Home > Uncategorized > Wealth has always been about power

Wealth has always been about power

What has confused economists for centuries is that they’ve focused on what’s inside the fence of property rights, not the fence itself. And who can blame them? Historically, the things that were owned were easy to see. In contrast, the act of ownership — the institutional fence of private property — was abstract. And so economists tied wealth to property, not the property-rights fence.

The confusion dates back to the physiocrats. They saw agricultural land and proposed that it was the source of all value. The physiocrats couldn’t see that it was the landowner’s (institutional) fence that made him wealthy, not the land itself.

Then came the neoclassical economists. They saw capital (machines and factories) and proposed that it was a source of value. The neoclassical economists couldn’t see that it was the capitalist’s (institutional) fence that made him wealthy, not capital itself.

Then came the digital revolution. New companies emerged (like Facebook and Google) that owned nothing but algorithms. Wealth had suddenly become non-material. Or so it seemed to economists.

In reality, wealth had always been non-material — a social relation of exclusion. The digital revolution just laid this fact bare because it emptied out property, leaving only the fence of property rights. The digital revolution got rid of land. It got rid of physical capital. It got rid of all the physical things on which to pin wealth. All that was left (in digital tech firms) was the fence of property rights. And this fence was put up around the most non-material of things — ideas themselves.

Blair Fix

  1. yok
    February 21, 2020 at 5:08 am


  2. Jerry Lobdill
    February 21, 2020 at 6:56 pm

    Very interesting!

  3. Ikonoclast
    February 21, 2020 at 10:03 pm

    I agree with the general direction of Fix’s thinking here, along with the general direction of the thinking of Bichler and Nitzan. However, I believe the ontology being utilized by Fix in this short essay, or at least his ontological terminology, needs to be clarified. A statement like “Wealth has always been non-material.” is problematic. At worst, it implies an ontology of the material and the immaterial. That is to say it implies Cartesian dualism. Why this is problematic for a scientific analysis should be clear. At best, it implies a contrast between crude materialism and complex systems processual materialism (which latter position I adopt).

    If it implies Cartesian dualism, where some things or processes or phenomena are material and some are immaterial then, to put it simply, science cannot go there. That is the realm of speculative metaphysics, mystifying ideologies and cross-contradictory religions. Capitalism itself is an example of a mystifying ideology and it trades in the ideational “coin” that Fix mentions. Namely, that the formal or notional numeraire (let us not call it immaterial) can and should represent the real in the realm of human values (specifically the relative values humans assign to things and processes or to goods and services when they are brought into the economy and to the rest of the natural world).

    The formal numeraire is notional, it is not immaterial. Why do I insist on this distinction and that the notional too is material? I do so because the notional has a material instantiation, indeed it IS, in simpliciter, its given material instantiation as it has no existence anywhere else. Notions (ideas, concepts) exist in human brains and in networks of communicating human brains. Humans are material. Brains are material. The processes in brains are material (accepting matter and energy as material).

    An idea (notion, concept) is a pattern in material or in matter/energy. For our purposes, a comprehensible, interpretable idea has information content contained within a pattern. It is these patterns we communicate with and all our communications are in the form of matter/energy patterns, like words on a page or pictures and sounds on a TV. We must view humans as programmable in a very real sense. This is really the same as saying they are educable, indoctrinate-able and so on. Humans of course are not just programmable. They are many other things and processes as well.

    Money (the formal numeraire), and the many ideas which surround it, along with the concepts of property and wealth, are social programming. As physical and social beings with semi-reprogrammable brains, our behaviors are altered by our social programming and new meta-behaviors become emergent in the system. At no point is anything immaterial involved, no can anything immaterial be involved, when matters are viewed and analyzed from this scientific perspective.

    Social power, including the power wielded by possession of wealth, in any of its instantiated forms, as so-called real capital or so-called financial capital, is always backed by physical force in the final analysis. Both the property and the fence, to use Fix’s terms, are material. The processes of exclusion commence as internal notions (brain patterns of matter/energy), appear as crystallized notions (laws on paper etc.) which are interpreted by physical beings (lawyers etc.), enforced by physical beings with physical accoutrements (police with handcuffs and guns if need be) and so on. At the base of all social programming when it needs to be enforced is physical force. A fence can be climbed over, a lock can be broken. The agents of capital, its security apparatus (humans with dogs, tasers, handcuffs, guns, drones and robots at the civil level and all the paraphernalia of war at the international level) always back the rules with physical force.

