Immigration in France.

Under the pretext that French citizens are equal before the law, there are no official statistics concerning their national or ethnic origins, nor their religious beliefs. These are considered private matters which should not be quantified. However, extrapolations suggest that between 5% and 10% of the French population are naturalized, or second, third, fourth generation immigrants from France’s lost colonial empire. Denying their existence as a minority has helped to hide underhand neocolonial meddling and profiteering by successive French governments and corporate companies. And, at a time when regional folklore and particularities have been generously encouraged, this denial has also turned them away from participation in the political process. This is changing and has reached a stage where their votes could decide the result of the two rounds presidential election, to be held in April and May.
Colonial immigration to France has been going on for over a century, but it was no more than a trickle until independence was granted. The last to achieve this, after eight years of liberation struggle, was Algeria in 1962. Algeria was France’s closest colony. Geographically, as Algiers is just 600 nautical miles across the Mediterranean from Marseille. And constitutionally, as it had almost the same status as did the metropolitan regional administrations. Europeans, mostly from France and Spain, had full civil rights and parliamentary representation, as did « natives » of Jewish faith. While « natives » of Muslim faith, nine tenth of the population, were only allowed a statutory representation by their tribal elders. This meant that, for the « French Muslims » who had joined the Free French Forces in 1942 and had fought in Italy, liberated France and occupied Germany, returning home meant reassuming a second class citizenship. Many refused and used their veteran know-how to organize the National Liberation Army.
Algeria was a part of France but Algeria was in practice segregated. When, after eight years of counter insurgency by up to half a million mostly conscript troops, independence was brokered in Evian and a million Europeans left Algeria for France, they brought with them this prejudiced attitude. It became that of a majority of metropolitan French, as the number of immigrant workers from Algeria increased significantly. (To a lesser degree, this increase also concerned workers coming from Morocco and Tunisia and, lesser still, from the twelve countries which used to make up French West Africa. And, lesser again, from ex-Indochina. Chinese immigration has only become significant since the 90’s.)
The 60’s were boom years for the developed world and France was no exception. Factories, multilane highways and building sites were going up all around the main cities, along with a huge demand for cheap labor. The new government of independent Algeria agreed to send young rural males to France, according to the needs of France’s economic growth. This commerce of human beings helped keep down the salaries of French workers and weakened trade unions, who were unable to cope with this influx of unqualified and often illiterate labor.
By the early 70’s, the mostly male immigrant population from Algeria and other African nations was at an all time high. Most of them were living in sordid conditions, dormitories and jerrybuilt huts, and sending all they could save back home to their families. But they had also acquired skills and, when the flow of non-European immigrants was stopped in 1974, it was deemed necessary that they should stay. Suddenly, public opinion discovered their plight. Literacy classes were organized, they were encouraged to naturalize themselves and it was made easier for their wives and children to join them in France.
All this time, Algerian workers in France had stayed as invisible as they had been under colonial rule. As they moved their families into aging apartment blocks on the outskirts of towns, these peripheral neighborhoods were abandoned by their French working class tenants and the invisibility was maintained. These are the « banlieues », where riot police face petrol bombs, where cars burn, where rumored arms caches are never found. But this is now. And another and more recent piece of the puzzle may help to explain how it came about.
Algerian immigrants had learnt how not to be seen the hard way. Many had experienced the « ratonades », pogroms organized by the police, the military and even civilians, in France as well as in Algeria during the war of liberation and the segregation that followed. But their children had not shared this experience, nor had those immigrants coming from West Africa, their neighbors and their school friends.
