There’s something funny about our economic system, isn’t there? It’s taken for granted that a successful economy is one that grows, and politicians and economists talk almost constantly about how best to encourage growth, foster it, and what to do if it falters, how to get it back on track. We refer to an economy that doesn’t grow as “stagnating”. In fact, we plan our lives according to the expectation of growth, in America if we’re lucky enough to have any savings at all (and 27% of Americans have no savings at all, while 41% of Americans have less than $1,000 in savings), we put it in a 401k plan invested in the market or we buy index funds or mutual funds or whatever because historically the markets have outperformed mere savings accounts or things like CDs that give you a guaranteed return.
The problem, of course, is that as has been pointed out by plenty of people, growth can’t continue forever. And as I’ve indicated in previous episodes and will go deeper into here, there’s reason to think maybe we’re reaching some kind of plateau of actual growth even as the stock market continues to spiral upwards towards the sky with no referent to anything resembling real-world economic conditions like people being able to feed themselves or keep a roof over their heads.
But sustained economic growth is actually an extremely recent phenomenon in historical terms, dating back maybe a hundred and fifty years or so, before which what we think of as economic stagnation was the norm (and with it a lack of inflation as we know it). As the saying goes, past performance does not necessarily predict future results. The question isn’t will the economy stop growing, but when and under what conditions. And if it did begin to turn, to stop, perhaps to fall, we have no plan, no structure in place to deal with the destroyed retirement plans and plummeting GDP, the companies whose investors expect growth who will initiate mass layoffs that will only accelerate the decline. Nothing except to panic and try to “get the economy back on track” with government action. But there’s no reason for growth to be necessary for an economy to function. In fact, if you wanted to, you could even do a carefully managed degrowth to do little things like save the planet, but no major politician I know of would dare suggest it. No growth isn’t necessary for an economy to function, but it what we’ve built our economy upon. And the reason is because it may not be necessary to function, but it is necessary to accumulate wealth.
The reason is pretty simple. If you have a system in equilibrium, the inputs equal the outputs and don’t accumulate at any given point. If the inputs stop equalling the outputs, if wealth is hoarded up somewhere, eventually money ceases to circulate. If you have three people who each have one dollar they pass between them, now you’ve got an economy, but if one of the people takes first one dollar and then another dollar, now there’s no more dollars circulating. No more economy. However, if you keep injecting new dollars into the system, well then one guy can keep taking extra dollars for himself as long as those sweet sweet injections keep coming. And so they have to keep coming.
No this is not a tirade against fiat currency, if you think fiat currency is the problem you’re missing the forest for the trees. It’s true that if you inject money into the system without growth to sop it up, you end up with inflation—though if all the money goes straight to the top all you get is asset inflation, as we’ll see. But if you went back to the gold standard, you’d still need growth to absorb the money you create every time you dig up more gold. Fiat currency has nothing to do with whether or not economic growth can continue.
But there’s only so much any person can spend on consumer goods, which is why while the ultrarich might live lavish lifestyles they still have and make more money than they can possibly spend. (In economics this is called the relative Marginal Propensity to Consume.) And so they take that extra money and put it into investment assets that will make more money for them as “passive income”—which is to say earnings that don’t require labor. That money may go to businesses that create new jobs and services and grow the economy, which is the ideal case in your classical economics textbook. However, there are limits to how much can be spent on goods and services, and so just as often that money goes into different sorts of assets, like gold, art, cryptocurrency, real estate or whatever. Which of course is another example of the insanity of infinite growth—you can’t have housing be an investment vehicle that will always appreciate faster than inflation and have affordable housing. And the oft-touted solution of merely building more housing will not by itself solve that paradox, only at best put it off to the future. That money can even be used to buy government bonds, which are like taxes that fund the government except that instead of the rich person losing the money they make a profit off of it on the backs of actual taxpayers.
