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sábado, 6 de março de 2021

Market capitalism and State capitalism

 

In common capitalism, of the so-called market economies, the State oligarchies are a kind of functionalism serving the enlargement of private capital, which decide on redistribution. In State-capitalism that bureaucracy takes power, appropriates the income generated and, decides and subordinates private capital.  

 

Summary

1 - State, an essential element for the success of capitalism

2 - Where a world of nation-states has led us 

3 - The role of the State in the practice of socialism

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1 - State, an essential element for the success of capitalism[1]

If the State is an essential element for the management and accumulation of capital, with the concomitant domestication of work, will it be strange that in the USSR and, other countries where the said socialist model was applied, State had assumed that role? Is the existence of a State (apparatus) a technical-administrative parameter or, a political element, of segmentation and hierarchy of a population, between governors and governed?

By State is meant the apparatus generated to build capitalism as a mode of production, from the 17th century onwards, aside to the Protestant reform, in a process whose maturity was reached with the French Revolution; and followed by a fleeting essay on the social organization based on self-organization, the Paris Commune.

The State has established itself as an essential device to delimit a territory (nation-state) for the exclusive use of its capitalists, of its export textile producers, of its commercial shipowners, of its pirates/privateers, of its bankers, their colonies and, for their defense against competition. These functions were aggregated under an ideology - nationalism - then symbolized by a king and, still, in northern Europe, where capitalism was more developed, by a national church whose maximum symbol was also the king (a practice that has been abandoned in recent times). The strong external competition, the conquest or the prey of the resources of the rest of the planet, demanded a scale that would materialize as that provided by the State apparatus, which constituted the aggregating element of the nation-state.

In the logic of feudalism, the concept of State does not apply; authority and arbitrariness came from the reigning feudal lord; the least harm to the people would be that their homes and fields would not be plagued by war and plunder, that young people would not be chased to serve in the war, or that girls would not suffer the rape practiced by passing soldiers.

The nation-state and the State are instruments created by capitalism[2], based on local groups of capitalists, organized for the exclusive exploitation of territory; or rather, for the exploitation of the labor product of the dispossessed of means of production. The possession and exploitation of that territory and its population required the borders surveillance by armed guards, both to prevent intrusions from outside, and the flight of workers abroad; and the State, with its taxation apparatus, was in charge of covering these expenses. On the other hand, the strong competition for the colonial prey forced an enormous mobilization of financial and human resources in the heart of each nation-state, in a frequent state of war with the competitors: or, for the subjugation of the colonial peoples and the transplanted slaves from Africa.

The promotion of patriotism in each nation-state was intended to generate the duty of defending the assets of the rich and their State, by the majority of its inhabitants, who had nothing of their own to defend: this duty even included the supreme sacrifice of life, to defend capitalists assets. The idea of homeland is an immense lie that makes dispossessed of assets defend the wealth of their wealthy countrymen.



The emergence of transnational companies and globalized financial capital, in growth and with an increased power, makes borders irrelevant [3], less for people and more to market holiday (physical or digital) and tends to reduce the State apparatus national essentially the role of tax collectors and the pacification of the workforce. Even the glorious armed forces of nation-states came to be constituted by professionals and mercenaries, no longer through mandatory military service, unsuitable for the sophistication of weaponry. 

 The relevance of the State apparatus is shown in its constant search to make the territory competitive, attracting investment, mainly external and from transnational companies; to reduce income and workers' rights to support companies, to strengthen their capitalization, since in the logic of capital, the gods first created the capitalist and then the slave, the wage earner to serve him and generate wealth; this, synthetically referred and desired by the political classes, like ad aeternum additions, of a nebulous GDP. As this concern is present in all States, materialized by a myriad of instruments for the fulfillment of this aim, there is fierce competition between nation-states, through wars (in their own name or, by proxy), environmental destruction, columns of refugees, poverty, epidemics; in the face of the optimistic and smiling air of the Gates, the Zuckerbergs, the Bezos and the like, wealth collectors and concerned with the great dimension of Humanity.

