Fact and fiction.

First speech and then writing have tried to describe the world of things and emotions. Naming, describing, and inventing new concepts and different points of view has been a long, slow process of increasing complexity. Very early on, if not from the start, words concerned two different and distinct domains. One discourse was about the practicalities of the environment and how to act upon it, about leaning to survive materially and socially. The other was a transmission of myths and legends that explained the unexplainable. Over time the first encroached on the second and gave rise to a new literary form that proclaimed its fictional nature. Fiction and non-fiction became separate well defined genres, using the same language and occasionally covering the same subjects. Literature described a universe that might be or could be. Science tried to put in words the universe that was.

In the mid-19^th century came the first daguerreotypes, and fifty years later the cinematograph. Another fifty years and television was becoming a domestic banality. In a century and a half, images moved from a marginal position to a preponderant one. In the past painters and sculptors had attempted to imitate a static reality (photography forced them onto other paths), whereas the new images were reality in motion. The camera made a perfect two dimensional image of events taking place in front of its lens. However, almost from the start, attempts were made to falsify photographic reality, with painted back-cloths, successive expositions or scissors and glue. But it was the cinema that innovated the most in all kinds of fictional imagery, showing great ingenuity during the celluloid era, and disposing of unlimited possibilities since the advent of digital pictures. As with words, images can be categorised as fiction and non-fiction, and both modes of transmission are frequently misleading as to where they belong.

Fact and fiction have always jostled for position, as have objective and subjective perceptions. But spoken and written words pass through the filters of the mind, where they are transformed into their significations. Making sense of words brings into perspective their contextual meaning. Images do not follow that process. The eyes and the mind see them in the same way as they see the surrounding reality. A similitude enhanced by colour and 3D. The direct perception of images makes them more emotional than words, and more difficult to categorise. Being subjected to a constant flow of images, where spectacle, spectacular news and advertising succeed one another indiscriminately, does not help either. Real events can seem less credible than an improbable sitcom, because they lack its visual and theatrical qualities. Advertising is particularly confusing, as it shows material and buyable products in an imaginary environment.

During the 20^th century industrial nations passed from the cerebral distance of print to the rhythmic pulse of sound, and on to the emotional involvement of images. The predominance of print coincided with colonial conquest and administration, a period of imperial expansion that was concluded by the declaration of war in 1914. Then radio and sound systems coincided with the rise of totalitarian regimes, hypnotic orators and WW2. Finally, images have coincided with the emergence of flower power, human rights, the preservation of wildlife and asymmetric/proxy wars. Are these coincidences fortuitous, or does a change of sense perception, between audition and vision, modify the way things are perceived, and result in psychical and social transformations? Other factors, such as the balance of nuclear terror during the Cold War, global trade/plunder and the digital revolution, played their part in shaping events. But the world’s description, the way it is represented is the foundation of a functioning mind, of thoughts, ideas, theory, theology, etc. The passage from the printed page to the loud-speaker, and on to the pixelated image, consists of two radical changes in points of view, of two successive mental restructurings.

The industrial nations have three levels of mediated perception at their disposal, and internet has made them equally available. The union of text, audio and video in the same digital format has made cross-overs very easy, which in turn has greatly clarified the distinction between fact and fiction. Information and knowledge, impressions and emotions are no longer the monopoly of press barons and media moguls, nor can they be subjected to explicit or implicit state control. They can no longer be manipulated at will. Checking, comparing and weighing up have been made possible on an unprecedented scale, and their effects are only beginning to be felt. However, close to a billion humans are illiterate and countless numbers are not digitally connected. These myriads are stuck in an oral limbo. They are exposed to the throb of sound and, increasingly, to the emotion of images, without the abstract mind set of literacy. And their digital disconnection deprives them of contradictory sources. Their perception of the world is constructed by the terrestrial and satellite emissions of governments and corporations, and by the more or less clandestine circulation of recordings.

The rhythmic pulse of audio produces a form of hypnosis, an abandonment that opens to suggestion and consent. It has always been the instrument of demagogues, actors and singers, but its electrification multiplied the effects. It has been and is used to mystify people and to make them wonder, laugh and dance, and occasionally to give words to a silent reality. The trance like state induced by loud pulsing sounds has often been used unscrupulously, and still is when it is not offset by other media. Learning to read and write takes time and needs a primary education system that includes everyone. Considering that literacy is still not universal in developed countries, what hope is there for developing and un-developing nations? And many languages are not written, so that literacy means acquiring another language usually that of past colonial rulers. Sound is not confronted by this problem as it conveys every idiom, just as images can represent any cultural or social domain. Sound is ethnic and tribal. It expresses the locality of voice and music. Images are also localised geographically and socially, but their message of empathy transcends differences and makes them comprehensive for all. And their growing diffusion is the best encouragement for mutual understanding as fellow human beings.

Global credit collapse.

