Keith's NO EMPIRE Blog

A radical dissident perspective on various topics. Comments welcome at

Wednesday, November 16, 2011

It's the Money

We have entered a period of rapid change as the corporate/financial elite pursue global economic and financial domination. Spearheaded by a rogue financial system, wealth is rapidly flowing upwards as the rich get richer and the rest are forced into a future of debt servitude. The problem is systemic, intrinsically tied to our debt-based, privately controlled monetary system. Modern capitalism is based upon financial control not ownership. This appears poorly understood by the intellectual forces of resistance whose analyses are often hobbled by the influence of Marxist ideology. As such, realistic assessments of current problems and real world solutions give way to talk about ownership of the means of production and other diversions. It is long past time to cast aside Marxian ideological misrepresentations which continue to influence and hobble progressive thought, stymieing any hope for change in this critically important time of neoliberal globalization.

Let us begin by noting that 19th century political economy was radically different from our current reality. At the beginning of the 19th century, many people only worked for wages on a temporary basis. They were primarily somewhat self-sufficient farmers who produced for themselves, requiring only temporary wages to acquire those few things which they did not produce for themselves. Or perhaps they were independent craftsmen or small merchants who operated their own businesses, earning a living in the market rather than work for wages. Most made a modest living which, nonetheless, was preferable to factory work as it existed back then. As a consequence, laws were passed enclosing the commons thereby eliminating the traditional means of livelihood for many. The result was to effectively force large numbers of people to work long hours for subsistence wages merely to survive. In effect, wage slavery in the literal sense of the term. From about the mid-19th century on, more and more people were sucked into the market economy and impoverished as a consequence. This wasn’t the consequence of industrialization per se, rather it was the consequence of exploitation of the workers by the industrialists, and by the system they created. It is this system Marx wrote about, a system which has undergone massive change in the last 150 years.

Nowadays, very few are able to supply their needs outside the market which has expanded enormously. The vast majority of people in First World countries obtain their needs and wants by purchasing them, hence, the need to acquire money to survive. Additionally, technological innovation and increases in productivity have dramatically reduced the number of First World people engaged in either farming or manufacturing. Most now earn their livelihood from employment in larger, more complex organizations, in a more diverse economy with a dramatic increase in specialization and the number of different jobs. Two points are critically important. The first is that to a significant degree the very concept of ownership of the means of production has been rendered anachronistic. What is a teacher’s means of production? A salesman’s? A clerk’s? A postal worker’s? A waiter’s? A scientist’s? Etc? The concept of ownership of the means of production was developed to organize factory workers to seize control of the political economy, which would then be run by Marxist elites. Out with the oligarchs, in with the commissars.

The second critically important point is that the proliferation of specialization and different job types isn’t necessarily bad. There currently exists a large and diverse number of job choices not available in Marx’ time. The point being that nowadays those of us in the First World need money to survive which means that most need to obtain employment in some organization, or become a small businessman, or self-employed craftsman, or artist, etc. As to worker control over the work environment, this is an important consideration which is sidetracked by discussions of ownership. The very notion that employees need to own the business to not be “wage slaves” is nuts. Perhaps that is why so few employees have aggressively acquired their organization’s stock. Furthermore, the number of organizations where this is even remotely feasible isn’t very great. Own the post office? The police force? NASA? MIT? What can’t be emphasized enough is the extent to which real world solutions to real world problems are ignored in favor of unrealistic and unworkable goals. Ownership of the means of production is an elite formulated myth, a revolutionary slogan, an ideological justification for the Marxists to seize power, nothing more.

Once one puts aside Marxist ideological blinders and focuses instead on what was the intended consequence of “ownership,” what do we have? Better pay? Better working conditions? Job security? Input into workplace decisions? Input into business strategizing and decision making? Input into the US political economy? Input into US geo-strategy and political decision making? If I was to speculate, I would guess that most workers, regardless of occupation, are concerned over their pay and benefits, working conditions, and job security. Fewer would be interested in direct involvement in running the business. It is difficult to even guess how many would be concerned about impacting the political economy or foreign affairs, except insofar as these areas negatively impact them. In any event, both areas are beyond the scope of business ownership, falling instead within the political system. Now my guess is that many people have become aware of the negative aspects of US wars of aggression and militarism, neoliberal globalization and structural adjustment, and of potential environmental catastrophes, and they would dearly love to have some political empowerment. Empowerment, I might add, that would not come by virtue of collective ownership of the means of production.

Let us begin by noting that to make changes, we need to deal with the world as it is, not how we imagine it to be based upon wishful thinking. In this regard, it would be helpful to eliminate most Marxist phraseology from our vocabulary. For example, what is the proletariat? It is a fictitious entity created by Marx to advance his agenda. Using the term proletariat to describe workers, primarily factory workers, creates the illusion of some sort of organizational affinity between individuals who may have nothing in common except socioeconomic grouping. I assume that it was Marxism’s goal to create some sense of class solidarity across organizational boundaries, thereby facilitating the organization of factory workers into the equivalent of one huge international union, which would seize power in the name of militant laborers. And when power is seized, then what? Why the elites consolidate their control. Happens every time. It happened in Russia, in China, in Korea, and in Viet Nam. It also happened in the US labor movement, popularly elected officials eventually yielding to a highly bureaucratized international federation where labor elites pursue their personal agendas at the expense of the membership. This is what happens in the real world. The “proletariat” inevitably turned into cadres for the benefit of elites who purport to speak for them.