But of course it’s all so, so much worse than that. When public companies have had money to invest in growth, they’ve often instead used that money on stock buybacks which artificially inflate stock prices for shareholders without changing anything about the underlying business, and corporations have been buying 6X more of their own stocks than all stocks bought by regular stock holders. Meanwhile, even a business investing in itself is no guarantee it will create many jobs. Indeed, to the contrary companies have been falling over each other to invest in AI, with corporate spending on AI now greater than all spending on personal consumption put together. Meanwhile, that spending on AI has been linked to mass layoffs, since AI is specifically touted as a technology that will generate profits by slashing labor costs. (Though as I talked about in my Technofuedalism episode, AI job elimination is no small part a way of transforming well paid work into the low-paid, piecemeal work of training machine-learning algorithms.) There’s absolutely nothing about corporate spending that necessarily promises job creation. To the contrary, corporations have every motivation to see how few workers they can get away with using, and the much heralded reshoring push in manufacturing is based chiefly not on bringing those jobs from overseas back here but on automating most of them away. Meanwhile, much of the spending on AI seems to be linked to different companies passing the same money back in forth in order to prop each other and their stock prices up.
The result is a feedback loop of wealth continually accumulating at the top without any relation to the wages that actually form most people’s income. Today 10% of Americans own 93% of the stock market, 1% of Americans own 54% of the stock market, and the trend has been towards greater consolidation, with that number up from 40% in 2002. And of course the public stock market is only a tiny part of a picture that also includes things like Hedge Funds and Private Equity which non-rich people aren’t even permitted to invest in. Meanwhile, 48% of Americans have no investment assets at all.
Indeed, even most consumer spending has nothing to do with average Americans, with the top 10% of Americans by income account for nearly half of consumer spending, while the bottom 60% by income account for a bare 10% of consumer spending. It’s like the entire economy is being sucked up into the upper echelons of society with no reference to the rest of us.
Indeed, there seems to be a way that the government deliberately funnels money to the top, not just through using debt from bond issuance to the wealthy instead of the taxes they should be using, but also through things like quantitative easing, which seeks to inject money into the “economy” by buying back bonds (but not canceling the bonds, pivotally, just hangin on to them, the government effectively and paradoxically owing debt to itself). This money of course goes to the rich people who own the bulk of the bonds, who then spend it on other investment assets which as we’ve seen seems to funnel much more to the top than the bottom. During the pandemic, forgivable loans to companies totalled $953 billion and went to figures including billionaires like Trump’s son-in-law Jared Cushner, Trump supporting property developer Joe Farrell, Kanye West, and the Church of Scientology—the majority of which free money actually went to line boss’ pockets than to actually quote-unquote “protect paychecks”. And this was more money than payments given directly to individuals during the pandemic ($931 billion), and even that direct stimulus was an outrage to certain corners who warned it would lead to inflation. However, the evidence is that the stimulus payments only caused a very small amount of inflation which shouldn’t be surprising both considering how small a piece of the economy spending by the average consumer has become and how consumer spending is the thing that actually creates the kind of economic growth that then soaks up those extra dollars before they can become inflation. (The Biden administration did have some fun on Xitter pointing out politicians complaining about moochers wanting loan forgiveness who themselves received forgiven loans.) Funneling money to the top on the other hand just causes asset price inflation as we’ve seen, but everyone cheers when the stock market goes up.
The equation, by the way, that explains the fundamental rot at the core of the system, is r > g. This equation appears in the magisterial tome Capital in the 21st Century by Thomas Piketty which upon its publication in 2014 caused an expected sensation for a economics text. “R” in this equation is the return on investments. “G” is economic growth. In other words the return on investments increases faster than the growth of the economy as a whole. Part of the brilliance of this insight is its simplicity. The growth of wages is linked to the growth of the economy as a whole, and so if the growth of investment returns outpaces the growth of the economy, the result is ever increasing wealth inequality.
