Class struggles.

The 19^th century saw the abolition of the slave trade and, progressively, of slavery and serfdom. It also saw the rapid development of machines and the rise of the industrial entrepreneur. These two processes changed the nature of class struggles. Previously labour had been in bondage, and the opposition had been between the land owning aristocracy and the burghal artisans and merchants. Quite suddenly labour was freed and mechanisation was replacing craftsmanship. The opposition was no longer between the rural raw materials and their urban transformations, it was between the coalition of property and the propertyless, between capital and labour. At the start, the struggle was one sided, but labour organised and slowly bettered its condition. Soon seen as a threat to property, these labour movements were repressed. Free labour fought back, and the violence escalated as the military backed the police. By the turn of the century the working class was classified as dangerous and was treated accordingly. So organisations went underground and armed themselves. Robbery and murder became political acts. Then a first war, followed by a second wider one, put everyone in uniform.

Society had become bipolar, property and its mercenaries were face to face with labour, without intermediaries. It was an accident of history, a consequence of the new forms of production. Armies, however, had kept the three-rank system. Officers were born gentlemen, but corporals and sergeants were promoted on merit. Armies still had a social ladder and a middle-rank between command and execution. They had avoided the direct confrontation of high and low, with the buffers of NCOs. The total wars that engulfed first Europe then most of the Northern hemisphere had a levelling effect. Valour and virtue took precedence over wealth and lineage. Total war concentrated power, both political and economic, in the hands of governments and of their officials. After 1945 the fighting and, to a lesser degree, the production of weapons dropped in intensity. Armies demobilised but a new middleclass had been created by the turmoil. Nurses, teachers, liberal professions, engineers, government employees, the armed and security forces had run the country in war and would continue in “peace”. For the next two decades middle became the dominant ideology.

During the 1960s the middle was attacked on both sides. Civil rights and national liberation fronts (women and gays) contested the white man’s rule, and voices were raised against leviathan governments. Slowly pressured by developing nations and state privatisations, the middle-class has lost its dominant role, and its model of social mobility no longer applies. The Dream has become a déclassé nightmare. Society is sliding back to where it was a hundred years ago. But this time the face off between property and propertyless is on a global scale. Another middleclass revival through mass conscription and a war of nations is unimaginable, because of technology and America’s preponderant military power. So what will the growing violence of class struggles lead to this time? Is there some other way to reconstruct the buffer zone between capital and labour, and get the trickle of social mobility going again, or is this the last showdown, the final struggle, the synthesis of a contradiction, with liberty, equality, fraternity, and the pursuit of happiness for all humanity?

Property is possession, control and power. It owns and decides the production of goods, services and ideas, and has military might to protect it. It can choose, like Septimius Severus, to enrich the army and ignore the rest. It can, like Constantine the Great, adopt a popular movement, empty it of its social content, and use it as a totalitarian ideology. (Both have been imitated countless times). In the past, property has been destroyed and has changed hands. But after wars, conquest and financial collapses it has always rebuilt its dominion. A century and a half ago, a few dreamers claimed that property was the inheritance of labour, arguing that labour made property productive and that this was the basis of value. It seems that their logic is shared by an ever growing world community, who have nothing to lose but their debts.

Cause and effect.

What could have motivated the French and British governments to obtain a Security Council vote that allowed them to use air-power against Gaddafi’s armed forces? The humanitarian aspect was the strongest argument put forward, and there was the Kosovar precedent. But Kosovo was a breakaway region of Serbia with an ethnic identity. Whereas the division of Libya was never envisaged, though ethnicity and regional oppositions were preponderant in the conflict. The overthrow of a tyrant and regime change might have been justified morally, but both were strongly denied till the end, as they were not included in the Security Council resolution. Libyan oil and gas probably played a role, though the uncertain policies of future Libyan governments and the actual consensus on keeping production down and prices up should have argued against intervention, as an embargo would have sufficed. Attacking the Libyan army with an important deployment of air power gave Cameron and Sarkosy the political statures of Commanders in Chief. It was also the opportunity to show off the effectiveness of the Tornado, the Rafale and other high-tech killing machines, all of which are commercial disasters.

