THE REAL WORLD
by Loise Neville
The media and the Left have both fostered blissful ignorance about the capitalist
system, which creates the society in which we live, breathe, and attempt
to have our being. Now that the shit has hit the fan with NAFTA, GATT, the
World Trade Organization and the so-called Contract with America which we
never signed, some halting efforts are being made to discern the patterns
of the capitalist money system which controls our politics. For this reason
I offer this little primer of the basics of our capitalist society.
Banks
Who runs the capitalist system? Banks and financiers are at the top of the
pyramid. What do banks do? They use your deposits whether checking or savings,
to invest in profitable enterprises to support corporations, to make money
on interest on loans and, if international banks, to buy and sell the currencies
of nations for profit (in the same manner persons buy corporate stocks)
with the added purpose of supporting or endangering nations by buying to
raise the currency value or selling to lower it. This gives international
banks extraordinary power over all the nations of the world. Arbitrage is
the name for this action with which banks make fortunes overnight. Banks
have an extraordinary bookkeeping system in which money loaned is figured
as money earned plus a system of expanding cash into credits as much as
36 times. An extraordinarily profitable business!
Today's banking is a worldwide system of syndicated banking called Eurobanking,
the currency: "Eurodollars." Eurobanks use the currency of all
nations and are absolutely independent of any nation in the world. All large
"U.S." banks are actually Eurobanks, separate entitles like nations,
not affiliated with the United States -Citicorp, Bank of America among them.
Every nation in the world, large or small, owes money to these banks. so
the banks control their politics and economies. When a nation lends money
to another nation, it merely co-signs the loan. The money actually comes
from these banks, and the money lent often goes not to the borrower nation
but to the bank to pay the borrower nation's debt to the bank. The needy
nation doesn't see a kopek or dime of it. Why did the U.S. lend money to
Mexico? To pay money Mexico owed to the banks. Why did we, earlier, lend
money to the former Soviet Union states? Because the banks demanded that
we do so. Why did the Soviet Union fail? Because the banks set up new rules
for international trade with which no socialist nation could cope, and the
resulting debt (later paid by the U.S. and other nations of the Group of
Seven nations, on the command of the banks) forced the end of the USSR.
Why is the world losing its forests? To pay debts nations owe to the banks.
Why do the banks have so much control over nations? Because they control
the world's money, and, by "arbitrage" gambling, they can destroy
the value of any nation's currency almost overnight, thus destroying the
economy of that nation. Therefore when the banks say "Jump," the
nations say, "How high?" If not, it's the Big Whammo, a national
depression which will hit every business and every person in that nation!
The Corporations
The corporations are the minions of the banks. They depend upon credit and
bank loans in order to conduct their production and marketing. They give
the U.S. its financial power and its credit standing as a nation. In fact,
Washington D.C. is called by economists "the largest international
corporation in the world." The corporations are the government's pets,
get tax money welfare from government and innumerable privileges, including
the privilege of paying little or no taxes. If corporations paid their fair
share of taxes, we ordinary citizens would not need the Contract with America
or any other financial squeeze.
The banks favor corporations because they are big moneymakers for banks.
(Some conglomerate corporations own their own banks as well.) Some corporations
are richer and more powerful than nations. Conglomerate corporations can
own hundreds of companies with different products under different trade
names. They own the media, which gives us our information and sets our opinions,
food products, agriculture, forests-you name it. It is difficult to discover
exactly what a conglomerate may actually own. Conglomerates are international
and as such may have a finger in every nation's pie. Many if not most oil
companies are conglomerates, own agriculture, pesticides, herbicides, fertilizer,
plastics, textiles and related synthetics. Oil is important not just because
it runs the world's machines but because pesticides, fungicides, herbicides,
paints, plastics and textiles are made from it. A quick look around your
dwelling will show how important oil is to providing you with machines,
furnishings, kitchen items, and clothes. This importance gives oil companies
special privileges, which reach even the UN Security Council, which conducted
a"turkey shoot" war with Iraq over oil and a blockade which is
still killing the people of that nation. Other covert and overt wars are
created around the globe for control of oil fields.
Other corporations are consortiums which handle only one product. Before
deregulation, banking chains were consortiums. Deregulation permitted them
to become conglomerates. Corporations, for their own marketing needs, play
a major part in the takeover of small nations. Which brings us to the stock
market.
