Economics, Faith and Capitalism
Recently, I was considering the flow of societies. In particular, the sense of stress that has made the rounds in most other nations of the world over the past decade or so on the way to their financial traumas. Issues of financial turmoil are fundamentals of a societal architecture. When they falter they tend to take a few of the other reflections with them. What was the key to understanding the issue and how could the United States avoid them? While most people pointed the finger at bankers, I believe there is a much more fundamental issue at play when economies collapse. Faith.
In every situation of monetary collapse there was a moment where faith dropped and countries such as Greece, France, Iceland, etc descended into uncertainty. Uncertainty shrinks perspective from a long view of the future to the near-term survival of those within it. That internal psychological chaos in every citizen went looking for someone to blame. Yet the uncertainty itself - faithlessness - was really to blame.
Cycles of Progress
In my mind, the issues of chaos that erupted in countries where citizens had lost faith for a moment had to be avoidable. I looked for a metaphor to guide my understanding. The bulk of those I found were geometric. Cycles of progress make sense when the boundaries of situations are relatively certain within a given time span. The chaos of economic collapse is partially uncertain.
While life certainly continues after a collapse it does so with the haze of uncertainty as to its end point. That uncertainty compounds the problem. To recover, international aid is often sent to the nation in need. But why? Are any citizens effected by collapse in the harshest terms able to leave the country anyway? I suggest not.
Economic collapse is a domestic issue. It must be solved domestically. Furthermore, the reliance on international currency can be a disaster for the long-term stability of a nation.
What do you think?
How much faith do you have in the United States?
Imagine a nation recovering from a collapse. It has not yet recovered its financial sector. Perhaps it never had a stock exchange. All that nation has is the work of its population. If there is a finite amount of money of any kind maintaining an upper limit on the total available wealth pool of a nation what happens?
Let's say we give "Nation A" 10 billion Euros. There are 10 million workers in "Nation A" who work all month to earn an average of 1000 Euros each. They have no faith in other currencies including their own. What will they do next month? With a fixed amount of Euros at their disposal they may see their currency rise in value domestically like an investment. Assuming people are spending what they earn this may suffice for a while. Yet it illustrates a problem and a few truths.
PROBLEM: Without continued growth a wealth pool will turn currency into an investment and create inflation within a nation.
TRUTH: Currency has at least two values. Often more. The Euro, for instance, has a value within the European Union. It then has relative values on the International market as well as domestically where it is used by other nations as their domestic currency.
In such as situation, where does the faith come from to support the re-emerging economy of a nation that has lived through collapse?
In the absence of definitive answers to these and other questions of economic vitality I wrote my own. I invite you to critique them at www.utopiancapitalist.com and leave me your comments. Capitalism is, in my opinion, the ultimate solution as long as it sets a good role model for society by doing what it can do to end the struggles of life without destroying the joys of life that come from choosing our own direction within it. Your thoughts?