Keith's NO EMPIRE Blog

A radical dissident perspective on various topics. Comments welcome at

Thursday, September 29, 2011

Ritual Voting and the Illusion of Democracy

“It is axiomatic that political power aligns with economic power” (David C. Korten)

One of the great myths of our time is that elections and voting constitute the essence of democracy. To the degree that democracy constitutes self-rule, even in the limited sense of citizen control of the political system, democracy is an oxymoron in a capitalist political economy. The very essence of capitalism is the rule of capital, that is the rule of money, that is the rule of those who control and direct the flow of money. To anyone not blinded by mythology, it is obvious that we live in a capitalist oligarchy, not a democracy.

Elections are rituals, pure and simple. As such they serve multiple functions. The simplest function is that of a political circus, full of color and noise, diverting attention away from the underlying systems of power and control. The next is the distraction of organized ritualistic behavior - phone banking, sign building, rallies, etc. - which keep activists busy while imparting the illusion of meaningful participation in the political process. Next is the symbolic legitimatization of government and its actions by associating voting with citizen approval of subsequent policy and actions. Finally, the whole process tends to misrepresent the role of government in our political economy while simultaneously bringing the market to bear on the political system. That is, to hide the fact that our government is subservient to business interests and elite pressure.

Currently, our economic system has totally overwhelmed our political system and is the decisive locus of power in our political economy. It is businessmen in large corporations and financial institutions who make the decisions which most effect our lives. They are the ones who decide whether to invest in solar power or oil exploration, whether to build a factory in the US or overseas, whether to build affordable housing or luxury homes, whether to support fuel efficiency and mass transit or to develop tar sands oil, whether to support living wages or to slash benefits, whether to invest in the real economy or engage in financial speculation. These are the things which fall under the domain of business decision making. Additionally, the economic elites exert strong influence on governmental decision making and infrastructure development.

The American economic elites exercise de facto control of the political system through several means. The first is the most obvious: those who control significant wealth fund political candidates who demonstrate a commitment to elite objectives and have the ability to get results. This is particularly important at the start of a campaign when candidates need to obtain significant initial funding to be viable. Thereafter, the ongoing need for future campaign financing biases elected officials in favor of “business friendly” legislation and executive actions. In this way, the market is brought to bear on elected officials. Another aspect of elite control is through the doctrinal system whereby the funding of think tanks and the control of commercial media, the elites construct the ideological framework within which political decision making occurs. It is important to note that the average person has negligible impact upon the creation of social mythology which informs our perceptions and guides our decisions, and which has been created by the elites to facilitate the attainment of elite objectives. Finally, our privately controlled financial system is debt based which creates a systemic need for growth. Additionally, the private banks, bondholders and Federal Reserve have the power to stimulate or depress the economy through monetary means to achieve their objectives.

The point is that the US and other Western “democracies” present themselves as democratic, and are viewed by their citizenry as essentially democratic when, in fact, they are not. In this regard, voting and elections constitute an elaborate charade to create the illusion of democracy. The best one can say is that the US has democratic forms which are totally ineffective in achieving the stated goal. Money is the big corruptor of representative democracy, however, to simply state that concentrated money power corrupts the system and leave it at that is inadequate. The implications of why expensive political advertising is as effective as it is has profound implications for the very concept of democracy.

I have come to several conclusions about human nature and political economy which are at odds with just about everything I have ever heard or read. The core concept undergirding these conclusions concerns what I refer to as the logic of irrationality. I define reasoning as logical if it is consistent with relevant assumptions, whereas, thinking is rational if consistent with empirical reality. They are not the same thing. For most people, the logic of ideology and bias tend to overwhelm rational thought. That is, when individual/group bias and ideology conflict with rational interpretation, rationality is usually ignored in favor of an ideologically consistent interpretation. This is true for most people and is probably an inevitable consequence of human evolution. For all or most of human history, being a member of a supportive group/tribe was an essential component of survival, hence, the majority of people willingly adapted their individual biases and simplifying paradigms to be consistent with the group ideology/mythology so as to fit in and promote harmony and solidarity.

