The Federal Bailout - a panoply of illusions (originally posted 12/11/08)

Teacher: Consider, oh child, whence these talents?
You cannot have them from yourself.
Child: Well, I have everything from Papa.
Teacher: And he, from whom does he have them?
Child: From Grandpa.
Teacher: Now look! From whom did Grandpa get them?
Child: He took 'em.
(Johann Von Goethe from "Katechisation")

Dear friends,

At the heart of the present world crisis in both banking and business is the illusion that value is something outside of what is socially accepted as such. Here, of course, I am defining an illusion (which should not be confused with the medical term “delusion”) within the Freudian context as: An idea or belief that is based upon wishful thinking that has no relation to reality, and does not admit to needing such a connection.

Nevertheless, roughly two and one-half centuries ago, Italian political economist Fernando Galiani insisted that “Value is a social relation.” For example, if you fill a room with either gold bullion or billions of dollars in cash, neither has any value, unless, at least, two human beings engage themselves with either of the aforementioned items during a process of exchange.

In other words, the value of any particular object or activity (i.e., commodity) is solely based upon imaginary notions of “value” that are concocted by buyers and sellers alike during commercial transactions. After all, as a dear friend of mine, Denny Wolfe, says: Other than the three elements that we call oxygen, hydrogen, and carbon, which in combination provide sustainable life to both fauna and flora, no substances or objects on Earth have intrinsic “value” for us.

On a more tangible level, for humans, it is food that is the most significant matter that has intrinsic value. Consequently, in his classic book called "The Principles of Black Political Economy", Professor Lloyd Hogan insists that food, which he also calls the “elixir of life”, is "wealth in the abstract".

All people, regardless of either income or social status, must eat in periodic intervals or surely we will succumb. Period. Moreover, unless we are farmers, we must acquire our food by exchanging something for it that is useful to the seller of food. The item of exchange must not only be of use to the seller of the food, but it also must be of use to the seller of whatever the food-seller needs other than food - since it is presumed that this food-seller already has enough food and is merely selling surplus product(s) in order to acquire other things.

Hence, a universal item of exchange is needed. That is, an object or substance must be agreed upon that represents value in the abstract. Food is perishable; therefore, it has to be something that can withstand time. Gold once served that purpose, meaning all commodities shared the same quality in relation to gold, only quantitative factors, regarding how much gold any particular commodity represents was the issue.

And so, this is where money – like Dorothy in Oz - appears in the marketplace. In other words, it is not something "inevitable"; rather, it is pure chance. This is particularly so, because at the point of exchange, the food-seller mentioned above simultaneously alienates himself or herself from his or her ward (food commodity) and transforms it into that universal exchange value (money). At this point of metamorphosis, even the outward appearances disappear, only quantitative factors distinguish the values of commodities. That is precisely why any phenomenon can serve as money (e.g., paper, gold, plastic cards, and so forth).

This also explains why the Federal Reserve System can create money, like gangsters in a cellar, regardless of whether or not the aforementioned currency has any value to it outside of its name. But the more money that you "make", the less valuable existing money becomes. That means that the value of the money is inflated. Most people think of "inflation" in terms of "price". However, a higher price is only the affect that inflating the economy with more dollars has on the representative value of any given commodity. As a matter of fact, ultimately, it is military puissance that determines the validity and value of money. It is sad to say.

Knowing this, nevertheless, a handful of unscrupulous billionaires met on Jekyll Island (Georgia) in 1913 and formed the Federal Reserve System. However, they could not do it by themselves, so they got some seedy politicians to support their endeavor. In the wake of industrial capital being replaced by finance capital (banks fronting money to businesses in lieu of the expected future earnings of the latter), this was the grand opportunity to make sure that overall competition in US banking - and industry - was almost non-existent.