Among the precursors of the current situation, Rousseau, as an ideologue of the bourgeoisie, generated the idea of ​​a social contract between the possessed and the destitute, all conformed to their social and economic situation; this contract, although no longer referred to today, is what reveals the current situation in which the State and the political class are in charge of maintaining law and order, involving work in the salvific lust synthetically represented by GDP growth.

The concept of social contract emanates from that of social cohesion, as an instrument of sedimentation of a political, economic and social structure whose articulation leads to a greater accumulation of capital and perpetuates a peaceful social stratification. The caretaker of this contract is the State, whose monopoly on coercive power is the greatest guarantee of the continuity of capital accumulation, of a mass of exploited as instruments of that. To work, that device requires a functionalism - the political class - producer of ideology and technocratic; and as much as necessary, rapacious and repressive, with the massive intervention of several police, laws limiting rights or, littered obligations, regressive taxation, etc. And, focused on presenting service - to capitalists, workers and the instances of global capital - through measures such as the referred GDP growth, attraction of foreign investment, low labour cost, etc.

This social contract would, in fact, for Rousseau, be the instrument of guaranteeing a social cohesion that would keep the noble and bourgeois oligarchies in power at the time, having as a symbol of that unity, a king. The third state was the huge and heterogeneous multitude of those excluded from power that served as a complement to those mentioned above, in order to have the total inhabitants of the nation-state. The State, therefore, represented and supported the interests of the oligarchies, on the domestic scene or in the international arena, and guaranteed the use of the necessary coercion towards the commoners, whose duty would be to work and obey. This was, in summary, the main raison d'être of the State that emerged from the development of capitalism and even today.

This imposed social cohesion is a care, a concern, a coercion, inherent in the very notion of the State, having as a concrete agent, a political class. Later, Durkheim, in order to avoid the problems caused by the resistance of the dispossessed, which could harm the desired capital accumulation, invents a neutral State, generating consensus but always attentive and ready to use repression, in the form of a law or a club, about workers. The litany of GDP growth had not yet emerged as the defining element of people's unity and happiness.

A neutral State do not exist, nor has it ever existed. The social strata that benefit most from its existence and performance will, if not increase its privileges, at least maintain them, seeking to neutralize, or co-opt part of the competition, if necessary; for that, they count on the performance of one or more parties - a type of functionalism specialized in the traffic of influences - that will be in charge of using State power for party benefit and of the economic strata most committed to this party cooptation [4].

Thus, the State is a coercive apparatus that aims to guarantee, by nature, the stability of hierarchies within a nation-state; the convenient segmentation from the social and political point of view, through a stable articulation, accepted by rich and poor; avoiding, through the political class, conflicts resulting from social inequalities; maintaining the narrative of patriotism as a way of channeling to other peoples or, other nation-states, of responsibilities and animosities regarding problems that, in fact, are internal.

Where there is a State there is no democracy; or, in a less lapidary way, only formula is truncated or, false of the same. The State emerges as an instrument of the nation-state in general, under the control of possessed social strata, managers of the main channels of social control.

In today's societies, a nation-state is called democratic only because there are regular elections and various voting possibilities; although little differentiated, within the scope of a narrow and specious definition of democracy that allows the perpetuation of oligarchies, with low levels of conflict so that there is no damage to the accumulation of capital.

As the increase in State power has historically been established:

·          The development of capitalism, synthetically anchored in the industrial revolution, had several effects, leading to a greater complexity of economic relations and to a greater diversity of classes and social strata. Connections between people became denser, especially with the great growth of cities and d the urban population; these multitudes of working poor, starving unemployed and newly arrived in the city in search of a better life, led to frequent riots, strikes and protests that had as counterbalance, strong police repression. That demanded a great financial effort for the maintenance of police officers on the part of State bodies - government or municipalities - if not of hooligans groups or criminals paid to break movements claim workers.

·          The role of the State in maintaining frequent conflict situations required, at all times, large financial resources, sometimes obtained by loan s bankers for the financing of armies, training of officers and recruitment of young people to war. These conflicts could result both from the redefinition of borders in Europe, and from the dispute over the control over resources and peoples in colonial areas, as well as to the defence of merchant ships against piracy. The emergence of the USA launched a strong competitor in this process, with a vast and rich territory open to the West and the South, whose defenders it did not offer were vigorous resistance. In turn, the independence of the colonies of the Iberian countries constituted, essentially, another business area for the dominant powers - which could already call neocolonialism. These conflicts between nation-states still required high State costs with the existence of a competent diplomatic corps.

