Friday, April 18, 2014

why capitalists do not want recovery and what that means for america...,

bnarchives |  Can it be true that capitalists prefer crisis over growth? On the face of it, the idea sounds silly. According to Economics 101, everyone loves growth, especially capitalists. Profit and growth go hand in hand. When capitalists profit, real investment rises and the economy thrives, and when the economy booms the profits of capitalists soar. Growth is the very lifeline of capitalists.

Or is it?

What motivates capitalists?

The answer depends on what motivates capitalists. Conventional economic theories tell us that capitalists are hedonic creatures. Like all other economic “agents” – from busy managers and hectic workers to active criminals and idle welfare recipients – their ultimate goal is maximum utility. In order for them to achieve this goal, they need to maximize their profit and interest; and this income – like any other income – depends on economic growth. Conclusion: utility-seeking capitalists have every reason to love booms and hate crises.

But, then, are capitalists really motivated by utility? Is it realistic to believe that large American corporations are guided by the hedonic pleasure of their owners – or do we need a different starting point altogether?

So try this: in our day and age, the key goal of leading capitalists and corporations is not absolute utility but relative power. Their real purpose is not to maximize hedonic pleasure, but to “beat the average.” Their ultimate aim is not to consume more goods and services (although that happens too), but to increase their power over others. And the key measure of this power is their distributive share of income and assets.

Note that capitalists have no choice in this matter. “Beating the average” is not a subjective preference but a rigid rule, dictated and enforced by the conflictual nature of the system. Capitalism pits capitalists against other groups in society – as well as against each other. And in this multifaceted struggle for greater power, the yardstick is always relative. Capitalists – and the corporations they operate through – are compelled and conditioned to accumulate differentially; to augment not their personal utility but their relative earnings. Whether they are private owners like Warren Buffet or institutional investors like Bill Gross, they all seek not to perform but to out-perform – and outperformance means re-distribution. Capitalists who beat the average redistribute income and assets in their favor; this redistribution raises their share of the total; and a larger share of the total means greater power stacked against others. In the final analysis, capitalists accumulate not hedonic pleasure but differential power.


umbrarchist said...

We do not distinguish Capitalism and Economic Power Games.

Adam Smith talked about "Enlightened Self Interest" but who was supposed to be enlightened? If the losers are supposed to be kept ignorant then that better serves the power gamers.

Not having double-entry accounting mandatory in the schools makes so much sense from a certain perspective but is that Adam Smith's Capitalism?

umbrarchist said...

The BBC produced Ago of Uncertainty created by Galbraith and released it in 1977.

When Milton Friedman heard about it he came up with Free to Choose. Galbraith blew Friedman away. but then AoU disappeared for 30 years while FtC was still promoted. Now you can find Age of Uncertainty on YouTube but Free to Choose had decades of propaganda advantage.

Money Manipulates the Mass Mind

Tom said...

It's pleasant to blame Harvard and the right wing, but Samuelson was King of Economics, and I think more than anyone else he made it a system of belief.

umbrarchist said...

Samuelson's ECONOMICS was the book used in one of the Econ courses I
took in college. But we only covered a small fraction of it in that
semester. But after I read

The Screwing of the Average Man by David Hapgood

decided there had to be something wrong with what I was taught. So I
decided I was going to figure out what it was if I had to read
Samuelson's cover to cover. So I would go home after work and read 15
or 20 pages each night. I had gone about 5 pages passed the equation
for Net National Product when it hit me.

At the time I was
working repairing stereo equipment. I hated the garbage most people
bought. But most people didn't even know what questions to ask about
the equipment. So that was why I noticed that the depreciation of
durable consumer goods got disappeared. Stereo equipment was durable
consumer goods.

Once a year we had a party at the warehouse where
equipment left by customers was auctioned to technicians and the
highest bidder got to smash it up. The money was used to buy pizza for
our monthly meetings. But there was so much junk that never should have
been manufactured. Of course an economist couldn't figure that out.