Capitalism 1.0's Dirty Little Secret

The Financial Times FT.com writes:

Capitalism’s dirty little secret: excessive lending was the only way to maintain the living standards of the vast bulk of the population at a time when wealth was being concentrated in the hands of an elite.

Illustration by Victor Juhasz, RollingStone.com

The amount by which the elite has benefited is startling, and illustrates the problem with lightly regulated free markets: the rich get much richer while the rest do not get richer at all.

For much more detail and salient analysis, please read, repost, retweet, resend, and repeat P2P Foundation's Michel Bauwens's Updating our insights on the deepening meltdown. SOURCE: @stuarthenshall.

Modern Work is Mostly a Lie

Modern work is mostly a lie.

Especially in the so-called knowledge, information, or entertainment sectors, work has all too often become little more than an arbitrary hierarchy of stupidity fees, ignorance fines, influence peddling, and pathetic popularity plays. It's increasingly an unjustifiable waste of time to set up such pointless and counterproductive relationships in the first place. It's no wonder that increasingly, many of the most intelligent, creative, and educated simply opt out.

Forget value judgments about whether this is Good, Bad, Indifferent, a vast Right-wing or Left-wing conspiracy; the fact that more and more modern work is mostly a lie -- tens of millions of make-work duck-n-shuffle experts at looking busy -- is simply a primary symptom of the overwhelming success of 18th and 19th century industrial era capitalism and the attendant cultural anomie typical of the evolution toward postscarcity.

Take a typical knowledge work case: a consultant just upgraded six Wordpress blogs to version 2.8.1 in a total of about 20 seconds, thanks to automation, and billed clients for six hours. Why? Because the client has no idea of the level of automation available since the relationship was forged, years ago. The last the client knew, these updates could be "very risky" -- OMG! the website could go down! -- and "take a long time" to make sure hell doesn't accidentally freeze over.

Multiply such norms by some X-hundred million similar seemingly insignificantly tiny transactions per day. Each time we engage in these behaviors, believing we are the only ones doing it -- okay, maybe a few others do the same, we exponentially understate to ourselves -- we simply fail to conceive of the aggregate effect.

This is standard operating procedure for so-called service providers everywhere: find a client who doesn't know how easy you've made your work, convince them it's even more complicated than they imagined, and start the meter running. We've all seen this a thousand times. It's defended as monetizing the marginal value of efficiency. The thinking goes, "Hey, if the client needs something done and it's of X value to them, who cares HOW we get it done, right? If we're really efficient, that's our paycheck."

Well, yeah, sort of. On the other hand, that's a complete make-work sham, isn't it? This is why so much of modern work is mostly a lie, perpetrated by small cliques who myopically believe they are the only ones getting away with this game, who are collectively addicted to and fearful of any change from the status quo, and who implicitly agree to cover for one another's fiddling about in cubicles all in the name of keeping the job trance intact.

The job trance holds that a Calvinist industrial era hourly wage slave J.O.B. is the only conceivable moral Justification Of Being.

This is not an indictment of the hapless humans enshrouded in this stultifying, anachronistic systemic miasma; rather, this is an indictment of a systemic group think that has failed to declare and deploy the productivity dividends born of the past two centuries of accelerating progress. This is to expose the obsolete, old world Centralized Capitalist organizing principle that is failing to serve us all as humans, as a community, as a nation, moving forward.

In the entertainment industry case, everyone knows that the job or the part seldom goes to the best qualified or most talented applicant or audition. That's not An Efficient Market Objectively Allocating Resources, that's a popularity pecking order that is arbitrarily -- and often capriciously -- allocating resources that reinforce the dominant Central Capitalist Party Monarchy. Those who think that they see that game and can one day become king themselves, fully buy in and defend the monarchy, even though it's strictly against their own best self interest.

Modern work is mostly a lie. That's why more and more of the brightest and best qualified people opt out. It's one of several off-balance-sheet explanations of why U6 total unemployment is already above 16.5% and empirically indicative of the growing Structural Unemployment that has steadily, relentlessly overtaken us in recent decades.

Still need convincing? Maybe conjuring the Bloomberg brand will reopen a singed synapse or two:

“We are going to have a huge pool of unemployed, second only to the Great Depression,” said Allen Sinai, chief economist at Decision Economics in New York. “It will be a big public-policy problem.”

