THE ILLUSION OF PROGRESS: HOW 'FINANCIALISATION' UNDERMINED THE PRODUCTION OF REAL THINGS

This is a useful article whiuch explains how the financialisation of the economy has actually undermined production....'Financialisation' is just another form of theft.

'The material age that had built bridges, ships, and power stations entered the twentieth century with unshaken faith in its own momentum. Yet beneath the surface, the structure of enterprise was already changing. The tools of finance—credit, capital markets, and accounting—were invented to fund production, but they began to evolve faster than the production they were meant to serve.

In the early industrial order, money and goods moved together. The banker was the steward of accumulated savings, and the stock exchange was a meeting place between the thrifty and the enterprising. Investment was a form of partnership between labor, invention, and capital. But as the century advanced, finance detached itself from its material foundations. Paper claims multiplied far beyond the stock of tangible goods. The abstraction that had once facilitated trade began to define it.

Two revolutions hastened this separation. The first was monetary: the gradual abandonment of money’s anchor in real value. Convertibility yielded to confidence; credit creation replaced saving. As Hans-Hermann Hoppe observed, when money ceases to be anchored in real value, society’s time preference inevitably rises: the future is discounted, patience gives way to immediacy, and the long view of the builder yields to the short view of the trader.[iii]

The second revolution was institutional: the rise of corporations whose worth came to rest less on what they produced than on what others believed they were worth. Accounting, once the record of fact, became the medium of expectation.

By the mid-twentieth century, profits no longer required production in the traditional sense. Balance sheets could expand through debt; share prices could rise through mergers, acquisitions, and later, buybacks. Speculation in financial instruments grew to rival the industries whose securities they represented.....Only when money measures service, and success is judged by what is built and preserved rather than what is traded or displayed, will progress cease to be an illusion—and become, once more, an achievement of character.




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