REVIEW: Creative Destruction – How to start an economic renaissance
Frank Lee
CYCLES OF CAPITALIST ACCUMULATION
A recession is defined in economics as two or more quarters of negative growth. A depression, on the other hand, comprises a sharp and deep downturn, usually as a result of bursting asset-price bubbles, a weak recovery, and a subsequent prolonged period of sub-optimal growth. This is about where we are at the present time.
Mr Mullan’s book – which I would recommend although my own views don’t always coincide with the author’s – is well-argued, researched and well worth reading.
The title itself is an obvious allusion to the theories put forward by the great Austrian economist, Joseph Alois Schumpeter (1883-1950) although Schumpeter was never part of the Austrian school of Von Mises and Von Hayek.
Capitalism is nothing if not cyclical, but the cycles themselves vary greatly from mild recessions to full-blown semi-collapses and Kondratiev waves. These episodes are necessary to the system; they are the cleansing method whereby all the bad investment decisions, false values and misallocation of productive resources which had grown up in the boom phase of the cycle reach their inflexion point where boom turns to bust.
The crisis was the moment of truth when suddenly all the plans, hopes and inane euphoria which were formed during the upswing were put to the test. Many of them were found wanting and those responsible would have to face the consequences of their actions.
The cycle took no prisoners. If your business failed, well, tough shit. No namby-pamby bailouts for the losers in the great game of rags to riches and back again. All very reminiscent of the film starring Eddy Murphy – Trading Places – a down and out street hustler who was groomed by two eccentric millionaires and became a stock-market player with considerable success.
Moreover:
This process was not just necessary to keep capitalism efficient; it was also necessary to keep capitalism moral. Only if market agents bore responsibility for their actions of prudence, reliability, sound judgement and trust, upon which capitalism was based, would the system be upheld. The crisis of capitalism was in a double sense – both practical and moral.” [1]
This process has undergone a fundamental change as will be discussed later.
THE RISE AND FALL OF BRETTON WOODS
Mr Mullan situated the latest phase of the Kondratiev Wave, or as he determines it, The Long Depression, during the initial upswing which started in about 1944. The period lasted from its early formulations which were implemented by 1945 lasting until approximately 1975. This era became known as Les Trente Glorieuses.
Thus was born the Bretton Woods system.[2] Key to this system was the anchoring of currencies of all of the major western economies to the US$-Gold nexus. The US dollar was linked to gold which held at US$35 per oz and was convertible into gold upon request.
But trouble was brewing. Owing to the costs of America’s wars in Indo-China together with the profligate spending of President Johnson’s ‘Great Society’ programme, surplus dollars began to flow abroad, particularly to Europe.
The Europeans – particularly De Gaulle – saw this as an opportunity to trade in these surplus dollars for payment in gold. This led to an outflow of gold from the US to Europe at which point the then President (Nixon) suspended US$ gold convertibility as of 15 August 1971. Speaking to his fellow Americans on a nationwide TV appearance he stated that this policy involved a ‘temporary’ expedient, but this soon morphed into a permanent arrangement.
This signalled what was in fact the end of the Bretton Woods system, and the beginning of the second phase of the Kondratiev downturn or as Mr Mullan puts it the beginning of the Long Depression. The new world order now rested on the rather dubious moorings of a fiat system – a system in which currencies float in a rather unstable relationship with each other in an increasingly volatile global environment.
THE NEW ORDER & ITS DESIGN FAULTS
This new economic disorder becomes increasingly chaotic as fundamental and seemingly intractable problems became increasingly apparent. Mr Mullan notes:
To maintain a semblance of vitality, western capitalism has become increasingly dependent on expanding debt levels and on the expansion of fictitious capital.[3] This layer of financial assets that are only symbols of value, not real values. For example, company shares are traded like goods and services do not, in the same way, embody value.
They are tokens which represent part ownership of a company and the potential distribution of future profits in the form of dividends. The paper or electronic certificate itself is not a genuine value that can create more value. Rising share/stock prices are often presented as a healthy economy, but the amount of money a share/stock changes hand for says nothing definitive about the value of a company’s assets or about its productive capacity. On the contrary, it is when real capital stagnates that the amount of fictitious capital tends to expand.[4]
Thus, during a property boom prices may reach astronomical levels where those who own their houses feel they are getting richer but come the down phase they wonder what happened to their new-found wealth which seems to have disappeared during the market correction.
The fact of the matter is that it was never there in the first place. It was fictitious.
The chief characteristics of the 1980/90s was the growing reliance on debt, and, in addition, the growth of financialization; this in order to stimulate growth. Debt in all its forms: corporate, household, financial, student loans, car loans and sovereign debt were a function of easy money – QE and ultra-low interest rates – and bore witness to increasing levels of leverage which kept the system going.
Debt was cheap. Its costs had fallen since the 1980s. Interest rates had been declining for over three decades.
The United States shows this clearly – and its rates remain the dominant influence across the mature economies because of the dollar’s role as a world money. Real commercial bank interest rates averaged 7% during the 1980s, 5.5% during the 1990s 4% during the 2000s for the period leading up to the financial crash of 2008 and have been below 2% ever since.[5]
Financialization [6] was the other leg of a system which in, Mr Mullen’s words artificially propped up – a ‘decaying system.’ Free monies from the Central banks was used by banks and other financial institutions to buy up and speculate on various markets including in particular stock and bond markets.
It was financialization and debt which acted as an increasingly counter-balancing force to the long-run tendency of decline in the productive industries.
Unfortunately, the productive sector was the creator of real value whereas the rent-seeking nature of debt-driven finance capital was essentially a parasitic outgrowth on the productive sector.
DIMINISHING RETURNS TO ZERO AND MINUS RETURNS
During the same period debt was and still is rising faster than national income, and indeed growth seemed to be in a long downward trajectory. At the present time growth has come to a stop in Europe. (In alphabetical order).