We're clueless about how to handle surpluses -- the most dangerous of which is cognitive surplus -- and the Old World Centralized Capitalist Party Bosses began embezzling our exponential productivity dividends long ago by providing myriad creative ways to soak up the first hints of the sociologically volatile stuff.

But change kept accelerating faster and faster and faster and faster. Faster than ever dared imaginable by my very own great grandparent share croppers.

So Industrial Era capitalism worked. It succeeded. It blew the doors off of history. It will continue to work and succeed for other civilizations that need to make that phase state transition from agrarian to industrialized. But it's utterly obsolete for America and today it is our existential obligation to define what comes next -- Postscarcity Agalmics. If we fail, then one industrial locomotive after another will simply run off the end of the same iron rails of fear and inertia we've run off.

As a recent New Scientist article put it

So will we cling to scarcity just so that we can keep capitalism? Or will capitalism have to evolve into some new kind of digital economics? The question underlines many things - from music piracy to the woes of the newspaper industry to Google's efforts to scan all the books in the world. (via @agalmacist)

KK on How to Get People to Pay

Free Market Socialism is called a Mixed Economy, children. It ain't some tinfoil hat-wearing Leninist Dystopian bullshit scifi pipedream. It's finding a way toward a pragmatic postscarcity agalmics.

Figuring how to make money in freeconomics is the challenge of our times. While the free is always an option (that is the point of Technology Wants to Be Free and Chris Anderson's new book "Free: The Future of a Radical Price"), free is NOT the only option. Sometimes the best way make money is to actually charge fans for what you produce.

Another evolutionary example from KK:

Print 200 copies of a book in hard cover. Sell with "free" shipping. Then make the rest of the copies free as a downloadable PDF.

The New Socialism: Sustainable, Global, Collectivist Society

Kevin Kelly wisely takes a more measured approach in June's Wired Magazine with The New Socialism: Global Collectivist Society Is Coming Online; in contrast, our mandate here is to lean hard into the foreseeable near to mid term future implications of such present realities.

So we say this new mixed economy is not just arriving online, it's evolving everywhere, right now, as a natural, organic process of humans apprehending postscarcity.

Incorporate This!

Today, at Salon.Com:

The truth is that corporations in the U.S. and other countries have always been quasi-public entities chartered for public purposes. You would never know this from corporate propaganda that treats giant, multinational corporations as though they were simply giant versions of sole proprietorships or partnerships. But history and law alike make it clear that today's large corporations, like automobile manufacturers, are much more like spun-off government agencies than like large-scale lemonade stands.

This is a fundamental mythology that comprises the metallurgical alloy most commonly found in the  psychological chains of wage slavery: the idea that The Lemonade Stand is a realistic analogy for how an economy works, much less, how it should work.

Drive down any small main street in America and you'll find the vast majority of non-Big-Box enterprises as nothing more than propped-up facades.

For example, there is no way that 5 bookstores can survive in Half Moon Bay, California. We know this to be true, because we explored purchasing one of the most historically well known stores. That whole "market niche" is a complete facade in that 40 mile radius region. Multiply by tens of thousands of similar regions and you get the truth of the post-industrial-capitalism economy.

A brick-n-mortar storefront that sells only Futons? Are you kidding me? Or BBQ Grills?

These are all naive and misconstrued -- even when oh-so-sincerely well meaning -- derivations of The Lemonade Stand; each and every one doomed to the exact same fate, as predictably as the sun will rise tomorrow.

We have to Free Our Minds from the shackles of the Industrial Era psychology that worked for THAT era, but which is hobbling us from moving forward.

As we've expressed and implied numerous times, Corporate Charter Reform is the only viable path forward. Charters can be for specific purpose and embody specific, essential, sustainable values such as compensation ratios, vs hard salary caps.

Compensation Ratios ensure a free, highly competitive, Even Playing Field that also provides an economic breaker circuit to prevent destructive, pathological hoarding. Dividends can never do that. If they could, they would have long before now.

... the power to charter corporations for the purposes we choose and in the forms we prefer will always be a power we wield as a sovereign people. We the people should think about using our power.

