The difference between capitalism and free markets is that markets need money to circulate, while people see it as the signal to extract and store.
The reason is that we are linear, goal oriented creatures in a cyclical, reciprocal, feedback generated reality.
Consequently the markets become financialized, as ever more has to be added and ever more metastatic methods of storing this abstracted and extracted value have to be devised.
Money is essentially a contract, between the individual and society, basically a voucher system. Yet we've come to see it as a commodity in and of itself. The reality is that as a contract, the asset is backed by a debt. So to store the asset, similar amounts of debt have to be generated.
Which makes it quite convenient to squeeze the money flowing through the real economy, requiring it to run on debt and drawing that saved money back into circulation. Though this creates a centripetal effect, as positive feedback draws the asset to the center of the community, while negative feedback pushes the debt to the edges.
Which has gone on since the dawn of civilization, as the Ancients needed debt jubilees to stabilize the dynamic.
The other method is having the government as debtor of last resort. It should be extremely evident the capital markets couldn't function without the government siphoning up trillions in surplus money, but the logic of that seems to be totally swept under the rug.
Given how much money gets spent on endless wars, it might explain why they seem so strategically inept and no one seems responsible, if their real reason is to spend the money, in order that more can be borrowed and Wall St. is happy.
The secret sauce of capitalism is that public debt backs private wealth.
Econ 101 says money is both medium of exchange and store of value, but a medium is inherently dynamic, while a store is static. Blood is a medium, fat is a store. Roads are a medium, parking lots are a store. They might be connected, but they are not the same. The functionality of money is in its fungibility. We own it like we own the section of road we are using, or the air and water passing through our bodies. It is a public utility and needs to be treated as such.
If the government was to threaten to tax out what it currently borrows, people would quickly have to find other ways to store value.
Obviously there isn't sufficient investment potential for everyone to save the amounts they need to feel secure, but we do save for many of the same reasons, from raising children and housing to healthcare and retirement, that if we were to re-develop the idea of the public commons as a store of community value, maybe we wouldn't have such atomized cultures, with everyone in their personal coccoon and their bank account as their financial umbilical cord.
This isn't socialism, in the sense that everything is community property, but recognizing that both public and private property is necessary in a healthy community. Like a house has family and personal spaces.
