We are not in the clutches of late capitalism; We are witnessing the late stages and death rattles of the post-1971 fiat system. Confusing the two (and basing solutions or policies on that error) is a recipe for counterproductive intervention and missed opportunities.
Never in my life have I had a more urgent feeling that we are nearing the end of something; that, to paraphrase William Butler Yeats, the metaphorical center cannot and will not hold. I think this sense of approaching finality, historical transition and unraveling of order has also permeated and influenced our politics.
The collective imagination and will of our two political parties is limited to reviving Franklin D. Roosevelt or Ronald Reagan, with ever diminishing results. Each party wants to return the country to its preferred path, but those paths have converged and ended. Hence the creeping feeling that we’ve reached an end point.
Many, especially those on the progressive left, refer to this state, this liminal phase, as “late-stage capitalism,” a term rooted in Marxism (but not coined by its founder). The term’s meaning has evolved over time, but more recently has become something of a nebulous catch-all, a lament meme about the yawning wealth gap and the absurdity of everyday life, which it resembles in its (at times) cartoonish futility, a play by Samuel Beckett.
Recent events have only strengthened the lawsuit. This has led some to speculate (or boldly claim) that we have reached the end of capitalism as a viable economic system; that capitalism, left to its own devices, will continue to remove or degrade our societal Jenga blocks until it all collapses. We are merely witnessing the inevitable conclusion of a self-destructing system, they say. Its natural end point is either a neo-feudalism in which ultra-wealthy overlords allot crumbs to the destitute masses, or a collapse producing in its wake an anarchic, Balkanized state of nature that favors the strong and the rich, minimally constrained, will trample the weak with impunity.
Given this bleak outlook, why not intervene pre-emptively and chart a course in a different system? Why not give the state more powers to coordinate economic activity? Why not redistribute the wealth before it ends up in the hands of the already powerful?
I think most of us get the momentum here. The idea that something is fundamentally broken and that something fundamental needs to change is pervasive. But the answer isn’t to conjure up the senile mind of Reagan or remix Roosevelt. And it certainly isn’t about abandoning capitalism altogether in favor of essentially academic alternatives – be it the workers’ state of socialism or some vague notion of a pre-lapsarian agrarian utopia. But too often our discourse seems to be limited to these paradigms.
There are several reasons for this intellectual blockage. First, I think we’re trying to stuff round pegs of reality into square, partisan holes. Second, I think we are misnaming the moment and misdiagnosing its flaws because our language has not evolved beyond the Cold War dichotomy of capitalism and socialism, bourgeoisie and proletariat, worker and capitalist.
I contend that we are indeed in the final stages of something, but that “something” is not capitalism. Well, we may eventually reach the end of capitalism – I’m not ruling out that possibility, nor am I claiming that capitalism has no inherent, intractable problems. But much of the contemporary tragicomic grotesqueness we ascribe to “late capitalism” is uniquely enabled and facilitated by fiat currency and is not entirely inevitable or inherent to capitalism. What we are currently witnessing is a late-stage Fiat. More far-reaching proposals for the end of capitalism are theoretical and premature. Consequently, our efforts should not be aimed at abolishing or overcoming capitalism, but at correcting errors in the introduction and proliferation of the fiat currency system.
Contemporary concepts of late capitalism are primarily based on or arose out of the accelerating and deepening wealth inequality seen as the inevitable and inescapable consequence of capitalism. These outcomes, the argument goes, are inherent in a capitalist system and thus predetermined.
But that’s just not as axiomatically true as we’re led to believe. Sure, capitalism brings with it degrees of wealth inequality, extreme iterations that we’ve historically tried to curb with myriad legal guard rails. But the obscenely exaggerated levels we have today, which have particularly aggravated over the past 15 years, are causally related to the monetary policies made possible by fiat currency.
These charts show a wealth inequality that has become increasingly acute since 1971, when we officially abandoned the gold standard and moved to a full fiat system. From that point on, we began to expand the money supply at an increasing rate, culminating in the COVID-19 liquidity infusions.
Rising tide increasingly fails to lift all boats. This is because the bottom 50% of boats are not exposed to the tide. They’re not even in the water because they don’t have any assets. This has only gotten worse in the last few decades.
The increasingly acute inequality is not the inevitable result of capitalism. Rather, it is the result of a fiat system in which those closest to, and most influential in, the rules of the monetary network reap the greatest benefits.
The chorus of anti-capitalists reached a peak in the run-up to the 2020 election as the fortunes of many of the world’s billionaires grew exponentially amid the COVID pandemic.
The role of monetary policy was almost completely left out of this discussion. Let’s examine Elon Musk and Jeff Bezos, the poster children of this growing wealth inequality across COVID. I’m not an apologist or a cheerleader for either, but her fortunes have been increased largely by Federal Reserve monetary policy. We flooded the economy with new money that went to the most creditworthy institutions and individuals first, e.g. B. the rich who then reinvested it in assets and the prices of those assets disproportionately owned by saps the wealthy. you have the idea
Here is a chart of Tesla stock. Look what happened as of March 2020:
Here’s Amazon, which basically doubled in size after March 2020:
Someone like Musk, who owns tons of Tesla stock, becomes incredibly wealthy on paper. It’s not because he’s stepped up exploitation because of the pandemic. That’s because we printed tons of money which, as always, ended up pooling assets and causing asset price inflation.
The ability to print money at will (and remember that 40% of the dollars currently in circulation were created in 2020-2021) is an inherent feature of fiat currency. it is not an inherent or necessary feature of capitalism.
I would argue that other phenomena, often attributed to late capitalism, are uniquely made possible by a fiat system. The fiat system, for example, allows for the possibility of waging war entirely on credit, which distances the average citizen from the reality of war and thereby reduces resistance to war. This is explained in the work of Alex Gladstein.
The offshoring of labor and the erosion of our productive capacity, which has been crushing the working class, has been facilitated, and even made necessary, by the dollar’s position as a reserve currency. This outsourcing has only exacerbated wealth inequality.
In conclusion, I would like to argue that the widespread and pervasive loss of trust in institutions is also related to fiat currency. In a fiat currency world, money itself lies. It can be manipulated and armed. to Paraphrase Jeff Booth, when there is misinformation at the grassroots level of society (that is the money), that misinformation leaks out everywhere. And we are only at the beginning of this process.
This is not a problem inherent in capitalism. It’s a fiat currency issue. The binary is not capitalism vs. socialism; It’s fiat vs. sound money. Much of our politics now revolves around solving the wrong problem and stuffing our very real systemic flaws into totally inaccurate Cold War binaries.
Properly identifying the level at which the problem exists allows us to pursue effective solutions, such as replacing the fiat system with one based on a neutral reserve asset with non-manipulable rules, i.e. Bitcoin.
This is a guest post by Logan Bolinger. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.