K: Nobody among so called reformers nostalgic for long lost prosperity of American people during Cold War dares to tell the truth that it was not capitalism but nearly complete abandoning of capitalism in 1950s and 1960s facing ideological war with Soviet Union that brought American prosperity by means of imposing total economic command and control structure of governance of capital investments. Principles of equality, equity and egalitarianism if not implemented were at least given a forum and social value as was taxing rich at 90% rate.
It was not finance capitalism that was fixed in those “glory” days to better serve peoples’ economy but it was socialist type long term corporate planning driven by specific. government policies mostly financed by government, anti-usury laws and aggressive taxing profits with surplus value to be channeled, instead of to elites to speculate with, directly toward Human (decent jobs) and material resource capital investments with no or minimal involvement of financial institutions.
The dominant today financial institutions in. 1950s accounted in US for just few percent of GDP mostly serving big corporations around which corporate controlled B2B small business contractors’ market was developed pretending to be free enterprise market for propaganda reasons.
Ford alone had 600,000+ small business often mom and pap type outfits in 1950s and 60s. That was a way to spread government and corporate capital among cash only, low debt mainstream local economy and we the little people to live of. Together plentiful jobs with GI bill, massive federal and state university grants as well as dramatically lowering or abolition of tuition fees in major state owned university systems like UC in California were an engine producing middle class in US.
The capitalism was not applied to get those positive results, instead capitalism had to be completely denied to achieve them. The control over capital distribution was held not by corporate shareholders and managers but was in few hands of National policy makers who as a part of ideological confrontation with Soviets wanted Americans to live better even if it interfered with fundamental canons of capitalism like maximizing profits, externalization of costs and unfettered accumulation and concentration of capital.
In financial realm not rules of finance capitalism but strict government social policies made sure that people’s savings were protected and not gambled away and that banks did not gain monopoly power in local mainstream markets. It was achieved by chartering US postal bank and state chartered public banks that provided low cost competition.
The robust welfare state and government supported unions provided protection for workers.
The dismantled 22 years ago Glass-Steagall and anti usury laws did the job of in large part protecting ordinary peoples from evils of everyday ordinary predatory finance capitalism.
Pure finance Capitalism was back then criminalized outsourced to mafia connected loan shark noir characters standing on dark street corners where they belong. Today those same criminals run Wall Street, Washington DC and Silicon Valley.
But still this middle class “paradise” of 1950s-60s did not last and ugly head of capitalism rose again as soon as existential threat to system of market capitalism itself from Soviet Union socialist ideology and revolution threat eased.
The pro middle class reforms were step by step abandoned as no longer necessary for survival of capitalist elites. Taxes for rich were lowered, capital and currency controls removed, public banking dismantled, public funds privatized, public borrowing/debt greatly increased, big corporations/private funds funded government budget deficits grew fostering government dependency of private and public equity capital.
The accumulated and concentrated capital unleashed its monopoly drive and its control over government and its institutions. As a result congress previously passed laws restricting capitalism were rescinded or circumvented by new legislations and by that destruction of pro middle class polices accelerated.
Today finance capitalism is free, in full swing while American middle class is dead. Anybody who in principle support capitalism should stop complaining as he is living in capitalism, paradise and in human nightmare as both are synonymous.
Any reform short of abolishing socioeconomic system of capitalism would make no difference to peoples who work for living as capitalism simply means rule of capital while any consideration of Fundamental needs of entire society and fate of all the people is rescinded.
Many libertarians who complain about monopoly global capitalism of today must realize that historically monopoly it is not abomination of capitalism but result of its natural evolution stemming from systemic promotion of unlimited capital accumulation and concentration of capital in few private hands via means of unfettered competition.
Historically it were repeated social Revolutions that acted to disperse capital among society only to return capitalism back in matter of decades into its final state of natural monopoly already Adam Smith and Marx knew.
So let’s not fool ourselves, anybody who advocates sham of economic/financial reform of finance capitalism doomed to be defeated by concentrated capital are promoting their own narrow agendas of phony Revolution that serves own benefit alone leaving the rest in a rot as they were before.
Such social de cohesion, lack of solidarity and empathy toward fate of others is a result of brainwashed capitalist mind most so called liberals possess and are imprisoned in.
No reforms would work as long as capitalism is left intact meaning rule of capital and commodity exchange markets, legality of exploitation, alienation of labor, legality of production and accumulation of surplus value, centralization of capital , legality of profit and usury of speculative financial capital formed from socially destructive arbitrary individual or narrow production decisions, etc.,
Such capitalism whitewashing positions today represent perverted marriage of leftists and libertarians.