France GDP Growth
Quarterly: 0.3%
Annual: 1.4%
Germany GDP Growth
Quarterly: 0.1%
Annual: 0.5%
Italy GDP Growth
Quarterly: 0.1%
Annual: 0.3%
UK GDP Growth
Quarterly: 0.3%
Annual: 1.0%
EU area GDP Growth
Quarterly: 0.2%
Annual: 1.2%
(Source: Trading Economics)
10-Year Bond Yields Yearly
France: –0.73%
Germany: -0.54%
Italy: –1.69%
UK: 0.67%
EU Area: 0.3%
(Source: countryeconomy.com)
No ifs or buts, these really are depression figures. European industry is not merely slowing to a crawl but is actually becoming negative. Mr Mullan attributes this decline in value production as systemic under-investment due to the Tendency of the Rate of Profit to Fall (TPRF). No guesses from what source that came.
THE TENDENCY OF THE RATE OF PROFIT TO FALL AND DECLINING INVESTMENT
The Labour theory of value began life with Adam Smith (1723-1790) was subject to further elaboration with David Ricardo (1772-1823) and additional further final touches by Karl Marx (1818-1883).
Briefly stated the theory rests on the thesis that capital or value represents the objectified process of past human labour. Actually, existing value/capital is nothing more than labour which has already been expended.
Thus, a potter will start with a piece of clay on his wheel, and through several stages of moulding, painting, and baking, the piece of clay has become a vase, a commodity, with a value and price. As labour becomes more productive and innovative, output (growth) expands in both a quantitative and qualitative sense.
This process did not simply represent the output of the individual labourer, it involved the aggregated social labour of the economy as a whole which produced goods and services.
In modern parlance – growth qua capital stock. It should be said that the value of a commodity doesn’t always coincide with its price (which is the phenomenal form of value) due to supply and demand pressures. In contemporary economic parlance this process would be described as productivity growth and value-added growth. Goods become cheaper and markets expand to purchase these new goods. We have seen this in the production of among other items, cars, I-Phones and shoes.
Of course, the whole process is underpinned by businesses quest for profit and this is central to the theory of capitalist crisis.
One cycle of accumulation will (I hope!) serve to clarify this.
Let M stand for money capital, C stand for Capital consisting of both living labour, workers, and dead labour, machinery and raw materials, and P for the production process.
Here we go: M – C … P … C’- M’
Let us suppose this is car manufacture.
Money capital is transformed into dead and living capital. M to C. These factor inputs are brought together during the process of production P. Thus, emerges new capital as a Car C’. But what is the significance of the ‘ or C’?
Well the ‘ is the surplus labour time (or value) which is part of total value of ’ which also includes necessary labour time which represents costs to the capitalist i.e., wages. Surplus labour time is the source of surplus value and ultimately money profit. The workers worked for 10 hours but were paid for 8.
The 2 hours were a surplus over and above what was paid to the workers. And this would be the case at any level of production. It is the source of surplus value and profit. Finally: M’ or the transition to C’- M’ This is sometimes referred to as the realisation problem, but simply means how does C’ become M’. This takes place in the final phase of the process where the cars are on sale in the dealership courtyard waiting to be sold.
Having appropriated the M’ surplus value, the business can restart the whole cycle once again, – ceteris paribus. However there maybe problems of transforming the surplus value into prices of production (that is to say converting C’ into M’) due to the level of aggregate demand. (For further discussion refer to Michael Roberts and David Harvey*).
It is essential that profit maximization is the driving force of capital and the accumulation process. If profit starts to undergo a secular decline, this will have serious implications to the system as a whole. This is exactly what Mr Mullan picks up.
Investment is in decline due to the falling rate of profit. And the rate of profit is declining due to the fact that labour input into each successive unit of output has declined. It may sound strange to say but declining profitability is due precisely to the increased efficiency and productivity of the system.
Marx argued that:
(i) each individual capitalist can increase their own competitiveness through increasing the productivity of his workers.
(ii) The way to do this is by using a greater quantity of dead capital —tools, machinery and so on—for each worker. There is a growth in the ratio of the physical extent of the capital to the amount of labour power employed, a ratio that Marx called the “technical composition of capital”.
(iii) But a growth in the physical extent of the means of production will also be a growth in the investment needed to buy them. So, this too will grow faster than the investment in the workforce.
(iv)The growth of this ratio, which he calls the “organic composition of capital”, is a logical corollary of capital accumulation.
(v)Yet the only source of value for the system as a whole is labour. If investment grows more rapidly than the labour force, it must also grow more rapidly than the value created by the workers, which is where profit comes from.
(vi) In short, capital investment grows more rapidly than the source of profit. As a consequence, there will be a downward pressure on the ratio of profit to investment—the rate of profit must therefore decline.
Each capitalist has to push for greater productivity in order to stay ahead of competitors. But what seems beneficial to the individual capitalist is disastrous for the capitalist class as a whole.
Each time productivity rises there is a fall in the average amount of labour in the economy as a whole needed to produce a commodity (what Marx called “socially necessary labour”), and it is this which determines what other people will eventually be prepared to pay for that commodity.
So today we can see a continual fall in the price of goods such as computers or DVD players produced in industries where new technologies are causing productivity to rise fastest.
Thus, according to Mr Mullan, falling profitability is the root cause of curtailed business investment.[7] Moreover, this observation has been observed in a number of authoritative sources.[8]
COUNTERACTING FORCES TO THE TRPF
Although the declining rate of profit is a necessary feature of the capitalist accumulation process there are counter-acting forces.
These include the increase in the mass of profit which offsets the decline in the rate of profit, and the rate of surplus value which also slows down the decline in the rate of profit. The two deep economic slumps of 1974-5 and 1980-2 had sufficiently reduced the value of constant capital. At the same time, the slumps had driven up unemployment and weakened the ability of the labour movement to protect wages (the cost of variable capital).
