capitalisms, still

Those were economic times.

There were times when societies were governed by a political order: a king, an emperor, a president and his party were their axis and their focus of power, sometimes absolute.

There were times when they were governed by their religious beliefs: a high priest, a pope, an imam had the possibility to decide how their countrymen lived in all aspects, from food to sex, including the rhythm of their activities, the moral criteria , the shape of time.

But in those days it seemed clear that the guiding principle was economics: all societies—with very minor exceptions—practiced the same form of economic exchange and were organized around it.

The world of 2022 lived immersed in an economic scheme called "capitalism".

Capitalism was a system based on a series of premises:

♦ Private property was the absolute guiding principle.

When someone bought or owned something—a banana, a factory, a statuette, an airplane, a shirt—it belonged to him.

Two centuries after it was promulgated, the rule of Napoleon's Civil Code, 1804, remained in force: "Property is the right to enjoy and dispose of things absolutely, as long as they are not used in a way prohibited by law or regulation" ;

♦ Property was transmitted from fathers and mothers to sons and daughters and various descendants in a process called “inheritance”, by which lineage was supposed to be the natural form of transfer of accumulated assets.

In societies where most births still occurred in traditional father-mother families, inheritance remained a crucial form of wealth acquisition;

♦ The use of the property could have two main purposes: consumption or profit.

Consumption was the para-capitalist moment of capitalism —an individual using a commodity without seeking direct profit—, essential for the functioning of the system.

Profit was obtained using a commodity to produce something or sell a service and it was measured in that basic unit at that time, money;

♦ Money, the universal measurement unit of value, was still issued and guaranteed —for the most part— by national states, which used it as the main support for their power;

♦ Private ownership of the means of production was the basis for each owner to “earn money” with them and accumulate more.

In this use, the power of the owner(s) was absolute: Napoleonically, they could do whatever they wanted as long as they did not break a law.

To do so, they often needed to use people to sell their labor power and do their bidding: "employees";

♦ Each person theoretically had the private property of their labor power —the intrinsic merchandise of each one— and was free to sell it according to “the laws of the market”.

The theory used to collide with the real circumstances and needs of each individual;

♦ The laws of the market —or “supply and demand”— were central in defining the prices of any merchandise, including labor power.

Thus, if there was a lot of supply of any of them, their prices fell.

Although various external factors also intervened in these prices, which the theory did not usually accept;

♦ Inventions and discoveries were also considered private property: regardless of their use or need for the whole, their inventor or discoverer owned them and decided how to profit from them;

♦ The success of these production and sales operations defined people's lives: it determined how they lived, what they could and could not do, what privileges they enjoyed or deprived suffered and, in most cases, how they felt: what reading they made of their own lives.

Money had, among many, a fundamental utility: earning it justified a life, gave it meaning.

A customer pays for the purchase of fish with banknotes at La Boqueria market in June 2011 in Barcelona.

David Ramos (Getty Images)

* * *

Capitalism was, of course, much more than an economic system: it was the format in which these people did everything they did.

The vast majority exercised it at all times: if they were not selling their labor power to get money, they were buying with that money the objects or services that they needed or did not need or, if anything, consuming those objects or services that they had paid for with it.

In short, very few activities of people in those days were outside the orbit of the economic scheme in which they lived, but that did not mean that they were able to understand it —or, even, that they proposed it.

There were times in history when most people felt they understood—or at least comprehended—their economic workings.

A 19th century Spanish peasant, still, knew that he had to produce so much wheat and so much fruit and the fruits of the garden and the olives for oil and take care of his twenty chickens and six pigs and two donkeys to be able to eat during the year, sell the surplus in the market to buy, perhaps, salt, some wine, a new tool and a piece of clothing very every once in a while, and pay tithes or any form of tax or rent that his king and his lords and his church charged him.

The world economy could be complicated, but to him, everything was simple and limited, and he thought he understood it.

On the other hand, already in the 21st century, everyone's economic functioning was made up of so many edges, so many interventions,

so much data that no one —or almost no one— understood it.

Everything depended on an increasingly confused, intertwined set of millions of causes and effects, of maneuvers that converged on each object, in each movement.