    What links real capital and financial capital is a set of notional formulas which set the rules of transformation and govern the transformation of one to the other (in an individual person’s or corporation’s hands as the “transformation” is really a transfer). This includes the process of capitalization as expounded by Bichler and Nitzan along with the formal rules (laws, regulations) governing buying and selling in all of the many markets.Capitalism is not a descriptive discipline but a prescriptive discipline. It prescribes the transformations, or transfers, linguistically / mathematically and enforces them by social programming at the first level and physical violence at the final level. It’s not unique in this. Earlier systems did substantially the same thing albeit in greatly different ways.

  4. Craig
    February 21, 2020 at 10:32 pm

    Of course wealth has always been about power. Power is and forever has been the zeitgeist/ethic of the age of humans. And the only way to effectively deal with and rationally guide power is to integrate the highest ethical,unitary and natural philosophical concept of grace into our systems with policies that reflect and effect it.

  5. Robert Locke
    February 22, 2020 at 9:55 am

    I have problems with this when I consider the concept of the firm. Who owns it depends on how you conceive of it, as a property, or as an association of living beings, managers, employees, customers, community.

    • Jerry Lobdill
      February 22, 2020 at 3:02 pm

      In this discussion the important conception is the firm as an enterprise, IMO, a property whose purpose is to generate income by providing products and/or services in the marketplace.

      • Robert Locke
        February 23, 2020 at 9:15 am

        Jerry, when I started looking at the academics in German business economics, which took shape in he era just after WWI, the German business economists made the firm the focus of business economics. In the first two decades of the 20th century, they spent a great deal of time discussing the nature of the firm and its purpose. I write about this in my book, the End of the Practical Man (1984). 155-162, Your statement that the purpose of a firm is “to generate income by providing products and/or services in the marketplace” hardly covers the subject, as these German professors knew, over a hundred years ago.

  6. Jerry Lobdill
    February 24, 2020 at 2:18 pm

    Robert, Thanks for your response. I could not find a copy of your book, “The End of the Practical Man: Entrepreneurship and Higher Education in Germany, France, and Great Britain, 1880-1940” (1984). My focus seems to be different I am interested in the effects of monetary system design on wealth distribution and how it impacts the lives and prospects of the vast majority of Americans today.

    • Craig
      February 24, 2020 at 5:13 pm

      Well, you’re certainly a lot closer to the real problem than all of the people here who are still obsessively caught in the weeds of economic complexity. It IS about money and finance, specifically the monetary and financial paradigm.

      Free market Libertarian economists ignore the glaring contradiction of giving private banking a monopolistic charter to create our money ONLY as Debt and wave the bloody flag of their motto that “There ain’t no free lunch!” which rather than being an insight is actually an excellent statement of the problem.

      Heterodox economists of all stripes actually say we need a new paradigm it’s just that they don’t know which paradigm, how to think paradigmatic-ally (integratively) or even have a good idea of the definition of a paradigm (a single concept that is simultaneously an integrative mental/conceptual and temporal phenomenon). Thus they blather on in the dark in many wrong/less relevant directions.

      For over 5000 years the economy has always been in a state of monetary and financial smothered chaos that parades itself as freedom. Time to awaken from the vast monetary and financial neurosis we live in.

  7. Meta Capitalism
    February 25, 2020 at 1:04 am

    Wealth is the power to choose the measure of success and even who lives and dies.

    • Meta Capitalism
      February 25, 2020 at 1:07 am

      To wit:

      The successful campaign to eliminate distributional issues from the core of the economic discipline has its mirror image in the popularity of GDP as the measure of economic success of a nation. While the pioneer of national accounting (i.e., GDP), Simon Kusnetz, explicitly said that GDP should not be used as a measure of welfare, and few economists would explicitly advocate such use, it is also true that economists as a group have done precious little to counter the popular opinion that growth, in the sense of maximization of GDP, should be the main goal of economic policy. (Häring et. al. 2012, 28-29)

  8. February 26, 2020 at 10:55 am

    When I first read Blair Fix’s post, my immediate reaction was that if this is where MMT comes from, it has lost the plot. Iconoclast’s reaction didn’t help either. Is it really Cartesian dualism which doesn’t work for science, or its nominalist/materialist interpretation, which wants to deny the reality of differences of place, motion, [mis]direction and encoding, hence the possibilities of information science, mathematics and meaningfulness? Is it not possible to “know” differences? Is the difference between two material objects itself material?

    Chapter 4 of Tony Lawson’s new book, “The Nature of Social Reality”, seems to me to be very much to the point. As against Jerry’s concept of the firm as an enterprise, Tony argues for the concept “positioning” the roles of its participants: not unlike Blair Fix’s fence, but positioning other positions, ultimately the many roles of individual people and artefacts. The wealth is cooperatively produced by these, not legally captured by illegal laws (i.e. laws both against nature’s laws and – as Tony relates to the East India Company and ‘The Money Masters’ documentary relates to the establishment of the US Federal Reserve Bank – insinuated in defiance of the constitutional laws of the time).

