by Mike Meyer ~ Honolulu ~ February 24, 2021
Someone needs to contact Capitalist Mission Control. There is a problem with Wall Street, and no one seems to know what to do.
A basic assumption of market economics is that people who trade do so for their own best interest. In the artificial world of modern economics, this is obviously a bad assumption, but more than a hundred years of mathematical models using that assumption have made it sacred.
This was a key part of the assumption behind the capitalist concept discussed previously: Mandeville’s Fable of the Bees or Private Vices, Public Benefits. To understand the mess we are in today, you need to go back to what started it at the beginning of the 18th century. The Fable of the Bees was published in 1714 and strongly influenced the Scottish Enlightenment thinkers, including David Hume and Adam Smith.
Smith’s Invisible Hand of the Market brought those public benefits from greed. This was the basis of the Free Market concept, although the Invisible Hand first appeared in The Theory of Moral Sentiments in 1759. This formed the basic justification for laissez-faire capitalism that created the brutal world of Charles Dickens in the middle19th century with such works as Oliver Twist.
The problem first discovered was that the benefits accrued to the owners and not the workers. The underlying problem is that the assumption only appears to be rational. But the issue here is the market that reveals the future by determining values for almost everything in American society.
With this brief history, the wild swings of Wall Street after forty years of increasingly distorted economics should not be a surprise. The GameStop disaster is a symptom of what happens when the invisible hand is guided by social media mavens empowered by a planetary network, and profit has nothing to do with public benefits.
Yet the mainstream media, filled with howlers of all types, insists and defines the market's increasingly absurd surges as prognosticators for a massive economic recovery. That the market is now rewarding any company with a + sign in its name and some access to media that can stream is another version of the GameStop scam. The difference is that it is being manipulated by mainstream capitalist owners of those new companies.
Needless to say, they are now valued well above any revenue that they can generate. Having spent a large part of my life in cable TV, finally working on the development of streaming media, there are no rational minds involved. Greed is the name of the game, and screw the hindmost.
What drives valuation now is not the production of goods but the hyping of services. This is in one way good because the capitalist-driven greed, after two centuries, succeeded in destroying our atmosphere and brutalizing 90% of our population. But to insist that the market is anything but a roulette wheel controlled by whoever can build the best memes is ridiculous.
Open markets are important for establishing pricing for products in limited supply that are not essential to our welfare and survival. Dealing with the total economy of a continental entity with 300 hundred million people cannot rely on a roulette wheel for human well-being.
The US and some of its oldest imitators are sliding into an economic disaster that is only an offshoot of a planetary disaster based on endless production and greed goals. This has been recognized as a lousy way to maintain a population and a planet for decades. A dynamic, immigrant population with vast natural resources, incidentally stolen from the indigenous population, produced a hundred fifty-year orgy of consumption.
The growth allowed steady increases in per capita wealth, raising living standards even with reliance on slavery or near-slavery. Two hundred years of population increase and the model of excess consumption while raising, finally, most living standards on the planet, ran up a huge bill that is now due.
Somehow, this is too hard to understand by the lucky enough people to end up on top of the pile. They want more and will insist that everything is beautiful and nothing hurts. Their idea of beauty comes down to racial supremacy and desperate need to keep this planet as a zero-sum game with themselves as the permanent winners.
Divorcing politics from the economics of wellbeing on this planet leaves an obvious listing of the winners and losers entering the mid 21st century. In one sense, we can see this as debt to the planet by those groups, nation-states, who took most and paid the least over the modern era.
The following comes from a new study published in The Lancet by Steffie Woolhandler, a public health professor at the City University of New York, on Public Health in the Era of Trump. But the Trump nightmare, as bad as it was, is not the cause of this debt paid by the US population.
Below is a chart of life expectancy in the G7 nations. The US began to fall off in 1980, coinciding with Ronald Reagan's election, which began to destroy the nation's well-being to funnel more money to the super-rich.
To put this in simpler words, the market diverged from overall well-being to the most wealth's arbitrary benefit. We can see the result, but Reagan’s marketing didn’t mention this imposition of debt on the entire population's life expectancy to benefit his owners.
The following chart from the same article listed above is the Missing Americans showing the excess deaths in America over the G7 nations. The zero line is the death rate among G7 nations.
This is not the COVID deaths brought to America by Donald Trump. It is the excess deaths from the 1980s to 2020.
This is a huge price to pay over the last forty years and shows how far from reality the US market economy at its height is from reality.
If we look at economics and growth in international influence, China has already passed the US. Despite early fumbling common to the Chinese government, they were able to control the pandemic with the resources to support their population. On the economic level, it is obvious that a centrally managed, limited capitalist economy is better than extreme, predatory capitalism for the populations in question.
This does not forgive China for humans rights abuses and the refusal to implement any form of direct democracy. Still, we can also say that for the US and other capitalist nations.
The market is not the divine answer. It is a portion of the answer, but the emphasis must be on the commons and universal wellbeing for us to have any hope for the future.