There is no future economy

This article by Allegra Stratton encompasses a good deal of the issues we've been seeing in our 'direction of travel' over the past couple of decades. The article itself focuses on the UK, but the UK is a pretty good example of 'the norm', the UK is just showing the signs of strain earlier, and at greater magnitude, than most countries due to its internal political disruptions.

We'll temporarily put aside that continual growth is a nonsense (think about it - how is it possible, mathematically, to continue to have growth on growth on growth, you eventually end up at infinity, or something equally as nonsensical..) to accept the basic premise of economics, theoretically, that you invest to become more productive or create new products.

Here's the thing - statistically investment is at an all time low. The article shows a graph of ever falling investment in the UK over the past decade. It's mirrored in other western economies.

So if you have stagnant wages, stagnant investment, ever more profit take being used non-productively (share buybacks, dividends etc) where exactly is the growth going to come from? What are we creating, or doing more efficiently, to generate growth?

From a contrarian stand-point it's fine if there's no growth, i.e. you just keep bumbling along as you are. The problem of course is we are institutionally set up to expect growth (and it's cousin inflation) to make all 'the wheels keep turning'. You see, it's a societal and political construct and a choice we have made.

But what we're seeing is at times like this when all our normal assumptions are 'not working' then, indeed, metaphorically the 'wheels fall off'. A system built with a set of assumptions, and lower and upper bounds (for all sorts of things like interest rates, rates of product and asset inflation etc.) won't cope when 'the numbers' go outside these predetermined, and expected, 'norms'. And this appears to be what we're seeing.

The corollary to this is, if we accept that these are times of 'crises', that it is in times of crises when opportunists benefit the most. Whilst every one else is standing around 'with their mouths open' in shock of what's happening, the opportunists are figuring out ways to benefit from 'dislocations' in the system and how to exploit them for, in this case, profit. Or, on a different front, in Putin's case, geopolitically and militarily.

Corporations are the ultimate sociopathic opportunists. If you haven't seen these two documentaries (the original here) they are worth a watch to test your thinking on how the world and its relationships with corporations works..

It's entirely explicable that as productivity falls, profits can still rise, because even if there's an 'ever decreasing pie', if you change the ratio of how that pie is distributed you can increase the 'real number' going to profits providing you decrease the share going elsewhere (to tax or wages). It is a zero sum game.

Statistically this is exactly what we're seeing, and hence all the 'hand-wringing' about inequality. The numbers clearly show we're not really growing (and we certainly appear to not be doing anything particularly new, or doing what we already do any more efficiently) therefore the pie is staying roughly the same size..

But we have had stagnant wages, and massive tax avoidance, for a couple of decades. In addition, much 'productive capacity' has been redirected to financialisation and this, in turn, moves money around, and takes a hefty 'cut' whilst doing so , but without actually really providing any 'value' (real products or services as we're use to using these terms). Monopolisation is another expected, and obvious, dynamic when firms get larger, they have more capital, with that capital they can 'hoover up' smaller firms, consolidating supply into an ever smaller number of 'mega suppliers'. A pattern confirmed by evidence over the past 40 years.

So with all these obvious 'dynamics at play' you can easily see we've spent the post war years building, and ever refining, this upside down funnel - which is working to extract ever larger amounts of wealth from the broad based populace 'at the wide bottom end of the upside down funnel', and transferring that wealth up 'the narrow spout of the funnel' to an ever smaller number of monopolistic recipient corporations..

The nature of 'this beast' is its only logic is growth and profit and therefore it is ultimately self-defeating - it's a bit like a group of caterpillars in a box with a finite number of leaves. They'll eat and eat and eat until there's no more leaves - and then die because they used up the very thing they were reliant on. It modern terms, logically, once you coalesce all the money into fewer and fewer and fewer hands then ultimately the bottom wide end of the funnel has little, to no, money anymore, and at that point you effectively no longer have 'an economy'. And without an economy the corporation has nothing to 'feed on' and therefore, effectively, dies of starvation.

It seems completely nonsensical but this is the basic logic of the capitalist system we have built..

buggered if I know :-P