stein before that though would bring you our debate show crosstalk that discusses the future of western capitalism. we'll. review the latest in science and technology from around the world. we've got the future covered. emerging countries in an ever changing world but what does it mean when a country is finally emerged. from.

the fate of western capitalism and globalization i'm joined by john laughlin the director of studies at the institute of democracy and cooperation. in politics at the university of kent and allan friedman he's a former economist working for the greater london authority and i'd like to point out predicted the second wave of this great contraction all right gentlemen let's look at capitalism as it stands today we have china we have brazil we have india we have russia lecturing the west now west lecturing the united states and the european union john is a case where the west says do what we say but don't do what we do budget deficits fiscal policy the mess and gridlock all around well the reason why these countries are lecturing america is that for forty years america has had an exorbitant privilege in the international financial system the dollar is the dominant reserve currency and moreover since the decision taken by president nixon exactly forty

years ago in august one nine hundred seventy one to close the gold window in other words to cut all links between the dollar and gold the whole world has lived in a dollar dominated regime of fear at paper currencies that is to say of currencies which are expressions of debt that will never be reimbursed and it's that basic fact that the monetary system is based on debt which nobody has any intention of reimbursing which in my view has generated the problems. that we know in the eurozone in the banking committee. all right these are connected with debt we have everybody else paying for it so when the u.s. makes a mistake when the european union makes an absolutely the eurozone. adrian i mean it's you know the indians are. specially the brazilians are very upset because they're saying we're exporting your inflation to us. i think there is definitely doubts and that's why you know you have to look at global imbalances and see exactly where these huge distortions and. imbalances come from but i would say this

. everyone in a way has benefited from the few sort of economy the chinese in a way have because they've been able to keep down the united states were already defined in a certain way isn't it i mean at the end of the day you can't have an entire economy running on debt to police that this is no you can't but the fact is i think there's been too much complicity in the global system that is at fault in a big problem the global system is not even just state that it's the fact that we have too much debt corporate private and public and the fed to do that the real economy is being undermined by all the kind of hot money circulating around the world so we really need to do is tie finance to the real economy no one has really come up it's not in the west not in the east not in the north and also in the south so i think it's a global problem which i don't think we've heard real solutions. not from country it's very political i think the political will is actually from the very countries that you say and now starting to say why should i listen to the u.s. and the reason is the spin i follow the work of radical whom explains very clearly

that these ideas about globalization and free trade that everybody took as being this must be true were actually very carefully fostered myth and you can trace it through the the liberation of the people who advised the president that were fostered by the u.s. in this three minutes and two of them have gone ok the first myth is the usa is the greatest power in the world economically and politically the second is the nations of vanishing they're not coming back but the third myth is that the state cannot play any role in the economy and in particular it cannot invest now the developing world never they were many people wanted them to abandon that but actually a lot of the countries that attorney you know paraded as paradigms of new liberalism like that psych india actually thirteen percent of the indian economy is in state hands the banks are still controlled are still capital controls and that was never allowed as part of the explanation for their success i think they're just now starting to say hi on all the things you told us not to do the things that got

us through and maybe you shouldn't do. west is more ideologically driven than any of the countries that we're talking you know just as the west is more hypocritical because i think one could make the same point about the american economy which after all depends to a very large extent on the money that's channeled through the pentagon whose budget level let's forget is two billion dollars a day and that money goes to factories all over the united states and represents a considerable part not only of the american economy but much more importantly of the american power in the world you know the invisible hand is guided by the iron fist of american military power so the idea of this dissin bolted american supremacies based on free markets and so on is completely wrong but it's certainly the case that there is not and cannot be a free market economy without a strong state of historic each student certainly true today just look at how the states had to bail out finance because if they didn't bail out the banks everyone was going to go down there has been

a collusion of the free market and the collusion of the strong states since the late nineteenth century at the very least possibly going back further in history and so really what we are talking about is states and markets colluding at the expense of civil society. but only have enough autonomy wages property and so on to make ends meet that's the real situation where we square the circle we have the tea partiers in the united states don't want to raise any taxes and they just want to slash slash slash it's a very very interesting last jobs to be slashed federal jobs local jobs create more unemployment there's a very curious poll which went on when the events of madison wisconsin were going on the sort of the american arab brought rising as it was dubbed turned out i'm told this anecdotally trust that two thirds of those people participating declared their affiliation as tea party is there is just people feel betrayed there's a right each against government now it's misplaced sick actually tea party support once they started going on about the debt ceiling and people realized it meant