Moreover, imposition of artificial individualism of economic decisions that must be inherently collective based on community consensus, legalization of always destructive socioeconomic competition or allowing individual failures of human endeavor which are always damaging to society at large and most of all legality of property and individual ownership of means of production and many other features of capitalism preclude any socioeconomically stable society regardless of role of money which always was used as most effective tool of looting, parasitic appropriation of forcefully alienated labor but not required in capitalism.
Capitalist socioeconomic system is not aimed at producing goods to satisfy human needs but via private or state capital accumulation to economically and hence politically control population by groups of elitists, like energy elitists or food elitists, media elitists and political elitists etc.,local or global.
Also the system effectively produces social outcomes of small or large scale inequality, inequity and elitarianism that is the core of people’s social misery, suffering which is the real product of capitalism as a social system where social relations and human bonds are negotiated by power, dominance and/or money. Selfless Caring and sharing are condemned, taxed and delegalized.
Not many know in the west that their perceived wrongly past prosperity considered a “proof” of viability of capitalism like in US or Scandinavia 1950s-70s was paid by blood sweat and tears of countless of millions of enslaved somewhere else out of sight and mind of millions of mindless western ignorants who thanked non existent human face of capitalism for it.
Not a cent of profits were ever shared by capitalists even in days of so called western prosperity, none. What western societies were allowed to consume in those “good days” was blood, sweat and tears from Soylent Green of humanity at large in the so called third world.
What we need is socioeconomically and environmentally, self sustainable, democratically self-governed by consensus equal, equitable and egalitarian society of caring and sharing aimed at one thing alone to satisfy basic human needs of healthy food, safe shelter, companionship and opportunity to create what people need.
Me: I don’t have any problem with you’re critique of finance and capitalism. I don’t think that socialism, real socialism, that is government ownership of production is the answer though either. The capitalism/socialism duality is a false one and misses the core of the core problem which again is the monetary and financial paradigm. Paradigm changes are permanent while reforms are either palliative or immediately ineffective. That is why we need a paradigm/ENTIRE PATTERN change.
I call my theory of the monetary and financial paradigm Wisdomics-Gracenomics. Why is that? It’s because it expresses the need to inject the solution to one of your key critques of capitalism which is that it has no real ethic other than power, profit and control.
Wisdom is the superior human mental discipline. It is the integrative mindset itself and the intention to find only the truths, highest workabilities, applicabilities and the highest ethical considerations in apparent opposites. Hence Wisdomics. Love is universally accepted as the superlative human spiritual value and the active form of love is grace/graciousness. To be logical and effective love must not just be internalized. It requires expression (both as human action and as systemic policy) at which time it becomes logical (as within so without) and expresses graciousness.
The current paradigm as the sole form and vehicle for the creation of new money is Debt Only, and it has not changed for the entire course of human civilization. By Debt Only I mean it has always denoted and demanded the burden of repayment. There isn’t anything inherently wrong with debt itself, but debt ONLY designates it as a monopolistic concept…and all monopolies are problematic.
Historically, all new paradigm concepts have been in complete conceptual opposition to the old/current paradigm For instance, geo-centrism to helio-centrism, nomadic hunting and gathering to agriculture, homesteading and urbanization. So, economically and monetarily speaking, what is the opposite philosophical concept to burden to repay? It’s monetary grace as in gifting, monetary gifting for short. Monetary Gifting IS the new paradigm concept and its applied set of aligned policies will create the economic pattern change. Hence Gracenomics as in a monetary and economic expression of the natural philosophical concept of grace.
Always go to the core of the core of the problem, and find the operant concept that applied changes the entire pattern of the system, body of knowledge and/or area of human endeavor. In other words when you’re down by 6 with 30 seconds left in the fourth quarter it’s time to “go long, go deep”, and although there may be tears in the night, there can be joy in the morning…if we abandon orthodoxies and obsessive dualing opposites and choose paradigmatic analysis instead.
P: Great analysis but I wonder if it suffers from the the typical left aversion to facing the role of money in the economy. The implication is that things were great in the 50’s and 60’s and suddenly the forces of evil came in to sweep it all away. No, the seeds that ended the hiatus were already sown then. Since FDR failed to address the money problem despite the pleadings of leading economists of the time (maybe he had no choice) the cancer that the banks represented was only in remission. No amount of regulation alone can overcome the immense power afford to those who actually create and distribute the nation’s money – private commercial banks. Until the left takes a lesson from the Populists of the 1880’s and 90’s. the money power will prevent the return to the good ole’ days of the 1950’s.