·          The drive of competitive capitalism forced to investments in education and research, in the natural sciences, astronomy, engineering, navigation, weaponry, geography or geopolitics with Mahan and Mackinder to express the ambitions of the great powers; but it also required the preparation of people with practical, administrative and accounting knowledge of the nation-states, in an accelerated process of structuring, creating a national identity. Later, other knowledge became necessary, using the energy of steam and electricity, the development of railway tracks, roads, transmissions, etc. Health care was essential for the existence of a qualified, numerous and healthy workforce (remember Bismark's pioneering action in the field of workers' health). In all these areas, there was a strong commitment, whose expenses required a counterpart in revenue. Although there were no concept of GDP it was intended to a stable social stratification, non - confrontational and, unequal distribution of wealth and income accepted without discussions or conflicts; superiorly managed by the political class and maintained by the State apparatus and its material, legislative and ideological resources.

2 - Where did a world of nation-states lead us?

As is clearly visible, the nation-states world of nowadays features up by:

·          A general subordination relation to global capital, especially financial, within a scale where it stands out, at different levels, those who have power to establish forms of unilateralism and, the overwhelming majority of the remaining, totally stripped of that power, whose equality with the powerful comes down to having a hymn and a flag;  

·          The existence of nation-states continues to be a way of dividing human beings, of generating and taking advantage of antagonisms, within the framework of a political macro-structure, in which the majority of these nation-states have little or no margin of viability or affirmation. Its constitution, in most cases, resulted from the arrangements and the convenient sharing between the colonial powers during the phase of the rise and geographical expansion of capitalism;

·          In recent decades the proliferation of transnational corporations and their power, acting under a global logical, targeting the production of components, useless in itself, to better master the production chain, become dependent the countries where those are produced by destroying those in any logic of rational integration into a national integration. And, therefore, making many nation-states as mere logistical platforms, with the capture of the respective political classes, as local civil servants;

·          The scale of migrations for economic reasons, ethnic or military conflicts show the failure of the nation-state model as a single and homogeneous entity, among equals, creating significant portions of those who are conveniently excluded, from vast areas that are tribalized or given over to banditry:

·          These antagonisms result of various types of artificiality present in many nation-states and of their borders, as an effect of the colonial legacy, and including multicultural entities, poor, disjointed, under the hegemony of one of them, submitted to the interests of global companies that exploit their resources. Other situations include the existence of feudal monarchies that, due to their wealth, are courted by the financial system;

·          The digital lataformas acting in a global logic, beyond the borders and nation-states generating monopolist powers and aggressive forms of action and of tax evasion, against which national governments, combine their impotence with formulas of subservience and/ or association;

·          The existence of international institutions (WTO, IMF...) aims to define the rules of economy, the formation of income and its distribution, riding one constant growth unsatisfactory and an eternal squeeze with the debt imposed on crushing the most nation-states;

·          All nation-states have a State, a political class, a bureaucracy, representing the national capital and also the representations of global capital, all committed in the "growth" which, however, little touches the overwhelming majority of the population; which, however, is beset by fiscal serve at the jump to the income derived and, by the normality of holding large debts; especially to have access to housing, since the States have long since given the matter to the gluttons of real estate and financial speculation.

3 - The role of the State in the practice of socialism     

In the 18 Brumaire, Marx states that the State machine is an autonomous and parasitic body managed by the executive power, which emerged in the transition from feudalism to capitalism. In this long process , experts of the Ancien Regime - lawyers, priests, soldiers - they were being adapted to the new situation, serving the apparatus of the capitalist State and not as servants of a king.

Marx, by focusing on capitalism in force in the most advanced countries in Europe - England, France and Germany - showed an optimistic and linear determinism based on the development of the productive forces and, therefore, he had not imagined that the first anti-capitalist revolution had arisen in the backward Russia; but he admitted that the rest of humanity would be free following the progress of those more advanced countries, socially and economically.