social spending tea party support dropped from forty percent to twenty percent in the polls. i don't think from what i've seen the american people are one hundred percent behind this dismantling what is left of the social state to the contrary they feel cheated by the banks they feel cheated by the politicians they're expressing into name because nobody is giving them a leadership not only leadership i mean if we look at we go into this the great contraction the great recession we look at wall street has recovered handsomely very handsomely we can talk about the eurozone a little while here but main street has just been gutted it remains that way i mean right now we had we just saw unemployment figures in the united states i mean there were no there's no good job growth at all you have no recovery from a recession when you don't have job growth well i think like many people that the financial sector is grossly over blown i think it's committed all sorts of abuses that debt has become obviously a commodity that people as a sort of dissemble to. the responsible isolation and so on and so on but i repeat

what i said just now which is that the fundamental problem is the debt generated by the monetary system and in a sense attacking the finance industry is only shooting the messenger because their job the job of banks is to safeguard people's savings and to invest it and in a situation where as edmund burke wrote everyone is forced to play the game although nobody understands the rules and very few understands the rules these people. i'm not denying they've committed to be used to it but ultimately they are presented with an unbearable situation in which they have to provide for a risk which is generated by the unstable monetary regime that we live in that's just saying that we need a banking system over the economy i mean a real economy and i think that's what we've really happened here and that's what causes so much rage i mean i would i'm the first to agree you need a banking system as john pointed out to have an economy but it seems that the economy has been sacrificed for so long in favor of banks because when you're bailing out greece you're not bailing out greece you're bailing out french and

german banks that's what you're been obviously and the big problem is that we're solving the interest of a second. which is overblown and i entirely agree with you on this and in fact whose growth and profit if there are any never trickle down to the masses it's a complete myth to say generate financial wealth financial profit and somehow everyone will benefit it's just not true it's not true in the us it's not true in the u.k. it's not true anywhere i mean except for maybe a city state like singapore small country like luxembourg that i can survive on on the proceeds of with nowhere else is the truth of what we need to do so channel money into productive capacities that can even include i would. never have been if it's into productive productivity why don't you just in. china or in russia i mean you don't have to do it in the u.k. you have to be very nature of the nature of the u.s. that hung on the very nature i mean to get out of a crisis you have to obviously preserve the jobs that are being destroyed but what you actually have to do is get out of it by investing in what's new now the interesting thing about the economy now is seventy eighty percent of jobs in the advanced world all service jobs and we have to think through what means because the

internet has vastly expanded the capability of humans to interact with the curious thing is they've reacted to that by actually being much more interested in things that are locally produced locally used the nature of services the personal fact means that actually you can rebuild an economy on the basis of advanced services in london i really saw this because people were getting absolutely terrified by the collapse of revenues from compact discs and so on and what happened is all the money was being spent on life performance and we were just about to dismantle our performance venues and i said hold on no you're going to need it and actually the apollo which was threatened with clothes a famous dance hall in and west london this is the apollo that's the way to go the trouble there is it's a very interesting example is i think it does show that people have a desire for you know rio in this case real service they can participate in and benefit from a complete virtuality which is what global finance after all is the same time as

you say it's now an army which is a global chain and does benefit from. this kind of globalization has brought about the current crisis i think what we also need is to diversify economies and not just have services even though they can be better and more productive services and less productive ones but also high tech industry high tech manufacturing that is also in even agriculture i mean there is still food shortage russia has huge resources in this respect that's where the money needs to go not into finance and not into services which in the end can be also very fortunately with good financial eyes all right gentlemen we're going to go to a short break and when we when we return from the break we'll talk about the fate of western capitalism and globalization stay with r.t. . well when one deals with water it has to realize that this tremendous amounts of

damage that are done not just human damage but damage to the physical environment in which the battlefield takes place tremendous amounts of damage done by aerial bombs by napalm boy chemical city whether it's a sonic boom city truck to marine mammals or it's the burning oil fields in iraq or it's destroyed coral reefs in the pacific for women purposes the list just goes on and on the geneva conventions of nineteen forty nine states that they are shall be taken in the war to protect one by against widespread long term and severe damage the united states although it is accepted almost all of the provisions of protocol one has taken exception to that.

