Review of Wealth Supremacy: How the Extractive Economy and the Biased Rules of Capitalism Drive Today’s Crises, Marjorie Kelly, Berrett-Koehler Publishers, 2023.
Kelly’s book appears at a moment of human awakening to the most successful and devastating financial scam in human history. It exposes ambiguities in our language that scammers have used to gain our acceptance of the idea that growing our money economy should be our defining global priority – a priority that primarily increases the financial assets of the world’s already richest people. It then provides essential guidance for restoring economic sanity by changing our shared story regarding the purpose of the economy. That, in turn, can enable us to advance a transition to equitable cooperative worker/community ownership.
My association with and admiration for author Marjorie Kelly goes back to her days as the editor of Business Ethics magazine, which she founded in 1987. Her first book, The Divine Right of Capital: Dethroning the Corporate Aristocracy (2003) has my ringing endorsement on the front cover, “We have found our Thomas Paine for the new millennium.”
Kelly, a previous contributor to Tikkun, is one of the important thinkers of our time. This, her latest book, is a seminal contribution to pushing our thinking and understanding ever deeper into how big money is driving humans to self-extinction. Her distinctive experience deepens her insight into the deceptions that lull us into submission and what we must do to address them.
Early in Wealth Supremacy, Kelly introduces us to a deeply troubling statistic. In the 1950s, the days of the once strong U.S. middle class, financial assets in the United States were roughly equal to GDP (Gross Domestic Product). She notes that now, by conservative estimates, U.S. financial assets are five times U.S. GDP. This financialization of the economy has allowed financial assets to grow far faster than actual productivity. And what is worse, these assets are very unequally distributed.
According to the U.S. Federal Reserve, in mid-2023 the richest 0.1 percent owned 12.8 percent. The poorest 50 percent of the U.S. population owned only 2.5 percent of total U.S. financial assets. This devastating inequality is by no means unique to the United States. It is global.
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Kelly is telling us that rather than being devoted to providing a good life for the world’s people, the global economy is now structured and managed primarily to grow the financial assets and power of those who already have financial assets and power far beyond any conceivable need or societal benefit.
Kelly points out that the current massive economic misdirection has been legitimated by two basic fallacies promoted by advocates of elite interests.
1. Wealth Supremacy: The fallacy that persons with significant financial assets are “worth” more and have contributed more than others.
2. Capital Bias: The fallacy that profit (including profit further enriching the already obscenely rich) is inherently good and should always grow. Costs of labor, an expense, should be minimized.
Kelly observes that public acceptance of these fallacies has led us to allow global financiers to control the global economy and game the system to grow their financial assets without requiring them to produce anything of real value. Their scams are facilitated by the ambiguity of the words “wealth” and “capital”.
We routinely refer to money—a mere number—as wealth and capital. In fact, money is just a token of exchange that we use to obtain things of real value—including clean water, food, shelter, and much else—on which our lives depend. These tokens give status and power to those individuals who possess them. They contribute nothing in themselves to the well-being of society.
Of course, any nation with its own currency can easily print and distribute more money. That, however, will only result in inflation unless there is a corresponding increase in the goods and services produced and offered for sale.
The distorting growth of financial assets about which Kelly writes mostly enriches individuals who have no real need of more money. But they can use those assets to consolidate the power of the corporate monopolies they control and suppress wages while increasing the prices of consumer goods. All of this contributes to further increasing their profits and financial assets—the primary but rarely mentioned source of most current global inflation.
The fallacies grounded in ambiguities of language support an endless variety of financial scams that grow the financial assets of financial fraudsters while suppressing wages and growing the debts of working people. Many such scams are so complex that they are difficult to recognize, resist, and prohibit. Many involve various forms of counterfeiting financial assets, the most obvious of which would be cryptocurrencies. But the scams also include financial derivatives, hedge funds, private equity firms, predatory lenders, and more. Authors fill books with examples of these scams, as for example, These are the Plunderers: How Private Equity Runs—and Wrecks—America, by Gretchen Morgenson and Joshua Rosner.
It likely never occurs to many who profit from these scams that they are engaged in immoral activity with devastating consequences for people and the living Earth. Many will insist that they have done nothing wrong because their actions are legal. Just because a scam is legal, however, doesn’t mean it isn’t a scam. Anything that contributes to reducing billions of people to lives of desperation and early death surely should be illegal. And legal reform is surely appropriate.
But, as Kelly argues, piecemeal legal reforms will ultimately be futile.
I have for years tried to sort out the details of how the various financial scams work so that I might help to explain and expose them to facilitate legal reforms. In reading Wealth Supremacy, I realized that Kelly is telling us that such piecemeal reforms are futile. The world of money is a world of illusion with numbers that appear and disappear like phantoms in the night. For every new law, the scammers will find ways around it.
Kelly calls us to look beyond incremental legal reforms. Better we focus our attention on exposing the fallacies of the currently dominant story that lead us to accept the scams as legitimate. Then attack the underlying structural defects through system transformation.
This brings us to the defining theme of Part III of Wealth Supremacy. In Part III, Kelly discusses pathways to equitable worker/community ownership that can secure a meaningful life for all people with no extremes of wealth and poverty. Kelly’s point is simple. The purpose of any responsible business is to serve the people of the community in which it does business. Such a purpose is a far cry from exploiting workers, customers, small investors, and Earth to extract as much profit as possible to grow the fortunes of aspiring and actual billionaires.
Ownership is the critical variable. It must be equitably shared and reside in and work for the well-being of the community in which a business operates. Call it economic democracy, an essential foundation of the political democracy to which we aspire and to which Tikkun readers have long been committed. An economy will work for the people only if ownership resides in people who care about and are dedicated to the well-being of their families and neighbors.
Kelly appropriately begins with the ownership of financial institutions. She reminds us of the days following WWII when our banks were small and local. Many of us back then relied for our financial needs on credit unions that we and our neighbors owned and managed to support affordable local housing and local businesses owned by local people to meet local needs. Such financial institutions are a model for a viable human future.
Those were the days of my growing up. My dad was a local businessman who regularly asserted that “If you are not in business to serve your customers [our neighbors], you have no business being in business.” He meant it and he practiced it. He loved making a profit, but his greatest love was meeting the needs of his customers and providing his employees with good, secure family-wage jobs.
My Dad’s sense of the purpose of his business is an extraordinary contrast to the current prevailing sense of the purpose of business. That purpose of ever-expanding profits to grow and maximize returns to major shareholders and top executives means that we can allow—even celebrate—such atrocities as billionaires enriching themselves by firing thousands of people with a sweep of their hand. In the immortal words of Gandhi, “The world has enough for everyone’s need, but not everyone’s greed.”
Mentally healthy humans will go to great lengths to avoid inflicting pain on others, even to the extent of extreme self-sacrifice. Those who take pleasure in inflicting pain on others to grow personal financial assets are exceptions to the norm. Such individuals are properly confined to institutions dedicated to providing them with needed healing. They are the last people we want heading our most powerful institutions.A viable human future depends on a transformation from the imperial civilizations that have shaped human societies for some 5,000 years to the ecological civilization it is now within our means to create together. It will require the efforts of billions of people who care for the well-being of living Earth and all its people and other living beings. The barriers are daunting. Wealth Supremacy by Marjorie Kelly is an essential guide to making the deep institutional transformation necessary to create an economy that works for all.
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