Tuesday, March 3, 2009

The Shape of Things to Come -- Part 12: Marriage of Heaven and Hell

An Angel came to me and said: 'O pitiable foolish young man! O horrible! O dreadful state! consider the hot burning dungeon thou art preparing for thyself to all eternity, to which thou art going in such career.'
I said: 'perhaps you will be willing to shew me my eternal lot & we will contemplate together upon it and see whether your lot or mine is most desirable.'
William Blake, The Marriage of Heaven and Hell

When at long last we awaken from our dream of untold riches, now become a nightmare of greed and betrayal, the true nature of our situation will become clear: what is meaningful is not the financial system, nor the economy, nor even money itself, which will soon lose all its value, but the availability of the resources necessary to sustain and enhance life -- and the manner through which these resources are to be produced and distributed. By that time a great many houses will be lying empty and the families who once lived in those houses living in the streets and begging for food; perfectly viable businesses that provided all sorts of essential services will be shuttered; fuel for transportation, power and heating will be prohibitively expensive.

But not for long. When the value of the dollar has finally diminished to zero, taking all the other currencies of the world down with it, then all those enormous debts, owed to banks, financial companies, speculators, hedge funds, etc., even the government, will no longer have any meaning. Stocks, bonds, securities, investments of every sort, including mortgages, both prime and subprime, all the many "derivatives" derived from those mortgages, and all the Collateralized Debt Obligations and other "financial products" concocted to insure those derivatives, will no longer have any meaning whatsoever. There will be a tremendous loss of wealth, and with it a social levelling such as the world has never seen. The Spell will be broken.

People will be able to return to their homes. Why not? The money owed on the mortgages would be valueless, even if it could be paid. And the institutions holding the mortgages will by then be ruined in any case. The old businesses will go back into business. Why not? All their old debts won't mean anything anymore. The laid off workers will be eager to return to work. Since no amount of money could any longer pay the electric bill, the heating bill or the water bill, there will be nothing to prevent these utilities from once again being supplied to whoever needs them.

In theory.

Tragically, however, the picture presented above represents the situation only in its most abstract, idealized form. Not everyone will "wake up" at the same time. There will be endless squabbles over money, even as its value diminishes into nothing. The long abandoned houses will be in terrible shape. The owners of the old businesses will be ruined. The workers won't understand why they cannot any longer be paid.

This is the point where the governments of the world must step in. And in my opinion, will step in, because at a certain point it will be clear that, like it or not, there is no other possibility left open to them. Hopefully, the world's leaders will anticipate the outcome soon enough so that a meaningful transition can take place, easing as much as possible the tremendous difficulties of moving from a money-based economy to a managed one.

Will this be "socialism"? Truthfully, it won't matter what it's called. All failed institutions will have to be nationalized since there will no longer be any other means by which they can operate. In the absence of meaningful currency, some other method of managing the economy will have to be devised. Possibly a computerized system of barter, as has already been contemplated by some (as discussed, for example, here -- or here), or the development of localized, temporary scrips for specific and limited purposes, or, as I proposed in an earlier post, a computer-driven rationing system.

If world leaders catch on soon enough to what is happening, then there could be a gradual and relatively peaceful transition from our current, very alarming, state of growing chaos, to an international system of cooperative and equable management of resources. If, through an irrational and pointless fear of "socialism," they attempt to postpone the inevitable at all costs, then we are in for a very rough time indeed.

12 comments:

  1. This plan to abolish money reminds me of Bush's plan to invade Iraq: all hope and faith and stupidity doomed to be crushed by forces to which it willfully blinded itself. The law of the natural selection of life cannot be abolished through wishful thinking--those who continue to subject themselves to the pain and discipline of realistic thinking will select the idealists out of existence. The only idealists for whom I am able to muster any respect are the consistent ones; and the only consistent ones are those who are willing to sacrifice their lives (not fashionable in our age of endless irony)--men like Jesus (if the tales be true), Gandhi, Martin Luther King. The rest of the crew are just talkers and hypocrites.

    ReplyDelete
  2. POP QUIZ FOR DOCG:

    1) I really do not understand what actual relevance the Dow Stock Market daily "volume" or closing "value" as in points at the end of a trading day, really means. Let alone the other, minor wall street market players/exchanges with lower volume/scores. What exactly does this Dow closing activity and closing number, given so much importance and daily "news" coverage reporting, really MEAN?

