When I was studying business, a topic that was repeated in several of my courses was “What is the main goal of a businessman/CEO?” The textbook explanation followed a meandering logic which delineated between various stakeholders (including employees, the public, etc.) and also between profit and value. The final answer? Your goal as a CEO/businessperson is to bring value to the stock shareholders.
It’s hard to understate how little we questioned this conclusion, which was treated as a fact of logic. But given this frame of mind, plus the fact that CEOs are chosen by the shareholders, one can see how seamlessly the influence of Financial Capitalism runs in corporate culture. Add to this the situation where much of the economy has been bought on the stock market by financial institutions and one can see what a dominant force these institutions are in our society.
In my last article I explored how this has been accomplished. But the question I am asking in this article is: what influence do these organizations have on our lives and our future? Many might stress media bias or political influence as a consequence, but for this article I would like to address some less discussed topics.
Financial Capitalism Defined
Before I continue, it will be helpful for me to define my terms. What I mean by Financial Capitalism is financial institutions working together as a cartel so as to be able to create money*, as well as defend their interests through official institutions. I am also referring to downstream instruments such as Wall Street by which companies, materials, and other resources are commodified onto markets and easily purchased.
*This is achieved by fractional reserve banks lending money back and forth to each other.
The current system of creating capital out of debt has inflationary pressures. Sadly, these inflationary pressures are not distributed equally. The price of limited resources such as oil and property go up much quicker than wages. This is not just an economic tendency; it is a stated Federal Reserve policy. The Fed prioritizes wages as a leading indicator of inflation, letting property and consumer goods prices go up but quashing the rising wage with interest rate hikes.
To compensate for the diminished purchasing power, many have chosen to seek higher paying jobs by getting a college education. This in turn has caused university tuition to spike, exacerbating the problem. As a result, each successive generation has been having a harder time passing through the steps to adulthood. Baby boomers got jobs out of high school and easily afforded their first houses. Gen X got bogged down in debt early, and as a consequence married, bought a house, and had kids later. For millennials it is even trickier, with many postponing moving out of their parents’ house.
The Decline of Small Business
One of the things financial capitalism does is create behemoths. Companies get big much faster than they would naturally. In fact, it is not uncommon for a company to have billions of dollars at its disposal before ever seeing a single dollar of profit. Of course, this can have its advantages, but once grown to a monstrous size these companies crush everything beneath their feet.
In the article Monopoly Power and the Decline of Small Business, Stacy Mitchell describes a process by which large corporations have stifled small business. The process, which is a natural result of financial capitalism, was staved off through most of the 20th century by anti-trust regulations. However, in the 1980s the DOJ and the FTC largely abandoned enforcement of the Robinson-Patman Act and other anti-trust legislation.
Now, as a result “the United States is much less a nation of entrepreneurs than it was a generation ago. Independent businesses have been disappearing across many sectors of the economy…Small, independent businesses have declined sharply in both numbers and market share across many sectors of the economy. Starting a new business appears to have become harder than ever. The number of startups launched annually has fallen by nearly half since the 1970s.”
Destruction of Cultural Uniqueness
These behemoths can also be looked at as invasive species, coming into an economic ecosystem and throwing everything off kilter. Of course they don’t always fit in right away, but thanks to financial capital they have lots of resources to experiment with until they find a method to squeeze their way in. Usually this means the smallest number of changes possible. For example, in India this meant that McDonalds had to change its beef patties to something vegetable based. Everything else stayed the same.
I recently read this comment on a video of a walk through Tokyo:
“Sadly, looking at the shops you could be in any city anywhere these days. I’m old enough to have traveled the world in the 60s. Each country, especially in Asia, was like going to a new planet. I’ve watched with dismay as the world has become a corporate homogeny. People should respect and cherish their culture and heritage. Once gone it never comes back.”
Of course there are more important drawbacks than just disappointment for travelers. As the economic environment changes, so does the physical environment—and cultural changes are not far behind. Along with these companies comes their marketing, public relations, and influence on the media. New shallower ideals creep in to replace the old and there is a loss of connection with one’s roots. People lose track of what used to set them apart and begin to define themselves by what they buy.
The New Entrepreneur
As I explained in my previous article, financial capital purchases companies at a fraction of the cost, basically buying on margin without the risks. As a result, an entrepreneur can sell his company at a much higher price to financial institutions than he can to other businessmen. Thus, the motivation for many startup companies has changed to one much more geared towards selling to Wall Street (or venture capitalist middlemen).
