from Ikonoclast

After reading “Capital as Power” by Bichler and Nitzan, where they talk about differential accumulation, a key and salient point about our economy appears to me to be a regime of differential inflation. Clearly, differential inflation can enable differential accumulation. Economists often talk about economies as if one average inflation rate affects the entire economy. This does not seem to me to capture the situation at all. The modern (neoliberal / monetarist) economy is notable for its differential inflation rates and the staggered spread of sectoral bubbles over time. (Tech bubble, property bubble etc.)

In terms of the differential inflation rates now embedded in the modern global economy we can note;

(1) Minimal to zero wage inflation (no wage rises).

(2) A long term high inflation period for real estate which (despite corrections) seems to have permanently implemented higher real estate prices relative to wages.

(3) General high asset inflation dependent on asset class but particularly notable for shares.

(4) Low inflation in basic goods and services (those purchased by wage earners and thus wage earners can continue to live day to day but most move to renting rather than purchasing real estate).

(5) Higher inflation for luxury goods but the wealthy can afford this and still be better off (differentially wealthier) because of points 2 and 3 above. Differentially Inflated luxury goods and services prices also serve to exclude more and more of the hoi polloi, including the middle classes, which process is a very enjoyable addition to the privileges of exclusivity for the rich in a crowded world.

Along with this pattern, the price of money (interest rates) is high for the myriads of small loans (credit card debts, personal loans and mortgages) of the type that workers take but low for large loans. Corporations can get billion dollar loans for an effective 0% real interest rate after taking relatively low general (official and headline) inflation rates into account.

The cheapness of money for large loans (and bailouts via quantitative easing etc.) is somehow quarantined from the expensive nature of loans to workers. A great deal of money creation has occurred (fiat and credit money creation) but much of this money in effect is kept in different circuits (it seems to me) than the wages – basic consumer purchases circuit.

The logical end result of these processes will be the reduction of workers to a new modern form of debt peonage. Forgetting the precariat, who will have no wages at all, workers will earn modest wages which will be entirely spent on basic consumption items, rents and hires. Workers eventually will own no property beyond personal effects (toothbrush, toiletries and clothes). They will rent accommodation, uber-style rides, computers, computer software and even their physical mobile phones (not just the plans).

The goal of late-stage, neoliberal capitalism is for the capitalists to own everything worth owning which can generate rentier income and have the working populace renting everything. This is the logical end-point of the neoliberal master plan: the scarcity of assets for the worker (and for the precariat of course). Can we even doubt the eventual full privatisation of water and in some cunning manner the (virtual) enclosure of the atmosphere, long term? The workers would pay private charges to breath. After all, all the O2 would be re-generated by cropland and forest plants owned by private holders. “My plants make the O2 so you have to pay for it.” Where does the logic of enclosure ownership end? Is this dystopian fantasy or a logical culmination of current capitalization and privatization trends?

https://rwer.wordpress.com/2019/07/05/the-master-plan-described-by-economist-james-buchanan/