One of the simplest lenses to look at an industrial society is whether it’s run by financiers or capitalists.
Socrates famously noted that some people live to eat and others eat to live.
Capitalists need money so they can do things. Financiers do things so they can get money. To a financier it doesn’t matter how money is made, so long as they won’t go to prison. All that matters is rate of return.
A capitalist has something they want to do: Ford wanted to build cars. Edison wanted to invent. The Wright Brothers wanted to fly. They need money so they can do whatever it is that turns their crank.
Capitalists create great societies. Financiers destroy them.
As soon as rate of return becomes the only consideration, a society becomes less interested in doing new things or doing old things well and starts searching for “unfair advantages.” They offshore and outsource jobs to lower cost domiciles: either for labor or for environmental regulations. They seek a monopoly or oligopoly positions in businesses where people have to buy: healthcare is the gold standard. They buy functioning businesses and load them up with debt. The business dies, but they are richer than they would have been had they run it.
Systematically they run the economy down. They become rich, but the society suffers.
This isn’t to say that finance isn’t necessary. As the saying runs “financiers make good servants and terrible masters.” But when finance becomes the primary driver of any economy: when it becomes a better way to get rich than being a capitalist, they ruin societies.
You can see this clearly in the West, especially in America and Britain. Sixty percent of people now can’t afford a decent lifestyle in the US, but America has the richest rich who ever lived.
This may seem like a victory for financiers, but it’s a Pyrric on. Yes, the America’s rich in 1950 or 1980 or even 2000 were not nearly as rich as America’s rich today, BUT America was the most powerful nation in the world, with the strongest economy. Now American elites are filthy rich, but rule of the second strongest economy, and China is pulling away from them: the difference is accelerating.
Do you want to be king shit of turd mountain? That’s the choice that America’s elites made. “Our country will suck ass and no longer be dominant but we will be rich, rich, rich!”
Ask Britain’s elites how that worked out. Would you rather be a British industrialist in 1870 or today, even if today you’re richer?
And as financialization destroys a country, that money matters less and less. In time, American elites will have to buy the best from China: cars, planes, electronics, etc, etc… Most of what they really want, America won’t make, because America will be backwards.
All this before losing the joys of being a super power.
Financialization is the destruction of countries, and the elites who pursue it lose more than they gain. Better to be a millionaire in 1955’s America, than a billionaire in America today, because wealth is always trumped by power.
Oakchair
Do you want to be king shit of turd mountain? That’s the choice that America’s elites made.
———
They chose to have to walk by the homeless guy on the sidewalk, to see opioids ravage their nation, the 8 year old girl scrounging for food a few neighborhoods down, hospitals filled with sick people soon to die, 14 year old boys smashing into each other because even they know at some level that the “American dream” is a nightmare.
The people ruling us chose that because they wanted a 4th vacation house, a new Mercedes every year, and to plaster their necks and fingers in blood diamonds. That’s the moral values of the people the mass media prostrates as the virtuous leaders you should follow.
The depraved thing is that the masses are so sedated by screens and poisoned by pseudo-food that they cheered this on. Now they’re so impaired by chemicals the first thing they think to do is foam at the mouth about proper pro-noun usage, what the correct number of Mexicans is, or whatever the latest 2 minutes of hate the media puts in front of them is.
Maybe Mao had it right. Society turns out better when all those oligarchs and their Professional managers have to live a few years in the shoes of the people at the bottom. It is revealing how the rich view having to live like the peasants they exploit as the real atrocity of the Cultural revolution. Because it’s not that they don’t know the misery they cause, it’s that they just don’t care at all.
bruce wilder
I remember a case study from business school. This case study — I am guessing without having the text in front of me — would have been written about 1982 about events in ~1980-81.
The case study was told from the perspective of the Secretary to the Board of Directors of a giant general insurance company. That is, the student studying the case was invited to analyze the decision-making of the Secretary, who was orchestrating an unprecedented multi-million-dollar bonus for his boss, the soon-to-be-departing CEO, a man who made a middling 7-figure salary and had been incumbent in his position for roughly 25 years.
