This is great. The decoupling of the financial economy from the real economy is an important phenomenon, and important to understanding the nature of power in our political economy.
We see a similar problem cropping up with Modern Monetary Theory. I think the theory itself is just wonderful. It is a great way to view the monetary system, and as it happens, it correctly depicts how the modern monetary system actually works when you cut through all of the myth and propaganda.
It would also make for a powerful political-economic tool. When you want people to do something, just inject some money into the general system. You're basically squirting this catalyst into a network to activate all of the potentials along that network, or people who want to do things. And there are people everywhere that just want to do things. Doing things is a huge part of life. And everything is set up to do things; the infrastructure is already there. If things get too hot, you just suck it back up. You tax.
Money itself is a symbol that subconsciously communicates to you this: "do what you think is useful, and everyone else is going to do what they think is useful, and then trade in all of those things." It animates life. It promises that life continues.
It does away with this superstitious "hard-money" psychology whose undercurrents can probably be traced back to Christian moral thought, this nagging guilt that says you have to suffer and toil to get anything good, which is a great attitude for a certain period of time (a time of scarcity and material hardship), but transplanted on another age (an age of abundance, at least for certain classes), becomes a hindrance, a superstition.
But there are problems with MMT. Not in the theory itself, which seems airtight to me, but in the way that the theory relates to our current political economic system. First, as the linked post showed, the monetary system operates in accordance with the interests of those most powerful, and able to affect the behavior of the system.
There are a lot of people out there that want to do good things, and there are plenty more people out there that want to do bad things. And the channels themselves in which the money flows determine who gets what, and who gets to do what, and those channels are determined by people who manipulate them to get the most out of them, and essentially the people who do bad things. Squirt a neutral medium like money into this existing system and the system continues to behave as it did previously. There is no clear way to modulate the flow of this money without directly using force to change the behavior of the system.
The other problem is that yes, our system works a certain way, and we have the incredible resources and infrastructure that we do, but the way in which all of this behaves and is ultimately utilized correlates with the aggregate in human belief systems, and more importantly, the belief systems of the most powerful people in the system.
Rich people and powerful politicians simply don't think in the manner that is required for MMT to actually operate. They are purveyors of the hard-money superstition, which is why you see austerity being practiced in deflationary economies. They are all projecting their own guilt, they say: "we had too much, and now we have to compensate for that." Which for rich and powerful people means that everyone else has to compensate and they can continue to consume at escalating levels. Austerity for the poor, socialism for the rich. So it goes.
Even if there are some non-superstitious wealthy and powerful people that understand the nature of the system, and could understand the theoretical operation of MMT, they still wouldn't implement it. They are fine with controlling the wealth and power flows. More flows to the population mean less of a mountain of power, control, and wealth for them to sit atop.
Compound all of this with the fact that resource strains and environmental antagonisms are feeding into these system-wide pathologies. So, for MMT to function without resuscitating the doomsday machine that we have collectively built, accelerating our path to collective suicide, it would require political force to radically reshape the nature of the system itself. As has been repeated by climate activists, we would require a WWII-style command economy that would massively reduce superfluous consumption and force an economic build-out of renewable infrastructure. Energy-use would have to be systematically reduced substantially.
The environmentalists would essentially have to commandeer the guns to do this, because the entire power structure that currently operates doesn't want this; it is perhaps one of the greatest things they fear. And who exactly is it that wields the guns now? We all grew together; that includes the most hypersensitive progressive and the most bloodthirsty reactionary. We're all stuck together too. Whoops.
A dramatic restructuring has happened before. But it takes a lot of energy and violence. This was essentially what happened through the course of the world wars and the dramatic political changes that changed the shape of the global power structure during and after. Even then, the locus of global empire shifted but the overall composition of the system retained its character. What is it really going to take this time?
