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The Mandtao blog is concerned with science and knowledge, so it might be a strange place to find discussion about economics, but this is a clear example of how academia is being used. And academia is the western home of knowledge.
My knowledge of academia's delivery concerning economics is limited, but it is very clear to me that what is required to become qualified as an economics expert definitely has a strong application of blinkers. For most people in the world of work, understanding of economics is rooted in supply and demand. Because most peoples' transactions are limited this is a reasonable approach. Go to the farmers' market. You buy veg that is available, you don't buy what you don't want. The farmer is left with surplus of what people don't want so they change what is grown until eventually there is a balance between supply and demand. The study of economics then extends this supply and demand principle, embellishes it with additional theories, applies a few graphs, and we have a supposed understanding of economics. Competition is an essential aspect of supply and demand. At the farmers' market if someone sells cheaper more customers will buy, and competition is a means of keeping the prices down - supposedly at the control of the consumer.
Economics is of course a study of money. So we get a history lesson in which money was originally introduced as a means of easing transactions at the farmers' market from when it was barter. We did not have to bring huge items to exchange, we didn't have to decide that an hour of maths teaching is worth a pound of potatoes, gradually value was applied to various trades and their products and money was used as a means of trading at a farmers' market. It is assumed in academic economics that theories of money are based around this transaction theory.
Taxation is also an important aspect of the modern economy. We pay a proportion of our income to the government so that the government has sufficient money to run schools, hospitals and the like. I question this. When the British were colonising Africa they needed to build infrastructure (such as trains) to get the raw materials back to the motherland. At the time Africans had a barter economy so when the British required labour there was no incentive to work. The colonial authorities insisted that all individuals must pay a money tax forcing money as the means of transaction on the barter economy. In this case taxation was required to build the infrastructure for the companies importing raw materials. This monetary flow is an indicator as to the underlying function of taxation despite the schools and hospitals rhetoric.
It is assumed that all finance is expected to balance their books. This is clearly the case at an individual level when if we don't balance our own books and we owe money we can eventually be imprisoned. Debt is in fact encouraged both by the banks and the system. If we have debts we must try to pay them back, it is therefore necessary for us to work to pay them back and we are brought into the financial system. People who have marketable skills such as teachers are encouraged to get mortgages and other forms of credit, so that they become more concerned about losing their jobs and are willing to put up with injustice at work in order to repay their debts.
Economics as an academic subject is far more complicated than these five simple axioms, and it is this complexity that it is claimed people cannot understand. Experts are then required to interpret the business of economics so economics is an almost mystical understanding of transactions and finance. And people trust the experts. And experts become experts by accepting the above axioms, learning the mental contortions that get applied to our global economic dealings, and it is generally accepted that, although things look wrong because of the many injustices, there are experts guiding the economic system based on the axiomatic approach as described above.
I am going to describe the above as the 5 axioms of 99%-economics, and these are the axioms that the 99% are expected to follow. And this expectation in extreme circumstances is backed up by the law such as the case of repossessions and failure to make loan repayments.
Now I want to consider another set of economic practices. Let us examine the conduct of transnationals (multinationals) - huge companies (owned by the 1%) who as a rule buy the raw materials, own the means of importing the materials, own the means of production, own the distribution logistics and own the retail establishments. At all levels of the sale of a product the profits are made by the transnational.
At this stage one might argue big is not necessarily wrong, one might contend that transnationals compete with each other keeping the price down. I argue differently. Firstly in BigFood at a supermarket there might well be 7 or 8 different brands owned by the same transnational. No competition. The number of BigFood transnationals is limited so together they fix the prices, it is not the consumer demand described in 99%-economics. They have sufficient stocks and are sufficiently big that if consumers reduce their demand BigFood does not have to respond. Whilst mothers spend a long time on their family budget seeking bargains they are very much at the mercy of high level BigFood decisions rather than any consumer wisdom.
The word transnational came into usage because as such they are not subject to national tariffs and customs duties. Part of the murky mysticism of economics are organisations such as World bank, IMF, GATT, WTO and other Acronyms, actions of whom we are not meant to understand, yet whose actions directly impact on the way economics work. These organisations facilitate international finance and transnationals to the detriment of small businesses and local transactions. Small businesses do not control all the aspects of the economic life of their own product, and are often squeezed out by the monopolistic bullying practices of the transnationals aided by the Acronyms, often leading to takeovers and increasing "centralisation" on fewer and fewer transnationals.