The productivity of labour rose as new techniques (and hi-tech ones at that) were introduced to many sectors of the economy, while wages were not allowed to rise as much. The wage share in the US economy plunged. The rate of surplus value rose. Additionally, subsidies to business and low interest rates helped to mitigate declining profits but could not stop it in the longer run. (Again, see Roberts and/or Harvey for a more detailed explanation.)
THE LEFT BOTTLES IT
In football parlance a player bottles it when he/she pulls out of a 50-50 tackle. A referee bottles it when he gives a dubious decision to the home team. The political left ‘bottled it’ when they gave up on socialism or communism circa 1989/90. There was a turbulent period of class struggle – the Miners’ Strike in the UK – and the air traffic controllers’ strike in the US, launched and overseen by Thatcher and Reagan circa 1984. This was also a period which bore witness to the collapse of communism in Eastern Europe.
Neoliberalism was to carry the day to such an overwhelming extent that even ‘left’ political parties were seemingly entranced by the new order. Strange they couldn’t tell the difference between revolution and counter-revolution.
One of the first things the incoming Labour government – in the shape of Gordon Brown – did after the 1997 election was to grant independence to the Bank of England! No more fiscal policy! Carry on entrenching Mrs T’s pet projects.
We know the rest. The new order was established from Washington to Moscow being imposed by the IMF, World Bank and WTO. The left had been neutered and was officially declared dead.
Mr Mullan explains:
It was ironic that it was not the strength of the alternatives to capitalism, but their demise that eventually crystallised the elites intellectual crisis. The return to depressed economic conditions had already put the establishment on the defensive. But capitalism’s self-confidence to its next blow came not from the vehemence of its former adversaries attacks but by the reverse. Opposition withered away not just in the Soviet Union as its international enemy, but from the domestic challenges from the left and from organized labour.” [9]
A similar view was put forward at an earlier date by Peter Gowan, who wrote,
We had thought that the interwar capitalist society was a thing of the past, a deviation overcome by post-war social progress. But it turns out that the post-war social gains were a deviation and the inter-war state and society is again the norm. Post-war social progress, was, it seems, a tactical aberrant form of European capitalism made necessary by the challenge of communism.
We now know the second part of the sentence whose first half, so strongly believed in 1989, stated: ‘Western-style welfare capitalism is better than Eastern Communism … ‘ The second half went unnoticed 10 years ago: It reads: ‘But western style welfare capitalism only existed because of communism.’ Europe seems to be drifting towards a divided, turbulent and ugly future.”[10]
THE ZOMBIE ECONOMY
What has seemed to have emerged in the neoliberal era was a wholly unexpected form of capitalist decline. This has been termed a zombie economy.
Low interest rates create zombie companies. Weak businesses survive (when they ought to have gone out of business) directing cash flow to cover interest on loans – but not the principal – that cannot be repaid but that banks will not write off. With capital tied up, banks reduce lending to productive enterprises, especially small and medium sized ones, which account for a large proportion of economic activity and employment.
Firms do not dispose of or restructure unproductive investments. The creative destruction of the slump when businesses of this type go out of existence and debts are wiped out and the reallocation of resources necessary to restore the economy does not take place.
Thus, a zombie economy, where failed businesses are kept artificially afloat is one where the necessary adjustments including liquidation of unproductive enterprises and assets are allowed to continue and the necessary restructuring fails to take place. This thus results in a semi-permanent depressed condition, until the next downturn comes along.
As opposed to Mr Mullan’s enthusiasm for a Schumpeterian policy of creative destruction we have been served up with an ever-deepening economic and social stasis by a brain-dead political and business class.
This has been eerily reminiscent of the British Prime Minster, Stanley Baldwin, who fought the 1929 general election on a “Safety First” ticket. Stabilisation and ‘muddling through’ has become the policy of successive western governments, particularly in the EU still labouring under the Stability and Growth Pact.
Schumpeter writing in Capitalism, Socialism and Democracy (1941) described a bourgeoisie which was losing not just its wealth in the economic crisis but also its sense of purpose. This loss of belief in their own functions, capability and sense of moral leadership is becoming increasingly evident. They are a corrupt and decadent force in society and more and more of them and society at large are beginning to realise it.
This purpose was reinstalled as a result of WW2. National economies of the belligerent nations were cranked up to full capacity and to all intents and purposes ceased to be capitalism and began to be command economies.
In the United States for example Roosevelt’s New Deal actually began to move away from the economic orthodoxies of the 1930s toward a more organized economic system, this process carried on until the US entered WW2 where it was taken even further.
…the war economy did not stimulate the US private sector it replaced the free market and capitalist investment for profit. Consumption did not restore economic growth as Keynesians argued … instead it was weapons of destruction.
In many industries, corporate executives resisted converting to military production because consumer market share would go to competitors who did not. Conversion thus became a goal of public officials and labour leaders.
Auto companies only fully converted to war production in 1942 and only began substantially contributing to aircraft production by 1943 … From the beginning of preparedness to the peak of war production in 1944, the war economy could not be left to the capitalist sector to deliver.
To organize a war economy and ensure that it produced the goods needed for war, the Federal Government created an array of mobilization agencies, which often purchased goods, closely directed those goods manufacture, and heavily influenced the operation of private companies and whole industries.
The US Treasury introduced the first income tax in US history and war bonds were sold to the public. Income tax payees rose from 4 million in 1939 to 43 million by 1945.[11]
Moreover, all types of technological discoveries were part of this process. Radar, aircraft design, chemicals, pharmaceuticals, the jet engine, plastic surgery for treating aircraft crew who suffered burns. And this in the most capitalist of all countries!
So, what couldn’t possibly be done, was done. A revolution had occurred because it was needed. And where there’s a will…
So Mullan’s arguments for a desperately needed change seem all too plausible and necessary even from a common-sense point of view. He argues:
Escaping from the grip of the Long Depression will not be easy, but it is necessary, and it is possible … there are many barriers to economic health, yet none is insuperable. The biggest challenges are not economic constraints. They lie in the realms of, ideas and imagination, culture and politics.” [12]
Agreed, but the ideological hegemony of the ‘Washington Consensus’ permeates all levels of social being smothering any attempt to break out of the template. From globalization and what are called ‘free-markets’, to hyper-individualism and identity politics, the orthodoxy of the power-elites seems escape proof.