Since the end of the Cold War and the demise of state capitalism – or should it be the other way round? – the private property of the means of production has taken over the planet. Behind the façade of “free enterprise”, the accumulation of wealth in a few hands has been spectacular. The past twenty years have been an exceptional time for money-grubbers, but the credit cycle has run its course and the growth it fuelled is at a stand-still. A situation that was recurrent in the past without being global, as the world was divided into blocs, and each had its own credit calendar. To-day’s credit collapse is synchronized by a unified financial market operating 24/7. 

The private accumulation of capital is the result of investing unspent private incomes, investments that can be made personally, or by funds, insurances and banks. Big and small savings are put aside for a rainy day. And, according to the Puritan ethic described by Max Weber, this parsimony is a moral act that should be rewarded, not only in the hereafter but in the here and now, by a profit. However, and this was true even when savings were coins in a hidden pot, unspent incomes reduce consumer demand and disrupt the circulation of added value. All the more so when it is on an extensive scale. 

Marx remarked that in imperial Rome wealthy citizens had limited investment opportunities, which explained their lavish spending on public games and private feasts, whereas in 19th century England the industrial revolution had greatly multiplied the range of possible investments. (Their only final limit seems to be the Earth’s ecosystem). Rich Romans consumed the incomes they drew from slave labour, whereas industrial magnates invested the profit they drew from underpaid labour in more machines and raw materials. Having restricted the ravages of Napoleon’s wars to continental Europe, England had a head’s start in the mechanisation of production, and its navy ruled the waves. So that the expansion of mass produced goods, mainly steel and cotton, was driven by exports to the rest of the world. Finished and semi-finished products were sent abroad and their value returned as raw materials. Labour’s added value could be invested without affecting the balance of consumer supply and demand, as the consumption was taking place elsewhere. Marx perceived the huge new investment possibilities but seems to have missed their disruptive effects. 

Quite obviously, if some nations export their consumption in exchange for investments, others must import theirs in exchange for investments. Those nations will produce less, lose jobs and can end up being ruled by tyrants who distribute the imported consumption arbitrarily. The other response to invested incomes is consumer credit. Incomes are the value of past productions and credit is the value of future productions. If incomes are invested in future productions, then the past productions must be consumed with credit. This simple time inversion allows the accumulation of private capital and is the cause behind the present credit collapse. Invested credit gets its value back when the produce is sold on the market, plus a profit to cover the interest. Consumed credit is consumed and must be produced all over again, not to mention the interest. Meaning that, while invested credit grows at the same rate as investments, consumer credit grows twice (and more) as fast as consumption, and leads to the private credit escalation that reached its limits five years ago, and to the chronic public borrowing that is facing a fiscal cliff. Whatever way one looks at the problem, there is no easy solution to loans and debts on such a grand scale. And all those who claim there is are either fools or liars. They refuse to see that this is a slow motion catastrophe. 

P.S. I have developed these ideas in several previous blogs, notably:-
http://lelezard.blogspot.fr/2010/08/binary-production-of-wealth.html 
and
http://lelezard.blogspot.fr/2012/05/deceptive-promise-of-growth.html

The capitalist triptych.

A nation’s added value, its gross domestic product, is shared by the different beneficiaries. The state takes taxes, labour receives wages and social benefits, and capital claims rent, interest and profit. This portioning is a political affair, as governments arbitrate who gets what. Governments also decide the use axes are put to, whether they go to labour or capital. 

The oppositions inside labour are primarily because of ethnic and religious differences, and between management and workers. However, labour also confronts itself according to the sector of capital it is employed by. Capital, the property of the means of production, begins with the distribution of conquered land. Originally, land was the only means to produce wealth. But, with the development of trade, money and credit became sources of income and merchant bankers equalled the munificence of princes. Finally, with mechanization, the tools of production enriched their owners, to the point where industrial entrepreneurs outshone the money lenders and the land owners. 

To produce value labour needs land, financing and machines. These are privately owned and expect rent, interest and profit, which are not necessarily evenly distributed. Capital is mobile and follows the best dividends. But this theoretical mobility has limits, and capital is split by conflicting interests. Those who own the land, and all it can produce above and below ground, despise the bankers and their “fiat” manipulations, and both groups feel far superior to the upstarts who get things done. These three groups make up the political spectrum, with land to the right, machines to the left and money in the middle. 

The ownership of land generates a conservative ideology because, for most of history, it was considered the only source of wealth and employed servile labour. And even to-day… vid South African miners or Mexican crop pickers. Around 1850 in Manchester, cotton mill owners were not labour friendly (Capital I gives some horrific descriptions of working and living conditions in Europe at that time). They had a plethoric labour force, as people moved to the cities after being thrown off the land to make way for changing and more profitable forms of agriculture (the potato blight of 1845 brought starving Irish immigrants). But then the passage to America became affordable and the flow of new arrivals from a deserted countryside was reduced to a trickle. The sudden threat of insufficient labour brought morality to the fore, to sanctify progressive legislation on child labour, sanitation, housing and living wages. Another significant factor was the increasing level of skills required by the production process. Literacy, numeracy and increasing qualifications became necessary in most industrial activities. Capital invested in the production of goods and services needed healthy, educated and willing workers. For its own benefit it had to be socially conscious. Bankers are masters of the measure of exchange value, of the money that circulates throughout society, knowing no barriers and mediating most of human commerce. This universal function gives bankers a central role that excludes partisanship. Yesterday, they supplied aristocrats and monarchs with one hand, and the merchant or artisan bourgeoisie with the other. At present it is raw materials and industry, a position that is not always comfortable. In times of economic expansion they rise to the social pinnacle, but recession brings their downfall. 

