The New Prosperity: Aristocrats and Corporatists

The economy and the market are back in good times—so the tribunes and augurs have been singing. Except, that is, for Friday and especially Monday, when the Dow dropped as much as 1,500 points and ended down over 1,100 points, both records in its history. Even so we are already being told eyes forward, keep on moving—and that “the fundamentals are strong”.

What fundamentals, exactly? Everything but how people are doing, it seems.

We just learned the US life expectancy dropped, for a second year in a row. We’ve also got epochal levels of global debt, falling energy quality (lower EROI due to our much-touted reliance on fracking), a return of great-power geopolitical rivalry, declining global power (“post-primacy”), severe legislative gridlock, totally dysfunctional healthcare (showy moves by Buffett and Bezos notwithstanding), stagnating innovation, basic infrastructure disasters like Flint, New Orleans and Puerto Rico, opiates flooding the streets, climate instability causing record costs

Maybe most significant among these “non-fundamental” issues is the continuing explosion of inequality; as recently (and repeatedly) documented by Oxfam, nearly all gains of the post-crash “recovery” have gone to a sliver of the world’s population, while the rest have stood still or backtracked. In the US, for example, real household income has remained stagnant since the 1970s. A large majority have less than $1000 in savings.

Make no mistake, America and the world are standing still in their own trash, perhaps even edging backwards.

What luck that none of it is fundamental!


What apparently is fundamental is the grand fact that we are now immersed in a new kind of economy—one where the concept of earning an honest profit has gradually been engineered out of existence. All the globe is awash in shadowmoney. Even wildly unprofitable companies like Netflix and Tesla, whose debt is rated “junk” (assuming the ratings agencies are trustworthy), continue to be able to issue debt at rates not much higher than the Fed. This last fact tells us either that these companies’ debt is wildly under-risked, or that the Federal reserve’s debt is, or both.

Politically too, nothing of the situation in this country is normal any more. From Antifa riots and white supremacists feeling the first thrilling stabs of power and visibility, to final, total regulatory capture within the government, to the pre-Alzheimer’s tweeting habits of President Donald J. Trump, the masterpiece perpetual-motion markets have been content to treat anything and everything as normal-by-fiat, or normal-by-groupthink. The fundamentals are strong.

Elsewhere we read that personal indebtedness in the country has for the first time surpassed what it was on the eve of the financial crisis… but that this is really a good sign. Prudence, saving, and self-sufficiency, we are told, are destructive to American growth, and if these illiberal character flaws taint the public mind too much it may be even be time to punish the reactionaries responsible with bail-ins. So far, the public has been most obliging, binging again and again on cheap credit to buy new cars and (now) largely useless higher education.

In Bitcoin and the cryptos, meanwhile, we have an especially pure example of the obsession of the Age of Virtuality: an entity that has no net merit, that lacks even the fiat currency’s backing by a powerful nation-state—and that is in fact highly parasitic, given the huge waste in electricity and hence CO2 production it brings—but can nonetheless become a symbol of futurity.

That symbolism is all that is needed, for it promises a complete escape into the Virtual, now tacitly our civilization’s only goal and hope. Through such tokenistic thinking, many now believe that there needed be no decline in the markets, ever; after all, correction and price discovery depends on there being some observer-independent standard of correctness, itself equipped with some concept of limitation or scarcity. These concepts are absent in Virtuality, or can be treated as infinitely plastic, or dismissed as outdated, or ignored altogether. Lead us not into solvency, but let there be bubbles in everything, is the new credo.

Even so, as in the stock market recently, a few drops’ worth of cold reality at least seems to have leaked through the cracks of the cryptos. For now these virtual parasite-currencies are collapsing mercilessly across the board, and have become so unstable and proved so difficult to use that even attendees of cryptocurrency conferences are still required to pay in national currencies. (Here again we face an example of the nagging concept which many in our culture seem to have been educated specifically not to understand: that a thing is new is no assurance that it is better.)

Another interesting sign of the times can be found when we ask: what is it that most think triggered the recent flash-crashes in the Dow? Along with fears that the central banks may begin to charge interest on loans at a rate even half of what was normal just 10 years ago, the “wake-up call” took the form of nothing less shocking than reports of a modest increase in wages.

