Fraudonomics

Fraudonomics

©2012 Douglas Harvey

It is interesting that the word “fraud” has been much in the news of late, most recently attributed to Barclay’s and the LIBOR scandal, with mention of an “investigation” that could result in “prosecutions.”  As a student of history, I feel compelled to note that we’ve seen things like this before, although perhaps not on such a broad scale with such a desperate and deeply embedded defense of the capitalist system. 

John Locke described his version of a Social Contract between society and government in his Second Treatise on Government.  Many know the particulars – people are born with “natural rights”: life, liberty, and property.  Government is created by the people to protect these rights, and if it fails it is their duty to replace it.  He went on to say that if the people need to change the government, it is much easier to change the people than it is to change the form.  Locke was silent on what one should do if one was property, but we can let that go for the moment.

Locke was writing in the 1670s, although his treatises were not published until the “Glorious” Revolution in England in 1688.  You may recall this event as well – where the Catholic King James II was essentially forced out by the bourgeois Parliament, who then brought in his sister Mary and her husband William from The Netherlands to “rule” England.  The catch was that they had to share power with Parliament, dominated as it was by mercantile interests – planters, merchants, shipping interests; in short, those who were profiting from economic empire.  Locke’s “social contract” provided the rationale for this coup undertaken to gain control of the governmental resources of what was rapidly becoming the largest empire in the world.  I guess that explains what is meant by “property.”

“Glorious,” eh?  Now the Bank of London could be formed, a mechanism whereby the bourgeoisie could loan money to the government which would in turn use that money to pursue the ends of the bourgeoisie.  (King William’s royal nickname has become, after all, “Billy the Bourgeois King.”)  Repayment of the “loan” would ultimately be underwritten by British taxpayers (sound familiar?).  The first big “scandal” was the South Sea Bubble, where investors lost millions in a scheme to “develop” the Caribbean region.  Investments were secured by hyping the bulletproof nature of the investment, (it’s goin’ to the sky -- you can't lose!!!).

Meanwhile, slaves (humans that were permanently property) and indentured servants (humans that were temporarily property) were brought to the New World to produce wealth for their masters on land secured by hook or by crook from the natives.  As for the indentured servants, these were simply people who had become proletarianized, that is, they were forced off the land in their own country and had to fend for themselves the only way they could, by selling their labor (sound familiar?).  Once their service was done, they might be awarded a piece of land as a way to start anew and help provide a market for goods manufactured in Britain.  They would then hire indentures to work for them and the cycle would be perpetuated. 

Proletarianized people are dependent people.  For example, in order to support the buyers of their labor, they need to purchase the goods they produce (dwell, for a moment, on THAT absurdity).  In this system, if one can’t sell one’s labor in order to buy the goods thus produced, one is screwed.  Even if employment is obtained, it is a great struggle to join with fellow workers to force better pay and working conditions – something not be forthcoming without a fight, history has shown.  In other words, employed or not, poverty is staring you in the face. 

This absurdity remains largely unacknowledged while the prospect of poverty is said to be a good thing: one will be motivated to go to work – a notion perpetuated by those who are dependent on your labor.  In the event that that isn’t enough to get you to work, those who live off of others’ labor spend large amounts of wealth convincing the working class to purchase various and sundry products they themselves manufacture.  These products and the production of them have proven to be a significant bio-hazard as we cross the population boundary of seven billion humans.  It’s not “global warming” that’s the fraud.

Now how much would you pay!!!  But wait!!!  There’s more!!! 

In order to be rid of the annoying need for resources and markets, using micro-chip technology, bad loans can be made and sold at a very high speed.  With complicit governments and regulators on board, these loans will ultimately be covered by . . . ta dah!  The workers!  Or, better still, loans can be made to governments (unwitting or complicit) that they can’t possibly repay.  When the due date arrives, governmental functions become privatized and these predatory capitalists obtain new market sectors. Hello Greece!  I got some land in Florida . . . 

