There Are Two Ways Out of the Breakdown of Capitalism. The Good Way. And the Other Way.
Here’s the score. Unvarnished, unadulterated, untainted. The rest of this beleaguered decade is a choice. A great and historic choice. No, not between politicians or parties. But between two models of political economy, ways of making economies go.
Capitalism taken to an extreme doesn’t work. It never could. It’s too prone to rent-seeking, instability, poverty, emotionally stunted psychopaths calling themselves “hedge-fund managers” and a whole universe of similarly fatal brain-eating diseases. So it ends up something like a zombie, eating itself just to stay alive, but because there’s less and less nutrition in the meat, it gets more and more bloated yet also more and more malnourished.
Go ahead and throw all the charts at me that you want. Just like global warming, the facts are very clear, very simple, and far beyond debate. The middle class is a minority, the majority of public school kids are in poverty, life expectancy’s falling, the average household can’t pay for an emergency, I could go on for days. All this while the ultra rich are getting fractally ultra richer…the lion’s share of gains slipping from the 1% to the 0.1% to the 0.01%.
Capitalism is eating itself. Left to its own devices, it will consume its own zombie corpse right into gristle and bone and then into whatever’s after that. I don’t know, maybe little gristly chunks of zombie soup.
Fortunately, there’s just one problem with all this.
We now live in a world of negative interest rates. That means: I lend you $1000, and I only ask you to pay me back $700. How can this be? Because a) I’m so rich I don’t give a damn b) I need somewhere other than my bulging mattress to put my money and c) I expect my money to become less and less valuable. Better to have $700 for sure than $1000 devalued to $500 possibly. That is, I expect deflation.
Why would I expect deflation? Because no one has any money left. Not enough, anyways. To spend it, save it, invest it. To create real jobs, not just slave away at dead-end McGigs. When you and I don’t have any money, money begins to lose its value. Why? Because it gets stuck in the coffers of the ultra rich. Remember them? They can’t spend it fast enough. There are only so many helicopters and superyachts a man can have, after all. Hey presto: deflation. Followed by its only defense: negative interest rates.
All of which tells us something Very Very Important. Imagine for a moment that you were the zombie corpse eating itself, growing more and more bloated. Now miraculously, your brain started working again. You’d probably get the message after a while, right? That maybe you should start eating something a little more nourishing than…your own limbs.
In the same gruesome way, negative interest rates emerging around the globe tell us something clearly. Stop eating yourself. There’s nothing left. No nutrition in this disgusting thrice-digested meat. Markets are crying out to invest, not just extract more value from already impoverished people with more or less wrecked lives.
Yes, impoverished. No one in a nominally rich country should live without money for an emergency, healthcare, transport, education, and so on. But millions do, right? Negative interest rates say: the rich have way too much, and the average has way, way too little. The economy must be rebalanced, not just eaten over and over again, because there’s nothing left to consume.
There’s only way out of the breakdown of capitalism, and that’s the word that Americans especially, just won’t, can’t, goddamit, shouldn’t say. The S-word. Socialism. Go ahead, say it with me. Be bad for once in your perfect shining life. Soooocialism. See? The devil stayed put in hell. So it can’t be that bad.
Negative interest rates are shouting “invest this money, fools!! Take me!! Use me!! Goddamit, here I am!!”. Investment in what? In the very public goods that are deficient, missing, that people are paying through the nose for because they were largely foolishly privatized by a generation of economic quack doctors, which is partly why average households can barely make ends meet. Education, healthcare, transport, and so on. Investment in public goods equals socialism. That’s what negative interest rates tell us, shout at us, scream louder and faster than we can plug our ears and make the sign of the cross to ward off the devil.
The S-word. Soooocialism.
In other words, extreme capitalism, capitalism as a fetish, religion, cult, doctrine, death sport, ideology is going to have to be counterbalanced by socialism. Capitalism + Socialism = balance, health, prosperity, sanity. It’s about time, because it’s midnight for capitalism without socialism. Not just because I say so, think so, write so. But because negative interest rates will make it so. Either that, or banks start charging everyone just to hold deposits, which is a situation that probably can’t go on for long in a sane society, because it’s more or less the equivalent of a bank run, which means you, me, and your grandma are going to be hurling pitchforks at each other to get to the nearest ATM. And I like your grandma.
There are two kinds of socialism that the breakdown of capitalism can result in. The good kind. Social Democracy. That is, public goods that are allocated democratically, invested for the common good, and held in trust by democratic polities.
Or National Socialism. The bad kind. Socialism only for the volk, the ubermen, the chosen few. What about the rest? They usually get cleansed, concentrated, eliminated, disappeared. National Socialism is a way to allocate the shares of a shrinking social pie to the “right” people, which always ends up being the dominant tribe, who always ends up checking people’s blood, in more and more inhumane ways, to see who “really” deserves to have a slice of the pie.
That’s the choice. Social Democracy or National Socialism. Good and bad. Social Democracy works. It works wonders for human prosperity, any way that you care to measure it. It’s one of humankind’s greatest creations. National Socialism, on the other hand, is the very opposite. It’s search for blood and gold leads inevitably to violence, war, catastrophe. It is one of humanity’s ugliest creations.
Which one will we choose?
The tremors are already being felt globally. What do you think ISIS is? National Socialism writ small. A way to allocate the dwindling public goods of food, security, work, in catastrophically failed — or maybe destroyed — states. What do you think a nation I won’t mention by name but that’s run by a notorious strongman is becoming? What do you think Il Duce Trump hopes to be?
The Great Wall of America that he hopes to build is exactly the kind of foolish public bad — not public good, but bad — that National Socialism malinvests in. It is a shared investment, a social product, socialism, that makes no one better off, that shrinks the haggard pie even further, and thus heightens the very social tensions that produced malinvestment in the first place. That’s the death cycle of a society, more or less. Once started, it’s hard to stop. So hard, in fact, that there’s not really a single example in history of a nation that’s escaped the destruction it wreaks.
I won’t say “the future is in your hands”. Who do I look like, a finely coiffed smooth-talking politician? Don’t kid yourself. The future’s not in your hands. It’s in theirs.
Take it back.