And no one, not even the most marginal, escaped him.

That complexity contributed to one of the great assets of that system: that it seemed inescapable, the natural shape of the world.

Very few, then, questioned that basic form.

The agreement was so homogeneous that there were not even political parties or sectors that proposed other ways: at most they discussed ways to manage it so that it would be more "fair" or more "productive", that would favor a minimum distribution of wealth or its creation. no more worries.

The agreement was so solid, unquestioned, that one writer of those days came to think that it was "easier to imagine the end of the world than the end of capitalism."

(They answered with some logic that, throughout history, all socioeconomic systems had ended and given way to others, and that there was no reason for this one to break the rule.)

The Amazon fulfillment center in Rugeley, England, in a November 2022 image. Nathan Stirk (Getty Images)

Capitalism was concretized and focused on companies, and a company was the capitalist structure par excellence: a free organization freely dedicated to getting more money for its owners through its activity —whatever it was—, its technical and tactical improvements, its skill to make and sell and manage.

In the name of democracy and the free market, companies were perfectly authoritarian organizations, with owners and directors who put in place the necessary structures to exercise their power without restrictions: so that what they decided was done within them.

That's why they were their "owners".

Capitalism was a deeply monetized system: where everything was defined by the circulation of money.

For the inhabitants of the world in those days, the production and sale of merchandise for money was their “natural” ecosystem.

Money was everywhere: it was the most immediate, most constant form of relationship between people and the economy —where other forms of circulation of goods had become extremely rare: barter, exchanges, collaborations.

Although it is true that, already then, that money had advanced a lot on its way to abstraction.

Money was always an attempt at abstraction: the first “coins” —some pieces of metal with a state seal that guaranteed their quality and quantity— were used to abstract the value of a cow or a piece of cloth or a day's work and make it interchangeable and transportable.

Thousands of years later, the weight of those coins was abstracted in turn and represented in papers backed by a bank or a state that they called “bills”.

Hundreds of years later, in the second half of the 20th century, those bills were replaced with plastic cards that ensured that the bearer had "money" in his bank account or had enough credit.

By 2020, even those plastic cards were replaced, in many cases, by virtual operations of those laptops that were called "smart mobile phones" (see chap.

17).

The trend increased with

(see chap.7) of 2020: then, the fear of being infected with handled materials made many decide to stop using the classic banknotes.

(In those days it was estimated that the currency issued by any state was one twentieth of the "money" in circulation: the rest were machine numbers, even greater abstractions.)

A customer uses an Apple Watch to pay at a McDonald's in February 2016 in Beijing, China.

Visual China Group (via Getty Images)

But each country had, then, its own "currency", one of the three or four symbols and central elements of its national autonomy.

Although some, then, tried forms of integration consisting of sharing a common currency: the European Union with its euro, the African Financial Community with its franc.

There were also countries that, believing themselves incapable of handling their own currency, "dollarized": they adopted North American money.

El Salvador, Panama, Ecuador, Micronesia, Timor were then among them.

Beyond these isolated examples, the currency was the great instrument of each state, its way of managing the economy of its countries.

It didn't always work.

* * *

The banks, then, were omnipresent, powerful.

In any given year the thousand largest banks earned more than a trillion euros, more or less the total tax collection of France, the sixth richest country in the world, or the sum of the collections of Spain, Poland, Norway, Sweden and Denmark, for example.

Its traditional business was “customer service”.

They were societies that, centuries before, had begun by receiving money from companies and individuals and lending it at interest to those who could pay it, but even then they had meddled in all aspects of life: thanks to that they handled a large part of the money in circulation.

In those days, in rich countries, the process of "banking" the population was completed: practically no one could live without a bank account.

In the other countries, the richest people were banked: another significant difference between classes was that the poorest continued to use their —scarce— cash, and the rich paid with those “cards” that defined and identified them.

Not having a bank account became another element of marginalization, which prevented many operations.

Of the then 5.5 billion people aged 18 and over in the world at the time, 76 percent—nearly 4.2 billion—had an account, and many had more than one.

