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Afternoon, freedom fighters
This week we discuss Session 2 of Prof Wolff’s online course Marxian Class Analysis Theory and Practice.
There’s a lot of substance here, providing a new perspective to the economic crisis we are currently drowning in. It’s certainly more realistic that what we hear from politicians, pundits and run-of-the-mill economists, Krugman included. I can’t resist saying that TheBenBernanke is no more knowledgeable or honest than Allen Greenspan, super cheerleader of Randian economics.
Did this session open any eyes or answer any questions you may have had?
I also recommend watching Prof Wolff’s talk at City Lights Bookstore in San Francisco in early September. (1 hr, 40 min)
Have at it.
Session 3 next week.
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Afternoon, pups
Afternoon, Sensai.
Wolff’s Economic Update from Saturday fits right in with this particular session, I thought.
I think the biggest thing I took from this lecture was how drastic and definite the change was in American Society. A clear demarcation in 1970, almost an Event Horizon, when Capitalism failed.
The observation that the end of the labor shortage, and the sudden beginning of a labor surplus, played into this heavily was a new one for me.
I liked Wolff’s evaluation of the deal struck between Walmart and China.
In the past couple days I’ve begun examining every political situation using the perspective of Marxian Class Analysis. It’s brought a ton of ‘aha!’ and ‘oh shit!’ moments.
I’m looking forward to the next lecture on USSR and PRC.
So…to crudely recap the lecture for those just joining in, Wolff started the lesson by revising the idea that Marx’s original contribution to economics is to classify social groups according to their positions in the production of goods and services and how or whether they participate in the distribution of–Marx’s big word–”surplus”.
Then Wolff talked about what had changed in the last 30 or 40 year that has caused our current economic crisis. According to Wolff, the labor shortage that had allowed American worker’s wages to rise since the inception of the nation ended around the 1970′s when computers started to be used. Since fewer workers were needed, jobs were lost there was more competition the ones that were left. Wages stagnated.
Workers wanted to maintain their habits as consumers, but had less money to do it. Women left the home to find paying work to maintain the standard of living, but families found that women working added a lot of cost to running a household (along with all kinds of other problems).
Meanwhile, capitalists thought themselves geniuses for increasing profits. But…the extra piles of money they made had to be managed, which led to financialization of the economy. The capitalists had to a) make money from the new piles of money they earned from cutting wages; and b) ensure that workers who had less money to spend continued buying the products and services capitalists produced. The answer was found in extending credit to workers with interest so that workers could continue to consume, which kept money rolling in to the capitalists in the old fashioned way. But the capitalists also started making money by charging interest from the loans they extended to workers to make up for the salaries that the capitalists cut when the labor shortage ended.
I was just listening to it now.
Heh. That’s the moment that capitalism succeeded because it’s when the capitalist class started making some real money.
If someone has a moment to recap the Walmart/China part of the lection, that would be great. I didn’t retain much of that part. I gotta start taking notes.
*lecture
Wolff made the point, and I think he’s right, that Capitalism was succeeding before this. Our society sustained itself and was growing, year over year, for almost everyone. The middle class was thriving, the rich were fairly rich, and the amount of poor was in decline.
IOW – the labor surplus produced by the working classes was being redistributed enough, by the Capitalists, to satisfy the wants and needs of most of the working class. Our society was fairly harmonious and our economy was going gangbusters. This is not to discount the civil and social issues of the past 200 years, but to say that most people had enough and so were satisfied.
Once the Capitalists started their outright blitz for mehr, things started falling apart.
Your recap is right on. People will have to watch/listen to the lecture to connect all the dots.
Keep in mind that Marx didn’t use the term class war. He used class struggle and that was directed at the workers and the capitalists. It’s still the logo of the IWW:
Sabo Cat
Prof Wolff’s analysis certainly plugs a few holes in our story;
1. Why did wages go flat starting in the 1970′s?
2. How did the MOTU come to think of themselves as such geniuses?
I’m struck by the simplicity of Prof. Wolff’s answers, as compared to the incredible pile of BS that must be accepted as truth in order to believe the myths nurtured by the 1%.
Wolff just mentioned that China had a massive production capacity for cheap consumable products. They needed an outlet for these products. They approached WalMart, and WalMart was happy to oblige.
This relationship took WalMart from a small, local department store in Bentonville Arkansas, to the multinational powerhouse that they are today.
