One of the primary economic paradoxes that has always perked the curiosity of both bourgeois and Marxist political economists alike can be neatly encapsulated in a notorious quip uttered by the famous New York Yankee’s catcher and manager, Yogi Berra, who, once upon a time, famously pronounced: “a nickel isn’t worth a dime, anymore”.
In this simple Yogism lies one of the primary post-modern financial mechanisms by which neoliberal bourgeois-capitalists have sucked value out of the workforce/population, under the cover of western economic opulence, into their own coffers to the bewilderment and detriment of the workforce/population, which slowly sinks ever-deeper into debt misery. Behind Berra’s quip rests a capitalist sleight of hand, which pivots on the hidden properties of post-modern value-determinations, embodied in fiat-money and wealth. Namely, what Berra’s quip points to is a transfer, or fluctuation, of “worth” over time and space, between a nickel and a dime, despite the fact that the relation between a nickel and a dime remains at face-value technically unchanged and timeless. Berra’s quip points to the declining value of money in society, meaning the declining purchasing power of money, year in and year out, over the passing decades. And this, in a nutshell, is the essence of the rising financial inequality festering across post-industrial, post-modern, bourgeois-state-capitalism.
Unpacking this conundrum is no small feat as this sleight of hand lies at the center of the extraction and accumulation of capitalist profits. First and foremost, to begin with, this capitalist sleight of hand; i.e., financial mechanism, was initially made possible by western capitalist economies when these western capitalist economies abandoned the gold-standard roughly in the early 1970s. This unfastening of wealth from gold detached value from any manner of universal measurement and/or points of reference which in the past could always be boiled down to the value of gold. Meaning, gold kept the relation between value and money (wealth), static, stable, and most importantly, honest. And, with the abandonment of the gold-standard, the relation between value and money (wealth) became increasingly arbitrary, ambiguous, and devoid of any solid referential basis. Namely, price, value, and wage, that is, value and money (wealth), went post-modern via the abandonment of the gold-standard.
Value and money (wealth) was unfastened and increasingly made subject to the arbitrary whims of bourgeois capitalists. That is, value, price and wage; i.e., value and money (wealth) became increasingly subject to the influence of power and power-relations, which is to say value and money (wealth) increasingly became subject to a new, post-modern, economic base, a base founded on force, influence and state-finance-corporate-networks. When gold was abandoned, the vacuum it left was filled by force, influence, and network-power, whereupon the relation between value and money (wealth) became increasingly a matter of influence, force and power. That is, a matter of networks and power-blocs, capable of determining, stabilizing, and managing the relation between value and money (wealth), according to their own perceived arbitrary standards and artificial determinations. This includes also the artificial, arbitrary, determination of value, price and wage through capitalist networks and power-blocs.
Consequently, the abandonment of the gold-standard opened western capitalist economies to new economic maneuvers, schemes, manipulations, and financial mechanisms, designed to increase capitalist profits for those select few who have the means and the power to do so. The result is, and continues to be, a vast globalized transfer of value from the globalized workforce/population to a small, globalized state-finance-corporate-aristocracy. Specifically, a capitalist aristocracy, which incessantly orchestrates this value-transfer via hidden value/price machinations, which have significantly destabilized the relation between value and money (wealth), while keeping the superficial structure of value and money (wealth) intact and unchanged. Yogi Berra’s witticism apprehends this capitalist trick very well. And, in addition, it is quite apropos that the initiator of post-industrial, post-modern, political-economics, via the abandonment of the gold-standard, should be a man aptly referred to as “Tricky Dick”, which was the informal, derisive, nickname for President Richard Nixon.
When Nixon removed the US economy off the gold-standard, a decision which was eventually adopted by all western economies, it ultimately set forth a post-modern gold rush, namely, a gold-rush grounded in financial manipulations and arbitrary values that would catapult and transform the banking and financial sectors into the premier economic vanguards of neoliberal capitalism, itself. The reason being, the capitalist-system, having gone off the gold standard, and now based on fiat-money, both digital and otherwise, was essentially empowered and privy to create money, seemingly out of nothing, namely, out of thin-air, so as to stimulate incessant capitalist growth and capitalist development.
