Changing course

Considering that unpaid added value can only realise its value by granting credit, that the accumulation of capital needs a corresponding accumulation of debts, and that debts grow faster than incomes and lead to financial breakdowns, it should be possible to find a more rational, less catastrophic way to produce and exchange goods and services. Instead of consumer credit for households and governments, there could be investment credit for businesses. Instead of labour having to borrow to pay for capital’s profits, capital would do the borrowing and would make no profits.

Investment credit goes to production and becomes part of the value produced and sold. Consumer credit is simply consumed. Invested value is restituted and consumed value is not, which means that businesses can pay back their debts whereas households and governments cannot. If perchance they do pay back, demand will contract. As unpaid added value depends on debts for demand, a shrinking debt reduces the amount of unpaid added value that finds a buyer. A lack of demand for unpaid added value that sets off a price war – as it is better to sell for less than not at all – and the sequel is the usual tale of woe. So, just supposing, businesses would make no profits and invest with interest free credit, because interest is paid with profits, while employees would receive all their added value, providing demand for all production. This simple rational model faces a series of objections, notably that abolishing profits would supress incentive to start up and expand businesses, that free credit would need a completely different banking system, and that property rights would be in danger.

Building and running a business needs a helmsman, there is little doubt about that. But a good salary, happy well paid collaborators and contented customers should be sufficient motivations for a commander, without the need for profits. And most business leaders are just that, while the push for profits comes from shareholders. The concentration of property into a few hands began with land, then came money and, finally, the machines and buildings of industry. This is the property that demands – and obtains by the force of law – rent, interest and profits. This is the property that refuses to let, to lend and to hire when the return is not up to expectations. The property grabbed by medieval barons, Renaissance bankers and Industrial Revolution magnates is as present as ever. A thousand years of rapacious appropriations is today’s heritage, but universal intercommunications could relegate that old world to the dustbin of history. The confrontation is ideological, between conserving and progressing, but the key is financial, it all depends on who controls the payment of exchanges.

Banks lend money at interest, often at usurious rates. They also borrow money at interest, the lowest rates possible, and they can then lend it out again many times over. They dispose of current accounts for free and, for the past few years, central banks have been lending them for free. Banks have all the common wealth at their disposal for free and they lend it out selectively and grudgingly, or extravagantly, at interest. This being so, the common wealth could be lent directly to those who are building businesses, without the intermediary of banks. Free credit exists, but the only beneficiaries are banks who leverage it and practise usury.

Political will could reduce the banking system to mere accountancy and people could decide what, where and when investments are made with their money. It would bring down the House of Morgan and bring about a radical transformation of property rights. A colossal reactionary force that seems unshakable, but confronting it is the unprecedented power of social media. The intellectual and material capacity to express opinions and influence decisions was once limited to courtiers and king’s advisors, before spreading to parliaments. Then mass media invented public opinion and went on to express and shape it. The press, radio and television were successive stages of a propaganda machine in the hands of governments and big business, alongside education. Technology did occasionally let through a little subversion, Roneo, offset, FM, provoking underground tremors that jolted the status quo and faded away. Today’s internet technology can propagate alternative ideas in print, sound and image around the globe. The potential force of its subversive shock waves is still unknown, as most applications are in their infancy, but the establishment’s outcry for greater control, bans and shutdowns is a clear sign of anxiety. And the media giants, CNN, Time-Warner, Sony, etc. may soon have less influence than Taylor Swift. The omnivorous nature of internet is modifying every aspect of society, and many changes have yet to come. What is already obvious, however, is the proliferation of independent ideas and original creations, and their unlimited diffusion. A frail enough weapon to combat the Leviathan, but it can be wielded simultaneously by millions.