Now that Gaddafi is dead and the National Revolutionary Council has taken executive control of Libya, what is the balance of all these motives? Aircraft sales have not improved, and yesterday’s comrades in arms are at loggerheads over Europe. As intensive bombing, both aerial and terrestrial, have badly damaged Libyan infrastructures, Libya will not be influencing the oil and gas markets for a while. A new government is in place, but the divisions remain, between Tripoli and Benghazi, between Arabophones and Berberophones, between the coast and the vast interior. Can these different factions unite to form a nation, and why should they? Why should the arbitrary lines drawn on maps by European diplomats decide what nations are for all eternity? Why should colonial borders continue to divide up humanity as though there was no history, obliging existing cultures and languages to disappear or amalgamate inside imposed geographical limits? Whatever may be, the only uniting factor in Libya to-day is Sunni Islam, which is practiced by almost everyone. Given its borders, Libya’s existence as a nation has been enforced by the violence of an autocrat, but it might also be possible to reach a religious consensus. Libyans may follow the path taken by Tunisia and Egypt. If they do, their joint momentum will inevitably push East and West. So, whatever their intentions, Cameron and Sarkosy will have consolidated a movement that has the potential to spread from the Atlantic to the Pacific.

The Moslem world is beginning to experiment alternatives to absolute monarchy and autocracy, just as the Christian world did four centuries ago. Then as now, this quest has a strong element of religious fundamentalism. Confronting absolutism needs strong convictions, and faith builds convictions more easily than reason, so that the fundamentalist element may be unavoidable. But European precedents (the Dutch and the English, recently the Poles) show that religious fervour is quickly secularised by the realities of government. However, the Arab Spring could be the premise of something much bigger, such as East and West coming together to produce something new. The decline of Western imperialism opens alternative paths, and syncretism is one of them.

Démagogie.

Sept mois après sa parution, je viens de lire la pièce en quatre actes de Frédéric Lordon, ‘’D’un retournement l’autre.’’ La forme vaut ce qu’elle vaut – je n’ai pas la culture qui rend sensible aux alexandrins – mais le fond manque quelques éléments essentiels. La pièce met en scène la finance et la politique comme si elles seules jouaient un rôle dans le drame. Comme si les copains du Fouquet’s n’existaient plus. Comme si le foncier et l’industrie se manifestaient dans une autre dimension. Pourtant, et Frédéric Lordon ne peut pas l’ignorer, le système qui nous régit s’est institué en quatre étapes qui sont devenues indissociables. Cela a commencé avec la constitution d’un État Central légitimé par la force des armes. Puis il y a eu la propriété privée du foncier, le domaine royal et les autres. Ensuite est venue la propriété privée de l’argent, celle de l’État monnayeur et, progressivement, celle des marchands-banquiers créditeurs. Enfin, surtout depuis la révolution industrielle, il y a la propriété privée des outils de production. L'État est devenu la chose privée d’une aristocratie, et le reste en a découlé. Le président et le banquier jouent dans un quatuor avec le propriétaire foncier/immobilier et l’entrepreneur, et tous ont bénéficié de l’argent-crédit distribué. Le banquier n’a fait qu’alimenter les circuits en liquidités, au profit de tous les propriétaires qui ont vu leurs patrimoines augmenter à un rythme rarement égalé. Tous ces emprunts toxiques ont payé des loyers, des intérêts, des dividendes et des impôts. Ils ont pourvu aux revenus du capital et de l’État. Dès que le crédit accordé a dépassé le cercle des débiteurs solvables, le processus était condamné. Mais, le crédit étant devenu le carburant de la croissance consommatrice, il était impossible d’interrompre son flot. La seule alternative était (et reste) de faire comme Clisthène à Athènes, une redistribution des revenus et (comment faire autrement?) de la propriété. Mais seul un démagogue soutenu par une large majorité populaire peut envisager quelque chose d’aussi radicale.

Fin d'empire.

Voila un siècle et demi que le monde tremble à l’idée d’une invraisemblable dictature prolétarienne. Tout comme l’Antiquité à l’idée d’un soulèvement des esclaves. Et, de ce fait, la dictature bourgeoise a pu perdurer, et son idéologie tyrannique s’est propagée jusqu’aux régions les plus reculées de la planète. Il n’y a pas d’alternative. Cette dictature se présente comme libérale, humaniste, républicaine et, à petite dose, démocrate. Et, quand tout va bien, sa pratique s’approche de son discours. Tant que l’argent coule à flots et que les richesses abondent, il y a un ‘‘ruissellement’’ vers les plus pauvres et de l’ascension sociale pour les classes intermédiaires. Mais, lorsque la machine à fric s’emballe puis se bloque, ce qui lui arrive périodiquement et régulièrement compte tenu de ses mécanismes, tout cela s’arrête. Alors la dictature bourgeoise dévoile son autre visage. Celui d’une aristocratie qui se cramponne à sa propriété, ses privilèges et son pouvoir, et qui est prête à mettre la Terre à feu et à sang pour que rien ne change.