However, contrary to Marxists, who state that no banking or financial institution whatsoever can create value out of thin-air, this is not really the case when it comes to the abandonment of the gold-standard and fiat money, despite some Marxists and bourgeois economists claiming the opposite. Granted, the creation of money by the central banks, including various financial institutions, appears like the creation of value out of thin-air, but this is not the case in the sense that what actually happens is that the illusion of instant money-creation; i.e., the instant creation of new fiat-money is, in fact, designed to dilute the total sum of value circulating across all sectors of the capitalist-system. The creation of new instant-money merely dilutes value across a larger monetary (wealth and capital) terrain and numerical sum wherefore a million dollars is no longer worth in value what it used to be. This means that there is less value being represented in every dollar with every financial injection of newly minted fiat-money.
Therefore, as Yogi Berra aptly stated “a nickel isn’t worth a dime, anymore”, and the reason is that any increase in fiat-money dilutes value over a larger sum of money (wealth), digital or otherwise, to such a radical extent that, according to Negri and Hardt, capitalists are “no longer able to measure value adequately. [Moreover, due to this dilution process] value can no longer be measured in terms of …labor-time”,1 meaning, that all modern labor theories of value, Marxist or bourgeois, are no longer applicable in the determination of value, price and wage, as “money [has been] unmoored in [this] phase of [complete] financial control”.2
In addition, these injections of instantaneous fiat-money into the economy tend to have the added consequence of resulting in the speed-up of circulation, production, consumption and distribution, both for capitalists and the general-population. The setting of interest rates by banking and financial institutions are supposedly designed to control inflation, but, in fact, they merely hide and veil the dilution of value across a wider economic terrain and a greater numerical sum of money and wealth. That is, interest rates conceal the dilution of value and help ease the transition into greater levels of value-dilution, including the fact that there is less purchasing power embodied in every dollar. Furthermore, the dilution of value, concealed in interest rate manipulations by the central banks and various financial institutions, permit the state-finance-corporate-aristocracy to absorb greater levels of capitalist profits through the cloak of natural inflation, and through the arbitrary manipulation of price, value and wage.
This process enables the state-finance-corporate-aristocracy to suck more value out of the general-population than it allocates unto them via the creation of new instant-money. That is, despite the general-population having access to, and having, more money and wealth than it previously had, the value laid-out across this money and this wealth, is significantly less than previous, due to the instantaneous manifestation of fiat-money, which has significantly increased the numerical sum of money and wealth, thus diluting value over a larger terrain of money and wealth.
To recap:
(1) value is diluted in and across the capitalist economy when money is instantaneously created by the central banks and/or various financial institutions. Meaning, that a million dollars is worth less in value than it previously was; and, moreover, this means that the attainment of a million dollars is easier for the general-population because there is more money circulating in and across the economy, which stimulates the general-population to work harder and buy more. Simultaneously, this also means that one billion dollars is in reach, which decades ago was virtually inconceivable. Notwithstanding, there is less value embodied in the sum of money and wealth, due to value having been diluted over a larger capitalist terrain.
(2) Injections of instant money in and across the economy also means that a person needs more of money (wealth) to acquire commodities due to the fact that commodity-prices, subject to inflation, tend to increase over an extended period of time and space. Notwithstanding, interest rate manipulations ease inflation and any sharp rise in prices, while permitting capitalists certain leeway to increase capitalist profits through the imposition of arbitrary mark-ups, which are validated on the premise of inflation and ever-increasing costs of production. However, these price mark-ups, which are, in fact, arbitrary and artificial fabrications by power-blocs and corporate-networks, always exceed inflation and the new production-costs, allowing for the cultivation of greater capitalist profits and value out of the workforce and the general-population.