The tendency for individuals in a group to evaluate situations from the perspective of a shared ideology creates a de facto internalized behavioral guidance system consistent with group objectives. The subordination of individual bias to group ideology is essential for group cohesion and direction, and a key to group success. It should be noted that group ideology and group objectives do not reflect the input of the various members of the group, rather, they reflect the biases and objectives of the group elites who basically control the overall thrust of group activity. Most groups of any significant size tend to form a hierarchy, with the majority following the direction of the group leaders. Most subconsciously align with power. Those who don’t tend to suffer consequences. Dissent which threatens to undermine group solidarity and effectiveness is considered treasonous.

The implications of all of this is that the elites basically control the actions of the majority through the control of information and social mythology. This appears to be changing somewhat as elite implementation of structural adjustment produces the inevitable (and anticipated) civil disobedience which, in turn, is dealt with by a return to the more traditional modes of coercive force to augment the psychological manipulation of the population.

Be that as it may, social control in the US still relies primarily upon information manipulation. While in theory there is nothing to prevent the electorate from voting for Third Party candidates and throwing the Republicans and Democrats out of office, this is not likely to happen. The electorate is not rational, the notion of a “rational” political man (or “rational” economic man) is a myth. The vast majority of the people are faithful followers who can’t seem to help being seduced by the logic of elite propaganda. Reality is misrepresented in such a way as to produce an anticipated response in the polity. As a consequence, people will satisfy themselves with the illusion of choice within the framework of established power, or opt out completely, rather than stage a rebellion at the polls.

Taking all of this a step further, the notion of the US spreading democracy or opposing tyranny or being concerned by dictators is ludicrous. We live in what has been described as the dictatorship of capital, the tyranny of money. This reality is camouflaged by elections and voting which give the illusion of popular participation in political decision making. A sham which tends to ameliorate popular discontent without significantly impacting elite goal seeking. Also, nowadays, how many nations don’t have elections? Most do, with the outcomes frequently manipulated. The elections of allies will be lauded as free and fair, those of regimes we wish to destabilize will be presented as illegitimate. In almost all case, voting is symbolic only, a means of manufacturing consent.

What does the future hold? I am not going to even attempt to discuss democracy in the broadest sense of the term. Rather, what, if anything, could be done to create a situation whereby elections and voting are more than a money driven charade? I am pessimistic about the extent to which the majority of citizens can become rational voters, at least in the short run. The human need for most to subsume themselves to group mythology and to align with power appears resistant to change. Realistically, the best hope would appear to be to seek to reduce the concentration of economic power as much as possible. While people would still be susceptible to the logic of propaganda, hopefully, having many more potential message senders would result in some ideological competition rather than our current consistent bias and propaganda.

Monday, September 26, 2011

Manichean Madness

“Those who can make you believe absurdities can make you commit atrocities.” (Voltaire)

There is no more absurd or destructive mythology than the notion of a giant struggle between the forces of good versus the forces of evil. In reality, the subjective labels of “good” and “bad” are moral and situational judgments properly attached to actions. Actions are subjectively evaluated as “good” or “bad.” People, in turn, should be evaluated based upon their behavior, their actions. A “good” person is someone whose behavior is generally “good.” A “bad” person is someone whose behavior is generally “bad.” A “good” person is nonetheless capable of committing “bad” acts. A “bad” person is nonetheless capable of “good” behavior. It is the subjective evaluation of behavior which determines whether or not a person is, on the balance, “good” or “bad.” There is no such thing as an intrinsically “good” or intrinsically “bad” person. The term “evil” is used to denote something monstrously bad.

