By Ramin Mazaheri for the Saker Blog
“‘(The German economist Kestner wrote:) The greatest success no longer goes to the merchant whose technical and commercial experience enables him best of all to understand the needs of the buyer, and who is able to discover and effectively awake a latent demand; it goes to the speculative genius [?!] who knows how to estimate, or even only to sense in advance the organisational development and the possibilities of connections between individual enterprises and the banks.’
Translated into ordinary human language this means the development of capitalism has arrived at a stage when, although commodity production still ‘reigns’ and continues to be regarded as the basis of economic life, it has in reality been undermined and the big profits go to the ‘geniuses’ of financial manipulation. At the basis of these swindles and manipulations lies socialised production; but the immense progress of humanity, which achieved this socialisation, goes to benefit the speculators. We shall see later how ‘on these grounds’ reactionary, petty-bourgeois critics of capitalist imperialism dream of going back to ‘free’, ‘peaceful’ and ‘honest’ competition.” (emphasis his)
- V.I. Lenin
The rather ideology-defining question of connecting banks and businesses; socialising the production and creating massive human progress, but then privatising the gains; (Corona proving the loser of the Cold War was both the USSR & the USA because corona exposed how in order to beat the USSR the US turned to) the constant swindles and manipulations of hyperfinancialisation, like Quantitative Easing… Lenin could have easily also unmasked the “Fiat is all the problem” critics of neoliberal capitalism in 2020 – like this article will – but Lenin lays in Red Square (because he is still so important today).
During the corona overreaction into Great Lockdown into US rebellions era many of the most dynamic commentators are those who feel dominated, insulted, financially cheated and unfairly bested by the almighty US greenback, which they insist is about to become less valuable than used toilet paper (as the value of unused toilet paper has infamously skyrocketed during the Great Lockdown).
A whole range of political, economic and moral ideas are represented by these who insist that the primary problem in non-socialist-inspired nations is paper (fiat) money and its alleged overprinting:
Goldbugs, bitcoin evangelists, and silver miners; crooked Austrian economic policemen and their sons and daughters who follow “the (University of) Chicago Way: Get them before they get you”; Trotskyists who kind of understand economics but interpret every stock market dip as a sign that capitalism is finally collapsing under the weight of its own contradictions; anti-imperialists who are getting ready all the yuan they have been hoarding under their mattress – all these groups have insisted since the start of QE5 (i.e., QE 2.1) that the very next sheet of printed dollars will be the one which breaks the greenback’s back.
I accurately related what happens to the US dollar in times of economic crisis in No, the dollar will only strengthen post-corona, as usual: it’s a crisis, after all, but this article seeks to correct another incorrect view related to and often shared by these ardent “dollar demisers”:
The problem is not the dollar, nor the fact that it is issued on paper, nor the fact that QE issues money via a keyboard tap – the problem is not even the nature of money itself but the capitalist-imperialist culture which surrounds that money. Thus, the problem with the “Fiat is all the problem” (FIATP) crowds is that they obsessively see only a financial system instead of a moral-political system.
Translated into ordinary human language: The “dollar demisers” have no conception that the problem is not paper money, nor is it all money – it is the capitalist ideals regarding money.
Goldbugs: Old Testament fire and brimstone in monetary policy
Of the FIATPs the most resistant to modern political ideas – and the ones who are the most vocal and the most certain about the immediate collapse of the dollar – are the proponents of gold, but also many bitcoiners.
I understand their frustration: I, too, would be upset if I believed that overprinting should lead to a drop in the greenback… but then if I believed that it would mean that I foolishly believed that economics followed mathematical laws, and it would also indicate that I had little understanding about the political-social-moral role money plays in the absolute non-science of economics.
This group, which believes that the physical asset they have invested in should be worth more than it currently is, has two major flaws: 1) They view economics as investors, not as real people/workers. The former are competing at least partially as carnival barker salesmen: they want THEIR product to win so they can profit. 2) Unlike normal people/workers, they do not realise that it doesn’t matter at all if nothing is “backing” fiat in the 21st century – the real-world necessity of needing to get something in return for your labor makes paper as good as gold, or as good as cowrie shells, or as good as increasingly scarce toilet paper, or as good as whatever a government-backed-by-guns says that it is. If the government says we go back to cowrie shells then we all go back to cowrie shells, and this could absolutely be a positive thing because money is merely a tool, duh!