In the Rich World there were very few people who did not manage their economy through these powerful companies.

That they continued to prosper: they not only made ever-increasing profits;

in addition, about a hundred million individuals entered the system each year.

The flow was particularly strong in the poorest countries, where there was still room for banks to continue their advance: half of the "unbanked" on the planet lived in just seven countries, Bangladesh, China, India, Indonesia, Mexico, Nigeria and Pakistan.

Thus, in more and more places, the vast majority of monetary transactions passed through the intermediation of banks: almost all salaries or commercial exchanges, of course, but also the most daily operations.

The “service”, of course, was not free: each time a person bought a kilo of apples or had a coffee or paid for transport with a card, he gave a tiny fraction of money to the bank that had issued it;

infinity multiplied by millions was extraordinary business—and most users didn't even think about it.

the Chinese state had launched its “Cross-Border Interbank Payment System” —CIPS— to compete with SWIFT.

And so in each field of confrontation: monopolies that were falling one after another.)

A Commonwealth Bank teller in Sydney, Australia, in January 2014. Steve Christo - Corbis (via Getty Images)

The other great business of the banks and similar entities was speculation: the game of the stock markets.

Originally, “stock markets” were supposed to be places where those who wanted to start or expand a business asked for capital to do so: “investors” gave them that money and, in exchange, received shares —parts— of the venture, which They made them owners with the right to share their profits.

But that basic theory had lagged far behind an increasingly complex practice of speculating on those stocks: there were, in those days, sophisticated machines that traded on the future and past and probable and possible values ​​of companies and commodities, making Millions of trades per second to thrive with buys and sells and ups and downs and expectations and disappointments.

In those days,

Which showed a trait of those times: investments—like so many other things—didn't stay put, but moved endlessly, as befitted what some theorist had called a "liquid society," where almost everything could continually change so that nothing could change. switch to.

And he defined another epochal landmark: in those days no one earned more than those who trafficked in money—nothing about nothing.

That money was—once again—a fiction, or at least a convention.

Although it was supposed to represent realities, it was nothing more than a barrage of numbers in machines, the result of speculative skill much more than what happened in the material world.

Money had been invented—and used—as a measurable equivalent of real values.

That condition had been lost—and that loss would have the consequences that we know.

In those days, wealth was measured by the "stock market valuation" of companies, that is, what thousands of people paid for their shares to have the illusion that they were going to make money.

And everyone believed that they could invent money for magic passes,

Countless examples showed this: one, very famous, was that day —which, by chance, turned out to be 2/2/22— when the price drop of a corporation, Facebook/Meta (see chapter 18) in the New York Stock Exchange liquidated, in a couple of hours, some 200,000 million dollars.

In other words: that company was worth 200,000 million more that morning than that afternoon, that is: 200,000 million had evaporated from morning to night.

It was another thunderous display of the fiction of wealth: that night the world was exactly the same as it was that morning — even the company was exactly the same — and yet that money, equivalent to the annual GDP —all production— of a medium-sized country like Greece , Peru, Pakistan or New Zealand, had disappeared.

In total, throughout that year — “bad for business” — five of the largest technology companies (see chapter 13) managed to dissolve more than 520,000 million euros into thin air: the annual GDP of Austria or Israel.

Wealth that existed a year before had ceased to exist.

But in general the fiction held up.

To produce it, the big banks —and financial companies— managed their “investment funds”, accounting monstrosities that pooled the money of many —middle and upper classes in rich countries, upper classes in poor countries— and bet them on the financial roulette.

Thus multiplied, these funds —billionaires— multiplied their power to intervene in the “markets”, they imposed their conditions.

Many participants were participating without even knowing it: their retirement savings, for example, their pension funds, were playing that game under the pretense that it was the way to secure—or increase—their value.

Thus, frequently, their money was invested in businesses and undertakings contrary to their ideas: their money had become independent of them and was acting beyond their will.

They did not control what,

An investor looks at the stock index in Nanjing, China, in May 2007.

China Photos (Getty Images)

* * *

Theoretically, widespread banking allowed control over the economy and a reduction in confusing transactions: every transaction made through a bank left a record.