Capital is a three-headed beast, and this is reflected in politics. It explains the contradictory policies of governments as they swing to the conservative side, then to the liberal wing and back again, with a pause at Middle-Bank for every passage. Until quite recently, only property owners could participate in politics. As that property was usually land, it gave and advantage to the conservatives. Universal suffrage brought labour into the fray and, no doubt inevitably, introduced the demagogue. Promises win elections and only engage those who believe them. And, whatever the spin and the lies, labour’s only choice is the party of exploitation.

Un détournement d’argent.

Les moyens de paiement en circulation sont soit de l’argent soit du crédit. L’argent est la valeur d’une production passée, et le crédit est la valeur d’une production future. Il s’agit de savoir si l’investissement accru doit se faire avec de l’argent ou avec du crédit, et de même pour la consommation accrue qui en découle. Tout en sachant qu’un investissement en plus produira dans le future, et que c’est la production passée qui est consommée. Ceci étant, il serait logique d’investir à crédit et de consommer avec de l’argent. Sauf que l’argent (la valeur d’une production passée) est mal répartie, et ceux qui bénéficient des revenus supérieurs épargnent et désirent investir pour en avoir plus (lorsqu’une entreprise accroît ses investissements avec des profits, elle agit de la même manière). Les fonds de pension et d’investissement, les banques et les assureurs collectent cette épargne et doivent la faire fructifier, en l’investissant ou en la prêtant. Du coup la logique est inversée, puisque c’est l’argent qui est investie et le crédit doit financer la consommation. La valeur passée est investie pour produire dans le future, et c’est la valeur future qui permet de consommer la production passée. 

Logique mise à part, cette inversion présente des inconvénients concrets. Un investissement réussi (hors les bulles et les faillites) rend sa valeur plus un peu de profit. Tandis que la valeur consommée est…consommée. Elle doit être produite à nouveau. Le crédit investi dans une production future est restitué lorsque cette production est vendue sur le marché. Le crédit pour consommer une production passée n’est pas restitué. Par ailleurs, le crédit est le moteur de la croissance, puisqu’il accroît à volonté la quantité des moyens de paiement en circulation. Lorsque le crédit est investi sa valeur est rendue, et il peut alors être renouvelé. Dans ce cas la quantité de crédit accordée augmente au même rythme que l’investissement et la valeur produite. Lorsque le crédit est consommé sa valeur n’est pas rendue, et son renouvellement ne fait que restituer le crédit précédent. Dans ce cas la quantité de crédit accordée augmente beaucoup plus vite que la valeur consommée. Pour que la valeur consommée puisse augmenter de 10, selon la progression 10, 20, 30, 40, 50, etc., le crédit (l’intérêt serait en plus) doit suivre la progression 10, 30, 50, 70, 90, 110, etc. Sa croissance est deux fois plus rapide. 

L’argent, le fruit d’une production passée, est l’intermédiaire dans l’échange de ces produits existants. Mais il est détourné de sa fonction par l’épargne, et se retrouve investit à profit ou prêté à intérêt. Un manque de liquidité pour les échanges de biens et de services qui est compensé par du crédit et, dans le cas des États, par le placement de l’épargne en bons du Trésor qui servent à garantir le crédit. Il en résulte un endettement des ménages et de l’État qui augment deux fois plus vite que le PIB (1), et mène inexorablement à la situation actuelle. Ce qu’elle a de particulier, par rapport au passé, c’est son ampleur. Les fumeux subprimes étaient des emprunts accordés à des personnes dont la solvabilité était plus que douteuse. Ainsi la progression du crédit à la consommation a largement dépassé tout ce qui a pu se faire précédemment, et le détournement d’argent a égalé cette démesure. Sauf que les richesses détournées sont bien moindres que les crédits accordés, et ne sont plus des liquidités. 

Ceux qui prétendent que cette crise peut se résoudre par des ajustements et de la réglementation se trompent ou mentent. Et, même si leur responsabilité est manifeste, l’expropriation des riches serait loin du compte. En fait il n’y a que l’inflation à deux chiffres qui peut résorber une telle masse de dettes. Selon l’expression de Keynes, il va falloir euthanasier les rentiers et, pour paraphraser Proudhon, concevoir une forme de propriété des moyens de production qui ne soit pas du vol. Un processus qui devra s’enclencher par une forte hausse des revenus les plus bas. Ce qui supposera, vu les programmes gouvernementaux actuels, une agitation sociale intense. 

(1) Si la consommation est exportée, comme le font la China, l’Allemagne et quelques autres, l’épargne peut être investie sans restreindre la demande. Mais il est évident que seuls quelques pays peuvent le faire, au détriment des autres qui doivent consommer sans produire. Voir aussi: The deceptive promise of growth.