Catabolic Capitalism
Discussion
Ted Trainer:
"Collins (2021) and others point to the way the economy’s increasing difficulties have led it to enter a “catabolic” or “cannibalistic” phase. As the capacity to do good business producing useful things deteriorates, investors turn to activities that plunder the economy. It is as if a hardware firm has to start selling the corrugated iron on its own roof to stay in business. The illicit drug industry and the Mafia are similar; rather than producing new wealth effort goes into extracting previously produced wealth. Much financial activity is of this nature, such as “short selling”, “asset stripping” and getting hold of assets that enable rents to be extracted. In the GFC a lot of money was lent to home buyers incapable of meeting the payments, because investors could not find less risky outlets. When the borrowers could not pay their interest instalments their houses were repossessed by the banks and sold off. Similarly in the US some of the money in the worker’s pay packet is put into a pension fund run by the corporation, to be paid back on retirement, but many corporations have taken these funds to invest, and “lost” them. Often they were lent to smart operators in the financial sector to put into speculative ventures, siphoning out fees in the process. Sometimes money is borrowed to buy weak firms, arrange for them to borrow too much and thus drive them into bankruptcy, and then sell them off, and because the pension money has become an asset of the firm it goes to the lenders and is lost to the workers who earned it and set it aside. So, accumulation and profit making are being kept up by activities which enrich big and smart investors (lenders) by getting hold of the wealth of little/naive investors (borrowers), through granting them loans they cannot repay. Another common mechanism is simply commercialising activities that the state once carried out without charge.
This is an aspect of “financialisation” discussed in Chapter 4. A good example is where students must now pay for college and university education, meaning large loans must be taken out and large interest payments then flow to lenders from the earnings of parents and students. Again the process does not involve lending to produce anything, it just enables wealth previously produced to be acquired by lenders. Collins (2021) and others see this process accelerating as the ever-increasing volumes of accumulated capital find it increasingly difficult to find investment opportunities in producing anything of value. Streek (2014) says, “… the struggle for the last remaining profit opportunities is becoming uglier by the day.” Collins (2021) says. “… catabolic capitalists will stoke the profit engine by taking over troubled businesses, selling them off for parts, firing the workforce, and pilfering their pensions.” As difficulties increase for governments and their revenues decrease they will come under greater pressure to give business the conditions it wants in order to stimulate economic activity.
“Regulatory agencies that once provided some protection from polluters, dangerous products, unsafe workplaces, labour exploitation, identity theft, and financial fraud will be dismantled … Public safety will be stripped down, privatized, and sold to those who can still afford it. Court budgets will shrivel, privatized prisons will exploit convict labour, and police will seldom respond to everyday crimes. Instead, private security firms and gated communities will guard the wealthy … catabolic capitalists will pick over the carcasses of bankrupt governments. Crumbling public transportation and decaying highways will be transformed into private thoroughfares, maintained by convict labour or indentured workers. After pressuring bankrupt governments to sell off public utilities, water storage, and waste management systems, corporations will deliver these essential services only to the businesses and communities who can afford them. And, as public schools and libraries go broke, exclusive private academies will employ a fraction of the jobless teachers and professors to educate a shrinking class of affluent students.”
End game. A number of analysts see the foregoing phenomena as aspects of a terminal decline, partly driven by increasing resource and ecological difficulties, partly by worsening inequality and “immiseration”, and partly by deteriorating “legitimacy”. Rising discontent in Europe and the US is evident in support for populist and fascist movements. Blame is usually put on the wrong targets, especially immigrants. That the squalor is due to capitalism is not recognised, thanks largely to the weakness of Left parties and the fine work done over generations by those keeping capitalist ideology in good shape."