I liked Wolff poking fun at the modern economists – ‘We just need a bigger stimulus!’. That doesn’t address the fundamental class elements.
Stimulus (bottom up, mind you) would solve the problem… for a while. But without a permanent solution to the imbalance in the management and distribution of surplus, we are forever lost. Stimulate the bottom, the bottom spends, but do not see a commensurate return. The goods and services purchased are temporary, but the money is forever gone. Unless the top begins to shift the balance back toward the bottom, the US is screwed.
WalMart was a little known dept store in Bentonville, Arkansas. By buying cheap goods from China they were able to expand into the giant they are today because workers no longer had the money to continue to buy the quality goods made in the US. Most of the people you see shopping there have low limits on their credit cards and pay a higher rate of interest than others. WalMart caters to the working poor and have made a killing in the process.
Doesn’t it depend on one’s definition of success, though? I mean, if success means that Capitalism is works for everyone in a society, that’s really different than saying Capitalism is successful if the capitalists become ridiculously wealthy.
Capitalism is a system that *requires exploitation*, so I’m thinking that the first definition doesn’t really apply. Capitalism is most successful when the workers are getting the very least amount of compensation for the most production possible while simultaneously participating the least in the distribution of the surplus.
I’ll be interested to see how this ties in to the next lecture on the USSR and PRC. The massive amounts of labor in China results in a surplus that is then entirely transferred to the US in the form of products and profit for Walmart. I’m sure this factors in to the failing ‘communist’ experiment that is the PRC.
So true. I also was struck by what he said about the little survey he takes with his classes, that the majority of them dream of being their own bosses. Dreaming of a non-exploitative system but not realizing it because we are never allowed to learn or consider such a possibility.
Amazing, I agree. So many assumptions need to be accepted as fact to keep the capitalist system rolling that Marx seems almost too simple.
I agree that it depends entirely on your definition of Capitalism and success in Capitalism.
In my statements I’m operating on the base definition that a successful economy is successful for all. I think that exploitation can work, but only in the symbiotic nature that existed in the US from the 1930′s to the 1970′s. There was some balance.
The problem with exploitative systems (for the ruling class) is that the ruling class will always be a minority. This problem can be avoided if the minority provide for the wants and needs of the exploited majority. Once the wants and needs of the exploited majority are no longer met… well, see the French Revolution.
The capitalists, their wholly-owned politicians and the media whores depend upon our being kept in the dark.
Wolff’s description of the WalMart/China story, stands the myth on its’ head.
In Wolff’s estimation it is the Chinese who move the story, it is their need for distribution that is the motivation, not the Walton’s seizng the ‘opportunity’.
If that is true, we should be considering whether WalMart has colluded with our enemy and has engaged in traitorous behavior, as opposed to just providing Americans with the stuff they want at the ‘right’ price.
Thanks SD and Kris
Or see the current economic crisis. Wolff is advocating the collective workplace, not a new idea, to do away with the exploitative aspect. Marx was also an advocate of such a system, which he referred to as communism, not as a condition of the state, but as a group of people who got together to produce things.
Wolff touched on that a bit with folks believing that their poverty or misfortune was a personal circumstance, a thing to be ashamed of. That the American Opportunity is out there, and the individual has somehow failed to seize it. The media has been active in pushing this idea on us.
Wolff touches on the work Robert Putnam, Bowling Alone (link), that examines the decline in Americans participating in social and communal activities, organized sports, church and civic activities, etc. Putnam ties this decline in the early 1970′s to the decline in wages. Decline in wages = decline in ability to provide for family = rise in shame = loss of self-esteem = loss of willingness to put oneself ‘out there’ in the community.
Mind-boggling stuff. If you look at the decline in the American Neighborhood closely it can be tied straight back to class struggle. We’re all suffering, but we’ve been convinced that we’re doing it alone.
I rather like Marx’s idea of communism. Not the Big Red Terror that I was brought up understanding, but simple communism. The collective owning their surplus. Wonderful concept.
The PRC becomes more capitalistic each year. It has always had state capitalism, as did the USSR, but sooner or later things will change. The PRC is seen by our govt as an ally, if for no other reason that its ability to provide cheap goods. Viet Nam is facing the same future. The rich Vietnamese capitalists want to see more of it, not less.
What you are asking is the central question to me.
Why can’t the MOTU accept something less than the whole pie?
Why was the ‘success’ of the economy between 1940-1970, including the compromises between capital and labor, not seen as something to continue as opposed to something to leave behind?