The whole financial mechanistic process of the dilution of value is designed to trick the general-population, through a capitalist sleight of hand, by giving the general-population access to greater sums of money (wealth), while simultaneously radically decreasing the value embodied in these greater sums of money and wealth, which means that the general-population has access to less and less value, despite having access to more and more money. The value of the money and wealth, which the general-population has access to, is now worth significantly less than it was prior to the injection of new instantaneous fiat-money by banking and financial institutions. Ultimately, this means the general-population, in reality, has less purchasing power and is worth less with every increase in the numerical sum of money, the reason being the fact that value is diluted over a greater sum of money and wealth.
To sustain its current level of value and purchasing power in its own possession, the workforce/population has to work harder and longer with every new instantaneous creation of fiat-money by the central banks. If it is unable to do this, which on most counts this is the case, then the level of value and purchasing power in the possession of the workforce/population goes down and is transferred to the state-finance-corporate-aristocracy.
For example, in the United-States, the money supply grew “from 6.407 trillion in January 2005, to 18.136 trillion in January 2009”3, which had a profound effect on the relation between value and money (wealth), during this time-frame, as this fiat-money creation out of thin air diluted the amount of value embodied in every dollar. The result was increasing financial inequality between the state-finance-corporate-aristocracy and the workforce/population, including the creation of an ever-widening chasm between value and money (wealth), despite keeping the value-structure of money intact. Moreover, this has also enabled the state-finance-corporate-aristocracy to raise the amount of money (wealth) needed for the general-population to purchase commodities via arbitrary value, price and wage-determinations, founded on nothing but power; i.e., the power to set price, value and wage, according to what an entity can get away with.
According to Negri and Hardt, in the age of post-industrial, post-modern capitalism, “how do [one] measure the value of knowledge, or information, or a relationship of care or trust, or the basic results of education or health services?”4 The answer is derivatives. For Hardt and Negri, “derivatives are part of finance’s response to the problem of measure”5 in the sense that “derivatives and derivative markets…operate…[to] establish commensurability, making an extraordinary wide range of existing and future assets measurable against one another”5. In effect, derivatives bundle together a variety of radically different commodities into a singular finance-commodity, which is then subjected to an arbitrary price and traded unto the global market. Through this economic process, derivatives provide an arbitrary marker for unknown values embodied in highly immeasurable objects, commodities, services etc., which are both conceptual and material in nature.
As Hardt and Negri state, “derivatives …make all manner of capitals across disparate spheres of place, sector and characteristic commensurate with one another”.5 However, what Hardt and Negri fail to see is that derivatives are highly arbitrary and artificial determinations, more or less, artificially fabricated values and prices, founded on the premise of power, that is, the power embodied in the specific ruling capitalist networks and power-blocs, which govern and dominate specific spheres of production such as finance. Derivatives are fictional manifestations and commodities, whose value and price-determinations have nothing to do with economic reality and everything to do with what a set of capitalist power-blocs can get away with, price-wise, within and across the marketplace.
As Marx might say, they are founded on “the whim of the rich and the capitalist”6, namely, power. That is, the power of a specific, capitalist-network to set the parameters and the sum of value and price across an industry, pertaining to a particular commodity, whether this is a mental commodities derivative, or a physical commodities derivative, while being able to maintain this value sum and price sum for an extended period of time and space, until this arbitrary value and price becomes, legitimately, an industry and global market norm. Therefore, contrary to Hardt and Negri, it is not derivatives, which establish commensurability between radically different commodities, it is power; i.e., the exercise of power through the medium of derivatives, which ultimately establishes artificial value and price, despite these values and prices being completely arbitrary and artificial constructs. Behind derivatives and derivative markets lie corporate, capitalist power-blocs, and capitalist networks, which pull the strings of power, according to the arbitrary whims of their mercenary impulses, which increasingly command maximum extraction and accumulation of surplus value. That is, maximum profit by any means necessary.
Likewise, the value embodied in derivatives, or a million dollars, decreases with every augmentation in the money (wealth) supply. The decrease in value is the result of dilution due to a larger sum of money and wealth now in circulation. Moreover, as the general-population requires more and more wealth to acquire commodities, as it did between 2005 and 2009, it begins to rely increasingly on credit, credit which eventually increases household debt for the general-population. And, between 2005 and 2009, this is exactly what happened for most of the general-population.