  9. Ken Zimmerman
    March 12, 2020 at 2:06 pm

    We know what class is. Or think we do: economic stratification created by wealth and privilege. The problem is that popular American history is most commonly told—dramatized—without much reference to the existence of social classes. It is as though in separating from Great Britain, the United States somehow magically escaped the bonds of class and derived a higher consciousness of enriched possibility. After all, the U.S. Senate is not the House of Lords. Schoolbooks teach the national narrative along the lines of “how land and liberty were won” or “how ordinary folks seized opportunity.” The hallowed American dream is the gold standard by which politicians and voters alike are meant to measure quality of life as each generation pursues its own definition of happiness unfettered by the restraints of birth (who your parents are) or station (the position you start out from in the class system).

    Our cherished myths are at once bolstering and debilitating. “All men are created equal” was successfully employed as a motto to define the promise of America’s open spaces and a united people’s moral self-regard in distinguishing themselves from a host of hopeless societies abroad. The idea of America was presented by its chief promoters with great panache, a vision of how a modern republic might prove itself revolutionary in terms of social mobility in a world dominated by monarchy and fixed aristocracy.

    All that is bolstering. However, the reality on the ground was and is considerably different. In the most literal terms, as we shall see, British colonists promoted a dual agenda: one involved reducing poverty back in England, and the other called for transporting the idle and unproductive to the New World. After settlement, colonial outposts exploited their unfree laborers (indentured servants,slaves, and children) [and indigenous peoples] and saw such expendable classes as human waste. The poor, the waste, did not disappear, and by the early eighteenth century they were seen as a permanent breed. This way of classifying human failure took hold in the United States. Every era in the continent’s vaunted developmental story had its own taxonomy of waste people—unwanted and unsalvageable. Each era had its own means of distancing its version of white trash from the mainstream ideal.

    Class had its own singular and powerful dynamic, apart from its intersection with race. It starts with the rich and potent meaning that came with the different names given the American underclass. Long before they were today’s “trailer trash” and “rednecks,” they were called “lubbers” and “rubbish” and “clay-eaters” and “crackers”—and that’s just scratching the surface.

    In case the message doesn’t come through clearly, this is from what is likely the most entertaining and informative study of the American “caste” system of the last 50 years. “A Guide Through the American Status System,” by historian Paul Fussell.

    Followers of the sociologist Max Weber tend to say class when they’re talking about the amount of money you have and the kind of leverage it gives you; they say status when they mean your social prestige in relation to your audience; and they say party when they’re measuring how much political power you have, that is, how much built-in resistance you have to being pushed around by shits. By class I mean all three, with perhaps extra emphasis on status. I do wish the word caste were domesticated in the United States, because it nicely conveys the actual rigidity of class lines here, the difficulty of moving-either upward or downward-out of the place where you were nurtured.

    How many classes are there? The simplest answer is that there are only two, the rich and the poor, employer and employed, landlord and tenant, bourgeois and proletariat. Or, to consider manners rather than economics and politics, there are gentlemen and there are cads. Asked by a team of sociologists what’s involved in “social class,” one respondent said, “Whether you have couth or are uncouth.” And there’s a “social” division distinguishing those who “entertain” in their domestic premises and those who wouldn’t think of it. Paul Blumberg notes “a fundamental class cleavage” today between people who can afford to buy a house-any house-and people who can’t, a fairly elevated version of the distinction down below between those who own cars and those who must depend on public transportation and who thus spend a great deal of their time waiting around for the bus to show up. In her book Class (1981), British humorist Jilly Cooper suggests a bipartite social scene in which the two parties are the Guilty and the Cross: On the one side are the middle and upper classes, feeling guilty and riddled with social concern although they often earn less money than the workers. On the other are the working classes, who have been totally brainwashed by television and magazine images of the good life, and feel cross because they aren’t getting a big enough slice of the cake.

    Two classes only were in the consciousness of the British Eighth Army infantryman in North Africa during the Second World War who delivered this eloquent account of them: Sir, this is a fine way for a man to spend his fucking life, isn’t it? Have you ever heard of class distinction, sir? I’ll tell you what it means, it means Vickers-Armstrong booking a profit to look like a loss, and Churchill lighting a new cigar, and the Times explaining Liberty and Democracy, and me sitting on my arse in Libya splashing a fainting man with water out of my steel helmet. It’s a very fine thing if only you’re in the right class-that’s highly important, sir, because one class gets the sugar and the other class gets the shit.

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