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Capitalism is a system of production/services/distribution based on systemic accumulation and rational consolidation of derived profit from labor power, dead or alive! By accentuating the profit motive, driven by the primordial and powerful force of greed, it managed to elevate itself to one of humanity’sdistinguishedsocio-economic formation.
In those ancient times when labor and land ruled the world, our general material wellbeing was, well, not well! It took the magic of capitalism to crank up global standard of living, to say the least.In the West, effectively expanding capitalism firstcame into being in its mercantile form, around the 14th century, locating itself inthe Northern regions of modern Italy.Themerchants of Venice, Florence and of course Genoaconsolidated mercantile capitalism by setting up merchant banks as well as leveraging state power to extend their reach as far as they can. Later on, industrial capitalism, the one with a Capital C, emerged in England and the rest as they say, is all written down.
What makes big C, (industrial capitalism) different from the others? For a start, big C had to mobilize, out of necessity, massive work force (labor) in urbanized settings for the effective production of commodities, thereby giving rise to a social agent of potent transformative capacity-‘theproletariat.’ And herein lies the inherently polarizing nature of big C! Old Marx was the first to seriously lament about the deplorable status of this new social formation. He hollered from Hyde Park’s speakers corner; ‘workers of the world unite and defeat the capitalist pigs’, or something to that effect. Be that as it may, capitalism gradually swayed the whole world (including countries like Communist China) because it managed to deliver‘the goods’, even to the most miserablemember of the beast (human mass.) To be sure, the going was not always smooth between the two main protagonists of capitalism (labor vs. capital.) Harmonious and acrimonious relations were interspersed only by the ameliorating policies of the state, gradually ushering what we still call, ‘the welfare states of the West.’Don’t let the Greeks and the Spaniards hear you though! Ironically, big C or Capitalism in general is nowfacing a more sinister offspring conceived in its own womb. This internally incubated offshoot has now been christened ‘Creditism!’
What is ‘Creditism?’ As far as we can tell, ‘Creditism’ is a word coined by Richard Duncan, currently chief economist at Blackhorse Asset Management and author of ‘The New Depression: The Breakdown of Paper Money Economy.’ It is obviously derived from the word ‘credit’ and credit is a term that has become quite common even amongst the commons. One doesn’t need to be a capitalistto understand or most importantly, to utilize its significant power. When paper money was unhinged from the ‘gold standard’,(1971) credit creation became an occupation of all and sundry, unleashing a global boom that is now in the process ofimploding/exploding!Massive credit creation became a necessity once effective demand started to slow down due to various reasons. Amongst these, stagnant wages all over and stagnant population in the lucrative markets of the West/North, stand out. From the supply side, big C’s inherent malice of overproduction remained solidly intact. As the problem intensified, its apex organizations/institutions (financial entities, including the so-called central banks, etc) started to create ‘credit’ as if there is no tomorrow so that the ball keeps rolling. And rolling it did with abundance. For example, the US Fed (the central bank) alone created more than 50 trillion USD of credit since 1971, more than the rest of the world GDP combined!
Entrepreneurship, the major driver of the capitalist system has now been sidelined and is effectively replaced by ‘creditism.’ Wealth is being accumulated not from production/service/distribution, etc but rather from being in close proximity to the juggernauts of credit. General Motors Corporation, which at one time was the largest manufacturer of vehicles in the world, makes its profit not from making cars, but from availing credit to car buyers via its financial arm! By the same token, even the smallest of businesses in the world currently depend on credit for their very creation and survival. Such behavior, which was anathema to early capitalist development, is now the established rule. Take away credit from the global system and we will have literally no surviving corporations/banks/sovereign states, etc as well as the notoriously noisy millionaires and billionaires. The implied motto of the global credit system; ‘credit is wealth and work is for suckers’ has taken deep root!
After the triumphalism of ‘neo-liberalism’, Marx’s slogan was promptly changed to: ‘workers of the world forget it!’ Soon thereafter creditism also heralded its own version; ‘entrepreneurs of the world forget it!’ Today the binary foot soldiers of capitalism (workers and entrepreneurs) were given the boot by Creditismo. In their place General Creditismo assigned, from top down to be sure, Col Billione and Major Millione to run the show on empty. In the mean time, the continuous bludgeoning of Creditismo/ subordinates, is going to collapse and spill guts and believe you us, it will not be a pretty sight. Buckle up and prepare for the Greater Depression to come! See Zeus’ article next column and Summers’ on page 50.
Recently, Ethiopia’s ‘prominent’ business people were given anaudience by the current prime minister. During their discussion some intimated the need for 90% financing (credit) of their very promising projects. Our research group that is based in the kebele pub house took up the suggestion and augmented it even more. Since this brass class of the Creditismo regime is already anointed, it must stop being modest and just demand the whole of it, 100% financing! Or even 110%, the 10% being a bonus for the trouble of starting up something. Heavenly Father, where are the entrepreneurs when we needed them most? Unfortunately, this is akin to asking, ‘Who is John Galt’? Ethiopia’s formal private sector seems to have an ambition, just like the rest of the global credit junkies that very much resonates with the originator of high finance. “Let us control the money of a country, and we care not who makes the laws.”Amschel Rothschild, the founding father of international finance and the original head of the mightyHouse of Rothschild. Good Day!