Only in his last years of life did Marx become aware of the existence of agrarian collectives in Russia that occupied 3/5 of the cultivated land, as seeds of self-managed forms and alien to the capitalist spirit; and, he also realized that the satisfaction of human needs should take precedence over the abstract process of capitalist accumulation. Trotsky, in his authoritarian and militaristic view of political action, would crush those economic and social structures after the October revolution.

We saw earlier the development of a State apparatus went hand in hand with the building of the nation-state, both designed for to meet the capitalist development needs, in the political, economic, social, security at international level, etc. In this context, capitalists used (and still use) the State apparatus and its bureaucrats to enhance private capital accumulation, choosing, in the form of electoral contests among the various party groups, those that can best serve this aggrandizement. To this model politicians gave the name of democracy, liberal democracy, social-democracy the ... or market democracy, as we usually say. In fact, it is an oligarchic model that puts off decisions, the overwhelming majority of the population in favour of a set of political oligarchies.

Later those same element of the nation-state structure also occurred in countries with lower economic development, with a class of small and weak capitalists, standing, as a result, the power of the State bureaucracy, unified as party managers under the name of worker, communist[5] or another similar emblem, in close connection with union bureaucracies, also oligarchic. In most of these cases, bureaucracies are present and control all economic, social, labour, cultural, artistic, sports, police, and military bodies. The heritage of fragile political, social and economic structures came to facilitate the establishment of hegemonic powers, self-anointed as the only source of all political knowledge, trumpeting an undeniable superiority - institutional and experiments on the whole population, poor, little educated, taken by a strong religious spirit, accustomed to the marginalization and brutality of power. As stated in a Portuguese proverb “flies change, the shit is the same”.

The notion of State apparatus assumed great importance around the establishment of a Soviet State, following ideas on the passage from monopoly capital (financial) to State monopoly capitalism, in the close-up view of Hilferding and Bukharin; or, an apparatus for the general management of production and distribution according to Lenin. This did not raise the question of the use of the State as a repressive, bureaucratic and military apparatus, but of its rationalized use in the service of the revolution; and Trotsky accentuates this tendency by defending the militarization of the economy (see Dictionnaire Critique du Marxisme pag. 5 1/5 2).

In reality, in the USSR it was a question of proceeding to capitalist development with an objective focused on an accelerated “economic growth” of the Keynesian type, concentrated on large, statized production units, which guaranteed adequate increases in productivity; on the other hand, small property, in industry, commerce and the countryside, was residual. It was expected that this would result in a substantial improvement in the population's standard of living and a healthy political and social coexistence.

In the USSR, the technical decision rested with party members, within the framework of the detailed guidelines of the omnipresent and omniscient Plan, produced and enforced by the high structures of the party-state - a political innovation that unified the State apparatus with the political class, while which all national structures, from art to mining, fit. In this structure, it was essential to strictly adhere to the superior guidelines to succeed in the structures of the Party and in life.

As we know, in market democracies the State apparatus is periodically parasitized by the members of the party that wins the elections, but the logic is that of rotation in the access to the pot, between two twin parties, both well rated with the local capitalists and the transnationals; what matters is to convey to the commoners the idea that there is a difference between choosing a dark black donkey or a light black donkey.

In short:

a) In the initial Western model, the State apparatus supports local capitalists (national) in the process of centralization and accumulation of capital, helping to win the competition of foreign capitalists; and, conversely, it seeks to support national capitalists to conquer foreign markets. Subsequently, in the current capitalism in which the role of borders is diluted, large companies and high finance are linked with domestic capitalists in a globalized context, monitoring or corrupting the governmental service elite.

b) In the old Soviet model, the State constitutes itself as a collective capitalist, as a manager of economic activity, to overcome the weakness of national private capital; and, on the other hand, it defends itself in the face of foreign investment, only admitted sparingly or in partnership, in cases where the national economic structure(ized) does not have the appropriate means, mainly technological.

In the first case, we talk about a market economy; the second was called socialism although it was, in fact , State capitalism.

