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by Peter A. Belmont / 2011-12-08
© 2011 Peter Belmont
I have written in this blog about (as it seems to me) an insupportable aspect of capitalism, namely, that the vast “gizmo” described as the aggregate capital of all the capitalists of the world—that gizmo must produce a return-on-investment (ROI) if it is to satisfy international capitalism’s principal requirement, growth of capital. This seems to me naturally unsustainable.
This requirement of growth of capital means that, each, year, rain or shine, if an ROI of 5% is being maintained, then the size of the gizmo, the size of the world’s “capital” must increase by 5%, each year. (Each year, the “interest” or ROI accrues adn is added to the entire capitalist corpus, the “gizmo”.) But if this is to happen, the opportunities for obtaining an ROI of 5%/annum must also grow—each year—by 5%.
Growth without end on a finite planet. Amen and amen.
But sometimes there is no possibility of continuous and system-wide growth, year after year. Imagine such a thing! preposterous! No real economic growth.
That’s when invention comes along and fake growth occurs. As it must, for the appearance of a sustainable ROI of 5% must at all costs be maintained. At all costs, but costs to whom?
The chief well-known current example of fake growth is the securitization of the bad mortgages made (2000-2008). Bad lending, lending which on the whole was known to insiders to be fraudulent on the part of the lenders,[1] which lending (or debt) was then, and immediately, like the hot potato it was, sold to (foolishly) unsuspecting investors.
One might say of this scheme that since it was seen to be impossible to continue ROI at 5% on the whole of the world’s capital the whole of the world’s capital must therefore shrink, and the insider investors were determined that the shrinkage would occur to people who bought from them, rather than to themselves.
The USA needed to be rescued from this blow-out of bad lending and bad selling of bad debts, and we had a truly marvelous bail-out of the enormous banks—those called “too big to fail” which meant that they had players inside government who would so arrange things that the bail-out would duly occur, at least for themselves. (Speculation is all very well, but real wealth is made from sure things!)
What’s wrong with capitalism beyond fake growth?
But there is much more wrong with capitalism than merely bubbles and other frauds. The deliberate impoverishment of the poor of the earth, with IMF at the helm (not mere connivance, but centrality of USA institutions!), and here is a very good discussion of this phenomenon, The West Aims to Turn the Entire Global South into a Failed State.
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[1] The lenders made loans to people without demanding proofs of ability to pay. No bank would do that if they planned to hold the mortgage indefinitely. Such loans were a fraud against the people who, it was eagerly hoped, would buy the securitized mortgages.
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