Political Transition #4

Financialization of Society

Financialization occurs as the rationalist phase embeds itself e.g. by 2007, the finance sector in the US was earning over 40% of domestic corporate profits—almost 3x the usual ratio—while not producing social goods and simultaneously unleashing financial disaster domestically and abroad. Read more.

Politicians have little incentive to care about the long-term effect on society, because their interests are served by short-term decisions related to elections.

Centralizing power and wealth becomes a priority. So more and more people become directly employed or indirectly dependent on the State for benefits. Businesses win padded contracts, subsidies and protection; individuals enter public service, get direct payments and receive many services.

Plutocratic Pluralism is associated with…

• fractionation and diffusion of power amongst many groups;
• growth of a middle class and the liberation of individuals;
• impossibility of political reform without an overt crisis;
• vested interests ignoring their impacts on wider society;
• preoccupation with quick profits and easy wealth;
• politicians ensuring election by doling out «government money»;,
• inexorable increase in welfare due to competitive bribery of voters;
• deliberate inflation to manage non-self-liquidating debts;
• resistance to taxes and addiction to borrowing by everyone;
• false (Enron-esque) accounting by government;
• falsification of government statistics, especially economic ones.

Power flows from Money, and Money flows from Power…

• Politicians have power to raise money and get power thereby, and they have power to spend money and get more power thereby.
• Politicians use their power to get kickbacks from business, travel the world and live the good life.
• Big businesses use their wealth to gain access to power, so as to gain more wealth. With more wealth, they seek more power.
• Politicians use their power to gain access to more money (i.e. from members of society), so as to gain more power.
• Top officials are part of this lust for power and wealth—moving between top positions in big business and in government.
• Politicians erroneously regard money as wealth and cut loose its links to real things (typically gold), which might restrict the amount of government debt or issuance of bank-notes.

Don't Forget Power

As time passes, society gets ever more complex and government gets ever more elaborate, intrusive and expensive. Money isn't everything: politicians know that. There was always, and there still is the lust for power.

Politicians need more and more Power

The most powerful vested interests end up being:

• the financial sector: the central bank, investment banks, big banks, insurance firms, pension funds, giant asset managers, property capital; &
• the political classes and senior bureaucrats, who enable it all.

There is no self-restraint personally or socially within the political-financial class. There will be individuals who might wish to set a limit, but they depart or are pushed aside by others who are less squeamish. The purest political power comes from the manipulation of money within the financial sector to create an illusion of wealth for all and the reality of colossal wealth for the new elites.

Where does this end? It seems as if it can, must, and will end in one way: economic collapse and societal disaster. Most suffering will fall on the middle classes. For more in this vein: see financialization in the US and UK.

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• Now, we must enter our unknown future.

Originally posted: July 2009; Last updated: 27 Mar 2014