La guerre déclarée en 2001 est différente des précédentes, puisqu’une seule nation possède une puissance de feu supérieure à toutes les autres nations réunies. La guerre ne peut pas se faire entre nations, elle est donc idéologique. Il n’est plus question de bombarder des nations sans discrimination. Il s’agit d’en éradiquer les éléments qui s’opposent à la tyrannie bourgeoise, et d’assurer que son idéologie domine. Les guerres du nouveau millénaire sont impériales. Dans un système soumis à une seule idéologie (sans alternative), toute déviance est hérétique et criminelle, ou pathologique. Pourtant la rébellion était archaïque et rétrograde. Elle prônait un état antérieur lointain, le califat, et des règles sociales d’un autre temps. Cela semblait être un résidu du passé qui ne tarderait pas à disparaître, un anachronisme insignifiant, mais cette apparence était trompeuse. Le mouvement s’est propagé, a pris de l’ampleur et a attaqué artisanalement avec des cutters le cœur de l’empire. Et, malgré dix ans de guerre, il continu de s’étendre et de se diversifier. Pour essayer de comprendre ce phénomène il faut remonter un quart de siècle en arrière (puis presque deux mille ans).

En 1986, l’équilibre de la terreur qui établissait les règles de la guerre froide s’effritait du côté soviétique. La guerre des étoiles de l’administration Reagan (1980-1988) avait beaucoup dépensé et creusé l’écart entre les deux grandes puissances. Et vingt années de Brejnévisme avaient interdit les échanges et accentué les retards technologiques et sociaux. Lorsque le nouveau secrétaire général Gorbatchev a annoncé la restructuration (perestroïka) et la transparence (glasnost) au XXVIIème congrès (mars ’86), il était trop tard. Le régime soviétique chancelait, mais ses tentatives de rétablissement se sont répercutées dans toute sa zone d’influence. Partout, les partis uniques appuyés sur l’armée et la police, voyant le vent tourner, s’essayaient à l’ouverture politique vers le multipartisme et les élections libres, comme le grand frère de Moscou. Enfin presque partout, l’Irak, la Syrie, la Libye, le Tunisie, l’Egypte n’avaient pas réagi, et l’Algérie s’est rétractée après les élections qui ont plébiscité le Front Islamique du Salut en 1991, l’année de l’effondrement de l’URSS.

Pendant plus de quarante ans, deux systèmes de production s’étaient affrontés dans tous les domaines, sauf la guerre totale. D’une part, un control centralisé de toute l’économie et des plans quinquennaux, de l’autre, la libre entreprise, la privatisation des profits et la socialisation des pertes. Deux avenirs s’offraient à l’humanité, avec quelques nations ‘‘non-alignées’’ qui avaient choisi beaucoup de control et une dosette de liberté. Puis, dans un lapse de temps très court, l’un des deux modèles s’est écroulé sous le poids de ses contradictions. Le futur s’est soudainement réduit à une seule perspective. Les années ’90 ont été la décennie américaine, un pouvoir sans partage et que d’occasions ratées. Champagne, caviar, cocaïne et les gâteries de Monika ont occupé les dernières années du millénaire, et occasionné la gueule de bois de 2001. Mais la grande rigolade hédoniste n’était pas au gout de tout le monde, ni à la portée de toutes les bourses. Et la seule forme d’opposition qui subsistait était une morale religieuse archaïque. Le refus de l’omnipotence américaine avait comme seul support la foi en des croyances ancestrales. Pour rejeter un futur sans alternatives, il fallait se réfugier dans le passé, et il se trouve que la religion musulmane, de part sa répartition et son histoire, s’y prêtait le mieux.

