Economics of Denial

February 2005


Every political or economic theory is composed of core principles. Some of these may be expressed openly, while others are seldom spoken of. The least spoken of are those foundation principles that are obviously wrong, but are essential to the validity of the whole shebang. The core fallacy of capitalism, simply stated, is: there is always more.

Whenever people talk about politics or economics, they're almost always debating the conclusions reached by one group or another. People very seldom debate the foundational principles of the things they discuss. But every kind of ideology has foundational precepts that are just as important to that theory as any postulate in Euclidean geometry.

When they're chatted about at all, the discussion invariably covers those less basic principles that are commonly a matter for discourse. But there are other principles which seldom see the light of day. The reason for this is simple: they are obviously false. The cardinal fallacy of capitalism can be stated very simply: there is always more.

We're all reasonable people and we know that this is very plainly not so. But the fallacy that there is always more cannot be seen to be false. People cannot operate on the notion that it is false or the whole structure of capitalism will fall to ruin, must fall and cannot be reinstated until the truth is once more hidden behind the veil of willful ignorance.

This is why capitalism is always going on about growth and the creation of wealth -- ideas as ludicrous as alchemy. For example: how much is a one pound lump of gold worth? It is worth whatever it is that I can buy with it. If I use that lump of gold to buy a forest, cut down all the trees and build a warehouse that I sell to a man at a profit, which I use to buy gold -- what do I have? A larger lump of gold, if I'm lucky. What wealth have I created? The world has gained a warehouse and lost a forest. The natural world has no real value in the capitalist landscape, except as an asset that can be profitably developed.

But in the capitalist sense, this small tale of investment and commerce is an expression of real growth. The trees and the wildlife were only potential wealth, whereas the warehouse is real wealth, so the sum of the world's wealth increased. Where is the proof of it? I made a profit. The loss of a forest -- the oxygen it would have produced and the reduction it would have made in carbon dioxide and global warming, the pleasure that it would have given to a multitude of people, hikers, birdwatchers and picnickers to name a few -- is not part of the capitalist equation.

In reality, the pie theory of wealth is much closer to the truth. There is one pie and it gets cut into however many shares. Sometimes we do discover new things we didn't know we had and the pie gets assessed a bit bigger, but this is something that happens in a finite universe. There is a limit to the size of the pie. In fact, the very limited amount of stuff in the pie is what gives much of the pie its overinflated value.

The reason why the limited pie theory is such a taboo subject in capitalist theology is because of an elemental fact of socioeconomics: the more millionaires there are, the more beggars there are. This is unacceptable on many levels. It makes people resent rich people, if they are themselves not rich, and it makes rich people of conscience regret their riches.

Want to test the pie theory in the real world? Look at Honduras or Columbia. Evaluate the condition of the ordinary common people 25 years ago and today. Look at the wealth that has been "created" in these countries and exported (mostly to the USA) and count the local millionaires.

For you see, capitalism is based on the concentration of wealth. That is what capitalism is all about. It is about my concentrating $1000 dollars in my bank account by taking $10 from each of 100 other people who now have $10 less than they had before. When the pie is seen as finite, the wealth of the millionaires and the billionaires is not wealth these people have created. It is wealth they have appropriated from each of us poorer people. It is money they have taken from us in the profit they make at every place in our lives. And the more they have, the less we have left.

The trouble now is that we're getting to the end of the more that we can transmute into growth in capitalist terms. The forests are almost gone. The oil is almost gone. The clean fresh water is almost all gone. The fish in the oceans are disappearing. The farmable land is almost all used up. It is the world's greatest crime that we live in a capitalist fantasy, and that our children and grandchildren will have to pay for all the generations who have lived that lie.

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