Paul said:
I really don't see how you can be a materialist without taking the main
branches of mechanics very seriously. I am not quite sure what you mean by a
physicalist theory of property and capital.
Reply:
A physicalist theory of property sees property ownership or capital as a
tangible thing that can be owned. A social theory of property views property
ownership and capital as a relationship from which profit can be made. If I
own a lot of capital, I have an asset against which I can borrow a lot more
capital. I can use that borrowed capital to extract an income greater that
the cost of borrowing it. That means, that if capital owned rises beyond a
certain asset value, the yields per unit of capital value rise also. At that
point, capital becomes simply a financial claim to a revenue stream; just
exactly who owns what, is not directly relevant, it is merely an ultimate
presupposition for the financial claim.
>From the point of view of grain or loans functioning as capital, it does not
matter if the asset is a 1000 tonnes of grain or a loan contract of an equal
value, what matters is the yield of the asset, the risks associated with
owning the asset, the ability to resell it, and so forth.
I don't dispute that grain quantities and loan contracts are different
things. It is just that if you think that the material force of hunger will
necessarily prevail over grain prices and the contracts staked on them, you
would be wrong. If that was the case, millions of people would be alive
today rather than dead because of starvation. Bourgeois economy is based on
the principle "either you trade, or you die".
Dutch law also imposes very strict obligations in respect of loans. But
there are also ways to get around the system. Holland is notorious for being
a tax haven and a tax shelter for many lines of business.
It was not "the illusion that mortgages were an asset independent of the
houses to which they pertained" that explains "the sub-prime loans crisis".
The illusion was that mortgages as an investment were secure, collateralized
placements, yielding a predictable, steady income, and that, even if there
were defaults, the damage could never be very great; it was an investment
which "could not go wrong". That is why securitizing the loans was throught
to be an unexceptional practice. Since property prices kept rising, people
became more and more confident, and that confidence created even better
prices.
*The pettybourgeois feeling was encouraged that anybody could be like a
banker, borrowing funds they did not own to claim income from activities
which they did not control or manage - to get rich quick, through clever
trading.
*Sellers seduced buyers to take out mortgages when those buyers did not earn
enough income, but believed that house prices would rise sufficiently, so
that the mortgage could either pay for itself through capital gain, or be
refinanced in some way.
*Buyers seduced sellers in granting them mortgages, irrespectively of their
ability to repay in the future. When the economic boom reached its limit and
the defaults which had always been there began to rise very strongly, the
debt chain began to strain.
Among other things, under US law, you can walk away from your mortgaged
home, and forfeit the obligation to repay. In Europe usually you cannot do
that; you remain liable. That touched off a panic which brought to attention
that there were not only a large amount of other dodgy contracts worldwide,
but also that it was impossible to identify all of them accurately, so it
was not even possible even to know rapidly how big exactly the size of the
problem was. Then the stock markets went into a tailspin.
The hypocrisy of US liberal underconsumptionist theory is just that their
reform proposals do nothing for the poor one-sixth of Americans. Liberal
underconsumptionism is primarily a middleclass theory where sympathy for the
plight of the poor is an aid to upward mobility for the middle class. It
does not actually help the poor.
J.
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Received on Sat Sep 25 16:30:49 2010
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