I’m sure this relates to my own favorite question for the MOTU;
What makes you feel you’re entitled to endless double-digit growth in profits?
How is it that the mediocre children of wealth expect to better the performance of their fathers and grandfathers by 15% every year, when their forebearers were actually much better businessmen?
That reminds me of a Raj Patel interview I heard on KPFA yesterday. Apparantly the Green Revolution was a corporate strategy to produce only enough food so that the urban poor could be fed and not riot for the redistribution of land in Mexico. Big oil had their land reclaimed by the state and that had to stop.
It works to strengthen not only the individual worker/owners, but their entire community. They aren’t likely to employ practices that will harm the local environment or economy, or offshore their own jobs.
Why the MOTU don’t realize they’ve killed the Goose That Laid The Golden Egg, is my other favorite question?
I mean WTF, how is it not clear that ever-lower wages preclude continuing consumer purchases, let alone growth.
That’s such an important point, because Wolff suggests that the right figured out that something was wrong and blamed the problem on a breakdown of morality and the family, and the left, who should have figured out what was happening from a Marxist perspective, totally missed what was happening. That explains the rise of the right since the 1970′s. Exclamation.
Maybe those capitalists will produce cheap stuff offshore and find markets elsewhere.
How often to you hear a discussion of aggregate demand in the mainstream media? The talk is all trickle down economics, which you gotta be blind or three days dead not to see didn’t, doesn’t and isn’t gonna work.
I’ve never read the Communist Manifesto. What exactly does it say? Was it a document that contained democratic ideas that could have led society in a different direction? Clearly it was used by some unsavory types to create totalitarian systems, but was there value in the ideas in the Manifesto?
That’s exactly what they’re doing. What’s the administration’s big push for job creation? Exports. The US is now a mature economy, meaning companies won’t make any more money than they did last year. There’s no growth here. That said, constant 3% compound growth is not sustainable anywhere.
It was written as a speech to be given at the Communist League in Paris in 1848. It was published as a pamphlet in Jan or Feb 48. It’s only about 50 pages and can be read online at the Marxist Archive. I couldn’t do it justice and doesn’t really figure prominently in Marx’s later writings. He was a young 29yo radical when he wrote it.
I gotta go back to work. I’ll be in an out.
I have long asked why the uberrich need to sit on their enormous piles of money with a shotgun and no rest rather than share a little and live a happy, peaceful life.
One of the biggest corporate focal points in the current American economy – Focus on Emerging Markets!
So the really don’t need us for anything much other than service providers. The economic capitalists can pick our bones clean by privatizing Social Security.
Meant financial capitalists :)
Heh. At some point they may need to bioengineer a race of consumers to buy their crappy products when the entire planet has reached maximum exploitation. There just won’t be anyone left to act as consumers.
Apparently, according to a new book by Leo Panitch and Sam Gindin, ‘The Making of Global Capitalism’, an empire of neoliberalism was planned in the 40′s. The American golden age was necessary to globalize American capital before class war could be safely engaged.
See: http://blip.tv/brecht-forum-tv/the-making-of-global-capitalism-with-doug-henwood-leo-panitch-and-sam-gindin-6375831
Sounds like a good screenplay.
Exactly. As long as we continue to provide service to consumers, we don’t need to be the actual consumers. SS and MM are the last vestiges of a more balanced society.
That City Lights interview link that SD posted above is really good. Prof Wolff talks about the American Steelworker’s union forming an alliance with Mondragon that is very encouraging.
Capitalism is Fraud.
I don’t know about fraud, but certainly exploitation.
Walton, I have heard, married into a old capital. His opportunities were directed.
He was sleeping with our enemies.
You said it yourself, comrade.
Couldn’t have done it without willing politicians who pushed through trade deals that did nothing but hurt American workers.
I guess it is a kind of fraud. Withholding information. A whole string of deceptions.
I didn’t realize that Sabo was short for sabotage.
That’s a broad brush. The financial industry may have committed fraud in many of its activities but that doesn’t mean that Maytag is committing fraud. You may consider capitalism fraud but that doesn’t make it so across the board.
Just what would you replace capitalism with? You’ve offered a lot of pronouncements but few, if any, ideas.
Not in the sense of destruction, but the wiki article called it ” withdrawal of efficiency”
Wikipedia:
Lenin:
And further:
Maytag is a participant in fraud. On one score, they do not serve two masters, profit and service. They lead you to believe, as the fraudulent deregulatory neoliberals do, that service is their means to profit. It ain’t necessarily so.
