from the streets of canada. trying to corporations. hello here at r t h q tonight in central moscow is kevin i am very pleased to have you come to these are the top stories from r.t. tonight the first fallout from dmitri medvedev and vladimir putin's presidential plans as russia's finance minister is being fired in the bed of sacked alexy could run after the treasury chief said on sunday he could not serve under a new government if russia's leading tandem switch jobs at the credit. bureaus and leaders scramble for urgent rescue plan to stave off a euro collapse and a new wave of global recession the international monetary fund's accuse of not treating countries equally but it prescribe small cuts for europe while doing america's bidding. and the un's most powerful body meets for talks over the

palestinian statehood bid which president mahmoud abbas handed in last week but the u.s. and israel are being blamed for stalling the historic move. to let and thirty one on the button next people of all cross talk looks of capitalism's fight for survival after leaving millions of people struggling to keep their jobs and homes programs just moments away. we'll. bring you the latest in science and technology from the realms. we've got the future covered. hello even welcome across town peter lavelle as the great global economic financial

contraction continues unabated is it time to rethink capitalism as we know it today should the world still rely on markets to generate wealth when the rich only get richer and middle class is crushed and is that of capitalism they can serve the interests of all. across not the future of capitalism i'm joined by tom palmer in washington he's a senior fellow at the cocktail institute in new york across their own camp that he is the founding editor of the independent newspaper and in bangkok we have richard duncan he is an author and sheet of qana mr black horse asset management in singapore all right gentlemen crosstalk rose in effect that means you can jump in anytime you want but first marsh i'd like to go to you is capitalism doomed the puzzle when you ask peter for many western consumers producers managers and owners capitalism has been more of an exercise in wealth generation and distribution has been a fundamental belief in deregulation that fuel consumption or lower taxes and more

political power for capital than for labor but the meltdown of two thousand and eight and failed growth attempts since then have exposed the myths capitalism has built up over a generation and many are now asking if the preceding generation was an aberration and of capitalism as we know it is dead karl marx it seems was partly right in arguing that globalization financial intermediation run amok and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct if it isn't death then it's radical change with key people are stretched to their limit free trade reached a doha round impasse in two thousand and six. carbon trading still sees developing nations saying they shouldn't have to pay for what developed nations have already done job concerns have heightened economic parochialism and deregulation that path led to banking bonuses lehman brothers tarp and massive banking debt socialisation but when it comes to ordinary people we suffer cuts we suffer austerity measures so

it's about making up his clock human and making it clear the purpose of capitalism itself says the global economy teeters the generation where capitalism was seen as a self-evident and righteous and has passed if it isn't dead it will be different and on the road ahead more questions will be asked of capitalism and who it's working for maxine peter thank you very much for that all right i'd like to go to richard first in bangkok when people say it's the end of capitalism what is what do you think it means what do you think they think it means petero actually i don't think the economic system that we have now is capitalism capitalism was a economic system in which the private sector controlled the production process through savings capital accumulation and investment and the government played very little row well now the u.s. federal government spending twenty five dollars out of every one hundred dollars

spent in the economy and the central bank is creating the money and manipulating its value moreover their production process is no longer driven by saving and investment instead it's driven by borrowing and consumption as in one nine hundred sixty four the total credit in the u.s. was one trillion dollars now it's fifty trillion dollars there's been a fifty fold increase in credit in the last fifty years less than fifty years this credit expansion is completely transformed the size of the economy is the structure of the economy and in fact the economic system itself and maya do we have moved from capitalism to credit ism for lack of a better word that i mean our credit ism is in crisis because the private sector is incapable of repaying its debt. ok ron if i go to you and to you in new york and good night it's a pleasure thanks to me when i run in new york now dependent i want to go to new york here that's a very interesting point richard brings up

a we don't even have capitalism anymore we don't even need to talk about its end because we're in a totally different system anyway what do you think about that. well i think we could talk about the myth of capitalism the myth of the free market there never has been such a thing as a free market governments have have always intervened usually for the benefit of capital the railroad boom of course involved a massive transfer of wealth especially in terms of land to the railroad industry the post world war two capitalism boom was in many ways especially in the west was a fusion of state and corporate interest so there's nothing unique about that and in terms of credit and financialization these are nothing unique either in the one nine hundred twenty s. you also saw a huge expansion of credit that fueled the stock market boom financialization goes hand in hand with capital we should see the post world war two boom as the aberration i know we're going to keep coming back to this but this was a period of unparalleled growth for unique historical circumstances and i we do