Algeria was only pacified in the 1870’s, Morocco in the 1920’s. This is recent history of bloodshed and mass murder, reinforced by the contemporary violence of the insurgency, 1954-1962. Whereas West Africa had been submitted to five centuries of European exactions, but no actual war and few uprisings since the end of the slave trade.
North Africa has a population which is part Berber, the probable descendants of the Numids conquered by Marius, and part Arab, since the 8th century. North Africans have an ancient written culture and a religion (Islam) of their own. West Africans have, to a great extent, lost their even more ancient Neolithic and Iron Age oral cultures and beliefs.
Almost all Europeans had fled independent Algeria, which meant that both sides kept in mind the old colonial relationship. In the independent West African countries, the European presence increased on the basis of pear group cooperation in health, education, security and defense.
North Africans have an identity which has upheld them in adversity and which they are loath to discard. West Africans have little to loose, with so few competing traditions on the path to being French.
Left to themselves, the North Africans in France might have developed a ghetto existence. It could not have happened to the West Africans, who have no strong common identity to fall back on.
Post-colonial France has brought together the inhabitants of two different worlds and submitted them to the same social exclusion. This could have opposed them but, as their children mixed at school, it turned out that they complemented each other, in sport, music and stand-up comedy, where the self deprecating humor of the North Africans is offset by that of the West Africans who, without compunction, joke about the colored and white society they live in. For the more traditional and older members, Islam has been a unifying force. As it is practiced far beyond the Sahara, to the banks of the river Niger.
This interaction took place out of sight, in the no-go zones on the edge of cities, and suddenly bust forth in the 90’s with marching and riots. Sport celebrities, variety artists and token representatives of varying darkness of skin were solicited by parties right across the political spectrum. Integration was on everybody’s lips. Special development and government aids to community organizations and to anyone able to offer a few jobs were promised, reduced and finally withdrawn.
Twelve years on, things are back where they started and, what with new clandestine arrivals, have probably worsened. Unemployment is higher than elsewhere, especially among the under 35’s, for whom opportunities are slim living where they live and looking, speaking and dressing the way they do. While French society at large remains as closed as ever, comforted by the ambient idea that terror is Muslim. So that, in November 2005, the accidental death of two adolescents during a police round-up sparked off street fighting in nearly all the « banlieues ». A policy of law and order was applied, which resulted in overcrowded prisons and a relative calm. Promises were made and the nation debated the pros and cons of affirmative action « à l’Américaine ». Which somehow got translated as « discrimination positive », which is full of innuendoes. In a country where women have claimed and gained such rights over the past thirty years, was it constitutional?
However, French society is not impermeable to the strangers in its midst. Countless are those who have moved from the dilapidated neighborhoods where they were brought up and joined the middle class. Though, for obvious raisons and because they have justly taken advantage of measures concerning their sex, it has been less difficult for women. But what seems apparent is that the members of this socially mobile group have maintained their communal ties and have realized the importance of militant action and of demonstrating who they are and who they can be.
In the coming contest for the presidency and for a majority in the National Assembly, this political activity should show its first concrete results. The Center Left (Ségolène Royal) is as usual working at wining votes on their right. So far, they haven’t shown any sign of recognizing this budding political force. This could be risky as the Center Right (François Bayrou), fishing for leftist votes, might have a greater appeal. Either way, the new government which results from the vote can’t go on ignoring the new minority, which has constructed itself and which needs take its place among the Bretons and the Basques, the Savoyards, the Alsatians, the Normans, etc.
If it refuses change, French society will find itself following the path of extremism. And, though the choice seems nowhere as clear as in France, most other developed countries are in a similar situation. With respect to the developing world, the French have not always been exemplary. The electoral campaign which is starting should show what the example is to be this time.

