Collapse of the imaginary economy

Most analyses of economic collapse focus on the effects of wealth inequality, financial malfeasance, and inadequate government regulation. Centuries of such analyses – by Hobbes, Locke, Marx, Polanyi, Friedman, Krugman, Graeber, Picketty and many more – have extensively examined the dynamics of economic instability.

Notably, wealth inequality has never been greater than it is now, except perhaps during the age of monarchies, masters and slaves. Financial malfeasance, corruptly “gaming the system,” is widespread; Wells Fargo Bank, for example, created millions of fraudulent depositor accounts to artificially inflate its reported operating results. Government regulation has fallen into the avaricious hands of industry lobbyists, bought-off politicians, and anti-regulation ideologues.

All this fervid activity is predicated upon a money-based economy, the type of economy that has now dominates world culture. Money-based economies are only one type of economy, however; non-monetary economies include types that are shared (potlatch-style, where those with the most are obligated to regularly provide great feasts), communal (redistribution-style, where each receives what he or she needs), or hierarchal (householder-style, where multi-generational family enterprise is self-supporting).

Money-based economies are imaginary insofar as they rely on tokens or signifiers of wealth (imagination-based currencies like dollars) instead of the exchange of actual goods or reciprocal labor. In this sense, the present economic structure of the world is real, but because it’s also imaginary, collapse is always possible.

As a Buddhist, our present situation feels very Samsaric to me. Samsara, for those non-Buddhists among you, is the cycle of birth and death, and the suffering that necessarily accompanies it. Samsara’s not Biblical or apocalyptic in the sense that it describes our present situation rather than forecasts what’s to come. In Samsara’s human realm – a realm of thought as well as feelings – people have enough imagination to come up with the thought of “me,” “other,” and all that follows, including imaginary, money-based economies.

Thus it follows that the current economic collapse is tied to our acceptance of thoughts and feelings that money-based wealth is real. This pandemic is the catalyst that reveals the depth of our economic delusions, the ways in which we’re deceived into accepting these delusions as real and the suffering that follows, almost a textbook definition of Samsara.

During the past 500 years, capitalism (yet another thoughtful idea) played a major role in developing illusory wealth, and as central illusionist capitalism has continually morphed in its appearance. Just as a magician uses sleight-of-hand, capitalism pulls off its trick through the use of two principal concepts: time and money.

Time as we conceive it – discrete and calculable units of past, present and future – is imaginary. Although we witness seasonal change, altered appearance of objects, and the occurrence of death, all these are aspects of an ongoing continuum, a real process physicists call “the arrow of time.” This process is what we, despite Einstein’s revelations, experience as “now.” We don’t actually know when the process began (the Big Bang?) nor do we know if it will ever come to an end. That notwithstanding, 14th century Benedictine monks employed the mechanical clock to regulate periods of prayer, and building upon that we arbitrarily divide time into ever smaller discrete units using sophisticated instrumentation. We now regulate all aspects of life on the basis of this “real” clock time, which capitalism employs to determine the value of money.

Like time, money is real but also imaginary, very Samsaric. The dollar bill in your pocket is really there but has no intrinsic value of its own; that dollar bill simply represents the energy value of labor, which itself is variable. The energy value of labor by one individual can be tangible, like paying a gardener to dig a hole in exchange for a chicken. The idea of the labor “work force” as a collective whole, however, is intangible; in our economy this intangible, imaginary collective work force is used to statistically determine the value of money. This is, among other aspects, the reason that currency rates fluctuate.

Imagination is the basis of our money economy; the entire edifice is Samsaric, an illusion. We willingly ignore this truth for prolonged periods, but when disaster strikes – plague, famine, pestilence and war – we’re forced to come face-to-face with the consequences of relying on an imagined economy: paper wealth (other than toilet paper!) collapses and savings lose their value. Ironically, however, capitalists have convinced us that unless forgiven, debt lasts forever. 

Debt is tied to our delusion of the existence of discreet segments of time (hours, days, months and years), and is an obligation predicated upon a future. Positive forecasts of future wealth result in what we today call “credit worthiness,” and the entire world economy is now based on credit. Credit has been extended far into the future to individuals, municipalities and central governments, all predicated on assumptions of future monetary wealth, but as noted, money itself has no intrinsic value of its own. Can you say “Samsaric house of cards”?

The history of capitalism is a record of its enhancement of illusion. It began using fictions about time and money, then imaginatively embellished with ideas about land ownership, private property, labor, credit, debt, stocks, bonds, markets, and financial systems. With the spread of the coronavirus the delusion of our Samsaric economy is revealed, the illusion collapses, and in the wake of its collapse we are left, naked and afraid, in the world as it really is.

One thought on “Collapse of the imaginary economy

  1. Hi Larry!
    Your column reminds me of a couple of ideas I picked up from reading about biology that compliment your point.
    First, the distinction between efficient systems and resilient systems. Maximizing efficiency decreases resilience – witness the global, just-in-time supply chain, which has been blown up by COVID-19 with an uncertain prognosis for recovery. Biological organism are in many ways not efficient because they have to be able to cope with changes in the environment, which require things like energy storage and immune responds, which are “unnecessary overhead” in many situations. Efficiency is important for resilience – but so is social cohesion and social justice.

    The other is the simple notion (that everyone agrees with and then ignores) that there is no free lunch (first articulated by the Buddha as karma?). Capitalism is based on growth and therefore requires growth to be unlimited, which, of course, it cannot be.

    Much Buddhism seems to me to be a religion of resilience.

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