It is what Max Weber called the escape proof ‘Iron Cage’ of bureaucracy, or in our own time the iron cage of the deep-state/media/security/corporate matrix. It seems a lost cause. But I wonder? The late-capitalist monolith may not be as powerful and impregnable as it would have us believe and as it really is. We shall see.
La Lotta Continua
[1] The Spectre at the Feast – Andrew Gamble – p.46
[2] The 1944 Bretton Woods agreement was negotiated in the small town of Bretton Woods in New Hampshire. It was to establish a new global monetary system. It replaced the gold standard with the U.S. dollar as the global currency. By so doing, it established America as the dominant power in the world economy. After the agreement was signed, America was the only country with the ability to print dollars. The agreement created the World Bank and the International Monetary Fund. These U.S.-backed organizations would monitor the new global system.
[3] Fictitious capital: Karl Marx made a simple yet profound discovery in the course of his critique of the contemporary political economy. He pointed out that money is not capital; it is only capital’s representation. It is a real representation only when and till there is continuous creation of capital during the production process. Money unrelated to the production process is fictitious as it is valueless
[4] Creative Destruction – Mullan – p.22
[5] Mullen, Ibid., p112.
[6] The term financialization is generally used as a reference to that part of the economy indicated by the acronym FIRE (Finance, Insurance and Real Estate) and its growing importance in the economy in both qualitative and quantitative terms.
Financialization is a process whereby financial markets, financial institutions, and financial elites gain greater influence over economic policy and economic outcomes. Financialization transforms the functioning of economic systems at both the macro and micro levels. Its principal impacts are to…
(A) elevate the significance of the financial sector relative to the real value -producing sector,
(B) transfer income from the real value-producing sector to the financial sector, and
(C) increase income inequality and contribute to wage stagnation
Since 1970 this part of the economy has grown from almost nothing to 8% of US Gross Domestic Product (GDP). This means that one dollar in every ten is associated with finance. In terms of corporate profits finance’s contribution now represents 40% of all corporate profits in the US. This is a significant figure and, moreover it does not include those overseas earnings of companies whose profits are repatriated to their countries of origin.
Thus, the increasing presence and role of finance in overall economic activity and the increase of profits channelled to the financial sector represent the salient indicators as to what has been termed financialization. It is argued by some that financialization may put the economy at risk of debt deflation and prolonged recession.
Financialization operates through three different conduits: changes in the structure and operation of financial markets, changes in the behaviour of nonfinancial corporations, and changes in economic policy. Countering financialization calls for a multifaceted agenda that
(D) restores policy control over financial markets,
(E) challenges the neoliberal economic policy paradigm encouraged by financialization,
(F) makes corporations responsive to interests of stakeholders other than just financial markets, and
(G) reforms the political process so as to diminish the influence of corporations and wealthy elites.
This ongoing transformative process represents a structural change in the nature of the late capitalist economy. Principally the relationship between the value-creating manufacturing sector and the FIRE sector – that is to say, the creative part of the economy and the distributive part.
In the earlier phase of capitalism, the financial sector was much smaller and served to grease the wheels of industry by providing investment capital and credit obtained from depositors. That symbiotic relationship has now ended, and finance has increasingly taken on a life form of its own relegating manufacturing industry to the second tier.
Financialization is a pattern of accumulation that relies increasingly on profit making through financial channels even for firms which are not financial. General Motors in the US, for example, had a trading and finance sector which was to grow larger than the original auto-vehicle operations.
[7] Mullan op.cit., p.116
[8] Mullan op.cit p.116 footnotes -35, 36, 37.
[9] Mullen, Ibid., p.200
[10] The Global Gamble – Peter Gowan, p.319
[11] The Long Depression – Michael Roberts – pp.56/57
[12] Ibid., Mullan – p.265.
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Q: Did the bond yield curve not invert recently? Is this not also a (precise) barometer for recession or at least a predictor of one with very good accuracy.
Another question is how would the devaluation of the US dollar factor into the recession – its seems inevitable that the US would need to devalue its currency within the first quarter or so of the decade to come. Just my thoughts.
Significant parts of this article would benefit from a concentrated hour or two of sub-editing and additional commentary by Nick Beams.
The parasitic Queen, Charles, William and George mixing a bowel of puddings, said today’s entertainment section.
Why these 4 disfunctional generations of parasites have become the civilisaonal symbol of the day, while the truth teller Assange languishes in solitary confinement? What service to society is this?
The nature of deceit or self-illusion, is to frame even its apparent exposures in deceit so as to persist or ‘survive’ at all costs. ‘Too big to fail’ means – everything (everyone) else is sacrificed for the sustainability of an inherently self-contradictory sense of self – or system.
I look primarily to the underlying patterns in consciousness that are then reflected or embodied in our world. Pattern recognition reveals common cause under multiple disguises. Whereas analysis of specific forms in their framed meanings leads into a rabbit hole of identity entanglements and emotionally invested judgements.
A self-inflation derives its emotional investment from a sense of self-lack – or self-inadequacy.
As such the error is not in its symptoms of attempt to resolve or remedy but in its cause, is a sense of self-division, self-disconnection and thus the drive to regain a lost or denied wholeness – and maintain or sustain such an identity investment under fear of pain of loss.
In our times, the word ‘self’ is generally equated with this sense of private or collective struggle, rather than the expression of unfolding perspective within a quality of shared being – of a giving and receiving in a life known and shared..
My suggestion here is that we experience the ‘Separation’ (or self-alienation and dissociated displacement of a self-as-thinking), set over and against its world, rather than a self embracing and embraced by the felt quality of living. Thinking makes a ‘mind’ rejecting and rejected – by the act of partial selection given priority over wholeness. By assigning special value to specific forms of problem and answer.