Maryland's Millionaire Tax Dodgers

And you're BOASTING about it? Really? After being asked to pay their fair share:

One-third of the millionaires have disappeared from Maryland tax rolls. In 2008 roughly 3,000 million-dollar income tax returns were filed by the end of April. This year there were 2,000, which the state comptroller's office concedes is a "substantial decline." On those missing returns, the government collects 6.25% of nothing.

If the underlying contention of such notions is accurate, the writer is suggesting that because the wealthiest were required to pay their fair share, THEY DODGED THEIR LEGAL OBLIGATION.

And this tax dodging is somehow both predictable and laudable?!

Somebody needs to go look up the term Fail Whale as pop cultural indictment of all things moronic and laughable.

Arbitrary and Emotional - Hallmarks of Capitalism

Pricing Deals with charts, graphs, and the absurd voodoo of the 52 Week High. The Wall Street Journal:

In other words, boards and bankers are just like the rest of us. They set aside their rational mind in favor of those anchors -- arbitrary and emotional points of concentration.

You don't need Goldman Sachs to do this math. Dr. Phil will probably do the trick.

Given, of course, the perfect symmetric information of economic mythology 101. So efficient. So impartial. Such an unbiased meritocracy. No room for foundational, existential restructuring here.

Snark and Anger at Las Magus

Alchemists have always been a sham and a farce. Financial alchemists -- las magus, to abuse both poetic license and spanglish -- are the bottom of the barrel of the breed.

Which leads to our question, have you ever wondered why the tone in this blog, along with growing numbers of others, is increasingly snarky and angry at the very core of free market capitalist convention? Why is Free Market Socialism emerging as the most likely, most credible evolutionary step forward, from here?

Obviously, both ideologies hold Free, Fair, Open, and Transparent Markets, central; however, unless you are ready to conceed that a small handful of irrelevant, underemployed, disenfranchised malcontent bloggers and tweeters have actually succeeded in steering the entire public debate toward Free Market Socialism and other Mixed Economic models, you'll have to conceed that plain old boring Empirical Analysis warrants the Snark, Anger, and Activism. In either case, as a defender of the status quo 19th century industrial wage slavery capitalism meme, you lose. You're just increasingly out of touch with present economic reality.

And when level heads like Barry Ritholz concur with data-driven sentiment that further supports a secular bull market for Snark and Anger, you become utterly irrelevant. Obsolete.

Case in point: while sharing the Back Story to Bailout Nation, Ritholz wrote:

The more I researched and wrote, the more it was apparent we were witnessing the greatest heist ever made. By the last section of the book, history’s biggest transfer of wealth — from the taxpayer to the Banksters — was taking place. Trillions were being shifted from the responsible to the reckless, from the prudent to the incompetent. It was infuriating — and you will see as the book progresses my initial academic tone gets replaced with greater snark and anger.

Keep in mind that The Reckless and Incompent referenced above are the same people that Mssrs. Kudlow, Forbes, Draper, et al, would likely refer to as the "Best and Brightest of Capitalism" off of whose backs government should dismount. Of course, when government gets off the backs of the criminals, then that same lot blames the government (us, You and Me) for not being on their backs. I used to think apologists for that circular argument were just stupid; now I realize that such are both stupid and malicious. Not stupid because they don't see their own logic as circular; but stupid because they think that We The People don't see right through it. The origins of the deeply rooted maliciousness -- toward themselves and others -- which seeks to further skew such an insanely skewed system simply escapes all rational explaination.

Disclaimer: I'm fairly confident that this blog takes exception to several of Mr. Ritholz's specific financial and policy perspectives and I'm equally confident that Mr. Ritholz would not likely give this blog the time of day. However, such speculative dissonance only serves to further strenthen the case for justifiable Snark and Anger directed at Las Magus: those thousands of alchemical scumbags, along with their posses of millions of boot-licking, ass-kissing, Office Space suck-ups that systematically fired the upstanding for "not fitting in with the team" as such teams twisted entire corporate cultures into the image of their own skewed and twisted makers.

All I'm suggesting here is that when diverse, data-driven perspectives come to agree, that's usual an area worth noticing. In this case, the Unsustainable Resources Skews that typify our increasingly obsolete 19th century industrial capitalism more than merit the Snark and Anger.

So shall we too remain, until the song no longer remains the same.