It’s hard to think of a more clear-cut example of how the imperatives of instinctive class enmity are at work in the decisions being made in this country: working people’s wages briefly edge up to a slightly less than starvation level, and the markets immediately panic.


For a long time now, the central question about this stock market, fueled as it is by central bank cash infusions as far as the eye can see, has seemed to be: is it a market at all, or an engineered aristocracy, a system contrived to generate mad money and infinite security for the investor class, and cement the rest of the world in debt-serfdom?

If it is such, then reality may take a long, long time indeed to leak in. Much as many doomers might yearn to see the captains of finance finally get the messy downfall they deserve for (redoing) what happened in 2008—to have the whole thing implode under the weight of its own wishful thinking and corruption—the glum truth of history is that such systems can go on for centuries. Or, given the madness already on full view in our latest presidential cycle, the knives could come out next year in a crash or a revolution. Whether we are convinced of perpetual-motion or not, we fool ourselves if we think that such designs can have predictable endings, especially once such high stakes are gambled so wildly.

In hindsight—though it’s giving the viziers of finance far too much credit to say it was planned as such—the Financial Crisis appears more and more to have been a perhaps inadvertent, de facto coup by the financial sector and large corporations in general. For the “bailouts” and near-decade of free-money “quantitative easing” policy that followed the Crisis marked not a return to true economic health, but an unprecedented merging of the interests of big companies and the agencies supposed to restrain them into one big, self-stimulating, noncompetitive blob—true proto-fascistic corporatism. Top it off with a billionaire, proto-fascistic president from a dynasty of big money and the framing is almost complete.

Imagine something like that plot device in some movie heists, where the ingenious bank robbers splice a repeating loop of “nothing happening” into the security camera feed, then make their move unseen. But in this case, the effect of the “heist” was to allow the full replacement of market systems, complete with their nasty tantrums and hard lessons even for the rich investor, by a new kind of wired-in, risk-free aristocracy, an investor/ownership class of “Architects” that creates limitlessly redeemable bubbles of virtuality for itself while securing the immiseration, through mass surveillance and debt serfdom, of the poorer classes, their natural enemies. 

Going further, in 2008, it appears somewhere the tape-splicing was botched: some guard saw the same fly buzz past the lens over and over, and that was the tipoff for calamity. The triggers malfunctioned, some Architects actually got burned financially, and so the bubble abruptly became important and known to all and the crisis took hold.

Ironically, the problem with 2008 was that too many of the old, non-virtual forms of market accountability still worked, forcing ugly (if curtailed) consequences, though mostly on the rest of us. This time the Architects are confident they will not fail. 

Now the coup is quietly put aside, and the Crisis itself tacitly treated as if it did not happen. Certainly as far as mainstream economic thought goes this is the case—the sooner 2008 is forgotten or waved off as a no-fault “fluke”, the better. Here is more false progress: we shall act as though problems have been solved, when in reality we have simply decided to force the problems into unconsciousness and declare victory. “The fundamentals are strong!”

2008 ought to have been made into a harsh cautionary example for the elites of this nation against their outrages of corruption and cronyism, and strict laws should have restored the sanity and “boringness” of the banking sector—but because of the no-fault approach of the already pitifully-indentured government, the teaching moment ended up being twisted into opposite, a $60 trillion (and how much more more?) bill for inverse-reforming an already disastrous system into something worse. If an aristocracy is too soon to call, call the result the “band-aid” economy, or the “see no evil” economy: the handling of the crisis amounted to a solemn oath to the financial sector that there really would be no limits, that going forward any behavior however insane would be accommodated and excused.

Like so many issues we face, the problem is a moral one. For, despite plenty of hand-wringing ten years ago about the “moral hazard” of TBTF and the grumbling about letting the perpetrators get off scot-free (even granting that the TBTF banks are now better capitalized), we see now that moral hazard is nigh-unmentionable—and it’s also the only game in town.