In spite of the absurdity of the Manichean concept of the forces of light (good) in constant struggle with the forces of darkness (evil), this ideological duality is part of Western mythology, and is constantly reinforced by the media, particularly the entertainment media. For example, Luke Skywalker and Harry Potter are depicted as “good guys,” their intentions and actions noble by definition. Darth Vader and Lord Voldemort are depicted as intrinsically evil in nature, their intentions and actions wicked by definition. The duality is sharply drawn. It is difficult to imagine Harry Potter doing something “bad,” and Voldemort’s evil nature is absolute. It is a one dimensional caricature whereby the label defines reality. Good guys do good, bad guys do bad. Actions are assumed to correspond to the label.

All of this is no accident. In a militaristic empire such as ours, there is a constant need to pre-condition the public mind to accept the righteousness and need for the inevitable wars of aggression and other despicable acts that empire inevitably engages in. As such, it is advantageous for the elites to have the populace believe that we are intrinsically good, and future enemies intrinsically evil. People and nations are judged based upon the Manichean label which has been attached to them. Propaganda is used to provide the details to support this mythological depiction. Information is evaluated based upon this ideological pre-conditioning. When we bomb and destroy, kill and maim, this is depicted as necessary, even desirable, to enable the “good guys” (us) to defeat the forces of evil. On such absurdities do empires and wars and atrocities flourish.

Thursday, September 01, 2011

Private Financial Control, Debt Money and Compound Interest: Inevitable System Collapse

“The study of money, above all other fields . . .is one in which complexity is used to disguise truth or to evade truth, not to reveal it . . .The process by which banks create money is so simple that the mind is repelled.” (John Kenneth Galbraith)

“(Money is) the fundamental principle of social organization in capitalism.” (Doug Henwood)

I have been reading a lot of radical critiques of our political economy lately and I am struck by the extent to which even radical critiques rely upon a certain conceptual orthodoxy which inhibits understanding. What is occurring is really rather simple, so much so that simply stating the facts sounds simplistic, particularly to those accustomed to technical economic jargon intended more to obfuscate than illuminate.
The three key features of our current system which are absolutely crucial to understand are that the financial system is privately controlled for private profit, it is a debt based money system in which new money is loaned into the system at interest, and there is no formal means for dealing with the long term unsustainability of compound interest accumulation.

The fact that our financial system is privately controlled for private profit means that the financial system will inevitably be gamed to serve the profit seeking motives of the financiers at the expense of the real economy. We live in a highly complex, highly monetized society absolutely dependent upon money and the financial system to function. Controlling the creation and distribution of money/credit-- who/what gets funded and who/what doesn’t -- provides the financiers with immense social power, currently close to de facto control of the global political economy. Much of the system consists of rules, regulations and procedures designed to impose a uniformity of behavior upon the various private individuals and organizations which make up the financial system, thereby promoting confidence in system soundness by constraining the financiers from blatantly pursuing private profit seeking by abusing their power to create money. However, these rules, regulations and procedures have been circumvented by the creation and use of exotic financial instruments and other machinations justified by economic sophistry to the detriment of the real economy and financial stability. Private control of the financial system is inherently dysfunctional and needs to be ended. Unfortunately, this seems unlikely to occur, at least in the short run.

Few people seem aware that our financial system creates new money by loaning it into existence at interest. Two important consequences of debt money are that it creates a de facto lean on future earnings since it must be paid back with interest, and that the paying back with interest requires that new money be loaned into the system to enable the interest to be paid. This, in effect, is an internal compounding dynamic which requires compounding growth of the financial system to avoid default and system collapse. In other words, the real economy runs on debt owed to the private financial institutions which created the money. Without this debt, there would be no money in our current system. This debt based money works to the advantage of the financiers and to the disadvantage of the political economy as a whole, and needs to be replaced by debt-free government created sovereign money. This would not eliminate either interest payments on borrowed money, nor interest income on saved money, rather, it would eliminate systemic indebtedness to private finance.

