Yves here. Yanis Varoufakis’ “postcapitalism” is more coherent than most justifications of the disconnect between the financial markets and the real economy. I could quibble with some of his history. For instance, during the construction of the railroads in the 19th century, just as we have seen with perpetually unprofitable unicorns, creating currency for stock speculation become more important than building productive routes. But the financial markets were vastly smaller compared to the real economy then.
By Yanis Varoufakis. A Lannan Foundation virtual talk published at his website
Two days ago, something extraordinary happened. Something that has never happened before in the history of capitalism. In Britain, the news came out that the economy had suffered its greatest slump ever – more than 22% down during the first 7 months of 2020. Remarkably, on the same day, the London Stock Exchange, the FTSE100 index, rose by more than 2%. On the same day, during a time America has ground to a halt and is beginning to look like not just as an economy in deep trouble but also, ominously, as a failed state, Wall Street’s SP500 index hit an all-time record.
Unable to contain myself, I tweeted the following:
Financial capitalism has decoupled from the capitalist economy, skyrocketing out of Earth's orbit, leaving behind it broken lives & dreams. As the UK sinks into the worst recession ever, & US edges toward failed state status, FTSE100 goes up 2% & S&P500 breaks all time record!
— Yanis Varoufakis (@yanisvaroufakis) August 12, 2020
Before 2008, the money markets also behaved in a manner that defied humanism. News of mass firings of workers would be routinely followed by sharp rises in the share price of the companies “letting their workers go” – as if they were concerned with their liberation… But at least, there was a capitalist logic to that correlation between firings and share prices. That disagreeable causality was anchored in expectations regarding a company’s actual profits. More precisely, the prediction that a reduction in the company’s wage bill might, to the extent that the loss of personnel lead to lower proportional reductions in output, lead to a rise in profits and, thus, dividends. The mere belief that there were enough speculators out there thinking that there were enough speculators out there who might form that particular expectation was enough to occasion a boost in the share price of companies firing workers.
That was then, prior to 2008. Today, this link between profit forecasts and share prices has disappeared and, as a consequence, the share market’s misanthropy has entered a new, post-capitalist phase. This is not as controversial a claim as it may sound at first. In the midst of our current pandemic not one person in their right mind imagines that there are speculators out there who believe that there are enough speculators out there who may believe that company profits in the UK or in the US will rise any time soon. And yet they buy shares with enthusiasm. The pandemic’s effect on our post-2008 world is now creating forces hitherto unfathomable.
In today’s world, it would be a mistake to try to find any correlation between what is going on in the real world (of wages, profits, output and sales) and in the money markets. Today, there is no need for a correlation between ‘news’ (e.g. a newsflash that some large multinational fired tens of thousands) and share price hikes.
As we watch stock exchanges rise at a time of tanking economies, it would be a mistake to think that speculators hear that the UK economy, or the US economy, have tanked and think to themselves: Great, let’s buy shares. No, the situation is far, far worse!
In the post-2008 world, speculators – for the first time in history – don’t actually give a damn about the economy. They, like you and me, can see that Covid-19 has put capitalism in suspended animation. That it is crushing corporate profit margins while also the destroying lives and livelihoods of the many. That it is causing a new tsunami of poverty with long-term effects on aggregate demand. That it demonstrates in every country and every town the pre-existing deep class and race divides, as some of us were privileged enough to keep social distance rules while an army of people out there laboured for a pittance and at risk of infection to cater to our needs.
No, what we are living through now is not your typical capitalist disregard for human needs, the standard tendency of the capitalist system to be motivated solely by the needs of profit-maximisation or, as we lefties say, capital accumulation. No, capitalism is now in a new, strange phase: Socialism for the very, very few (courtesy of central banks and governments catering to a tiny oligarchy) and stringent austerity, coupled with cruel competition in an environment of industrial, and technologically advanced, feudalism for almost everyone else.
This week’s events in Wall Street and the City of London mark this turning point – the historic moment that future historians will undoubtedly pick to say: It was in the summer of 2020 when financial capitalism finally broke with the world of real people, including capitalists antiquated enough to try to profit from producing goods and services.
But let us begin at the beginning. How did it all begin?
Before capitalism, debt appeared at the very end of the economic cycle; a mere reflection of the power to accumulate already produced surpluses. Under feudalism,
- production came first with the peasants working the land to plant and harvest crops.
- Distribution followed the harvest, as the sheriff collected the lord’s share. Part of this share was later monetised when the lord’s men sold it at some market.
- Debt only emerged at the very last stage of the cycle when the lord would lend his money to debtors, the King often amongst them.
Capitalism reversed the order. Once labour and land had been commodified, debt was necessary before production even began. Landless capitalists had to borrow to lease workers, land and machines. Only then could production begin, yielding revenues whose residual claimant were the capitalists. Thus, debt powered capitalism’s early oeuvre. However, it took the second industrial revolution before capitalism could re-shape the world in its image.
The invention of electromagnetism, on the back of James Clerk Maxwell’s famous equations, gave rise to the first networked company, Edison for example that produced everything from the power generation stations and the electricity grid to the light bulb in every house. The funding needed to build these megafirms was, naturally, beyond the limits of the small banks of the 19th century. Thus, the megabank was born, as a result of mergers and acquisitions, along with a remarkable capacity to create money out of thin air. The agglomeration of these megafirms and megabanks created a new Technostructure that usurped markets, democracies and the mass media. The roaring 1920s, leading to the crash of 1929, was the result.
From 1933 to 1971, global capitalism was centrally managed and planned under different versions of the New Deal, that included the War Economy and the Bretton Woods system. Following the demise of Bretton Woods in the early 1970s, capitalism returned to a version of the 1920s: Under the ideological guise of neoliberalism (which was neither new nor liberal), the Technostructure again took over from governments. Our generation’s 1929, that happened in 2008 was the result.
Following the crash of 2008, capitalism changed drastically. In their attempt to re-float the crashed financial system, central banks channelled rivers of cheap debt-money to the financial sector, in exchange for universal fiscal austerity that limited the middle and lower classes’ demand for goods and services. Unable to profit from austerity-hit consumers, corporations and financiers were hooked up to the central banks’ constant drip-feed of fictitious debt.
Every time the Fed or the European Central Bank or the Bank of England pumped more money into the commercial banks, in the hope that these monies would be lent to companies which would in turn create new jobs and product lines, the birth of the strange world we now live in came a little closer. How?
As an example, consider the following chain reaction: The European Central Bank extended new liquidity to Deutsche Bank. Deutsche Bank could only profit from it if it found someone to borrow this money. Dedicated to the banker’s mantra “never lend to someone who needs the money”, Deutsche Bank would never lend it to the “little people”, whose circumstances were increasingly diminished (along with their ability to repay any substantial loans), it preferred to lend it to, say, Volkswagen. But, in turn, Volkswagen executives looked at the “little people” out there and thought to themselves: “Their circumstances are diminishing, they won’t be able to afford new, high quality electric cars.” And so Volkswagen postponed crucial investments in new technologies and in new high quality jobs.
But, Volkswagen executives would have been remiss not to take the dirt-cheap loans offered by Deutsche Bank. So, they took it. And what did they do with the freshly minted ECB-monies? They used it to buy Volkswagen shares in the stock exchange. The more of those shares they bought the higher Volkswagen’s share value. And since the Volkswagen executives’ salary bonuses were linked to the company’s share value, they profited personally – while, at once, the ECB’s firepower was well and truly wasted from society’s, and indeed from industrial capitalism’s, point of view.
This was the process by which, from 2008 to 2020, the policies to re-float the banking sector from 2009 onwards resulted in the almost complete zombification of corporations. Covid-19 found capitalism in this zombified state. With consumption and production hit massively and at once, governments were forced to step into the void to replace all incomes to a gargantuan extent at a time the real capitalist economy has the least capacity to generate real wealth. The decoupling of the financial markets from the real economy, that was the trigger for this talk, is a sure sign that something we may defensibly label postcapitalism is already underway.
My difference with fellow lefties is that I do not believe there is any guarantee that what follows capitalism – let’s call it, for want of a better term, postcapitalism – will be better. It may well be utterly dystopic, judging by present phenomena. In the short term, to avoid the worst, the minimum necessary change that we need is an International Green New Deal that, beginning with a massive restructuring of public and private debts, uses public financial tools to press the oodles of existing liquidity (e.g. funds driving up money markets) into public service (e.g. a green energy revolution).
The problem we face is not merely that our oligarchic regimes will fight tooth and nail against any such program. An even harder-to-crack problem is that an International Green New Deal, of the sort alluded to above, may be a necessary condition but is, most certainly, not a sufficient condition to create a future for humanity worth striving for. Can we imagine what may prove sufficient? My controversial parting shot is that, for postcapitalism to be both genuine and humanist, we need to deny private banks their raison d’être, and to terminate, with one move, two markets: the market for labour and the share market.
Fully aware of how difficult it is to imagine a technologically advanced economy lacking share and labour markets, I wrote my forthcoming book Another Now – in which I lay out the argument that terminating labour and share markets, along with the type of commercial banking taken for granted today, is a prerequisite for a postcapitalist society with functioning markets, authentic democracy and personal liberty.
This is really an excellent piece. I’m not sure this current situation isn’t just taking advantage of a crisis, rather than the new normal. I struggle to see how this is sustainable much beyond perhaps the short-medium term. But I agree the potential is there for things to spiral straight into dystopia.
“I do not believe there is any guarantee that what follows capitalism – let’s call it, for want of a better term, postcapitalism – will be better. It may well be utterly dystopic, judging by present phenomena.”
I have been watching in horror as we seem to inch ever closer to the world portrayed in that 90s Keanu Reeves sci-fi “Johnny Mnemonic”. It’s a little different from the William Gibson short-story:
“In 2021, society is deeply engaged in a virtual Internet, which has a degenerative effect referred to as “nerve attenuation syndrome,” or NAS. Another major issue is the takeover of society by large corporations, many of which are based in east Asia. In Japan, the Yakuza organized crime family acts as corporate enforcement. Their brutal tactics make the transmission of data to be a dangerous business.
Johnny (Reeves) is a “mnemonic courier” with a data storage device implanted in his brain, allowing him to discreetly carry information too sensitive to transfer across the Net, the virtual-reality equivalent of the Internet”
Michael Hudson found clues of a debt based system between peasants and what he calls the Temple (equivalent of the feudal lord) back to antiquity. In that system, it was the King who was creditor and had to enforce periodic debt jubilees because the real interest rate charged was way higher than the growth rate. Therefore the notion of debt-free feudal system pre-existing to the modern capitalist order put forward by Varoufakis is doubtful.
Feudalism–perhaps better described in this context as the manorial economy–originally didn’t involve any form of monetary indebtedness. It was only when serfdom began giving way to various forms of tenant farming and/or share-cropping that indebtedness became significant in the lives of “ordinary” (meaning living and working on the land) people.