This and other texts in:

http://grazia-tanta.blogspot.com/

https://pt.scribd.com/uploads

http://www.slideshare.net/durgarrai/documents                               
                                                                                                                                     


[1] Why is there no anti-capitalist strategy? 

http://grazia-tanta.blogspot.com/2021/02/porque-nao-ha-uma-estrategia.html

[2] On this topic:

https://grazia-tanta.blogspot.com/2019/12/estado-nacao-nacionalismo-instrumentos.html

https://grazia-tanta.blogspot.com/2019/12/estado-nacao-nacionalismo-instrumentos_28.html

https://grazia-tanta.blogspot.com/2020/01/estado-nacao-nacionalismo-instrumentos.html

The precarious future of the nation-state - 1, 2, 3, 4

https://grazia-tanta.blogspot.pt/2017/11/o-futuro-precario-do-estado-nacao-1.html

https://grazia-tanta.blogspot.pt/2017/12/o-futuro-precario-do-estado-nacao-2.html

https://grazia-tanta.blogspot.pt/2018/01/o-futuro-precario-do-estado-nacao-3.html

https://grazia-tanta.blogspot.pt/2018/01/o-futuro-precario-do-estado-nacao-4.html

[3] The coronavirus crisis came to establish oligarchic, authoritarian and impoverishing procedures on the part of the States that had been promoting free movement so much. On the other hand, the States promoted confinements, the sickly telecommuting, the closing of schools, unemployment, poverty, police arrogance, fines, discrimination against the poorest in public transport, along with restrictions on circulation for all. And, eventually conditioning the circulation to those who are not vaccinated and refuse to fatten databases about humans to the delight of Big Pharma and the information manipulators. All this for a virus that has so far affected 1.52% of the world population and that killed 2.2% of those infected, among whom the older ones, who have long been pushed, by capitalism to homes that look like prisons… since they are not competitive!

[4] The situation experienced in Portugal - centered on the time of regime change (1974) - is very clear regarding the inequalities

https://grazia-tanta.blogspot.com/2018/07/a-longa-marcha-das-desigualidades-1-o.html

https://grazia-tanta.blogspot.com/2018/08/a-longa-marcha-das-desigualidades-2-da.html

[5] Or, from a cosmetic coalition like the SED, in the German Democratic Republic

 

sábado, 3 de outubro de 2020

The post-Covid world that will arrive… one day


 Summary:

1 - Human beings, instruments of capital

2- The infinite accumulation of capital

3 - Surplus of people

 

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1 - Human beings, instruments of capital

Among the multiple effects of the pandemic, some - non-sanitary ones - can be highlighted, such as greater difficulty in utilization, by the large emporiums, regarding the scrutiny, classification, manipulation of personal data, for purposes of their segmentation or homogenization, with the norms to be followed and the accompanying surveillance, diluting individual capacities in an alienating and useless work, articulated with a leisure time filled with mind-boggling activities.

These useless activities serve only to convince its practitioner to remain integrated at the circus of capital, however useless their "work" could be from an economic, social or, cultural enrichment point of view. Work, being an effort, only fits if it produces something socially necessary or useful; however, in many cases, the performer's entire life is crossed without him ever realizing the uselessness or damage that resulted from the application of his time and his physical and soul capacities. This distortion in the lives of human beings has become typical of capitalism and, due to its dimension, leads to damages of an animistic, environmental and sanitary nature that affect large human groups or even humanity; as is the case with military cannon.

In the past, in the dominant classes, especially in the nobility, their main activities were leisure and war, with the delivery of heritage management, the collection of taxes and tributes, to someone qualified for the purpose - an ecclesiastical or a commoner. In the other population strata, in the countryside or the embryonic cities, there was no place for useless tasks, seen as work; everyone knew the purpose and real usefulness of their work effort, even if it was leisure or the satisfaction of a gentleman's whim. It was a question of guaranteeing subsistence and measuring labor effort according to the needs of the family group and the payment of the tribute to the local master - in kind, young people for war or domestic service in the castle or palace.

In times of epidemic, bad harvests or, devastation by the war - there is no ... unemployment benefits or tasks defined by the public authorities to make up for the lack of income, as in the New Deal, the only emigration remained, or the search for occupation in the cities, where productive activity was much more diverse than in the countryside.

Mobility after the European expansion of the sixteenth century was extended to the global space, greed, spirit of adventure, war or through the trade of spices, slaves, weapons .. . This mobility involved areas where complex and even more advanced societies lived than European ones, but which gave in to European colonization. Where this did not happen, as in North America and the Caribbean, the rule was the extermination of its inhabitants and the massive recourse to slavery ... covered by the divine figures of the Christian pantheon and its priests.

