The problem with capitalism is that markets need money to circulate, while people see it as the signal to extract from the noise of society and the economy. Requiring ever more to be added and ever more precarious ways of storing what has been extracted.
Econ 101 says money is both medium of exchange and store of value, yet a medium is necessarily dynamic, while a store is static. Blood is a medium, fat is a store. Roads are a medium, parking lots are a store.
Money is largely a contract, with one side an asset and the other a debt. As an accounting device, it is an effective medium, but as a store, it requires debts to equal the assets and these iou’s eventually become unstable.
For one thing, 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. Since finance serves as the value circulation mechanism of the community, this is analogous to the heart telling the hands and feet they don’t need so much blood and should work harder for what they do get.
The Ancients used debt jubilees to rest this dynamic, but with industrialization and colonialism, the modern world is only just reaching the end of that chain.
Another consequence is that government has become debtor of last resort. It doesn’t take much knowledge to realize the capital markets could not function, without governments siphoning up trillions in excess money per year, but the media doesn’t exactly dwell on that.
Given the amounts thrown into the burn pit of military spending, it explains why we have endless, strategically inept wars and no one is held to account.
The fact is that there isn’t sufficient investment potential for everyone to save notational value for individual future security, but since we all save for many of the same reasons, such as housing, raising children, healthcare, retirement, etc, if these could be invested in directly, as community networks and assets, we would have stronger, healthier communities and environments, as stores of value and not just resources to be plundered for notational wealth.
As it is, our individualistic ethos results in an atomized culture that is more easily dominated by oligarchic elements and mediated by a parasitic financial system.
As the executive and regulatory function of society, government is analogous to the central nervous system, as finance is to the circulation system. There was a time when government was still private, but as monarchs lost sight of the fact they served a function to society, in order to be served by it, they had to be shed, in favor of government as public utility. Finance is now having its, ‘Let them eat cake’ moment.
Not that finance can simply be an arm of government, anymore than the head and the heart are one. Given politicians live and die on the hope they inspire and we experience money as quantified hope, there is a strong tendency to inflate the money supply, when other options for leadership are failing.
Though we will likely have to wait until all the debts drawn on our future come due, before anyone tries thinking it all through. In crisis, there is opportunity.