What could be emerging now isn’t another form of “feudalism” but what might be called neo-peonage, debt slavery. People are legally “free” (which the original medieval serfs were not), but the term definitely deserves scare quotes.
Post-pandemic America could end up being simply a Bank With A Police Force, unmediated by any sentimental slop about democracy, inalienable rights, etc.. We’re probably more than halfway there already.
Debts need not be denominated nor finite in order to be recognized as valid. It does help reify them, though.
And “A bank with a police force” is the most interesting way of spelling “markets” I’ve seen in quite a while.
You might also describe the new arrangement as neo-indentureship
Think about “effeciency” in all activities, so survival can be achieved from global warming transistion !
Capitolism is ineffecient in the extreem encouraging constantly replacing planned wornout, with “new stuff! Profit motive trumps desire to make products last their evolutionally mandated lofetime till replaced by a new inovation for satisfaction of the needed solution.
Man could have reduced job labor hours of work by 1/2 to 2/3rds over the past 80 years yet instead of that …hours of work have increased but fewer people are doing the jobs ! France has reduced to a 35 hour week and has atained the highest effeciency ever recorded in industrial production unless the Chinese may now have equlipsed them no data known to exist as nobody wants to know! The knoledge would through the “capitolistic class” into disaster, as they want us to believe in nonsense !
Cost of production caculated in money is being replaced by calculating in energy units which represent units of global warming! A unit of measure far more important the money!
enough for now , I think many one can understand this new method of measuring production which will soon be accepted world wide so we can get on with solving humanities real problems instead of getting richer than neighbors being our goal!
I don’t think Varoufakis claims a debt free feudal system, only that the order of debts appearance was at the end of the production cycle.
“debt appeared at the very end of the economic cycle”
I think Yanis was saying that debts came first, leading UP to the harvest. Smallholders would run up debts for beer, plow animals, etc., to be paid on the thresthing floor (without interest unless payment was insufficient and hence late)
I think Yanis is describing finance capitalism’s late stage — cannibalistic finance capitalism (share buybacks), or pre-collapse capitalism. Any better suggestions — we do need a common title for perverse finance capitalism.
If large corporations and banks can make their profits by increasing their debt and by obtaining liquidity from the central bank via QE, then there is no need for any other human beings except those who work in and for this very closed incestuous system. Those not in this cycle can just wander about homeless and jobless on an empty stomach. That scenario appears to be what occurs in the “post-capitalism” world of which most of us will be a member in standing.
We really need to absolutely destroy most of the global institutions which are now in operation before we can start anew.
Varoufakis’ last post here was a retraction of sorts from his first reaction to cryptocurrencies. He restated his position, saying he no longer thinks it is a solution to our financial needs because crypto is just as corruptible as the finance we now have. It’s the system, not the actual unit of exchange, because all the rot comes from manipulation for gain where none really exists. Like YV mentioned that in a crypto finance world there would be crypto derivatives, and etc. He said he didn’t think it was suited to be a “Monetary Commons” which is what he is looking for. And here too, he seems to be setting up his ideas for an actual, functioning financial commons which is designed to address real economic needs and real “wealth”. He is being kind to talk about “post capitalism” as if it were an extension of capitalism – a salvage operation sort of. When it becomes more obvious every day that capitalism as we have known it is in a shambles. There’s no reason to pretend that profit can somehow survive its own self destruction. I don’t think it can.
Important nuance: “It’s the system, not the actual unit of exchange, because all the rot comes from manipulation for gain where none really exists.”
The problem is political, not mechanical or technological.
Growth is nearly history. It used to be that the system could just expand. I dont think IP or crypto quite equal the historical outlet of war and conquest of new lands abroad.
Globalism has nowhere to go, excepting investments in revolutionary technology. Possibly.
Urbanization might be overlooked too, though maybe that wont be the future either.
Does God ever tell people to eat less? God and the infinite is the fiat bank at the center of the Federal unions of States with their hands out kneeling. Bread and blood and figure it out.
So Jesus preached that debt forgiveness was okay to ask for. The Jubilee made the system work. Once debt cannot be paid nobody is happy with the system. This is because the system doesn’t reach down past others to the orphans and those whose families hate them or loved them and were all killed and tossed to the winds.
We’ll meet up in America. We’ll meet up in Philadelphia. We’ll study and talk and wait in Berlin.
Vision will make for you a king. After that it is an inheritance. After that it is that you killed the other king.
The worldly man was willing to go to the castle city 25 or 50 miles away and sell the crop and the less perishable grain and give the rest to the church and head home. Yeah bread.
We have to find God and create God and kill God. God is the repository for the perfect vision. It is an economic thing as a means to be sheltered and clothed and fed.
God can afford to lose it all since god never eats. For god there is no debt it cannot pay or ignore. The Fed is like God. “You go and ask for our money.” Is the Governor the one or does he get to send the State Treasurer? Little State Speaker of the little State Senate?
I combined the National Insurance company with the National Treasury and my citizens are to have Whole life policies from birth, meaning they cannot be born into debt they cannot pay.
I like the battle Salamis. “These sailors that saved us have no farms and you cannot sell deeds to the waves.” It is fair that they have the vote anyway. I like that.
Wow, rich and subversive prose, reminiscent of Eliot! Please keep posting!
Finance capital is about exchanging IOUs for real resources. We are now in the phrase where we have a lot of IOUs and decreasing real resources. Many of the IOUs will be found to be worthless, and the real resources will be found to be more scarce than we expected. This phrase is the final phase of price discovery, as we begin to find out the extent of the bezzle.
In illusions, (according to Chrisopher Nolan) the stage when the disappeared object is brought back (to rapturous applause) is called “the Prestige”. In this case, the disappeared object is the wealth of nations, and it will not be brought back. How about calling this absence of prestige “the Discredit”?
what and how do we fight this development?
Anybody having any concrete ideas?
stop buying their crap would probably be an important step.
why do so many still bank at BoA?
Shop at Walmart?
partially answering my own question, even I darkened the latter’s door in the last 8 months…in the search for stocked shelves(and notably, often failing to find them even there)
The Enclosures go on, apace, abstracted into the background and subconscious.
Nevertheless, Withdrawal of Consent in a corporatised and totalised mob state must include withdrawal of our participation in their systems, to whatever extent we can manage.
After all, it was the sudden collapse in Demand that set off their apotheosis into some ethereal realm, disconnected from felt reality.
To them, we’re milk goats…and our milk is money velocity.
Withhold your milk, and convince as many other goats to do the same.
I’d also be seriously thinking about all this “wealth” we hear about…what is it exactly?
zeroes and ones in a mainframe, somewhere? or in the Cloud?
Utterly reliant on the sufficient Belief of a minimum percentage of Humans…it only has the power we give it.
So stop giving it…and convince as many of the other goats to do the same.
Once a sufficient number of actual humans understand what money is…perhaps with the help of the ongoing spectacle of diaphanous thoughtforms being “made whole” by the creation, ex nihilo, of trillions of dollars…maybe we can use that extraordinary tool set to do something else.
Speaking of Enclosures, aren’t we as the general public viewed as little more than Highlanders to be Clearanced? There is certainly an element of dehumanizing that has become less and less disguised over the years.
Time to organize a general strike. Mentioned here last week I believe. Or perhaps a credit card payment moratorium. Enough people are probably already having problems paying card debt so why not organize it?
I’m terrible with time, but whenever it was….one day, “general strike”, “rent strike” and “debt strike” were all at the top of twitter’s trending list…the next, george floyd’s video.
a little later when the resulting protests started burning cop shops and looking at banks, everyone rushed off to topple statues.
all indicative of what the Machine considers important: withdrawal of consent(which is what those 3 phrases represent) and the symbolic edifices of power.
(tiffany’s, et alia were sacrificed…as were mom and pop’s…the better to be pointed at as evidence of Mob=Bad.)
one hears about “Influencers”….the vapid Kardashians “influencing” status seekers towards new fabric arrangements to cover their emptiness….
we’ve heard for most of a generation how we, as hyperindividuals and Enterprises, have the Potential(tm) to be “Influencers”, ourselves.
instead of artisan goat cheese and spectacle vids, couldn’t we “influence” in another way?
Amf – Basically what you are saying is just what I have been telling people for over 10 years now when they ask “so what can we do?”. I say LESS!
Apparently it is the hardest thing you could ask of them. I have had some folks express outright anger at me, saying it was the worst advice they ever listened to and feel they lost years of potential because of it.
As far as what money is- all you need to understand is that without it you die, without enough of it you and your loved ones suffer and die, there is never “enough” because money always goes away much faster than it comes. Until we change how money works nothing else will change
How about “make beautiful things from what you have, careful to source whatever else you need for that sustainably.”
People need to act, make and engage with each other more, not less. Take external energy out of what you do: use your mind, your language and your hands.
Transformation of what industrial and finance capitalism has left us is something we can all do. Money is one thing financial capitalism has left us, poorly distributed as it is, spend where you can away from the maw of the techno-sphere where IT and finance capital steals a percentage on every transaction.
The problem is that there are 8 billion people. How many people would need to die before withholding would even put a tiny dent in the manufactured zeroes and ones in a mainframe where the owners of such zeroes and ones would even notice.
How do you clawback property / resources from such people when there are blind trusts hiding their identities? How you stop the creditors from shutting down entire countries on the order of what happened to Argentina in 2012?
I was thinking about how the slaves who overthrew France and then had to pay France for that privilege (oh, the irony). That would seem to the underlying modern foundation of the lost profits tribunals / treaties.
So you manage to overthrow your masters but they still manage to continue the extractions even if they “lose.” Seriously, WTF. Even if someone wins against the exploitation, they still lose.
If capitalism falls what makes any of us think that the exploitative nature of the system falls with it. Why wouldn’t the local / regional / even global exploitation continue in some similar fashion under whatever new system takes its place?
examine your assumptions…which are still more or less Their assumptions:
what gives Them Power?
what gives them Title to a plot of land, or to an idea or process?
from whence does their Right to Extract come?
Are these things somehow inherent in their nature?
What enables their specialness and exemption from consequences?
Our forbearance…we, in aggregate, and mostly automatically…even in the language of our thoughts…Give them that power and those qualities and abilities.
Big Boss man only has subjects if people—-that’s us, btw—bow and scrape when he walks by….
Give ear to his musings about the blood of our youth prolonging his life…or to how, “logically”, our children must be sacrificed that Commerce(holy) may resume.
They so obviously do NOT deserve such considerations…who can deny this at this point?
Why do we still give it to them?
It wasn’t the Little People who broke the Social Contract.
In fact, the majority of us are still upholding our end of the deal.
My county is likely to have it’s first Covid death , sometime, today…brother of wife’s uncle, long time employee of the city.
He’ll likely pass in the next county over…where there’s a real hospital…I wonder if his death will be added to their tally?
More importantly, what effect, if any, will his death have on the people here?
Boys went and got plates at the fireman’s bbq dinner…said maybe 5% of the throng were masked(they came home and showered, and are avoiding us…even though they did everything right)
At some point, the giant, tottering edifice of what we call “civilisation” will cease to function adequately, and fall over…and ordinary people will finally become aware of it.
