THE RISE IN ACCUMULATION AND FALL OF DEMOCRACY (PART I)

THE RISE IN ACCUMULATION AND FALL OF DEMOCRACY (PART I)
Now that I have allowed the lessons of Thomas Piketty’s great book (Capitalism in the Twenty-First Century) to soak in, I am going to do another series (this is the first) not just on his book, but on how to perhaps escape the dire consequences he is predicting in it for a continuing and accelerating accumulation of wealth to the rich at the expense of the rest of us. To me it matters not how such wealth was accumulated, whether through return on capital or inheritance or the market theft and overpaid executives we are witnessing today; what matters is that it is getting totally out of hand, i.e., that the proportion of total net income is winding up (at the expense of education and infrastructure and wage inequality, among other things) in the coffers of the rich at an accelerating rate, and worse, (per Piketty), that research shows there is no end in sight, that it has been going on for 300 years (with a short break in the first half of the twentieth century when old wealth took a hit due to the Great Depression and the enormous destruction of two World Wars) and that research indicates it will continue. The problem? r > g, which I will discuss throughout this series.
Piketty makes the point that re-accumulation has returned in all its fury since the 1970s, that the numbers show we are nearing if not in a second Gilded Age etc., and even worse, that it is happening on an international scale. Hence my concern is not just for how such wealth was accumulated but rather how it is to be distributed for the common good of the many rather than held in increasing disproportion by the few. Such a view is not socialistic; it is rather capitalistic in that it represents the best use of the excess in wealth created by all of us but captured by the few.
After all, what good are trillions in Swiss banks (other than to passively add to the wealth of those who are already superrich)? Those resources (held by the few but made possible by the many, including those today who are suffering from wage inequality – such inequity headed for Swiss bank accounts) should be actively employed in infrastructure, education, health, research and development etc.
Those whose names (or numbers) are on Swiss bank accounts would suffer no diminution in income in such an event since there is money to be made in providing infrastructure, education etc. with active deployment of their capital as well, and to the argument that their wealth in Swiss banks is in bonds and sovereign debt around the globe and is thus already actively used for such purposes in borrowing countries, it is to be noted that this only confirms a redistribution of wealth (from underpaid Americans to the junk bonds of Greece, for instance, whose borrowing costs – read interest to Swiss and others’ bank accounts – has the country on the edge of depression).
The costs (or interest to investors) such long since broke countries like Greece have to pay on their debt, of course, increases the return on investment to the superrich invested or investing in its debt, and so long as Merkel provides for the pretense that her southern fellow EU member is solvent and the high rates of return are available to the superrich with banking intermediaries in Switzerland and elsewhere, it is doubtful that the superrich will bring their money home for such desperately needed funding as infrastructure, education etc. In essence, what good does it do the world if those in charge of its wealth use such wealth only to create more wealth and little if any “trickles down” to those of us who helped them accumulate such wealth in the first place?
This is tricky territory for an amateur economist like me, but if we are to escape Piketty’s prediction that we are to become a world owned by “patrimonial capitalists,” I feel we must respond. His r > g formula, while the central contradiction of capitalism, seems to be set in stone, but stone can be chipped, and I intend to break out the chisels and hammers and go to work on it.
That is tricky territory, too, as what his formula portends has not been so well-described and researched before and I don’t know where to best start, but as with any new project, one must start somewhere, and here and now is somewhere. Tyranny arising in any ostensible democratic society, whether a tyranny of wealth or a tyranny arising from bullying of any other component of such a society, must be resisted is we are to remain a true democracy and not just one in name, as we may already be today in a world of rampant wage inequality and historic accumulation of wealth by the few.
There is good reason to believe that more than a fairer distribution of the wealth created by human endeavor is at stake; there is reason to believe that our democracy and our First World status are also at stake what with a continuing and deepening mal-distribution of resources created by all of us but channeled into the coffers of the few. Such a model will not work in the long run unless we are willing to live under a corporate 1984 version of human existence bereft of any pretense to democracy.
I am not willing. Having waxed philosophical (blame it on July 4) in this first part, I will be more Piketty-specific in the parts following this one. Stay tuned. GERALD E