Capitalism, generating the incessant demand for capital accumulation and benefiting from technologies that generate high productivity gains, could reduce the time dedicated to working, freeing Humanity from labor effort and giving it free time for its use in the delight of culture, sport, sociability ...

But it did not and will continue not to. It benefits from the essentials of productivity gains, builds huge bureaucracies and instruments for the control of labor and its workers so that the labor force remains pacified and captured by the logic of capitalism, accepting its subordination to the stars as written in the stars. capitalists.

An entire ideology based on the segmentation of labor income between workers and employers is developed; and these, even though they are very minority, benefit from the majority of gains. Capital leaders say that it is essential to have capitalists because they are the ones who create jobs, pay wages ... thus showing the secondary character, the accessory of workers. In the capitalists' bible, God created the capitalist and, as a result, created the wage earner to ensure the welfare and entertainment of the former.

2- The infinite accumulation of capital

Capitalism conceives no limits for accumulation and invents ways to increase it to infinity, to consolidate its perpetuity and perpetuate its power over the population and the resources of the planet. On the one hand, in terms of the production of goods and services, it seeks to maximize its supply to increase profits; and, on the other hand, in total contradiction, it seeks to maintain restraint in income from work knowing that restricted purchasing power means less consumption, less spending. And, that is why people point to the unreasonable recourse to debt to feed consumerism in all social strata, after the capacity to use labor income has dried up. How do you get out of this?

Of course, this is not enough. This results in dementia inherent in the financial system, which, as a central element in the multiplication of capital, is always overcome by a drive, gluttony that is never satisfied, with the increase and appreciation of the securities it issues; nor with the profit margins it obtains from the transactions it carries out, at all times. Hence the financial crises, the military conflicts and the "investment" in armaments, with the leadership of the managers of the big central banks, of global institutions such as the IMF or the BIS - Bank of International Settlements, which follows the situation of the global financial system; as well as national and political classes that are responsible for managing the impacts of financial folly governments, and turn them in social and economic crisis, with increasing sharpness and increasingly frequent, as can be seen by comparing the Wall crisis Street in 2008 with the one that develops in the coronavirus ride.

Financialization, with the creation of money exponentially, in a virtual way, inserted in networks of data circulation, generated in instantaneously way and linked together, is, at all times, speculative business networks. The material basis of the economy, based on the production of goods and services or domestic self-production and self-consumption, has lost relevance and has become an appendix, a by-product of the market, duly supervised by the state apparatus.

3 - Surplus of people[1]

There is a time of great uncertainty in the face of the virus and fear in the face of the assault on the income of the popular classes. Among the effects of the pandemic, some can be highlighted, such as greater difficulty in using, by the large emporiums, the scrutiny, the framing, the manipulation of personal data, for their segmentation or homogenization; also, with the establishment of standards to be complied with and adequate surveillance, diluting individual capacities in an alienating and useless work; or, with leisure time filled with mind-boggling activities. With these useless activities - not felt as such by the worker - it is intended to give him a false idea about the importance of his work. It is an alienating and pacifying practice - typical of capitalism.

In the pre-capitalist modes of production, labor functions could be painful, but their purposes were known; no one performed functions without knowing the objective, even if it was the satisfaction of a whim from his master. In capitalism, technologies would allow sharp reductions in working time, without loss of income, if all the functions to be performed were recognized as socially useful. This would mean increased leisure time, for study, culture or sport and this would result in the great political question - if the means allow the production of all goods and services useful to Humanity, it is necessary to abolish those who condemn the crowd to journeys of long, painful and low-income jobs. As well as all socially useless or harmful activities.

For the way the crowd - in times of covid-19 - allows for massive unemployment, the layoff, the extended resource to charity, the limitations in the circulation in the physical space, the loss of hours of life with the eyes glazed on the new screen, a very nebulous and not very promising future, it appears that the articulation between the capitalists and the political classes dominates the situation.