The gold proponents sound the most Old Testament – they act as if it is a God-given law that gold and only gold or gold-backed tools must be used as a medium of exchange and that it is just a matter of time before God’s wrath smites us for going fiat. I am unaware of this verse in Scripture.
Goldbuggers especially feel entitled to some sort of moral supremacy over the “early adopters” of digital fiat money (i.e. QE) when the average person knows they deserve nothing of the sort.
Gold and silver, after all, only became poplar because monarchs and aristocrats thought that wearing shiny stuff would give them an air of divinity to us plebes. That Lenin quote doesn’t apply to this crowd, for whom there is no “development of capitalism” – no changes or progress – merely the eternal value of gold (their God), which always was and always will be.
Austrians/Chicagoans/Bitcoiners – ‘moral hazard is when I don’t profit’
Bitcoiners can be placed along with the goldbugs because they both share an intense moral rage. However, libertarian/radical-individualist bitcoiners don’t have an old-fashioned sense of collective morality, thus their critiques of 21st century Western capitalism lack Biblical depth. This is why many of them really belong with the Chicago/Austrian crowd, which is ruled by competition, cruelty and greed-is-good.
(However, I am an open supporter of bitcoin, and we’ll see that those who would use bitcoin for personal and not social gain actually fall into all three camps.)
The Austrian/Chicagoan crowd… wow. It’s not really sure what they want – other than that they want money for themselves, and for the exciting law of the jungle to rule unchecked.
This group is defined by one primary characteristic: anti-socialism. The proof of their opposition to the ideology of political modernity is their Salafistic, fundamentalist insistence that all would be well if we could only just return to the roots of classic English liberalism. Oho! How they pine for the sweet days of Adam Smith & David Ricardo up until the Third World holocausts of the late Victorian era – what sweet days unmarred by problems they were!
These sentimental and thus ultimately right-wing critics of QE merely “dream of going back to ‘free’, peaceful’ and ‘honest competition” – Lenin had to deal with these types in his day as well.
We can certainly include many MMT-ers (Modern Monetary Theory) here, as they believe that capitalism is a way to control rentier exploitation, not expand it.
This entire group truly acts as if capitalism only started with the invention of the cotton gin or steam engine, and their primary fear mongering reflects that limited historical view: a warning that we are headed towards to “neo-feudalism”. But feudalism was certainly capitalist – there is ultimately no significant difference between the two in either their means nor their ends (simply change “king” for “banker” and “church” for “corporation”; certainly, nobody has ever confused feudalism with socialism.
This group insists that QE is a perverted degradation of sweet, sweet capitalism from the Salafist era of Smith and Ricardo. Oho! If only we could return to that angelic era unmarred by economic inequality when those mild and holy saints of competition spread the ideals – the TRUE ideals, not the false ones of this QE-corrupted era! – of the true capitalist gospel!
People like the MMT-ers because they are capitalists but at least they are not heartless hypocrites bent on ruining their country in order to show their personal greatness. However, they essentially claim to have found the elusive “Third Way” – I just don’t understand why they don’t openly push socialism, because after over a century of trying humans have found that there is no Third Way.
However, absolutely nobody likes Austrians/Chicagoans, and Austrians/Chicagoans are made quite content by that: they view it as proof that they are winning the competition over losers who are just jealous of their success.
The ‘QE feeds imperialism’ crowd – but then why did imperialism exist before digital fiat?
Bitcoin evangelists can often declare how fiat money feeds American imperialism. Surely, if everyone would buy some of their bitcoin and use it in everyday purchases, then Western militarism would collapse.
The obvious problem here is that these laudable anti-imperialists correctly perceive how imperialism is wrong and predatory as an economic system, but they fail to see how neo-imperialism is equally undergirded by a political-cultural-moral system. The Pentagon’s “war on ____” is not solely about the greenback – that is an outdated nation-state analysis and not a class-based view.
