Tag Archives: #money

The great redistribution and the biopolitical penetration of the American brain

13.V 2017

Wealth is inherently empowering and motivating; poverty is neither [Jonathan A. Winters].

Rising inequality is not the result of economical rationality and neither is it only a function of erosion of empathy or moral fiber (although the latter is its sine qua non). It is rather a direct reflection of redistributive policies that have helped the richest get richer. On the other hand, poverty by itself neither motivates nor provides a core set of common interests for the poor the way wealth does for the rich. The presence of wealth focuses the political attention of the rich on wealth defense; its absence has no parallel effect on the poor[1].

Inequality has always been a topic in public discourse. However, after the 2008 financial crisis, the destruction of wealth on a massive scale awakened much larger segments of society to the reality that they were unable to finance the lifestyles they had previously enjoyed. Response to the crisis has been articulated through an unprecedented injection of “easy money”. But, this money was hoarded by capital and did not filter down to labor. Rather than serving the collective interest in financing general economic progress, “easy money” turned into the extraction of resources from increasingly impoverished societies. The case of airlines industry presents an illustrative example of this mechanism. Even as the price of fuel collapsed, little of that benefit was passed on to consumers or airlines’ employees: Air travel is as uncomfortable as ever, ticket prices have gone up and none of the profits resulted in higher wages of the airlines employees. Most of the “easy money” has been used to reinforce their monopolistic power.

Democracy requires commonality, inequality undermines it. The democratic process was originally conceived as a way to peacefully resolve economic disputes between people who share common values, either cultural, religious, or in terms of lifestyles or visions of the future. When inequality reaches the critical point, the bonding tissue that keeps society together begins to tear and democracy becomes compromised. In the absence of commonality disputes can no longer have peaceful resolve. Instead, the resolution occurs through negotiation or war. As electoral democracy alone can no longer safeguard the economic interests of the many people from American oligarchs, economic initiatives are no longer effective. A quest for social change takes center stage and a search for a new equilibrium is set in motion.

Social stability defines equilibrium. Social transformations, therefore, represent a change of equilibrium. They are always disruptive and have the appearance of discontinuous processes. Economic changes always take place against a particular social backdrop: When a social equilibrium is reached, society stabilizes allowing the economics to set in. The subsequent economic developments are typically linear – small departures always revert back to the equilibrium — restorative forces overpower those that destabilize the system.

2008 was a paradigm shift not only for economics but for the entire way of empirical approach to reality, which has laid the foundation of rationality and has dominated the Western thought. The crisis has set in motion a social change – the system has begun to search for a new equilibrium, announcing the end of 500 years of history. And, as history is getting unwound, the repositioning in the oligarchic space is taking the center stage. There is no left or right any more. The only meaningful distinction that reflect the type of oligarchic redistribution and its re-functioning is their emancipatory or regressive orientation.

The mindfuck

Where there is inequality of estates, there must be inequality of power. (James Harrington)

Oligarchy rests on the concentration of material power, democracy on the dispersion of non-material power. The American political economy is both an oligarchy and a democracy — a distinctive fusion of equality and inequality. Civil oligarchies represent the most significant political innovation, never seen in history before the creation of the modern state. As a characterization of the Western (predominantly American) political system, civil oligarchy is the result of a shotgun marriage of two contradictory concepts, brokered by an interesting play of numbers: The vast majority of citizens exert very little concerted material power in politics, but a small number of individuals each have at their disposal the resources it would take tens of thousands of their fellow citizens acting in sustained coordination to match[2]. The two groups stand in constant opposition — their conflict never disappears, but defines the driving force behind the underlying sociopolitical dynamics. It pushes all other themes out and becomes the main axiom of the political economy. This disparity of numbers forces a continuation of underlying antagonisms until one side declares victory. As a result, the political process loses its connection with democracy.

The reconciliation of oligarchy and democracy requires a Hegelian Aufhebung, a non-linear logical maneuver whereby the resolution of the inner contradiction is suspended until the concept is completed during synthesis — abolition of the Real to realize the Idea.

Oligarchs represent individuals endowed with enormous wealth which both empowers and exposes them to threats. In America, they constitute only a fraction of one percent of the population and have at their disposal material “voting” power that is hundreds, and in some cases tens of thousands, of times that of the average citizen. To understand the power multiplier, which reflects the underlying wealth differential, one should think of wealth as an instrument that enhances the persuasive power and influence of an individual. For example, being able to convince poor people to vote against their direct interests and in favor of the oligarchs, and to convert these things into laws and tax codes – the essence of the Republican Southern Strategy program as outlined by Lee Atwater — requires considerable resources and access to media, religious and secular institutions, lobbyist and a variety of political consultants that only money can bring. Mind-fuck is an essential ingredient for the functioning of civil oligarchies; without it, they could not persist.

The Material Power Index (MPI) is a way of quantifying the disparity of democratic participation. MPI assigns a base value of one to the average material power position of Americans across the bottom 90 percent of the population. The weakest American oligarchs have between 125 and 200 times the material power of an average citizen. Oligarchs at the very top of American society have an MPI just over 10,000, which happen to approximate the MPI of Roman senators relative to their society of slaves and farmers[3]. This has gone even more extreme after the 2010 Citizens United ruling. In this way oligarchs can legitimate their position with all of their power and influence, without resorting to force – which time and again has proven to be an expensive and fragile tool of stability.