Adaptation.

As Spinoza pointed out, we humans are not free. But we can and should seek the causes of our predestination. At the time, ideas were largely focused on some external omnipotent entity. And two centuries passed before Darwin was able to understand that life in general and us humans in particular exist because we have adapted to changing circumstances. Then Freud came to the conclusion that hidden (subconscious) memories influence our thoughts, our acts and our metabolisms. And Elias Canetti realized that large human groups have a psychology of their own. Meanwhile, Adam Smith explained that work produces the wealth divided up among nations (and nationals). And Marx claimed that events are the result of a historic class struggle over this very division. And Keynes argued that money is a fiction maintained by social consent. And Friedman replied that, fiction or not, money is primordial. Whereas Reich dared to affirm that frustrated eroticism makes us dangerously ill. And Alice Miller described the destructive effect of the parent-child relationship. At the same time, McLuhan perceived that media have their own hot or cold message. While Lorenz and Wynne-Edwards both concluded that our mutual adaptation makes animal and human behaviour quite similar. And Germaine Greer dissected the sociology of sex. And...
The causes are there for us to comprehend. We do what we do, because we must. Our personal and collective past, the rules of society, our genes, they all bind us to a predestined path. And so it is with individuals, so it is with humanity as a whole. Over the past forty years, it has become increasingly obvious that humans are stretching their exceptional adaptability to the limits. Our world is about as synthetic as it can get. Our environment has become essentially prosthetic. And the iron rule of history is that there is no going back.
We can’t go back and we just as certainly can’t stop, but another course still seems conceivable. The track we are on is the result of what we are. And yet all the causes structuring our beings are modifiable. Even the primary genetic causes show we can be something else. There are no eternal laws out there to which we must submit. There is just change, and adaptation or extinction.

Schumpeter too.

So the wheel has turned full circle. 57 years later, the same anxious hunt is on again.

Globalisation.

La mondialisation du commerce commence par le troc. Des échanges où un seul des deux négociants connaît la valeur relative des marchandises. Lorsque l’indigène prend conscience de cette relativité, alors se met en place le colonialisme et le tribut d’empire. La métropole profite du travail et des matières premières provenant des nations soumises par ses soldats colons. Le commerce mondial ne s’effectue plus qu’entre métropoles impériales. Avec toutes les incitations guerrières que cela suppose.
La décolonisation instaure une forme de commerce mondial sous tutelle. Les anciennes métropoles contrôlent toujours le crédit bancaire, les transports et l’essentiel de la technologie. En échange de leurs produits, les nouvelles nations doivent se contenter d’un genre de redevance, une rente de situation. Ce n’est qu’à la fin de la guerre froide, en 1991, que ces zones d’influence perdent leurs dernières justifications.
Par un long processus encore en cours, les nations de la planète accèdent au marché sans contraintes. Malgré leur dépendance sur le crédit, le transport et la technologie des nations riches, le pouvoir de négociation des nations émergeantes semble s’améliorer. En formant des associations, elles peuvent parfois influencer les prix à leur avantage.
Le juste prix sur le marché mondial est encore un idéal à atteindre pour beaucoup de nations. Mais, le serait-il, cela ne résoudrait pas l’autre équilibre des échanges commerciaux extérieurs, celui de la valeur ajoutée de part et d’autre. Pour mieux comprendre, imaginons des échanges bilatéraux exclusifs entre deux nations. L’une des deux exporte du pétrole, l’autre exporte des chaussures. Cet échange, à juste prix, signifie que l’importateur de pétrole obtient une matière première à transformer. Tandis que l’importateur de chaussures met au chômage ses fabricants de chaussures nationaux.
Il y a des marchandises destinées à être transformées, qui mettent en œuvre du travail. Et il y a des marchandises destinées à être consommées, qui ne mettent pas en œuvre du travail. On voit que toute nation a intérêt à importer des matières premières (ou des produits intermédiaires) et à exporter des produits finis. Toutes ne peuvent le faire et ce sont les nations dominantes qui se réservent cette situation avantageuse.
Echanger des produits finis contre des matières premières assure de l’emploi et permet une augmentation du revenu investie. Echanger des produits finis contre des matières premières signifie que leur consommation se fait ailleurs et que le revenu qui lui est alloti peut être investie. La transformation (par l’échange) de produits finis en matières premières correspond à la transformation de consommation en investissement.
Les grandes nations industrielles se sont construites par l’appropriation des ressources et des emplois de la planète. Aujourd’hui, c’est au tour de la Chine. Elle transforme la consommation en investissement par son commerce extérieur. Mais elle le fait à une telle vitesse et à une échelle si énorme, qu’elle est en train de s’approprier le travail du monde entier. Et les revenus investis sont à l’avenant.
L’Europe, les Etats-Unis et le Japon en seront bientôt réduits à recevoir des droits pour leurs propriétés intellectuelles et des rentes sur leurs investissements, mais ils n’auront comme emplois que des services aux personnes (celles qui en ont les moyens). La production de biens étant toute localisée en Chine, il restera la domesticité.
Après avoir investi l’Europe, les Etats-Unis et le Japon, voilà que le capitalisme s’empare de la Chine. Mais le capitalisme se nourrit d’investissements, de revenus détournés de la consommation. Comme ses prédécesseurs, la Chine est donc obligée d’échanger ses produits finis contre des matières premières et des produits intermédiaires sur le marché mondial. Pour investir les revenus du travail, la consommation des richesses produites par ce travail doit se faire ailleurs. Pour continuer son expansion, ce système d’accumulation capitaliste doit pouvoir transformer une valeur croissante de produits finis en produits intermédiaires et en matières premières. Cette transformation se fait lors des échanges sur le marché mondial. Et elle se fait au détriment des autres participants au marché. Eux doivent désinvestir et emprunter pour générer des revenus et consommer plus de richesse que n’en produit leur travail. L’Etat vend les investissements qu’il possède au nom de la nation (privatisations), la dette publique et l’endettement des particuliers gonflent et la balance commerciale penche toujours plus pour le déficit.
Jusqu'à présent, ces grandes expansions capitalistes se sont produites dans un monde où les découvertes de ressources végétales et minérales étaient en expansion. Ce n’est plus le cas. Depuis quelques années on découvre que la planète a des limites et qu’il n’y en a pas d’autres, même au bout d’un long voyage. Et, puisqu’elle se fait au détriment des autres nations, l’accumulation capitaliste a toujours été source de conflits. Les nations industrielles ont constamment fait la guerre, l’ultime recours de leur domination. Alors que prédire pour cette gigantesque concentration en cours ? Qu’il n’y a plus de concurrence entre capitalismes nationaux pour attiser les antagonismes, puisque le capital réunit enfin l’humanité entière ? Que cette fois-ci tout se passera comme sur des roulettes, « And the world will be as one ». Par contre, quand ça coincera (car le capitalisme subit nécessairement ses propres contradictions), le séisme qui en résultera dépassera de loin tous les précédents.