We should be ready to step into the crater with practical things…like food production…and most importantly, an Idea…a Direction…of what to do next.
where i live, i’ve settled on the evangelical model, turned to secular and egalitarian and autarkic ends.
Bearded madman yammering for decades about local ag and Emersonian Self Reliance, becomes Bearded Prophet in the breach.
Let him who has ears…
It strikes me reading your questions, Amfortas, that we the people are rather like Russia vs. western power. Certainly in the way that you describe, we aren’t making war on those who enforce their will upon us, but patiently (or not) waiting until we have outwaited them. I can foresee a time (mightn’t be in my lifetime but still) when those big box stores, those big banks will indeed be too big to fail – but there will be nothing left to prop them up. So they will. And the people will have hardship but so, what’s new? Some won’t make it, some will. And God bless us all, every one.
It’s not going to last forever, and I can’t see any magic formula to sustain it. But we are nice people basically and we’ll do our best with the army we have. Um, well, something like that only non militarily speaking.
The big box stores, big banks and entertainment industries (cable, big sports, netflix, youtube, google) could be viewed as GSE’s (government sponsored enterprises) because they provide a pacifying force (entertainment, cheap consumer goods/food) or a constraining force (banks with student loans, credit cards) for the US population.
I believe the important events that signaled to the upper crust that they can get fairly much what they want were:
1. The Iraq War which was launched with US media support (thnx New York Times and Wash Post) and bi-partisan support (HRC, John Kerry were prominent Democrats) AND taxes were cut for the wealthy during the war
2. The 2008 financial rescue, which saved the connected.
3. The 2020 financial rescue,which saved the connected again.
When the political class sees themselves doing well (Repubs and Democrats) in the current system, the system will not change.
Law and Order President Kamala Harris is just what the political/financial class wants to preserve their world that is working for them.
The hope for the populace is that Biden and Harris behave far differently than they have in the past.
What are the betting odds on that?
You hit the nail on the head why Trump got elected in 2016. In the primaries Trump was the only candidate that was not a Bush Republican clone, and in the election he was not the Clinton Democrat candidate. And since then the Clinton Democrats and Bush Republicans have got very chummy, no coincidence I think.
A large part of the American people know that they have been taken for a ride by their political class, and either no longer participate or will vote for somebody who will wreck the system. Trump bad, yes, Establishment worse YES! Who will win in 2020? I don’t think it will be the political establishment, their are enough people out there who really want to stick it to them.
too bad trump is part of the establishment. His family has been there long enough. his dad was made rich by political connections and federal and state gov’t spending… even had congressional hearing about the money old fred skimmed off the federal contracts…
We are doubly screwed when people think the choice is between the establishment, and trumps crew.
*Sigh*. Being rich does not make you part of “the establishment”. The reason the CIA was after Trump before he even took office should be proof enough. Did you miss that Trump succeeded in a hostile takeover of the Republican party? Members of the establishment do not marry swimsuit models. Nor do they decorate in gold. They hire the right decorators, give money to the right charities, and seek to sit on the boards of important organizations. Trump could care less about that. New York Magazine made fun of Trump through most of the 1980s for being a brash guy from Queens who (unlike Jamie Dimon) didn’t bother trying to look socially respectable.
I went round and round on how to answer. Wrote up more than a few abandoned responses. So good thought exercise.
I’ve settled unhappily on their ruthlessness and willingness to commit genocide give them that power. Plus the perpetual motion system that is The Machine.
One might (only might) strip power by destroying all the zeroes and ones in the mainframe (my fingers type mainframe but my mind wants The Matrix – ha!) as well as all the backups but The Machine with its local, regional, national and global subsystems will carry on until any power vacuum is restored (or imbalance is righted?)
Unless or until The Machine and its subsystems can be dismantled and destroyed everywhere.
The hard under-the-radar life is both brutal and beautiful but it can’t support billions of people while The Machine lives on. Unfortunately dismantling The Machine isn’t as simple as removing a postal sorting machine and making sure it can never be reinstalled. Too many tendrils that most of us aren’t even aware of.
but all of those tendrils lead back into something…and we’re all so bereft of metaphysics, and have these cartesian lenses so firmly affixed, that we can’t see it.
Exxon doesn’t exist, save as a bundle of fancy papers in a lock box in the caymans.
There is no Mr Exxon…but the belief that there is makes it manifest.
same with Leaders and parties and even money, itself…”wealth”.
chick at the beer store takes my dollar because we both have implicitly, but yet tacitly, agreed that it has value…and that it takes around ten of them for me to walk out of there with a six pack of shiner.
nobody thinks about where that value comes from…it just is.
I’m fortunate…i live in a strange place…and i could(in fact have) bring in a big sack of tomatoes and walk out with that six pack. chick at store then puts a tenner in the register so the counting of beans can go on unmolested.
think of all the selectively enforced laws….rich guy i know(owns the bank where my by now proverbial bank president works) often drives around town, looking at stuff and talking to people, with a large glass of scotch and water on ice.
he’s one of those people who rarely appear drunk, even though they always are…and everyone knows all of this.
but he’s never, ever pulled over. I do the same thing, and i go to jail.
so what’s “The Law”?
what is it? what value does it have?
similarly(no, really!) my brother is having difficulty leaving work at work, since his “office” is now the otherwise unused open dining room table.
he speaks of moving it to his bedroom…and I’m like, “no! b/c when you wake in the middle of the night to pee, you’ll see it, and your subconscious will suddenly be at work”. i suggested throwing a sheet over the entire work apparatus, and doing some ritual gesture(turn around 3 times and click yer heels), in order to “shut the door” on work, so that he can Be Home, and maintain a part of his life that is something other than work.
all of these things are related, in that we seldom dig into the fundamentals of them.
we not only don’t have time to think…we don’t have the time to cultivate the wherewithal to think about such fundamentals…and we are well trained to avoid thinking about them, because they open doors to other great big important things…the accumulation of which might one day force us to confront them.
so we turn on the game(well…maybe a rerun of a game) or watch some vapid show, whose background reinforces the material basis of our existence…reinforces what we “should” aspire to, and so on….and we sink back into unconsciousness.
Everything the Machine has done over the last 50+ years is to embed this unconsciousness into our being.
that’s where the real battle is to be fought.
what is the Good Life? What’s Important?
and, importantly, what is not?
it ain’t easy, that’s for sure.
but consciousness never really is, and neither is Being Human, instead of some geared wheel in a great machine.
enough of us reclaiming our Humanity is what the Machine and it’s thralls fear the most.
I’ll give you that it’s a fiction and a belief system. But The Machine is supported by violence. All we have to do is look at history to see the bodies. e.g, What do we learn when we look at the USSR and how its Machine fell?
So if a billion people woke up tomorrow and said we see the lie(s) and refuse to serve The Machine, does The Machine simply accept that? What replaces The Machine and protects those billion from the other remaining billions left in thrall to the global or local tendrils of The Machine?
If the US simply fails. A few might regain their Humanity for a while and try to build “virtuous” lives. How long before The Machine reboots itself and the cycle starts again? People will try to rebuild what they know. Local flavors. Better or worse depending on one’s perspective.
Is the primary global code of The Machine still in the US?
Until and unless we can infect The Machine and change its base DNA code, I fear that we end up in an endless reboot sequence. But Mother Earth couldn’t care less about what humanity wants. So there’s that. Adaptability will become prime and the code will become infected. Will it be in time?
* Embedding consciousness: I call them cultural whispers trying to slip through our filters all day every day. More of them land than we’d like to think. e.g., low information voter: is that an ignorant person who doesn’t know any better (poor thing let us take care of you / show you the way – but only if you’re worthy), a highly educated person who’s already made up their mind because they’ve “done the research” (contradictory evidence be damned. No one attacks my reality bubble! Besides I’m fine. Everything is just F.I.N.E.) or insert your local flavor here.
it can mean anything it’s meant to mean depending on when and where it’s deployed. Enough truth to cover the lie. The real question is what exactly is the lie? Your brother seems to be becoming more aware of the lie.
The logic that lies behind what we currently experience as “The Machine” won’t go away should you manage to demolish its current manifestation. Human groups cohere, and in-group/out-group boundaries manifest — it’s part of the pack-animals that we are. A “monopoly on the legitimate use of force” will re-emerge, and a new civilization-machine will be constructed.
There is no escaping this logic, rooted as it is in our biology. What can be better or worse are the attitudes and behaviours of those entrusted with the maintenance and control of the machine on behalf of its constituents.
I strongly recommend Jane Jacobs’ “Systems of Survival” as a useful entry into thinking about how moral structures inform cultural behaviours. If nothing else, it provides a helpful interpretation of how corruption corrodes and undermines otherwise useful human organizations.
Your post reminds me of the opening montage in the original Mad Max movie — the wheels stopped turning …
A similar scenario is referenced in Huxley’s “Brave New World” as having taken place in their past, leading to the scientific dictatorship of the World Controllers.
They know those zeros mean nothing. It’s the worship they desire more. It’s a mind @#$%.
Remember that old saying, “What if they threw a war and nobody came?”
Well, what if a billionare (or millionaire) threw a party (or showed up in tv) and nobody came or cared?
They don’t seem to care about the score, but they do seem to care a LOT about keeping the herd docile and on the right side of the feedlot fence, and they do get nervous when the animals don’t respond to the usual calls and songs and prods. They were apparently very aware of weak fences and a stampede simmering, and they very quickly ginned up a shiny object — at oligarch scale, a dead Black guy is less than a rounding error — calculated to push partisan buttons, flood the “mob” with false observations, and reorient them into partisan silos that have cost billions to build, while they shore up the fences.
Pradhan et al. extended a primate coalitions model to encompass human class systems. It explains observed properties and interactions of classes quite well. Interestingly, they also find sufficient conditions for class system formation: “a division into a bottom class and an upper class is inevitable whenever fitness-enhancing resources, such as food or real estate, are exploitable or tradable and the members of the bottom class cannot easily leave the group.” A more concise and on-point summary of the global neoliberal project would be hard to find.
Bichler and Nitzan have voluminous research into the nature of power, and they specifically treat sabotage of competing/challenging efforts as a dimension of power. It’s worth pointing out that achieving successful outcomes is only one side of the coin; the other entails denying success to resisters, pretenders, and alternatives. In particular, consider the influences on the trajectory of each contestant’s morale in each situation, when repeated encounters are likely.
In Pradhan’s formation conditions can be found several actionable if not especially good factors which can be materially affected to reduce the benefits of the class system, possibly enough upset to force some reorganization: reduce the availability of resources (redirection or destruction of product or means), reduce the fitness enhancement of the resources, before or after or contingent on their exploitation (adulteration, pollution, substitution); reduce the exploitability of those resources (demand reduction, relocation); reduce the tradability of those resources (transaction cost increase, logistics obstacles, enforceable senior claims); subvert barriers to partial or total bottom class exit (covert means of moving people between jurisdictions); provide new pathways and spaces for bottom class exit (transient expropriation for use e.g. squats). In addition to those material means, the factors can also be diminished by credible means of social exclusion, from non-recognition of alienation to taboos to shunning all the way to Jivaroan headshrinking.