Now, there’s been some misunderstanding about this from people claiming to “debunk” Piketty. For example, if you Google “r > g” you pretty quickly find an article from Fortune that concludes Piketty’s idea is false, citing a poll that asked a group of economists whether they agree that wealth inequality in the US has increased since 1970 because of r being greater than g. They even call a Slate article that addresses this same poll and concludes it doesn’t actually debunk Piketty “self-defeating”, because it admits that “r > g” wasn’t the cause of wealth inequality in the US since 1970. However, as Slate points out even Piketty doesn’t make this claim. Both the poll and the Fortune article are simply misrepresenting his work. As you can see if you actually read his book, Piketty says that r was not greater than g through most of the 20th century, though this had much to do with both exploding growth and high tax rates on the wealthy. However, he also shows that this period was on the one hand an aberration in world history that began in the early 20th century, and that because both growth rates and marginal tax rates have been falling, we’re heading towards a situation where r is again projected to become greater than g.
The solution Piketty advocates for is massive wealth taxes to siphon away all that excess wealth and redistribute it to the common good and common welfare. But even he admits that in the current political climate it seems unlikely that progressive taxation on the scale he wants will be implemented.
Instead the wealthy will continue amassing more wealth that allows them to singularly control the economy and wrest the wheel of democracy to their own ends and their own benefit. Which is how we end up today in a world of increasing consolidation and monopolization where billionaires pay lower tax rates than their secretaries. Indeed, the rich have been remarkably successful over last 50 years or so in using their wealth and influence to get politicians to roll away their tax burden and shift it substantially onto the middle class.
And there’s numerous studies showing that wealth and power is associated with traits like Machiavellianism, narcissism, and psychopathy—the so-called “dark triad”, with the rich and powerful being more selfish, less empathetic, and more likely to evince unethical behavior. Which might be a problem in a world where such people have ever greater control of our economic, social, and political lives.
Introduced in the comic book series the Forever People, written and drawn by Jack Kirby, in 1971 as part of the “Fourth World” setting within the larger DC Universe, the Anti-Life Equation is some sort of mathematical formula that allows those who know it to completely dominate the minds of others. How it does this exactly isn’t really explained by Kirby, though he does have a character say that it’s called “the Anti-Life equation” because “if someone possesses absolute control over you — you’re not really alive.” In the original comics themselves, Anti-Life is explicitly linked to fascism—as a Jewish person who was alive during the Holocaust (and fought in the war), Jack Kirby was understandably concerned with what drove something like the Nazis to power.
Issue #3 of the Forever People makes the comparison explicit, by showing a mass of people in thrall to Anti-Life with the epigram, “’That is the great thing about our movement—that these members are uniform not only in ideas, but, even, the facial expression is almost exactly the same’—Adolf Hitler”. This is followed by Glorious Godfrey, the huckster salesman/tv preacher of Anti-Life, telling his followers that he will give them “the power to wield death”. Behind him, banners proclaim, “Life will make you doubt! Anti-Life will make you right!” and “Judge Others! Enslave Others! Kill Others! Anti-Life will give you the right!” Anti-Life he tells folks is “the happiness package”.
Anti-Life here, in other words, is prefigured as fascism’s urge to give over yourself over to an absolute authority, relieving yourself of the need to think for yourself, of the need to doubt, and giving you the ability to punish those identified as scapegoats with impunity. Godfrey’s followers will literally put on a mask, obscuring their identity and individuality in service to the totalitarian leader.
Here though there’s a distinction between Anti-Life—the concept that Glorious Godfrey preaches to his flock, and the Anti-Life Equation, the secret key sought by Godfrey’s leader, the villainous god Darkseid, that will make all these exhortations irrelevant and give him instant control over others.
What the actual Anti-Life equation consists of was left vague by Kirby but has been expanded by other comic book writers. Notably, Grant Morrison in his series Seven Soldiers (2005-06), posits the Antilife equation as a concatenation of things like loneliness, fear, alienation, and despair multiplied by guilt, shame, and failure, annihilating self-worth and resulting in the conclusion that hope is folly, love is lies, and life is death. As Miracle Man says when exposed to the equation, “It’s all just a pointless %@,!# mess, we’re all so ugly and stupid and doomed.”