Joseph Alois Schumpeter.

(V.F. voir plus bas)
In 1939 Simon Kuznets had not studied the cycle which was to take his name. I have added it and drawn a new average curve. Curiously, if the beginning of the curve is placed in 1900, historical events seem to fit into place quite precisely. E.g. WW1 and the oil crisis in 1973, or the 1929 and 1987 stock market crashes. This correspondence in time suggests that the long wave is influenced somehow by the dominant source of energy, but its regularity must be explained by something with a perfect time table, such as borrowing.



October the 8th, 2008.
I started by imagining that Schumpeter’s time scale began in the year 1900. This conveniently placed the 1929 stock market crash on a short and peculiar up and down phase (middle of curve 4), and 58 years (instead of 57?) later was the stock market crash of 1987. Other coincidences of growth and recession, of war and peace, seemed to occur, but something was lacking.
I was already convinced that business cycles were linked to, and even caused by, debt and credit cycles. By this I mean that growth in the value exchanged on the market must be fuelled by a proportional growth in the value of the means of payment (credit and cash) in circulation. The long cycle corresponded to 30-year debts, the intermediate cycle to 5-year debts, and the short cycle to a mix of 1-year and 2-year debts. Now 10-year debts, treasury bonds in particular, were absent, as was the curve of Simon Kuznets’ later work on housing cycles. So I decided to add a 19-year cycle and draw the resulting curve 6. This gives a more precise picture of past events and, one may suppose, of future ones.
The complete globalisation of debt cycles is quite recent. The timing of debt cycles depends on who is emitting the credit. That means that the main banking system gives the cue to all those in its sphere of influence. Venice, Amsterdam, London have to a certain extent filled this function in the past. It was after WW2 that New York became the western world’s purveyor of credit, with the US dollar as its currency. A predominance that was reinforced when the gold standard agreement reached at Bretton Woods in 1944 was abandoned in 1971.
However, the Soviet Union and China, and their satellite states remained outside this global structure, until the late 1980’s and the early 1990’s. Now that they are an integral part of it, they are swept by the same wave system.
Why choose 1900 as the starting point for all the curves? In the absence of more precise material on debt cycles, why not? The coincidences are there. What of other debts of intermediate terms, 3, 7, 15 or 25 years? That would need software know-how I don’t have. And, for a really precise calendar of events, the yearly volume of debt of each of the cycles would have to be considered. That may not be statistically possible.