It is not very difficult to see haw a handful of super rich oligarchs can tip the scales of any election. According to 2007 data, the 400 richest Americans have an MPI in excess of 10,000; these 400 top oligarchs have the “voting power” of four million people. Outside of this group, the average MPI of the 1/100th of a percent of the top earning taxpayers (who own about 2% of all American wealth), about 15,000 people, is around 1000. This means that 1/100th percent of the population had the “voting power” of 20 million. This is a significant fraction of the voting population (about 130 million in the 2016 US elections). Normally, elections are most often won within 1-2 million margin. Therefore, a victory can be achieved by attracting 100-200 top oligarchs.

Synthesis: Oligarchies as new cognitive coordinates

The essence of oligarchy within democracy rests on the near-veto power oligarchs retain on threats to concentrated wealth. The wealth protection instinct has been one of the strongest sociopolitical forces in human history. Although the attitude towards all kinds of inequality like slavery, racial and gender exclusions had been revised in the past, the same cannot be said for wealth inequality. The resistance against radical redistribution of wealth has been remarkably robust and resilient across a variety of political systems, from dictatorships, monarchies, peasant societies, to post-industrial formations and democracies[4].

As an approach to the problematics of comparative politics, oligarchy as the politics of wealth defense emerges as a better candidate for a unifying framework than the traditional framework based on assumptions that the dominant dimension of a country’s political actions is geographically conditioned. The oligarchic landscape defines new cognitive coordinates necessary for understanding current geopolitical developments. A variety of complex socio-political configurations and their transformations gain instant clarity and simple intuitive interpretation when seen from the point of view of oligarchic redistribution and repositioning.

The mechanism and logic behind this is relatively simple. Oligarchy should be understood as the politics of wealth defense. Outside of the context of wealth defense, different oligarchs can, and generally do, have vastly different agendas (e.g. democrats vs. republicans in the USA, pro-choice vs. pro-life, Tesla vs. Uber, or Bill Gates vs. the Koch brothers). However, they are all united in one common goal – their wealth preservation. This explains why one single common driver alone captures such a wide diversity of developments that sometimes, on the surface, appear to have no logical or rational connections.

[1]  Jeffrey A. Winters, Oligarchy, Cambridge (2011)

[2] ibid.

[3] ibid.

[4] ibid.

A commodity like no other

10. IV 2016

While imposing the globalization of agriculture on the Third World economies, developed countries are taking a great care to maintain their own food self-sufficiency. The West has never abandoned this policy and with systematic financial support for their own farmers (in Europe, this support accounts for more than half of the entire European budget), it is blatantly violating the free-market economy rules it is trying to impose globally. In this process, many countries are kept in a state of postcolonial dependence and are becoming increasingly vulnerable to market fluctuations (e.g. starvation in Haiti and Ethiopia as a consequence of higher prices of corn due to biofuel usage).

The following three examples give a sample of strategies that have been employed in the past. The methods range from outright bullying in the global markets, to stalling tactics when it comes to financial aid measures.

1) The bulk of the economy of the African county of Mali is based on two commodities, cotton in the south and cattle in the north. Mali produces top quality cotton. However, it can not compete on the global markets because the financial support of the US government to its own cotton farmers exceeds more than the entire state budget of Mali. The cattle industry suffers a similar handicap as the European Union’s subsidy for every single cow (around 500 Euros) is higher than GDP per capita of Mali.

2) West has been continuously pressuring African countries into dropping government subsidies for fertilizers, improved seed… Without subsidy, agriculture could no sustain itself based on the domestic market alone. In that way, the western pressures opened the way for the best land to be used for export crops ruining these countries’ capacity to be self-sufficient in food production. This led to integration of local agriculture into global economy: as more domestic crops were exported, countries had to rely increasingly on imported food while farmers thrown off their land were forced into slums, where the only work available was in outsourced sweatshops.

3) To put things into perspective in terms of scale, priorities and timing, compare $700bn spent on stabilization of the banking system in the US with $22bn pledged (by the rich nations) to help develop poorer nations’ agriculture, out of which only 1/10th ($2.2bn) has been made available so far.

The circle of postcolonial dependence is closing again

Systematic extension of these strategies is spreading globally with large international companies (from Korea, Saudi Arabia etc.) leasing long-term arable land in undeveloped areas. By investing in infrastructure, these companies will create jobs for the locals and, at the same time, secure the consumers for their products as they will spend that money on “imported” food farmed on their own land. The proponents of the new world order use this part to argue that the lack of food is in itself and indicator of progress, since people in fast developing third-world countries earn more and so can afford to eat more. However, this new demand causes withdrawal of supply from millions in the countries lacking such fast growth.

Unlike other commodities whose abundance or scarcity can be converted into quality of life upgrade or downgrade, basic resources like food, water and energy are a matter of survival whose absence at some point could have irreversible effects on the entire economy. The list of products and services which, like food, are not commodities like others extends further including defense, the environment as such, culture, education, health etc. Substantial fluctuations and otherwise normal market uncertainties in prices of these resources can not be tolerated and decisions regarding their accessibility can not be left to the market. By extension of this argument, the free market should be left to rule only inessential products (toys, cosmetics, clothing,…).

From production to rent economy and the growing scarcity premium of the basic resources

We are approaching a global state in which the potential scarcity of basic resources like energy, water and food, would become the determining factor in international politics. A proper approach to these problems can not be addressed as a short-term issue. It is unlikely to be handled by any regulations, but rather with a long-term agenda in mind and out of the realm of free-market economy.

With the advancement of technology, the production costs are likely to continue to decline, but the price of basic resources (like other technology related products) need not  decline in tune with production costs (e.g. the price of oil does not reflect its production costs). Rather, the economy in this area will evolve from production to rent based. The consumers of the basic resources (in this case the entire planet) are likely to pay a rent premium to the owners of these resources and this scarcity premium is likely to continue to grow due to their diminishing supply.