Bank circulation was a surveillance weapon: states could know how much money each person had, what they did with it.

Their excuse was that this way they avoided criminal maneuvers;

their benefit was that, thus, they knew how much tax each one owed —unless he had enough wealth to hide his money in those dark areas that the joke of the time called “tax havens”, laughing at the same time at the idea of paradise and the idea of ​​tax.

The rise of tax havens was a direct effect of the free circulation of money that had been imposed at the end of the previous century.

Thanks to her, the richest companies and people —those who could afford it— hired specialists in diverting money, who took theirs to certain countries dedicated to concealing fortunes, keeping those of the world's owners away from any information and, above all, everything, from any tax pressure.

It was estimated that, in those days, 10 percent of European wealth was hidden in those paradises, where between 30 and 50 percent of African, Asian, Russian, and Arab wealth also took refuge.

It was a scam set up in full view of the world, with the consent of the (in)competent authorities: the states showed no real desire to expose them.

There was only, from time to time, a group of journalists who got it —partially, but demonstrating that if a few dozen individuals could do it, the states had no more obstacles than their complicity.

“The states organized a legal system where the main economic actors acquired an almost sacred right to enrich themselves using the public infrastructures and social institutions of the country —educational system, health system, etc.— and then move, with a signature or a click, their assets to another jurisdiction, without anything being planned to pursue the wealth in question and make it contribute fairly and coherently with the rest of the tax system”, wrote a famous French economist, Thomas Piketty, at the time.

It was, clearly, money that was subtracted from public taxation, that is: money that was stolen from the states, from the citizens —and that, especially in the poorest countries, prevented those states from taking proper care of those citizens.

Experts calculated that only the big North American companies evaded, each year, some 100,000 million dollars of taxes, enough —according to the FAO— to end hunger in the world in a decade.

For that, large companies and fortunes had all the resources.

They had, of course, teams of experts specialized in using all the tricks to pay as little as possible.

His presence in different countries made it easier for him: one of the usual options was to manage to pay taxes where taxes were cheaper—or close to nothing.

In a lukewarm reaction, 38 of the world's richest states, gathered in an organization called the OECD — Organization for Economic Co-operation and Development — decided, in 2021, to

set a basic tax rate for all corporations operating in their territories.

They proposed a minimum of 15 percent: it was so minimal—so much less than what citizens were paying—that it would not solve any problem and would allow large corporations to continue paying much less than what they owed.

Even so, his pressure managed to postpone its application, which continued to be debated.

A Berlin activist carries a suitcase full of fake money to demand more transparency after the Panama Papers in April 2016.Sean Gallup (Getty Images)

Beyond tricks and subterfuges, in most countries taxation clearly favored the richest.

The liberal wave of the '90s had managed to disarm the systems that Western countries had instituted decades before to force the fortunes and important salaries to pay much more taxes.

It was this process of liberalization and lack of control of the economy that was associated with Ronald Reagan, but that his predecessor, the Democrat Jimmy Carter, had started.

(The American system was effective and worked to the end: its "Democrats" did much the same as its "Republicans" but with kinder words and more tolerant gestures, so they served to decompress the situation when it seemed that the right wing was overreacting. )

It was, in short, the concretion of the ideas of the economists who, more than half a century earlier, had laid the foundations of “neoliberalism” and its “market discipline”.

According to Mr. Friedrich Hayek, an Austrian economist, the market was an "extensive and complex order" that had to be imposed on the political authority of the state because its knowledge and resources were far superior to those of any state body.

Their triumph allowed them to carry out that program—to emancipate the markets from the states—to unimagined extremes.

And the most curious thing was that it was the states themselves —led by like-minded politicians— that chose to abdicate their rights and, in that same process, found that the extraordinary growth of the system had overwhelmed them: they had run out of resources,

at the mercy of the power and maneuvers of these large companies.

In those years, national states became increasingly incapable of controlling anything: some sectors began to demand the redefinition of those states that remained within their national limits while the realities of the economy had already completely overwhelmed them.

And others —or the same ones— proposed the Chinese model as an alternative: a system where the power of the market and the democracy of delegation had been replaced by the order of the state and the authority of the hegemonic party.