    2) What if the Dow continues to sink swiftly (say, next year at this time we are under 3000), and is it possible for it to sink to ZERO? If so, what would the USA (and world) "economy" and general conditions (housing, personal wealth/savings, energy prices, general world political situation) look like at such points, in your imagination?

    3) Can a truly "socialist society" (which I support) in the USA co-exist in any ways with our current "capitalist" model, and if so, how?

    4) Related to #3, can you reconcile (or are comfortable with) certain "libertarian" ideas and wishes, alongside and along with a truly socialist society? If you have any libertarian beliefs, that is, and if so, what are they?

    5) What, in general, are your opinions on "intellectual property" rights, "copyright infringement," and various no-rules file-sharing sites?

    6) I think I discerned in a previous blog/entry post from you that you do not own a TV (let alone cable) and I was wondering if this is intentional or for financial reasons? If, as it seems, you have limited yourself to mostly internet content and interractions, don't you honestly consider yourself "limited" in any way as to having a true feel for the "pulse" of what general TV/radio/printed press mass-media USA feeds daily to the masses in general? If not, how do you believe those masses (the majority out there) would think and feel about the subjects and issues and ideas/suggestions you talk about, if you could reach them via any medium?

    7) Related to #6, do you feel yourself to be rather esoteric and/or elitist in your views? If so, does this matter to your ego's health and well-being? If not, does this matter to your ego's health and well-being?

    8) Would it be possible or desirable for you to put "economics" aside for awhile and branch out into epistemology, social/political philosophies in general, and other topics where you might impart to readers more value in your main ideas and life-views (IMHO)? More of a suggestion than a question, but I find your non-economic posts and offerings more interesting, and wonder if you could more thoroughly link up and enhance both at the same time?

    9) Regarding your blog's artistic and visual connections to your seemingly real-world views, mostly sociological and political, what are some of your general aesthetic ideas which may or may not back up your words? In particular, how do you feel that your own education, experiences, and resulting ideas are essentially more "valuable" than that of the "common man" or those "common folks" who may read what you write? And if so, how they may result in more of a base connection/communication to others as to what you think and feel and result in down-to-earth, real change in our socio-economic-political civilization?

    10) In 1500 words or less, can you sum up what your general intentions are, with this blog/diary?

    END OF POP QUIZ, ANY REPLIES GREATLY APPRECIATED...

    ReplyDelete
  3. OK, first I'll respond to "Anonymous1," and then "Anonymous2":
    "This plan to abolish money reminds me of Bush's plan to invade Iraq: all hope and faith and stupidity doomed to be crushed by forces to which it willfully blinded itself."
    I'm not arguing for the abolishment of money. There is no such plan. Even if it were possible for me to abolish money I'm not sure I'd want to do that. What I've been writing about is the way in which money is about to abolish itself. Or, to put it in your language, the way in which all the "hope and faith and stupidity" of the free market ideologues, schemers and manipulators produced an economy "doomed to be crushed by forces to which it willfully blinded itself." What I'm trying to explain is how, as a result of this folly, we are now on a course that, of itself, will lead to a situation where the value of the dollar will ultimately diminish to nothing -- taking all other world currencies with it. This is now inevitable, as I see it, regardless of what policy is now followed, whether we try to shore up the banking system while keeping in the private sector, or nationalize it, or just let market forces prevail and do nothing. ALL roads lead to the same result: the value of money, the dollar and all other currencies, will inevitably be reduced to zero. If you read my previous posts you will see why I believe this to be the case. Whether you or I or anyone else likes this situation or not, is no longer relevant. IMO it is in the cards. What I am recommending is that we prepare ourselves for this outcome by gradually introducing a managed economy. Some type of socialism, yes. Sorry, but I see no other way. Perhaps you do and if so I'd love to read your ideas.

    ReplyDelete
  4. Anonymous 2 (the same person?) writes:
    "POP QUIZ FOR DOCG:

    "1) I really do not understand what actual relevance the Dow Stock Market daily "volume" or closing "value" as in points at the end of a trading day, really means. Let alone the other, minor wall street market players/exchanges with lower volume/scores. What exactly does this Dow closing activity and closing number, given so much importance and daily "news" coverage reporting, really MEAN?"

    That's a great question. I've been thinking about that myself and might be posting on just that topic soon. For now all I can say is that it's sort of like a nurse taking a patient's temperature every 8 hours or so. That's reasonable for most patients because body temp doesn't usually vary all that drastically from hour to hour or minute to minute. But nowadays the Dow is in such a convulsive state that winding up with a particular number at 4PM Eastern doesn't seem to mean much anymore. My post, when I post it, will be called "Reading the Entrails," which will give you some idea of how I think about this rather quaint ritual.