Waning are the days of starting small and humbly growing one’s business along with his position in the community. Instead we’ve got “Go Big or Go Home!” culture. Unfortunately, there are a limited number of winners in this game with the rest destined to work for the corporations.
There is a canned persona one must develop working for a corporation. This is much different from the freedom felt by the small time entrepreneur, whose interactions with the public can be whimsical, experimental, and altogether more real.
Commodification and Materialism
Financial capitalists tend to “gobble up” everything. The most pronounced effect of this on the lives of the everyday man was seen in agriculture. Just ninety years ago over a third of the nation worked on farms. Today, the majority of farming has been taken over by the corporate sector.
The extent of influence on our thinking from this kind of change is huge. In those earlier times hard work and nature were the direct producers of the food that sat on the table. Ruggedness and religiosity were the natural results of this kind of lifestyle.
Another tendency of the Financial Capitalist system is commodification, and nowadays it seems everything is commodified. You pay for people to take care of your children as you work for money. Food is bought rather than grown, housing is purchased rather than built, and clothing is shopped for rather than sewn. There are even people who will walk your dog for money. And with this, money has become our goal. It’s become the way we decide things. Questions like “Which job should I take?”, “Where should I live?”, and unfortunately sometimes even, “Who should I marry?” all begin receiving the same answer: “Whichever gives me the most money.”
Money then begins to replace religion and character building as a person’s guide in life. Even if you still do look for meaning in these things, you’ll see they have changed. Gone are Christians who preach restraint, wear simple clothing, and fast twice a week. They have been replaced by motivational speakers who wear diamonds and two thousand dollar suits, encourage you to pray for financial success, and constantly beg for money. Gone is the idealistic philosophy which hoped to give men guidance and meaning for their existence. This has been replaced by materialism and nihilism which treat philosophy as something that is to be picked at from the outside rather than lived.
This pursuit of money creates a kind of unidimensional person, someone who is altogether unlikable and untrustworthy.
A Frightening Future
As I pointed out in my previous article, financial capitalism’s “gobbling up” of the property of America includes: companies, raw materials, natural resources, land, housing, media, military contractors, creative and intellectual property, and human resources—basically anything purchasable.
Unfortunately, at the same time as all the property of America filters into fewer and fewer hands, there have been advancements in technology which are poised to replace workers at a faster and faster rate. Had people remained on self-owned farms these advancements might be looked forward to as a relief from work—finally time to pursue the finer things in life. However, since people are basically bought and sold on the market for wages, introducing technology to replace them could do the same thing that introducing the tractor did for the mule. Things that have cheaper, more efficient replacements lose their value, and the common man might see his job prospects shrink into hopelessness.
What place does a propertyless, jobless person have in society? I suppose that all depends on the character of the people in charge, but when even soldiers are being replaced by drone strikes it’s hard to imagine him having much power.
How Did We Get Here?
“Capitalism provides very powerful motivations for economic activity because it associates economic motivations so closely with self-interest. But this same feature, which is a source of strength in providing economic motivation through the pursuit of profits, is also a source of weakness owing to the fact that so self-centered a motivation contributes very readily to a loss of economic coordination. Each individual, just because he is so powerfully motivated by self-interest, easily loses sight of the role which his own activities play in the economic system as a whole, and tends to act as if his activities were the whole, with inevitable injury to that whole. We could indicate this by pointing out that capitalism, because it seeks profits as its primary goal, is never primarily seeking to achieve prosperity, high production, high consumption, political power, patriotic improvement, or moral uplift. Any of these may be achieved under capitalism, and any (or all) of them may be sacrificed and lost under capitalism, depending on this relationship to the primary goal of capitalist activity—the pursuit of profits.”—Carroll Quigley
Although the object of worship in the laissez-faire economy is money, it is ruled by the fickle god of Chance. Unfortunately, Chance has now put the economy in the hands of global financial capitalists. This is a situation that the people would probably not have chosen or fought for, but here it is presented into our laps.
If Chance got us into this situation, then planning is the way out. Third Position economic planning prioritizes:
distributism—the belief that the productive assets of certain industries (such as agriculture) should be widely owned rather than concentrated;
corporatism—the establishment of official lobbies by industry through voting rather than the current system which prefers the wealthy;
traditionalism—the attempt to preserve and protect culture;
futurism—the direct pursuit of mankind’s most exciting potentialities
authoritarianism—the idea that an efficient government should be the strongest player in a country and have final say on issues.
Third Position governments have stood up to and defeated Financial Capitalists before, and they can do it again.