In my last post I suggested the recession may be a deliberate act, created by the banks to make the rich richer and the poor poorer. It is certainly having that outcome.
This is the theory of Plutonomy. I have referred to this before, here. It was also dealt with very well recently on the Think Left web site. The theory of Plutonomy is explained there as follows:
The term ‘Plutonomy' was first coined by Citigroup analysts in 2005, to “describe a country that is defined by massive income and wealth inequality” and specifically identifies the U.K., Canada, Australia, and the United States as plutonomies.
In their report, published three years before the onset of the financial crisis in 2008, the Citigroup report stated that:
“…asset booms, a rising profit share and favourable treatment by market-friendly governments have allowed the rich to prosper and become a greater share of the economy in the plutonomy countries,” and that, “the rich are in great shape, financially.”
As the Federal Reserve reported, “the nation's top 1% of households own more than half the nation's stocks,” and “they also control more than $16 trillion in wealth – more than the bottom 90%.”
‘In fact, (the Citigroup report) said, America was composed of two distinct groups: the rich and the rest. And for the purposes of investment decisions, the second group didn't matter; tracking its spending habits or worrying over its savings rate was a waste of time. All the action in the American economy was at the top: the richest 1 percent of households earned as much each year as the bottom 60 percent put together; they possessed as much wealth as the bottom 90 percent; and with each passing year, a greater share of the nation's treasure was flowing through their hands and into their pockets. It was this segment of the population, almost exclusively, that held the key to future growth and future returns. The analysts, Ajay Kapur, Niall Macleod, and Narendra Singh, had coined a term for this state of affairs: plutonomy.'
Worryingly, the Plutonomy Update (14.08.11) concludes:
The report further asserted that, “the middle-class has suffered more than the wealthy from the housing crash because middle-class families tended to rely more on their homes to build savings through rising equity. Also, the wealthy naturally had a much larger and more diverse portfolio of assets – stocks, bonds, etc.”
In short, when the day comes where the rest of the industrialized world falls into the same trap as Greece, the middle class will be pushed down into the lower class, and a global socio-economic plutonomy will emerge. The middle class cannot survive the perfect storm of fiscal austerity, increased interest rates, inflation and ‘Structural Adjustment.' We are entering a global age of austerity, where our political leaders commit social genocide for the benefit of the global banks, and at the behest of the institutions that represent them. The IMF and other supranational institutions increase their own powers and authority in order to punish and impoverish large populations. What has been done to the ‘Third World' — the ‘Global South' — over the past several decades is now being done to us, in the industrialized North.
Is Plutonomy real in the sense it was planned? I think so. Is the plan still rolling? Yes, I think so too. And this weekend it will go forward another stop when trillions are given to the rich to bail out their wealth.
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As I’ve been saying, along with repeatedly airing the possibility/probability that the economic destruction being caused by the likes of Osborne was malevolence, not incompetence, since they’re taking all the existing money away from us we need to create our own locally. I’ve already cited Worgle as an example we should follow. There’s also the Wir Bank to look at. From these we can learn, and it seems that at least someone in this country has. Witness what the Freemen are coming up with, the Lawful Bank. I’m an admirer of what the Positive Money crew are achieving, particularly since they’re now expanding to New Zealamd, a country rapidly establishing itself as a foreunner in these matters. As so many politicians are obviously bought and paid for by commercial interests, the interests of the electorate will simply never be served by political means. We need to do it for ourselves therefore, we need to haul ourselves up by our own bootstraps. Creating our own currency so we may trade as needed and enable the able as they should be is the only way forward.
BB
There is a excellent book called “wall street capitalism, the theory of the bond holding class” It argued that society was in fact being downsized to an extent it could continue to pay bond interest. A very good market analyst called Albert Edwards also argues that the credit bubble was intentionally created to transfer wealth from middle class to the super elite. Ravi Batra in his book “Greenspan’s Fraud: How Two Decades of His Policies Have Undermined the Global Economy” explains that Greenspan worked for the super rich and each of his policies enriched that group at the cost of the rest of society.
I’ve come across this Albert Edwards theory before too but never cited it because I lost the reference. Again, it makes perfect sense if you believe in conspiracy theory, and it’s getting almost impossible not to now. I think the hardest thing for most people to believe is that some other people could think on that kind of scale.
BB
I think it’s very clear they could and did
The logic of the Mont Pelerin movement has made that clear
There was dictum from poet/politician, Andrew Marvell – If you want to get away with a ‘lie’, make sure it is a big one. It seems that as a species, we would rather believe in everyone being ‘pink and fluffy’/ cock-up rather than conspiracy. It is the perfect vacuum to be filled by ‘parasitic’ exploitative personalities.
Books are written about such dynamics but suffice it to say that explaining other people’s behaviour in terms of what ‘you’ would feel or think in a particular circumstance only works if the ‘other’ thinks and feels in a similar way. There are a significant number of ‘others’, who would fulfill the criteria for narcissistic, sociopathic etc., who do not think or feel as do the majority of people.
If the ‘other’s’ behaviour makes no sense, ‘we’ need to ask why the ‘other’ would want us to believe what ‘we’ are being offered. Osborne’s Plan A makes no sense unless he was deliberately wrecking the economy whilst strengthening the capacity of the super-rich and transnationals to safely stash their wealth in Tax havens. To paraphrase Gramsci ‘We need to try and see the world as it really is, not as we want, or fear it to be.’