20/11/08
J’ai pris ces courbes, qui ne représentent qu’une échelle de temps, et je les ai fait commencer en 1900. Les guerres mondiales correspondaient assez bien et le krach de 1929 aussi. Puis j’ai comparé avec le cycle suivant qui débute en 1957. Là aussi la crise pétrolière arrivait à point, ainsi que le krach de 1987. Mon idée était que les courbes étaient celles de la croissance de la demande solvable, alimentée par la dette et le crédit, le crédit court de 1 et 2 ans, ou de 5 ans, et la dette longue de 30 ans. Il manquait le dette de 10 ans qui se rapproche du cycle étudié par Kuznets. Je l’ai rajoutée en rouge(5) et j’ai redessiné la somme des quatre courbes(6). Le résultat correspondait mieux aux événements du passé et il annonçait une période de stagnation (avec inflation?) pour les trois années à venir. La dernière fois, en 1951, c’était le début de la guerre froide et d’une nouvelle étape dans les “bienfaits du colonialisme”.
Pourquoi démarrer le modèle en 1900? Pourquoi pas, puisque la date semble convenir? Par ailleurs, les courbes de la dette n’ont pas cette parfaite régularité. Avec les données exactes des endettements mondiaux, le calendrier serait forcément plus précis.

Empire.

The Constitution of 1787 is the foundation of the American Republic. It remains the basis of how the United States are governed to-day.
Over the same period, France has declared a Republic five times. The first time from 1792 to 1804, the second from 1848 to 1852, the third from 1870 to 1940, the forth from 1944 to 1958, the fifth from 1958 to the present day, and some are campaigning for a sixth.
The original American Republic was made to fit a society whose structure bore a close resemblance to that of republican Rome. That is, patricians (white Anglo-Saxon Protestants), plebeians (immigrants from Europe) and slaves (natives of West- Africa). This was quite a stable structure for both worlds. But, with time, slavery leads to emancipation and finally to civil rights.
In 1792, French colonies were employing slaves. But there was no significant slave labor in France. Having abolished the monarchy and the infamous slave code (le Code Noir), the first French Republic was immediately confronted by the conflicting duality of patricians and plebeians. It failed, and turned to ephemeral empire (Napoleon).
The res publica (the common weal, la chose publique) is fractured along the patrician/plebeian divide. In this sense, it is a lie. The only welfare that matters is that of the dominant class. And, to hide this reality, a common foe is needed. As the Republic is not a commonwealth, only a common danger can maintain the illusion. To exist, the Republic must always be at war. Enemies of the interior (slaves or terrorists) or of the exterior (the rest of the planet) threaten the nation as a whole. War transcends the class barrier. The legions of Rome mingle patricians and plebeians. They face similar hardships in a communion never achieved at the Forum or the Senate.
Protracted war, however, leads to standing armies, successful generals and all of society intent on submitting its neighbors. Republics usher in the absolute power of empire. Because empire (imperium) is what they impose on those they have conquered. Republics cannot avoid becoming imperial.
The republican class struggle must lead to war. A common enemy, interior or exterior, is the only cohesive force which has the power to deny the contradiction between common welfare and the class divide. The Republic needs constant war to avoid unmasking the egalitarian myth. Republics have an internal division which, at its paroxysm, leads to civil or foreign wars. And, whenever possible, the second solution always seems the best. Iraq’s fate reminds one of that of Carthage, with Rumsfeld as Cato. Delenda est Baghdad.
But what of the resilient republics, those that last centuries, those built on a three class system? The traditional aristocratic triarchy of soldier, priest and merchant, being replaced by patricians, plebeians and slaves. Is this really more stable than the face to face, following emancipation? And to what extent does emancipation provoke this confrontation? To which party do the emancipated belong to? Can even civil rights bring them a sense of belonging? Can the bonds of servility be cast off to reveal a plebeian or a patrician?
We know that throughout the Americas this was not the case. Patricians and plebeians came from Europe. Whereas slaves were natives, Africans and a few surviving Americans. They were unable, physically, to mingle unobtrusively with the two classes of citizens.
In Rome, emancipated slaves joined main stream society, often without even a brand mark. In the Americas no such thing was possible. A third class citizenship persisted almost everywhere, until civil rights were granted and affirmative action was installed. However the mark was still there, unmistakable. And, anyway, by the mid-1960s in the USA illegal immigrants were fast becoming the « dangerous » element of society. The new « aliens » from south of the border, whose difference united the rest of society. At that same time in France, the native subjects of its colonial past were immigrating en masse and, by their appearance, were filling the same function.
The class confrontation between patricians and plebeians is sometimes out-sourced as war and, potentially, empire. But war only leads to empire for the victorious. And victories, when they are not the result of luck or sheer valor, depend on might and wealth. Empire is costly in means and men. It needs a constant flow of tribute and an increasing number of troops. At some point, the armies of empire cease to be made up of citizens and become mercenary. At some point in time, the flow of tribute is insufficient. How the American Empire collects tribute is explained by Michael Hudson in a Counterpunch interview. http://www.counterpunch.org/shaefer04232003.html How far it can go remains to be seen. Meanwhile the dependence on mercenary troops is already started. It should also be noted that the Roman Empire at the time of Hadrian started building walls along its frontiers.