The exploitative nature of the current system depends on widespread support of class cannibalism, tastefully abstracted. There would be relatively little predation in the social sphere if social predators were not sought out and welcomed (albeit under duress), but instead were excluded and forced to exit. While history has indeed shown that revolts tend to bring immediately worse situations, there is value in sabotaging the technology of class oppression that authoritarians have assembled and passed down over hundreds of generations; in reducing the knowledge and operational base to support that technology; or, in distributing it so broadly and evenly that it provides no significant persistent advantage to anyone.
This is excellent, thanks — I would add only the observation that techniques of social control by the elites (a la Bernays sauce) have become rather more sophisticated than the old fashioned mummery of religion.
No one from Nashville writes:
“ ‘ How do you clawback property / resources from such people when there are blind trusts hiding their identities? How you stop the creditors from shutting down entire countries on the order of what happened to Argentina in 2012?’ “
Well, identification of the guilty parties shouldn’t be that hard. Start with the publicly known players at the top, find out who they know or are connected to, and work your way down (or up) from there.
Stopping creditors from shutting down a country’s economy is easy. First, repudiate the debt. Second, float an entirely new currency, backed by gold reserves. Require any other country wanting to buy your exports to pay you in that new currency, which forces them to buy that new currency, and this gives the new currency value. Short of military action, there is little the banksters can do to enforce their claims.
That’s a good solution. Stop buying anything new; if needed, buy used stuff. Shop local and at small stores and businesses. Drive as little as possible. Minimize your wants and your needs.
Enough have done this intentionally or unintentionally. Hence, the establishment increasing the intensity of crisis to disguise the need for bailouts and hand-outs of all sorts to alleged (and over-hyped) “masters of the universe.”
This makes me think of how people are protesting. People should protest in a way that generates the least amount of economic activity as possible.
Looters are only upsetting the uninsured. The pandemic leaving unsold goods on the shelves is more devasting to the establishment than economic activity generated through insurance claims or getting caught up in the criminal “justice” system.
Agree. They have gamed our voting. Lets see them deal with our boycott
I’m a ‘declinist’, personally, so the future is local, to my mind. The old capitalist vs socialist mode of production recedes in importance when production itself is profoundly disrupted. True communism may well be the natural way we prefer to behave.
What it won’t be is Mad Max zombie apocalypse or feudal warlords. That is, barring barbarian invasion or an ecological catastrophe that precipitates famines. Our social contract is frayed but I don’t think we hate each other that much yet; we would all rather get along and keep food on our tables.
America, and the world at large, was once a collection of largely self-sufficient polities, linked by transport infrastructure (roads, rivers, rails). It can become so again, after a few years of transition and likely, rationing. No more commuting; where you live will be your ecosystem. Join a church or comparable group; get to know, and be known to, your fire chief, town planner.
As individuals, almost none of us needs nearly as much as we consume today, in terms of food, clothing, shelter, transport and services. We’ll double up with family (however we define that), or take in boarders who will become like family.
We’re all going to become a lot more intimate with illness, infirmity and death again, at home, as we can’t shunt grandma off to a hospital or home. We’ll be raising and butchering animals again too. We’re going to need God again, a sense that somebody is looking out for us in a world we can no longer pretend we control.
Work for wages won’t disappear, especially where small factories, mills and workshops can be reopened. But it’s going to be a lot of piecework and day labor, based on tangible production not flapping yer mouth or pushing paper. But it’s ok, we’ll all be ’employed’, continuously, repairing things or rigging up substitutes.
Timber, water and farmland will become very valuable, but also subject to the general requisition; hoarders and wasters won’t be tolerated. Justice will be rough at times; people will need to guard their reputations and learn to listen before mouthing off.
A huge amount of private wealth (i.e. the expected value of future cash flows from capital) will simply disappear into the ether as expectations diminish, but people will miss it a lot less than they imagine.
Claims of absentee owners and creditors will be unenforceable. Money will continue to exist, but commerce is going to become very pragmatic, and credit extended solely on the basis of personal trust. Central governments will also only be obeyed and sent taxes inasmuch as they are providing concrete material benefits© in return, pretty much transportation and defense.
Anyway, you get the idea….
that jeffersonian idyll will require a drastic thinning of the herd, I’m afraid.
transitioning to a lower energy state…even if we had managed to do it properly, beginning in the early 70’s(Yves mentioned Limits to Growth)…was always going to entail a lower population.
i suppose plague and famine and internicine warfare , rather than some enlightened management of reproduction, didn’t gel with the pedal to the metal harvest the bosses decided on.(we’ve had the Pill and Early Abortion of Zygotes in the tool box for how long, now?)
That the latter, messier and more violent, method of Limits is preferable to our elites is just further indictment of them and their works.
Bricker and Ibbitson have a book out called “Empty Planet: The Shock of Global Population Decline”
If they are to be believed, your lower population is already inbound, though of course more drastic incidents as you describe may well hasten the process …
My grandfather’s family came over in the mid-1800s. Yes, they had the farm and the woods in the middle of nowhere. But he also traveled 6 hours away (today’s magic freeway time) to find work in order to pay taxes and such. My grandmother worked an hour away too (again highway time). Things weren’t exactly “local” then either. People cheated each other, treated their animals and land like crap then too. They killed off the First Nations tribes either with direct warfare, starving them out or instilling “systems” to deal with the remainder.
Back in the day, who enforced absentee owners claims because they were certainly enforced. What makes you think that absentee owner claims would disappear or that systems wouldn’t be instilled to deal with the remainder? How many people are really “necessary” from an absentee owner planning perspective? And how many people can a local area really support on its own without something as common as gas powered machines? If society collapses, it will be brutal and there will be a great culling of the herd. In that scenario, I want to be one of the first causalities.
“I don’t think we hate each other that much yet; we would all rather get along and keep food on our tables.”
Please, define “we”.
I can assure you that the oligarchs have only bottomless contempt for all others and see them as sevants, no more. As you must have noticed during these 40 years of neoliberal onslaught, nobody’s life, except for theirs, matters.
The only reason we had a social welfare state, was that the Soviet Union offered an alternative to the neoliberal world order and they had to offer something for us to not take the communist pill. Now? There are no alternative countries that have any influential power: Cuba, Morales-Bolivia sure were altenatives but absolutely no threat to inspire or support other nations to move leftwards.
Russia and China are now two neoliberal hellholes on the same level as EU and US.
“basket of deplorables” is hatey as all get-out amirite
This triumph of capitalism is central to Branko Milanovic’s “Capitalism Alone” in which he analyzes two competing versions of capitalism: Liberal-Meritocratic Capitalism as exemplified by the US, and Political Capitalism as exemplified by China. He outlines the contradictions inherent in both, as well as the dangers of an emergent plutocracy should an elite manage to arrange things such that it can replicate itself across generations.
Well, thanks for the responses. And Amfortas, you’re already living with both feet in this world, so respectfully noted! However, I don’t think any of us knows the exact timing of the CO2 doomsday machine. I believe our civilizational reset will predate it, and have other causes. I honestly don’t know the carrying capacity of land supporting a populace consuming at a c1920 level.
Like everyone else here, I hold our ‘Meritocrat’ elites in utter contempt; but I also don’t fear them. They are effete courtiers, helpless outside their bubbles. Their ‘power’ lies solely in bribing the actual authorities to enforce their property claims, and to keep the PMC casino running.
Last century’s (c1820-1920) elites were predominantly industrialists, still embedded in the real economy, with some notion of how to reorganize productive operations when the economy fell on its ass.
Our current financialized paper rulers are more decadent, incapable and out of touch with actual levers of power and production than any ancien regime since Bourbon France. And at least the French aristo still dominated the officer corps and clergy. How many veterans or pastors or degreed engineers are in the Trump, Biden, Bush and Obama royal families? How handy is Jeff Bezos with a spanner? or a rifle?
At a certain point in crisis, as wealth (which is a profoundly psychological phenomenon) dissipates, actual power reverts to the actual authorities. And I don’t mean the whiny placemen who currently talk down to us. And nor is it straight to some heavily muscled biker either. It’s the people who actually oversee organizations and people day to day. Anyone who has dealt with an organization knows who these people are; it doesn’t always reflect the org chart.
And I say again, absent the onset of starvation (which invariably requires a war and/or an ecological discontinuity, which ain’t here just yet)
where we turn on each other like wolves, these people aren’t morally or behaviorally inclined to kill helpless citizens.
Public order will be maintained; it won’t be what we’re used to, it won’t be pretty, and it will be wise not to stand in its way. But it will be there.
Great posts, fellow wafer (?), but I was waiting for you to address why it is not really a choice (For us, the elites, or anyone else) that we are headed for the future you have laid out. Responses to your posts seemed to be operating under the assumption that someone somewhere will have a say in the matter and not the converging crises that will be making the decision for all of us.
Cheers. Most of it is “good, honest hatred” (to quote my all time fave Trek villain, Commander Kor / James Collicos). Quite understandable, given the times.
But it also starts to sound like an atavistic longing, or a death cult wish: for rivers of blood to wash out all the years of greed, injustice and stupidity. It becomes indistinguishable from the doomer stacker fantasies on ZeroHedge.
And that just isn’t how real human beings are going to react in the actual event, again, barring cataclysm. And as the existing order ceases to deliver, a new order is created.
Maybe they’re all priests, given Biden’s showiing night 4 of the (inaccurately named) DNC. Woe to the shaman who cannot coax the rain.
Indeed — the “mandate of heaven” is always so very slippery …
I think you’re right. Something else people will be looking for is highly durable, easily repaired goods. The era of disposability we know now will fade away.
We should never have shipped our jobs and factories to China. The people who were responsible for doing that need to be made accountable. Sadly, some of them have escaped accountability as they are now dead – the flight of factories and jobs to China started 30 years ago.
Advocate for public banking.
Get the Fed to channel the flow of fiat money into the public sphere. Nationalize all parasitic Wall Street banks.
“getting the fed to channel the flow of fiat money into the public sphere”…. is putting the cart before the horse.
What needs to happen to accomplish this outcome is to end the feds (and other private banks)ability to create money; and to bring its operations back into the treasury, where it belongs. Then the treasury can make money debt free, and congress can direct its insertion into the economy.
couple this with a general understanding of the citizenry, that it is “their” money. And should be put to “public” use…. not created by bankers for the express purpose of inflating the FIRE sector and wall street speculation.
Banking now has the unique ability to create money in making loans, which also gives them a prerogative in choosing WHO gets loans, and these entities are usually the force behind financial speculation, be it in real estate/capital investment or wall street speculation. Small banks operate in local spheres, the big banks do this on a global scale… all because they don’t lend “their” money…. The “fed” creates money for the US gov’t and the US gov’t guarantees repayment with interest.,rather than creating the money itself,without debt.It is crazy… and some people believe the reason is to control interest rates… but really that could just be “done”…. there is no need to feed an army of wall street parasites to do something a committee could do on the gov’t dime…a debt free dime.
