Re: [A-List] accumulation/financialisation - a query

["Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>]

Jurriaan Bendien wrote:

> And he went into the temple, and began to cast out them that sold
> therein, and them that bought; Saying unto them, It is written, My
> house is the house of prayer: but ye have made it a den of thieves.
> (Luke 19:45 and 19:46).

Excerpts from:
THE COMING TRADE WAR, Part 4
Scarcity economics and overcapacity
By Henry C K Liu

Neo-classical economics developed at a time when wealth was limited to
what a relatively primitive industrial society could produce, and demand
for goods was always greater than their  supply. It is the economics of
scarcity rooted in the medieval rule of parsimony, or principle of
economy, frequently used by Franciscan monk William of Ockham (circa
1285-1349), which came to be known as Ockham's Razor. Or to put it
another way, scarcity, leading to the need for economy, is the
determinant behind economics theory. The Franciscans, with their
devotion to the poor and opposition to an opulent church, were the
modern-day communists of the medieval Church.

Marxism is rooted in German philosophy. Dialectic materialism as
expanded by Karl Marx (1818-83) is based on Hegelian dialectics, a term
for the natural tendency of the mind to proceed by creating contrasting
opposites. A thesis inevitably produces an antithesis, which would
equally inevitably be followed by a reconciliation and fusion into a
synthesis, which in turn becomes the new thesis, to be opposed by a new
antithesis. It is a cyclical concept of life discovered by the Taoists
more than two millennia before Georg Wilhelm Friedrich Hegel
(1770-1831), albeit that the Taoists emphasize fundamental constancy
while Hegel emphasizes conceptual change. The more things change, the
more they stay the same, according to Taoists.

Hegelian dialectics introduced philosophy into the Western study of
history as a view of human social evolution through time. Social reality
is a process developing through time, a consequential unfolding of
connected events, necessary, logical and deterministic. By materialism,
Marx asserts that the basic element in social organization is economic.
Rejecting Hegelian idealism of ideas forming society, Marx asserts that
ideas are formed by the economic institutions of society, at the base of
which are the "relations of production" which determine the shapes of
religion, politics, philosophy, law and morality.

Yet Hegelian ideals are the stuff of revolution, the speeding up by tour
de force the natural evolution of dialectics. Communism is a
transitional stage rooted still in the neo-classical economics of
scarcity. It is through communism that society will eventually evolve
into socialism based on an economics of plentitude. Yet communists are
not evolutionists; they are revolutionaries who want to leapfrog the
evolutionary process. They are in essence idealists. Thus communists are
Marxist in the theory and Hegelian in practice.

Christianity is not known for its tolerance. It is a religion of "tough
love". Niccolo Machiavelli (1469-1527) recounted the pious cruelty of
Christianity. David Hume (1711-76) exposed the intolerance of Christians
in comparison with the Pagans. Friedrich Wilhelm Nietzsche (1844-1900)
attacked Christian love as a fraudulent disguise for virulent hatred for
all that was humanly vigorous, beautiful and noble. The history of
Christianity is replete with militant religious intolerance.

The history of Christianity is closely linked to the evolution of
capitalism, notwithstanding that Jesus overturned the tables of the
money lenders and expelled them from the Temple because those
responsible for maintaining the holiness of the holy were unable to
separate service to God from service to Mammon, the demon of love of
money. Christianity subscribes to the notion of collective genetic
guilt, as capsulated in the concept of original sin. By that concept,
all Germans are perpetually guilty of the sins their ancestors committed
in the Holocaust, all North Americans are perpetually guilty of the sins
committed by their ancestors on native Americans and all whites are
perpetually guilty of the sins committed against blacks and other
colored peoples. The Bible records that Abraham confronted God's
decision of punitive destruction for Sodom and Gomorrah with the demands
of justice, urging him to consider the innocent along with the wicked.
God's decision on Sodom and Gomorrah was an act of indiscriminate
religious terrorism. It set a morally questionable precedent for state
terrorism such as the Blitz of London, the bombing of Dresden, the two
atomic bombs dropped on Japan, the bombings of Vietnam and modern-day
insurgent terrorism.

While critical of clerical corruption, Martin Luther mounted an attack
on what he regarded as a structural flaw in Christian theology, by
declaring the right of every individual to be his own priest through
revelation from the Bible, in the name of the spiritual equality of all
believers. The Reformation was misnamed. Luther was not interested in
saving a corrupt Church through reform; he aimed to save Christianity by
dismantling orthodox theology. But the Bible, the source of Luther's
religious revolution, is a holy book with many dark sides.

Monotheism, scarcity and imperialism
Biblical faith itself has been a stunning moral source for the critique
of biblically based religious doctrine. The monotheism myth, the belief
in the one true God, creator of heaven and Earth, constitutes a system
in which identity depends on the rejection of multiculturalism and the
subjugation of personal free will and independence. Some modern writers
have placed monotheism at the root of evil in the Western world.
Monotheism's vehement legacy is the implied consequence of the law of
scarcity, which is built upon a logic that rules the scarcity paradigm
that proclaims that there will never be enough of the blessings and good
things necessary for prosperity, such as land, resources, even food and
water, let alone oil, to go around for all to enjoy freely.