Frédéric Lordon.

Limiter les profits financiers des fonds de pension et d’investissement ? Et demain on rasera pour pas cher. Karl M. s’est moqué de Proudhon, à propos du crédit gratuit. En expliquant que le crédit, gratuit ou pas, dépend de ceux qui l’accordent. Que l’argent fiduciaire, les moyens de paiement, la solvabilité, tout cela est aux mains des banques. Que ces dernières sont propriétaires de ce moyen de production qu’est le crédit. Qu’il faut commencer par remettre cela en cause.
Les fonds de pension, la retraite de grand-mère, c’est sacré. Pour les fonds d’investissement, avec une bonne dose de démagogie, ça pourrait peut être se concevoir en France, mais certainement pas aux Etats-Unis, ni aux îles Caïmans. Donc, bof !
Si tout cela vous intéresse, un économiste américain qui s’appelle Michael Hudson a décrit le système dont profitent les E.-U. depuis plus de trente ans. C’est une merveille de simplicité et d’efficacité. Hudson argumente contre, à l’époque sous Nixon, y voyant un dévoiement impérialiste. Ce qui se passe, c’est que le déficit extérieur est payé par la dette publique. C’est à dire que la vente de bons du trésor américain, partout dans le monde, rééquilibre la balance commerciale.
Ils avaient commencé par payer leur facture pétrolière avec des pétrodollars. Ce qui a sérieusement perturbé les marché des changes. Les bons du trésor n’ont pas cet inconvénient. Leur valeur monte ou descend selon les taux d’intérêt en vigueur, mais sans influence direct sur la valeur du dollar. Ils peuvent en imprimer autant qu’ils veulent. D’autant plus que les pays clients en ont un tel stock, déjà, qu’ils sont obligés d’en racheter tous les ans pour maintenir les cours.
Ceci dit, j’ai remarqué que la France (et sans doute d’autres pays) a vendu une part de se derniers déficits budgétaires à l’étranger. Ses déboires actuels, avec sa balance commerciale dans le rouge, montre peut être que le marché mondial des bons du trésor est saturé. Ou que les E.-U. ont interdit de marcher sur leurs plates bandes.
L’interview de Michael Hudson.
http://www.counterpunch.org/shaefer04232003.html

Borrowing.

