|1.||Is there an economic crisis?|
|2.||What are its causes?|
|3.||Who benefits and who loses from an economic crisis?|
|4.||Is there a solution to inflation, unemployment, recession, and depression?|
Conservatives believe that there is an economic crisis but that it does not involve large numbers of unemployed persons. It has to do with the availability of capital to banks, corporations, and investors--in other words, there is a crisis of liquidity caused by too much competition among banks. In competing to loan money, banks have driven down the interest rates to too low a level to gain a reasonable return. Also the increased cost of oil due to the Arab oil producing states raising their prices has created pressure on the economy.1 The crisis is both internally and externally caused by the flawed operation of our own financial institutions, and pressure on our economy from an outside world over which we have lost control.
To conservatives, unemployment is not a major problem. A certain amount is necessary to keep inflation under control, that is, to keep the dollar from decreasing in value. Their only concern is that too great a number of unemployed persons may lead to social unrest and government intervention in that sector of the economy not under their auspices and control. Conservatives think that a substantial rate of unemployment, between 6 per cent and 10 per cent, is economically useful to keep wages down and workers in line.
The conservative solution to the liquidity crisis is twofold: (1) A massive coordinated input of funds is transferred from the government into the corporate economy. This transfer of funds must be under the control of the corporations themselves. (2) The consolidation of banking under the control of a few major banks, such as the Bank of America, Chase Manhattan, Morgan Guaranty Trust Co., First National City, Chemical-New York. Consolidation would limit competition among banks and allow a stable control by a few superbanks over funds that circulate in the economy. Bank failures and the takeover of smaller banks by larger ones is an acceptable policy to conservatives.
Downturns in the economy are not necessarily viewed as a crisis by conservatives. Situated at the economic pinnacle, major corporations and banks increase their control over the economy in a depression. Their paper profits may seem to go down in the short term, but in the long run they benefit financially.2 A managed recession, during which a downturn in the economy is deliberately created, is in many ways in the interest of conservatives who control the corporate economy because it allows them to increase and consolidate their power over the American economy.