At the sharp end, obviously, we all sell our time and effort in return for cash. So that we can pay for things like a roof over our heads, food etc. That money is clearly 'real' in that we earn it and then pay for things that wouldn't be provided or supplied if it were not 'real'. It's all about trust - equally obviously. If the money we pay for stuff was not redeemable against other stuff - so that the people to whom we pay it can then buy their own 'stuff' it would be worthless.
All good so far?
So move up a level. Businesses buy raw materials and make those materials into products that are then sold and whose price is a factor of raw material costs, labour input, marketing and the machinery of business, and profit. The same applies to the provision of services where the 'raw materials' might be expertise or time but the same costs of 'business' and profits apply. They need real customers with 'real' money to pay for their goods and so the 'real' money cascades downwards into the economy as described in the first paragraph.
And along the way we need a system of governance, laws, healthcare, education, infrastructure that help to make this capitalist system work effectively. And we need protection to ensure that we are free to engage with this democratic capitalist system, so that other people who don't buy in to this system cannot simply invade and steal the fruits of our labours. So we all - businesses and individuals - pay a percentage of our income to fund these things that we cannot - or cannot be arsed - to provide ourselves. We do what we do, earn money within this system and pay for others to provide the governance and infrastructure that help to make it work for us.
And all this is expandable from an individual to a community or a regional, national or even international scale. But obviously the wider one goes in this venture or outlook, the more danger there is from 'competitors' who might not share our work ethic, but nonetheless want the fruits of our labours for minimal effort. So we therefore need more protection and have to pay a bit more, but because it's a bigger picture there are many more people to contribute to the overall costs of what is in effect 'the protection of our way of life'.
It is a system that has worked for centuries. It is not perfect but is perhaps the least worst of all possible solutions and systems in that it rewards endeavour and meets (in theory) the needs of the vast majority of people on the planet.
All of which is not rocket science. It is a system which encourages work and effort - there will obviously be winners and losers in terms of returns, but the simple fact is that, as the saying goes, money makes the world go round. And this system enables this to happen. It works.
There are extremes and inequalities built-in to this system - for every winner there will, sadly be many losers (financially), people will be exploited through no fault of their own, by dint of background or opportunity (or lack thereof) or geography. But it is a system that offers the best opportunity for all in the end. Some might be lucky or unlucky. Some will do well without deserving it, some might fail having given their all to a project. But I don't see any other system that offers anything like the same level of opportunity or prosperity as capitalism.
Someone has to make the money to pay for everything else. It really is that simple. And while socialism has value in terms of fighting for the disadvantaged and reducing inequality, in the end it cannot pay the bills.
It (capitalism) is not all good however: It enslaves people into work. It promotes the situation in which we become effectively 'slaves' to the banks or to the machinery of society where many people have little choice in life but to work hard to pay for their lifestyles. It ensures that millions of people get up in the morning and go out to produce stuff that is not fundamental to the success of the species. It sees gown men and women flying across the Atlantic, First Class, to attend a meeting in which the clothing of a Barbie Doll for next season is the critical item on the agenda. I find that extremely funny, but it does happen and it's where we are now. If I didn't find it funny I'd probably go mad by the way!
On the downside what capitalism does is that it encourages us to aspire beyond our means. It becomes usury. We are told at every turn what we 'must have' for the coming season or that we'd be crap parents if we didn't provide this for our kids and so we borrow via credit in order to provide what we are told we must provide, and then we are not just working for our home or our food, but to pay the interest on what we have borrowed in order to provide what we are told we must provide for ourselves and our kids. And then we are going out to work not just for ourselves but for the banks and our creditors.
And soon then we are trapped by the money-lenders, into effectively working for them, regardless of who we actually work for directly. And it was our 'choice' to take on those debts - which were small and manageable to start with but have now become difficult or problematic. But it was our choice to take them on. We have the 'goods' that credit allowed us to pay for now instead of when we had the money to buy them. And we now find ourselves working two day's a week for the government (tax) and two day's a week for the bank (to pay the interest on our debt, not the actual capital of the debt) and we have one day's income for ourselves.
And this is a mad scenario, but it's real and many people simply cannot hope to get out of it.
But let's take this up another level - to governments and international 'players'.
The UK is currently in debt to the tune of £1.6 trillion. £64,000 per household in Britain. The Tory government claims that it has reduced the deficit by half in the last five years. That means it has reduced the amount by which we are increasing our debt year-on-year from £xbillion to £ybillion. It means that we are now increasing our overall debt by about half what we were increasing it by five years ago. So the debt is increasing but not by as much as it was. And projections are that we'll be in surplus by 2019. And by surplus that means that we'll be starting to pay back what we actually owe, instead of increasing it, by that time. Surplus doesn't mean that we're fine, it means that we'll be starting to pay off the massive debt we owe, by a small amount by that time.
So by 2019 we'll be paying off a small part of the capital on which we're paying massive amounts of interest in four years' time.
The interest we're being charged on our 'national' credit card will start to come down by a very small amount by then.
But who do we owe this money to? Germany is in deficit. France is in massive debt trouble. Italy and Spain and Greece are in dire straights. The US is in debt to the tune of $18 trillion. China is in worse shape with a $27 trillion debt.
But to whom? Who is the recipient of all this potential money? Who, on a global scale has so much money that all of these countries owe it money? Trillions. Who? Is it some guy with a white cat or the IMF? And if everybody owes more than they can afford to pay. Ever. Why are we not etch-a-sketching the whole system and starting again? Is it just to keep ordinary people working because they have to?