Capitalism is a fraudulent ideology. Maytag is a company run by capitalists. Maytag engages in fraud.
I don’t see any cites to either Marx’s or Engels’ writings, nor do I consider Wiki as source material.
In 1920 Lenin admitted that what they had created was state capitalism. Is that what you want to see? If so, I reject it out of hand. Take it somewhere else. The Communist Party USA might welcome your idea, however.
Bioengineer serfs, comrade. They’re doing the best they can with the technology they’ve got.
My Irish grandmother, who was definitely from the working class, used to say, “Oh, bourgeois!” when she thought something was nonsense.
One of my new questions;
Do the W$ MOTU understand their ship is sinking, and are they simply grabbing while there’s something left to grab?
It doesn’t seem as if ‘sustainability’ is in the capitalist lexicon?
Also, it sure seems as if they are preparing for violent repression, private armies and militarized police forces.
They’re ahead of the public on that front, they understand the public will revolt before the public does?
I believe that would be a minced oath, a ‘respectable’ way to say bullshit.
Don’t make an arse of yourself. Lenin quotes Marx from http://www.marxists.org/archive/lenin/works/1917/staterev/ch05.htm.
What we have is a capitalist state. That was supposed to be the final solution. Oops. As Lenin was describing it, state capitalism, or common ownership of all means of production, was the means of transition to higher communism. Are you studying Marx or not, comrade?
“Collective workplaces”, without seizure of the capitalist state, will be crushed.
Of course, comrade. They’ve got legions paid off, from grunt to porky propagandist to CIA assassin, to suppress proles.
We’ll have to agree to disagree.
You want to seize the state, knock yourself out.
Started in 1970, did it? In digging around for info to back up a comment I made on another post, I was reminded of the Powell memo, full text here.
This would explain why the assault on the producing class by capital, largely using government as the means, seemed so well-coordinated — it was.
You want to collectivize workplaces, knock yourself out.
Some communist you are, comrade.
Lincoln Electric, manufacturers of welding equipment have been practicing a sort of collective workplace since 1934.
They guarantee work, and share profits via an annual check that averages 40% of the workers annual pay.
I think most collectives are being ignored as opposed to attacked.
I’ve never said I was a communist.
You want to call yourself a Leninist, Communist, whatever, it’s not my cup of tea. Never has been and I’m not not the least bit interested.
I imagine you’d be more comfortable at the Communist Party USA
Quite possibly. Of course, they’ve also collapsed because a sole collective can be undermined by it’s competitors. The capitalist state is not forthright.
Perhaps the outright capitalist theft and international slavery gives collectives a reprieve. How long, comrade?
One of the points that Prof Wolff makes clear is that the crux is who controls how the surplus is distributed. So, it follows that it matters little that ‘the people’ actually ‘own’ the industry, as in nationalized as in Soviet Russia if the decision-making is done by the owners of the capital, by the state (‘state capitalism’)or by ouija board. The point is that it is *not* being done by the workers. His solution is what he calls ‘democracy in the workplace’. Sounds fair, easier to sell to Americans than ‘Communism’ or ‘socialism’, and one can sort of see how it could work. But I can see pitfalls. Well, mainly with the ‘democracy’ part.
I have been digging into co-ops, spurred on by Prof Wolff, Noam Chomsky and the UN Year of the Coop info available. Mondragon, of course, and the Cleveland Model companies, but also lesser-known ones. The Cdn Copperatives have a website, I have been working my way through that.
Well, all that’s nice, I suppose, but I wonder if even ‘worker control’ means much. I belong to several co-ops (West End food coop/farmer’s market, Mountain Equipment Coop, Costco and I used to belong to a credit union) and they all seem to run just about the same way as government does — the people at the top make all the decisions. My input seems to be limited to voting for directors once a year (and I don’t know any of the people anyway, so my vote is hardly informed) and, of course, I get to pay at the checkout. I joined existing coops, so the organization and mission were already set. It’s not much different than buying shares in regular corporation, really, at my end.
In the final result, does it really matter what the form of ownership is? When the decisions are made by entrenched managers and legalized by the directors, does it matter whether it is on behalf of ‘the workers’ or ‘the shareholders’? Just different ways of raising capital, with the one seeming warmer and fuzzier, so it looks to me.
PS — Mr Dragon-man, why you call it Marx in the Morning when it happens in the afternoon?