Separation trauma – need not be dramatic in outward form to work a denial and splitting of the personality to a masking adjustment and displacement of ‘survival or adaptation’ to the frame of a world of loveless attack, denial, or betrayal and abandonment. Love and self are one until rejection or denial induces guilt, fear and division.
I didn’t move to write this as my comment, but without some sense of setting the scene – this presumption of fear, conflict and destruction as the basis of life itself runs invisibly unchallenged – to frame and set in re-cyclic futility the attempt to sustain the unsustainable, as if to make truth from lies or peace from war. There is an identity component that is fundamental to the social or economic pattern.
The ability to generate bubble realities of a ‘special love’ or alliances set in common hates, holds a temporary order within chaos – as if to escape, judge, set over and manage, check or deny conflicts as outsourced or diverted to ‘other’ and ‘world’ – away from the mutually reinforced identity complex.
This works power struggle or consequence-avoidance, seeking to get possession and control by getting rid of debts and liabilities.
We already have endless and innumerable examples of such a strategy of emotional investment and identity.
But that life CAN be lived, shared and experienced differently is inherently within the quality of a true life that we cannot altogether block or deny – excepting to repeatedly struggle and die in refusal of it,
and yet it is rendered or masked over as externally driven patterns of struggle and entanglement in which we have relational responsibility.
Any relationship that we open to take from, or be received into, is one in which we have accepted life. The idea of getting from others, or getting rid of unwanted self onto others, seeks to anonymise and exploit the living to effect a private fantasy. But it is impossible to judge others without applying the same judgements to our own self – however it may be presented or packaged.
This then leads to a situation in which we are locked within our own judgements excepting the recognition and extension of an acceptance to the denied, from which a shared release can restore relational honour or equality of the right to being.
How does this all connect to uncovering a foundation from which a truly profitable economy can grow as an extension of worth uncovered, embodied, and shared ? It is from the vigilance against deceits that lock us into a false and futile cycle of destructive contraction, limitation and denials that are presented as ‘progress’ or salvation from feared and hated outcomes that are generated by the attempt to enslave and control life.
To NOT do or to disinvest of the false is to open the mind to be aligned by the movement of the true – which is not clever thinking – but simply recognised whole and true.
I imagine my comment fits well with yours, Brian.
When there is profit downgrade projection, corporate media/propaganda hypnotises us into thinking it is our duty to buy more and work harder in order to make their balance sheet look good again.
All to the detriment of our intellectual and spiritual wellbeing, and in the process, destroying/polluting the environment, poisoning our food, hurting our family relationships and weakening our social cohesion.
The way you put it is very easy to see – but suffers from ‘they make us do it!’.
It gives power and freedom away. Perhaps because we do not WANT to own our own life-consequences? Or only those that inflate, stroke or support our self image?
The idea of shifting from personalities to deceit – is to bring it back into our sphere of responsibility and freedom. Not ‘freedom’ to do whatever we want – but freedom to be FROM who we are in what we choses to do – or perhaps choose no longer to do, or give support and allegiance to.
There are many underlying human beliefs that give rise to negatively reinforcing loops of thought, action and result. These I generally assigned to ‘self inflation’. Taking an image of ourself and adding to it.
The periodic ‘compression’ that occurs as a moral realignment in the true sense rather than a moral presentation in self image – is such that conflicting self illusion can no longer be carried on a wave of expansion and so we are forced to re-evaluate our ‘self and world and relations’. Clinging to a sense of possession and control – in fear of dispossession and chaos or indeed subjection to an avenging ‘payback’ – is the willingness that someone else suffers or pays for the sustainability of a lie given power – and the father of it – which is the wish something be true that is not. And selling or recruiting support for a private sense of possession that is then manipulatable.
Almost everything in mind these days on Economy, or social and political organisation is quantitative and reductionist and weaponises ‘moral’ narratives by means of fear and guilting, to induce compliance in our own destruction or mass-management as carbon units running on narrative dictate.
Truth and life both have and are qualitative relational recognition and experience but for the most part we have lost or covered this with an identification of private possession and control – at the level of thought. And yet it ought to be obvious that we are no more free in our thinking than the media in its ‘journalism’ unless we think and see from a different presumption than a masking in private possession and control.
How do we do more with less as a living cultural expression – rather than getting more for less as a contractual obligation? For a start we can recognise the deadwood of false economies and cut them out so as to allow new growth.
How much ‘GDP’ is the quantitative measure of destructive or negative agenda?
IE: How much is invested and used up in producing dead and toxic foods, pharmas and exposures that degrade, denature and disease us? Such that there is an ‘economic’ model for farming humans for sickness, pain and death? Which is considered too big to take on (politically) and too big to fail – as well as to effective by stealth in terms of control over populations. Perhaps it is too horrific to openly consider – but HG Wells saw the gist of it back in ‘The Time Machine’.
And curiously the ‘divide’ between the eaters and the meat is often put in just such terms to induce selling out on our human belonging so as to ‘escape’ or rather defer being ‘meat’.
Fear of pain of loss induces compliance with false premise under tyranny. But such a system of coercion can never become humanly alive – regardless of technological expansions by which it is entranced. A smart prison will be more efficient and less morally constrained – because the idea of human worth is just a social construct to be replaced by fantasy gratifications in exchange for active denial of others.
Compression is a time in which the seed is formed for future growth. But contraction recoils from life in attempt to deny change as if to hang on to ‘power over life’.
Somewhere in the mess at hand is the capacity to arrive at our starting place and know it for the first time. Only be recognising what we are NOT – can we release and be released of its false framing of choice. Truth is self-revealing – as we know in recognising inspiration and the movement of curiosity and desire within us – or indeed through us – to our relational experience. Most everything we ‘do’ gets in our own way. Our sense of self in image and concept – usurps the flow of our own fulfilment – which is a shared experience and not a fantasy acted out upon the body or world – that speaks only of lack seeking to be filled.
