Is Capitalism Collapsing?

The world financial crisis which started in 2007 is getting worse each day, as the economy of most countries around the world face increasing levels of problems.

Unemployment is on the rise, and in a country like Spain it has already reached 20%. What is wrong with the current ractice of global capitalism?

In my opinion, the basic foundations of capitalism is unsustainable on the long run, especially due to its following two pillars:

a) The core objective of investors and business enterprises is profit maximization

b) The financial system is an interest-based system

The first factor leads to greed, and it's part of human nature to want more wealth and to earn more profits. Those who have a million want to make it 10 million, and those who have 10 milion want to make it 100 milion, ... and so on. There is no limit to human greed, and this is dangerous for society, as greed can lead to fraud, corruption and a monopoly practice of business in order to maximize profits. Is it a coincidence that the game we grew to love was called "Monopoly"?

The second factor, interest-based finance, makes the financial system unstable on the long run. Every number of years, a capitalist economy must go through a recession and on the long-run a depression or a major recession like the one the world is going through today. The important question is: Why?

And a summary answer is that an interest-based system expands money supply beyond the size of the real economy. This leads to "bubbles", which are normally found in real estates, stock markets and commodity markets. With time, what happens on the long run is that the size of the financial system becomes several times larger that the size of the real economy, and when one piece of the domino collapses, the whole system fails, as what is taking place today.

There are other factors why today's global capitalism is unsustainable, including its promotion of maximum levels of consumerism for maximum profits. Resources are depleted, our environment gets polluted and standards of life on earth becomes worse.

More reflections on this matter in future posts .....