    "2) What if the Dow continues to sink swiftly (say, next year at this time we are under 3000), and is it possible for it to sink to ZERO? If so, what would the USA (and world) "economy" and general conditions (housing, personal wealth/savings, energy prices, general world political situation) look like at such points, in your imagination?"

    I think that could and probably will happen. Actually what will happen will be that the Dow will go way down precipitously to a certain alarming level and they will then decide to discontinue trading until things "cool down." So it won't literally go to zero. However, they will never be able to get the markets going again, because shutting them down will precipitate such a disaster in all other segments of the economy that everything will collapse and there will be no point in having a stock market anymore. That's when they'll be forced to swallow the bitter pill of nationalization and the dreaded "redistribution of wealth" from the billionaires to the people as a whole. Our leaders can do this the easy way (by accepting socialism), or the hard way (continual bickering and legislative inertia over pointless ideological issues that no longer matter -- fiddling for the benefit of the Rush Limbaughs of the world while the rest of us burn).

    "3) Can a truly "socialist society" (which I support) in the USA co-exist in any ways with our current "capitalist" model, and if so, how?"

    Most European countries have adopted a mix of socialism and capitalism and until recently that model has worked pretty well. But after the dust settles from the current calamity, there won't be much in the way of "private sector" money to provide the capital needed for capitalism. So each country will then have a choice: do we do what was attempted in the former Soviet Union and simply hand over nationalized enterprises to individuals with connections in the interest of "free market" reform? I suppose special money could be printed and handed over to them so they would then be able to purchase the companies "legitimately" to get the old system rolling again. That would in effect produce a new generation of oligarchs. But it would satisfy the neo-conservative (aka neo-liberal) ideologues -- assuming any are left by then;

    or, they could simply accept that socialism in itself is a viable economic system that, when coupled with strong democratic principles, and an informed electorate, can be both effective and fair. Which is NOT to say that I am favor of the elimination of all forms of private property -- or a certain amount of private enterprise either, so long as it is sufficiently limited and controlled.

    "4) Related to #3, can you reconcile (or are comfortable with) certain "libertarian" ideas and wishes, alongside and along with a truly socialist society? If you have any libertarian beliefs, that is, and if so, what are they?"

    If you go to the following post on this blog, you'll see that Noam Chomsky, a strong liberal advocate, considers himself a libertarian. And feels that the term has been co-opted by the right -- for the wrong reasons. http://amoleintheground.blogspot.com/2009/01/chomsky-libertarian.html
    My position is very close to his. Ironically the original libertarians were the anarchists, whose position is generally regarded as well to the left of Communism. :-)

    "5) What, in general, are your opinions on "intellectual property" rights, "copyright infringement," and various no-rules file-sharing sites?"

    That's a complicated issue. I am definitely an advocate of fair use, as it is described in the current laws. But unfortunately many special interests tend to use bullying tactics to scare people out of exercising fair use. And the law is so vaguely defined that even if you stay within the limits of fair use you could still be sued. I'm definitely in favor of the liberalization of that law and, more important, its clarification.

    "6) I think I discerned in a previous blog/entry post from you that you do not own a TV (let alone cable) and I was wondering if this is intentional or for financial reasons? If, as it seems, you have limited yourself to mostly internet content and interractions, don't you honestly consider yourself "limited" in any way as to having a true feel for the "pulse" of what general TV/radio/printed press mass-media USA feeds daily to the masses in general? If not, how do you believe those masses (the majority out there) would think and feel about the subjects and issues and ideas/suggestions you talk about, if you could reach them via any medium?"

    I have a television set (actually three) and a converter box, which works great. I don't have cable, partly because of the cost and partly because I don't want to become a couch potato. But I do a fair amount of TV watching, especially the news, but also certain other shows. My favorite is House, as you might imagine. :-) I'm not sure where you got the idea that I don't watch TV.

    "7) Related to #6, do you feel yourself to be rather esoteric and/or elitist in your views? If so, does this matter to your ego's health and well-being?"

    Hmmmm. I have an unusually broad range of interests, so I would not characterize myself as an elitist, no. I come from a working class background and, while I have a Ph.D., have never felt comfortable with the academic world, and my relation with it has essentially been marginal. By choice, for the most part. I do have some tastes that could be considered esoteric, yes. But if you look over this blog you'll see all sorts of stuff, from folk music to pop to bluegrass to hip-hop, etc. I guess I could sum myself up best by saying that I'm an educated person with a very wide range of interests and a passion for learning more about each and every one.