Consumption is the finality of all production. Investments are merely a prelude. Growth in consumption depends on the balance of two separate and interdependent processes. Supply and demand must increase at the same rate, to avoid inflation or deflation of the currency.
Increased supply means an increase in the production of commodities preceded by increased investments (1). In creased investments can be financed by incomes or by borrowing. Increased demand means an increase in incomes. Incomes increase as the result of increased investments or of borrowing. Borrowing in both cases is just credit. Virtual currency created ex nihilo by the banking system. And which, once created, is circulated as increased income, for investment or consumption.
Borrowing can finance growth in either investment or consumption. In the first case, it increases the incomes of those who provided the increased investment. In the second case, it increases directly the incomes of the borrowers. Growth in investments can also be financed by incomes. In this case, incomes are diverted from consumption to become incomes once again. Investments increase but incomes do not, except by borrowing.
Borrowing, means paying back. And it will seem preferable to invest income and thereby own the investment, rather than owning a debt. But investing incomes means that demand for consumption does not grow as fast as supply and must be supplemented by borrowing. By shifting the burden of borrowing from investment to consumption, invested incomes change the structure of private property and make it limitless. When increased investments are financed by that part of income which is considered profit (2), the owners of the investments extend the limits of their accumulation to infinity.
Borrowing increases incomes and maintains demand for consumption abreast of increasing supply. Paying back, however, reduces incomes. A reduction which can only be avoided if all previous credit is constantly renewed. New loans (credit, delayed payments, mortgages, etc.) must be granted to balance invested incomes, and old loans must be lent out again as soon as they are paid back. Borrowing piles up, until the stock of new borrowers is exhausted. That is borrowers of proven solvability. However, as loans must be granted in ever increasing quantities, the process is unable to stop, until it is overwhelmed by defaults.
Borrowing comes in many varied forms. But the most important particularity of each form is its duration. The different delays before payment vary from a few hours to 10, 20, 30 years and more. Each delay creates its own virtual currency and thereby helps increase incomes (and/or investments) and sustain growth in consumption. Each delayed payment is linked to a certain time span. Imagine that weekly credit is granted for the first time. This means that all credit granted the first week increases demand. Whereas all credit granted the second week includes the first week’s renewed credit. That is all the first week’s paid back loans. And only credit in excess of the first week goes to increasing demand. These weekly jumps are difficult to integrate into the granting of credit, which follows a more regular growth curve. This periodic disconnect, between credit granted and credit renewed, means that growth in demand has ups and slowdowns. As regular as sine waves.
As incomes are being invested, growth in demand for consumption depends on increasing credit. But the periodicity of credit growth is unavoidable. And each duration of credit has its own cycle, from the shortest to the longest. So that effective growth in demand is the result of adding together all these credit cycles. Which means that at any point in time some credit cycles are expanding and others are not. It also means that the long cycles influence the general trend more than the short ones. Treasury bonds, corporate bonds and mortgages make up most of long term borrowing. « Consumer » credit, « Interbank » credit and discounting are among the numerous kinds of short term borrowing.
Corporations are making so much profit that they don’t need to borrow. And those that do get bought up by pension/investment funds. Mortgages seem to have reached a peak. While budget deficits are already stretched to the limit. In fact, only massive inflation can reduce these mountains of debt. Which grow even faster than I have suggested. As paying back and lending out again must include interest.

(1) Gains in productivity may so reduce the amount of labor as to offset the cost of increased raw materials. But, in general, increased production needs increased investments.
(2) Savings can be compared to profit. They are income over and above the necessary. Part of the Puritan ethic is to prefer investment to extravagant spending. Not spending part of income reduces demand and must be compensated by borrowing. One man’s saving is another man’s debt. The rich save so that the poor may borrow. And the poor save so that the rich may borrow.