Large volumes of Kapital pour into a Liberal Capitalist Market/Mixed Economy. Its financial markets record massive gains, yielding massive returns in investment. Shares in the stock of ownership across individual firms rapidly soar in Price beyond their actual Value. Speculators shoot the Prices of Real Estate and Cryptocurrencies upward. A similar process is also occurring at the Commodity Market, where investors are buying more and more Gold, Silver, Crude Oil and Petroleum. Banks are issuing loans with large amounts of Kapital to potential borrowers who lack the ability to pay off the Schuld, even as Interest Rates hover at 0% and appear to be falling into the depths of Negative Interest.
Economic life under Liberal Capitalism, the Total Mobilization of Production for Profit, knows only “Six Alls”: Lend all Kapital, borrow all Kapital, spend all Kapital, invest all Kapital, earn all Kapital, and save all Kapital. Everyone rejoices until the coming oblivion of an Economic Bubble.
Economic Bubbles occur whenever the Price of anything rapidly increases within a short period of Zeit. It consistently follows a recurring pattern of rapid Price increases, a “soaring euphoria,” that follows with rapid Price decreases, a “crashing dysphoria.” Exactly why this phenomenon tends to occur has been the topic of intense debate among Liberal Capitalists. There are currently two prevailing interpretations, both of which are derived from an “Austrian-Monetarist Synthesis” interpretation and a “Keynesian-Monetarist Synthesis” interpretation.
- The Austrian-Monetarist Synthesis argues that the more Kapital there is in existence, the more likely the Interest Rate is expected to fall. With more Kapital in existence, the scale of investments grows to unsustainable levels, allowing the Economic Bubble to burst in order to liquidate these malinvestments of excess Kapital (the Austrian School calls these malinvestments “cheap Credit”). It believes that changes in monetary policies by the government will cause Economic Bubbles.
- Inversely, the Keynesian-Monetarist Synthesis argues that the “animal spirits” of “Bulls” and “Bears” determine whether an Economic Bubble will form or not. Investors convince themselves that the Price of something should be inflated exponentially over a short interval. Everyone expects that the Price is going to keep climbing forever until an external event like the Coronavirus Pandemic causes the Price to crash. It believes monetary policies can correct those malinvestments.
Both interpretations from the outset do in fact appear to be different until one realizes their similarities as two halves of the same psychological and psychic conditions from which they drew their separate conclusions. Their attention is on an Individual causing an Economic Bubble to form and burst. An Individual creates a herd mentality, allowing the Economic Bubble to eventually reach critical mass. Neither knows the identity of this Individual but both do recognize that it is beyond anyone’s control, their real point of contention being how the civil society should react. They conduct their arguments on the basis that any Individual, be it an actual Self, a Class/Estate, a People, a State, or a Church conduct their economic lives as ‘rational’ beings. Little to no room is given to the role of any discernible psychological and psychic factors which define the decision-making processes of a Totality.
When one observes these Economic Bubbles with the Work-Standard according to their psychological and psychic conditions, on the basis that people do have actual souls in the spiritual sense, a different picture emerges. It is the equivalent of people overworking themselves to generate the most Geld within the shortest interval of Zeit by rapid increases in the Velocity at which they contribute Arbeit. As the Price rapidly climbs, the Quality of Arbeit also rapidly declines in response. The inferior Quality of Arbeit yields a superior Quality of Geld, which basically means more Arbeit is being converted to yield less Geld. If this happens under the Work-Standard, we can expect Attrition to quickly rise, followed by a swift collapse in the form of creeping Inaction as people collapse from exhaustion and eventually die from overwork. This was made apparent to me while I was writing “Japan’s Lost Decades and the Rise of Zombie Firms and Zombie Banks,” “Total Mobilization of Production for Dasein,” and the “Transvaluation of all Arbeit” for the SMP Compendium.
Naturally, this sort of behavior is counterproductive, not to mention why post-1945 Japan continues to be a fascinating case study on this matter for the Work-Standard. The flourishing of the Totality requires a greater Quality of Arbeit that is superior to the overall Quality of Geld. That in turn will allow more Geld to be generated with less Arbeit, minimizing the effects of the Attrition Rate and most importantly reducing the likelihoods of any shortages, long queues, and black markets for unavailable goods and services.
It is now possible to argue that a similar set of circumstances are capable of existing within the Total Mobilization of Production for Profit. They arise in the form of those “Six Alls,” their implications suggesting that there may be some form of basis for Liberal Capitalists to perceive the effects of Inflation on Kapital as being impacted by those three key attributes. Thanks to the Work-Standard, the decision-making process of the Liberal Capitalists toward reacting to Inflation is discernible regarding the standpoints of the Keynesians, Monetarists, and Austrians.
- The Keynesians focused on the Demand-Pull Inflation, Cost-Push Inflation, and Built-In Inflation. Inflation does carry over with each passing year and it can be affected by the production outputs of goods and services and the inputs of Kapital being spent on those same goods and services.
- The Monetarists determined that the speed at which any amount of Kapital changes hands is what causes Inflation. Both the amount and the speed of Kapital can be manipulated by the amount of goods and services available at a given Price.
- And the Austrians insisted that the amount of Kapital in existence alone will affect Inflation. The more Kapital is allowed to circulate into the Market/Mixed Economy, the greater the likelihood for an occurrence of rising Inflation.
From the standpoint of the Work-Standard, we can argue that all three Liberal Capitalist schools of economic thought conduct themselves according to two of the “Six Alls” within Total Mobilization of Production for Profit. For the Keynesians, it is “spend all Kapital” and “invest all Kapital.” For the Monetarists, it is “lend all Kapital” and “borrow all Kapital.” And for the Austrians, it is “earn all Kapital” and “save all Kapital.” The arguments of those three can be further synthesized to state that Kapital is influenced by the Availability, Frequency and Quantity that governs the sheer magnitude of its own existence. All three variables have to fall in line with economic growth itself–real or imagined, depending on whether Individuals are always going to be perfectly rational, having full access to flawless information and processing everything on the basis of the most pleasure for the least pain. Only then can the effects of Inflation can be minimized and the effects of Deflation avoided.
Everything sounds great on paper, but not in actual practice because nothing here actually reflects the economic life of any Totality, including within contexts where economic life interacts with the political, social, and cultural life of any nation-state. Economic life for all three can be separated from the other aspects driving the psychological and psychic conditions of the nation-state. The Totality is not what really matters here; for them, it was always Kapital first and foremost. Thus, it becomes difficult to study the decision-making processes that contribute to Economic Bubbles.
Unlike Arbeit under the Work-Standard, Kapital itself needs to be made as widely available as possible by the Financial Regime vis-à-vis monetary and fiscal policies and then quickly injected into the Market/Mixed Economy in large quantities for any economic growth to occur. The result is consistent insofar as it eventually bears an uncanny resemblance to the example provided at the beginning of this Blog post. Topping everything off is of course an Economic Bubble.
Since the Work-Standard relies on Sustainability and Quality, could its third variable be the “Velocity of Arbeit,” the rate at which Arbeit is being converted into Geld? What is coming to mind here is becoming more reminiscent of the concept of Dasein from Martin Heidegger’s Being and Time. We already know that, in addition to Work-Productivity, every effort stresses the need for a balance between the “Scale” and “Duration” on the one hand and the “Scope” and “Density” on the other within any form of Economic Socialization. The greater the Economic Socialization, the greater the likelihood of maintaining Solidarity whenever Arbeit is being converted into Geld.
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