In Portugal, what followed the financial debacle caused by the PS-PSD party-state, before and during the troika's intervention (2011-2015); and, the pacification by the "left" of the sparse contestation then took place, still shows its effects. The Portuguese political class, as in other countries, did not solve any problems of those existing at that time and added the effects attributed to the covid-19.

The occupation of the State by political parties that place all the responsibilities for the economic and social management of society on their members and are attached, remits the population to the situation of meek and soft objects, of subordinates subordinated to the interests of the political class. The virus crisis, which has a duration far beyond what was initially foreseen, reveals, in a first instance, the immense inability of management by the political classes - with emphasis on Western Europe, USA and, Brazil - contrasting with the coldness and capacity observed in several East Asian countries. In all cases, however, there is a constant - the absence of popular initiatives capable of organizing themselves in a network, moving away from the pyramidal logic and the monstrous bureaucracy that characterizes state apparatus; the people stick to the TV and watch, passive, the repetitive spectacle starring hordes of mandarins and writers; and, being stupid, they will be ready to sleep with a mask or bathe in tar if determined by a prime minister.

If humanity cannot, due to physical or institutional limitations, produce the income necessary to accompany the speculative financial drift, it must resort to devices to increase the capital involved in the economic circuit; and in the process, the globalized financial system and the governments that serve it disrupt societies, spread suffering, artificialize economies, offend the planet.

In Portugal, this summer, the savings rate exceeded 10%, which is close to zero (when not negative) values ​​in recent years; and this is related to major drops in consumption and disposable income. The people have the good sense to take precautions for worse days, however, the banking system and governments do not know what may arise; for example, they can penalize accounts with a balance above a certain amount to encourage consumption or, increase the tax burden to reduce the public deficit. The power wants to return to the zero savings rate so that the money can be captured by the financial carousel; its business is to generate debt, not savings. And in 2023, it is expected that in Europe in the euro, there will be no money on paper or metal; everything will be recorded, not on the stars but the servers of the globalized financial system[2], a much higher degree of control over the lives of populations.

Today, the so desired economic growth, that of the nebulous GDP, has as its central and most usual feature, the recourse to debts contracted by families, companies and, States. The financial carousel runs on another stage.

·              As a rule, families are indebted to banks, namely to support homeownership and means of transport, essential needs neglected by States; these, avid tax collectors, gave their satisfaction to the sacred "private initiative"[3]. The debt gear, originating in families, has the following framework:

·              Families are indebted for decades, taking advantage of the low-interest rates granted by banks; and the States show their parasitism by collecting taxes - IMT, Selo and later, IMI, ad secula seculorum.

·              The risk for banks is low because the property is subject to mortgage and surety bonds; the risk is entire of the families, in cases of unemployment or marital separation, for example;

·              Low-interest rates are in line with wages, also with weak developments. And the former do not particularly concern banks, as will be seen below;

·              The creditor banks are not waiting for decades to pass to recover the borrowed capital and interest. They add up a large number of credits, share their value in securities they place on the financial market, recovering the equivalent of a large part of the credit granted to debtor families. This operation is called securitization and corresponds to the constitution of a cascade of successive operations, with the inclusion of new credits, involving successive groups of long-term home buyers or others;

·              Briefly, there is a family debt built up for several decades and a bank granting the loan. This bank will collect several loans of this type (and others) and issue bonds that will be purchased by other institutions, thus recovering a value that includes the value of the totality of these various loans granted. However, he did not cease to be a creditor of that family and others; only an expedient used to anticipate the return of the value of loan.

The transaction put into circulation a value that is the mirror of the housing loans included therein; and, this can be multiplied n times, as many as the securitizations made involving the debts, being able to be associated with a set of mirrors or the constitution of the pyramids of Ponzi, whose maximum value is, theoretically, the infinite. Putting all those debts together, the same bank becomes the debtor of those who purchased the bonds issued but collected money for new investments.

The transaction put into circulation a value that is the mirror of the housing loans included therein; and, this can be multiplied n times, as many as the securitizations made involving the debts, being able to be associated with a set of mirrors or the constitution of the pyramids of Ponzi, whose maximum value is, theoretically, the infinite. Putting all those debts together, the same bank becomes the debtor of those who purchased the bonds issued but collected money for new investments. The financial balance does not change; what is added is the present and future fiscal puncture to pay the public debt and private indebtedness, resulting from the abandonment by the states of housing and public transport policies in favor of the much sung private initiative.