This has been a mainstay of the boom bust cycles for a century… of the federal reserve… it doesn’t seem to be going away with out legislation to force it.
So the choice is to let the elites control the magic keyboard or have the politicians do it. Is there perhaps a third option?
Hmm, elected officials, ostensibly aligned with popular interest (although of course not typically in practice)
Elites with pipes straight to the fiat money generation (that most novices falsely think is a government entity)?
I’ll take the former. Mint the dang trillion dollar platinum coin!
NC, it’d be really helpful to outline some of the weaknesses in Ellen Brown’s work, because I for one have been hanging my hopes on public banking (as long as we can’t have table-flipping Revolution). Brown has achieved some big, heartening wins lately.
I really don’t like attacking her because her heart is in the right place. But in a recent interview, she revealed she didn’t understand the Fed has a balance sheet. Her pieces have so many errors about how banking works and what banks actually do that it is hard for me to read her.
More generally, she does not acknowledge or consider that the US was full of public banks in the late 19th and early 20th century and all were shuttered save the Bank of North Dakota due to their massive corruption and resulting losses. Think of CalPERS cubed. And the Bank of North Dakota has retreated to a very narrow role, that of joining other banks to make loans when the size might be too large and providing liquidity to state banks. It does not originate any loans, as in make new loans of its own.
How would you prefer to reform/restructure our banking system Yves?
or could the Credit Union model be a useful example???? :
Alphonse Desjardins brings credit unions to North America as the Canadian journalist organizes La Caisse Populaire de Levis (The People’s Bank of Levis) in his home in Levis, Quebec. The first deposit was just 10 cents.
Tax the surplus into public use instead of use by worthless asset price inflation (stock buybacks and assorted monopoly finance etc.)
Jubilee for the human sector.
Definition of wealth – actual definition – Please accept my apologies for not crediting the proper people for the following paragraphs – please claim them if you see them.
Money is a commodity, invented to help people by facilitating transactions. It is not wealth in itself. Wealth is natural resources, water, food, land, education, skill, spirit, ingenuity, art.
owning their homes at the same cost they would have had to pay in rent – the economic definition of equilibrium in property prices.
banks could have been told to refrain from gambling on derivatives, from lending for currency and commodity speculation, and from making takeover loans and other predatory financial practices. Public ownership would have run the banks like savings banks or post office banks rather than gambling schemes fueling the international carry trade (computer-driven interest rate and currency arbitrage) that has no linkage to the production-and-consumption economy.
The government could have used its equity ownership and control of the banks to provide credit and credit card services as the “public option.” Credit is a form of infrastructure, and such public investment is what enabled the United States to undersell foreign economies in the 19th and 20th centuries despite its high wage levels and social spending programs. As Simon Patten, the first economics professor at the nation’s first business school (the Wharton School) explained, public infrastructure investment is a “fourth factor of production.” It takes its return not in the form of profits, but in the degree to which it lowers the economy’s cost of doing business and living. Public investment does not need to generate profits or pay high salaries, bonuses and stock options, or operate via offshore banking centers.
Credit is seen as necessary; but what of credit derivatives, the financial sector’s arcane “small print”? How intrinsic are financial gambles on collateralized debt obligations (CDOs, “weapons of mass financial destruction” in Warren Buffett’s terminology) – not retail banking or even business banking and insurance, but financial bets on the economy’s zigzagging measures. Without casino capitalism, could industrial capitalism survive? Or had the superstructure become rotten and best left to “free markets” to wipe out in mutually offsetting bankruptcy claims?
Credit is seen as necessary;
Credit is actually an obsolete relic of the Gold Standard when fiat was too expensive for large scale public use.
So credit is no longer necessary, given, as it should be, inexpensive fiat.
So we now can have the actual lending of inexpensive fiat – inexpensive fiat created in an ethical manner, e.g. via an equal Citizen’s Dividend.
All of the sudden in the space of just a decade or so, we had unlimited food via the Bosch-Haber process, and unlimited money via a pure fiat system.
…what could possibly go wrong?
I for one am proud to hike dangerous streets with no sidewalks so others could have the disposable income to tour the Sierra Nevadas.
But alas, if the masses had a little more discretionary income, the Mineral King trailhead would be inundated with novices! Can’t have that.
PS- No UBI. There is work to be done and meaning sought by the masses. Take the stranglehold from fleecing employers. Jobs Guarantee all the way!
When touring the Sierra Nevada on foot as is my custom, money is merely ballast-won’t buy you a damned thing. And there are no trails specifically for illionaires. My biggest expense is gasoline and munchies.
Everybody has to walk their own walk, how refreshing-a level playing field where the price paid is your own labor.
While I appreciate the spirit of your post, I must point out that money (if by money you mean sovereign currency) is absolutely NOT a commodity. It is a state monopoly by which the sovereign provisions itself for public purpose.
Money is a commodity, invented to help people by facilitating transactions. It is not wealth in itself. Wealth is natural resources, water, food, land, education, skill, spirit, ingenuity, art.
I agree with your important differentiation here–thanks for that point out.
Eventually the banks and the rich will see that MMT is really welfare for them. Plus guaranteed wage slavery to government for their victims should keep them too busy to ponder injustice.
So quit worrying and learn to sing Kumbaya (or whatever) through a mask and to use a shovel – your “betters” have already got a plan for you.
Or, in this still largely Christian nation, read the Old Testament wrt economic justice and learn therein that:
1)The banks should not be privileged by government (Deuteronomy 23:19-20).
2) Land reform is needed (Leviticus 25).
3) The poor have rights.
4) Theft requires restitution.
Of course God may have His own plans such as natural disaster Keynesianism to provide real work to do. The California fires being an example of this?
i believe the banks and the rich already KNOW that MMT is really welfare for them. because it is what exists now, and they use their wealth fomented this way to continue keeping the government in their hands.
same with “privatization” which is really just gov’t guarantee of private profits at our expense.
they know what you seem not to know: MMT is what exists now. and they pay presenters in and out of government to claim that it is NOT what exists now.
Yes, fiat is certainly created for private interests NOW.
However, the MMT School would only partially eliminate that (by eliminating positive interest/yields on bank reserves/other US sovereign debt).
Why not eliminate it completely rather than, as Warren Mosler proposes, provide unlimited, unsecured loans at zero percent interest to banks? Along with unlimited deposit guarantees FOR FREE?
I think part of the problem is we have embraced some of the tenets of MMT — we can print money to solve problems — but instead of solving real problems, we mostly used the money to do what we always do, make the wealthy wealthier. Beyond the PPP, and other giveaways to capital, we also have the Fed buying up bonds. Since bond yields are so terrible, money moves to the stock market in search of yield, and stocks start to levitate and detach themselves from any grounded reality.
Part of the solution is to cut it out! Use the money to pay those living hand to mouth. They will spend their money immediately, and the wealthy will be brought to heel, to get wealthier only if they fulfill some useful role that serves the people, because those living hand to mouth are pretty good at separating needs from wants. The stock market will reflect profitability instead of speculation, and things will drift toward healthy again.
Alas the right wing doesn’t see it that way and drives us into market dysfunction. If you can get rich without performing a useful function, then the wealthy will just do that.
thanks for voicing this–
I think part of the problem is we have embraced some of the tenets of MMT
we can print money to solve problems — but instead of solving real problems, we mostly used the money to do what we always do, make the wealthy wealthier.
following Anonymous’s theme—waste not want not
They will spend their money immediately, and the wealthy will be brought to heel, to get wealthier only if they fulfill some useful role that serves the people, because those living hand to mouth are pretty good at separating needs from wants.
seeing it and living it
The virus has set three worldviews in clearer relief. First, there’s the Old World view that sets the western European white male above the rest of the world and that includes both the human and non-human parts of that world. All is there first to be conquered, then to be controlled. Capitalism arose in that stinky stew, and Varoufakis’s heralding its demise coincides with the long-awaited death of what I call the Francisco Pizzaro worldview.
Most of our elites have already moved past the 16th century and swung over to what I call the Gattaca worldview. Quietly rejecting the Pizzaro-ites’ monotheistic religion and love of tradition, these tech-freaks envision a 3%-er style future where meritocratic elites live the good life while using Panopticon surveillance and next-generation, Facebook-style manipulation to manage the proles as they rough it in a world dying under the weight of human profligacy. In their nasty combination of Huxley and Orwell, you’ll need to apply for a license to grow food, but the Secretary of Agriculture with be Native American and transgender.
The third view seeks neither to conquer the world with sword and shovel nor to control the cosmos with AI and the Big 5 tech companies but instead to adapt our living to be in harmony with the Earth and the rest of the universe. It rejects both a faith in inexorable progress and a reliance on a tradition built as much on ethnocentrism as reason while it draws upon those human traditions that have emphasized harmony over conflict, wholeness over intellectualism, evolution over either manipulation or retrogression and empathy over either autonomy or authority.
As John Wayne, capitalism and the Pizzaro worldview finally ride off into the sunset, the fight that has gone on between the Pizzaro-ites and the Gattaca fetishists comes to an end. Now a battle is renewed between those who would turn us all into cogs in a machine they have designed against those who fight not only to keep human lives from becoming one more product but also to return humans to a place of harmony and peace with the world that gave them birth.
I especially like “wholeness over intellectualism.”
I’ve been watching the stock market go up for no apparent reason, along with quite the hype job on real estate, which if you’d believe the mainstream media, all of the sudden despite massive job losses in the midst of a pandemic that closely resemble Great Depression numbers, lots of people are suddenly desirous of tying themselves to a burdensome debt, as in doing time in the big house for 30 to life.
What it boils down to is these 2 markets are the only thing left that they can manipulate, everything else is moribund or worse.
Look at interest rates on saving, with the miracle of compound interest you can double your money in a few short centuries. They can’t lie about that by offering 12% interest, can they now?
The crash is going to be monumental and then some. Both stocks & real estate have never really gone down since both went on a tear in the 90’s…
Having a slimy telemarketer for a President is good timing for the end of capitalism as we knew it, with one of the prime reasons he got elected being that he was a self proclaimed billionaire.
Guess what comes next after the downfall, open season on ostentatious displays of wealth. That 56,000 sq foot home that the press breathlessly told of exchanging hands for $57 million is going to be right in the crosshairs of consternation by the common man, who was screwed decades ago by the actions of his ‘betters’. The idea that such residences tend to have hundreds if not thousands of windows makes for easy access.
And, in the immortal words of Mark Blythe, the Hamptons are not a defensible position.
Actually, they are. The residents of the Hamptons have been fighting infrastructure spending so that the bridge, highway, and subway/rail systems are becoming decrepit. If you can’t get there, you can’t invade it. The denizens of the Hamptons have alternate means of transprot available, such as boats and helicopters.
