trends in money & finance what is money? what is wealth? debt, waste and scarcity...

Trends in Money & Finance

What is Money?

What is Wealth?

Debt, Waste and Scarcity

Financialization: Hijacking the Information Revolution

Decommodifying Money

Money Basics

• Impersonal: allows transactions to be extended over time and space.

• Trust essential

• Most prominent initially in external trade.

• Capital: money increased in the process of exchange.

Main Characteristics of Money

1. Means of Exchange money as information,

a symbol

2. Store of Valuea commodity, a thing-in-itself,

a source of power

The evolution of money: growing importance of the means-of-exchange function

The Disintegrative Power of Money

• rooted in the impersonality of money• internal concerns with alienation of land

& labour• money-trading: long considered an

unsavoury occupation.• related concerns with bourgeois

competitive individualism• major breakthrough--Capitalism: the

means of production become forms of money.

– increasing production means increasing money—and vice versa.

• money becomes industrialism’s main measure of wealth.

The Industrial Definition of Wealth

Money

Material

N.B.: Perpetuation of the System demands the perpetuation of this definition

Industrialism: Accumulation

• Production-for-production’s-sake• Invisibility of key factors• Centralization of production, massive

upfront investment • Focus on labour productivity : resources

substitute for human energy• Cog-labour: humans as component parts• Regulation: controls as limits• Scarcity-based: role of waste since WWII• Globalization: free trade & intellectual

property

Postindustrialism: Regeneration• New relationship of culture to economics: centrality of

human development• Substitution of human creativity for resources• Direct targeting of human need: conscious consumption• Human-scale technologies: production ‘distributed’ over

the landscape ; Integration: ALL places are places of production

• Qualitative Wealth is PLACE-BASED• Distributed regulation: incentives for positive action

throughout economy.• Self-reliance / interdependence:

“Trade recipes, not cookies”

Industrialism: The Divided Economy

Invisible Visible Use-value Exchange-value “Consumption” “Production” People Things Unpaid Paid Women Men Informal Formal Private Public

Scarcity & Class

... inequality & relative scarcity:

1. control of scarce resources & ...

2. monopoly of high culture

...by a minority.

Markets and MaterialConnection between needs,

wealth & markets.

the Invisible Hand: worked...

1. for an economy focused on meeting primary needs—simplicity.

2. in a situation of relative scarcity

3. in the absence of sophisticated information technology

The Threat of Abundance

• Productivity boom of the Roaring Twenties– output outdistances worker wages

• Crisis of effective demand & structural overproduction: Great Depression as a reaction to potential abundance.

• White-collar work, universal education: the threat to cultural monopoly.– increasingly social character of production; rise of

industrial unionism

The Post WW II Waste Economy

Permanent War Economy

The Suburb Economy: Oil / Autos /

Subdivisions

Note the gender and racial subtext of sprawl

“The greatest misallocation of resources in human history.”

…James Howard Kunstler

Keynesianism & the Crisis of Effective Demand

• Baran & Sweezy: crisis of profitable investment outlets for capitalism.

• Money: a tool of national economic planning. Strong domestic multipliers.

• The Paper Economy: growing disjunction between the real & financial economies

•  Planned Inflation & Purchasing Power• re-redistribution of income: offsetting wage hikes in the

unionized sectors• Debt & the Economic Treadmill: Work-and-spend

Fordism & the Reinforcement of Industrial Wealth

Matter

Waste

Fordism

Suburbanization/ Consumer Economy

War Industry

Money

Debt

Keynesianism

Paper Economy

Planned Inflation

New forms of credit-money

1970s: End of the Line for the Fordist Waste Solution

• saturation of markets

• social & environmental costs coming due: fiscal crisis of the state

• limits to inflationary strategy

• Vietnam war, decline of the dollar, German/Japanese competition

• OPEC & the energy crisis– Petrodollars & Currency Crisis

Post-Fordist Casino Economy• floating exchange rates: “interest rate standard”

– Eurodollars & Petrodollars

• new technologies & Megabyte Money• financial sector: 30-50 times (?) larger than the

material economy• Speculation: Stomp the weak / Get rich quick• Empty wealth creation: de facto redistribution of

wealth.• The End of Mass Consumption & rise of new

“producer services”: new forms of ‘effective demand’.

• Polarization of work and society– end of social contracts: attack on Welfare State– the growing gap between rich and poor

Debt & Forced Economic Growth

1. Competition for money

2. Lack of purchasing power

3. Wage dependency

equals

Export warfare

“The main point that needs to be understood is that in order for money to come into circulation, someone must go into debt to a bank. If there were no bank debt, there would be virtually no money—it’s as simple as that. Since banks charge interest on all this debt, and since the money to pay the interest can come only from further debt, debt grows like a cancer within the global economic ‘body.’ This debt imperative creates a growth imperative that is forcing us to destroy the life-support systems of the planet.”

– Thomas Greco

Debt in the US Economy

• 1970s: debt 1½ the size of GDP

• 1985: twice the size of GDP

• 2005: 3½ times the size of GDP

Source: Magdoff , 2008: calculated from tables L.1 and L.2; Flow of Funds Accounts of the US; and table B-78 from the 2006 Economic Report of the President

The Global Casino: Hijacking the Information Revolution

• expansion of employment in speculative industry– Wall St.: more advanced technologically

than the military.

• Bubble Economies: last ‘frontiers’ for capitalist growth.

-stock crash of 1987

-tech stock bubble of late 90s

-housing bubble of 2001-07

• Housing speculation: most destructive & exploitative of the poor & average people.

Decommodifying Money • diversification of forms of everyday

exchange– supporting the informational character of

currencies.– undercutting the scarcity-power of money.

• financial industry restructured as public utility and/or service industry.

– money directed to priority areas of green development

– transition: green Tobin tax

• new forms of remuneration– direct consumption; basic incomes; account-

money; free food, health care & housing

• gradually enlarging the sphere of gift relationships

– consistent with new productive forces based in mass collaboration