8. Landlordization of Capitalism and Extinction of an Economic Species

Marx’s precision analysis in Capital also offers a very different approach to thinking about socialism which, in fact, vitiates critiques of socialism and its potentiality implicit in the works of Bell, Lash and Urry, and Piore and Sabel reviewed in Chap. 4. That discussion, however, takes us too far outside the bounds of this book on periodizing capitalism. Interested readers are encouraged to look at Westra (2014, 2018a).

It is a telling fact that notwithstanding the proliferating of patents, R&D expenditure in the US held at 2.5 percent of GDP from the 1970s; and there is further, little evidence that patent proliferation has served to raise productivity growth which also has largely remained flat in the 2000s (Baker 2016: 85).

For the uninitiated, under the “gold standard” the state has no policy role in regulating the money supply. The gold reserve of each country, secured in respective central bank vaults, constitutes the foundation for both credit creation by commercial banks and the “legal tender” or banknotes issued by the central bank. Money issuance, whether for discounting bills of exchange or to meet cash payment needs, occurs “automatically” in response to ebbs and flows in buying and selling of goods. If defaults hit an economy, gold reserves are drained from central banks besetting economies with deflation and austerity until gold stocks were replenished. Under “fiat money” regimes marking economies from the 1950s, and the global economy with the 1971 demise of Bretton Woods, state debt security IOUs serve as monetary reserves. It is the holding of these government securities or bonds between the central bank and commercial banks connected to it that determines the level of the “monetary base” and extent of credit creation in the economy. Unlike the gold standard, the arrival at an “optimal” supply of money in fiat money regimes can only be achieved through state policy. Flexibility to set this policy was one of the reasons for the shift away from the gold standard in the post-WWII golden age. The faddish notion of central bank “independence” to day simply means the state has allocated to central bank officials the role of setting monetary policy.

See the sources in Note 1.