Once we rid ourselves of ideological blinders, we can begin to analyze the situation intelligently. Using clear language, we can discuss hierarchy and power, and what can realistically be done to maximize life, liberty and the pursuit of happiness for the population as a whole. Let us begin by noting that while hierarchy and power are correlated, they are not the same thing. Virtually all successful groups/organizations have a hierarchy. Hierarchy appears to be a natural phenomenon occurring where animals band together for survival. Wolf packs, chimpanzee troops, and human tribes, for example. Hierarchy is the difference between a mob and an army, the army surviving at the expense of the mob. Hierarchy facilitates group goal attainment, and permits specialization of functions. Hierarchy, in and of itself, is not a problem. The problem is that without organizational constraints, hierarchy tends to lead to concentrated power and to arbitrary power. Also, there is a tendency to limit mobility within the power structure, and to overemphasize top down decision making.

The essence of our capitalist system is the rule of capital, that is to say the rule of money. In other words, the rule of those who control and direct the flow of significant amounts of money. Currently, our financial system is in private hands for private profit. The ramifications of this are enormous, including the effective control of the political system by concentrated money power, so that while the government is the single largest spender of money, its priorities are so attuned to the wants of business and finance that it effectively supports business goals and objectives. If the political system were to gain control of the financial system, and if taxation were to break up concentrated wealth, capitalism as defined would no longer exist. I differentiate between the government and the larger political system. The Bill of Rights, for example, is part of the political system designed to restrain government abuse of the citizenry. That the Bill of Rights has been continually abused, and recently contemptuously so, indicates that excessive government power is as bad as excessive private power. There is little point in exchanging private tyranny for public tyranny, and vice versa.

I think that most progressives would agree that our current system isn’t working well. Part of the problem, however, is that there doesn’t seem to be a clear understanding of what our system is, how it functions, and how to realistically change it. Too often people fall back on ideological suppositions which don’t make sense in our modern world, and which are unlikely to be implemented in any event. The first thing which needs to be understood is that the financial system more or less controls society at the macro level, and that concentrated wealth is concentrated social power, and that meaningful change is not possible without breaking up concentrated wealth and gaining control of the financial system.

Let’s get fundamental. We have a debt-based money system. That is, banks create money by loaning it into the system as bank credit. Virtually all of the money in the system exists as a consequence of bank loans which must be repaid with interest. If all of the loans were repaid, there would be no money left in the system. In fact, there would be no money to pay the interest due on the loans. Where does the money come from to pay the interest? It is borrowed. In the system as a whole, total debt needs to grow at a sufficient rate to keep money in the system and to pay the interest now due on past loans. This means that the economy needs to grow at a rate sufficient to service the debt required to provide the money needed to run the system. In other words, compounding growth of debt is built in to our dysfunctional financial system. This means that a steady-state sustainable economy is not possible with our current system, and that lack of economic growth leads to economic collapse, unless forestalled by inflation or recessions/depressions accompanied by debt write down. A debt-based money system is a disaster and needs to be replaced by sovereign money, that is, money created by the government rather than money created by the private banking system.

In addition to being a debt-based monetary system, our financial system is privately owned and operated for profit. The consequence of this is that our financial system primarily serves the profit seeking goals of the financiers at the expense of the real economy, and is unaccountable to the democratic will of the people. Attempts have been made to control the avarice of the financiers with financial rules and regulations. These seem to work for a while, but are eventually circumvented resulting in negative consequences for the real economy and the citizenry. This is the situation we are now in as unstable exotic financial instruments combine with financial speculation to cause the financial system to implode. Our private financial system is a social disaster which needs to be replaced with a public banking system which serves the real economy.

Our financial system is a disjointed system in which monetary policy is separate from fiscal policy. This is the equivalent of treating the two sides of the same coin as separate entities. Public control of the financial system, however, would favor the joining of fiscal policy with monetary policy to achieve social objectives. Money creation and taxes need to work together to control and direct the flow of money. Progressive taxation of income and wealth for both individuals and organizations, along with income redistribution, is absolutely essential to correct the current dysfunctional concentration of money power.

Several things are critically important. The first is that public control of the financial system is a precondition for meaningful change. As long as the financiers control our money, the financiers will set policy. The second is that the majority are under attack by the financial oligarchs. Neoliberal globalization inevitably leads to structural adjustment, which is basically the impoverishment of the majority leading to a form of debt servitude. Modern society runs on money, and the people who currently control money are using their money power as a weapon. There is a real possibility of a collapse of the global financial system, hence, a pressing need for alternatives to global finance. Local money, local banks, local script, even barter may be required if “official” money disappears.


Anonymous Anonymous said...


alternate discussion forum to MW.


3:59 PM  

Post a Comment

<< Home