Commentary on Political Economy

Sunday 17 July 2011

Capitalist 'Tractatus'

This comment just appeared on the Gavyn Davies Blog:
wittgenstein | July 18 5:08am | Permalink
PS: Let us "cursorily" decipher "wittgenstein"'s post below, in the style of the 'Tractatus'.
1. The US are the "core" (the political guarantor) of the capitalist world market and the US State is the guarantor of the world market for "private investors".
1.1 A "crisis" threatens that world market because private investors cannot invest "profitably".
Corollary: The US State needs to guarantee profitability for "private" investors and also its own political legitimacy by maintaining both investment and employment.
2. Any expansion of "employment" results in higher wages and lower "profitability" for "private" investors.
2.1 So as to secure both investment and employment, the State needs to take over the role of emoloyer and investor either directly or by "guaranteeing" profits to private investors that are "illusory" and inflate asset prices.
2.2 So as to maintain the "fiction" of "private investment", the State prints money and "borrows" from private investors so private investors can "delude themselves" that they are making "profits".
3. Normally, inflation should raise the cost of government "borrowing" (debt), but because the US State is the only "safe place" where private investors can deposit their capital, interest rates on public debt actually go "up" in the capitalist periphery but come "down" in the US "core".
4. As "private" investors scramble to secure "profitability" competitively between themselves, they seek to exploit "gaps", and by so doing widen those "gaps", in the capitalist system of investment entitlements (otherwise known as "markets", especially "financial markets").
Corollary: As a result, the entire method or system of "calculating entitlements" and "profits" begins to unravel and collapse. US treasuries become the absolute only "safe haven" for capital.
5. As the role of the State necessarily expands via the growth of "public debt", the entire "system of entitlements" becomes ever more "politicised" so that the entire "rationale" of capitalism (profits reflect the efiicient use of social resources) begins to unravel and collapse.
CONCLUSION: We need a better way of determining how to use social resources than that provided by capitalist institutions, viz. "the market", "corporations", "banks", "private investments", "the State" in its present undemocratic form. Cheers.

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