With that elimination of “moral hazard” has gone, characteristically, any reasonable pretense of “free markets” or “animal spirits”. We have slid, over the course of the past 40 years, from a mixed-economy with at least some market-based accountability into a corporatism redolent of the Fascist era, according to Edmund S. Phelps. Patronage has replaced competition, he observes, clogging the arteries of the old capitalist spirits (though he also continues to believe, much in keeping with the faith of the Age of Virtuality, that the dearth of major innovations since the 1960s is merely due to sociological incentive rather than hard scientific limits, a matter I have at addressed elsewhere). In this way the market has, at least for a while longer, wound up without any teeth at all: those corporate entities too big to fail know they will, with a wink and a nod, be refinanced at lovely terms by their comrades in the Treasury and Federal Reserve. They know it, and everyone invested in their heavily-repurchased stocks knows it.


What we see so far, though, is not yet enough like the aristocracies of old to stabilize itself for long as such, for at least the aristocracies were steadied by generations of social custom, family ties and often feudally-based loyalties, all of which are highly attenuated or absent in the US. If instead the direction is towards proto-fascist corporatism, then given the outcome of the fascist governments known to history the prospects of long-term stability are worse still.

What we have so far seen is instead a gargantuan levitation, a contrivance against gravity and reality, mainly achieved by tossing the weight of 90-95% of the people right out the airlock. In such a situation, where principles and accountability have been suspended, there is also a levitation in time itself, in that there is no deeper history to correct a certain pattern of conduct (many traders now in the markets already are too young to remember a time when declines were understood to be part and parcel of capitalism). And so the direction of drift will invariably be towards increasing excesses, and increasing excuses to dismiss any problem as “not fundamental”. The result will be moral, and likely financial, ruin. Why should any citizen bother making honest profits when corporations and financiers can borrow (or burrow) their money for free, indefinitely?

But as with climate change, no one gives a damn, for now, as long as there is still gas in the tank and the cheap-money doesn’t turn into inflation and wages don’t actually rise. And so the ride may yet go on, possibly for quite a while, until reality seeps in in that surprising way it does, corroding through the system in places where we least expect it. There is no reason to expect a “correction” or two, however spectacular, to accomplish that.

And yet deep down people also do give a damn. For much of what is holding up today’s market is actually a terror deeper than that of 2008—for the debts and chicanery are only more vast now, the bailouts and free money have created only a tepid recovery in the real economy, and less-than-nil in quality of life.

As Phelps notes, there have been no recent developments or discoveries to open grand new areas of the economy, only dubious re-modelings of old ideas like fracking, vac-trains, ride-sharing and indistinguishably-fancier smartphones that people are starting to get sort of bored of anyway. Behind this, in turn, lie certain unbearable truths about the dire condition of the scientific enterprise, out of which, like a huge Christmas-stocking, our economy has over the decades gotten used to pulling one magic money-making toy after another, to slake our unblinking need for novelty.

Yet these ideas must be thrust into unconsciousness, or waved off as not “fundamental” enough—for if the reality of the current Everything Bubble is so much as allowed to be acknowledged, this time the resulting swan dive will mean there will not even be a hope of fake recovery. Even the ruse of capitalism, like the absent king whose image is still enshrined over every door in the land, would fall, never to be revived. What, then, would we believe in?


Above all the show must go on—meaning, in the larger scope, the ever-accelerating consumption of a finite material base, disguised temporarily by addictive virtual tokening. And so it will. “Needs” of the most arbitrary and artificial type, designed on high and then pushed on a population made dejected and impressionable by false dreams and false education, will continue to be manufactured and dressed monotonously as innovation. For however absurd this prospect seems, it is the only stability our system now knows; and the very poverty of thought that it has created in us can no longer produce its own antidote, only intensifications and repetitions.

It is a sad fact that most of the time human beings prefer not to think, then act, but to act, then rationalize. What cannot be rationalized, in turn, is excluded from awareness, added to the pile of things too bothersome to waste time on. Such reflexive mental triage is sometimes necessary in order not to be crippled by self-doubt; yet in the amounts that have become habitual in our economic system and other parts of our national (and global) life, they are the telltale of a sickly and spreading unconsciousness. For consciousness is nothing at all without the ability to recognize, and step outside of, one’s prior ways of thought.

So it is natural that our Homo Ignoramus economists will go on to say after this record drop, and perhaps many more to come, that the “fundamentals” are fine. But what fundamentals are they even conscious of anymore?

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