    "8) Would it be possible or desirable for you to put "economics" aside for awhile and branch out into epistemology, social/political philosophies in general, and other topics where you might impart to readers more value in your main ideas and life-views (IMHO)? More of a suggestion than a question, but I find your non-economic posts and offerings more interesting, and wonder if you could more thoroughly link up and enhance both at the same time?"

    I've done a lot of research and writing on issues other than economics. In fact economics is new to me -- as you may have gathered. I've also published a lot, mostly in the realm of esthetics, theory of the arts, musicology, etc.

    "9) Regarding your blog's artistic and visual connections to your seemingly real-world views, mostly sociological and political, what are some of your general aesthetic ideas which may or may not back up your words? In particular, how do you feel that your own education, experiences, and resulting ideas are essentially more "valuable" than that of the "common man" or those "common folks" who may read what you write? And if so, how they may result in more of a base connection/communication to others as to what you think and feel and result in down-to-earth, real change in our socio-economic-political civilization?"

    I don't see my ideas as necessarily more valuable than anyone else's. But I do think I have some original ideas that would interest others, which is why I write so much. I don't think there is such a thing as the "common folk," so I'm not sure how to answer that part of your quiz. When I refer to "ordinary people" here it's just a term for everyone who is not part of the moneyed elite. I've never met anyone I'd regard as common or ordinary and I've had good conversations with all sorts of people, including small children. As far as effecting change is concerned, I don't see myself as a "rabble rouser" or someone out to start a movement. I'm putting my thoughts out there on the 'net in the hope that they might filter through, one way or another, to people in a position to make a difference.

    "10) In 1500 words or less, can you sum up what your general intentions are, with this blog/diary?"

    To amuse myself, first and foremost. To express myself. To vent. And to communicate with others, as I am doing now. Thanks for giving me that opportunity.

    ReplyDelete
  5. "ALL roads lead to the same result: the value of money, the dollar and all other currencies, will inevitably be reduced to zero."
    The value of paper money - yes - but there is another form of money which had been around for 3000 years and never lost its value : Gold and also silver.
    I am opptimistic enough to believe it will even become "legal tender" again.

    ReplyDelete
  6. Hi, I'm a visitor from the FT.

    You have a nice writing style. But you fail to comprehend that the present is forged by historical forces. Including, I fear, yourself.

    You fail to recognise that a person's personal identity is inherently attached and shaped by their environment. Especially by their community.

    Be Happy,

    In Light of Nihilism

    ReplyDelete
  7. "The value of paper money - yes - but there is another form of money which had been around for 3000 years and never lost its value : Gold and also silver.
    I am opptimistic enough to believe it will even become "legal tender" again."

    I've been thinking about gold for a while myself. But before I continue I must add that I am not in any way qualified to give any sort of investment advice, so my comments must be taken simply as my personal opinion, which could very well be totally off the mark.

    I would not invest in gold myself, though I've sometimes considered it. First, I have a feeling the market is probably being manipulated, which means the price could fluctuate unpredictably for no reason other than the will of whomever is doing the manipulating. Look what happened to the price of oil.

    Also -- consider a situation where hyperinflation or worse leads to either a total meltdown of the dollar or a continual spiral downward. You are holding gold. And let's say the book value of your hoard has increased enormously since you bought it. So you are holding gold, the value of your other investments has completely tanked, you no longer have any meaningful cash -- and you need to go to the supermarket to buy some groceries. I don't think you'll be able to take a gold bar with you to the store. And if you go to the bank with it, they'll probably laugh. So you'll head for a gold dealer. And he'll give you a pile of dollars for your gold. Once that transaction is made, however, then you'll be in the same boat as everyone else. In other words, if currency no longer has value or is losing value rapidly then in effect you no longer have anything of value to exchange your gold for. Ironically you could probably exchange your gold bar for a car or even a house. But if you want to buy food with it, you'll have to exchange it for money and when you do then you'll be left holding a fistful of worthless or nearly worthless dollars. I don't know, maybe I've got it wrong. But one thing we need to realize: this isn't going to be grandpa's depression. The old strategies won't necessarily apply.

    ReplyDelete
  8. "Hi, I'm a visitor from the FT."

    That's the Financial Times, in case any other poets happen to be reading here.

    "You have a nice writing style."

    Thanks.

    "But you fail to comprehend that the present is forged by historical forces. Including, I fear, yourself."

    Granted. My own views are conditioned by historical forces, sure.