These transnationals have tremendous power and dominate the economic life of individual consumers. They have tremendous influence over governments sufficient for me to say that they are more powerful than governments. As evidenced by environmental damage governments are unable to exert control over the transnationals. Climate denial became real through business investment especially after the international community outvoted the US at various COP meetings that eventually reached the limited Paris accord. Now their stooge has pulled out America and enacts numerous environmentally-damaging policies. [It is better to understand that Trump-puppet is not an individual with policies, but a stooge enacting policies of the fellow wealthy. Avoid personalising as it ignores the true nature of the economic system.]
The transnationals control production - what we buy, and finance through banks and Acronyms form an alliance that controls global economic life. It is this alliance I see as the 1% controlling the global economy using 1%-economics.
Transnational cartels and market mechanisms remove competition, and eliminate any vestige of supply and demand. The banking and insurance dynasties control money. Under their control that money has lost its transactional raison d'etre, and the accumulation of money is facilitated by the financial sector. Money moves away from the 99% to the owners of finance and the transnationals leaving our economies controlled by the whims of the superrich. With jobs and consumer-potential being controlled by the whims of their decisions, the backdoor governments offer tax breaks, incentives, loopholes and now in the US, the new tax laws, so that the burden of taxation is placed on the poor whilst transnationals are evading tax at will. Taxation has now become a means of transferring money (wages) from the poor to the rich. Because this 1%-alliance controls government they control the printing of money. The US tax bill makes no efforts to balance the books, but is simply a political manoeuvre to benefit the 1%. For 8 years the UK government has applied an austerity policy to the 99% following the crash with the supposed aims of balancing the books. But the only observable change in wealth has been an increase in the gap between rich and poor.
To understand 1%-economics you need only understand this, the actual economic system is designed to increase the accumulation of wealth to the 1%. Initially this began with real transactions but then they determined that there could be increased accumulation through "imaginary transactions". 1%-control of governments perpetuates this accumulation through fiat policies that become necessary when accumulation has depleted government coffers. The policy of 1%-economics is print more money when necessary.
It is also intended that we fail to comprehend the vast amounts of money appropriated by the 1%. Examine this. ****** I suspect that the wealth of just one family, such as Rothschilds, Rockefellers, Waltons, Gates, is equivalent to enough money for a billion people to live - certainly the poorest of us. Whilst population numbers concern me, it is not the lack of natural resources that leads to poverty and hunger but the accumulation of the few superrich.
The interaction of these two economic systems is on a knife edge. We are conditioned to accept the economy as described in 99%-economics whilst the actual system continues to accrue for the 1%. People see the systemic failure of economics but then experts continue to maintain the charade of the 99%-economics, and encourage people to have confidence in it. For most there is a failure to actually consider the economic realities because a breakdown in the economic system, which would follow from an actual examination of financial dealings and the ensuing lack of confidence (as demonstrated by the crash in 2008), can only lead to chaos - violent chaos. Aware of this the 1% already have private security in place. It is not if but when.
Governments will continue to maintain the charade of 99%-economics as per 1%-instruction. They understand the nature of the two economics, but manage the impending catastrophe through brinkmanship rather than economic strategies that could lead to 100% stable and sustainable economics. We survive by hope, hope that the sickness of the 1% doesn't demand such an accumulation that the delusion is broken, the conditioning is shattered, and chaos breaks out.
Hope is not enough. Constructive 100%-economics that can lead to stable transactions need to be introduced but this is unlikely as the only people who can introduce them are the 1% as they are in control. And that would be like saying to the mentally ill end your delusions, how can they end them when they don't know they are deluded?
I used to have faith that the 1% would maintain the system through brinkmanship, now that faith is gone. War is spreading, is on the increase, countries just hope they are not the next one to be targeted. Rather than brinkmanship the 1% are now turning to private security, and accepting that the future holds a protected apartheid existence in which they survive and the 99% fight amongst each other for the crumbs that trickle down.
Now only hope.
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