En l’an 66, Rome est au sommet de son pouvoir. La puissance de ses armées dépasse celle des autres nations réunies. Néron joue et chante sur les scènes de théâtre, il veut être un artiste. Et, dans un recoin de l’empire, la Judée entre en rébellion. Situé sur le passage terrestre entre l’Afrique et l’Asie, ce petit lopin entre la Méditerranée et le Jourdain a tout subi au cours de son histoire. Et ceux qui y vivent ont une culture et des croyances particulières auxquelles ils sont très attachés. Cette fois-ci, entrainés par la faction la plus radicale, les zélotes, c’est contre le gouvernement du procurateur romain Gessius Florus qu’ils se soulèvent. Malgré ses problèmes de politique intérieure (69 en particulier), Rome aura le dernier mot et, après un long siège, Jérusalem sera rasée en 70. Cet événement provoque l’effroi parmi les communautés juives disséminées dans toutes les villes de l’empire. Mais il confirme les pronostiques de la secte chrétienne et va la sevrer de ses racines judéennes.

La radicalité des zélotes était alimentée par leur foi (Flavius Josephus décrit ceux de Jérusalem comme de la racaille assoiffée de sang, mais à Massada il est moins sûr). La foi absolue qu’il faut pour se sacrifier dans un combat désespéré. Cette foi était celle des martyres chrétiens. Elle est réapparue à Albi avec les cathares, à Münster avec les anabaptistes, et chez les protestants des Flandres et d’Allemagne face à l’Inquisition espagnole. Puis il y a eu un changement de paradigme. Dieu est mort de solitude et d’ennui, et son paradis est devenu terrestre. L’au-delà dimensionnel est devenu temporel, et le chœur céleste s’est transformé en lendemains qui chantent. Ceux qui se sacrifiaient le faisaient pour le bonheur des générations futures, et non plus pour leur propre salut.

Conspiracy/Conspiration.

Shale oil is expensive to extract, and would be much more so if the environment was respected. And, to a lesser degree, the same goes for shale gas.

In Iran and Iraq, the gas comes up by itself and the oil just needs to be pumped. Both countries could export large quantities of both products at very low prices. How convenient it is for the shale extractors that war and embargo have stopped them from doing so! And for the whole industry, whose production costs are rising everywhere.

Le pétrole de schiste est cher à extraire, et le serait beaucoup plus si l’environnement était respecté. Et, à un moindre degré, il en va de même pour le gaz de schiste.

En Iran et en Irak, le gaz remonte de lui-même et il suffit de pomper le pétrole. Les deux pays pourraient exporter de grandes quantités des deux produits à très bas prix. Comme il est commode pour les extracteurs de schiste que la guerre et l’embargo les ont empêchés de le faire ! Ainsi que pour toute la filière, dont les couts de production sont en hausse partout.

Demos & res publica.

Ever since they urbanised and developed, human societies have been subjected to tyranny, to the right of might, to weapons in the hands of a few. The alternative that occasionally manifests itself is the right of law, a set of rules that applies to all, rich and poor, weak and strong. For this to happen, oral traditions are not sufficient. The process needs writing and, more specifically, the wide-spread literacy that occurs when the spoken idiom is written using a phonetic alphabet. It took place in Babylon (Hammurabi’s code, 1700BC), in Jerusalem (Josiah’s Deuteronomy, 620BC), in Athens (Draco’s laws, 620BC) and in Rome (the decemviri’s Twelve Tables, 450BC), but not in Memphis. And it began again, after a long Dark Age, thanks to printing and the ample circulation of written idioms. Universal literacy and the rule of law seem to be closely connected. To insure their application, rights, duties and prohibitions need to be written down for all to see.

The passage from memory to written archives completely transforms a society. If writing is controlled by a few, its effect is conservative and will become totalitarian. If reading and writing can be practiced by all, something else happens. Top-down information is stale, forbids initiative and ends up congealed. Whereas the criss-cross of information that occurs when everyone participates nurtures creative thinking in every domain. Information technology can be used to oppress or to liberate. It leads to dogmatic rigidity or to imaginative cacophony. The freedom to read, think and write does not necessarily accompany the means that make them possible. It depends on access and on social equality.