You can defend the Shinnecock canal quite easily . And find a small navy to patrol the borders.
Shelter island is easily defended.. so is Nantucket and the Vineyard.
BASICS+1—-Get the Beta before making a strategy
If I remember correctly, there’s a $15 miilion house in Martha’s Vienyard owned by a grifter who got it as a payback for his helping large banks after the great recession in 2008. I believe this house may be available for the common folk.
“Look at interest rates on saving, with the miracle of compound interest you can double your money in a few short centuries.”
That’s putting it mildly. Based on the quick napkin calculation using the “Rule of 72”, my bank presently pays .15% on savings and those few short centuries work out to about 480 of them
I recently posted Frank Zapp’s short description of what he believed the future holds
Substitute the term “our capital market system” for freedom (or not) and it’s pretty obvious to me that what we have now is already too expensive to maintain and we are all seeing many parts of that brick wall. The full view of that, probably ugly, brick wall has yet to come.. and what it will look like on the other side.
All I know for sure is that many of us will probably not be alive to see the other side.
I know this is a cynical view and I know it’s important that people continue to work on potential good solutions for what’s coming, but based on general human history I don’t have a particularly optimistic outlook.
What I do believe is that participation in what we have now should be kept to a bare minimum, i.e., avoid debt like you would avoid the plague, and avoid buying crap. Enjoy what we have now in nature. These things we have now that money can’t buy will not be around much longer.
Much of the housing hype is around people leaving the cities because of (they say) homelessness, crime. All the things that their presence did nothing to curb…so goodbye.
Meanwhile, the hype is funny. There was some show with a guy showing off a NYC penthouse on TV. That tells you something. If that slick penthouse was really worth what they wanted, they wouldn’t be trying to let the masses in on any deal. The agent wouldn’t be on tv…he’d be selling the damn penthouse.
But they are trying to float those illusionary prices and rents for as long as they can. Loans were taken out based on over-hyped “value.”
Floating so much fantasy these days.
Everybody knows the establishment is lying, they know everybody knows and the pretend goes on because no one has the guts to change the rat system.
I realize a good part of the value of a house is that sacred 2,500 sq ft lot, but can you name any other commonly held used consumer item that goes up in value?
Soon–good quality gardening tools and knives. Sharpening stones. Grain mills.
Tattered jeans, during a hobo chic period
Over the span of history, how have people had any agency over their own lives? That may result in some discrepancies between real vs. perceived agency.
What metric(s) might clarify or deepen understanding of any dimensions of agency? For example, how to describe the existence of, and levels or degrees of economic, social and psychological servitude?
After reading Varoufarkis, on the heels of Dayen and Stoller, some rebasing of people’s understanding of how they fit into the economic world is in order. Otherwise the majority will continue to be fish that don’t notice the water in which they attempt to swim. That metric development probably includes some new vocabulary. Perhaps readers may offer some practical, not theoretical, recommendations or resources about the topic?
I think you are onto something here agency cant mean the ability to choose betwen brands of deodarant nor even the ability to reject deodorant altogether…
The hunt for new vocabulary is already on! Just the other day Lambert put out a call for new words for modern phenomena like the embubblement of those who lack empathy because they can’t conceive of the reality of those outside their experience, or the process(es) behind crapification IIRC, or the snares or dark patterns embedded in our interactions that are hostile or harmful to us. It would be good to collect the responses and formalize the definition.
I think Beakwetter is already in, BTW
Haven’t finished listening to all, but when YV says “terminate” share markets, labour markets, and commercial banks – what is he talking about? Who is going to do all this terminating? Is he not talking – in effect – of a revolution? While one is needed, I am skeptical about the people in the west being able to carry out such a fundamental change (even though his prescription seems correct).
I was wondering the same. Perhaps by ‘share markets’ he means what has been termed the uber-like ‘sharing’ economy, a further degradation of the already degraded labor markets.
Terminating the labor markets does seem revolutionary and at the same necessary and well, perhaps utopian but here we are. Though indeed they have been grotesquely manipulated by internationalised arbitraging of the commodified market for labor.
I suspect that by “share markets”, YV is referring to publicly owned mega-corporations. My hint of this is the mention of no tolerance of “absentee owners”.
That transition is quite hard to imagine, though it has been suggested that that such companies could be nationalized (current shareholders to be compensated with fiat — not that different from what is happening now in terms of share buy-backs) and converted into worker-owned enterprises, after suitable modifications to weaken their monopoly power.
Or one could ban buybacks or limit CEO and executive stock compensation to something much less, either $0 or no more than base salary. I just looked at my corporate employer’s executive comp structure in their public filing. While I know the top people and think their base salaries are completely reasonable, their stock compensation is grossly over-generous.
In a previous repost on NC of a Yanis talk, he explained that if an enterprise becomes employee owned, then the struggle between labor and capital ends. It also ends the share markets necessarily since absentee owners are cut out. He describes himself as a Marxist capitalist, so presumably competition between enterprises will still take place. I gather that publicly owned firms would whither away if the limited liability shield for them is dropped.
What I do believe is that participation in what we have now should be kept to a bare minimum, i.e., avoid debt like you would avoid the plague, and avoid buying crap. Enjoy what we have now in nature. These things we have now that money can’t buy will not be around much longer.
thanks for the something to meditate on while doing the rote chores today
,,,Give me stuff…I’ll be your disposable slave…
This is one of the main problems… the seductive power of “stuff” and more stuff. Give me toys to play with, and I’ll forget all my guiding principles. (I think it was Pepe Escobar, who once noted that Marx did not anticipate this seduction process – and its existence would have to lead to a re-assessment of the relationship between labour and the capitalist.) Unfortunately, once the genie is out of the bottle, there ain’t no way to get her back. Unless or until… a giant depression of climate catastrophe.
I meant …or climate catastrophe (but maybe ‘of’ works, too)..
“a giant depression of climate catastrophe”
…climactic (climatic sp. ) proportions….
Words can be fun!
I feel like the focus on stuff is not what is broken about being rich. Sure you can have all the toys, but for the most part, you already bought all the toys you truly wanted or at least had time for, and there is nothing left to spend it on, so the vast majority of money gets dumped into a hole in the ground, such as the stock market. Put another way, you don’t get rich by spending it all. The problem with the rich is not ridiculous amounts of stuff, but rather they are excess savers. They take excess capital and bury it. This blunts the effects of stimulus programs and makes them much more expensive.
The super-rich are symptomatic of a failed circulation of currency within our political economy much as obesity is symptomatic of a dysregulated metabolism which renders access to stored energy problematic.
In both cases, there are attendant co-morbidities …
“Our desires and possessions are the strongest fetters of despotism.”-Ed Gibbon
Somebody a while ago did a riff on Oscar Wilde:
The answer to the apparent disconnect is that there wasn’t much connection in the first place. There are only about 630,000 publicly traded companies in the entire world, according to an internet search I did 5 minutes ago, and far fewer in the U.S. This is minuscule compared with the economies of nations. Wall Street may be tiny compared with the U.S. economy but we keep our funds invested because the imperative of capital is, first, to preserve it and secondly, to grow it. If we lose our savings preserved in capital, we are back to subsistence like the feudal peasant.The prevailing view among investors is that the companies listed on American exchanges, taken as a whole, are the best place to preserve and grow capital; nervousness among investors is that this view may prove wrong. The market deals with capital/savings, and has nothing to do with ‘Main Street’ which Is essentially a subsistence economy. Subsistence does not necessarily mean poverty, nor do savings necessarily mean riches, but savings are associated with not having to work, while subsistence is associated with having to work. It must be mathematically true that most people must always be in subsistence, and that only a small minority can live on savings. The failure of Main Street is political, meaning failure to acquire political power to get and keep safeguards against the thousand natural shocks that flesh is heir to. Investors/savers must alway engage in risk management or they will lose their investments. As most people must always live in a subsistence economy, their collective failure is to live as if politics do not matter. For this reason Wall Street has more power than Main Street, and uses it for self-preservation. The unhappiness of Americans, as we see from many surveys, is the result of not using their available political power to improve the quality of their collective lives, but instead acquiesce in the crap dealt out to them by Wall Street.
” If we lose our savings preserved in capital, we are back to subsistence like the feudal peasant.”
I think that many of us have already been there for some time, but we didn’t notice because of myriad distractions, and just enough cheap calories and a Pavlovian aversion to admitting it.
BF Skinner would be so proud.
But look! …the tapestry is frayed…start pulling threads!
apo Kalypsos—-the rending of the veil that hides the Secret.
The perceived legitimacy of the whole thing is shredded for a whole lot of people.
are we supposed to wait while they stitch it back together, patching it with human leather?
I think it does mean Revolution… which, yes, will most certainly be ugly and chaotic and without any predictability.
But the alternative has the potential to be much, much worse…given how the Bosses have shown themselves for who they are.
High tech neofeudalism, with the Manor and the fiefs abstracted to such an extent that the peasants can’t even find a Bastille.
(and, yeah…I re-read Wulf Zendik early this morning before the jointwalk,lol.–“Dropping out is a revolutionary act.”—so i have a revolutionary boner. apologies.)
Skiffy wise, I think of
– Ursula K. LeGuin, City of Illusion, with a primitive flyover center bracketed by elite coastal cities. Except in our case the Shing are not extraterrestrial.
– a cute novel by Philip K. Dick, which I can’t cite until I get it un-lent back. In this one, the huge majority of the human population are living sealed in underground factory-bunker-cities, producing military robots to wage the horrific chemo-bio-nuclear war going on on the surface. Meanwhile on the surface, life is dominated by a huge media industry turning out stories about a horrific war. The upper echelons of the industry live on latifundia worked by ostensibly-military robots. Junior members wait their turn for enough land to get cool/clean enough (there really had been a war) to start a new fundium. Yucks galore.
The Dick novel is THE PENULTIMATE TRUTH.
Apropos of debt peonage, one of the twelve novels he wrote in one year so as to meet his alimony payments during the early 1960s.
Look at how Russia rebuilt itself without a revolution after the Chicago Boys episode. They did it. It’s not impossible.
Citizens of the USSR & the Soviet Bloc had something to look forward to after decades of forced austerity, whereas we’ll be constantly longing for the past in the future.
How much wealth of the stock market is held by the top 10%? Wasn’t it somewhere around 84% a couple of years back? Of the remaining 16% I would guess the bottom 50% (probably more) has nothing “invested” in the stock market but their labor and local resources are still extracted to support said stock market so they can lose bigger than big.
The stock market seems more like a rigged casino. Certain “investors” can never lose as they are part of the house or they are doing “good” work on the house’s behalf. As a rule the system will always support them. Exceptions (examples must be made) do happen now and again. Others know how to spot and manipulate the rules / loopholes and win big. Others think they know how the system works but lose big. Some of those are made whole all over again by the good graces of the house. Pension plans, 401ks it’s a roll of the dice there. They can’t all lose or enough someones might start asking more uncomfortable questions about house rules or the system itself.
