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"It was in the summer of 2020 when financial capitalism finally broke with the world of real people, including capitalists antiquated enough to try to profit from producing goods and services."
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This is from a speech by @yanisvaroufakis entitled "Something remarkable just happened this August: How the pandemic has sped up the passage to postcapitalism," which analyzes Aug 12's market conditions: UK GDP down 22%, FTSE100 up 2%.
https://www.yanisvaroufakis.eu/2020/08/21/something-remarkable-just-happened-this-august-how-the-pandemic-has-sped-up-the-passage-to-postcapitalism-lannan-institute-virtual-talk/
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https://www.yanisvaroufakis.eu/2020/08/21/something-remarkable-just-happened-this-august-how-the-pandemic-has-sped-up-the-passage-to-postcapitalism-lannan-institute-virtual-talk/
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That same day, the SP500 hit an all-time high.
As Varoufakis writes, this isn't the usual bull market in cruelty, when share prices rise on new of layoffs as investors calculate that lower wage-bills might lead to higher dividends.
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As Varoufakis writes, this isn't the usual bull market in cruelty, when share prices rise on new of layoffs as investors calculate that lower wage-bills might lead to higher dividends.
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Rather, these bull markets are rising on news of crashing productivity and ever-lower profitability, news that buyers of the products and services these firms sell have less money to spend than ever.
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How is the financial economy so thoroughly decoupled from the real economy? Varoufakis offers an explanation based on performance of the post-2008 bailout market, when the finance and real economies diverged so widely that their decoupling was undeniable.
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Here's how that works:
* The European Central Bank gives a bunch of free money to Deutschebank in the hopes that they will lend it out to businesses who'll hire and invest in capital infrastructure
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* The European Central Bank gives a bunch of free money to Deutschebank in the hopes that they will lend it out to businesses who'll hire and invest in capital infrastructure
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* But Deutschebank can't force businesses to take out loans, and they hew to the banker's adage that one should never loan money to people who need it. So the businesses that are struggling and so might spend in ways that preserve jobs and firms are disqualified from loans.
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* DB's loans are on offer for very cheap, so firms that DON'T need them take them out, because when someone offers you money that cheaply, why wouldn't you take it?
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* These borrowers have no productive use for the loans, though. Due to the lack of capital in the rest of the economy, there are no consumers who can afford to buy their products and services.
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* So they use those loans for financial engineering: the autophagic stock buy-back, in which companies splurge on their own shares, driving the price of the remaining market shares up.
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This is the process: Central banks make cheap loans to commercial banks, commercial banks make cheap loans to firms that don't need them, the firms spend that money on buybacks.
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That's why share prices rise on news of economic collapse, because economic collapse triggers new central banks loans to giant commercial banks, which triggers share rises through buybacks. It's socialism for the very, very rich, and brutal austerity for the rest.
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As Varouvakis writes, this is the end point of the post-2008 zombification of the world's largest companies (whose execs are mostly paid in stock, and get richer every time the zombie devours a little more of itself through buybacks).
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And the zombification has a name: postcapitalism, a system where the value of firms is totally decoupled from whether anyone buys their products - where profitability and share price are decoupled.
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The left has theorized a postcapitalist world based on a more fair and humane system of allocations, but that's not this postcapitalist system. The zombie-company postcapitalism repeats all the sins of capitalism, but faster and at higher magnitudes.
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To realize a better postcapitalist future - a global GND future that rescues our planet and species and civilization - Varoufakis says we have to eliminate both the market for shares and the market for labor.
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This is a thesis he elaborates on in a forthcoming book called Another Now, which comes out in October.
https://www.penguin.co.uk/books/111/1117271/another-now/9781847925633.html
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https://www.penguin.co.uk/books/111/1117271/another-now/9781847925633.html
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It's an attempt to sketch out just such a future, to outrun the famous Jameson quote that "it is easier to imagine an end to the world than an end to capitalism."
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I've been engaged in a similar exercise since shortly before the plague started, working on my next novel, "The Lost Cause," a post-GND utopian novel about truth and reconciliation with white nationalist militias and their plutocratic/neofeudal paymasters.
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Writing the book has been an incredibly important form of self-care during the crisis, my daily hour in the first days of a better nation. You can read the prologue on @BluejoWalton's charitable fundraiser The Decameron Project.
https://www.patreon.com/posts/new-decameron-36398964
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https://www.patreon.com/posts/new-decameron-36398964
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And you can follow the progress here:
https://twitter.com/search?q=from%3Adoctorow%20%23dailywords&f=live
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https://twitter.com/search?q=from%3Adoctorow%20%23dailywords&f=live
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And here's a video of Varoufakis delivering his speech, with a fascinating Q&A:
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