Monthly Archives: April 2014

Virtualized Capital: Kafka meets Piketty

Capital: a Creature of Bureaucracy and Law. Kafka would be pleased.

Capital: a Creature of Bureaucracy and Law. Kafka would be pleased.

We mentioned in the last post a scenario where capital transcended human ownership, and became – through law – an entity in and of itself, lording it over mere humans.  It sounds far-fetched, but is it? The discourse on inequality is about wealth accumulation of a small number of people, but it is essentially a discussion about the centralization of capital, where fewer and fewer people control that capital. Now, as the number of people controlling the capital decreases, the question arises: what happens if it gets down to two people, or one person, controlling the preponderance of capital?  There are political answers to this, and social answers, but – for now – let’s consider the financial side.

In the West, Capital is generated primarily through the corporate-legal structures of western liberal democracy.  In essence, companies produce goods and services, and accumulate assets and profits.  They grow through acquisitions – other assets – and increase profitability.  However, most companies are moving now towards virtualized infrastructures.  What that means is that companies own less and less of their own assets, and become, essentially, capital generators, rather than capital owners. Let’s take a hypothetical example… Continue reading

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Capitalism, Meritoctatic Democracy, and Legitimacy

 

Piketty (top) and Reich have both taken on the subject of Inequality

Piketty (top) and Reich have both taken on the subject of Inequality

Piketty on Capital and Reich on Inequality are both essentially saying the same thing, that inequality is structurally bad, and growing. (We can revisit posts on social mobility and the inevitability of capitalist collapse to understand some of the ways in which this manifests itself.)  In essence, Piketty – and Reich – argue that capital will continue to accrue to fewer and fewer people.  There is a possible alternative, extended, dystopian view that suggests that capital – through the corporation – actually transcends human ownership entirely and become a virtualized entity in and of itself, a creature of law, that exists to perpetuate itself and grow.  Therefore, in essence, capital exists to extract wealth from people, and rather than realising an objective of ‘raising all boats’, it actually pushes all boats into the water to the point of sinking, though not quite. For to sink those boats would be to undermine the source of wealth itself, and the essence of capital growth, which capital needs to survive.

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