We already know what were the strange consequences of that dilemma.

* * *

Meanwhile, other attempts were appearing to de-link money from the control—even nominal—of the states.

The most widespread was an instrument that was called, at first, “cryptocurrency”, where crypto, of course, meant “hidden” or “secret”.

The first, launched in 2008, was “bitcoin”.

A view of the data center of Enegix, one of the world's largest Bitcoin mines, located in Ekibastus, Kazakhstan, on Jan. 3, 2023. Anadolu Agency (via Getty Images)

Bitcoin was the invention of one or more gentlemen and/or ladies who introduced themselves as Satoshi Nakamoto, a Japanese engineer in his thirties —whose real identity was never known.

In a world where almost everything ended up being known, alias Nakamoto managed to keep his secret forever.

His bitcoin was a unit of value guaranteed by an ingenious and primitive computer technique called a block chain.

The “block chain” was a database distributed among so many users that it could not be falsified: nobody could modify information that others also had registered.

And “bitcoin” was a “currency” whose value would come from its scarcity: shared control systems ensured that only a defined amount would be created, 21 million units.

In its creation and management, users intervened as equals:

the vertical regulations of the state or the big banks were replaced by that horizontal network of people who did not know each other but trusted that their number —and the technologies they used— would certify the records and exchanges.

Their diligence was rewarded: the system delivered, according to complicated protocols, small amounts of currency to those who helped keep the “program” (see chapter 18) running —for which such computing power was needed, such a waste of energy, that its environmental footprint began to be very worrying.

In 2020, it was calculated that the world was spending the same energy per year on bitcoin "mining" as an entire rich country like the Netherlands.

With the increase in demand and the consequent scarcity, its value grew and many imitators arose: little by little, the block of state currencies experienced its first crack in centuries.

Eliminated the need for a higher authority to guarantee contracts or transactions between individuals, cryptocurrencies were the first great moment of the “peer-to-peer” doctrine —or person to person, equal to equal—: that is where the journey we know began.

In June 2021, a small Central American country, El Salvador, which did not have its own currency and was managed in dollars, was the first to accept bitcoins as legal tender.

In August another small country in the region did so, Cuba, which had trade problems with the United States.

On the other hand, in September the great state power, China, banned them emphatically: it understood that they threatened its foundations.

Its autonomy seemed indubitable;

What was still being discussed in those days was who would take advantage of it: whether "the public" in general —whoever it was— or the banks and funds that were already appropriating most of the wealth and money launderers of the drug trafficking, child pornography, arms sales.

The great asset of capitalism had always consisted in its ability to integrate everything that could threaten it.

A man waits for customers at a shoe store with a sign that says it accepts Bitcoins as payment in a picture taken on June 15, 2022 in San Salvador.

NurPhoto (via Getty Images)

So cryptocurrencies were at the same time a way to get out of the system and to follow its most extreme principles: secret treasury resource, numbers without material support, quintessence of speculation: pure value that could increase because there were others who wanted it, a X-ray of the laws of the market and financial capitalism.

Another fiction: in 2021 the total of cryptocurrencies was worth three trillion dollars;

in 2022 it dropped to 800,000 million: 2.2 trillion dollars disappeared without a trace.

And in a short period of time, what had started as a network of peer-to-peer transactions gave way to the creation of financial entities that functioned as banks and issuers of crypto.

The disappointment ended when several stratospheric scams became known: using the old "pyramidal schemes", a series of gentlemen took advantage of the opacity of that market to make millions of unwary believe that they possessed "cryptocurrencies" that never existed and defrauded them in many billions.

Just a few months earlier the most damaging of them all, a oh-so-cool thirty-something named Sam Bankman-Fried, was being celebrated by the global economic establishment as a genius innovator.

The cryptocurrency crisis was not only a blow to confidence in that other form of money;

it was, above all, for those who believed in certain paths of human progress.

13. The extremely rich Never had so few had so much: a thousand super-rich dominated the world economy.

And it stoked a constant growth that the planet would not support.

the world then

A story of the present

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