It shows how a relatively small network of well-connected people enriches itself at tremendous cost to the rest of the country.
Other recent research suggests Australia may be among the big offenders for corruption. It seems the glare from the long resources boom has blinded us to skulduggery in the shadows. It’s not an image of our country most of us would celebrate.
So how do they do it? Few would be surprised to learn of clandestine meetings, secret deals, creative accounting and regulators looking the other way. But none of this could survive without some trickery of the first order. In fact, the biggest trick is one of the oldest. It goes back almost to the invention of money itself.
The trick is to make money appear as a rare thing of value. That’s right, you read that correctly. It’s a trick.
Money certainly works as a measure and store of the value that resides in other things. Food, minerals, medicine and technology are all things of value in themselves. And money enables us to exchange them, even with people we don’t know, at a distance.
But the value isn’t in the money in the same way that nutrition isn’t in a can opener. Money is just a slip of plastic or a number in a database. What can you do with those? Nothing! Unless the rest of us who participate in the monetary system grant you the authority.
Money is permission from the people who provide goods and services for you to obtain some of them. That’s literally all it is.
Imagine if you alone could control who is granted that authority. That would be an awesome power, wouldn’t it? No matter that someone is hungry, while food is being thrown away. Without you granting your authority, nothing could be done for them. What would you make people do to get some money?
In our present system, what the people with the money want, for granting the authority to use it, is more money. In other words, more access to things of value for themselves.
For the rest of us, a way to get money is to work. But there aren’t enough jobs for everyone. And most jobs around the world provide mere subsistence. For any quality of life, nearly everyone must borrow from the relative few with money. When we pay it back, we must pay back more than we borrowed. And all the lender must do is have money, to begin with.
Is there any mystery to how the rich get richer? It’s obvious, isn’t it?
But why should money be that rare? Plastic isn’t rare. Numbers aren’t rare. For that matter, food isn’t rare either. Why should anyone go hungry?
Good question. This system of extraction, which we all take for granted, only works because other people control our access to money, as if it is a rare thing of value in itself, instead of simply an authority to obtain resources.
This is one reason why the concentration of wealth is so destructive. It robs most people of access to what they need and grants obscene profligacy to a few who have no concern for them. As they fly their luxury jets from penthouse suite to private island, will they notice any children starving? Unlikely.
Without some countermeasures, like labour unions, progressive taxation and social services to level the playing field a bit, the flow of wealth is all upward. Which is just how the mates like it.
Now imagine you could make the money out of nothing in the first place. What better way to get rich than to make money for no cost and then sell it for a profit. It sounds ridiculous, doesn’t it? But it happens every day. It’s what banks do.
Are you starting to notice how stinky this is?
This sale of money itself, which we call debt, is as old as tyranny and inequality. But it hasn’t gone unchallenged. Even despots relented occasionally. From Sumer to Babylon, rulers in the ancient world freed debt slaves and returned forfeited land to its original owners. Later, in the Peloponnese, Solon ushered in the Greek classical age with – you guessed it – a debt jubilee.
These weren’t simple acts of largesse. They certainly made incoming rulers more popular, but they were also necessary. These states needed motivated farmers and soldiers to keep them functioning, not miserable, resentful drudges.
Judaism, Christianity and Islam all maintained injunctions against interest on money. If you lent money in these pre-industrial societies you were entitled to get it back plus some of any profits the investment generated. But you didn’t get a return just because you lent it. That’s a big difference — and it was about to change.
Through military conquest, European states gained access to vast natural resources and slave labour. And they harnessed this engine of productivity with an emerging global financial system, the purpose of which was to move investment quickly to where the profit was.
By the 18th Century, when population growth, urbanisation and industrialisation accelerated, a system was in place for wealth extraction on a massive scale, enriching a global class of idlers and wastrels. To flourish still depended on ideas, initiative, effort and perseverance, but only for those who weren’t born to rich parents.
From the 1980s, as information technology put the system on steroids, the servants of capital began to conjure new ways of sucking value from the work of others. Having wrung what they could from the present, they mortgaged the future. A vortex of credit pulled whole populations into spiralling debt. When the system collapsed, governments transferred more wealth from worthwhile programs to prop it back up.
You might have thought that the GFC had burst this bubble. But that would be naïve. Reviewing the research, analyst Rana Foroohar found that only 15 per cent of U.S. market capitalisation since the GFC has been productive. The rest is basically gambling.
https://t.co/gcQXPokXcr— Sajida Wasim (@WasiMOra) August 18, 2017
The Economy’s Greatest Illness: The Rise of Unproductive Finance
This demonstrates systemic failure at many levels — government, business, the media and a gullible public have all had a hand in it. But it can only happen because promises of future money – and their derivatives – are given an independent value that can be traded. Someone must pick up the tab. And they must do it from real productivity. That would be us. And the natural world.
It is this terrible financial burden which is propelling us toward global environmental collapse. And it is why life is becoming unaffordable for your children and grandchildren. We must all work harder and longer – even as jobs disappear – converting more of the already damaged earth into the trades and interest payments that keep these giant parasites bloated.
Until the system collapses again, as it surely must. It’s all happened before, many times.
Oh dear. What a mess. Is there anything we can do?
Indeed there is. All around the country and the world, a growing network of academics, entrepreneurs, creatives and organisers are inventing, testing and implementing viable alternatives. You won’t hear much about them on the nightly news. And there’s a reason for that.
Customer credit systems, community currencies, local exchange programs and loans repaid with discounts on service are all potential ways authority can be granted to obtain resources without automatically enriching a third party somewhere else.
For most of the things human beings need day to day, these are better, more efficient systems, because they retain the value of productivity within local communities. All that’s missing is a renewal of the public awareness and trust that has been eroded by years of big brand marketing, corporate propaganda and the corrosive influence of the mates.
Kevin Cox and Mike Dowson will be joining many others, including thought leaders like Kate Raworth, to present these initiatives and more at the New Economy Network conference taking place in Brisbane from 1 to 3 September.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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