The end of Capitalism?

The world is adjusting to the shortage in credit. People are beginning to spend less, and as a result jobs are beginning to be lost. Bush is planning a $145m tax break to encourage spending, to boost the economy.

But wait a second. Isn't it a good thing that people are spending less and doing less work?

If we are happy then we don't spend because we don't need anything! We only spend when we want something. A happy people actually do little spending and therefore little work! The more ill or disabled you are the more money you need to live. What does that say about the rich?

It is revealed again and again in economic history that contrary to the view that we would only work where necessary, the economic view is that work itself is necessary regardless of its products. That seems contrary to at least my experience of work.

For example if we don't get paid for our work then we feel it is a waste of time. And, to get paid we need to sell and therefore someone needs to value and buy the labour. In other words useless work is also work that we don't want to do.

Yet economic systems require us to work, often just for the sake of it. It is repackaged however in the concept of consumerism. This encourages people to buy things they don't really want, which then creates an apparent supply and therefore justifies unwanted labour. In more extreme cases job-creation schemes have been designed which also achieve nothing, I heard in the East at some time the government had people digging ditches and then putting the soil back again. And so now we have the American tax breaks and calls for people to shop (which when you follow it through the system is a call for people to start digging ditches).

It has been long argued, and probably plenty stressed in this blog, that work is not really about supporting ourselves or the human race. The great economists like Smith and Keynes, while they built good engines, seem to have overlooked where they would be driven.

It certainly supplies the function of useful production, but with modern technological advances if the human race could support itself 10,000 years ago how much easier it should be today. Yet we work three times as hard (rough figure: see Charles Handy). A paradox!

One explanation is that we consume so much more today... so we were poor before? This is essentially the idea of Progress, that humanity has progressed and things are better today than before. Materially it is true that we didn't used to have mobile phones. But does that mean people in the past were living poorer lives? Surely they just lived in a different way. I certainly lived quite happily without a phone before, but now I've got one I live differently. One is not better than the other, they are just different. Consider also the next great invention that will become indispensible in the future (surely there will be many e.g. time travel) - are our lives today less good because of that?

However one might argue life was better without the phone, because living a life with a phone has the overhead of someone having to make it and me having to pay for it. An overhead that is not present in the other life.

And this is the crux of the illusion that is capitalism. We are drawn into living a life with a massive time consuming overhead because we forget very quickly how life was before, and we just don't think about how life will be. And the more we work the less we have time to think about the alternatives and the nature of what we do. Participating in the capitalist system has made us belong to it, and thinking outside the bubble has become very hard. and bubbles seems to be buzz word for Capitalism!

There is another huge overhead to the capitalist bubble and that is the Environment. Our lives are begin transformed into existences with huge complex overheads. This is not innocent. That huge overhead is ultimately enabled by the environment. Every bit of work we do involves changing something, and when that change is material it is Nature that we are changing. The more we spend, the more we work, the more we influence Nature.

This change is not important for Human life. Human's clearly lived happily before (they would have evolved to like it! sad animals die out, so humans must have been happy!).

But changing Nature is a bit like fiddling with the operating system on this computer. It is quite happily supporting this blogger, but if I start to change the computer some changes might work and some might make the whole thing crash. If we make Nature crash Capitalism is going to become a bit pointless.

So why has this Capitalism become so popular? Originally there was a system of Aristocracy where people were ordered according to breeding and class. Of course money was important in this system too and ownership of land (set up in England by the French after Hastings) and the resulting taxes enabled the upper classes to be amongst the richest. The medaeval system was essentially a protection racket: Knights saying to the Serfs - "pay us and we look after you, don't and we won't (catch the drift ;-)". The same system exists today.

Some commoners like Cromwell famously developed huge money and power and led to the eventual overthrow of this ancient system. By the 1700s society was becoming ordered along the lines of those who worked and those who had the money to pay for industry.

Taxes were augmented by returns on these investment. The workers now payed not only taxes but had their earnings taxed at source in profits and dividends. By the 1900s Capitalism was in full swing.

It is partly because growing labour and growing markets ensures increasing returns on investments that labour is so important. If markets became static or receded then rich people would not be able to get interest rates. Why do rich people need interest rates? because this is how to get money without working yourself (its the old tax system). And the root reason for having money is to pay other people to do work in your place. Money essentially ensures the ancient status quo of higher and lower status people. That seems to be the main aim of humans, and Capitalism is just the best system at the moment for achieving that. True there are economies of scale and paying other people to specialise and be professionals enables them to do a better job, but this is not the reason that Capitalism is supported.

Am I sure? Well consider the relationship between the heads of industry and industry itself. Northern Rock executives have just got Christmas bonuses of 50% of their salaries in secret, known only by the UK government treasury. The government essentially gave the go ahead for tax payers money to the siphoned through a failing company into the pockets of the richest. The same people whose irresponsibility had caused the crisis! This is not a meritocracy, this is not reasonable or justifiable, it is simply the oldest law of the land that those with status are supported by the system. That is the meaning of status. A lower status person stealing even a jumper from a shop will have the full force of the system against them, while the high status people can steal millions and it be fully sanctioned. Status preceeds all other things in humans.

Another example of the status quo control that Capitalism affords the elite is in money. We assume that money has some value. Think again. That is only true for the lower status people. When I write a cheque, I have a credit check I have to prove I can repay it and I need some collateral. Sub-prime borrowers only failed to pay back the interest, you can be sure they lost their houses and everything else that stood as collateral. The high status people working in the banks, or with the banks, on the other hand can write cheques for any amount they like! Even before the current system of Fiat money they could write cheques for a staggering 20 times their collateral! That is like me taking out a £2m loan secured by a lousy £100k flat! But that was ok for a bank. These days it is endless. Bush wants to pay for a war he just writes himself a cheque. It is meaningless and we are fools to accept the same system. Go back to Gold is the key now.

So as the once serene gods of the establishment begin to sweat and make progressively more irrational moves we begin to see the real Wizard of Oz behind the curtain of illusions. There is no place like home and the yellow brick road upon which we walk leads us nowhere. Progress, development, apparent riches do not exist. While there is food in your mouth, clothes upon your back and a safe place to sleep, the light show outside our window is a pantomine to control us, whether intentionally or not, who knows.

So what is the point of life, if work and progress are not. Well that is the issue of this blog, and this part of my life (irony ;-) ). Certainly seeking the truth is not the truth itself (self reference I am satisfied is impossible). But I am confident that without knowing the truth, life cannot be lived.

Regarding work, sitting around doing nothing ain't the solution either. The fruits of labour - ALL the religions say - belong to God. Which makes sense within the Capitalist model because who owns our hands? If I own my hands do I own my body? If I own my body can I lose my body? Can I lose my hands? If so what am I if not my hands or body? If I do not own my hands then how can I own what they do? (compare with the nonsense John Locke writes). A Deep look at this shows that ownership does not exist. "God made us", means very profoundly that "all this just is, mysteriously and without explanation". If we work or not is actually meaningless, whether for Capitalists or not, what we do is what we do regardless of outer forces. The only meaning is why we do it. If we do our work because of the dreams and illusions of Capitalism we are a fool, just as the Germans were fooled by Nazism. All that really remains is to find out what our life is about, and the current crash should help enormously.