As 2021 begins, the stock markets are breaking records, analysts are turning out optimistic forecasts, and the vaccine euphoria, peace and Dubai can be heard from every device – while at the same time, in reality we are under a lockdown, poverty is worsening and things are falling apart.
It seems the most accurate term for describing these times is the one coined by the Austrian political economist Joseph Schumpeter in his work “The Theory of Economic Development” from 1934: “false prosperity.”
What is false prosperity? The camouflaging of an intrinsic crisis by the creation of a false illusion of prosperity – by printing money, for example. This is how those in power block the critical processes of inquiry and renewal that threaten it, and preserve the feeling that very soon everything will go back to what it was before. Like a dentist, who instead of carrying out root canal treatment just anesthetizes the tooth time after time, and sends the patient back on her way.
The condition of false prosperity, in which the state invests its resources in distorting reality instead of clear-headed inquiry, is a situation in which the liberal state de facto relinquishes its greatest advantage: the ability to renew, to change, and in practice devotes itself to preserving the power and interests of its own, at the expense of relevancy, and in doing so ultimately brings on its own disintegration.
It is important to emphasize that the courage to look reality in the eyes, understand the broken context in which we are living, the challenges it raises, the self-cannibalism that it demands from those who want to survive – this courage is almost unconnected to any specific socioeconomic viewpoint, or another – as much as it is possible today, from within the technological revolution, to speak in a socioeconomic language that was designed for the industrial revolution and its consequences. No real connection exists between the critical need for solidarity and support for those who are paying the price of the pandemic, and the present economic actions, which show no comprehensive plan for economic growth, and what motivates it is really the desire – whether conscious or unconscious – to obscure the realization that the present order has ended.
Anyone who thinks the crazy printing of dollars in the United States stems only from a desire to help the common people, does not understand the situation. To a great extent, later down the line when inflation rises – and “false prosperity,” no matter what everyone is saying today, almost by definition creates inflation – then those who “benefit” from this inflation will be the debt-ridden state, because the value of its debt will fall, and it is the people who will pay the price.
As has been written here time after time, the coronavirus is just the trigger. This is crucial to understand. Much more than the coronavirus has created reality, it has exposed it: The moment that human existence changes in a fundamental way, the order that organizes it, the theories, the story it tells, must be updated and change – economically, socially and politically.
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There is a good reason that no economic theory exists that explains the capital markets since 2008. Interest rates are zero for a reason. The rise of Bitcoin is first of all proof of this – and this text is not just an economic one. In our era, the market is the subconscious of the entire human consciousness. The lack of courage to take a close look at the present reality, the energy the old order is expending in distorting reality, its ignoring the context of these revolutionary times, of what it demands, the growing and deepening conflicts of interest between the people and the state, between price and value – all this is happening on a much broader plane than just the economic one. Even the celebrations of the vaccinations in Israel are a sort of “false prosperity.” Not because the vaccines won’t work, but because the problem is much deeper.
As Schumpeter writes in his work, a true recovery is only possible if “it comes of itself.” Any resurrection that results only from artificial means leaves part of what the economic depression must accomplish undone, and adds further undigested remnants of old incompatibilities and new incompatibilities, which will also require dismantling – so the economy is left facing an even more severe depression in the future. To a certain extent, this is the entire doctrine. What happened on Capitol Hill is just the beginning.