Before all privately held gold was confiscated by Roosevelt in the 1930s, the price of a troy ounce was set at $20.86c.
The post confiscation price was set at $35, and this lasted till 1971, when Nixon went off the gold standard permanently.
US gold reserves reached a peak of 21,000 tons in 1949. Not surprisingly, foreign countries like France preferred to hold an ounce of gold than little pieces of worthless green paper. Gold reserves fell to 8,133 tons in 1971, where officially they have remained ever since.
Some people even believe the US still holds that amount, and I’ve got some really good swamp land to sell those people.
The current gold price is about $1,500, though like all markets the precious metal markets are grossly and blatantly rigged. In a free market, it could be $4,000 or $10,000 or higher. For every ounce of physical gold that is traded, so are 50 ounces of non existent paper gold, dumped on the market to depress the price.
All this shows is the debasement of the currency, which is why gold is so disliked by central bankers and governments. Gold simply retains its value. So $20 in the 1920s is the equivalent of $1,500 or $4,000, or whatever, today.
Gordon Brown was criticised for selling 400 of Britain’s 750 tons for $250/ oz. at the turn of the millennium, at the bottom of the market, losing billions. But this is missing the point. Switzerland sold 1,300 of its 2,500 tons shortly after in 2001, near the bottom of the market. The aim in both cases was to dump that quantity of gold at once deliberately to depress the market.
All other markets are rigged in a similar fashion. Oil, commodities, equities, bonds, interest rates, forex. There are no free markets. There is no such thing as genuine price discovery or rational allocation of resources. Instead, we have a centrally controlled economy little different from the now defunct Soviet Union, which will inevitably produce increasing distortions, undermine its structure, and accelerate its now imminent collapse.
Such an economy cannot be remotely described as capitalist, unless the term is defined so broadly as to be meaningless. Crony capitalism, maybe, crapitalism, parasitic finance capitalism, a looting kleptocracy, unbridled rent seeking, call it what you wish. The concentration of wealth and power to the extent that the Three Amigos, Gates, Buffett and Bezos, own more than the bottom 170 million half of the population. Such a situation cannot long endure, not for reasons of humanity and social justice, but because it removes purchasing power from the economy, along classical Marxist lines.
Markets have been ramped up by central bank monetary policies, uncontrolled money printing and negative interest rates. These were the policies that led to the 2008 crisis, and the situation is now immeasurably worse. Enormous bubbles have been created in property and other markets. Banks have been weakened to the extent that they will simply fail in the coming financial crisis. Grossly irresponsible borrowing and spending have left governments in a similar position. There is no room for manoeuvre. A perfect storm is coming, most likely within the next two years. It is difficult to see how this can be avoided.
On about 25% of the bonds in the world, and increasingly on bank deposits, negative interest rates prevail. People will withdraw money from the banking system and hold it in cash, as they have in Japan for the past 30 years. Existing bubbles are the largest the world has ever seen and far exceed those of 1929 and 2008. Further interest rate cuts, demanded by Trump and others to help win elections, can only prolong the inevitable and make the consequences even more dire.
Readers should consider what steps they should take to try to protect themselves. Holding money in cash in safes or fireproof boxes is one option, though of course that physical cash could rapidly become worthless. It is better to keep any money held within the banking system spread across a number of different accounts. People need accounts to function normally, but this gives some greater flexibility when accounts are frozen or confiscated, as has already occurred in Cyprus, the EU template for the next crisis.
You forgot the most and openly rigged product, diamonds.
China needs a mention too for bringing shark “capitalism” to dinosaur size level.
paul / marc is a jew-el when he forgets about the 1% of Arabs being wronged in 1 location (leaving the other 98%).
Why leave out all the Arabs being wronged in Iraq, Libya, Syria, Yemen and so many other places. Or so much of humanity being wronged by the endless unbridled chicanery of a certain Levantine minority. The same people who rig diamonds and all other markets. So much trouble caused to so many by so few.
You & friends are the ones 99% of the time hammering on about the 1% Arabs in “Philistine” forgetting the rest. Not to mention the billions of people wronged who are not Arabs.
Given all the recent Khazar antics of AIPAC and the Board of Deputies, we are all Palestinians now.
Oh, crikey redux. Ha-El’s Ba-Els even already. That’s it. Enough is enough. I’m taking all my diamonds back to Tiffany’s this Christmas.
Well Paul – that’s quite a summary!
But No Fed? No BIS? No Dollar decoupling?
Surely all those countries who have their reserves in $ treasuries are about to get a bigger rub-down than most?
The empire is dead – long live the new empire!
What we are seeing and going to experience is Gramsci’s morbid symptoms between the old and new.
The old empires plan is of a mew virtual currency that is controlled remotely and can be switched on and off to keep its subjects safely coralled in our allowed communities – no crossing the parish boundaries without privilege! No need for stocks if you try -your card won’t work and you can’t use anyone elses because of biometrics and no cash accepted except the prisoners ‘cash’ – cigarettes, drugs, prostitution…
Ah Brave New World indeed – long planned – artives like a Jumbo Jet dropping loudly from the sky – BOING BOEING.
I recommend the following book. The title pretty much says it all:
Killing the Host: How Financial Parasites and Debt Destroy the Global Economy
by Michael Hudson
https://michael-hudson.com/2015/09/killing-the-host-the-book/
Michael Hudson is past his sell by date
Not crispy enough?
Bear Stearns was murdered outright via naked short selling of shares. Lehman was staffed with shit-for-brains Functionally Retarded chief executive that turned their historical investment bank into a leveraged to the tits hedge fund levered 44:1 on the precipice of Kondrative Winter.
Deregulatory moves in 1999 under Greenspan & Clinton were responsible for our present Greater Depression which will last for the duration of Kondrative Winter. Glass-Steagall Act was the only safeguard for the global financial system and Greenspan saw to it that it was abolished.
