If and when I watch TV, I do like to watch hard talk. Though it is rarely hard it most certainly is often talk and today was a prime example.
Prof Harvey’s beef is Capitalism and that’s the reason he was given air time.
Right there from the get go, this interview should never have taken place. Here is a professor that has a beef about something that does not exist and an interviewer that has no idea one way or the other. That makes for a horrible and time wasting combination. In fact, Ms. Montague is so uninformed that she was genuinely appalled at the professor’s arguments.
Look! What we have in the West can be many things but it most certainly is not capitalism. We have corporatism, we have favoritism, we have socialism, we have fascism, we have elitist/socialism or aristo/socialism but we most assuredly have no Capitalism anywhere in the West and most certainly neither do we have it anywhere else in the world. At least not where it counts.
Professor Harvey is either genuinely misguided or he is on a mission. He purposely omits to take into account political expediency that brings us first and foremost managed interest rates. If you are scratching your head and wondering what the management of interest rates has to do with Capitalism or the absence thereof, then you are either new to this blog or I have been unable to get my point across. The long and the short of it is that interest rates managed unilaterally and arbitrarily by an unaccountable entity (The Fed in the USA) is not compatible with Capitalism. The interest rate is the price of money. Just like the price of electricity or the price of tomatoes, if the price of something is set by decree then you must perforce agree that there is no Capitalism. And if this price happens to be the price of money, then your entire economy is most emphatically not a Capitalist economy.
Dispute that if you can.
Now. I will grant you that in the West our economies and societies are more steeped in personal freedoms than, say, in China. Or at least they were till very recently. But the inescapable truth is that neither the choice of monetary system nor the management of interest rates are subject to the people for ratification. Since money comes upstream of all human endeavors bar none, you must agree that by managing the monetary system unilaterally and arbitrarily, our governments run command economies.
So, starting with our monetary system which in and of itself is the do or die of a society, nobody could claim any resemblance to Capitalism.
But I grant you too that the concept of a monetary system is much too arcane for even professionals in the finance industry to get their heads around. So, let me show you some other glaring inconsistencies that prove beyond any reasonable doubt that Capitalism exists nowhere on God’s green earth.
Let’s be pedantic: from Merriam Webster.
: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market”
Without taking too much of your time here is the problem. “Investments and prices that are determined mainly by competition in a free market”.
Now tell me Professor Harvey.
Is the price of money determined by competition in a free market?
Is a government arbitrary investment in a failing company using public funds determined by competition in a free market?
Is a government subsidy to an industry determined by competition in a free market?
Is a government mandate to produce something that is not economically viable like ethanol determined by competition in a free market?
Is a government purchase of its own sovereign debt determined by competition in a free market?
Is a government decision to raise duties and taxes determined by competition in a free market?
Is a government arbitrary and unilateral decision to suspend a perfectly legal investment mechanism (covered shorting September 2008) consistent with competition or a free market?
Is a government’s arbitrary and unilateral decision to allow chosen entities to disregard accounting rules that apply to the rest of society consistent with competition or a free market?
Finally Professor Harvey, is a government unilateral, arbitrary, incessant and aggressive expansion of public debt determined by competition in a free market?
You could not possibly answer in the affirmative to any of the above. In turn that means that you could not possibly associate any of the Western economies with Capitalism.
Now, one of Professor Harvey’s ancillary beefs is the excessive consumption that, says he, is driven by an insatiable thirst for wealth and things. Of course, the professor attributes this obsessive behavior to Capitalism.
If the good Professor made the effort to inform himself on our monetary system, he might just come around to the fact that excessive consumption is enshrined in the fiat monetary logic. If our governments did not impose a fiat monetary system, excessive consumption would just not be an issue. However in the absence of a fiat monetary system, the problem would be different. In the absence of fiat money, things like the moon landing or cancer research or, indeed, the Marshall Plan might not be possible at the rate these things have been and are made to happen. Of course, it can be argued that in the absence of a fiat monetary system the pace of life would be slower so cancer might be less of an issue. But hey! The road not taken and all that.
So, excessive consumption which leads to the depletion and/or the devastation of natural resources, is nothing but a function of the monetary system. Once again, Capitalism has nothing whatsoever to do with consumption excessive or otherwise.
… and Ms. Montague, like most everyone including professionals in the finance and banking industries, has no idea, cannot make informed decision thus cannot ask the relevant questions.
The monetary system is the one and only construct that underlines all human choices. A fiat monetary system in particular is predicated on the perpetual expansion of credit and money i.e. inflation. However, as evidenced in numerous posts on this blog, inflation cannot be and is not infinite. It is a mathematical impossibility. The problem is that at the outset a fiat monetary system does serve an actual productive purpose. But as the system is doped incessantly and aggressively over decades without ever allowing it to reset, the end of the inflationary dynamic calls for large government and Kafkian logic that makes for aberrant socio/economic outcomes.