Monday, April 30, 2007

Dear George,   Before you read any further, put this letter[1] down, phone Treasury and have Paulson come over and walk you through it.  I’m going to run you around the barn so many times, a ditch’ll surround it by the time we’re done.    We’re going to talk about the financialization of capitalism.  It’s all part of a process in which we have gone from the capitalism of Adam Smith that was based on small producers and merchants to the age of monopoly capitalism.  Financialization is a logical outgrowth of monopoly capitalism.    In monopoly capitalism (or Corporatism since monopoly capitalism really isn’t capitalism), profits accumulate and investment opportunities shrink in an increasingly controlled and saturated market.  Profits become concentrated in the top one-percent of the population.    So, what are the poor darlings to do with all this surplus money?  Why, they turn to increasingly sophisticated financial instruments that increase capital without increasing productivity.  .    The financialization of capital has shifted the center of economic power from the factory (now located overseas) to Wall Street, which manipulates the market through its “buy”, “sell”, “hold” recommendations.  Where Wall Street once reflected economic conditions, it now dictates them.    Economist James Tobin refers to this as “the casino aspect of our financial markets.”  He goes on to say that”…we are throwing more and more of our resources…into financial activities remote from the production of goods and services, into activities that generate high private rewards disproportionate to their social productivity.”    Thus, we have the ascendancy of the bean counter, that master of smoke and mirrors who is prepared to geld our economy if he can increase his short-term profits by one-tenth of one percent, or inflate the price of a stock through layoffs and reductions in benefits.    You see, George, Corporatists fear stagnation.  Stagnation is only possible in a culture that has made a fetish of growth.  Take away the fetish and you take away the threat of stagnation.   This fetish is more fixated on the illusion of growth than on growth that is real and productive.  Two factors feed this illusive growth:   unnecessary military spending and the spider webs of financial instruments spun by our bean counters.    The truth is, George, that the Great Depression never ended.  World War II and the Cold War simply put it on hold.  This is why your Eternal War of the Empty Policy is so essential to the continuation of our delusional growth. We have a tiger by the tail.  If we let go, the Great Depression returns, if we continue the way we are, we drown in our debt and the Great Depression returns.    This is why virtual reality must trump reality.  The word Virtual derives from the word Virtue, which derives from the Latin word, Veritas meaning truth.  So in reality, the imaginary is more real than the real.  It makes no difference if this etymology is a crock of shit since make believe, image and illusion are more important to the health of the Corporatist State than actuality.  Our bean counters have taught us that what you make up is more important than what you do.   This is why democracy must fall on its sword.  Democracy obsesses on real issues; corporatism thrives on illusion.  This requires the public to swallow the corporatist line lest someone notice that our CEOs are buck-assed naked.   Your admirer, Belacqua Jones   [1] This letter is drawn from “The Financialization of Capitalism” by John Bellamy Foster that appeared in the Monthly Review.  The article is online at http://www.monthlyreview.org/0407jbf.htm.  I would highly recommend it.   5:03:44 AM    comment []

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