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Economy
Related: About this forumThe Great Divorce: Finance and Economy
http://www.cadmusjournal.org/article/issue-4/great-divorce-finance-and-economySocial networking did not begin with the Internet. It is as old as human history. For what we now call social networking is really the evolution of human relationships which constitute the backbone of civilization. The emergence of the Internet is the third giant leap forward in a saga that began with the development of symbolic spoken language, the first great instrument that enabled human beings to evolve beyond their animal ancestry. Second came the invention of money as a symbol of value. Language connects people and facilitates the exchange of information, emotions and ideas. Money connects activities and events, facilitating the exchange of goods, services, property and anything else of social value. The progress of humanity over the past two millennia would have been inconceivable without this remarkable invention. But like all human inventions, money has a downside which arises from the inevitable tendency of we human beings to bind ourselves to the wheel of our own triumphant machinery and be conquered by our apparatus.
Today, we are witnessing the consequences of that great invention wreaking havoc on the very fabric and stability of civilization, of humanity passively surrendered and blindly subordinated to its own creation. That which was intended to serve humanity now dictates. That which was intended to promote prosperity now undermines it. That which was intended to liberate human beings from the bondage of physical dependence, now robs people of the fundamental freedom to pursue a sustainable livelihood. At the root of the current crisis are not subprime mortgages, credit rating agencies, financial institutions or central banks. It is the Great Divorce between finance and economy, which is a subset of the widening precipice between economy and human welfare, between money value and the value of human beings. So great a divorce could well give birth to a great depression.
The question boils down to what is the purpose of financial markets? Why did we create them? Why do we have them? Why do we need them? Financial markets were founded a few centuries ago to support the growth of joint stock European trading companies, whose capital requirements for development of new markets far exceeded the personal wealth of their proprietors. Instead of borrowing for interest, these proprietors invited other investors to risk their capital and share in the rewards of successful entrepreneurship. Thus was born the forerunner of the modern, widely-held, publically-traded, professionally-managed corporation. As commerce and industry developed and prosperity grew, more and more ordinary people had an opportunity to invest their savings to share in the ownership and profits of huge productive enterprises. The financial market became capitalisms answer to communism. Instead of everyone being equally poor by distributing limited wealth equally, all had an opportunity to become equally rich by sharing in the gains of industrialization and real economic growth.
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