http://www.iadb.org/intal/intalcdi/PE/2012/09985.pdf
ABSTRACT (30 PAGES)
What is called “capitalism” is best understood as a series of stages. Industrial capitalism has
given way to finance capitalism, which has passed through pension fund capitalism since the
1950s and a US-centered monetary imperialism since 1971, when the fiat dollar (created mainly
to finance US global military spending) became the world’s monetary base. Fiat dollar credit
made possible the bubble economy after 1980, and its substage of casino capitalism. These
economically radioactive decay stages resolved into debt deflation after 2008, and are now
settling into a leaden debt peonage and the austerity of neo-serfdom.
The end product of today’s Western capitalism is a neo-rentier economy—precisely what
industrial capitalism and classical economists set out to replace during the Progressive Era
from the late 19th to early 20th century. A financial class has usurped the role that landlords
used to play—a class living off special privilege. Most economic rent is now paid out as
interest. This rake-off interrupts the circular flow between production and consumption,
causing economic shrinkage—a dynamic that is the opposite of industrial capitalism’s original
impulse. The “miracle of compound interest,” reinforced now by fiat credit creation, is
cannibalizing industrial capital as well as the returns to labor.
The political thrust of industrial capitalism was toward democratic parliamentary reform to
break the stranglehold of landlords on national tax systems. But today’s finance capital is
inherently oligarchic. It seeks to capture the government—first and foremost the treasury,
central bank, and courts—to enrich (indeed, to bail out) and untax the banking and financial
sector and its major clients: real estate and monopolies. This is why financial “technocrats”
(proxies and factotums for high finance) were imposed in Greece, and why Germany opposed a
public referendum on the European Central Bank’s austerity program.
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