welcome back to crosstalk i'm peter lavelle we're discussing the fate of capitalism in the age of globalization all right let's shift gears here i mean one of the things that's happening in western economies is this what i call this age of of entitlement where people believe that the state owes them something i'm looking at the baby boomers here i mean is this a mentality and we mix it in with election cycles here too you know where the election cycle going on in the united states nobody wants to touch these entitlements that's just the kiss of death when you want to be elected ok but that has to start changing i mean the welfare state and the abuses that are committed against it is a massive problem and. just to give an anecdote recently a few years ago in london the bar of hama smith was won by the conservatives and they won it by going around all the council flats in hammersmith and promising people a new kitchen if they voted conservative and they did and presumably the new kitchens were provided in other words to state the state's role as a political community as

a community as. completely bastardized. and has become instead a vehicle for providing material goods and naturally that is open to abuse it's open to abuse by indigenous people it's open to abuse by immigrants and it is one of the courses one of the many causes of ballooning state budgets people as you say in your question expect the state to provide for them and they regard the state as a cake. normalises we look at the history of political economy this is a relatively new phenomenon and it came about after the second world war we before that people didn't expect so much of the state you were lucky if you got basic education but nobody promised you would job nobody you promised you job opportunities it's gone too far but it's got into the election cycle now it's very few people a few mavericks can fight it but most people just go along to get along i think but i would probably. the. chief of the the welfare states after the

second world war was that it did provide universal standards at the very least people weren't left say to die in horrible conditions and that was the whole reason why it was created in the first exactly so i think the idea of universal standards is still one shouldn't entirely abandon but i think it's the mode of delivering any kind of any kind of wealth that we need to revisit and what was destroyed with the centralization of welfare was all the mutualistic arrangements or the reciprocal arrangement among workers and then fact were quite advanced things like friendly societies things like hospices they were actually all community based or based on professional association on guilds essentially and if we not privatized wealth but turn into something community based user base so that people can participate in the services that they receive then i think we're doing the right thing because you know we'll neither not looking at the state. that you look into your model which still exists in front exactly you still have thousand politicians you think it

could be linked to local government so it's not anti status is just saying the central state doesn't know what we need. local authorities might regional authorities in some cases but especially to the community of users and providers that should really be empowered not some bureaucrats in london paris or new york or washington d.c. good to see i would distinguish between a sense of entitlement and a sense of right and the difference is this entire moment you say i want to and nobody else is going to get it and i particularly want to i don't want to take it you can't take it away from me because that is very important i think a society of right simply means we should all have it but the curious thing is that you need to update life liberty and the pursuit of happiness because nobody says life liberty and the pursuit of education but actually if you look at what's happened as society has progressed the one thing that has never happened is the leaving age for school has never gone down it's always gone up simple proposal universal higher education that's what the workforce of tomorrow will need to be like if it's going to produce the sort of stuff that we can sell and it's not by

the way counter posing the advance course of produce or services to the basic ones basic infrastructure is needed in order that you can have those intellectual functioning the creative city has to be continually redesigned to be the place where this sort of thing happens so actually you need this huge infrastructural investment and you need what i call social investment investment in civilization and going back to the role of the state right here in this is a very imperfect u.s. i mean and almost to the point where it's a self-inflicted wound because who can afford to do huge infrastructure projects i know the united states freeway system for example that really needs a lot of repair you can do privatized that i hopefully not but a lot of people you can have structures other than the central state and its agencies you can have infrastructure banks for selling to local investment trusts and all sorts of ways you can deliver on the same goods and services we're talking about without involving either the central state or cartel capitalism what we need

to break is the collusion of the central state and big biology. national corporations and essentially decentralized economy we all believe in local democracy or at least most people do we never believe in democracy when it comes to the economy we don't believe in local participation it comes to economic decisions when i think we should just simple question is the b.b.c. a state institution it's a public. exactly that said of the state republican a shooting star of the. day but for the same you know what a price one should rephrase the state has to come back but in a diverse diverse one of the things we have to do is reinvent the state actually the public realm enticement based on the fact that if the private investors are going something else that is publicly accountable is going to have to step in it doesn't have to be. all roads lead to rome but it's about democracy too i mean when you have an election cycle you have to deliver the goods at least at a certain point or make promises that you can't keep and this is one of the

problems that the industrialized west has because it has to give the pretense of making promises in entitlements such a very short limited basis but when you have india brazil china russia they think very long term i mean everyone in russia talks about a twenty twenty five project ok and slowly but surely they're working away at it but there's a longer vision and it's now tied to the election cycle how much of the problems in the economy in the west is tied to elections the more the state provides material goods and the more that it's seen that to be that inevitably more it will fall prey to election cycles but i want to use what we've what's been said about higher education and other social goods provided by the state to illustrate or to me seems to be a very disconcerting fact as we know in britain for instance higher education now is now no longer free when i was a student it was free this is one of the many examples property is another one