The final critically important point to understand is the consequence of having a financial system in which the driving force of private accumulation is unsustainable compound interest. In the real world, nothing increases geometrically for very long. Consequently, the geometric increase in debt obligations has historically been resolved in one of several ways. First, the economy needs to continually grow to provide a real physical base to support the growing financial system. This entails both a growth in population and growth in the formal monetary transaction economy at the expense of the informal economy, that is, social interactions need to be increasingly monetized. Secondly, price inflation has tended to ameliorate the interest burden by effectively lowering the real rate of interest. The final way of dealing with unsustainable compound interest in our private system is through debt default and the writing down of bad debts. This write down is usually accompanied by a seizure of real assets (foreclosure) which are usually liquidated. This has been the historical consequence of recessions and depressions, in which the breakdown in the financial system causes a crash in the cash starved real economy which, in turn, forces a bad debt write down to repair the financial system. Massive foreclosures during recessions/depressions represent a cannibalization of the real economy by the financial system. While it should be possible to deal with compound interest at the systemic level through progressive income and wealth taxation to interrupt the accumulation process and redistribute the money, this has not been done because our capitalist political economy is designed to facilitate the accumulation and concentration of wealth, and any procedures which interfere with this are resisted regardless of the systemic implications.

Our current situation is both dire and unprecedented. For starters, our population and real economy have more or less reached the physical limits of growth. Consequently, the real physical base which has historically supported the growth of the financial system needed to meet interest payments on the debt are no longer able to do so. One consequence is the de-linking of the financial system from the real economy in what is usually referred to as financialization. Secondly, the current financial policy is to restrict inflation as much as possible thereby eliminating the de facto lowering of the nominal interest rate. The consequences of this are currently being masked by very low nominal interest rates, a consequence of Federal Reserve policy. One consequence of this is to cause investors to make riskier investments and engage in financial gamesmanship to obtain higher yields. A truly unprecedented situation is the massive bailout of the financial sector by transferring bad debts from the financiers onto the public. As a consequence, bad debts are not eliminated from the system, only from the financiers’ books. In other words, the financiers profit from good investments and profit even more from bad investments insofar as they create the money to loan the government to purchase their bad debts from them. The consequence of all of this is to starve the real economy while providing the financial sector with vast money power, hence, social control. The final result may be a massive privatization of public wealth as the financial system devours the real economy and the polity as a whole.

Taken as a whole, our private financial system has miserably failed the real economy and the polity while simultaneously increasing its control over both. Financial warfare seems an appropriate description. It is difficult to predict the final outcome or even the game plan of the financial elites. It appears to be a sort of slash and burn philosophy whereby capital will milk an area for all it is worth, then move on to greener pastures in a globalized world. A world of interdependencies linked by the global financial system where the areas will compete against each other to obtain financing. Apparently, the accounting rules will be modified to accommodate world-wide debt servitude. It is difficult to imagine this scenario actually working, total system-wide financial collapse seems more likely. It is also difficult to imagine the consequences of a system-wide financial collapse, however, it appears that is precisely where we are headed.

A critically important point is that our current private financial system is inherently unstable. It is held together by self-serving rules, regulations and procedures, some designed to reassure the financiers that they won’t be cheated by their fellow financiers, others designed to ensure that the fruits of the real economy flow into the financial system. These rules, regulations and procedures (and their organizational manifestations) can, of course, be changed. The extent to which they can be changed is contingent upon the extent to which the more powerful global financial centers can agree upon new rules, regulations and procedures which serve to inhibit individual and organizational profit seeking in order to achieve systemic equilibrium and stability. Implementing rules, regulations and procedures to deal with the systemic implications of unsustainable compound interest has never been attempted, much less implemented. While progressive taxation on income and wealth could achieve the desired outcome, it is practically inconceivable that the rich and powerful capitalists would go along with this, much less initiate it. It is difficult to imagine private capital solving this problem in such a way as to maintain the current hierarchy of power and equally difficult to imagine private capital agreeing to any significant alteration of the current hierarchy in our capitalist society, therefore, systemic collapse seems likely. In other words, the inherent bias and self-interest of private financiers will likely preclude solving our current financial problems as long as the financial system is run by private capital for private profit.