Thursday, March 26, 2009

A Short History

I was reading some comments by one Douglas Rushkoff, not an economist but something of a historian and author and that vague anomaly known as a media critic. His comments appeared in a site called Arthur Magazine, a media website and I was captivated by his long view of the history of the economic fiasco. Rushkoff makes the case that monopolies first developed in the middle ages and started us down the path of monopoly contracts and the creation of surplus wealth. The idea he suggests was created by Royal Charters wherein sovereigns gave certain merchants the right to trade in a monopoly provided the sovereign got a cut of the action. This legal constriction killed innovation he says and prevented development through competition.
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The notion of "inappropriate surplus wealth" is not viewed terribly favorably in the US, a place where accumulation for its own sake is viewed as the natural order of things. The fact is that, as Rushkoff points out American colonists were penalized by the system of forced sales to specific markets so they rebelled and created their own anarchy- which worked very well for them. They sold to whomsoever they pleased and bought from whomsoever they pleased. No longer were American raw materials required to be shipped to England to supply British factories in a monopoly trade that saw those same finished goods flooding the US market at the expense of other sources of supply.
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Things got complicated and more muddled up as time went by thanks to the expansion of industry and the modernization of trade. However we now find ourselves at the mercy of giant conglomerates of monopolies that treat us as mere colonials and consumers. The idea behind the monopoly culture first created by Royal Charter was to prevent local business from flourishing and to extract wealth for distant benefactors. Rushkoff's position is that we need a stronger local economy and less centralization. Speculation is born of centralization and wealth creation by accumulation of capital is more productive than wealth creation by work. When you stop and really think about it, it makes perfect sense.
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Do I contribute more to my community by working in the community or by collecting dividends from my stocks and bonds? The answer is so blindingly obvious it demands a human being pause and question the whole structure of capitalism and investment living. It is such a powerful notion it is scary. Rushkoff gets attacked quite virulently for his historical analysis and he spends a great deal of time explaining that which he does not believe in to support his perspective. To me, seeking a common sense approach to economics it makes perfect sense. I encourage anyone to google Arthur magazine and type Rushkoff into the search feature on the home page, then try reading and thinking and wondering.

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