But the law of scarcity, like monotheism, is a baseless myth, because it
does not reflect the visible truth about the real world. The scarcity
myth has come to be regarded as a law in large measure through the
enormous influence that the Bible has exerted on the making of the
Western mind, and thus the Western fixation on material accumulation.
There is ample evidence that scarcity is the result of man-made
maldistribution rather than a natural state.

Buddhism views the world as a place of plenty, thus Buddhists have no
desire or need to accumulate material things. For Buddhists, the only
accumulation worthy of effort is good deeds. Joy belongs to the giver.
The law of scarcity does not derive its all-inclusive power and its
pervasive influence from facts about the real world or communal human
experiences. Its authority flows from faulty metaphysical principles and
misguided Christian beliefs about the nature of God. Scarcity is encoded
in the Bible as a principle of oneness (one land, one people, one
nation) and in monotheistic thinking (one deity). It becomes a demand of
exclusive allegiance that threatens with violence of exclusion.
Imperialism and globalization are direct geopolitical outcomes of the
Christian quest for the holy grail of oneness.

While the dark side of the Bible sanctions the formation of a collective
identity that is singular, static and exclusionary, it also provides
hopeful glimpses of an identity that is multiple and mobile, inclusive
and evolving, governed by the good "principle of plentitude" and not the
evil law of scarcity. The principle of plentitude affirms that there are
enough of the good things to go around, and proclaims the ethical
imperative of generosity, and envisages a world of ceaseless giving.
Neo-classical economics dismisses the principle of plentitude as being
outside of the concerns of economics. Charity is a voluntarism in the
province of morality, not economics. When US President George W Bush
promotes voluntarism as a substitute for public welfare programs, he is
advocating the abdication of government responsibilities, declaring that
compassion is a personal and not a state function, while he injects
self-righteous morality in US foreign policy. Because Americans are a
compassionate people, they are expected to exempt their government from
being compassionate also. As for the all-volunteer army, there is
nothing voluntary about it; it is all economic coercion.

Economic science needs to repudiate scarcity and to rehabilitate
plentitude. Today the monotheistic notion of market fundamentalism is
given expression through the doctrine of free trade, with an unbalanced
preoccupation with human political rights rather than human economic
rights and welfare, and the flawed assumption that political equality
can be achieved without economic equality, all of which are distorted
moral principles that are so taken for granted in the neo-liberal West
that it tends to view as a symptom of deformed mentality questions
regarding the value system that underlies such warped morality.
Neo-liberals have become decadently self-satisfied with unquestioned
slogans of the indisputable economic benefits of political freedom and
equality. They have become happily trapped in self-delusions that deny
glaring realities that reflect neither freedom nor equality, nor
economic benefits to the majority. They find solace in blaming the
undeniably obscene outcome on the bad decisions by market participants
rather than the structural fault of the market system. Cathedrals, the
greatest achievement in medieval Europe, were not built by market
forces. Postmodernists are even worse; they are notoriously dismissive
of the inquiring search for historical foundations to seek
self-celebration in devising new meanings for well-understood words to
justify contemporary anomalies and timeless truth.

The importance of the idea that every individual is created in the image
of God is dramatically revealed in the concept of the Garden of Eden.
The story of the expulsion by God of the first man and woman from the
plentiful Garden of Eden is viewed as a fall from an initial blessed
state of wholeness, peace, and perfection, a descent from a regime of
plentitude to one governed by the law of scarcity. The law of scarcity
stands for a regressive and destructive world view. Scarcity, the
assumption that someone can only prosper when someone else does not,
proliferates fratricide and genocide. Scarcity is an idea that the
writers of the Bible invented and sadistically inscribed in the mind of
the faithful, a law manufactured by monotheism out of necessities in a
primitive society in which insufficiency was the norm, and the desire to
stand apart and excel was necessary for survival of the species and must
not be viewed as something shameful. To have more than others in a world
of scarcity is regarded as a sign of heroic accomplishment. Selfish love
is not conceptually inconsistent, and not even undesirable, for it is a
permissive basis for drawing sharp boundaries between the beloved and
the rest of the world.

The ideal of plentitude
Although generally overwhelmed in the Bible by the law of scarcity,
God's making man in his image exemplifies the ideal of plentitude. The
law of plentitude means the rejection of one God in favor of many gods;
and it requires not merely diminishing the distance between the divine
and the human but heroically eliminating it. As reality shows man in a
great variety, the image of God must also be multidimensional.