The Stock Market
The stock market gives our money system its name-capitalism-as it gives
individuals the opportunity to make quick money by investing their capital
in other people's businesses and thereby share in the profits of these businesses.
For those who know how to play the game it's a quick-money bonanza, an opportunity
to make money without the effort of working for it. It is, along with government
bonds and other investments, the method by which the rich increase their
capital.
On the surface, this could be considered true economic democracy, as anyone
can share in the profits of anyone else's business and by purchasing enough
stock in a single company, can control or even take ownership of a company.
Democracy indeed! In practice this 300-year-old experiment has had quite
different results: It is a gambling game which creates an unstable economy,
a game only the rich and informed can largely benefit from. It creates depressions
and unemployment, does not benefit the worker even when stocks do well,
and even creates the takeover of small nations. To understand how it creates
recessions and depressions one must understand how the stock market works.
Depressions
To make money on stocks, it is necessary to buy them at a low price and
sell them at a higher price. Therefore, when the price is low, many buy;
when it is high, many sell. This creates the up-and-down effect of the market.
It also affects the businesses that people are buying into, as after fees
the company either has more or less capital with which to operate. A stock
increases in value when many are buying it, and decreases when many are
selling it. Therefore these investors will deliberately sell, sometimes
in large blocs of stock, in order to bring down the price so they can buy
it again at a low price and make money again as the value rises once again.
Sometimes this is overdone. Canny stock buyers will become aware when the
value of a corporation's stock exceeds the actual financial value of the
corporation. This is the time to sell and sell quickly because that stock
is certain to fall and be devalued. Some economists declare that this is
exactly what created the Great Depression of the 30s. In 1929, stock gambling
had overpriced all stocks. Big stockholders sold huge blocs of stocks across
the board in the hope of (as usual) bringing the price down for repurchase.
Fortunes were made, but alas, they had overdone it and bankrupted the corporations
which had counted on the big money flow. There was a snowball effect on
independent businesses as well. The result was a depression which swept
through all the technological nations of the world. Workers were thrown
out of jobs and onto the streets, funding banks were hit, and the result
was an international disaster.
The Overthrow of Small Nations
Why has the stock market created the overthrow of small nations? Because
purchasers won't buy a stock unless it shows a steady rise in value by increased
sales or lower production costs for greater profit. But how long can a corporation
continue to grow? What if the home market is saturated? It's time to seek
new customers and lower production costs. Small underdeveloped countries
are the answer to both of these needs. But small countries have a way of
wanting to do their own thing. They are aware that large foreign corporations
will alter their culture, exploit their workers and natural resources, then
send the profits home without benefit to the host country. It's time for
a takeover. With a little help from the CIA, the banks, and covert aid from
the U.S. military, a civil war can be whipped up to overthrow the government
of the little country. In extreme cases, Washington will invent a pretext
for direct invasion. Result: a new government with a new president of corporate
choice who will be guaranteed a percentage on all business transactions
to enrich himself and his friends. The local military will be likewise gratified.
This is called by Washington "reform," and the new government
is dubbed a "democracy." The elections required for democracy
status are easily handled by the CIA and the local militia. This process
has occurred all over the world and continues at this very moment, with
special attention to former Soviet East Bloc countries. The next step is
taken by the World Bank and International Monetary Fund banks, which encourage
the dictator to take out multiple loans with increasing interest, to make
the small country eternally in debt, hostage to international banks, and
further subjugated by the draconian IMF decrees which will guarantee its
perpetual status as a slave state. I offer this little primer of how our
capitalist system operates with the belief that knowledge is power and that
with knowledge we can create the means to recover the power which through
ignorance we have lost.
References: Neil Jacoby, Corporate Power and Social Responsibility
Howard Wachtel, The Money Mandarins; World Finance Jonathan Kwitney, Endless
Enemies Holly Sklar, Trilateralism Martin Lee, Unreliable Sources Bruno
Leone, Nationalism; Opposing Viewpoints Susan Leeds, The ABCs of Economics
Boardman and Tuerck, World Monetary Disorders Cheryl Payer, The Debt Trap:
the IMF and the Third World.