To be sure, it also allowed big banks and companies to determine the progress of the economy based upon their profit margins. That is why whenever we hear that the "economy" is doing bad, it simply means that the profit margins of the aforementioned large enterprises are not as favorable as their owners/managers wish them to be. The labor of everyday people makes the economy, after all. Therefore, as long as folks are healthy, how can the economy be bad?

One of the difficulties in maintaining a healthy economy is: There is no "free" market in the United States. Instead, combines, monopolies, cartels, and other such organizational forms eschew competition. Yet, free competition presupposes free trade. Free trade presupposes a free market. So about what is all of this talk of “free” enterprise that gets bandied about so much in this country through the opinion-making, government- and corporate-controlled mass communications media?

Moreover, today, both our federal government and the corporate media promote the word capitalism as a concept that can be used interchangeably with terms like freedom, democracy, or the magical phrase "market economy." Due to the illusions of politicians, businesspeople, and the overall citizenry, the idea of capitalism as "eternal" is popular as well.

“...the notion of ‘obedience’ to the ‘natural laws’ of a free-market economy has been represented not as reflecting solely the dictates of prudence and the calculus of self-interest, but rather as possessing far loftier ethical overtones. In times of economic crisis this residual naturalism inhibited business and political leaders from ‘interfering’ with the supposedly unalterable laws of the market: its principles were thought to be ordained by nature rather than by men, and men believed that to violate them was to court social disaster. Only the severe breakdown during the Great Depression effectively destroyed this archaic naturalism and prepared the way for the widespread acceptance of a managed capitalist economy in which market mechanisms are assiduously manipulated through the offices of government." - The Domination Of Nature, by William Leiss

Currently, we are in a similar situation as the Great Depression economically. However, the general population is exponentially more educated (only about 3 out of 8 people even finished high school, in those days). Presumably, one would then think that that means either power or wealth will have to be relinquished by the government, banks and corporations, in order to maintain their legitimacy. Yet, that does not seem to be the case.

Please remember, that the whole purpose of the original North American venture by the British ruling class was to extract as much wealth as they could from the land and animals (both human and non-human), for the good of their class - not their so-called "race" (another illusion).

Nevertheless, beginning with the complete falsehood about “Pilgrims” coming to this land in order to be able to express their religious beliefs more freely, while, for generations, their alleged descendants fought “Indians” over “un-inhabited” territory, North Americans have lived under the illusion that the United States was always the United States, it just had another name.

Still it has been up to those in power to remain so. As Professor Hogan explains, "It must be emphasized that Wealth Accumulation is not done in the abstract. Indeed, it must be carried out by the exercise of the conscious will of people acting in the role of wealth accumulators. These wealth owners have the onus of preserving the form of their wealth while, at the same time, striving to increase its magnitude. Just as important, is the necessity for continuous control over the Wealth Accumulation Process by the wealth owners”. (Hogan, ibid.)

But the “Bailout” is using taxpayers’ money, we are told. "Taxpayers' money?", I ask. It is taxpayers’ sweat and blood! It is an illusion to either think or believe that a great deal of the money that the federal government absconds from us under penalty of law goes towards the commonweal. Besides, does all of this mean that the big banks and companies are saving their own money, while they waste ours? Well, perhaps, that just means that, as Professor Hogan has insisted, they are simply doing what they are supposed to do, that is, protect their wealth.

Finally, at least to me, the biggest problem with any illusion is: It can neither be proven nor disproven. This is especially true, because, occasionally, illusions are realized. For example, state lottery games and gambling casinos proliferate, because so many people are willing to embrace their illusions of acquiring great wealth and prosperity, at almost any cost. Yet, there are people who actually “hit”, now and then. The banks and corporations, along with their servants in the US Congress are certainly hoping for that to be the case with the "Bailout". Therefore, it is an outright lie for Krugman, Wolfson, Bernanke, or any of the other apologists to suggest that any of this is about either logic or reason, much less that it makes sense. In any case, it will not work.

Cheers!

G. Djata Bumpus