I think it is.
The figures are meaningless. They simply do not equate to the real world. Every household in the UK 'owes' £64,000? To whom? Whose money is at risk because of our debt? Whose livelihood is suffering because they are funding our profligacy? Who has actually paid for all this stuff we have bought on the 'never never'?
Who is the underwriter of all this debt? Is it real?
It's all a mechanism in which the EU and the US have just printed money when it suits them. It is not real money as we would recognise it. It's fabricated lies. Designed to create a system in which we are all slaves. The money used to bail out the EU in recent years would have made every individual in Europe a millionaire several times over. But then who would clean the streets, who would go to the factory every day to make the stuff that makes the world go around?
But here's the trick. The thing that means we can never be free of the system and will always be 'forced' to go to work to pay off our debts and the debts ratcheted up by our governments. You see we own the debt ourselves. Sometimes as wealthy individuals but more likely for us ordinary people, via big corporations and especially pension funds - the financial giants upon whom we rely if we're going to be able to eat in our dotage - and to whom we all pay, sometimes voluntarily but also whether we like it or not. We pay, all of us.
You see, when a government needs money it does two things in the main. It raises taxes from us and our employers and on the goods that we purchase. And in an ideal world these taxes - our contributions - pay for the things that we need to protect and enable our system - the things I described above as stuff we cannot be arsed to do ourselves. And in theory, in principle that should work just fine.
But for reasons of political expediency and sometimes in times of crisis (like war), this tax-take does not cover the costs of what our government needs (or wants) to spend. And in these circumstances governments are forced to issue 'bonds' - effectively IOUs on which the government pays interest and then repays the capital which is borrowed over time or on previously agreed 'due' dates. And on these due dates the government will inevitably have had to issue more bonds to raise the money it needs to pay back the last lot of bond holders, and so it goes on.
{One comment on this issue is that governments should live within their means unless there is a war situation. The tax take should pay for everything. It doesn't and this is called a 'structural deficit'. It is called this to ensure that most people have no idea what it means. What it means is that the Government spends more money on stuff than it takes in in tax. One example of this is Mr Brown's PFI profligacy. Yes PFI (then called PPP) was introduced by John Major but as a fund-raiser of last resort. Mr Brown saw it as an off-balance-sheet way of paying for everything - major investment in schools and healthcare - that did not come out of tax receipts. The 'never never' in other words. It has meant that for an £85 billion investment in the endlessly profligate NHS, we and our kids and grandchildren will be paying back more than £300 billion over the next 35 years.}
And the people with the 'real money' (by which I mean serious amounts and not the 'real' money I talked about at the start of this endless blog) needed to fund government are the financial giants and pensions companies who have this 'serious' wedge because we all pay into them.
So they own the debts that our government incurs, and they do so because we all pay into them so they have enough money to be real players in this market. And they make the money on interest whilst still owning the capital which will be repaid in full on the 'due date'. And in return we get a pension that is arguably worth more than the sum of its parts when we retire.
But along the way these pensions corporations cream off £billions in profits which pay for themselves and their shareholders. Inevitably wealthy individuals and other corporations. And all based on the contributions of ordinary people.
So we pay for their stake in the game, we underwrite any potential losses they might make because they cannot be allowed to fail, and in return they get extremely rich while we get a bit more in return than we paid in.
Whilst these people who supposedly work for us and do the things for us that we cannot be arsed to do ourselves have effectively taken over the world and we have now become their slaves. I know that's a strong word but it is accurate. We seem to have arrived at a point where the people who we employ to do stuff for us 'wealth creators' (we, the people who do the real work and create the wealth) are now effectively our masters and controllers.
It's a fiendishly clever system in which the people who control and manipulate money, skim off a percentage of all the deals that are made, now effectively control the people who grown the food and produce the 'stuff' that actually meets our needs in everyday life.
The UK is the biggest financial services hub in the world. It is the UK's biggest 'industry' but it does not in and of itself create anything of material value to ordinary people. One cannot live under a roof made of financial services. One cannot eat financial services. But one also cannot live without them.
And because of them we are having to pay - via tax - interest on bonds and other government loans that amount to more than we spend on healthcare or defence or education combined. We're spending more on the interest on 'our' debts than we are on these things.
I'm not sure that when we agreed to fund the things that we need but cannot (be arsed to) do ourselves, we envisaged this outcome. But it is a very neat trick to get us to pay the companies to buy the bonds and then pay the taxes that pay the interest on them and then the tax that should pay for the machinery of government as well. It's almost a magic money tree. But you won't be surprised to learn that it's not for the benefit of 'ordinary' people.
It shouldn't be like this. But every major country in the world has succumbed to this financial services-driven bollocks. They use terms to disguise the fact that they are fucking about with our money when they shouldn't be. It has become the 'norm'. Accepted. Living beyond the means of the people for whom they work. Without actually asking us if that's alright. As I say Capitalism works in principle. But in practise? I'm not so sure. When the US, the UK and the EU can just print money, when they can rescue the banks from gambling losses when the principle of capitalism states that they should be allowed to fail, we're in new territory. I'd argue that this current system is not capitalism. It's corporatism and I'm not convinced that it works in the way it should - i.e. to meet the interests of the man and woman in the street, which was the starting point of the whole system.
It seems to me that we have created a monster and one that we have no hope of ever being able to get back under our control.
Thanks for reading.
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