In other words, the Antilife Equation isn’t merely the urge to give yourself over to authority in exchange for a sense of self-worth and greater meaning and order. It’s the breakdown of hope and self-worth created by cynicism and alienation that leads one to despair that they can’t be anything else than what authority would make of them. It’s the kind of thinking that breaks you down until all that’s left is grievance looking for whoever can give you the biggest stick to punch down with.
While I was working on Anarchism and the Promise of Reviolution, I came across the book The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century (2017) by Walter Scheidel, which proposes that historically only mass violence has reduced inequality, from the mass deaths of the Black Plague to the mass deaths of the World Wars. There’s a number of issues with this book, for example it dismisses the reductions in inequality achieved during the Progressive Era in the United States (with income tax first introduced in 1913) or during the New Deal period before US entry into the Second World War, or similar social democratic reforms in other countries during times of peace, instead favoring the more radical changes that were able to be accomplished during the wars, when for example in World War II, the US government took over whole industries and would dictate prices and rations. It’s also incredibly reductive, for example positing that because Vietnam and Cuba saw comparatively less violence during their respective Communist Revolutions they consequently saw a lesser reduction in inequality than did the Soviet Union and China following their own, as if many other complex differences weren’t also involved. Indeed, sometimes Scheidel merely refers to threats of violence as if they’re actual violence to explain a reduction in inequality.
But the fundamental problem with the book is that in the end it posits that because the world we live in does not threaten the sort of mass deaths on the scale seen in the past (a large assumption indeed, I think), and because we would not want such a thing if we could have it, that there’s fundamentally no way to stem the tide of rising inequality. This is probably why the book has become a favorite of some right wing figures, including Jordan Peterson.
But Piketty’s own lamentation at the current political situation speaks to a kind of hopelessness that leads to cynicism. A belief that real, meaningful, substantive change for the better actually isn’t possible, and therefore there’s no point in doing things like engaging in politics or political groups. It’s perhaps not surprising that only 63% of eligible voters voted in 2024, especially when American democracy feels ever more like a sham where politicians are bought and paid for, Congressional districts are gerrymandered beyond reason, and the Senate and presidency are undemocratic by design.
The brilliance of r > g is that it explains succinctly why inequality will continue to get worse and power will continue to accumulate at the top as a basic function of capitalism deep in its core. But the threat of it, the threat implicit in Piketty’s lamentation about political will to engage in the kind of taxes to change anything substantive, or Scheidels ideas about inequality only being won at the end of a sword, the bloodier the better, is that change is not possible, hope is folly, that it’s all pointless and we’re all stupid and doomed.
What’s the point of fighting technofuedalism then? What’s the point of even pointing out it exists, of complaining that the billionaires have us over a barrel? And once your hope is broken down you become ripe for the kind of people who will tell you that it’s the poor people and immigrants who are the real threat, who need to be kept in their place or else they might take your place in the pecking order, when you’re just trying to hold on as it is. Don’t they know poverty is inevitable? Don’t they know you can’t change the system? There isn’t even a system to change, there’s just nature, someone will always dominate someone else, there’s just the weak and the strong, and if you’re not strong you’re weak.
Life will make you doubt. Anti-Life will make you right.
Except for one thing. There’s just one thing that flies in the face of all this. The Life Equation to balanced out Anti-Life, perhaps.
Return on investments may grow faster than the economy. But as I pointed out in the beginning, the economy can’t grow forever, and indeed most of the growth now seems to be happening within the artificially inflated assets at the top of the pyramid. And it may seem like the government can just keep printing money that can keep piling up at the top as we career headlong into the technofeudalist future.
