In 1990 income from the US financial sector comprised 14% of the whole economy; by 2002 it had climbed to 40%. So close on half of GDP is derived from an industry that produces nothing except money and fiscal instruments, including mortgages and rentier income. When money was gold and silver coinage, it was actually worth, or estimated to be worth, what you bought with it. Even when paper money was still backed by gold reserves there was some assurance of worth; but now it relies entirely in our faith in the issuing authority – In God we trust… In Canada today we see that faith flagging slightly, as Mooney’s downgrades our banks on its list of reliable places in which foreigners can invest – the real estate bubble is to blame, because all bubbles can do is burst. When China first tried to float a paper currency, no one wanted it; the government had to impose a death penalty on anyone refusing to deal in paper. All the same, when the Mandate of Heaven ran out on that ruling dynasty, the paper money vanished with it. As western economies writhe and heave in their death throes, however, money, which used to be merely a tool to facilitate barter, has taken on a life of its own. It has gained its independence from the real world and exists in a spectral realm only understood by Wall Street or Bay Street – and evidently not even by them.
No western economy has been remotely in a state of equilibrium since the late sixties, when the post-war boom finally settled down, and then entered a catastrophic period. The seventies saw runaway inflation, cured by raising interest rates to 20%. The eighties saw mounting public debt, assuaged by privatizing it, raising taxes and making citizens pay for such things as education, welfare and healthcare. Therefore the nineties saw a steep rise in private or personal debt – which inevitably led to the sub-prime cataclysm and financial melt-down of 2008, when banks failed and the stock market crashed. Each economic crisis brought a solution which created another crisis.
The critics of capitalism have always pointed to the flaws in a system based upon the concept of infinite growth in a finite world. It is definitely an excellent way of raising funds to start or expand a business; yet its scope of vision fails when a company or corporation reaches maturity. I saw this first-hand when my late wife’s company was gobbled up by the Rogers media empire. She went from producing a good product, a magazine, to producing an income for Rogers; and no matter how much income the magazine now produced, the next financial year’s target was always set higher – and she was urged to consider taking advertorial money (advertisements disguised as articles), a practice she considered unethical. I had never really dwelt on the matter before, but when I did it seemed transparently obvious that growth cannot continue indefinitely; and the fallacy of a stock markets depends entirely on this impossibility being possible. Stock values, the very viability of a company, depend on it – and it is a mirage.
There are those who say capitalism is collapsing, and there is Wolfgang Streik, Director of the Max Planck Institute for the Study of Society, who says it is dead, and we are merely left with the stench of its rotting corpse (I recommend the CBC Radio show Ideas on this subject). I think Streik is correct when he says we are now in an interregnum between capitalism and whatever will replace it, forced to hunker down and watch as the world around us grows increasingly bizarre and unrecognizable, with the success of executives rewarded inordinately and workers unable to rely on regular employment in a market threatened on all sides by technocratic change. Streik describes the attitude of such times as “coping, hoping, doping and shopping.” With both parents working just to make ends meet, the modern family copes as best it can, hoping the situation will improve. The steep rise in drug use indicates two forms of despair: drugs essentially either help you increase performance, or else numb in order to help you endure defeat. The rest of us go shopping, just to keep up with a culture which is about nothing but consumerism. But all of this is beginning to have calamitous effects on society. In European countries on the southern shores of the Mediterranean, like Greece, Italy and Spain, for example, the very structure of the family is changing. These countries have effectively lost control of their own money, and are now enslaved to the IMF and World Bank, forced to repay bail-out loans by drastically cutting social services and so on; jobs are now scarce. This has meant that the youth there can no longer afford to leave home and start lives of their own; as a result they can no longer marry, which has caused a catastrophic decline in the birthrate, causing it to fall into a negative statistic that may well prove impossible to correct. The levels of social unrest all over have given rise to populist political movements which reflect nothing but discontent. Terms like post-capitalism or post-truth tell us little beyond the fact that we’re pre-something that has yet to appear. What will it be?
No one knows, of course, but the financial titans of this world certainly understand that something fundamental has changed. The stock and bond markets are no longer the reliable places to invest capital that they once were. There is a scramble to invest in tangible assets, like real estate, which is now vastly overvalued everywhere in the west. Streik tells of a man who purchased a disused nuclear missile silo in the Midwest. The place was resistant to an atomic attack; so he built a series of ultra-expensive apartments inside it, all of which sold out in days to financial and tech barons. They clearly expect the worst. There has been a similar run on luxury items, from jewelry to high-end automobiles and Pacific or Caribbean islands. An astounding number of huge western corporations have their headquarters in some of the Gulf emirates, where a feudal system has always been in place – and where there’s no tax. Shelter from the storm. Yet the storm does not have to be. What does have to happen, however, is the complete overhaul of a broken system, from governments to the means of production, with an emphasis on local governance, a syndicalist workplace with equitable profit-sharing (and loss-sharing, if the need arises), as well as the distribution of wealth by merit alone. Extreme measures to be sure; but the alternative is a neo-feudal world, where corporate barons with private armies ensure their own welfare over that of subservient masses desperate to survive in a state where the means of livelihood are controlled by a handful of oligarchs. We are now increasingly encouraged to believe in the divisions of society – the Indigenous, LGBTQ, women’s rights, religious differences, political stripes and so on – yet these divisions are smokescreens. All rights would be settled by an overhauling of society into something equitable for all. To do this, however, requires unity of purpose. Let us forget our petty differences and unite to achieve the greater goal, which will bring us our individual needs anyway. As always, the future is in your hands if you would but realize it.
Paul William Roberts