Virtual Wealth Casino Economy
“We don’t talk of 'earning'
money these days,
we talk of 'making' it.”
For the evening meal around the bonfire, Chef Lua had prepared a light tofu salad with broccoli and pineapple. She also brought out canned tuna and resealable containers of beef jerky, chips, and a great variety of cheese and crackers for those passengers who would not consider her nutritious meat-free salad a complete meal.
We each found a place around the bonfire, cast and crew all mixed together, and enjoyed some quiet time staring at the mesmerizing dance of flames before us.
Tucker had brought along his own private stash of rum for such occasions, generously offering some to everyone. Jan and Captain Bob were the only ones to take him up on it, the others satisfied with water, coffee, and tea.
We were enjoying a simple meal together on a pristine island beach all to ourselves under a clear night bursting with stars. I was lightly strumming some islandy music on my guitar, as one would expect to hear around a beach campfire with friends.
And then, about a half-hour into our calm, carefree time together, a mildly inebriated Captain Bob lit the fuse.
“Well, seems like many of us honest, hard-working people got toasted royally in our pursuit of the good ol’ American Dream from that financial crisis. Gotta love those fat-cat ‘playas’ on Wall Street pulling all them puppet strings. Privatize the profits and socialize the losses, huh Paul?”
Bob knew about Paul’s career on Wall Street and decided to do a little needling to get him going. But Paul’s response was not what he expected.
It is an economic reality today, after all, that in ‘advanced’ economies — where cumbersome and inefficient bartering is relegated to a fringe activity — any substantial economic activity must always be matched by a financial transaction. If the financial system fails to provide the means for such transactions, the real economy cannot function.
So when asset values dropped precipitously, as they did in 2007-2008 — and credit dried up — the system went badly awry, resulting in a sharp decline in real economic output.
Not helping matters, ‘fractional-reserve banking’ allows ‘alchemical creation’ of money out of thin air by private banks as interest-bearing debt.
But debt is not wealth.
Real wealth has a physical dimension to it that limits its growth, which places obvious limits on real overall wealth — while debt can theoretically grow — forever! And modern banking requires just that: perpetual expansion.
It is also noteworthy that the historically fierce debate over interest systems and ‘usury’ was rooted in the obvious concern that money as a ‘disembodied force’ would be dangerous because if could grow out of control and, like an acid bath, dissolve deep life connections in all human economic transactions.
Combining the necessity of financial transactions in all major economic activity with fractional-reserve banking, unchecked growth in interest-bearing debt (to place bets with), and a bevy of ethically bankrupt and greedy Wall Street ‘banksters,’ is it so surprising that sleazy financial shenanigans resulted in severe economic pain for millions on ‘Main Street’ — and for one ‘Captain Bob’? He wanted some answers.
Paul calmly responded,
“Well, captain, I have to say there was a time when I was ‘all in’ with the Wall Street culture and proud to be there. We were respected financial wizards once — raising money for big projects of great genuine worth to society. Twenty years ago, I would have had a very different reaction to that characterization you just made about my professional life. But slowly, over the years, I got to see how my colleagues became ever more addicted to making easy money, gambling with any and every manner of complex ‘financial product’ they could come up with — and they could never get enough. It had become a game of rising and falling digits and graphs on a computer screen — a virtual-wealth casino economy — with little connection to reality or providing any genuine value to society. But it was the drug culture on The Street that really did me in. And now I’m kinda glad it did. I had been pulled in too deep. I had lost my way.”
Paul wasn’t proud of the years he had spent competing hard for commissions and pushing fishy fanciful financial products on gullible investors — products he knew were of very dubious value.
His description of a virtual-wealth casino economy resonated with Julie.
“Our whole culture now reinforces this strange new model of success today, Paul. We don’t talk of 'earning' money these days, we talk of 'making' it. Somehow the notion of earning a living by offering products or services of genuine value to others has gone out of fashion. I just don’t get that. When did that happen? It’s like we’re just trying to dupe each other all the time; and we take pride in our ability to get away with it. We have definitely lost our way.”
Tucker chimed in. He’d already had a few hits of rum and was juiced up nicely for some good verbal sparring,
“That is just such nonsense. The free market determines the genuine value of things quite efficiently and does a pretty good job sorting out winners and losers. People buy whatever they think will improve their lives — including ‘financial products.’ Some people make bad decisions — too bad. And by the way, the less government interference in this self-correcting process, the better. Leave Wall Street alone; the free market will iron out any wrinkles. Survival of the fittest, that is all.”
Bob knew where to cast his next bait,
“Yeah, less government would be great, since all that the politicians do these days anyway is just take soft bribes in the form of campaign donations to tilt the playing field in favor of the rich, huh Clara?”
Clara responded emphatically,
“Politicians are simply looking after the best interests of their constituents. We do what we need to do to improve our communities. We lead!”