Dang! I missed the start of this. Forgive me, sensei!
The point, as Dr. Wolff discussed in the last session of his Intensive Intro to Marxism classes (which SD serialized for us a few months ago in the first “Marx in the Morning” series), is that what Russia and China tried wasn’t Marxism. He emphasized this quite heavily.
All that the Russians and the Chinese did was: 1) swap out boyars and mandarins for commissars and cadre leaders, and 2) free up all the cached wealth on which the nobility had been sitting and pump it into the greater economy. Doing those two things was enough to vault both nations from backwater laughing-stock status (Russia was known for making incredibly silly and tragic military decisions — see also the battleship Potemkin’s history — and China spent most of the 19th and early 20th centuries as little more than a rich prize to be fought over by Western nations) to superpower status inside of three decades. But it was merely state-sponsored capitalism, not economic liberty, equality and fraternity of the sort Marx envisioned. Nor could it have been, as the two nations in question didn’t have a cultural or legal tradition that was conducive to the flourishing of democracy in any field of endeavor.
Yes, the roles themselves produce antagonism despite workers’ best intentions. Michael Alpert learned the workers who took over abandoned firms in Argentina began to take advantage of the exclusivity of their jobs. He recommended job rotation to frustrate the occupational tensions.
Does it really matter who owns? Of course it does. Workers must ensure that authority is an office only and is responsible to them.
Yes, I understand the history, I understand and support Prof Wolff’s premise, that workers are at least major and possibly the only legitimate ‘stakeholders’ in a business enterprise and should rightfully be involved in decision-making. My question is about the mechanics. I suggest that even legal ownership such as communism, nationalization or cooperative ownership, cannot guarantee worker direction. IOW, ownership does not necessarily confer management.
Some cases I am thinking of:
Political self-government: Decision-making in putative democracies, from town councils to nations, seems to have been assumed by/ceded to a class of professional rulers. These politicians, beaucrats and administrators rule in the name of the people, but rarely consult them, although they may seem to (“Your opinion is important to us…”). We have some good recent examples of what happens when actual citizens attempt to do any actual decision-making other than putting an X beside a prepared candidate or issue — Occupy, CELDF, etc.
Corporate shareholders: Although shareholders are legally the owners of corporations, actual management is generally done by professional managers — the CEO’s and CFO’s and stuff — and authorized by the board of directors. The shareholders role is usually limited to voting for directors from a prepared slate. They can attend the annual general meeting, of course, but most don’t and most vote by proxy, if at all. The distance from power increases when shares are managed as part of a portfolio or mutual fund. I have read of cases where concerned shareholders actually attempting to affect policy are characterized as ‘disruptions’ or ‘revolts’.
So, I just don’t think that simply changing the form of ownership can ensure that enterprises will be managed in the best interests of the people who work in them. Or even if that is a sufficient goal — what about the best interests of all of humanity, the environment, the planet? Clearly, a big topic, but if only maximizing profits of the shareholders is clearly too narrow a mission, how wide should it be?
I strongly feel that Marxian class analysis is indispensable in understand where we are and a lot of how we got here. We have seen a lot of what doesn’t work and this helps us to understand why it absolutely could not.
My question concerns how to make democracy work in the workplace. Since it doesn’t seem to work much of anywhere else, why would it magically work there?
Because I started out introducing Marx to the Lake at the Diner on Tuesday mornings in a paragraph I called Marx in the Morning. I just kept the name. Seemed simpler.
OTOH I have read (a jillion yrs ago, can’t remember the source) that kibbutim started out with rotating managers, all members taking turns as directors, but that was abandoned b/c some members were good at it, and others were just awful.
How to make it work? Hard to know, harder still to codify. I suspect that part of the key, as Mad-Eye Moody advised, is ‘constant vigilance’.
Wolff’s Democracy At Work is supposed to address that issue. I haven’t finished it so I can’t expound upon it.
If you’re interested in the book please order it via your local indy bookseller.
His monthly economic update for October should be on his website by the middle of the month and he has said that the book will be the focus of the program.
Oh, that splains it. I have been looking in the mornings, and then finding usu after most of the good stuff has already happened. I’ll do my looking later. :)
OTOH what? Obviously, you can’t rotate without training, so not everybody passes through a particular type of job. Absolute sharing is not the objective Alpert was going for. Now why would you be inclined to think it was, comrade?