In one of his dialogs, the Meno, Plato has Socrates discuss with a boy who is an illiterate slave. Socrates explains how to construct a square B that has twice the surface of square A. And Plato’s purpose seems to be the demonstration that logic transcends knowledge. Plato recognised the young slave’s humanity but, in a world where slaves were the motors of society, bred and programmed for certain tasks, he never envisaged the end of slavery. This fatalism dominated imaginations until mechanical devices powered by fossil energies began replacing muscle power. Then abolition became possible and even inevitable, as land enclosures throughout Europe provoked mass migrations of very cheap labour.

When the ancients wrote of liberty and equality, they excluded women, children, slaves and foreigners, human groups who might or might not have had rights to accompany their duties. Social inequality originated in a society that resulted from raids, wars and conquests, where the defeated were condemned to bondage or death. Slavery became unnecessary when machines replaced muscle power, and when there was nowhere to escape from “working for the man”. The bond of slavery was replaced by working class wages, and not having to buy the work force allowed for capital investments in machines. The end of bondage (slavery, serfdom) pulled up and pushed down. This was most obvious in the US, where whites, disliking the idea of competing for jobs with emancipated black slaves, installed segregation to keep the two communities apart. The new class divide, which began with the industrial revolution and seems associated to it, is between capital and labour, between proprietors and workers.

Previously, freedom, property and citizenship had been synonymous, but this excluded a large part of society. Then, freedom and citizenship were extended to include almost all of society, while property was set aside as though it no longer belonged to the social sphere. Civil rights and the possibility to influence legislature by speech and ballot were disconnected from the ownership of property, creating the illusion that politics and the distribution of wealth were separate, that government and market were different autonomous entities. Ancient Athenians widened their political base by granting land and citizenship to emancipated slaves and resident foreigners – they also bailed out bankrupt farmers and changed the rules of succession to break up big property ownership – but the barrier of slavery stopped further progress. Ancient Romans did not go that far, as the patricians kept a firm hold on their vast Latium estates right through republic and empire. The plebeian voters were mostly propertyless and their tribunes did not count for much in the city’s government. Political change was only achieved by open rebellion, which led to militarism and empire. The Roman republic had a two party system, a party of wealth and a people’s party that fluctuated between corrupt compromise and civil war. Athenians divided their territory into boroughs (demes) that were part urban, part rural and part maritime. A form of gerrymandering that assembled all social activities into a political unit whose representatives were chosen by lottery. Athenians invented the word demagogue to designate someone who could lead the people, show them the way, and convince the assembly with words, as did the poet Solon and Pericles with his “Olympian” voice. Romans were just as appreciative of eloquence but their orators seldom addressed the forum and, anyway, most conflicts were settled by armed force. The legionary’s loyalty to one of the two parties would finally tip the balance, which made the legions the determinant factor in Roman politics.

Athenians had a citizen’s army, an army of conscripts who would vote on their own conscription (they only hired mercenaries when the toll of war had halved the male population). Their “boroughcracy” included all social categories into each political unit, and their representation by lottery brought everyone into the decision making process. The districts of Rome did not encourage social mingling. Plebeians and patricians kept to their own quarters. Athens had two powerful neighbours, Corinth and Sparta. Governed by tyranny and gerontocracy, they were threatened at home by the Athenian regime of debate and vote, and abroad by enterprising Athenian merchants who controlled the Aegean and the Hellespont. This led to war with intervals of inconclusive peace, to the decline of the three cities and the rise of Macedonia. The Romans were to submit their neighbours in ever widening circles, the Etruscans, the Samnites, the Greeks of Taranto, then Syracuse, Carthage and the world. Athenians enjoyed the theatre, Romans preferred the circus.

When, thanks to the printing-press, the written idiom began circulating again, when spreading literacy and egalitarian aspirations strived towards legislations applicable to all, the Athenian and Roman experiences were the main sources of inspiration. (The Bible had some influence on Protestant nations, but the Deuteronomy is a very peculiar antiquated kind of legislation, and the Gospels’ precepts are not the material constitutions are made of.) With hind sight, the Enlightenment scrutinised both systems, the aristocratic republic with its militarism and the popular democracy with its demagogues. When this theorising was applied to the practicalities of constitutional government, it produced a form of syncretism, a sterile hybrid. The elected demagogues were subjected to the aristocratic rule of a military-industrial complex. The people’s representative was an emperor…with no cloths.

