The Upside-Down Economy

The idea that the financial markets are the essential force that drives economic growth and progress, has dominated political thinking for too long. The financial markets and their agents have dominated politics and the Congress over recent decades more than ever before. After all, it took several decades for the financial elite to accomplish the complete abandonment of the controls instituted to prohibit the financial market excesses that caused the Great Depression. We are at greater risk today of an even bigger crash than 1929.

The U.S. and world economies are stumbling on the precipice of part II of the “Great Recession” of 2008. The global integration of financial markets and institutions put the entire world at risk and none of it has any democratic foundation. It is all happening against the will of the people and in opposition to the public interest. The massive contraction of the middle class and the swelling of the ranks of the poor are now undeniable. The so called “recovery” has been all about the financial elites and the stock market. Corporations are awash in cash. Those who lost jobs that had a livable wage can now only find minimal-wage jobs and must work at least two to pay rent. The real economy falters and the financial markets are built on quicksand.

The Disappearing Real Economy

The economy is upside down because real economic activity – the production and exchange of goods and services needed by the people in their everyday lives – no longer drives the global economic system. The most powerful economic force in the world today consists of the actions of multinational corporations attempting to continually grow consumption by reducing the costs of growing production. International “free trade” is in effect the removal of production from the nation – outsourcing.

To minimize cost and maximize output, capital is moved to poor nations with the least labor costs and environmental controls. Economic “globalization” allows U.S. corporations to import cheap goods for our increasingly poor workers to buy at Wal-Mart with credit cards. That, of course, reduces the availability of production jobs here by exploiting the destitute elsewhere. While capital is easily mobile globally, labor is relatively immobile. The globalization of capital drives wages down so that U.S. citizens can only buy cheap imported goods.

Continuing down the ruinous path of the Wall Street financial elite is supported by a lot of political rationalization. The fact that work, pay, production, and consumption are what any real human economy is actually about, is simply ignored. On the one hand, we are told that capital must be free to find its “highest and best use.” That will enable the capitalists – falsely characterized as “the job creators” – to invest in new technology and production, thereby improving employment. Well, how has that worked out? The new technologies have mostly reduced the need for skilled labor in the U.S. The free international movement of capital – they call it “free trade” – has increased demand for unskilled cheap labor abroad. Who benefits? The wealthy investors in “globalization.” Who suffers? Workers everywhere suffer the loss of control over their lives and the inability to earn a living wage.

Feed the Rich, Starve the Poor

The myth that the super rich somehow need a tax break pervades the political discourse even though wealthy corporations and individuals pay less in taxes than ever. The delusion is that such public largess economically favoring the already rich would allow them to invest in the real economy. The “news” media – owned by the same mega-corporations that feed the super-rich – go along with that fiction even in the face of several decades of decline of American work, pay, production, and consumption.

All the while, the rich continue to get richer, paying less and less taxes, by controlling politics and indebting the nation. Both the U.S. Congress and the President are elected by having access to massive political funding by so-called “political action committees” (PACs). Legislation is actually written by the biggest financial lobbyists in the Congress – the lobbyists for the financial elite that is enriched by the “globalized” economy. Worldwide corporate theft, subsidized by the U.S. government, is a scam of unparalleled proportion.

Simply put, in a real economy it is income from employment that drives economic health. Employment provides individuals and families with incomes to buy the necessities and niceties of life. It is employment that produces goods and services people need. The income from employment allows consumption to drive production. Financial speculation among the super-rich has distorted the real economy by “financializing” it and ruined all that.

That is why the economy is so upside-down today. Financial speculation drives investment in cheap overseas production, leading to domestic poverty and declining ability to buy what is produced elsewhere. It is all driven by the greed of the financial elite, not by any national economic policy. Big investment banks’ speculating in abstract financial instruments – derivatives and the like – are allowed to create phantom money by depleting the real economy in the form of consumer and government debt.

In a real economy the Big Banks would be invested in actual productive activity. But because of outsourcing, underemployment, and low wages, workers cannot afford goods produced domestically as cheap goods from abroad flood the shelves of the big-box stores. At the same time, the propaganda of marketing and advertising encourage more and more consumption of less and less meaningful products. Low wages force reliance on consumer credit, increasing indebtedness to the corporations controlled by the financial elite. It is an upside-down economy.

