On The Real Economy by Joe Beageant

Posted March 12, 2011 in Learning, Opening and Closing Readings. Tagged: ,

Defenders of capitalism claim that there can be no real economy, no real material value created by the real people on Main Street, without the financing of Wall Street’s virtual economy.  Allegedly, they are so intertwined as to be the same thing, which they are, and that no other way of doings things is possible, which is patently untrue.  The storyline goes that without virtual-economy financing from Wall Street, without the ever-expanding debt that drives the quest for limitless growth, the world would end.  So strong is this hallucination that capitalist theoreticians such as Guy Sorman say, “Even in this time of financial crisis, the global benefits of the new financial markets have surpassed their costs.”

What the &@#! globe are ya living on, Guy?  Have you looked around lately?  The global financial crash, which continues to cause worldwide misery, is a benefit?  As Ken Smith says of big picture economists, “Climate is what they write about, but weather is what we get…”

Goods and services have at least two values.  The first is their use value, the value of a commodity or service in real on-the-ground terms, such as the useful value of a tool, or shelter or food, or worth as a service, such as transport.  The second is their transactional value:  how much money banking and “investment” can make controlling the money involved in the transactions surrounding those goods or services, or financing the creation of new ones through loans, marketing and institutionalized capital control.

The consequences of creating unneeded services and products for the sheer sake of growth, even if the services and products are themselves pointless, are enormously profitable.*  For example, water is bottled at a cost of a few cents and sold for a buck. Much of it is just bottled water from a municipal source.  The consumer has already paid for such water twice, once in taxes and again as a utility bill, but nevertheless buys bottled water at a little over 10,000 times the municipal cost…

There is no arguing that there is no greater method of creating economic growth than capitalism… But growth is like crack cocaine for bankers and economists, both of which see the world purely in terms of wealth accumulation and production.  For we who do the producing (or once did the producing back when workers were still considered a necessary evil) the truth is that American capitalism is like a wine press.  It squeezes the masses for the money representing their productivity, in a process otherwise known as the virtual economy.  A few people in the virtual economy become multi-millionaires.  The rest of us pay the freight financially, socially and ecologically.

*Modest edits made to this sentence to fix what seemed to be a publishing error.