have a hybrid. system where largely it is controlled by corporate interests and the thing is capitalism tends to words and monopolies are as we've seen in many historical period and these monopolies will exert power over the government to increase their share of the mean to increase their war wealth to increase the upward transfer of their wealth and that's what is really going on in this period and again it's nothing unique historically ok tom i'd like to go to you in washington what is what is different about this economic turndown for capitalism and we've already heard about credit was it big deregulation was it just preferential treatment towards corporation or was it for tax policy what is unique about the challenges that capitalism is d.c. today. well the big problem was a crisis of interventionism indeed richard pointed out the state institutions the central banks pumped out drag

a thick amounts of credit i mean setting interest rates into negative territory two thousand and four two thousand and six the fed had negative interest rates this is not a capitalist phenomenon this is politicians intervening into the economy to pump it up and create a short term this created an asset bubble this is a completely predictable result of expansionary monetary policy of that sort and then interventionism through fannie mae freddie mac. the basil accords poison the world's financial systems so what we've seen is a real failure of interventionism and cronyism not free market capitalism we have a real case of mistaken identity here as to what is responsible for the crisis people such as a room who say it's an increase in greed greed is a pretty constant thing in human society and there's no metric that showed it increased but we do have very good metrics of fed policy and government policy to create an asset bubble that then burst and now we're living with the consequences but we have seen in this in the really beers repeating is

a huge increase in per capita incomes around the world because of free market capitalism india and china and china after nine hundred seventy eight india from one thousand nine hundred one literally hundreds of millions of people lifted from terrible poverty caused by socialism and lifted into middle class prosperity this is the largest poverty reduction experience in all of human history that's happened in our lifetimes really look like you want to jump in there i mean one of the interesting things about today's capital is or maybe to capitalism of our generation we've always associated capitalism with civil liberties and a strong middle class now what we just heard from tom is that we have rising middle classes in the emerging world but we have in the emerged the industrialized world we have middle classes that are being polled variety still k. so capitalism need something different to different people in different places

apparently. well first of all in terms of india having been there frequently that's a nice fantasy to tell people that hundreds of billions of people have been lifted out of poverty something like over eighty percent of the population is in moderate to extreme poverty a few tens of millions of families have had been lifted out but when you're talking about a population of over or billion it's not that significant and what you have also is massive dispossession going on and we cannot and that's important to remember because we cannot separate any particular capitalist economy from the rest of the world so the post world war two us. led boom was in many ways based on super exploitation in the third world remember so it was an error of all sorts of wars and great instability in the in the post colonial world and a lot of it had to do with ensuring the flow of cheap come oddities copper from

chile to and from bolivia oil from the middle east box from indonesia and supporting all sorts of repressive regimes to ensure the this is just so you can see that we're hearing what we've seen is that the instability has now moved to this you have these austerity programs that are now being imposed on the western nations themselves whereas in the eighty's and ninety's they were being imposed on the periphery because the demand is always the same by those who control the economy that they need to have their profits they need to have their wealth flow upward so that we see is a system that is breaking down but again i don't think this is anything a historically if we're talking about the last couple of centuries unique what is going on in this moment in terms of financial institution and i was like a likely time i did say about fantasy but i want to go back to richard first before we go to the break ok i've lived in asia for most of the last twenty five years and

i've watched. be transformed by the economic boom that's taken place but the boom here has occurred for one reason and one reason only this because of the u.s. trade deficit the u.s. trade deficit grew to be eight hundred billion dollars that was two million dollars a minute that's what enrich the rest of asia that's what made it a boom and that trade deficit was paid for on credit now that brings us back to our credit crisis now this economic paradigm credit expanded every year in the united states from one nine hundred forty seven until two thousand and nine and when it started to correct then the crisis started so we're now at the end of this forty fifty year old economic paradigm and it looks like it's going to implode when you think about that time earlier you said fantasy go ahead and it will take a sort of what we heard from a rumor a lot of what we heard just a lot of the rehashed dime store marxism and it doesn't stand up to the facts let's look at some actual facts on trade flows take the american economy does

a much greater trade with canada next door that's the largest undefended border in the world and over six hundred billion dollars a year of trade goes back and forth across that border thanks to the matter is the people in poor countries in africa for example suffer from a lack of trade not too much trade so this whole periphery couper. as they say dime store marxism just doesn't stand up to analysis of the facts and if you look at india i recommend from das is very good but i don't i'm going to jump in here and i want you to continue this point after a short break and after that break we'll continue our discussion on capital state party.