    "You fail to recognise that a person's personal identity is inherently attached and shaped by their environment. Especially by their community."

    I'll agree. Up to a point. But surely the identity of someone like William Blake or Walt Whitman or E. E. Cummings or James Joyce was formed as much in reaction against their environment as by it. As I see it, these and others like them were/are the visionaries, the ones capable of going beyond those limitations into fresh territory. Not that they see the world in some universally valid sense, but that they are able to see beyond the limitations of those around them and, to that extent, capable of shaping, as well as being shaped, by history. I'm trying to use their visionary in-sights as a kind of lever to boost myself up out of the dead-end we now find ourselves in.

    What's happening now, by the way, is a unique historical event, a force in itself that will surely change the conditioning of everyone now affected by that force. What I'm attempting to do here is ease that transition.

    >Be Happy,

    I'm already there, thank you.

    >In Light of Nihilism

    Heh.

    Nice post, thanks.

    ReplyDelete
  9. All the blogs on your site are now advocating socialism and subliminally communism as in Marx as a cure for the awful mess we are now in or entering, depending on your excess use of credit. However neglected among all the "ideologies" is the work of Bakunin, Durruti and others who promoted the concept of freedom from big governmrnt by the adoption of an ethical and controlled lifestyle and the creation of very small government. Has no one thought that anarchism despite its bad name can actually present a solution

    ReplyDelete
  10. Gregory, I'm sympathetic to the anarchist position, but it's very difficult to see how anarchism can work in the context of a global economy in which so many things are now so interdependent and intertwined with other things. Sure, a group of idealists might want to buy an island somewhere, and set up their own "green" economy, based on "natural" farming methods, some sort of Kibbutz-style cooperative government, etc. Attempts along such lines were made as part of the Sixties "counter-culture." But I don't know of a single one that survived -- and the ones that did last for some appreciable length of time were invariably bankrolled by independently wealthy people, who ultimately would threaten to take their money and depart if things weren't being done their way. Once these people, and their money, were gone, things would fall apart pretty quickly.

    Sorry, but I don't see any alternative to a planned economy of international scope: some form of the dreaded "international socialism" so feared by the likes of Rush Limbaugh and his acolytes.

    If you read what I've written here on George Orwell, and the all important distinction he drew between what he regarded as true socialism and its Stalinist alternative, the alternative that led to totalitarianism, Big Brother and, ultimately, the downfall of the Soviet system, you'll see that our greatest fears regarding socialism are in fact based on a caricature, having little to do with the real thing.

    Regardless, whatever we ultimately choose to call it, some form of planned economy remains, as I see it, inevitable. It's not so much a question of whether we like it or not and you are certainly free to dislike it. Ultimately it will simply become a matter of survival. Mark my words!

    ReplyDelete
  11. I think that Michael Hudson has the best description of the future of the world if present economic conditions continue. He sees a feudal system arising from the concentration of money and power in the hands of the elite wealthy. These few rich men will have the power to rule the world the way they want to rule it and that will probably be reminiscent of any of the past aristocracies that began to fall beginning in the 19th century. The rich do not have much of an imagination and I'm sure they cannot even visualize the democratic socialism that is described in the article. See http://www.levyinstitute.org/pubs/wp_708.pdf

    "Unless the world changes its path, the “final ” stage of finance capitalism threatens to deteriorate into debt peonage so widespread as to become neofeudalism, relinquishing control of the economic surplus to a financial elite making itself as hereditary as the old landed aristocracies." (page 23 of above article.)

    ReplyDelete
    Replies
    1. I prefer to think along the lines set out in the Communist Manifesto, regarding the inevitable downfall of Capitalism due to its own internal contradictions. I'm not an advocate of Communism, by the way, but I do very much admire Marx's critique of Capitalism.

      The current source of the wealth in the hands of the 1% is largely due to some huge financial bubbles that are once again about to burst. Only this time there won't be any more government handouts (thank you, Tea Party). There will simply be a destruction of wealth to an unprecedented degree. Paper wealth, that is. NOT real wealth which will largely be unaffected. When the dust clears, things will be a lot more equal than ever before and there will be some real opportunities for socialism to take hold -- whether anyone really wants that or not.

      When I originally wrote this post I was convinced the collapse was just around the corner. I underestimated the ability of the elites to keep all those balls hanging in mid air. But a Ponzi scheme is a Ponzi scheme and sooner or later it has to self destruct. I'm still waiting . . . :-|

      Delete

 
Add to Technorati Favorites