Companies also resort to debt. Low-interest rates are rooted in central bank policy in the same direction, with due repercussions on commercial banking, which in turn develops securitization actions to free up capital for new loans.

Cheap credit - and the almost zero rates of return on deposits - work together to encourage consumption and, at the same time, discourage savings; hence, an almost obligation is formed in the sense of indebtedness… as it is in the interest of the financial system and the political classes that, in the sequence, take possession of the future of people and companies, captured by the obligations in the financial system. The credit training is born, not savings but in the Ponzi pyramid in which it appears the practice of securitization.

These pyramids are also magnified by the constant entry into the "legal" circuits of money from various types of traffic (drugs, weapons, human beings…), corruption, etc. to the joy of the financial system and the distracted eye of the supervision of central banks and other pompous regulators; as a rule, governments are more cautious about fiscal leakage from small businesses and very little about tax evasion from the wealthy [4]. These regulators and national governments have traditionally been distracted by the money that circulates between the visible financial system and the dozens of offshore registries around the world, especially on remote islands.

By maximizing the availability of cheap credit, companies reduce the use of equity; and, in the Portuguese case, it has also become trivialized - and for many years now - the use, by companies, of contributions, due and unpaid, to the sleepy Portuguese Social Security , parasitized by all governments ... without any protest from the union world or the parties opposition sayings. The decapitalization of Social Security  is a recurring practice that is part of a tacit agreement within the political class.

The competitiveness of companies will thus arise from low wage levels of workers - atomized and disorganized - in working hours unpaid in precarious work, dismissal or, even facilitated, by layoffs facilitated by the government in covid-19 times.

This whole system based on credit cascades is extremely vulnerable even if anchored at very low- interest rates, to avoid difficulties for companies and, linked to equally low inflation rates; thus, it fosters a high consumer propensity for the population, which, with stagnant wages, embarks on recourse to credit, facilitated by banking.

·              This model of integration of entities - companies, especially the smallest ones, the States and the banking sector - depends essentially on the central bank, which can hardly cancel it:

·              The supply of the financial system cannot be stopped because bank credit would be much more expensive and difficult to obtain without firm guarantees, which many companies could not offer;

·                Its cessation would lead to a huge global crisis, it would be the collapse of a house of cards, with the bankruptcy of countless companies, indebted and with an accumulation of bad loans in the banks. The activation of mortgages would lead to the accumulation of real estate without buyers and, therefore, devalued, with upstream impacts, on construction, which incorporates elements from many industries, services and work;

·                The dismissals of workers and the mobilization of replacement income, coming from the state level, not prevent m difficulties in paying the installments of loans for housing;

The subsequent effects on public accounts (deficits) would affect the usual use of public debt "auctions", certainly with much higher interest rates than today.

 

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http://grazia-tanta.blogspot.com/

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Grazia.tanta@gmail.com                                        1/10/2020                        1                                                   

 


[1] According to the Portuguese Minister of Labor, 42000 companies resorted to the simplified layoff (two minimum wages) and other measures that involved 380000 workers

[2]  The disappearance of physical money in Europe from the euro - today, a value of $ 14.5 ^ 11 - which will incorporate the availability of the financial system for speculation to which must be added the costs of supplying populations with notes and coins, leaving populations without any instruments of exchange other than a direct exchange of potatoes for onions, for example. If you think that the fortune of the five richest people on the planet - Bezos, Gates, Arnaud, Zuckerberg and, Ellison - is $ 414 ^ 9 … it might not be much…

[3] http://grazia-tanta.blogspot.pt/2012/12/a-nao-politica-de-habitacao-eo-imi-1.html 

http://grazia-tanta.blogspot.pt/2013/01/a-nao-politica-de-habitacao-eo-imi.html

[4]  In Portugal, the BES case is a good example of the interweaving of circuits and the parsimony of how governments view the issue, incorporating into their rosters people who are very well connected with the financial crime or senior law firms. No ruler wants to (or can) show himself as a Robin of the Woods, although the staff of the… sheriffs of Nottingham abound within him.