See how well these free markets work!!!

Consider, for a moment, the cultures replaced by this system, including the societies from whom those in perpetual servitude were taken.  They had not developed this bourgeois notion of accumulation to any great extent.  Villagers in much of North America, for instance, would travel frequently, making their annual rounds to a wide variety of food sources.  It was not unusual for even the most sedentary of them to move entire villages every few years.  Accumulation, under these circumstances, was a detriment, and yet poverty in terms of hunger, a lack of shelter, isolation, etc., were virtually unknown.  Laboring for sustenance was not something one spent a lot of time on.  

Fear of famine was virtually non-existent.  Europeans remarked that indigenous Americans could be found playing a ball-game in lieu of stockpiling food.  Why?  The land was rich, food was plentiful – it will be there tomorrow.  As for material goods – why would you want more than you need?  You just have to move the stuff around and it gets in the way.  Immersed in the bounty of the earth, indigenous peoples were time rich.  Do you have time to make an arrowhead out of stone or moccasins from brain-tanned deer hide and porcupine quills? 

Lucky us!!!  Capitalism has given us so much free time!!!

The economic system currently dominating the world is based on fraud.  It has finally come down to a kind of shell game that relies on blatant deception – a ponzi scheme – to stay afloat.  In addition, we are altering the planet in ways we are only beginning to understand, and it could quite possibly be disastrous for the only home we will ever have -- the home out of which we emerged.  What can our hunter-gatherer / village agriculturalist forebears teach us about backing out of this blind alley Big Capital has taken us down?  Simplifying our lives and immersing ourselves in our surroundings is surely a part of the answer.  Arresting and jailing the fraudsters and "occupying" the corrupt system must be a part of it as well.

Douglas Harvey

July 15, 2012

Trickled-On Economics

“Trickled On” Economics

©2012 Douglas S. Harvey

One thing about an election year, particularly this one, is that it reveals the fallacy that humanity has somehow emerged from “mere animal conditions.”  We may have comfortable homes, climate-control, exo-skeletons (known as automobiles) to allow us to move about rapidly and move objects many times our own weight, etc.  But beavers, ants, and foxes have these things.  One thing that humans have the capacity for, if they strive to use it, is being able to see life from another’s viewpoint – we have the capacity for compassion.  If anything would allow us to rise from a “mere animal condition,” it is this compassion.  But under the capitalist model, currently the dominant paradigm in the world, the priority is put on expropriating land and labor in order for a small group to accumulate wealth they did not produce.  In our deluded national narrative, these people are said to be “job creators.”  In fact, their access to wealth and power has allowed them to create a sort of neo-feudal system that can be aptly called, “Trickled-On Economics.”

In this dominant paradigm headed by Big Capital, compassion is highly discouraged.  There is a tendency among the politicians, managers, and overseers of capitalist institutions to live like there is no tomorrow and pretend like there was no yesterday.  After all, the working class – those who actually produce wealth – can be depended upon for a source of insurance in the event the gaming schemes of Big Capital fail.  This attitude of borrow now (“leverage” if you are rich), worry later, unlike the wealth itself, has trickled down, or should I say “trickled on” the general public.

The so-called “debt crisis” currently providing rationale for cutting social programs was created by capitalists manipulating the housing and financial markets for short-term profit, a scheme that crashed the global economy.  While they were doing that, working class people struggled with a steady decline in income resulting from off-shoring American manufacturing, union sell-outs, and outright union-busting.  To make up for this decline, they were handed credit cards, deregulated during the Reagan years, and usurious lending became the order of the day.  In addition, instead of providing education for its citizens as some social welfare states of western and northern Europe have done, the student loan industry was created, with student loan giant Sallie Mae becoming a for-profit corporation by 1995.  As if this was not enough (it never is), for-profit health care, starring Big Pharma, has become ensconced in Congress, K-Street, and Wall Street.  Also, moving in from the desert is a dust devil known as the for-profit prison system.  Examples of profiteering from others’ misfortune, or indeed manufacturing misfortune for profit, (note: I do not even broach the war profiteering game in this essay), has no limit in the capitalist paradigm.