The 19^th and 20^th centuries saw the literate industrial nations fluctuate between centralised production and deregulated laissez-faire, between big and small government. The propertied classes (those who own land, money, tools, patents and copy rights) rely on governments for the security of their interests at home and abroad, and for the education and health of their work force. Security is a priority, as militarism is at the heart of the system. Education and health are more optional, as too much of both threatens the class divide. However, the experience of total war during WW2 modified the balance. Mobilising and uniting the nation for a war brings demagogues to the fore, and gives them unusual powers. Total war nurtures absolute power. To conscript the nation, the leader must convince the people that their divisions no longer exist, that they are as one in the face of adversity, and that he constitutes their unity. This discourse reached its optimal signification with the standardisation of Government Issues.

At the end of the Second World War an egalitarian spirit pervaded the victorious nations. It was the equality of campaigning armies where all ranks have similar living conditions, and of the shared austerity that war imposes on civilians. This sentiment was distracted from matters of representation and wealth distribution by the welfare state. The social hierarchy of power and income mirrored the military, but even the humblest conscript was fed, dressed, housed and kept healthy. His acceptance of discipline was linked to these provisions, and so it would be when he returned to civilian life, bread, circus games and conformity. During the 20^th century, successive hot and cold wars favoured the Roman model of a permanently mobilised nation, with governments redistributing incomes to the needy and leaving property in the hands of a few. A model built around a professional army and predestined to universal empire, eschatology, decline and fall.

Twice, history has preferred a commonwealth held by a few, and has disconnected property and citizenship to avoid any real representation of the many. Twice, the military-industrial complex has prevailed, whereas the Athenian experiment in the distribution of property and political influence has always been interrupted by bellicose neighbours who did not share these egalitarian aspirations. The wars that followed imposed militarization and, whatever the outcome, the Roman model was victorious. The sword is mightier than the pen, when property is concerned. The ideal of equality concerning incomes and decision making persists however, as a humanistic utopia and, occasionally and briefly, as an alternative to the ferocious competition of market economics, party politics and national warmongering. But, beyond an intimate circle, empathy and sharing are not spontaneous sentiments, least of all among the few who have the most. And the moment of generosity – usually a youthful middle-class movement – is short and inconsequential.

Athenian democracy used the redistribution of land to increase the number of its citizens, and to reduce the dominion of the Eupatrid aristocracy, a positive discrimination that laid the bases of meritocracy. The Roman republic did not follow the same course. The Plebeian class remained dependant on patronage and public hand-outs, so that the only social ladder was the army. This led inevitably to military dictatorship and empire. The class divide can be reduced by a redistribution of property, creating a level playing field where individual merit determines social status. When it is not reduced, social tensions lead to conflict, to civil and colonial wars, and to a vast security industry, which seems the dominant trend. The republic resolves conflict by force, democracy relies on the word’s power of conviction, Robocop vs. debate and argument. The urgency of perpetual war favours the first, an open network of communications favours the second. But the distribution of wealth is really what is at stake. Will demagogues take the power to redistribute property, or will emperors be the toys of the security complex?

Simple problem, impossible solution.

Value is invested, labour is added, and the product ends up consumed. Not immediately of course. There is always a lapse of time between the first investment and the final consumption. And, sometimes, invested and added value will pile up year after year for a decade or so before consumption can begin e.g. the Eurotunnel 1986-1994. Another particularity of infrastructures, real estate and land property in general, is that they receive rent for a time span that is far longer than the time needed to restitute their original cost. The practice of rent is as old as property, and the notion then extended to money and, ultimately, to all forms of investment. Income that is not consumed is paid rent.

Rent (or interest, or dividends) is a part of the value consumed, whose payments last long after the investment and added values have been restored. If the rent is consumed, it is merely a transfer of consumption from the lease holder to the renter, from the borrower to the lender, or from the employee to the share holder. If the rent income is not consumed, it is paid rent. As a consequence of this, not only is there insufficient consumption but the unconsumed incomes get larger and larger, as do the unconsumed rents. The short term solution is to grant consumers credit and mortgages. This increases their consumption for a while, but they end up paying more and more rent, which is not consumed. And, at some point, the insufficient consumption can no longer be compensated, growth stops and the investment bubble is deflated. “And the harder they come the harder they fall, one and all”.