twenty years ago. largest country in the suitcases of. course how did. you get the job. where did it take. me to leave leave leave leave. leave. leave leave leave. leave. leave to go. to. the for.

the first story. in the future. welcome back to crossfire peter lavelle to remind you we're discussing if capitalism is due. to slow. and i think we'll go back to a run in new york ok you're accused of a dime store copy marxism ok you can respond to that when you want but one thing is gentlemen one thing is undeniable is the the income distribution in the united states and names and some texan in europe now is getting worse and worse we've never seen anything like it since the beginning of the great depression and nine

hundred twenty nine now is that has something to do with the current model of capitalism the rich just get richer and the poor just get for a room go ahead. well of course if we look at the neoliberal turn in the one nine hundred seventy s. what's going on is that at that point wealth and income has dropped to historic lows for the upper one percent the upper ten percent three point one per side and so you have reagan coming in the us that are coming in in england and you see a massive upward transfer of wealth so for example by the mid one nine hundred seventy s. the top one percent of the population held about twenty percent of the wealth that was a historical low by the late one nine hundred eighty s. barely a decade later it was up to thirty five percent and recently we are now above gilded age levels the four hundred richest families in the country in america have more wealth than fifty percent of the population that are hundred fifty million people and we need to really understand we can talk about the neoliberal moment in terms

of deregulation flexible was asian trade liberalization personal responsibility we can talk about the idiology and tools of it but really what it is is about a massive awkward transfer of wealth because even though the ideology is market fundamentalism that government should not intervene in markets government always intervenes in markets and it depends on whose side they're intervening on the keynesian moment you did have some intervention on the side of labor but now what it is it's on the side of capital so with all of the various debt crisis such as the mexican peso crisis in the one nine hundred eighty s. least asian financial crisis and the credit crisis now we see government intervening to aid corporations to ensure that bondholders are kept whole that that is what this is about i think we need to do away with the fantasy of the free market that is i'm uncomfortable purchase like a paddle ok richard if i go back to you in bangkok i mean i really brings up

a very interesting point is that governments around the world are propping up capitalism because capitalism is really to the benefit of corporations and not to labor and. not to civil society in general is that how capitalism is changed it would say since the 1980's well during my my lifetime it seems to me that everyone has become much richer of course the income disparity has become greater but its credit has expanded to fifty trillion dollars that's created a great deal of wealth globally the problem is now that. debt on one side is an asset for someone else and so when the dead begins to blow up as it is now it also destroys the assets so the banking system is extremely vulnerable because its assets are being destroyed with the debt destruction and if the credit begins to contract now all of us are going to become very much poor the rich and the poor and so whatever a kind when i left office again we have around three billion all manner of the other and try to address it to dollar doesn't want her. really i repeat what i had

. i said let's not forget that over three billion people in the world live on less than two dollars a day i think all this abstract well actually forgets the reality of the extreme deprivation of poverty this is this is. lori's example that. life expectancy for russian bail from the soviet union went from approximately seventy three years old to fifty nine years old what you're seeing is the destruction of people itself what we call that there is a reverse there's a reverse true. goodness is reversed here is getting better ok but now i see your point that said that's an extreme crash that is that is unprecedented in human history for an industrialized country to achieve a drop in life expectancy outside of a war was no absolutely true the collapse of the soviet union and you can see why

russians are very sensitive about the ninety ninety speakers of the shock therapy that was a practice in this country and people haven't forgotten it you've been wanting to jump in go ahead this is a very important point a room brought up but he's got it backwards if we look at the percentage of the population that's living and two or three dollars a day it's a business lehi but it's falling and that is the key and it used to be that almost everyone except for the tiny ruling elites who controlled the streets lived at such an abysmal level of poverty that percentage has been falling as a percentage of world population he mentioned the case of india he said well still it's the case there are lots of poor people in india have always been poor wake up and the question is are they getting richer or poorer that's the relevant question poverty is the natural state of mankind and wealth has to be created it's created by free market capitalism by investment by production and by. exchange so if you