            With the declining share of wealth enjoyed by the working class, it was logically reasoned that higher education was a way out of mind-numbing, dead-end jobs and into a better life.   Both federally-insured and private loans for education skyrocketed.  For some, this better life came to pass, for others it became a trap and in some cases a death-trap.  Student loans do not have bankruptcy protection, and the collection agency can seize your home, your social security, your disability income – pretty much anything they want to seize.  There are numerous horror stories out there, including many suicides.  Indeed, as Alan Collinge has written in his book The Student Loan Scam, defaulted loans are more lucrative than those not in default because assets can be seized. 

            Credit card debt, which now ranks behind student loans in consumer debt as of the summer of 2010, is the result of falling wages and job loss.  By 2012, there were well over a half billion credit cards in use in the U.S. alone.  That is double the total population of the country.  Bankruptcies were down in 2011; with a mere 1.37 million filings in the U.S. (it was 1.55 in 2010).  Many bankruptcies were brought about by medical bills contracted in a system that preys on the sick. 

            A compassionate set of policies that would address these issues would not include taking billions of dollars in tax revenue from the working class and handing it over to Wall Street bankers to cover their failed schemes and scams as has been done more than once since 2008.  In this paradigm of the Bean-counter, we can hand $700 billion at a pop over to criminals in suits, but we cannot help struggling college graduates or families stranded without gainful employment.

            It is not hard to see that the issue is systemic.  Capitalism has no built-in moral code other than maximizing profits.  Whatever morality exists is brought to the table by individuals, but the system itself does not reward compassion; indeed, ruthlessness and cruelty are central features of the game.  Capital has been engaged in a long-term struggle to deprive people of access to the resources they need to build a good life for themselves.  It creates an environment that allows a small group or even one person to live extremely well on the backs of those whose access to resources they control.  Once people become separated from the resources that they need to live, they must re-acquire them on terms favorable to the capitalist.  In some cases, the result is modern-day slavery.  The separation of people from the resource base is a central theme in the human history of the world and at the heart of our systemic problem today.

            This system has led to the abuse of the non-human resources, as well.  Humans and their resources are, ultimately, not separate at all.  Labor is the interaction of humans with the non-human world and the results are often very beautiful, profound, poignant, moving, powerful, and on and on – in a word: art.  Forcing human beings to interact with resources on terms favorable to the Capitalist is hardly emerging from “mere animal conditions.”  It results in environmental degradation of both human and non-human.  Degrading and dangerous sweatshops, mines, oil rigs, etc., have increased because of deregulation and defunding of safety oversight.  Environmental oversight has been rolled back, defunded, or ignored.  These underscore the systemic nature of the dual expropriation of labor and resources for the sake of the wealth accumulation of a very few.  

From mountain-top mining to clear-cutting rainforests, the systemic unsustainable use of resources creates an oppositional relationship between humans and their environment.  “Man vs. Nature” is a conflict drilled into our heads from an early age, but it is this term “Versus” that needs to be questioned and studied.  A political economic system in which compassion features predominately would institutionalize such introspection.  We have examples from our past.  Agriculture, for instance, traditionally employed the concept of “husbandry.”  Farms were once places where abundance was possible for all species involved and sustaining this human and non-human natural order was the priority. Under capitalism, agriculture has industrialized and cold, hard numbers dominate decision-making processes. 

Under a more humane system, labor would be an extension of the production of nature; indeed, human labor IS an expression of nature.  But its usurpation by a few is like the felling of the forests, the leveling of mountains, the making of war, or the building of sweatshops: we trade our humanity – our compassion – for the sake of accumulation by an ambitious and even sociopathic few.  If we are serious about emerging from a “mere animal condition,” we need to “think outside the box,” and box is the capitalist paradigm.

© 2012 Douglas S. Harvey