But as I said at the beginning, there’s no such thing as infinite growth. Investors want to see returns on their investments and that means that the companies they invest in have to show some kind of real world returns. And as illustrated by the Marginal Propensity to Consume there’s a limit to how much even the ultra-rich can spend, and when it reaches a saturation point the companies catering to them cease to grow. This explains the desperation of companies and investors to find the next “revolutionary” technology and back things that no one really wants, like Virtual and Augmented Reality outside of the context of games, actual scams like everything related to Crypto, or the latest hot thing, AI, which when it turns out not to nearly be able to do the insanely overhyped things its boosters claim, will result in a massive burst bubble and economic retraction. Technological breakthroughs have led to sustained periods of growth before, there must be another one just on the horizon, right? Maybe. But, you know, past performance is no guarantee of future returns, is it? It’s also why so much money has been thrown into gambling on anything you can think of and the financialization of everything as more mechanisms of increasing the circulation of currency (and wealth creation at the top) without actually making anything of real value that anyone actually needs.
In fact, and this is another reason that the Right are so obsessed with population growth, is that as Piketty points out, there’s been a key link between population growth and economic growth with the population of the world in the 20th century alone tripling from 2 billion to 6 billion. And this makes sense, more people means more workers and more consumers and therefore more economy. But this kind of population growth is also unsustainable and already faltering with many countries already showing negative population growth. And with that comes the promise of economic retraction.
Anything that cannot go on forever will eventually stop. And that includes growth, and with it Anti-Life.
Our politicos may not be willing to even conceive of a world without infinite growth, but that doesn’t mean we can’t. As I’ve said before and I’ll have more to say about in the future, the right solution to this is if possible to create worker cooperatives that don’t depend on the demands of growth made by shareholders and can potentially operate on equilibrium as the major corporations ultimately buckle with the rest of the economy. Cooperatives can then join with unions, mutual aid groups, and political organizations to create a kind of dual power, a way of creating economic and political change and moving the needle away from shareholder capitalism. It’s not that this effort will be easy or simple. And I don’t know exactly when the illusion of infinite growth will falter, and I’m not young anymore and may not live to see it. But it will falter. And this will cause severe disruptions and deprivations. The best we can do is try to build something as an alternative that might last and help us weather the storm.
As the great novelist Ursula K. LeGuin put it, “We live in capitalism, its power seems inescapable — but then, so did the divine right of kings”.
So I guess this was shorter than a typical episode is now, but I’m trying something out. Still got it out only about a month since the last one. And more to come, I feel replenished with ideas.
Don’t forget to subscribe and like, hit the bell or hype or whatever it is that’s supposed to be good for the channel. Support me on Patreon at Patreon.com/ericrosenfield where you can get early, ad-free episodes, exclusive author’s notes, and other exclusive content for only $1.
Thanks and see you next time.
Bibliography
Books
- Capital in the 21st Century by Thomas Piketty, 2013
- The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century by Walter Scheidel, 2017
- The Forever People by Jack Kirby, 1971-1972
- The New Gods issue #1 by Jack Kirby, 1971
Videos
- This video from How Money Works has lots of great info about things like corporations buying 6X more of their own stock than regular stock holders and how the top 10% of Americans now account for almost half of all consumer spending (though another source for the latter claim can be found here)
Links
- 27% of Americans have no savings
- History of economic growth in charts
- 10% of Americans own 93% of the stock market, and 1% own 54% of the stock market
- 48% of Americans have no investment assets
- Forgivable PPP loans went to billionaires and Trump allies and lined bosses pockets rather than protecting paychecks
- People warned direct payments to people would lead to inflation but the actual inflation impact of the payments was small
- Biden admin had some fun pointing out people complaining about forgiving loans for students when they received forgiven loans themselves
- Article in Fortune about Piketty’s r > g theory being false fundamentally misrepresents the theory
- Numerous studies link wealth and power to Machiavellianism, narcissism, and psychopathy, the wealthy are more selfish, and more likely to evince unethical behavior
- There’s a number of issues with the book The Great Leveler
- Warren Buffet still pays lower taxes than his secretary