Julie wasn’t buying it,
“Is that so. It seems quite obvious to me that politicians only care about getting re-elected, and that means listening to their wealthy campaign contributors. If that weren’t the case, we would be taking far more aggressive actions on climate change and other threats to the environment and moving away as fast as possible from dirty fossil fuels. This two hundred year old fossil-carbon energy experiment has got to stop or it’s game over for ecological stability on this planet. We are already experiencing a sixth great extinction from our collective impact on the natural world. Don’t politicians have a responsibility to do something about this unchecked, reckless behavior and push back on what is becoming a naked corporate takeover of the federal government by Big Oil, Big Ag, Big Pharma, and others? Isn’t that what we should demand from our political leaders?”
Jan offered her opinion,
“The free market will tell us when it is time to make a change, and that includes telling us when it is time to move away from fossil fuels. Politicians should not get involved. The free market process is magically self-correcting. Leave it be.”
Jack jumped in, assertively,
“Magic it is, alright — black magic! If the market told the truth, it would be telling the whole ecological truth, not just a feel-good, endless-growth, prosperity-for-all myth. Let’s get real here, folks! It is a profound market failure — criminal negligence, I would submit — not to include the pollution-related health care and climate-changing costs of a ‘petroculture’ economy built almost entirely on the continuous burning — for over two hundred years now — of massive quantities of fossil fuels.”
Jack explained why free-market economics has, so far, been quite successful at sustaining and improving social order. The distribution of goods, services, and other assets is facilitated through open and free buying and selling, supporting a dense network of exchange, that is available to everyone.
It incentivizes producers to know their markets and respond to them instead of relying on top-down regulation. Learning happens continuously from experience, so processes become more effective and efficient.
And a free-market economy supports a more egalitarian society than many other forms of controlled economic systems.
He said that there is incontrovertible evidence for centuries of positive social gains on many fronts that are correlated with free-market expansion: a clear and steady decline in violence of all sorts along with equally impressive increases in human health, longevity, access to education, and global human rights.
But Jack also argued that classical free-market economics urgently needs to be restructured to send both a market price signal reflecting private utility and a socio-environmental score reflecting the burden of the transaction on public goods. The ‘commons’ matter.
Market price alone should not have the final say. The composite price-score would reveal a truer relationship between common resources and individual desires showing how much is given up or sacrificed publicly and over time for what an individual desires privately and right now.
Jack stated firmly,
“We can’t keep on powering a world coming up on eight billion people by continuing to burn grotesquely large amounts of fossil carbon and expect the Earth’s biosphere not to choke and gag on the accumulated exhaust. Our planet’s climate appears innocuous enough, but make no mistake my friends, she is an ornery and temperamental beast, and we are foolishly poking at her with sticks. What could possibly go wrong! It’s a stupid, reckless, and dangerous game we are playing here, folks.”
Jan’s reaction was not surprising coming from a corporate attorney for Big Oil,
“Come on, climate change? Wasn’t it called 'global warming' just yesterday? What happened there? Warming not scary enough? How can you claim we have anything to do with that? It’s been going on forever. And many scientists disagree with the notion that we are causing this climate change you are referring to.”
I had been playing some light, jazzy cocktail-hour music on my guitar, while listening to the others talk and thinking about the neoliberalist turn we took in 1980s that brought deregulation of the corporate sphere, privatization of the public sphere, and corporate-friendly ‘free-trade deals’ on a grand scale to all regions of the world — and in the wake of the 2008 financial crisis, brought severe structural adjustments in debtor nations like Ireland, Greece, Italy, and Spain.
This ‘free-market revolution’ — with its veneration of greed, individualism, and competition — has starved states of revenue to support public works and the social wage, precipitated several financial crises, and hastened ecological destruction globally.
Many climate change deniers are, consciously or not, simply defending their cultural investment in this grand ideological project of extremist capitalism, which holds that ‘the market’ is always right, regulation is always wrong, private is good, public is bad, and taxes that support public services should be eliminated.
To admit that the climate crisis is real and a legitimate threat to civilizational survival would deal a major body blow to this grand global neoliberal experiment.
British prime minister Margaret Thatcher’s famous declaration that ‘there is no alternative’ has lodged deeply in the psyche of capitalist society.
Grotesque concentration of capital in private hands driven by all-out grabs for global resources has entrenched the power of transnational capital to dictate the trade and finance policies of most countries. These policies pit democracy against oligarchy as they battle for dominance.
In extreme cases, pathological disregard for community in the developed world by the pure capitalist class basically says: ‘Sorry that you have to compete with the poor of the world for jobs and wages. Just because we are fellow citizens of this great country creates no obligations on our part to consider your interests.’
At its core, neoliberalism appears to be nothing more than a sophisticated rationale for unfettered greed.
So not surprisingly, intended or not, neoliberalism has restored processes of capital accumulation and wealth concentration to pre-1930s levels.
If this corrosive brand of extremist capitalism goes unchallenged — and place-agnostic footloose money managers continue to recklessly create highly interdependent, brittle, unstable communities motivated only by their short-term economic interests — then ever-increasing environmental degradation, economic inequality, and community dissolution are assured.