The Make-Nothing Economy

An interesting statistic from the socialist Monthly Review:

Indeed, since the 1970s we have witnessed what Kari Polanyi Levitt appropriately called “The Great Financialization.”6 Financialization can be defined as the long-run shift in the center of gravity of the capitalist economy from production to finance. This change has been reflected in every aspect of the economy, including: (1) increasing financial profits as a share of total profits; (2) rising debt relative to GDP; (3) the growth of FIRE (finance, insurance, and real estate) as a share of national income; (4) the proliferation of exotic and opaque financial instruments; and (5) the expanding role of financial bubbles.7 In 1957 manufacturing accounted for 27 percent of U.S. GDP, while FIRE accounted for only 13 percent. By 2008 the relationship had reversed, with the share of manufacturing dropping to 12 percent and FIRE rising to 20 percent.8 Even with the setback of the Great Financial Crisis, there is every indication that this general trend to financialization of the economy is continuing, with neoliberal economic policy aiding and abetting it at every turn. The question therefore becomes: How is such an inversion of the roles of production and finance to be explained?

The financial sector has grown at an unsustainable pace.  Meanwhile, the rest of the economy has seen lower wages and higher debts.  This doesn't work.  Henry Ford realized that his workers needed to be able to afford the cars they were building.  Why don't executives realize that today?  A little bit more:

We can picture this dialectic of production and finance, following Hyman Minsky, in terms of the existence of two different pricing structures in the modern economy: (1) the pricing of current real output, and (2) the pricing of financial (and real estate) assets. More and more, the speculative asset-pricing structure, related to the inflation (or deflation) of paper titles to wealth, has come to hold sway over the “real” pricing structure associated with output (GDP).23 Hence, money capital that could be used for accumulation (assuming the existence of profitable investment outlets) within the economic base is frequently diverted into M-M′, i.e., speculation in asset prices.24 Insofar as this has taken the form of a long-term trend, the result has been a major structural change in the capitalist economy.
Viewed from this general standpoint, financial bubbles can be designated as short periods of extraordinarily rapid asset-price inflation within the financial superstructure of the economy—overshooting growth in the underlying productive base. In contrast, financialization represents a much longer tendency toward the expansion of the size and importance of the financial superstructure in relation to the economic base, occurring over decades. “The final decades of the twentieth century,” Jan Toporowski (professor of economics at the University of London) observed in The End of Finance, “have seen the emergence of an era of finance that is the greatest since the 1890s and 1900s and, in terms of the values turned over in securities markets, the greatest era of finance in history. By ‘era of finance’ is meant a period of history in which finance…takes over from the industrial entrepreneur the leading role in capitalist development.”

In other words, the job creators aren't around.  What we have are a bunch of speculators making imaginary money on nonproductive activites, and keeping more for themselves to plow back into those "investments."  Don't buy the job creator bullshit, the bubble pumpers are in charge.