The notes of the case writer focused on what the Secretary anticipated for himself and for the successor to the CEO, the probability of there being a head-hunt (possibly again orchestrated by the Secretary), the salary offered to the successor candidate, the possibility of offering options to the successor or setting a precedent by awarding options to the incumbent CEO before his departure and so on.
What I remember criticizing was the lack of attention in the case to the consequences to the company. Setting off a tournament among C-suite execs to become CEO “if not this time, then next”, the consequences of having CEOs of short tenure for the risk-aversion and integrity of an insurance company, and so on.
When the decisions that led to financialization of corporate business were made, the stories being told valorized heroic risk-taking CEOs, who would disrupt. Narrative overcame deliberate judgment and consideration of consequences. Still happening in many areas of national life.
Feral Finster
Finance is easier and delivers higher ROI than work.
So why would the oligarchs want things any other way?
Purple Library Guy
Capitalists create SOMETHING. I’m not sure “great societies” is what you could call their results, except when there are some strong trade union and other class struggle movements around. Otherwise, the difference between financiers and capitalists is not about massive inequality; capitalists run sweatshops at home if they have the chance. When capitalists are thoroughly in charge, most people are dirt poor and working 12 hours a day . . . but at least something is being made.
In our haste to rightfully condemn the financiers, let’s not overglamorize the capitalists. Henry Ford was a Nazi who would never have paid his workers enough for them to afford his cars if he’d managed to break the union.
Ian Welsh
Smart oligarchs might prefer being less rich, but in control of a more powerful and richer society.
Mark Level
A Pyrrhic victory indeed!!
It’s like a bird fouling the nest just to become grotesquely obese. Yes, America is now “turd mountain,” with sick, despairing consumers (not citizens, what’s the point?) and decayed and dangerous infrastructure. Many early deaths of despair, but hey, Elon can spread his seed willy-nill he. (He only generates “hes” by the way– any child has to be in a clone-like relationship per his narcissistic, solipsistic lens.)
I did not comment on the last thread as the QED was well-established by the host & other commenters. But I like how one comment seems to have directly engendered this one.
The Achilles Heel of the Rulers is the solipsism. Observe it now with the morons who run the International Blob pouring more treasure and blood (especially Ukrainian blood, but they “love” those Ukrainians so much, dontcha know? It’s for the greater good, which is enjoyed by the MIC and War profiteers.) They engineer idiotic Ukie “victories” for the Narrative. Oh look, they took out 5-8 Russian planes and did a terrorist attack to kill civilians on a train, as long as it lets the millionaire pundits on the boob tube or NPR declare, along with Lindsay Graham (who at least, in his defense, has made millions if not tens of millions off all those dead Slavs) “The Ukrainians aren’t losing!!” Evil, closeted, reptiloid turd that he is, even Ms. Lindsey is smart enough not to say “The Ukrainians WILL win!”
Meantime Russia grinds on to the north, the south, the West . . . It’d be nice to live in a country that was run by competent adults, but we get neither. It’s be nice to live in a country where the words “common good” meant something, but Mr. Powell of the Memo and the other lizards threw that idea into the memory hole back in the 197s (half a century ago, and it sure feels it) and it ain’t never coming back in U$A.
At least in other countries they fear their citizens (again, a state that no longer matters or even exists here) enough to do something that helps make their lives easier, and the majority more prosperous.
I had to laugh when one of the Trump toadies (was it Hegseth?) brought up all the “peasants” in China!! I guess he doesn’t spend too much time outside of the Fox studios or the White House. I’d bet percentage-wise and objectively speaking, the U$ now has more peasants than China by far.
But there’s something about white people, the men in particular– their past glory can never be taken away, they will delude themselves they are the top of the pecking order until the food riots start and Malcolm X’s chickens come home to roost.
Millennia old civilizations can be deprecated and disparaged while the house is burning down around the Jeering “Exceptional” caste. Britain and Germany are the furthest gone, the US at least has lots of land and some resources. I really do hope that in response to the next attack on Russian Nuclear sites, the promise that others (not Putin so far) have made to those running the Tech & Intell from outside of Ukraine will get hit back. I dunno if it will be the Germans or the Brits, but they are both braying wimps just begging to get walloped for imagining they can bully others who are far more smart and powerful than they have been in decades. Patience is a virtue only until it isn’t.
Oakchair
RE: The last part of Mark’s comment.