Their inevitable solution of isolationism (towards non-bitcoining nations) is the same flaw of the libertarians: as long as the extent of my individual rights/society are not curtailed, then I am content to not become involved in the problems of others. This “just wait for fiat to implode” leads to the same flaw as the Trotskyists “just wait for the capitalist system to implode” – what does Palestine, for example, do in the meantime? The moral aspect of this question should be obvious, but have you ever heard a bitcoiner discussing Palestine?
They discuss Palestine about as often as they discuss bitcoin’s moral Achilles heel: the fact that 40 percent of bitcoin is held by perhaps 1,000 owners (known as “whales”). If the moral philosophy of that tiny vanguard party is libertarianism, radical individualism and Anglo-American liberal Salafism (which it sadly is), then I for one say that we should confiscate their bitcoin immediately because how is their political-cultural-moral system they any different than American banksters? Aspiring to be an all-controlling bankster but with bitcoins is still banksterism.
Inevitability has laziness inherently inscribed in it, as well as selfish individualism, because YOU do not need to do anything, take a moral stand, resist, sacrifice, etc., only wait. Thus, of course comfortable bitcoin investors do nothing but play defense around their own little yard and digital wallets, waiting for the fiat-based economy to implode and then the price of bitcoin to explode: They feel they are all set – Palestinians deserve what they get because they haven’t gone fully bitcoin quickly enough.
Even Kestner had to write “[?!]” at these “speculative genius(es)” who are indeed at the crest of the wave: Lenin, however, would surely say that many of them are actually just “reactionary, petty-bourgeois critics of capitalist imperialism”.
Conclusion: The world actually had major problems before QE-fiat
These groups lack coherence, modernity and popular appeal because when they look at the QE economy they see a financial system and not its concomitant political system.
When they do perceive a moral system they look with the isolated eyes of a Western individualist instead of with the united, consensus-respecting socialist outlook provided by billions of pairs of eyes. Therefore, FIATPs answer comes down to the same old Western answer post 1989: technology and technocratism. The FIATPs could have become epidemiologists, had they been biologically and not monetarily inclined.
FIATPs often deserve credit for seeing the internationalist aspects of Western war, but their lack of modern political ideology causes them to fail to see the domestic & historical aspects such as the Yellow Vests, Black Power Movement, the jailing of Eugene V. Debs, etc. They seem to think that because they have invented a new tool they have discovered a new morality – they have not, and this is another example of their often blatant arrogance and overweening pride.
The FIATPs hostility to socialism is based entirely on the outdated and always-inaccurate Western capitalist-imperialist propaganda that socialism is totalitarian (when it is instead all about the empowerment of the individual in order to reach his or her full potential), of course, but it is especially unfortunate with many of the bitcoiners because the social morality they are demanding in public policy is fundamentally socialist democratic, not liberal democratic – 99.9% of bitcoin holders are not whales, after all.
Money in any form – fiat, bitcoin, gold, beads, whatever – is not the key to happiness for anyone with a compass whose pointer extends to heaven even only occasionally. Money is the root of all evil – its pointer only drops towards earth, thus it will always carry the potential of carrying disastrous imbalances.
Goldbugs, bitcoin whales and Austrian/Chicagoan gangsters may be speculative geniuses and merchants talented at finding profits, but they are not a vanguard political party which can lead society to a healthy balance of broad prosperity and stability – they aren’t even right about money.
Corona contrarianism? How about some corona common sense? Here is my list of articles published regarding the corona crisis.
A day’s diary from a US CEO during the Corona crisis (satire) March 23, 2020
If Germany rejects Corona bonds they must quit the Eurozone – March 30, 2020
Pity post-corona Millennials… if they don’t openly push socialism – April 14, 2020
Coronavirus – Macron’s savior. A ‘united Europe’ – France’s murderer – April 22, 2020
The end of globalisation won’t be televised, despite the hopes of the Western 99% (2/2) – April 27, 2020
Why do Westerners assume all African-Americans are leftists? – June 5, 2020
Ramin Mazaheri is the chief correspondent in Paris for Press TV and has lived in France since 2009. He has been a daily newspaper reporter in the US, and has reported from Iran, Cuba, Egypt, Tunisia, South Korea and elsewhere. He is the author of the books ‘I’ll Ruin Everything You Are: Ending Western Propaganda on Red China’ and the NEW ‘Socialism’s Ignored Success: Iranian Islamic Socialism’.