Consequently, through a combination of the dilution of value embodied in money (wealth) and the appropriation of greater sums of profit and value from the general-population, via inflation and exaggerated price mark-ups, global financial inequality has drastically increased between 2005 and 2009, resulting in a greater debt-load across the general-population coupled with greater profits and a greater value-transfer for the most well-off. In effect, value flowed to the 1% during this period, which saw their incomes, purchasing power, and their wealth significantly increase, while the 99%, saw their incomes, their purchasing power and their wealth stagnate or significantly decrease. The reason was the fact that the 1% was able to keep up with the new, artificially fabricated rate of dilution in value, across a broader capital terrain, while the 99% could not keep up with the new, artificially fabricated, rate of dilution in value.
Furthermore, in an ironic twist of fate, through the dilution of value over a greater sum of money and wealth via the instant creation of fiat-money, the general-population has been led to believe it is acquiring more value and is witness to the increasing elimination of financial inequality, due to the fact that it has more wealth and access to wealth in its hands than ever before. However, this is an illusion in the sense that the general-population, although capable of accessing more wealth and is seemingly in possession of more wealth, nonetheless, has the same or less amount of value in its possession, due to the fact that this value is stretched out over a larger sum of wealth and money, coupled with larger amounts of debt.
This process of diluted value, by the central banks and other financial institutions, is nothing but a capitalist scheme by which to get the general-population spending more, namely, by tricking the general-population into believing it is wealthier, which is not factually the case. In fact, by spending more, the general-population invariably lowers the amount of value in its possession and increasingly transfers this precious value to the upper-echelons of the capitalist-pyramid; i.e., the 1%, that is, the state-finance-corporate-aristocracy, through debt, through interest payments and through exaggerated commodity-prices. Namely, through an incessant, financial process of continuous value extraction out of the workforce/population and into the pockets and hands of the state-finance-corporate-aristocracy; i.e., a small set of micro-fascist, oligarchical networks.
Additionally, this leaves the general-population increasingly indebted to the financial institutions of the state-finance-corporate-aristocracy, which invariably increases financial inequality between the general-population; i.e., the 99%, and the state-finance-corporate-aristocracy; i.e., the 1%, at an ever-increasing rate, with every artificial dilution of value. This globalized transfer of value, under the guise of the increasing opulence of the general-population through mass consumerism and financial schemes, essentially picks up steam with the elimination of the gold-standard in the early 1970s, which permitted the state-finance-corporate-aristocracy to increasingly misrepresent the relation of value and money (wealth), through price, value and wage machination, which technically allowed the general-population to superficially have more, but, in fact, to possess increasingly less in terms of value. That is, the manipulation of the amount of value embodied in every dollar, which has been steadily and progressively decreasing with each new magical financial injection of fiat-money (wealth) into the economy, has permitted the perpetuation of this capitalist ruse.
Wherefore, the general-population, technically, possesses more things and commodities, but yet, in fact, increasingly owns less of the total sum of value across the globe, which is embodied in these things and commodities. Of course, the reverse is true for the state-finance-corporate-aristocracy, whereupon value is increasingly being sucked out of the workforce/population across the globe and siphoned into the coffers of the 1%. The result is an ever-increasing share in the total sum of value for the state-financial-corporate-aristocracy, which invariably comes at the expense of the global workforce/population. According to Hardt and Negri, this “monetary instability of finance and speculation, [manifested due to the arbitrariness of derivatives and fiat-money, simultaneously] corresponds to the precarity of labor”.7
In sum, this is a process of generalized global impoverishment, which is concealed behind the mask of capitalist opulence and magnified by capitalist mass consumerism, capitalist instant credit and convoluted capitalist financial mechanisms. Indeed, the overwhelming result of these capitalist schemes is the increasing imprisonment of the general-population into increasing debt. Because every dollar of wealth the general-population possesses, even if it makes more money and possesses more wealth than previous generations, has had its value stretched-out over a greater sum of wealth and money. Meaning, the value embodied in this wealth is less than, or equal to, the value possessed by previous generations, who on the surface seemingly possessed less wealth; i.e., value, than the contemporary workforce/population, but, in fact, own more things and commodities outright.
