Good Evening Friends,

It seems I lost some of my post last time. So I'll just have to create it now in this new post. We ended last time with a quote from Kevin Phillips, who quoted Foreign Policy magazine, which talked about state policy that focuses on financial assets is all about wealth creation, with the manufacture of goods and services not considered except as a secondary consideration. We started to refer to chapter four of Phillips's book, Wealth and Democracy (2002), "The World is Our Oyster: The Transformation of Leading Economic Powers."

This chapter talks about financialization, what happens when national economies become dominated by finance and wealth creation based on speculative invesment at the expense of manufacturing: what this means for the gap between rich and poor; what this means for the middle class; what this means for societal health; and so forth. In fact I would say that this is a central theme of Mr. Phillips's writing as a whole. The tendency of capitalism always renounces production - as strange and counterintuitive as that might sound - after an intial period of industrialization (always, always, always remember the New Money/Old Money dynamic here) before the inevitable turn to deindustrialization.

New Money always wants to become Old Money or God-Money, just as quickly as possible. Financialization is a long established method the bourgeoisie uses to try to achieve this. Phillips (in the same chapter referred to previously) says that financialization is nothing new in the history of the world. He implies that the same thing can be seen in the medieval and even ancient periods, no less so in this era of capitalism (the latest expression of elite class solidarity and wealth accumulation.

For example, in 1971 90% of international financial transactions were related to the real economy - trade and long-term investment. 10% were speculative. By 1990 the percentages were reversed. By 1995 about 95% of vastly greater sums were speculative and about 5% were related to the real economy. The trading volume had reached to over a trillion dollars a day, and they tended to be very short term, 80% of them with round trips of a week or less (Chomsky, Noam. Profit Over People: Neoliberalism and Global Order. Seven Stories Press. New York, Toronto, London, 1999. pp.23-24)

You see, a little dab'll do ya. The international finance/investment sector do not require (and I argue do not want) a lot of production to get the wealth machine churning. Five percent out of more tha a trillion dollars a day is more than enough for them, thank you very much. They can take real production and build complexes of speculation on top of it, and build additional speculation on top of the first round of speculation, as we have all come to know.

And now some quotes from Kevin Phillips's Wealth and Democracy: A Political History of the American Rich, 2002.

As societies consolidate, they pass through a profound intellectual change. Energy ceases to vent through the imagination, and takes the form of capital. Brook Adams, The Law of Civilization, 1896 (Phillips, K. p.171). Pretty self-explanatory.

History repeats itself, but only in outline and in the large. We may reasonably expect that in the future, as in the past... that new civilization will begin with pasture and agriculture, and expand into commerce and industry, and luxuriate with finance. Will and Ariel Durant, The Lessons of History, 1968 (Phillips,K. p.171).

I like that phrase, "luxuriate with finance," which, of course, is the goal of the ruling block - to come as close to God-like inevitability with respect to wealth as possible. Although I am not even going to summarize Phillips's argument at all, I will just mention in passing that he provides three historical mini case studies in Chapter Four of his book "The World is Our Oyster." These are Hapsburg Spain of the 1500s and early 1600s, Holland of the 1600s and early to mid 1700s, and Britain of the 1800s and early 1900s.

We'll go to another post and look at two more quotes.

wingedcentaur.