which shows that the generations are getting poorer we are on a downward slope in spite of all the. propaganda about how free trade makes anybody richer i don't have figures but i it is my firm conviction that there is nobody or very few people who are rich parents property prices have been driven up by militarily generated flexion and by monetary instability generally and the accumulation of debt is obviously a taxation in one form or another on future generations to the benefit of present one one of the this is one of the big issues of today into what you are limitless very interesting is if we look at the emerging market world you have this expansion of middle classes huge middle classes right now but we have in the west in particular the united states in your zone we see the middle class being under enormous assault in the income disparity that we see the inequality that is growing now i mean to echo what john just said there i mean very few people know will say

they're going to be think they will do better than their parents i think what's happening is that we're seeing a polarized nation not just between the rich and the poor in the sort of juristic sense but we seeing essentially conservation of the on the class and i don't like using the word but it isn't on the class we seeing a middle class it's constant being squeezed for all the reasons a drum set and we seeing a tiny tiny upper class i'm not using this in any social sense we're really in an economic one is getting much much richer than anyone ever before where you know that their wealth is going up by a factor of ten one hundred or more and you know but china has a similar problem because it has now got the fastest rate or it's got a fastest growth of billion as you know soon london property prices will be pushed up in that segment of bodies and used to go with growing middle class simultaneously do well sure but the fact is the kind of capitalism that we're dealing with does polarized society even in a very different context so yes you have to write about the middle class in china but china would also experience and is already experiencing social strife and

conflict because of this polarization it takes on different forms but capitalism always works it works good. the expropriation it does not trickle down to the masses that's a great myth which i hope the last three or four years you know it's going to get you also if i go to use it you know a lot of people say the middle class they get the state off my back but maybe in the industrialized west it's the state that can save the middle class actually i think the fourth myth is that the middle class exists. there are two divisions you need one is between the financial guys and the corporate guys and i'm happy if the corporate guys invest the financial guys are not going to so if the corporate guys don't invest the public's going to have to come in which is what's happening now but the other thing is the property property owners and i was amazed to discover when i got to the united states that everybody who's in the trade union is considered middle class you just mean guys with jobs that's what you mean if you're very terrible the family capital or capital gains or whatever you just meet people

who make money from money and people earning money from work most of these middle class people make money from work and they should cast their lot in with the poor of people who make their money to the point where being employed means middle class well i once. dealer i know in both once very powerfully that for him working class meant people who didn't want to work. was an urgent you know when it collapsed and i would put it another way around when you get a crisis the middle class becomes the people who have to work and they start having this illusion that they can become rich like everybody else and suddenly realize hey we're just like the poor guy down the street that i used to pass by they're all in the same boat when they realize that then you'll get democracy back then you'll get equality back because once people think we're all in the same boat then they start thinking we should all have the same rights except the guys who are taking it away from us and that's precisely where we need much more. many more risk in sharing our risk and profit sharing arrangements so that you know you don't have

a disconnect you take risk and suffer the consequences because what we've essentially dealing with is a system that has. privatized profit nationalized losses and socialize risk and that is the system we're still in three or four years after the onset of crisis them for the rich and capitalism for the poor exactly and in some ways what we really need is for people to share risk and profit so that if things go well everyone benefits and the way to do this is through property it's through various forms of property not just individual property but also forms of communal property housing associations are a great great example of this that's where you share risk and profit everyone is better off if you work together you could never for example negotiate better energy deals with the big companies you could only do it as a small body and we could have this across the economy. money is with a credit union manitoba the prairie's have them right you give them their money they keep it. other people like you. think tory a trick. to be old fashioned here thank you gentlemen for discussing this

with r.t. . wealthy

british style. expert on the. market why not. come to. find out what's really happening to the global economy with mike stronger for a no holds barred look good but global financial headlines tune in to conjure reports on our.

love the top and left alone controversial extradition laws in britain trap its own citizens and gaps in the justice system spending years behind bars without charge. italy prepare us for a wife of a stereo as a government sits down to approve a range of major tax hikes and spending cuts while downplaying fresh outrage over its own lavish budget. with the waif of revolution still in the air of the arab world there are fears america's support for regime change could spell trouble for israel its closest ally in the region. you're watching r t coming to live from moscow i'm marina josh welcome to the program and.