The Kinist Review

In the shift to the artisan-agricultural system, there is an initial shock, which is the general inflation and price adjustment that occurs in the abandonment of the mass manufacture economy. Since the goods made are of generally higher quality (allowing for individual variation), and are designed to be repaired rather than discarded, the market value of the goods tends to be very high. In some cases a person will require more than one trade, and the whole household will need to be involved in the productive economy, in one capacity or another. In the feudal and early post-feudal era, trade guilds would set prices, and typically insured that the artisans received enough to live on. It was a means of controlling competition in certain industries, where uncontrolled competition would tend to drive production ceaselessly to the lowest cost provider, causing great economic instability, and eventually, the loss of handicraft altogether. The value of quality is replaced by that of quantity and least price in the industrial economy, whose drive toward ever increasing productivity demands greater and greater mechanization, which demands greater and greater job losses. The end of the overproduction of industrial capitalism is always massive unemployment, as we are seeing, where productivity is uncontrolled, production is unresponsive to demand fluctuations, all ending with millions of units of various goods that cannot be sold at any price that will support the production system on a stable basis going forward.

Thus deflation become a genuine concern for overproducing industrial economies. When financial corruption disconnects the value of a stock from the future prospects of a company, and financial obligations from transparency, where even the holders of commercial paper cannot calculate their obligations due to the complexity of the debt instruments and the opaque ways that they distribute risk, you have an economic system (made of of vast concentrations of labor in a few corporations) that is essentially a debt bomb that is awaiting a general decline in confidence to trigger an obligations cascade. This is what brought down the major financial houses on Wall Street -unknown obligations arising from credit default swaps, derivatives, and other exotic instruments where the ledger is unknown until the remittance calls come. These banks literally owned so much bad paper that they had no idea how much they would owe if the obligations were all called in simultaneously. And in the summer of 2008, they were.

The final pinnacle of industrialism ends in the massive welfare state, since there are so few jobs remaining that will support life above a third world level that there is increasing pressure to tax productive industries and workers to support the maintenance of the masses. This is the economy of limitless production that is supposed to finally free nearly all men into the life of almost endless leisure -a lifestyle that is not healthy, as man was meant for a proper balance of work and leisure. Too little of either and you end with social malaise.

The general inflation associated with the shift to an artisanal economy is lessened by the fixed standard of gold as an exchange instrument, which resists inflation because it is not easily produced, unlike paper money (as we are seeing with the so-called stimulus plan, which is nothing more than monetary hyperinflation to absorb overproduction). This shift would resemble the situation that obtained during the era of the “living wage” where men were paid vastly more than women, and women traditionally barred from certain industries, in order that the economy be such that a man could support a family on a single income. This was artificial wage inflation built into the economy to support non-economic social values, and a return to such non-economic values would necessarily precede the adjustment to the artisanal economy. But like all such devices, freely fluctuating prices rise to meet these higher wages, and stability is reached. It is only in the debt-fueled inflation economy that wages struggle to keep up with prices, and real wages go down as consumers absorb the overproduction of the marketplace (built on paper currency disconnected from a commodity that resists inflation, such as a precious metal). It is classed as overproduction precisely because it requires inordinate debt to absorb it. Absent the cheap credit, the entire system collapses and reaches again its point of stability where the majority of debt is highly priced, credit is more difficult to obtain, and cash investment is used to fuel growth as demand requires, not the hyper-speculation (and thus uncontrolled risk) that occurs when money is extremely cheap to obtain. Now the Fed is attempting to cheap-money their way out of what is nearly a depression spiral. But the old Keynesian remedies of the past no longer apply, since there is no international faith in the currency. The buying of U.S. debt instruments now (at such low rates of return) is only the mark of foreign investors attempting to prop up the U.S. economic system in the attempt to recover at least some of their investment, since if the dollar collapses further, the U.S. may be forced to default on some or all of its debt. That would be catastrophic, and would plunge the U.S. into decades of turmoil, and likely violence. What we are seeing now is the debt economy finally being revealed for what it is: a hoax on the public. In the 1970’s very few households had credit cards. Now most do. This is why the debt bomb is so much more destructive. U.S. households are 14 trillion dollars in debt.

All traditional societies subordinate economic activity to social values that need to be preserved for a stable and habitable society. The values of industrial societies, and the mechanisms to achieve them, are intentionally and necessarily destructive of the various traditional institutions of church, family, guild, and so forth. This is why industrialism is radically anti-traditional. Its goal is an infinitely inflatable currency, and an infinitely mobile and reducible workforce. Of course, men cannot live under these conditions.

Technological advances do democratize production in some areas, but the ability to compete is really based on advertising, mass suggestion, and economies of scale that the independent producer can never muster, except in very low production, low output situations. This precludes areas of activity such as clothing manufacturing, food production, and so forth, where economies of scale are vital. Think of this scenario as “the dressmaker versus Target.” If the dressmaker’s designs catch on with a certain elite who can pay a premium for bespoke clothing or production-limited lines, then the dressmaker can earn a living. Where price is king, and price IS king for the vast majority of shoppers, attempting to maximize their dwindling real incomes, in social situations where one is judged by one’s ability to purchase and display certain premium brands, the economy of handicraft will never survive. It is only where off-the-rack clothing is generally unobtainable that the dressmaker can survive. This is the sort of self-regulation that will not occur outside of a social predisposition to reject mass manufactures as unfit. So, by an inexorable logic of “productivity,” the dressmaker then becomes loom operator, and shortly then becomes “shop” steward (if she is clever at reducing payroll), and then becomes unemployed and trains for “emergent industries”, as a near slave-labor conditions entice companies to third world labor markets. Meanwhile, even where such industries emerge, the evolutionary life cycle of their economies shortens their domestic duration not to decades but to years. It took less than a generation for nearly all software authoring to vanish into deflated labor markets. When the new industries don’t emerge, skilled labor then is left to be absorbed by the low skill service economy, whose ranks are increasingly occupied by those whose upward mobility is severely limited, thus assuring a “class” of workers who will be perpetually available. This is the logic of labor markets. They do not operate according to the needs of individuals or families. The skilled laborer is increasingly at loose ends, as he ages, to attempt to retrain to compete with the same forces at work in ever-new industries. This cycle destroys the leisure of which families and culture are the primary recipients. Culture is at odds with the fearful logic of productivity, whose optimal employment rate is effectively zero.

In some rarefied, highly creative industries, small businesses can still compete. But Googles and Citicorps are the rule rather than the exception. And when a company goes public, the pressure toward expansion, collusion, and other ways of assuring demand become paramount, as the company is no longer run by an individual, with his own personal values in play, but rather by the abstractions of stock price and market capitalization.

We’ve seen how accurate stock price is as a register of real value. It isn’t.