Growing suppression of public education and critical thinking facilitates the manipulation of consumer behavior. People keep trying to buy whatever represents the imagery of the consumer culture that dominates their experience. “Affluenza” afflicts some of the few who experience new wealth. But the pervasive desire for the trappings of affluence – driven by pervasive marketing propaganda – drives consumer behavior, leaving little room for “free will” in economic behavior. Mass media images dominate consumer as well as political thought. Cultural images of “the good life” all involve increased unthinking consumption of corporate products.

Converging Crises and Catastrophic Collapse

In the present context, certain fundamental factors are at work. The vast accumulation of “phantom wealth” by the Big Banks via the “bailout” has encouraged further speculation and facilitated more economic concentration. The easy availability of cheap loans to corporations already awash in cash has not resulted in their investing in the domestic economy. All that cash and cheap credit is used for mergers and acquisitions, which further concentrate corporate wealth. A stock market booms while the main-street economy remains stagnant with vast numbers of workers unemployed or underemployed. Stock market growth is without foundation in the real economy. It has little basis in actual economic value, its growth is speculative, and is at increasing risk of collapse.

After the greatest financial heist of the public treasury ever, we must ask why such vast accumulated wealth has no benefit to the real economy. Overextended consumers can no longer rely on home equity and credit cards to make up for those decades of stagnant to regressive wages. It becomes clear that another few hundred million more dollars in the coffers of billionaires will not be invested in domestic production for the suppressed consumer demand for necessities that results from stagnant domestic employment and over-indebtedness.

It is not as if this is all happening in the abstract. Real world allocation of capital has planetary consequences. The distortions of mass production induced by extractive capital are global in scope. With a world population of over seven billion people and the drive to emulate Western patterns of consumption, the carrying capacity of the planet’s ecologies is already exceeded. Whatever one’s interpretation of the world’s economic system and imagined alternatives, the convergence of overproduction, consumer culture, overpopulation, looming crises of food production, resource wars, and climate chaos, all foreshadow a catastrophic collapse of existing economic and social systems. Only a massive human effort to reorganize the way we live on this planet can avoid human tragedy on a scale as yet mostly unimagined.

The Ideology of Predatory Capital: Social Illusions and Planetary Reality

With the fall of the Soviet Union and various other communist states, the victory of capitalism seemed assured. Ronald Reagan took on a God-like aura, anointed by Margaret Thatcher. The “Iron Lady” affirmed that there was no such thing as “society,” and there was no alternative to unfettered growth of neo-liberal capitalism. All was well in the West, or so it was said.

Now, all sorts of things were possible with the “peace dividend.” The triumph of American Individualism over Soviet totalitarianism was expected to yield huge savings resulting from the end of the arms race that had been required by the “cold war.” Yet, somewhere on the way to peace and prosperity, the military-industrial complex that President Eisenhower had warned us against, just kept growing bigger and bigger. We were warned against potential new forms of conflict for which we must be prepared.

That growth relentlessly consumed more and more of the federal budget. The pursuit of military goals to assure the continued supply of energy from the Middle East left little money for “domestic programs” throughout the second half of the twentieth century and beyond. The pursuit of endless wars of choice into the twenty-first century created widespread international resentments. “Freedom fighters” in their own minds, growing numbers of “terrorists” and “insurgents” defended against indiscriminant U.S. invasions and occupations. Such groups grew much more rapidly than they ever had before nine-eleven. The costs of these military adventures have been mostly off-budget, yet have continued to bloat the national debt, their funding appropriated from nowhere. Meanwhile the congress continues to focus on cutting corporate taxes and domestic programs and subsidizing fossil-fuel extractive industry. Small government for the people, big government for the Empire.

The Ideology of Economic and Military Predation

In tandem with aggressive U.S. foreign policy, the growing dominance of neo-liberal economics – formerly called “Laisse Faire” – meant increasing control of the U.S. economy by international corporations. So called “free markets” and “free trade” operated as ideological cover for ever-increasing corporate domination of both domestic and international economies. The story was always, let individual entrepreneurs and small businessmen – the mythical “job creators” – be freed of government regulation and Adam Smith’s “indivisible hand” will assure the best outcome for all. But the hard economic reality has been quite different.