Asset inflation was unstoppable at that juncture and today we are evidencing the misallocation that was structurally instituted so that a small group of investment bankers on Wall Street could reap outsized profits off of the backs of the indentured into bankster servitude.
The dark pool derivatives universe cannot be inflated or reinflated was systemic collapse manifests system wide. The global banking system can be reduced to mere Ponzi Finance architecture, and it is subject to all the structural faults that Ponzi schemes fall prey to.
Housing prices do not rise exponentially and neither does asset accumulation, except of Wall Street.
MOU
EDIT: “……..or reinflated once systemic collapse manifests…”
EDIT: “……..,except on Wall Street.”
MOU
Interesting fact that flies under the radar.
Glass of the revered Glass-Steagall Act, was also the Glass of the Glass-Owens Act, the creation of the Federal Reserve entity.
Kondratiev scores low marx.
I appreciate the reviewer’s “merry little tinkle” at the end but surely the gist of this article is that capitalism will only be out of the shit if we have another war i.e. capitalism will only be out of the shit when we are in it.
But George we haven’t stopped being in a war for a long long time now and most of the western anglo empires government debt sits in the pockets of the bankers and their industrialists progeny. We daily give them our labour and wealth for free as slaves and serfs we always have done ! We think we are free but we worship the god they give us and them, the direct favourites of that god – mammon and their idols.
Any who dare to free us from their debt slavery and upset their places in their theatre of the absurd, temple, ate demonised, imprisoned and murdered – like JC, JA & Qaddafi.
No. This article is a review. Kondratiev waves (which mistake geese for ganders or starlings or something else of that sort, maybe moles) say capitalism will only be out of the shit if/when we have a new/disruptive technology. Their link (sic) with wars lies in the external push wars give to new/disruptive technologies, c.f. Archimedes.
old school thinking there George , wars are not happening, not wanting, I mean real wars where white folks start to get involved, not just their born again white trash neighbour’s “hero” sons and daughters….. no , so what then? The devaluation of the your currency … that should do the trick.
Someone should write a book on the general public’s respect for Jeremy Corbyn.
Apparently, a few hours ago – the footage on Sky Sports of the Darts World Championship showed the WHOLE audience singing “Oh, Jeremy Corbyn”. Looks like the movement is as strong as ever! You can rig things as much as you like, but the truth will always win out in the end! <3
Well, I've always loved darts and used to play a (admittedly bad) game or two at the local pub in the '90s; now I will adore the game!
I recently watched (courtesy YouTube’s second guessing the shape of my echo chamber) an ‘old’ documentary about King Edward VIII, née Prince of Wales, against whom the then Prime Minister Stanley Baldwin and the editor of The Times led a successful charge to give him the heave-ho, tarring him with every conceivable brush–from being a danger to the nation to the boldest hint of sexual deviancy they thought would fit in print–while completely ignoring his tendency to admire fascism, because he showed an ounce of monarchic compassion towards the poor, depressed and dispossessed of the Welsh collieries, for which concern the poor, depressed and dispossessed of the nation and the Empire–but not their rulers–loved, respected and supported him.
Aided by useful IDIOTS like BlowJo, who will be selling off Brit companies in a fire-sale atmosphere.
If you think it’s bad now…
Missing two huge elements: the Anglo-Arab oil dollar nexus and the US-China dollar profits.
In June 1967 a short war between Israel and its Arab neighbours upset the Anglo-Arab oil dollar pillar. The US$ gold convertibility ending as of 15 August 1971 disabled Uncle Sam’$ other leg, but a splint for solid US profits was created in China from cheap desperate labour and big trade in – US dollars.
In October 1973 the Yom Kippur war put more tension on the remaining Anglo-Arab leg. Having Iran as bogey after 1979 frightening the Arab oil sheikhs to behave and created many opportunities for Anglo weapon sales and mercenary work.
A US dollar with without solid looking footing cannot sustain a full spectrum empire. Rambo Gambino without superior lethal and financial weapons and scary bogeys cannot keep up the protection racket.
Israel was scary for some poor Arab rulers but Iran is much more frightening for the rich Arab rulers – the ones that count. Russia is the old dinosaur to scare Western Europe but China is turning into a real Dragon not only for Japan and Korea but the rest of the globe too.
But Israel is nice to trees:
https://www.jonathan-cook.net/2019-12-16/jnf-uk-israel-charity/
The poor fake moslem Arab rulers have been in bed with the not so poor Khazar fake Jews for decades.
No Jewish billionaire comes close to any Muslim Arab Sheikh in bank accounts let alone in potential (oil) wealth underground.
Yes, Bloomberg has a mere $52 billion. Poor as a church mouse compared to Zuckerberg’s 69 billion. Let alone the Rothschild trillions.
Peanuts. 1.5 % of Aramco was valued in its first IPO at US $ 2 trillion:
https://www.forbes.com/sites/arielcohen/2019/12/18/saudi-aramco-ipo-hits-2-trillion-mark-but-forecast-still-guarded
You looked behind the curtain.
One sturdy non sequitur succeeding another.
Iran is Persia THE cradle of civilisation- the arabs are a few desert tribes who mostly ran slaves and other tradeable goods on their camel trains.
Aramco is the Arab America Company set up by the yanks.
The floatation is just the last ditch grasp for cash to convert to wealth as the petroleum engined market comes to an end and envolves to new forms of energy.
The private savers and investors in Aramco, via pension funds, will be dipossessed of their money as all collapses while the wealthy will have protected their savings by investing in paintings and like.
A historic note: John Locke (1632-1704) had earlier come up with a labor theory of value (though he didn’t use that precise term) in his famous book Two Treatises of Government. He was not, of course, all that interested in economics, but rather in explaining the institution of land ownership. According to Locke, the farmer was the rightful owner of the land, since he had “mixed” his own labor with it, effectively making the land a part of himself. Again, Locke was not that concerned with questions of profit and loss, but with undermining the rational behind feudalism.
