Science As Seed Corn
How the Entire Capitalist System Depends on Science for Growth
Overview
The past several System Failure essays have focused on the ideological genesis of science, because science plays a critical role in the capitalist economic system that arose and replaced the feudal economic system of the Middle Ages.
The Roman economic system was based on slavery. Most work was accomplished by masters and slaves in those days. But after the Fall of Rome, Europeans began working primarily as lords and peasants in a feudal economic system. After the Protestant Reformation, that system was replaced in turn by capitalism, where the bulk of the work is done by employers and employees.
Capitalism is still the predominant economic system in our own time. But it’s getting long-in-the-tooth. Capitalism requires constant growth to avoid collapse, and for 300 years that growth has come from science in the form of technology. Tech creates occasions for investment either by making old processes more efficient, or by opening up whole new markets that didn’t previously exist.
But not even science can provide enough miracles to fuel infinite economic growth…
Introduction
As Bankers rose to fill the void left by the Popes at the highest levels of international geopolitics, their new capitalist economic system was built around science as the source of the growth that it relies upon for stability. But not even science can produce infinite miracles. The growth engine that powers capitalism has stalled in the 21st Century, setting us up for another date with destiny like the Fall of Rome or the Protestant Reformation.
Bankers
So far, all human economies have been pyramid-shaped. Wealth “trickles up” these pyramids from powerless masses at the bottom, through privileged intermediaries in the middle, to powerful minorities at the top.
In the days of the Roman Empire, Caesars occupied the top of the economic pyramid. After the Fall of Rome, during the Middle Ages, the Popes took over that spot. In 1694—after the Protestant Reformation severely curtailed the power of the papacy—banks stepped into the power vacuum left by the Popes and assumed the top position of our modern economic pyramid.
A few short decades after the Protestant Reformation, the Bank of England popped up in London and started issuing bank notes, or IOU’s for gold and silver. Since they were much easier to carry than the heavy metals they represented, these paper notes became immensely popular. Before long, much English commerce was conducted with paper notes, and the Bank of England was well on it’s way to establishing a national monopoly on the creation of currency.
Because they could manufacture the money everybody was using, Bankers soon realized they could loan out much more money than they actually held in deposits. All they had to do was print up fresh paper notes for their loan customers, and then sit back and collect the interest. This realization was the birth of Fractional Reserve Banking.
Entrepreneurs
Entrepreneurs form the middle layer of our modern economic pyramid. They take out loans from banks, and repay those loans by bringing goods and services to market. Entrepreneurs are the economic intermediaries between the Bankers at the top of our pyramid, and the rest of us who comprise the base.
Entrepreneurs must always return more money to the bank than they initially borrowed. That’s the interest on the loan. Banks are enfranchised into the commercial activities of entrepreneurs because they get a cut of the money made by people who take out business loans.
Those of us who inhabit the bottom of the economic pyramid—the vast majority of us—have several entities above us who are entitled to a cut of our labor. If you hire a landscaping service, for example, the 16-year-old kid who shows up to mow your lawn only keeps a fraction of the price you pay. There are at least two people above him in the pyramid who are entitled to tribute. The owner of the landscaping business gets a share of the profit. And so does the bank who granted the loan to that entrepreneur.
When banks issue loans, they expect not just the return of the principal amount but also additional interest. This creates a perpetual cycle where more money is owed than exists, compelling entrepreneurs and their employees to generate ever-increasing wealth to cover these obligations.
Without continuous growth, the system risks collapse, as debts cannot be repaid and the flow of money through the pyramid falters. This inherent need for expansion is what fuels our relentless drive for economic growth.
Scientists
For three centuries the economic growth required to maintain the stability of our economy has come from science. Fresh scientific innovation is brought to market by entrepreneurs in the form of labor-saving technology. That’s the Industrial Revolution in a nutshell.
Since 1694, Fractional Reserve Banking has systematically created more debt than currency. But it hasn’t mattered because the size of economy has grown apace. So long as the size of the overall economic pie keeps increasing, we can afford to pay our dues to those situated above us in the economic pyramid.
But nothing can grow forever. Not even science can churn out enough miracles to keep the economy growing at 3% per year. Eventually, any economic model predicated on infinite growth can no longer represent a real-world of finite resources.
During the first half of the 20th Century, science made new discoveries at a dizzying rate. A mere 66 years elapsed between the first flight of the Wright brothers and the first human footsteps on the moon. The earth-shattering discoveries of relativity, nuclear energy, and the structure of the human genome were all made during that window.
But science hasn’t been able to keep up this frantic rate of discovery. That’s partly because of the built-in limits of its ideology, and partly because we’ve already harvested all the low-hanging scientific fruit. The 50 years since Apollo have been considerably less revolutionary—in terms of new discoveries—than the 50 years preceding it. The growth engine that once purred efficiently under the hood of capitalism is now choking and sputtering.
As a result, it’s becoming harder and harder to service dues to those above us in the economic pyramid. Fractional Reserve Lending is systematically creating more debt than currency—as it always has—but we can longer grow our way past that problem. Bad debts are accumulating in every nook and cranny of the economy.
In 2008, these bad debts blew up the global financial system. We bought time by allowing the Federal Reserve to print trillions of dollars to buy those bad debts at face value. Bankers were thus saved from having to write down that bad debt on their balance sheets. But all that money printing deranged the prices of assets like stocks and real estate, placing home ownership out of reach for an entire generation.
All that money printing was was euphemistically branded as “quantitative easing”. But of course it did absolutely nothing to address the underlying problem of faltering growth in our 1694-vintage economic system. Our ship has already struck the iceberg; we’re now in the tense aftermath, in which the true scope of a mounting disaster gradually becomes clear to all those involved.
Conclusion
Science is the seed corn of capitalism. Our economic system is comprised of layers of financial obligations that evolved under conditions of constant economic growth. But those conditions are now changing; science is no longer providing capitalism with fresh technologies that create new economic efficiencies and open up new frontiers for growth. Because capitalism is inextricably linked to Fractional Reserve Banking practices, the layers of financial obligations that are the structure of our economic system are becoming impossible to service.
Further Materials
The YouTube videos linked below expand on the problems of science, growth, and capitalism by drilling down on the epidemic of fakery that’s consuming our growth-starved economy. You won’t regret watching them!