Irrational Logic and Fictitious Value

[William Prest]

The real economy is based on anything of value that can be used directly or indirectly from nature. Anything that does not derive from this direct source directly or through stages of development is fictitious. In fact, one can say that fictitious value is also based on a lie or a swindle. The direct and logical economy is based on the real value found in nature and that people can labour on to make something of direct use to fulfil a natural need, such as spinning raw cotton into thread and then weaving that into cloth that can then be used many ways. Another example is the finding of wild food, or growing it on a plot of land as agriculture. Without the raw material or food provided that we find useful in nature and has value to our needs so that we can continue to live, there is no economy period; not even on an individual sense and certainly not in the community and universal sense. Taking material that is useful from nature is thus logical in the context of fulfilling a need and allowing ones life to continue.

The false economy is a derivative of the axiom of the law of supply and demand. Out of this emerges futures speculation and adding value as a result of shortages, real or artificially made. It also is a derivative of “flipping” a “surplus” value (commodity) many times where the “value” added is done so for profit without adding any further labour or value there-to. Though the commodity without change holds the approximately same value throughout, the part added to artificially increase value becomes the fictitious part of value and though arrived at by a logical process of making a profit, is actually irrational logic as it is based on nothing more than “drawing increased value out of thin air”. All real value is provided by nature in many forms and labour value increases the total value of a use value. When production is effective and efficient enough to create a surplus, that surplus does two things. It creates a commodity that can be traded, bought and sold. It also causes the overall value to fall inversely to the abundance of it; i.e., more commodity, lower price and less commodity, higher price. This then forms the crux of the matter.

Real estate or land, does not increase or decrease in supply, except in extremely small amounts. For the argument, we are not considering the influences of global warming and rising sea levels, which for some is an issue and contentious in itself. However, we can consider expanding human population which is verified statistically. Land is a use value; the place where all things are derived from nature that we can work on to create all other use values. As the population grows, the same land has to support more people and is thus worked on to create more use values, whether food, water, oil, clothes, shelter or transportation. Given the rise in population and that all land is not directly useful, we can say with confidence that 6 billion people using a fixed amount of land as 1 billion, makes the base value of land six times more in value than it was originally in this consideration. Yet by looking at real estate prices over the same time, the gap of price rise is much greater than six time. In fact, it is known from statistics that the 2009 dollar is worth only three cents of the 1971 dollar by devaluation alone. Even with the 33 fold increase in prices, real state has increased even more.

The recent world economic collapse was inspired by the collapse of the real estate market by over speculation, over pricing and charging rates that were greater than could be sustained by the market (the actual productive part of the economy). The watershed was the loss of millions of jobs and further damage to the economy. When people defaulted on mortgages in the millions, banks foreclosed homes en-mass and real estate at large decreased in value, tumbling to near oblivion in some places, it revealed the irrational side of the market; based not on real value, but on fictitious value in an idealist bid to expand the profit margin and thus increase wealth and its partner, power. Thus real value was cloaked in a thick cover of “added value taken out of thin air”. This practice is just another form of theft; stealing real value from people in the exchange for fictitious value created in order to turn a profit by speculative flipping of a fixed resource. Herein lies a mistake, as land can never be a commodity. There is no surplus of land! Nor is land produced by labour, except in the rare instance where it is “reclaimed” as done by the Dutch in dike building in sea bed shallows and removing the water to make dry land below sea level. Even here there is a severe limit. This land can easily disappear as a result of a breakdown or natural disaster, as has happened to the Dutch people throughout history. On the whole, land is not created by labour. Even the removal of trees in the Amazon, which is labour intensive, only serves to free up already existing land so that the production of agricultural commodities can commence. All land is thus the superstructure upon which the variable economy is founded.

Marx stated that a commodity emerges out of surplus value and it is this that is traded for things that are needed, but not readily available by regions and seasons. Land being fixed in quantity and never in a surplus condition, is thus not a commodity but a use value. The treating of land as a commodity, means that land is not being equally shared, though the needs of all people are the same, i.e., food, water, shelter, clothes and so on. It means that in order to have surplus land that can be sold or traded as a commodity, many people have to be without. Treating land as a commodity is a swindle! Logic says we should share this primal resource equally among all. But we do not; a few are in possession, and everyone else has to compete to obtain the “surplus” that is not really a surplus. This is the irrational part of this economic divide. It is often defended with law, force and constant threat. It is often fought over for resources therein with very expensive and heavily ecologically damaging wars. Thus, the demand for this fixed “surplus” causes speculation and the creation of fictitious value. Irrational logic and fictitious value merge as one enforced by war, which in itself is highly profitable. War in the eye of the conqueror is purely logical as they seek to fulfil their acquisitiveness, but irrational in the larger context in the destruction of resources, nature and innocent lives.