I’ve pretty much settled on Tuesday afternoons about 12:30 for these discussions. I start announcing at the Friday morning Diner. I haven’t decided which course to focus on next but for the next 3 Tuesdays we’ll be here.
Gar Alperovitz also has a book out talking about collectives. It’s in it’s second edition. America Beyond Capitalism.
I was going to say. One might dispute the relevance of the Lenin quote (or the conclusions drawn from it) without questioning its provenance. Old V.I.’s words are out there; they’re not hard to find.
Thank you very much for that synopsis. I hadn’t read Wolff for awhile, but that sounds about right.
You have to remember that the ONLY goal of capitalism is to accrue more capital faster. That’s it. It’s very simple. From that perspective, what capitalists did made perfect sense at the time, and still does.
Capitalism does not encourage long term thinking, not even thinking in the long term for the rational interests of the capitalists themselves. They have to make more profit now, not 6 months from now, or 6 years, or 60. It doesn’t matter.
“In the end, we’re all dead.”
–John Maynard Keynes
I think that is a really important point you are making. Democracy isn’t quite enough, management needs to be done in a system closer to direct democracy than representative democracy, and so does distributing the surplus.
From each according to ability and to each according to need is an amazingly profound idea if applied to the workplace. Not everyone is suited to management nor everyone to labor. There is a lot of both responsibility and humility required for a direct form of democracy.
This is not right, comrade. Capitalists require a framework and capitalists engineer that framework. Theirs is by no means all short-term, tactical thinking.
My next cat will be named Sabo. Just for the record.
Yer very welcome, sir. Helps clarify the lesson for me when I recap.
Something it would be good to remember is that capitalism was invented to manage risk, and that most of that risk at the time was related to transport on the high seas.
There is no one so interested in forward thinking as a man who schedules delivery of goods by clipper ship transport from London to San Francisco in 1849.
The fact that they are not, at this moment involved in worrying about the future has nothing to do with the essence of capitalism, what you’re describing is manic human behavior.
I think what we’re observing a behavioral phenomenon that we understand is depraved, and aberrant, what we have to understand is that it’s also cyclic, and perennial.
There will always be assholes, and some times, the assholes are in control.
When the assholes are in control, they fuck everything up, and then they must be removed from command for the good of the country.
That’s what I’m hoping anyway.
Vote Jill Stein!
I disagree.
“The last capitalist will sell to the proletariat the rope with which to hang the second-to-last capitalist.”
–Karl Marx
Their insane lust for profit will be their undoing. And ours. If we let them. I consider that optional.
Risk management? That’ insurance. No doubt you are thinking of Lloyd’s of London. But I would not go so far as to say that insurance created capitalism. It had a role, sure. So did reinvestment of profit. And Protestantism. And the merchant class wanting more power for themselves as opposed to the aristocracy. It’s a long list.
Capitalism rewards sociopathic, or assholish if you prefer, behavior. It is now CAUSING it. It cannot be reformed. Only destroyed and replaced.
It’s worked pretty darned well in the Mondragon Corporation for longer than most of us have been alive. Though they are running into some growing pains as they expand and take in workers from outside Spain: They find that persons from certain cultures have a really hard time speaking out, particularly to managers — and Mondragon is built on active and vocal participatory democracy.
Ha ha ha ha. Been imbibing the financial capitalists’ bullshit for too long, comrade Bob. Usury is not compensation for risk. Sure, if you don’t want to be an ex-capitalist, you have to set the usury by the risk. But the usury is profit; profit as reward for getting the risk right is just a self-indulgent capitalist tale.
Shame, comrade Bob.
Comrade Ludwig:
Comrade Barbarian:
Your standard for strategic thinking is far too high for capitalists, comrade.
No it’s not insurance.
Ok here’s a story, you can believe it or not.
Ten of us are traders who finance trade which involves shipping goods by sailing ship.
When one of us loses a ship, all our wealth vanishes beneath the waves.
We decide to get together and sell shares in our endeavors and thus spread the risk.
Each of us buys a 10% share in each of our ships, and thus pool our risk.
If we lose a ship, each has lost only 10% of that particular investment, and so nobody is completely ruined by any one act of god.
Eventually, you understand that selling shares in businesses becomes a business on it’s own…
It’s ‘a’ story, not necessarily ‘the’ story, but capitalism didn’t start out with guys like Robert Rubin and Jamie Dimon.
Nah. Capitalist would rather insure his own ship than spread his investment.
“Risk management” the origin of capitalism is just hasbara, comrade Bob.