IMO we should make the study of Parasitology part of the school core curriculum .. but that wouldn’t be likely with Gove’s parallel actions in deliberately wrecking of our education system.
I agree but I doubt this is Osborne’s idea. I don’t believe he’s that bright. It’s his handlers, whomsoever they may be, that are behind this as they are him, Cameron, the whole Bullingdon crew. Some where deep in the murk behind them are the real rulers of this and other countries.
BB
This is an article which references Albert Edwards work.
http://www.zerohedge.com/article/scandal-albert-edwards-alleges-central-banks-were-complicit-robbing-middle-classes
AE says:
Some recent reading has got me thinking as to whether the US and UK central banks were actively complicit in an aggressive re-distributive policy benefiting the very rich. Indeed, it has been amazing how little political backlash there has been against the stagnation of ordinary people?s earnings in the US and UK. Did central banks, in creating housing bubbles, help distract middle class attention from this re-distributive policy by allowing them to keep consuming via equity extraction? The emergence of extreme inequality might never otherwise have been tolerated by the electorate (see chart below). And now the bubbles have burst, along with central banks? credibility, what now?
You’ll know from the numerous posts you’ll receive about this blog that many of your readers agree with you on this, Richard. I’ve argued previously (6th September) that Osborne’s failure to have a plan B has nothing to do with incompetence but everything to do with pursuing an overarching policy of neo-liberal social and economic realignment. That’s been framed by other commentors on this blog as the rise of new – or neo – feudalism. And more recently I think I mentioned that we may as well claim Hayek’s phrase and say this really IS the road to serfdom for many, many people (not the Soviet Union inspired version he envisaged) unless something is done about this, as it now is to some extent (see http://www.guardian.co.uk/commentisfree/2011/oct/17/city-protest-occupied-mainstream).
Where the concept/theory of plutonomy is extremely useful, I think, is in framing what we are seeing in the UK, across the EU, and elsewhere, in global terms. By so doing it clearly illustrates that plutonomy, in various national/regional guises and variants, is a global phenomenon which threatens to destroy and/or diminish the lives of the many to the benefit of the few. Of course, to argue that this is planned or directed will leave anyone who suggests such a thing open to accusations of conspiracy theory. What has become increasingly clear since 2008, however, is that a social, cultural and institutional system (witness our own Dr Fox as a very recent example) has been constructed which has as its core – but unwritten – aim the promotion of plutonomy (or neo feudalism, if you prefer). The hegemonic nature of this system – which was always denied but recognised by some many years ago – is now being exposed because “ordinary” men and women are no longer willing to be conned into believeing what are patently and obviously lies peddled by the agents of plutonomy.
As George Orwell said, ‘To see what is in front of one’s nose needs a constant struggle’ but many people are now finding that the struggle is both necessary and worth it. Maybe we can challenge hegenomy and plutonomy after all?
i never thought you would enter into this conspiracy theory guff RM !
It’s not a conspiracy theory
It’s what was planned and what has been delivered
It’s neoliberalism
It’s conspiracy fact
See my reference to being called a conspiracy theorist in my earlier comment, Richard:
‘Of course, to argue that this is planned or directed will leave anyone who suggests such a thing open to accusations of conspiracy theory. What has become increasingly clear since 2008, however, is that a social, cultural and institutional system (witness our own Dr Fox as a very recent example) has been constructed which has as its core — but unwritten — aim the promotion of plutonomy (or neo feudalism, if you prefer).’
These guys aren’t most people. I was thinking more of the man on the Clapham omnibus.
BB
That “Think Left” is an excellent website. http://www.think-left.org
Bill Kruse I agree but I think GOs triumphalism when he announces that he is tackling tax avoidance suggests that he is fully aware of the ‘joke’. I have no doubt that the ‘political wing of the City’ are not the architects of this clever heist.
The film Soylent Green depicts the ultimate Plutonomy … climate change, acidification of oceans, food shortages and the fortified citadel for the 1%.
http://think-left.org/2011/09/08/soylent-green-george-osborne-and-plutonomy/
Richard – this concept has been around a while hasn’t it – the business/economic cycle fallacy.
It is quite obvious that credit liquidity and money supply are the #1 causes of economic growths and slowdowns; lend out $ so as to pay it back is near on impossible, default occurs and then banks repossess the collateral……this is how wealth gets concentrated in the hands of an ever decreasing circle
BTW- did you feature on channels 4’s “Britain’s Trillion Pound Horror Story”???
rob
Re C4 – no! Can’t do everything….
Also in on the conspiracy was George Monbiot with his openly neoliberal “Bring on the recession” article:
http://www.monbiot.com/2007/10/09/bring-on-the-recession/
What a perverse conclusion you have come to. Very odd
Richard – where do you stand on the possibility of drastically lowering taxes across the board?
I think it would be a great idea to only tax company profits at 5% the gains from the previous year, and 6% on the remainder: that gives an incentive to increase productivity.
It would also be advisable to revise the payment procedure with its bureaucratic estimated forward payments and applications for rebates if a loss is made…simply let companies pay tax up to 18 months after the performance period – surely this would tremendously improve capital liquidity???
I would also simply tax individuals at 5% – i think we can learn a lot from hong kong/suisse
it would be interesting to here your thoughts on this and show your own thoughts for improvement
regards, robert
And how would you provide education and health care, pensions and law and order?
Or do you want society to fail?
That would be the outcome of your suggestion