Capitalist economies work best for their people when markets are regulated to control the worst excesses of the power of capital itself. The free-market ideologists carefully neglect to admit to the power of power to accrue more power. The question, “free for whom?” is neither asked nor answered. That is exactly how the mega-corporations have ideologically controlled polity, economy, and society. The corporatists, whether pundits on CNBC or the politicians bought and paid for by the corporate and financial elites, have clear expectations and intentions. Only by reducing taxation on corporate profits and eliminating “onerous regulations” needed for public health, workplace safety, and the environment, as well as those evil “entitlements,” can the capitalist economy work best – well, best in fact for the corporations and worst for the people.

Of course, corporate taxes are at all-time lows and deregulation of financial markets has been fully achieved by the Republi-crat one-party corporate state. The result is the starving of federal and state budgets and destruction of middle-class employment. Deregulation of financial markets, aided by the power of electronic computing, has allowed corporate malfeasance on a scale never before imagined. This has driven both U.S. and international economies to financial crises on a scale not seen since the great depression of the 1930s.

Deregulation of production and labor markets has released large corporations from any responsibility for environmental damage, abuses of labor, increased health risks to citizens, or unfair competition. Their domination of politics, economics, and society was thereby assured. Their control of politics and the mass media have kept at bay any serious discussion or action to counter the climate crisis that fossil-fuel driven extractive capital has created. The corporate state propels us toward the sixth great extinction while its elites grab their short-term profits.

Illusions of Separation and Dominion

All this is sustained by massive social illusions about the nature of human society and the nature of nature itself, all promoted by the power elites’ propaganda. The social illusion that the capitalism we have is what we need is promoted and sustained by the financial, corporate, and military elites who benefit economically from its unrestrained damage to people and planet. The problem, of course, is that almost all political discussion, deeply grounded in illusions and propaganda imposed through the media they control, flatly excludes reality. The power of mass media control is the power to ignore.

It is not only interesting but very important to note that the illusions fostered by the power elite about society are the same illusions promoted about nature. The perspective is atomistic and reductionist. But contrary to the pseudo-science of economics, the natural world is the world in which we live, and it is a complex living system, not a simple mechanistic causal chain. It and we are complex interdependent living systems. Despite any illusions we hold about our dominion over nature, we are inescapably part of it.

To think clearly about humanity and its place among the other complex living systems on earth, we must purge the old ideological schism over capitalism vs. socialism. (It is all internal to society anyway and the ideological debate ignores nature while assuming human domination over the earth.) Roosevelt tried to save the capitalism of the early twentieth century by modifying its destructive tendencies – it worked for awhile. Later, communism collapsed from its own dead weight. Neither was much cognizant of the natural world – that would have been anti-industrial and thereby unacceptable.

Despite the limitations imposed on him, Roosevelt did a pretty good job – the “New Deal” reforms kept U.S. Capitalism alive for almost a century. The former extreme boom-bust cycle was dampened by the regulations he imposed on banking – separating speculative investment banking from commercial depository banking. The result was “the business cycle” where relatively mild recessions between periods of growth replaced the severe crashes previously experienced. Social Security, unemployment insurance, and later programs dampened socioeconomic instabilities. But in the post Reagan-Thatcher era of deregulation, we have regressed to extreme risk of financial collapse and social chaos resulting from the abolition of those reforms. Our situation is not unlike the past, but amplified by the electronic speed of today’s financial transactions and the much greater size and power of today’s corporations.

If we continue on this path of self-delusion about economic and planetary realities, the next financial collapse will be far more severe and will reverberate throughout the world in the form of social chaos. If we continue with the self-delusions of the extractive predatory capitalism we have, not only will the world economy collapse, but the unmitigated climate disruptions produced by the delusional endless-growth economic system will put the planet over the brink, ultimately – and soon – leading to full-on climate collapse, extreme crop failures, mass starvation and uncontrollable migrations, widespread armed violence, and untold human suffering.