Me: Yes, I agree the problem has been long palliated and/or missed. It is idiotic that the banks are granted the ability to create (or deny agents) access to money which is the very life’s blood of economic and individual survival, but it is titanically idiotic that they are enabled to create it ONLY as debt. As Michael Hudson and David Graeber have pointed out the deepest reason empires tended to invade their neighbors was because private indebtedness destabilized their domestic economies…so they felt the need to steal their assets by force.
The systemic power to create our money (upwards of 97% of it) must also be addressed, but no reform, not even a genuine public bank, which I would also like to see happen, will finally resolve the paradighmatic problem. It will take a new applied paradigm concept and its aligned policy program to end our being forced onto all fours for over 5000 years by the current monetary and financial paradigm. Only paradigm changes are permanent.
P: Yes, “reform” implies maintaining a current system that is inherently flawed. To use the historical model of money created through debt as a justification for perpetuating that model, ends any hopes of radical transformation and democratizing our medium of exchange. Our current set of progressive intellectuals seem incapable of grasping that.
Me: Indeed. The biggest problem with something actually new and effective is that it faces the long unconscious acculturation of the present paradigm. In this case over 5000 years because whether new money was created by the Palace or by private banks…it was always created ONLY as Debt. We are much more stupid than the ancient empires most of whom utilized periodic debt jubilees (a form of monetary gifting) to reset their domestic economies and renew their social contract in order to prevent internal revolt.
In a fractured polis with a sizable idiocracy that is fightin’ mad an immediate, mathematical and temporal universe anchored doubling of their purchasing power ought to be a policy that progressives would leap ecstatically for. Most do not see it, not even the reformers on the left. What the left had better worry about is that the right latches onto the 50% Discount/Rebate policy FIRST because it is as beneficial for enterprise as it is for the individual, and hence grabs the attention and allegiance of independents who have suffered loss of purchasing power since the 70’s when we began shipping manufacturing over seas. Also, the republicans are quick to recognize power, know how to rally their voters in pursuit of it and getting and keeping it is their overweening ethic.
F: As long as there is commodity production you can not abolish money – the general equivalent. [Karl Marx in refuting Proudhon].
‘Monetary Gifting’ is basically credit, it does not change a thing. Besides it is fundamentally wrong in assuming economics run only on exchange value based markets. Initially you need to create money to pay for prices of production and to take it to the market, then you need to create the same amount to enable the merchant to buy the commodity. The consumer pays for it out of his wages (=part f price of production). No matter how you distribute the circulating capital among market participants you end up at least creating twice the amount of money of the commodity’s worth. This cycle starts again anytime an additional commodity is produced. All it does is creating sort of ‘fictitious capital’ in fiat, since here is no commodity equivalent for the surplus capital . Aside from being fundamentally wrong in the approach it is creating credit, regardless if it is formally debt or ‘purchasing power in money form’ . I get totally lost with the notion that this would not be inflationary……
Me: “‘Monetary Gifting’ is basically credit, it does not change a thing.”
It is credit as in a gift of money…which changes the current monopolistic paradigm for the creation and distribution of new money…of Debt ONLY.
“Besides it is fundamentally wrong in assuming economics run only on exchange value based markets. “
I never said economics run ONLY on exchange value based markets. It is however a very important and basic aspect of the economy, and the current monetary paradigm IS the biggest problem afflicting modern economies.
“I get totally lost with the notion that this would not be inflationary…… “
The several sentences before this are flimsy theoretics and not very accurate IMO. My response to the quoted statement is simply: Look at the point of retail sale and suspend any abstract theoretics while doing so, and then do the math. Retail sale’s significance is that 1) it is the terminal summing point of all costs and so price including profit or not profit, 2) the terminal ending point of the entire economic/productive process where production exits the economy and becomes consumption, 3) the terminal expression point for all economic factors, in this case specifically inflation, and 4) it is universally participated in by every individual economic agent giving a policy at that point macro-economic effect.
We’ve never had 50% inflation y/o/y and hyperinflations are very rare, require several preceeding disastrous circumstances like going to war, losing the war and having the winners impose onerous debts on you and finally having the private banking system leverage up currency speculators who short the currency which is what actually initiates a hyper state. Hence every hyperinflation can easily be avoided…if you impose rational restraints on Finance.
Just do the math. Today I pay $4.55/gal. for regular gas. Tomorrow with a 50% Discount/Rebate policy at retail sale I only pay $2.28/gal. Explain to me how that is going to be inflationary???