The biblical story of the Tower of Babel is a mythical tale of God
crushing man's godly ambitions and punishing him with divisiveness. The
consequence of unsuppressed pride and rebelliousness to God on the part
of the people is bondage to human overlords. And thus the division of
people into peoples of many different tongues is God's strategy for
keeping humans human in order to preserve deity. Striving to preserve
unity and aspiring to godliness, the people resolved to build a city,
construct a tower toward God and make for themselves a name. The name of
the city where men sought to reach God was Babel, a word that comes from
a root meaning "confusion" and which contains a Hebrew word for "heart".
The story of Babel thus prizes not monumental structures conceived by
human minds and produced by human hands, but the human heart, which
brings man closer to God. A single world nation united by a universal
language promotes a false sense of human powers, of what human beings
can accomplish by taking matters into their own hands. Monotheism abhors
pluralism, but pluralism is a gift that God bestows on humankind to make
us more human. Like Adam and Eve, the builders of Babel were cast out of
a peaceful, easy life of plenty and fell to a realm of the scarcity for
challenging God. Scarcity is a device to keep humans ungodly.

Much of neo-classical economics has to do with improving efficiency to
increase production to come closer to eliminating undefeatable scarcity.
The objective is always to increase supply through new investment for
greater productivity and efficiency. Yet for neo-classical economics,
the quest for the elimination of scarcity is like trying to catch the
hood ornament of a moving car from the driver's seat, with the goal
remaining unreachable at any speed, or any amount of investment. But the
world economy now, through technological progress and deregulated
markets, has entered a stage of global overcapacity in which
neo-classical economics of scarcity has become obsolete and the
management of aggregate demand is the necessary solution. Material
overcapacity is a result of mental undercapacity.

A new economics of plentitude
According to the rules of neo-classical economics, over-consumption is a
path to financial ruin. But overcapacity is also a path to financial
ruin in a market economy.

Capacity represents sunken investment that requires continuous positive
returns. Under-utilization of capacity translates directly into
inefficiency, a deadly sin in economics because idle plants are
non-performing assets that result in financial losses. Overcapacity is
not merely a temporary under-utilization of capacity; it is the systemic
inability to achieve full or at least optimum utilization. Yet
overcapacity is a structural condition in the world of scarcity
economics, because excess capacity is the condition needed to prevent
the emergence of shortages, which is another name for scarcity. But
scarcity is needed to maintain economic value as expressed in market
prices. Thus the market model of neo-classical economics must constantly
be plagued with the curse of scarcity while simultaneously preventing
scarcity with the more fatal disease of overcapacity. This contradiction
is the internal paradox of neo-classical economics that traps the market
economy in an arrangement of never being able to enjoy the full capacity
of its productivity.

The insecurity generated by looming scarcity drives savings, which as
investment add to overcapacity. And savings reduce current consumption,
meaning lowering demand, which adds to overcapacity. The challenge of a
market economy in an age of structural overcapacity then shifts from how
to produce more to how to sell more. Marketing becomes the critical task
of management. The answer for decades has been to use planned
obsolescence to ensure recurring demand. Another answer was to lower
prices to broaden the market. Advertising stimulates the desire for
goods, but only rising income increases demand for goods.

A more rational solution than planned obsolescence would be to end its
inherent waste and to manage real demand to sustain full utilization of
capacity to produce lasting, quality products. This means consumers need
to have sufficient income to buy quality goods and services produced by
the market economy. But neo-classical monetary economics has created a
financial scheme in which the people producing the goods cannot afford
to buy them unless profit is greatly reduced if not eliminated, and the
people receiving the profit from goods production cannot consume more of
these goods. The reservoir of productivity is overflowing while the
defective plumbing of neo-classical monetary economics continues to
block the delivery of goods to a public deliberately kept thirsty for
more goods. At times, needed aggregate demand is created by
irresponsible monetary policy, either with the depreciation of money,
which is the monetary effect of inflation, or with easy credit, leading
to debt bubbles that can cause severe economic damage at times of
reckoning. It is time to shift from the economics of scarcity to a new
economics based on the concept of plentitude to cure the modern-day
plague of scarcity in a land of overcapacity.

Mercantilism and fiat money
Unless products are sold for gold to Martians, or at least to foreigners
or colonial subjects in a mercantilist trade regime, lowering prices
requires a corresponding lowering of wages, which in turn shrinks
effective demand further. Mercantilism is not merely a quest by nations
for gold, but a quest for national purchasing power in the international
market as expressed by the relatively constant monetary value of gold.
In a world of fiat currencies not backed by gold, mercantilism cannot
exist by definition. Any nation that habitually incurs trade deficits
will find its fiat currency not accepted by its trading partners. Any
nation that incurs export trade surpluses denominated in a foreign fiat
currency is engaged in reverse mercantilism, ie, shipping real wealth
overseas for paper.

Thus it is outrageously preposterous for the United States, a country of
recurring trade deficits denominated in fiat dollars, to accuse its
exporting trade-surplus partners of practicing mercantilism when the US
trade deficit is in essence an undisguised abuse of unearned privilege
of inexhaustible national purchasing power in the form of dollar
hegemony - an international monetary anomaly that permits the US to
print paper dollars in exchange for real products from its trading
partners exporting to the US market. Dollar hegemony is based on oil
being denominated in dollars in the world market.

http://www.atimes.com/atimes/Global_Economy/GG28Dj01.html