Interdependent Reality

The underlying reality of both human society and living earth systems resides in the fact of interdependence. Some elements of the idea of personal independence and freedom are important and true and lead to cultural creativity in a variety of ways, within a context of inherent societal and ecological interdependence.

Yet the ideology of American independence, unfettered capital markets, and “free” trade, as promoted by the power elites, is rapidly becoming deadly in its consequences for both human society and large numbers of living species, as well as the living earth systems of which we are a part.

Ecological Reality and Political Illusions

So, Bernie Sanders is a “democratic socialist,” or, in the European term, a “social democrat.” From the perspective of the ideology of the U.S. power elites, that is a political horror of horrors. That is why the mass media try to ignore Sanders. Besides, the unreality of “The Donald” is so “entertaining.” After all, the social programs Bernie Sanders advocates would disrupt their near total power over the economy. But from the perspective of a desire to secure the future against the ravages of unfettered predatory extractive capital hell-bent to destroy the living earth in favor of the next quarterly report, Bernie is a rather mild-mannered moderate. He would institute many of the same sorts of programs that Roosevelt did to save capitalism from itself. But today there is a big difference.

It is no longer a matter of fixing our socially and environmentally dysfunctional version of capitalism; now it is a matter of replacing the disaster capitalism we have with a new ecological economy never before seen on the planet, except in miniature among indigenous peoples. We must create local indigenous economies at planetary scale. That is a daunting but necessary task that must be accomplished in very short order if we are to avoid much more severe social and ecological chaos in the wake of economic collapse as well as climate collapse. The system we have is destabilizing all sorts of natural systems that have been in relative balance for a very long time. Oscillations in disturbed systems tend to amplify toward system collapse. This is why tipping points are so important. The economic and climate oscillations are accelerating.

It is not just poverty, racism, unemployment, or the extreme accumulation of phantom wealth in the delusional financial markets that are at stake – as if they were not enough. Now it is a matter of social and ecological survival. The living interdependence of multiple species in multiple ecologies around the world is being disrupted on a massive scale. We are only partly aware of the complex ways humans depend on these even more complex ecological inter-relationships. Many such interdependencies are being exposed as we careen toward mass extinction. Scientists know this; politicians are not listening. We are all at extreme risk. Only massive cooperation among people, neither corporate competition nor the corporate state, will make the difference between a forming a new ecological society and our present path to an accelerated extinction of many more species, including our own.