Getting a return on the income one does not spend seems traditionally moral but, inevitably, it results in boom and bust. A phenomenon that is repetitive, and seems to adopt a variety of time spans, and sometime they all deflate together. So, is the present situation, not to mention the dreary future of stagflation, a fatal part of the human condition, something mankind will have to drag itself through knowing that two or three generations hence it will be happening all over again? Can the Protestant ethic be transgressed? Undoubtedly, private property cannot be tampered with. The subject makes people fidgety, uncomfortable, aggressive and ultimately violent. Supposing, however, that unspent incomes cannot be invested and thereby increase unspent incomes. Supposing incomes must be either spent or redistributed as taxes and wages, or simply as less rent. Could this be morally defended, by giving the wealthy the opportunity to show empathy and citizenship, and a generous compassion for others, for their cities, their nations and the whole wide world? (1)

Visibly they don’t like the idea, and then they begin to laugh. Who will invest if they don’t? Where will growth come from, if they don’t invest their savings? Who will create jobs?

The monetary creation that must accompany a growth in exchanges is essentially credit. [And, when credit overreaches itself and has to contract, quantitative easing by central banks is a puny attempt at taking up the slack by circulating more cash. However, and this may have been the intention from the start, quantitative easing has allowed governments to increase their borrowing at affordable rates of interest. In effect, governments are “printing” money to pay their expenses. How long can that last?] Credit can mediate all exchanges, investments as well as consumption. In the past credit has favoured both, but its preference goes from one to the other. Business finances are a mix of shares, bonds and credit. Sometimes incomes invested in shares and bonds predominate, sometimes credit predominates. Credit mediates transactions as well as does money, but it is not money. It is a guarantee that real money is forthcoming. And this guarantee has a price that can be exorbitant, usurious. And the only organisations that can grant credit widely and regularly are banks. Banks where everyone has an account and where money moves virtually from one to the other. This existing virtuality can be extended to include the not-money of credit, while clearing houses keep an account of transactions between accounts held in different banks.

All money is virtual but credit is more so than income, which brings up the question of property. The property rights of credit only come into play when there is a default. An entrepreneur owns his company and can expand or sell it, as long as his credit is good. A chief executive runs his company for its owners, who may sell it as a whim, or when investments have been sacrificed for dividends that went elsewhere, and the company is obsolete. Credit has another advantage: as monetary creation it should be a social service, subject to public scrutiny and provided at cost price. Credit should be granted to new and expanding businesses, thereby increasing employment and consumer demand. However, credit’s evanescence means it is granted briefly and must be renewed frequently, and can be interrupted at short notice, which leads back to the nature of credit and its ownership. Can a bank own something it does not possess? (2) And why claim back monetary creation that is in circulation, if not to demand more remuneration. The new money is in the system fuelling growth. The investment is transferring its value to production and is getting it back, ready to be invested anew. Let the credit be owned by the company and become part of its capital. But then, who owns the company? Should it be the prime mover, that individual who got things started, who had the idea and put it into practice. No doubt that person should be privileged, but very few enterprises can be undertaken by a lone individual. From the outset other people will be concerned and active. Why is it that their share of ownership seems so preposterous? An ownership that cannot be sold, as there are no more unspent incomes. Its function would be to choose investment strategies and decide who earns what.

By now they are hilarious and tears are streaming down their joyful faces.
Demonstrably, Utopianism is an eminently laughable matter.

1. Probably in the “Grundisse” (the Penguin edition is an excellent read), Marx noted that wealthy citizens of imperial Rome had to spend their incomes on feasting, building, art works and public games, for lack of investment opportunities. That situation had been superseded by the unlimited investment opportunities of the Industrial Revolution.

2. Basel III will require banks to hold 4.5% of common equity (up from 2% in Basel II) and 6% of Tier I capital (up from 4% in Basel II) of risk-weighted assets (RWA). Basel III also introduces additional capital buffers, (i) a mandatory capital conservation buffer of 2.5% and (ii) a discretionary countercyclical buffer, which allows national regulators to require up to another 2.5% of capital during periods of high credit growth. In addition, Basel III introduces a minimum 3% leverage ratio and two required liquidity ratios. The Liquidity Coverage Ratio requires a bank to hold sufficient high-quality liquid assets to cover its total net cash flows over 30 days; the Net Stable Funding Ratio requires the available amount of stable funding to exceed the required amount of stable funding over a one-year period of extended stress. http://en.wikipedia.org/wiki/Basel_III