It is also true in all other sectors of the economy, especially where there is a desire for profit making under the capitalist system of continual growth and progress. When food is produced in a bumper crop and a crisis of over production results, prices fall and profit is lost. A lot more has to be sold to get much less profit. To a capitalist business venture, this is disastrous. Often the solution is to either get the government to subsidize the falling price to maintain profit, or to destroy the surplus to keep prices stable and maintain the profit margin. Simple logic tells us that we should feed the poor and hungry with the surplus and put some aside for lean times. But the lust to maintain profits means that there are “no markets” and surpluses have to be destroyed. This is the irrational side of this economy. There is a market, but it is the hungry poor people market of the excluded from the economy. Their need for food is as real as the active market, but it is ignored unless somehow they can obtain the ultimate symbol of the fictitious, script money. The same idea holds for any other surplus. Crises of over production are usually handled irrationally. Instead of considering the various possibilities of production, immediate profit is usually the only consideration. Future concerns “will take care of themselves when we get there” is the mindset in this scenario.

Continual growth and progress in a closed ecosystem of the Earth is irrational, yet that is what the capitalist mode of production and profit making demands. It approaches the closed ecosystem as if it were infinite in expanse and capable of limitless growth. Thus we have discovered things like exceeding the carrying capacity and the tipping point of the ecosystem, where things change irrevocably or collapse outright. When there is no more growth allowed because the entire ecosystem and/or market has been tapped out, capitalism reaches a point of closure which runs counter to the survival instinct of the capitalist “owner of the means of production”. At this point, value production and profit degenerates into corrupt practices such as lying about the real value of a corporation and shares therein. The emotional desire to maintain profits at all costs invokes irrationally in order to maintain and compound fictitious value that now forms the basis of growth and profit making. Lies mount and many unwary people are swindled.

In 1981, Reagan deregulated the economy that allowed for plenty of “fixes” in order for bankers and his business backers to create ever more profit in a reality that could no longer support real growth. This was financed on debts and speculation that came to be known as the casino economy. The result ended in the economic collapse of Sept.-Oct. 2008 that saw remarkable events. These include massive unemployment and loss of homes and a shrinking industrial nation's economy. At the same time, the developing Asian economy grew in leaps and bounds, because costs and controls were cut to the bone. Added to this are false flag operations, such as Weapons of Mass Destruction (WMD) in Iraq that are now argued by the state as being fictitious and just a means to whip up war fever. Added to this, there is now open speculation that the war in Iraq is for oil and speculative bidding. At last report, a Russian oil magnate won the bid and now “owns” the Iraq oil fields in question. These are no longer issues of the “fringe” and lunatics, but of people within the capitalist state and media itself. If then the war in Iraq is based on a false flag, is fictitious and thus irrational, then what of the attack of Sept. 11Th, 2001 on the World Trade Center that led to the “war on terror” and the destruction of civil rights under the Patriot Act, the Homeland Securities Act and the end of Habeus Corpus? A growing number of people and professionals now consider 9-11 a false flag and it is far from the first. Thus war hysteria was whipped up over a lie that is costing more lives and has costing about $700 billion to fund.

There was a fix to all of this by way of bail out money in 2009; funds printed out for government distribution by the privately owned Federal Reserve Bank in bailouts to major banks and big business. The working people got massive lay offs and inflation simultaneously. At the close of 2009, many got their last government benefits by way of unemployment insurance and now face the mean streets as an emerging mass of homeless in the millions. Inflation driven by wage increases was thus proved another lie. The manufacture of more script devalued the script money in circulation. It only appeared to be an increase in value but was fictitious by virtue of a massive increase in debt combined with devaluation. This fix was “drawn out of thin air” and had no basis in real value. That is yet to come from the unemployed masses. Irrational logic and fictitious value combined once more. For capitalism that cannot envisage its own death, this is a formula for its own demise though the struggle continues ever more desperately to survive.