How to Create a Corporate State and Destroy the Planet

Ever wonder why President Obama insists that the “Trans-Pacific Partnership” (TPP) be “fast-tracked” through Congress? Why does its content have to be kept secret from the Congress and the American people? Yes, members of Congress may view its drafts in a secure room but are not allowed to even take notes away with them. Under “Fast Track,” a bill cannot be debated or amended; it must simply be voted “up or down.” That in itself certainly lacks transparency and severely constrains the democratic process. If something is kept secret from me, I have to assume that it contains something I would object to if I knew what it was – probably something that would hurt me too. Secrecy has been a primary tool of tyranny across cultures and time. In the hands of powerful elites, secrecy is almost always a means to increase or maintain unjustified power. For a further motivational clue in this case, you could look at the composition of the group negotiating the treaty. This TPP thing is being written by corporate lobbyists and lawyers, with token representatives of labor or environmental groups. What gives? Okay, so it is pretty obvious that this so-called “free trade” agreement is being written in the interests of trans-national corporations that dominate international trade. Not surprising, of course. But this one reaches far beyond the administration merely pandering to the political interests of corporations. It is a question of national sovereignty – whether nations or corporations will have sovereignty over fundamental elements of political authority. NAFTA was only the beginning. We have no direct knowledge other than those initial drafts of chapters obtained and published by WikiLeaks. They alone are scary enough. Apparently, provisions in its 29 chapters allow mega-corporations to override national, state, and local laws on environment, worker safety, and even carbon emissions policies. It is easy for the uninformed to read paranoia into a claim that the corporations are taking control of the federal (and state) governments. But that is what has happened with other “trade agreements” that allow corporations to sue governments in corporate controlled tribunals for non-compliance, NAFTA being a prime example. Under such provisions, corporations can override national sovereignty; as a result, we are increasingly living in a “corporate state.” Corporate Profit Trumps Mitigating Climate Chaos In the case of the TPP, someone is chasing us whether we are paranoid or not. “TPP elevates corporations and corporate profits to and above the level of governments. TPP lets corporations sue governments for laws and regulations that cause them to be less profitable.”[1] Once governments and their laws are subordinated to international corporate tribunals, well, it is “game over” for national sovereignty over the things that matter to real people. Any national or local effort to uphold standards of environmental protection, labor safety, or efforts to constrain carbon emissions to avoid climate catastrophe will be denied by international corporate tribunals. Naomi Kline describes an obvious case of corporate interests subordinating local economic and planetary climate mitigation needs. An attempted project to bring an advanced Italian solar panel manufacturing operation to Ontario, Canada, would have boosted local employment. It also would have contributed to the necessary conversion of regional energy production to renewable energy. But under the threat of World Trade Organization rules that treat any preference for local manufacturing as a violation of “free trade,” the company withdrew its plans.[2] Ironically, the net gain in carbon emissions reduction by adopting renewable energy production can be wiped out by the carbon emissions of international shipping. For effective carbon emissions reduction, manufacturing of renewable energy technologies must occur near their location where they are to be installed. Indeed, for effective emissions control international trade must itself be curtailed. Consider, for example, almost half of China’s carbon emissions come from manufacture for export. In addition, all those giant container ships emit large quantities of carbon. Local and regional production of a wide variety of products must replace mega-corporate driven remote manufacture for international trade, if carbon emissions reduction is to reach meaningful levels to constrain global warming to livable limits. In this and many other ways, corporate “free trade” ideology expressed in international trade laws is trumping attempts to mitigate climate disruption. It is thereby threatening to wreak havoc on human populations around the world. The ideologies of unrestricted growth and profligate wasteful consumerism support this destructive economic model. The legal elevation of corporate profits over public policy directly increases the power of corporations have been building over governments and their people. It thereby establishes legal corporate sovereignty over all other authority in the world and prevents necessary social action to address the approaching climate catastrophe. Who benefits? Only the international mega-corporations do, at the expense of everyone. A Partially Exposed Coup d’état No wonder they want to keep it all a big secret until the TPP is passed by Congress. No wonder they want to restrict Congress from debating the pros and cons of the content of the bill and prohibit amendments. A coup d’état to overthrow a government is usually exercised in secret, without negotiation. And no wonder. The TPP usurps the public interest in key areas that affect the lives of everyone: environmental protections, labor practices and safety standards, intellectual property, and more broadly, the economic ‘rules of the game.’ We tend to think of revolutions in terms of rebellious generals and their troops storming the presidential palace in a “banana republic.” But today, an unprecedented corporate revolution is occurring in the form of international laws that give the mega-corporations sovereignty over everything. The secrecy of these negotiations includes the propaganda smokescreen that implies that it is just about “leveling the playing field” of trade rules. But only a few of the twenty nine chapters are about trade. What has been leaked so far, thanks to Wikileaks, indicates something far more odious. Much of the document deals with ways to assure corporate sovereignty over national interests by sanctifying profits above the interests of people – the public interest. In fact, it is about how the mega-corporations will rule both governments and the people around the world. The irony is that the secretly negotiated TPP deal by and for the corporations is intended to pass congress without discussion or public knowledge, masquerading as an economic benefit for the nation. And it is to be voted on to circumvent the already seriously damaged democratic process. It is an international treaty passed by congress and the governments of other major trading nations. Any attempt to change it would have to be approved by all the nations that signed it. Get ready to live under a corporate-police state, or join the effort to stop it now. Otherwise, game over for saving even a shred of democracy. __________ 1 Dave Johnson, “Stop Calling the TPP a Trade Agreement – It isn’t.” Reader Supported News. http://readersupportednews.org/opinion2/277-75/30426-stop-calling-the-tpp-a-trade-agreement-it-isnt. 2 Naomi Klein, This Changes Everything: Capitalism vs. The Climate. New York: Simon & Schuster, 2014. Chapter 2.