There exists different views on what makes an economy productive. One such theory provides the expectation of a mixed economy which becomes increasingly more productive, where finance and land ownership becomes public, and there is freedom from banking and the feudal concept of landlords. Financing would be decided by governments and would be used to invest in means of production, infrastructure, and modernization.
What happened instead in Anglo-Saxon capitalism (especially under Thatcher and Reagan) was certain public goods, such as the sovereignty of money, was given to private institutions who, rather than financing factories and production, primarily financed existing assets, such as mortgage loans, which merely transferred ownership and failed to create value that would ensure economic growth.
Then came the rise of neoliberalism in the 1970s/80s and the decline of regulations needed to protect society from rampaging, monopolistic-rentier capitalism, which deteriorated the middle class to little more than peasants and serfs of a bygone era, where central banks and the elite replaced the medieval feudalistic lords. Rentier capitalism necessitated the creation of supranational financial institutions, who’s primary objective was to ensure plantation agriculture of Third World countries, preventing land reform and thereby guaranteeing American and other foreign investors’ ownership over the agriculture of these countries (1).
However, the rentier capitalism developing “back home” eventually degraded even further culminating in the current state of financialized systems propped up entirely by a never-ending cycle of the banking system investing into non-value creating assets (2), and economies run almost entirely on debt (3). This is good for assets holders but not conducive to the development of a sustainable economic system. As long as there is something to exploit, then asset prices run higher. The moment there is nothing and no one left, these assets suddenly become quite worthless.
An analogy of this could be made with cows. One can only milk cows as long as they are alive -the sicker and older they get, the less milk you can squeeze out of them. The American financialized system focused on how to better milk the cow instead of producing new cows as can be seen in the Boeing example (4).
What we are seeing in India right now with Modi’s Farm Bills is reminiscent of the World Bank’s strategy of agricultural take-over by allowing large international businesses to purchase Indian land, stockpile Indian commodities, and circumvent local guaranteed market prices. The move towards privatization, reminiscent to changes in the US during the Reagan dministration, raises the question: is India following the rentier society example rather than focusing on a real industrialized democracy (5)? If so, while historically damaging to a country’s future economic stability, this can be seen as a positive opportunity for a savvy investor.
References
Kuroda Put: The BOJ Just Bought The Most Stocks In 2021 To Halt Topix Rout
Here We Go Again: Boeing 737 Max Makes Emergency Landing After Engine Failure
The Reshaping of Global Agriculture: The WEF Agenda Behind India’s Modi Government’s “Farm Reform”
Chinese Stocks Tumble To 2021 Low, Hong Kong Enters Correction As Central Bank Support Fades