This is the post-modern capitalist sleight of hand, ushered-in with the abandonment of the gold-standard, wherefore the total sum of value in the world is having to be increasingly spread-out over more money (wealth) than any prior time in human history. Debt is the prime indicator that there is less and less value embodied in wealth and that a million dollars isn’t worth in value what it used to be. Today, the general-population may, theoretically, own their own houses on paper, but their mortgages tell a different story in the sense that, in actuality, the banks own these houses whereupon the general-population is ensnared in rent-to-own schemes where they are dishing out more value than they are getting back. In effect, when they actually own their houses outright after paying-off their mortgages, they will have paid far more in price and in value than the actual worth and value embodied in their homes. Today, houses have less value embodied in them, and moreover, due to inflationary real-estate schemes and outlandish property mark-ups, the general-population may only own, in actuality, the front-door on their dwellings while the banks own the rest. It is in this regard that the general-population is sinking ever deeper into debt-slavery and is increasingly falling under the thumb of the state-finance-corporate-aristocracy.
Indeed, Yogi Berra was right, more so than he, himself, realized at the time, when he uttered that magic phrase: “a nickel isn’t worth a dime, anymore”. However, the frightening prospect is that this dilution process is not over, due to the fact, as Hardt and Negri state, increasingly in our “contemporary [post-industrial] phase, the creation of money is determined primarily by financial instruments, …instruments [which] generate money in the manner of lending banks, that is, by lending more money than they have”.8 And, because of this excess of monetary and wealth creation, which increasingly dilutes value evermore towards nil, soon a dime will be worth less than a nickel is today, and a nickel less than a penny is today, and a penny less than nothing.
Conveniently, all the while the state-finance-corporate-aristocracy, through sleight of hand, will strengthen its stranglehold on humanity and reduce the human condition to corporate-techno-capitalist-feudalism. That is, a plethora of corporate fiefdoms populated by a litany of post-industrial, post-modern, debt-serfs, crushed beneath the overwhelming weight of interest payments, insurmountable debt, and the ever-increasing threat of full automation. As Karl Marx eloquently surmised, in Das Capital (Volume One):
The production of surplus value, or the making of profits, is the absolute law of this [type of capitalist] mode of …[value] extraction…[wherefore] every accumulation becomes the means for new accumulation…[and] the concentration of capital, …[where] capital [eventually] grows to a huge mass in a single hand in one place, because it has been lost by many in [every] other place. [The result is] the accumulation of wealth at one pole [and] the accumulation of misery, …slavery, ignorance, brutalization and …degradation at the opposite pole.9
Indeed, this drawn-out, socio-economic process of value-dilution and value-transfer is gradually engineering capitalist society, through sleight of hand, into one giant, monetary-based, capitalist pyramid. That is, a corporate-techno-capitalist-feudalism where the 1% reap greater and greater portions of global values, while the 99% are increasingly forced into debt servitude. Namely, into a vast, globalized horde of post-industrial, post-modern, debt-serfs, who must accept any sort of degrading work possible, both in order to escape the ravages of unemployment and sate the appetites of their state-finance-corporate overlords, demanding higher profits, less these newly-minted debt-serfs be rendered utterly destitute and excluded.
- Michael Hardt and Antonio Negri, Assembly, (London, England: Oxford University Press, 2017) p. 164.
- Ibid, p. 186.
- See: Money Creation.
- Michael Hardt and Antonio Negri, Assembly, (London, England: Oxford University Press, 2017) p. 165.
- Ibid, p. 165.
- Karl Marx, Economic and Philosophic Manuscripts of 1844, Ed. Martin Milligan (Mineola, New York: Dover Publications Inc., 2007) 21.
- Michael Hardt and Antonio Negri, Assembly, (London, England: Oxford University Press, 2017) p. 186.
- Ibid, p. 191.
- Karl Marx, Capital (Volume One), Trans. Ben Fowkes (London Eng.: Penguin, 1990) pp. 769-799.