One scenario I can imagine is the Western backed Ukraine launching some terrorists attacks that kills a lot of civilians as well as Putin. The West cheers and parties for a week. Then since they killed the guy holding the restraints Russia decides to show the Eurozone what a winter without electricity is like.
A self-fulfilling prophecy if there ever was one.
Mark Level
Oakchair– of course you could be right, but not being a serious military analyst there is no way to know. The SBU is vicious and insane, they have certainly burnished their N@zi and Banderist credentials by killing many high-level Russian officials as well as perfectly innocent civilians, such as Daria Dugina, a woman in her late 20s whose father is claimed (likely falsely) to be Putin’s brain. (Unlikely as he is an obscure “philosopher”, interested in Qaballah; no evidence he and Putin have ever met face to face.) Does it blunt the Russian sword in the least? I think not, again this is just “narrative” for the MSM Liars.
Could they actually get to Putin? It is unlikely, I think, but the fact that there were (seemingly) 2 actual attempts on Trump means it’s not impossible. And yes, the result of that “success” would be exactly as you say. What interests me that I have learned on MoA is why Putin has never condescended to exterminate the Cocaine Cowboy/ Green Goblin, Highest paid actor in the world who plays a piano with his pipi. They let him live for 3 years, and froth at the mouth about his power as if the war hasn’t been lost, and make demands like not only Putin will be captured and tortured but his children and grandchildren will be as well. (Collective guilt and Punishment, as his Israeli friends so enjoy?) . . . I agree with the consensus that they don’t bother due to the old truism, “When your enemy is destroying himself (& in this case, his nation also) don’t interfere.”
But again, I think Putin et al are human beings and at a certain point we all reach a limit. So if we were betting with you over a healthy beverage for the winner, say, I would bet that even though he’s decades younger than the Russian President, Zelensky may not live nearly as long at this point. That’s why I closed with the line about “patience.” One of my gurus once pointed out that virtues can become a vice if reflexively practiced. This is where I think things are currently. (But I’m not Russian, so I may be mistaken.)
Feral Finster
“Smart oligarchs might prefer being less rich, but in control of a more powerful and richer society.”
No, then they just bugger off for greener pastures and leave the rubes to hold the bag.
Ian Welsh
No. You can’t take your billions and move to China just like Chinese mandarins in 1830 couldn’t move to Britain.
different clue
Well, the billionaires maybe can’t move to China when American unlivability reaches their lives, but they can bugger off somewhere.
Mr. Thiel has his luxury bunker in New Zealand. It may not be China, but it won’t be bad. NZ allowed him to buy the land and build the bunker, so apparently NZ does not object.
And I remember reading some years ago about how Junior Bush bought a 200,000 acre or so chunk of land in Paraguay above one of the biggest groundwater aquifers in the world. It may not be China, but it may not be bad.
JR
@PLG,
Wish I could find the article, but read not long ago, that Henry Ford did want to pay his workers a real wage and wanted as many people as possible to be able to afford his cars. It was the financiers, his backers who insisted on higher returns, making that much less likely to happen.
This doesn’t negate your point about not overglamorizing capitalists.
Purple Library Guy
Well, Ford was certainly willing to kill a few union members to appease those financiers. And the concept of decent wages certainly wasn’t even on the table until the union formed and was striking. Colour me skeptical that that old Hitler-booster (who, let’s not forget, actually went so far as to create a whole pro-Nazi, anti-Jewish NEWSPAPER) actually wanted to pay his workers well before his hand was forced. But if he did, that would make him a bizarre anomaly in the history of titans of industry.
Feral Finster
@Ian:
Why do you think Swiss bank accounts or Panama exist?
different clue
I have only a few minutes before I have to “get to work”. So I can only mention a few things about Ford from memory.
His anti-Jewitic newspaper was called the Dearborn Independent. Supposedly Hitler read it and drew inspiration from it.
The legend goes that Ford raised pay for his workers because his turnover was so great that he couldn’t keep a minimally-stable workforce. So he raised his wages enough to encourage his workers to stay in place.
I hadn’t heard about Ford’s “financiers” pushing him to oppose the Union. I thought he was anti-Unionitic right from the start all by himself. But that is just my memory.