I guess I might go further and say that the current purpose of the stock market is exploitation. The higher the stock rallies, the more zeroes and ones get added to the mainframe which in turn can be used to extract more resources and labor. Great vaporware trick that.
My opinion on the stock market is you can’t lose to rigged processes if you refuse to trade. They can’t rig dividend payouts. While the bastards can game a few pennies out off your order, they can’t significantly game secular growth of a decade or more. If you are trading, you are losing. If you are investing, there is some hope for you.
Charles – excellent summary! Thank you. Saving it for reference.
Yes +1—As most people must always live in a subsistence economy, their collective failure is to live as if politics do not matter. For this reason Wall Street has more power than Main Street, and uses it for self-preservation. The unhappiness of Americans, as we see from many surveys, is the result of not using their available political power to improve the quality of their collective lives, but instead acquiesce in the crap dealt out to them by Wall Street.
chris arnade alludes to this in The Commons here:
Are the 2,000 plus billionaires in world today similar to the 2,000 plus plantation slave owners in the years before the civil war in the United States? Are low wages today just a more benevolent form of old world slavery. Do the markets drool over the fact that massive world wide unemployment will ultimately lower the labor cost to produce goods and services? Will the post pandemic labor force be completely without a voice at the table and succed in completely eliminating unionization? Hasn’t that been a goal of industry since the first strikes that occurred against corporations. With so many idle individuals will the need to work only for food and shelter? Everyone here at this site is far more educated than I at economics, your comments would be greatly appreciated.
Had me til the last sentence. :)
To be clear, there is a wide wide gulf between living in bondage, suffering beating, mutilation, rape and murder, to today’s predatory pay grades and callous disregard for human dignity. Hyperbolic rhetoric does not well serve the memory of monstrous injustices from our past.
To me, the most abhorrent segment of the billionaire behavior is the concerted attempt to so inflame the precariat that they lose rational self interest. If the masses cannot be trusted to work to their own advantage, then I think we will quickly find ourselves in a (regrettably familiar) economy that does not serve the general population. If the economy doesn’t do that, then what is it good for?
If your Free market economic model relies on the assumption of rational economic self interest, then society should do its best to encourage rational evaluations of economic self interest. If it doesn’t, then we probably need a new economy with a lot less choice in it. I can’t imagine that is what we really want.
I agree with much of what you say wrt the monstrous injustices of the past, but I think there is a segment of the population that the bills do subject to slave-like conditions. That is not the symbol manipulator precariat, but the “unskilled” laborer around the world. Many are homeless even while employed, at least here in LA, or they live in overcrowded conditions (pandemic a huge problem). They are murdered, raped, beaten, etc., locked into “dormitories” that burn down or are not properly ventilated. I think sweatshops are definitely toeing the line.
“In Britain, the news came out that the economy had suffered its greatest slump ever – more than 22% down during the first 7 months of 2020. Remarkably, on the same day, the London Stock Exchange, the FTSE100 index, rose by more than 2%. On the same day, during a time America has ground to a halt and is beginning to look like not just as an economy in deep trouble but also, ominously, as a failed state, Wall Street’s SP500 index hit an all-time record.”
There is something that signifies worse ahead than stock indexes.
From the Telegraph (although the news has been other major publications):
Apple Set to Be Worth More Than Entire FTSE
“Following a 60pc rise in value this year, the iPhone maker will soon be bigger than all the companies on London’s blue-chip index combined…’
(Take that Beatles!)
I mention this bit of insanity over hundreds of other “insanities” because of the stock split coming up. People will watch in real time how acquiescence to this fuedal-like state of being was and IS developed.
Study the narratives people tell themselves and the ones sold to them. It’s all a version of the late night TV ads proclaiming that some product “will make you rich.” They’ve even stuck a little bit of Apple in people’s retirement or investment funds so none of you will feel “left out.”
Yes, you could get wealthy, but the you have to make some of the worst dregs wealthier first. That’s the global economy. It is the totality of the practiced value system, not the various social values proclaimed by the servants to the global elite (who we call politicians and representatives). Machiavelli is taught in Poli Sci 101. Sure, they try to present it as a cautionary tale (wink-wink), but you can look at how things are run and see it is used as a manual.
Businesses not only know the consumer is strapped for cash, they would be wise not to talk fundamentals in their fiscal and earnings reports – whether they are making profits or not. Even businesses that make a profit are punished if they don’t have a fairy-tale around future growth and IT MUST INVOLVE PAYING MORE TO THE TECH INDUSTRY. Like a Feudal lord.
I uses these examples as a way to show why there will be absolutely NO WAY that “business” leads us out of this crisis. So the world had better find some form of community or governance that will.
And again….watch the stock split hype next week. Study it. The propaganda must be fought.
This should be read in conjunction with this article (warning: very long):
I began to read your suggested article until I came to this:
I stopped reading.
Yeah, there are fewer sure turn-offs than the tiresome cry of the deficit/debt chicken-hawk, whose befouled nest we’ve been forced to share, lo all these neoliberal years …
If the Brave New World wants to eliminate both the share market and the labor market which in turn eliminates the commercial market then we need something like a overall structure to reorganize ourselves. Based on real wealth. We have two things to base it on: people and the planet. But they cannot be antagonistic. We need a synergy. If we insist on bean counting everything, then let’s start with the value that is actually there – it is more or less a “constant”. The value of 10 billion people doing good things for the environment and civilization is so enormously valuable we really can’t measure it and once it gets jump-started it can exponentiate. The problem will not be debt, it will be wealth. So much wealth it will be… worthless? This might be a refreshing change from the financial monopoly we have suffered, and survived only by destroying the environment.
If everyone’s needs are attended to, then there is no need for money at all. We need to co-operate to provide what each person requires to live. No one deserves to have twice as much as is needed to live comfortably and no one deserves to have billions more than anyone else has. Under this scenario, “Love” will have to turn to things other than “money.”
I can think of a few.
My difference with fellow lefties is that I do not believe there is any guarantee that what follows capitalism – let’s call it, for want of a better term, postcapitalism – will be better. It may well be utterly dystopic, judging by present phenomena. In the short term, to avoid the worst, the minimum necessary change that we need is an International Green New Deal that, beginning with a massive restructuring of public and private debts,….
I agree with that follows capitalism might not be better, might be much worse.
I quibble with “we need an international” anything. That’s more committees, more ‘experts’,more searching for large pocket donors to fund committee work – we already know the 12 billionaires in the US have outside influence on the GOP/Dem parties thanks to their money, forming more centralized organizing committees. Another Brussels we do not need, even for a green new deal.
My take is the opposite: what is needed is more local real democratic decision making in small groups, town, cities extending to larger areas, states, countries; smaller area experiments extended to the larger area if they work and resisted if they do not work, etc.
your comment and StO have commonality to consider, but i think this is HoW it has to go:
My take is the opposite: what is needed is more local real democratic decision making in small groups, town, cities extending to larger areas, states, countries; smaller area experiments extended to the larger area if they work and resisted if they do not work, etc.
I think, if by commonality you mean locality, I agree with you and Flora. A funny thing happened on the way to post-capitalism – next to the Proj. Syndicate link today is another talking about how since the US Fed went on a policy of global liquidity even small countries have begun to use monetary management like QE and buying assets in their own currencies, etc. All because the Fed was priming the pump. And effectively backing all of them. I think that’s very good news. Small countries, like rural, small localities here in the US, will be very successful once they are liberated from financial monopoly tactics of the billionaire era.
I am always cautious about equating the stock market and the economy. They are related, but they are by ne means the same thing. A good visualization of global wealth is here (the derivatives are kind of scary): https://www.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization-2020/
The US stock market is dominated by a small number of tech stocks at the present time. Half of their revenue and profits come from overseas. https://www.visualcapitalist.com/the-stocks-to-rule-them-all-big-techs-might-in-five-charts/
Most S&P 500 stocks still have negative returns for the year to date. The “equally-weighted S&P 500” lags the market cap weighted index badly. Stocks that are major players in employing Americans and providing goods and services to the typical American often make up only a small percentage of the S&P 500 market cap. The stock price of the company I work for is down 25% from the peak and we are profitable, growing, and have virtually no debt.
So I appreciate that my 401k has gone up, largely because there has been unprecedented financial and fiscal support in both magnitude and timeliness, but it doesn’t tell me a lot about where unemployment is going. The lack of renewal of the unemployment support etc. right now is likely to have a large impact on the actual economy as it will remove a fundamental cash flow underpinning of the economy. I think eventually, that would ripple back into the stock market if not rectified.
History has shown that high degrees of inequality allow for financial assets to be at elevated elvels for quite a while and for those people to live a good life. After a while though, it generally proves to be unsustainable and things re-align, often in unpredictable and unfriendly ways. I find it ironic that the people who most talk about “Make America Great again” don’t want to follow the acctual policies of that massive global boom period in the first 3-4 decades post-WW II. Taxes were relatively high, inequailty was relatively low, civil rights were being expanded. the social safety net was expanding, and the environment was beginning to be protected.
I was thinking the same thing- that a few huge mega corps dominate and the rest are just leveling along, or negative etc. A while back I downloaded the spreadsheets provided by the Treasury on all of the companies that got PPP loans. There were two sheets- one for loans below 150k and those above. The first thing I thought when I looked at it was the sheer number of businesses on them. And how many more businesses are out there that either didn’t get loans, or didn’t need them, or forgot or whatever? How many businesses are there that are not publicly traded? Kind of incredible really. I’m not sure I really have a point other than to second your comment
Thank you for an amazing piece of thinking. Unsure I’ve gone sufficiently deep enough into the layers of this, but think it’s too soon to tell whether this is the Greatest Ponzi ever engineered by the usual suspects at the nexus of Wall Street and The City of London, the large central banks, government leaders, the 0.1 Percent, Big Tech, and corporate CEOs, with eventual massive financial losses and disruptive reversion to the status quo likely; or if we are in the early days of transition to some undefined Post-Capitalism system. In fact, I suppose there is some question about whether these two outcomes are paradoxical and mutually exclusive in a linear sense.
Whether those in their greed and quest for power have unintentionally dug themselves a hole from which it’s now too deep to extract themselves without incurring great loss; versus intentional and they have a plan in place that both increases and solidifies their grip on wealth and power and this is just a phase of their planned journey to absolute control, remains an open question. Based on the GFC and subsequent developments, I expect it’s more likely the former.
Looking foward to Yanis’ forthcoming book and Stephanie Kelton’s The Deficit Myth to assist in charting a different course.
whether the PTB have dug themselves into a hole, or all this chaos is part of some eleventh dimensional plan, doesn’t really matter.
both scenarios require some unknown threshold of the assent of the masses to move forward.
if the latter, and they lihopped* this catastrophe in order to consolidate, this doesn’t necessarily mean that we must allow them to succeed in the final Enclosure and their ascension to lordship and godhood.
If the former, and They screwed up, smoked too much of their own propaganda and forgot they they were humans, too, and subject to the laws of nature…it doesn’t mean that we must sit in the ruins, waiting for them to jump start the damned thing all over again.