want to look at india the question is has it been changing since ninety ninety one for better or for worse and the question is unmistakable for better the same thing in china i visit both countries and i did change gears gentlemen literally commission you and your business richard in bangkok ok let's look at the great contraction going back and the two thousand and eight i mean from way i the way i look at it is that we've seen banks bailed out we've seen corporations bailed out if you go to tarp and united states i mean it's always the rich people being bailed out is that how capitalism is supposed to work because are these the people only creating jobs for the rest of us. but again i think that the government recognizes that rather it thinks that we have capitalism or not is irrelevant this is clear that if they don't bail out the banks and for that matter the major automobile companies that if the banks go bankrupt it's going to destroy everyone's wealth that fifty trillion dollars i keep talking about would completely disappear and we would all be hungry so they had no choice but you know this is not classical

capitalism but powerful ism. capitalism is based on a gold standard the reason we have the roaring twenties and the great depression is because the gold standard broke down in world war one and created a big credit bubble during the twenty's the same things happened this time the gold standard broke down with the redwood system in one nine hundred seventy one it created a very long credit boom and now the credit boom is going up and we're likely to collapse into a new great depression unless we come up with a very clever new strategy is to resolve this crisis tom what do you think about that because a lot of people say that there will be western in financial institutions of their tool box is empty right now that is a contraction is not like we've had recession since the second world war there's something fundamentally wrong and it has to be some fundamentally new answers to the problems that capitalism face today what would you say to that. so the first question is bailouts are not a feature of capitalism it's not

a feature of the free market that someone whose best friend is the treasury secretary gets a giant shock like goldman sachs that this is cronyism pure unadulterated cronyism that we're suffering from right now bailouts of the banks bailouts of companies and initialisation of general motors by the american government and what's happening in other countries around the world as well as cronyism we see is a real crisis of interventionism which is what caused this crisis so i would have let the current would have let them crash. absolutely would have let the reluctant the last part of the we do a comment about a few words our economy is firms can rise if they produce value and satisfy customers and they go out of business leaders agree with me this is ok i want to room i want to go. to system we have capitalism for the rich and we have nothing else for i want so we have socialism for the rich and we have capitalism for the poor how do you like that do you agree with that phrase or not. i think that's

a very cruel way are you considering it and i think that richard brings up an important point in terms of yes something had to be done what we see free marketers. peddle idiology of the house down. let it burn down it's not what happens now what happened with the credit crisis is that the governments nationalize the losses they should have national actually nationalize the bags it is in the public interest to have control over the credit system and that could have easily been achieved and this is the point i'm making as we can see again and again and again bailouts are actually the norm there's been hundreds of these financial crises and with increasing frequency over the last thirty to forty years under the neo liberal regime and you have all sorts of bail out the mexican peso crisis was a massive bail. baggs log term capital management was the bailout that you have

these bailouts again and again and again because the only other option is to let the economy crash which would be extremely devastating now the way the bailouts are structured they're structured namely for the benefit of the corporations and wealthy and certainly some benefits flowed out trickle down words in terms of that the credit system keeps pumping but we need much more of a human centered system rather than a profit it's a very good point and i go to richard on this point here what is the future of capitalism here because i think a lot of people would agree irrespective of the ideological trajectories that it's reached to reach a certain you know critical mass that you can't obviously we can't keep going on the way we are now what needs to fundamentally change where we are because you said that there is no capitalism and if you're a proponent of that system what needs to be done to bring it back on line. right i think as i said we have a government directed economy now to a very large extent through these bailouts and the government spending so much

money but in order to revert to something closer to economic orthodoxy that perhaps could ensure sustainable growth what we need to do is we need to stop borrowing and consuming and instead we need to borrow and invest what i'd like to say my fear is that if the credit begins to contract then this economic system built on credit is going to implode therefore how can we ensure that credit continues to expand but it expands in a way that generates a productive return rather than just borrowing and consuming as we've been doing for decades i'd like to see the government borrowing invest for example i'd like to see the u.s. government borrow a trillion dollars at two percent interest and develop solar energy over the next ten years then that would be an investment that would yield returns for eternity that would also pay for itself we could bring down the budget deficit by two hundred billion dollars i would have to jump in here to many thanks to my guest

today in washington new york in bangkok and thanks to our viewers for watching if you don't you see an expanded member.

did i. mention free to take three. or four charges free m.h. three. stooges.