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> Currency in practice is our measure of capital, but it isn't inherently capital. In fact it is the only real capital that exists. The rest is just leverage.
by dnomad 8y ago
> Currency in practice is our measure of capital, but it isn't inherently capital.
In fact it is the only real capital that exists. The rest is just leverage. In a real economy all debts must be settled with sovereign debt ie currency.
> The government could give everyone a trillion dollars, but whoever actually owns land and factories and natural resources will still be the people with capital.
You've fallen to our own confusion. This is the classic mistake of people who don't understand Marx: the mere presence of assets doesn't make you a capitalist. Everybody has assets. It is only the people with currency (more precisely, the people owed currency) that are capitalists because their assets are sovereign liabilities and therefore must be accepted for all debt settlements. The "inside economy" can actually grow as long as people accept the sovereign debt for payments. The only limit of this process are the sovereign's borders and the existence of foreigners who refuse to be paid with the sovereign debt.
This is important, particularly if you want to understand what's actually happening in China, where the entire system is driven by massive amounts of sovereign debt but the country as a whole has zero external debts (including its external assets). Growth, as the last forty years of China's history makes very clear, is not limited by any kind of exogenous investment. Countries don't need to borrow money to grow despite the narrative pushed by the global bankers.
- quadrangle 8y agoI'm no Marxist, but capital is about private ownership of core natural resources and means of production. We use money to allow that ownership to spread around in complex ways. I agree with and accept your points about debts and liabilities etc., and they don't seem to conflict with what I was saying otherwise. Maybe we just agree and are clarifying semantic terms…
- dnomad 8y ago> We use money to allow that ownership to spread around in complex ways. Yes, we agree. My point is that "private ownership" is just another way of saying that people have accumulated sovereign debt. There's no reason the sovereign must issue these debts by the way, the sovereign could directly seize control of all assets and try to satisfy all wants itself, but these days everybody pretty much agrees the sovereign should issue debt and not try to do everything itself. When it comes to growth, (the original question, "Where does the capital come from that flows in to savings?"), all of the debt in the system (particularly the private debts that are created when capitalists borrow and lend money) must be leveraged off existing stock of sovereign debt. If there was no sovereign debt there would literally be no money (in any form) to invest or borrow.
- quadrangle 8y agoyeah, agreed largely. I still think "private ownership" can mean more directly that the state protects the idea of particular people owning things, e.g. someone or some legal entity "owning" some land. And that could happen legally in a number of ways, not all involving currency or related debt instruments. The state could, in principle, seize the land, but as long as the state allows private entities to control it, it can be said to be "privately owned". As far as creating currency, as I understand it, it works out to be a lot more effective and efficient for the state to issue that debt-currency (and create demand for it through taxing it back) and thus create markets using it than to directly manage resources through a top-down bureaucracy. (To be simplistic admittedly)