In either case, our participation…again, in aggregate…will determine what comes next.
the more people who are even somewhat aware of the choices, the better….and the main task of the Machine right about now is to obscure and confuse the very awareness that there is a choice.
(*LIHOP= “let it happen on purpose”…is 911 trutherspeak for the idea that the PTB knew about the plan for airplanes and buildings, and let it happen in order to use the calamity as an excuse to tighten the reins and further the Enclosure.
…as opposed to MIHOP, which is “made it happen on purpose”, which is the more rudimentary and low brow version wherein the cia, or whatever, actually perpetrated the event. The latter is used to denigrate the more likely former…but when it’s all said and done, it doesn’t matter either way…what matters is what They were able to do with the crisis.(20 years later and where’s my Habeas Corpus?))
Oil Companies Wonder If It’s Worth Looking for Oil Anymore
End game for oil? OPEC prepares for an age of dwindling demand https://www.reuters.com/article/us-global-oil-demand-insight-idUSKCN24T0KT
This Is What The End Of The Oil Age Looks Like
Are the 2,000 plus billionaires in world today similar to the 2,000 plus plantation slave owners in the years before the civil war in the United States?
If in our system of fiat money, 93-97 percent of the money is created by banks creating credit and the other side of credit is debt, the answer probably is yes.
In other words, money is not — cannot be — merely free-floating, notional debt, but requires real debtors in order for it to become real leverage and wealth in the world.
And if that’s true, since we’ve seen central banks after 2008 and now in 2020 create many billions of new money out of thin air — purely notional debt, we were supposed to believe — by what mechanisms and to what extent did this purely notional debt become real debt leveraged against real-world entities like, for example, us?
Because there’ll be specific mechanics by which this works.
In Varoufakis’s post above he lays out one way the system, via the inflation of asset prices and corporate wealth it sustains, has worked against the many. There’s also the constant neoliberal drive to insert markets and privatization — and therefore debt and debt peonage — into new areas where they hadn’t existed before.
But there’s more to it than that. Once you start thinking about money as more than notional debt but real-world debt that requires real-world debtors in order for it to have any power at all, then the questions start ramifying into everything.
Indeed. That is why the extremely low interest rates do NOT trickle down to the great majority of people (except for their savings accounts).
It’s annoying to hear the brain dead analysis over trickle down interest rates as “stimulus.”
IF they were created ethically (e.g. via an equal Citizen’s Dividend), low interest rates should be a universal blessing.
But, of course, currently, interest rates are not lowered ethically but via welfare for the banks and asset owners.
Perfect examples: local dentists and veterinarians having been visited by management consultants who told them to borrow a bunch of money, upgrade facilities, expand, etc. … then must also do things like charge much higher fees, upsell/ overprescribe procedures with their new equipment, and then refer you to Synchrony’s Care Credit instead of in-house financing arrangements, as before. I’ll spare the choir my many anecdotes around this. Meanwhile, the dentist/ vet is in debt peonage to some girthy, girthy types.
“Everything is getting better and better look at the stock market” the 1920’s believer in free markets (Sounds like Trump, doesn’t it?)
That belief will be gone by the end of the decade.
“Stocks have reached what looks like a permanently high plateau.” Irving Fisher 1929.
This 1920’s neoclassical economist that believed in free markets knew this was a stable equilibrium.
He became a laughing stock.
Better shelve this for a few decades until everyone has forgotten.
Now everyone has forgotten we can use it for globalisation.
So, if stock markets crash, people stop believing in the markets.
What can we do this time?
Get central bankers to keep pumping in liquidity.
Oh blimey, now look what’s happened.
The US stock market is at 1929 levels.
If you let the markets correct, people stop believing in the markets.
If you keep pumping up the markets, they become detached from reality.
You just can’t win with the markets.
Third time lucky, perhaps?
Looking at the 1929 stock market and comparing it to today is kind of like comparing our Civil War to Hiroshima, in terms of armaments.
You’d be surprised.
What lifted US stocks to 1929 levels in 1929?
Margin lending and share buybacks.
What lifted US stocks to 1929 levels in 2019?
Margin lending and share buybacks.
A former US congressman has been looking at the data.
What I gather from the article is if the earths temperature continues to rise at a prodigious rate were in trouble
Don’t lay fault with capitalism. American society and politics has been blinded by populist rhetoric and has failed to recognize and address capitalism’s limitations. The challenge is to understand and implement policies that better balance society’s needs and values with capitalism’s strengths. The new green deal is a good starting point for discussion.
The stock market (bubble??) is due to the Fed pumping necessary liquidity into the markets. The Fed is relying on monetary policy because our government has not been able to implement an effective fiscal policy. The capitalism model needs both monetary and fiscal policy to work correctly. The focus should be on developing effective fiscal policies. To do this, we need politicians that are willing to work together and across the isle. My impression is that the republicans have been particularly bad at this.
whew! exhausting wading through all these comments this late in the day. A couple of observations:
Equity markets do not create debt. They reflect ownership of capital. The bond market, underwritten by banks is where most of the money comes from and represents the vast majority of debt. That debt is an obligation of the big corporations not the serfs. The serfs owe consumer debt and mostly mortgages on their homes. Total dollars in the stock market is aprox 30 trillion. The bond market 33% bigger at 40 trillion. Total consumer debt = 4.1 trillion. meh.
The fed is not juicing the stock market. The Fed is currently engaged in “financial repression” to artificially lower interest rates. A couple of trillion in legislated fiscal larges from the treasury is juicing the market. The Treasury is not creating the money from nothing they are issuing bonds to the “rentiers” who are making pitifilly small returns because the fed is repressing rates. In Germany interest is actually negative.
Most revolutions are set in motion by well meaning intellectuals like the commenters on this site. Most revolutions are quickly co-opted by the unwashed that loot and draw blood. This clears the field for the eventual rise of the new autocracy. New boss same as old boss. Real progress is very slow.
It does seem that ever since about the year 2000 equity markets have failed. And in the failing they ceased to provide “ownership of capital” simply because all the ownership shares they sell do not keep pace with the money they borrow. Those shares are meaningless when firms go bankrupt. Which happens relentlessly as demand dries up. Debt is the only safe ownership and that in turn becomes pure destruction of capital. And the “capitalist” system grinds to stop almost in disbelief. So the key to a new system is demand. The only question is what kind of demand? Seems like the world is in harmony that it needs to be Green, and certainly not green washed. And not demand for money which is just a medium of exchange. It doesn’t matter how we balance tokens, they are still meaningless.
“The Fed is currently engaged in “financial repression” to artificially lower interest rates.”
Charging interest (especially those extremely high rates by commercial banks) is parasitism – earning income without producing anything. They’re feeding off the labor of others.
“The Treasury is not creating the money from nothing they are issuing bonds to the “rentiers”..”
A large chunk of those Treasury bonds are bought by the Fed which creates money (reserves) from nothing.
Before we move on, perhaps we should find out what small state, unregulated capitalism was really like when it existed before.
William White (BIS, OECD) talks about how economics really changed over one hundred years ago as classical economics was replaced by neoclassical economics.
He thinks we have been on the wrong path for one hundred years.
Small state, unregulated capitalism was where it all started and it’s rather different to today’s expectations.
The classical economist could observe the world of small state, unregulated capitalism in the world around them.
How different is classical economics?
Ricardo was part of the new capitalist class, and the old landowning class were a huge problem with their rents that had to be paid both directly and through wages.
“The interest of the landlords is always opposed to the interest of every other class in the community” Ricardo 1815 / Classical Economist
What does our man on free trade, Ricardo, mean?
Disposable income = wages – (taxes + the cost of living)
Employees get their money from wages and the employers pay the cost of living through wages, reducing profit.
Employees get less disposable income after the landlords rent has gone.
Employers have to cover the landlord’s rents in wages reducing profit.
Ricardo is just talking about housing costs, employees all rented in those days.
Low housing costs work best for employers and employees.
Adam Smith on Profit:
“But the rate of profit does not, like rent and wages, rise with the prosperity and fall with the declension of the society. On the contrary, it is naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin.”
Exactly the opposite of today’s thinking, what does he mean?
When rates of profit are high, capitalism is cannibalising itself by:
1) Not engaging in long term investment for the future
2) Paying insufficient wages to maintain demand for its products and services
Today’s problems with growth and demand.
Amazon didn’t suck its profits out as dividends and look how big it’s grown (not so good on the wages).
Today’s economists, working up from micro foundations, have got rather confused.
What is the fundamental flaw in the free market theory of neoclassical economics?
The University of Chicago worked that out in the 1930s, but it got lost along the way.
Banks can inflate asset prices with the money they create from bank loans.
Henry Simons and Irving Fisher supported the Chicago Plan to take away the bankers ability to create money.
“Simons envisioned banks that would have a choice of two types of holdings: long-term bonds and cash. Simultaneously, they would hold increased reserves, up to 100%. Simons saw this as beneficial in that its ultimate consequences would be the prevention of “bank-financed inflation of securities and real estate” through the leveraged creation of secondary forms of money.”
The IMF re-visited the Chicago plan after 2008.
It looks like they did have some idea what the problem was.
At the end of the 1920s, the US was a ponzi scheme of inflated asset prices.
The use of neoclassical economics and the belief in free markets, made them think that inflated asset prices represented real wealth accumulation.
1929 – Wakey, wakey time
Why did it cause the US financial system to collapse in 1929?
Bankers get to create money out of nothing, through bank loans, and get to charge interest on it.
What could possibly go wrong?
Bankers do need to ensure the vast majority of that money gets paid back, and this is where they get into serious trouble.
Banking requires prudent lending.
If someone can’t repay a loan, they need to repossess that asset and sell it to recoup that money. If they use bank loans to inflate asset prices they get into a world of trouble when those asset prices collapse.
As the real estate and stock market collapsed the banks became insolvent as their assets didn’t cover their liabilities.
They could no longer repossess and sell those assets to cover the outstanding loans and they do need to get most of the money they lend out back again to balance their books.
The banks become insolvent and collapsed, along with the US economy.
When banks have been lending to inflate asset prices the financial system is in a precarious state and can easily collapse.
What was the ponzi scheme of inflated asset prices that collapsed in Japan in 1991?
Japanese real estate.
They avoided a Great Depression by saving the banks.
They killed growth for the next 30 years by leaving the debt in place.
Debt repayments to banks destroy money, this is the problem.
What was the ponzi scheme of inflated asset prices that collapsed in 2008?
“It’s nearly $14 trillion pyramid of super leveraged toxic assets was built on the back of $1.4 trillion of US sub-prime loans, and dispersed throughout the world” All the Presidents Bankers, Nomi Prins.
They avoided a Great Depression by saving the banks.
They left Western economies struggling by leaving the debt in place, just like Japan.
It’s not as bad as Japan as we didn’t let asset prices crash in the West, but it is this problem has made our economies so sluggish since 2008.