I am not sure whether Locke made the distinction between ‘value in exchange, and value in use’, a description used by A.Smith, and picked up later by Ricardo. Like Smith, Ricardo at the very outset excludes utility or use value from the field of his enquiry, allocating it to the subsdiary role as a condition of the product’s exchange value.
Marx eventually settles on the bifurcation of use-value and exchange value. Any commodity has both of these aspects. A meal can be both. It’s use value consists of it being made and consumed by the same person. It’s exchange value is imparted by a chef on behalf of his employer and sold in a restaurant (a market) to a consumer. See Capital, Volume 1, Part 1, Chapter 1 – Commodities. The Two Values of a Commodity: Use-Value and (Exchange) The Substance of Value and the Magnitude of Value.
”A commodity is, in the first place, an object outside us, a thing that by its properties, satisfies some human wants or another. The nature of such wants, whether for instance, they spring from the stomach, or from fancy, makes no difference. Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as a means of production.”
Read further …
Again, Locke’s principle concern was the question of ownership, not economic value. But he was talking about the actual ownership of land and livestock, not just some sort of usufruct.
a) Kids’ cereals contains poisonous herbicides but they are not shown on the ingredient list. b) Adults soak their head in hydrogen peroxide to become blonde. Are these features of Capitalism?
It turns out the definition of recession is quite arbitrary because originally it only used to be one negative quarter which was classed as a recession. I read some years ago when Richard Nixon was US President he was discussing the economy and his chances of re-election with one of his economic advisers, and was worried the figures for the next quarter were negative and so in recession. His economic adviser said, “So change the definition of recession to two quarters.” That’s just how full of shit economics can be.
I always like Ronald Reagan’s definition: “A recession is when your neighbor loses his job. A depression is when you lose yours.”
That was certainly one of the wittier comments on Reagan’s prompter.
Where most pure capitalist arguments are contentious is how they link demand to labour levels.
It is a sine qua non that demand is lower amongst the unemployed and marginal earners than those with stable reasonable salaries.
So overall economic output is a function of aggregate labour earnings, which is not what owners want at all. Owners want all the wealth coming back to them.
Owners can hoard wealth but what they can they actually do with it in the declining phase of cycles? Nothing. They wait until a cycle is nearing the bottom before reinvesting.
Labour struggling to survive are less interested in offering labour and more interested in teaching capitalist owners a violent lesson about humanity. So capitalists must factor in the cost of treating labour like expendable manure rather than human beings, something right wing economists exclude from their theses.
Offer a billionaire father another £20bn but the price is sterilisation and extermination of his descendants and you discover the value of certain human capital.
Tell them that they can have £20bn but the price is death of 1 million faceless foreigners and they jump at the chance.
So basically ‘capitalists’ are racist genocidalists at heart, because capitalism assigns no price for going around killing people, only profits to the few who benefit from it. Especially when it is killing foreigners in poorer countries.
If you want stable societies, then the postulates for achieving them have to be rather different.
Discussions include the effects of mutual ownership forms, the costs of degrading the environment, the costs of selling active harm, the acceptable levels of ill health and the acceptability of killing capitalists.
Capitalists are happy killing others, so economics should now openly discuss the value of killing billionaires.
Unfortunately, and assuming that you are hinting at the return of capital punishment, the solution inherent in your last sentence involves becoming a murderer yourself. We obviously can’t, in all human conscience, condemn in others what we might happily do ourselves.
Tempting though… Just look – I couldn’t even bring myself to downvote it : )
Economists that run Business Schools would argue that killing billionaires is counterproductive because billionaires provide means of production, capital, and investment acumen that government cannot provide.
Economists are always on side with billionaires.
MOU
The BiG LiES.
1. GNP does not have to go up and up – It’s definition is bs.
2. Free market capitalism is a lie – it only applies to the employed and self-employed workers.
The Banks and Mega corporation are immune and guaranteed a suckling teat from the State spending at will through their purchase of politicians and civil servants.
The Banks were not allowed to fail because bankers and their ‘shareholders ‘ consider themselves to big to fail.
BOING BOING BOING…
Lets see if BOEING will be allowed to fail for its criminal mismanagement by its over paid directors and collusion of its shareholders and pork-belly politicians filling their boots at every turn.
It is the BLACKSWAN, and the capitalists free marketeers having parked 400 unairworthy bodge job aircraft have finally stopped turning out 40 more a month, with all the ones laid up across the world the enormous expense in getting the airworthy and massive compensation claims including for allowing two plane loads of people to crash and die …the company ought to fail, its executives and directors should suffer the consequence- bankruptcy and criminal charges; the shareholders – many major funds should lose their investments; the insurers should pay their liabilities and lose their profits for decades – that would be the normal course of business from the ashes of which better businesses could move in ..,
HA HA HA … Trump will be forced to save them all with the public purse – it is election year.
It is as bust as any bubble. And the free market capitalists will rush to apply a SOCIALIST cure of letting the US public purse rain even more money into it but won’t NATIONALISE it!!! While they carry in whingeing about socialism.
And the tax payers will pay as usual, while the billionaires pocket even more from FAILURE, while they too blundly condem socialism
Lol.
PS as reviews go it is rather comprehensive – it feels like I read the whole book!
I put the book on my list for reading thanks for your review.
Must say that the 90s, where the problem was starting in terms of debt, were also awesome (in NL). The people never had so many social securities like early pension, free college (only not if your patents were rich), securities for not getting fired and an ever-expansioning feeling of love and freedom with the tearing up of borders and where Germans, French, Spanish, British, Polish, Italian were seen as neighbours (not as people trying to steal the jobs).
Problem with cyclic capitalism is that it is treated like a zero-sum game where in times of boom the wealth goes to the rich and in times of bust the poor will pay.
It is not exactly a zero-sum game, since there is progress (compare the streets of your city 150 years ago with how the streets look now). But the progress made possible by boom periods (money) is only due to scientific inventions in which people and governments invested their money and not due to economists who create Ponzi scheme after Ponzi scheme.
Anyway, thanks again for sharing this book review