, and becomes unable to fulfil its role of obtaining profit. A surplus of currency capital also arises, growing madly into a bubble. But it is natural for a bubble to burst. The inevitable aftermath of the bubble is horrendously bad credit.

It is not possible for Kimura to deny this reality without denying capitalism. Does Kimura think that he can separate the bubble from capitalism? A bubble is not some abnormality of capitalism, but rather a typical phenomenon of this system. Kimura says that a "normal", not shoddy, capitalism should be created, and in this way the contradictions of capitalism would be erased at once, and all difficulties such as crises and bubbles would recede, leaving us with a peaceful and calm capitalism. Of course this is nothing but a childish fantasy.

The bourgeoisie diverts the workers from the contemporary contradictions of capitalism, and lie to the workers when they say that these contradictions are something that come from outside of the essence of capitalism, and thus can be overcome through some reform. The Communist Party also joins in the chorus, saying that if capitalism is made healthy and the "shoddy" parts are eliminated through "democratic reforms", then capitalism wouldn't be such a bad thing, and could still prosper.

(Translated by R. West)