By Jim Roache
I believe the discipline of Economics has a fatal flaw - it assumes a degree of rationality of which our specie is devoid. It also assumes you can reason with power - you cannot. Finally, and fatally, it has failed to integrate globalization into any of its fundamental schools of thought.

All the rational argument in the world will not convince those in power (by wealth, social position or politics) to act rationally because 1. it would not be in their interest to do so 2. because that minority, elite, rich, powerful, many sociopaths and/or - already know the rational positions of the various schools, and they have made it their business to circumvent them or bend them to serve their own purposes, and 3. they hold the rest of us in complete and utter contempt - expressed in private often using terminology that is shocking, demeaning and exasperating to the listener.

It is counter-intuitive to assume that they can be convinced to abandon privilege and adhere to any of the optional disciplines en masse in their decision-making. They look for ways to skirt rules, laws and regulations without it costing them too much (even in terms other than financial).

In recent times this has involved hiring Ph.Ds in Math, Economists and a few MBAs who majored in Finance (those who accused the rest of us of shovelling clouds at B-School) to devise these new "creative" products - you know the list - sub-prime, CDOs, CSOs, MBSs, and now carbon credits - anything to achieve what economists and others interpret only in financial terms, failing to notice the elephant in the living room.

The mess we find ourselves in at the moment is grounded in finance but that is a means to an end. The end is the intertwining of monetary, political and, if necessary, military and police power (including private security agencies).

Our governments seem in agreement, especially with the most creative, read corrupt financial machinations, and while people of a conspiratorial bent, might assume that they have been bought and paid for, and while in some cases this may be true, it is an unfortunate over-simplification to let that stand as the sole tenet of the argument.

It is undeniably true that the recent recession was the result of what can only be deemed corruption. Ignorance, or feigned ignorance, by those in the most powerful positions in the western world should not satisfy anyone with regard to their culpability. Ignorance is no excuse in law. And a few short decades ago, ignorance would not have saved such people from the consequences of their actions or failure to act for the greater good.

The rather bizarre notions by which our unruly children - commerce and politics - have been conducting themselves, thanks mostly to the University of Chicago (Rockefeller High) and bogus Nobels, has fascinated some of us to the point that an interesting case study or a good mystery novel might. How could any educated manager or politician believe that business was to be run in the sole interest of the shareholder (when the managers are the major shareholders) and that the focus should be sort-term when all experience in modern corporate history was to the contrary. GE, P & G, Johnson and Johnson and similar enterprises have been around a long time for a reason, several reasons actually.

If I need to tell you what they are, stop reading. There is no hope for you, and quite possible little or none for the rest of us.

That governments and theoretically international (really U.S.) entities like the UN, World Bank, IMF, BIS, etc have not seem fit to eliminate the financial hokus pokus between double dips implies many politicians and judiciaries have been bought; that someone has put the fear of god into them; or that they are fellow ideologues (functionaries) not bright enough to know that they are not really members of the A Team and are disposable in due course.

Another major difficulty I have is that most of the Schools of Economics, including von Mises Austrian School, are based in a period when nations and perhaps a few empires were in power, and therefore had to be kept functional, within certain limits. The various theories were more or less adequate to that purpose, if one were to be able to convince oneself that the flaws of each approach wee acceptable under given circumstances.

If we are stuck with economists, it is time that they came up with a modern theory to deal with the harsh realities of globalization. Any government or any empire, no matter how great their hegemony, can only extend informal power beyond its sovereign borders. That is where their ability - even if they wished to be socially responsible - to apply law, regulation or policy ends....at their borders.

There are now very few capitalists extant, beyond those in the quickly-fading real economy. We now have corporatists, and this implies much more than a semantic difference. A rich and powerful elite has just successfully engineered the largest transfer of wealth to the top 2-3% of Western Society in history. If there is any extra wealth in the hands of those in the middle, business or individual, they will be coaxed back into the markets (stocks/bonds) or they will be sold on the idea that carbon taxes, turned onto another "creative" investment that is "Triple A," or, alternatively, encouraged to take on more debt; and the last remaining semblance of wealth in the middle of out three-tier system (capitalism) will be mopped up.

I don't believe this is necessarily a mass conspiracy, although there certainly has been collusion. And there has been a coup d'état in the West - using money and technology - to engineer the recent recession. There will be a second "dip", if deemed necessary.

What has happened of late has taken place because it could - as Clinton said of his young page. It has been an inter-generational dream for several centuries, but the technology to facilitate its fruition simply did not exist. War could not do the trick. But then along can Bill Gates and a phalanx of young people who created and refined an evolutionionary/revolutionary technology of immense potential for good or evil.

As this technology evolved to global proportions, bring wondrous benefits to mankind around the globe, the Internet in particular was a tipping point at which it caught the attention and has allowed an elite (a small, not necessarily more brilliant sector of society) to play "out of bounds," using a new rule book, the book of no rules.

Banks and global corporations play out their centuries old dreams of minority world political, monetary and technological dominance in cyberspace - money is electronic - it can be transferred around the globe in a nano second. And money is power.

Economists (and many others) are simply behind the curve in this regard. There is no government or branch of government, including the law and the regulators, even were they so inclined, able to cope with people and entities who function beyond their jurisdictions. Those that theoretically exist - the UN, IMF, World Bank, BIS, etc are powerless within a global context.

In addition, by using outmoded economic theory, one is inclined to consider symptoms, i.e. given aspects of macroeconomic reality we have never had before in history.

Corporatism and the political power it can buy or seize by force (including cyber force) is in very few and often unknown hands. Economists still discuss Keynes, Friedman and Von Mises, plus all variations on their central thesis, as if these antiquated ideas held any relevance to a global reality in which all the rules have changed or been eliminated and where money and social position is an even more direct road to power because troublesome politicians and the law have been eliminated from the equation.

The world is not ruled by governments, democratic or otherwise. It is now ruled by the captains of globalization using cyber technology and the manipulation of money and markets to push politicians aside and assume almost absolute power unto themselves. Some politicians (few) seem aware and are concerned; other are bought, along with media, or are oblivious to the fact that they are now merely tolerated.

Some politicians and policy analysts, then, have partly grasped that economists is global, but they remain unwilling to sacrifice sovereignty in order to cope with the new reality. As long as corporations and those who control them function globally while governments or empires try to retain local or sovereign political power, corporatists win the power struggle by default.

They control governments. Governments exercise no real authority over them. Those in government and it agencies, including the courts, who have not been bought, can easily be frightened into compliance - carrot or stick. Either way, government power is now a myth, particularly in the Western democracies, diminished almost to the point of irrelevancy.

Post your comment  (0)

Connect:

Post to Twitter

Post to Facebook