> [!summary] Progressive Summary > The book is a devastating critique of "capital bias", the way our world is centered around the need to maximise and protect capital at all costs. Corporations are seen as "objects" to be owned, rather than communities of workers. Their sole aim is to maximise profit, and decrease expense (mostly wages). Armies of professionals are imbued with a fiduciary duty, a sacred obligation, to protect capital. # Structured Notes ## Definitions ## Chapter Summaries ### Chapter 3 - Naming Shapes Reality: Wealth Supremacy and Capital Bias [[Ecogather newsletter on language - 15 May 2024]] the feudal meaning of "privileges" referred to the legal rights of the aristocracy that were unavailable to others, such as the right of a hunting party to trample peasants' crops, while commoners weren't allowed to hunt on their own land much of "investing" is really "extracting", for example when private equity invests in firms in order to strip them of their assets [[A secretive legal system lets fossil fuel investors sue countries over policies to keep oil and gas in the ground – podcast]] ISDS - Investor State Dispute Settlement under the Energy Charter Treaty (ECT) After Italy banned new coastal oil drilling, the UK oil company Rockhopper sued the Italian government for the loss of “future anticipated profits.” The government was forced to pay the firm 190 million euros — 9 times the amount the firm invested in the blocked project. - https://caneurope.org/outrage-as-italy-ordered-to-pay-out-millions-to-oil-investor-over-energy-charter-treaty-claim/ Marjorie Kelly went to a meeting of the Social Investing Forum in 1989, when there was a total of 16 attendees around one conference table. This is a precursor of ESG, a field that will exceed $50 trillion in assets by 2025. - https://www.bloomberg.com/company/press/esg-assets-rising-to-50-trillion-will-reshape-140-5-trillion-of-global-aum-by-2025-finds-bloomberg-intelligence/ https://www.bloomberg.com/news/audio/2021-12-10/the-esg-mirage-podcast - largest ESG rating company doesn't try to measure the impact of a corporation on the world - it measures whether the world might mess with its bottom line - sustainable investing is really about sustaining corporations ### Chapter 4 - Calling Out the Deep Forces at Work > When our goal is to remedy racial injustice, we can’t effectively aid these farmers by solving only for racial bias while leaving capital bias intact. > > Martin Luther King Jr. came to this realization as, late in his life, he began planning his Poor People’s Campaign, widening his concern to embrace economic injustice for all the dispossessed. In a dialogue with Harry Belafonte, he expressed confidence about winning the battle for integration. But without transforming the broader economic system, he said he feared “I am integrating my people into a burning house.” This is the same argument in [[Reference Notes/Teaching at Twilight|Teaching at Twilight]] which says that educators must go beyond saving their students. Otherwise, the students would just be sent off into a burning house. ### Chapter 5 - No Amount of Wealth is Ever Enough: The Myth of Maximizing ### Chapter 6 - Expanding Wealth is a Sacred Obligation: The Myth of Fiduciary Duty > Wealth today shapes society and the planet with its relentless extraction, yet that wealth—in its anonymized, institutionalized form, which today is its virtually universal form—is governed by fiduciaries. Their duties are now in many ways the ruling force of the system. > If we inquire why fiduciary duties evoke a kind of awe, the reason seems to be that in the Western tradition, property rights are considered sacred. Property rights are the deep, untouchable source of conservative power—the sanctuary of law and tradition that for millennia protected the monarchy and aristocracy, the sanctuary of fiduciary duty where the Stephen Schwarzmans of our time stand as high priests. > In the eighteenth century, Edmund Burke valorized the social order where the propertied class holds highest place, for as he put it, “the property of the nation is the nation.” The power to perpetuate property is “that which tends the most to the perpetuation of society itself.” This social order is protected, he wrote, by “the great primeval contract of eternal society” that binds posterity “to the end of time.” Retain a “potent monarchy” and a “spirited nobility,” Burke wrote, and you will have “a protected, satisfied, laborious, and obedient people.” > The laws of property Burke revered were harsh. A peasant caught stealing a sheep could be executed. Slaves were brutalized and worked to death, children torn from mothers and sold. The poor were held in contempt. In some parishes, paupers were treated as livestock, twenty men drawing wagons while harnessed together. Property in that world, said British legal theorist William Blackstone, conferred on the owner “sole and despotic dominion.” A terrifying phrase if ever there was one. > > Today, the monarchy is largely gone. What remains of Burke’s world is its notion of property. > If we feel a kind of confusion, disorientation, and fear around questioning the rules of fiduciary duty—a fog of miasma, where change feels murky, impossible, unwise—it is a signal we have entered the predemocratic mind. It is a mind where political judgments are disguised, submerged. “Value, not values.” It is a world not designed to be changed. An eternal social order we are severely warned against questioning. ### Chapter 8 - Workers Are Not Members of the Corporation: The Myths of Corporate Governance and the Income Statement > [!NOTE] The Myth of Corporate Governance > Workers are not members of corporations. Membership is reserved for capital owners, while workers are disenfranchised and dispossessed. > Privilege in the predemocratic world intertwined bias based on race, sex, and property. Of the three, only property bias, capital bias, today remains legal—indeed, mandatory. > [!NOTE] The Myth of the Income Statement > Income to capital ("profit") is always to be increased, while income to labor ("expense") is always to be decreased. These are implicit rules of the income statement. Marjorie Kelly uses the language of war. She says that "capital is at war against workers". ### Chapter 9 - Ecological and Societal Damages Are Not Real: The Myth of Materiality > [!NOTE] The Myth of Materiality > Gains to capital are real (“material”), while social and environmental damages are not real (not material), except to the extent they affect capital. This is among the rules of corporate and financial accounting. > The rules of accounting say materiality is about what’s important enough to be included in—and what can be omitted from—a financial statement. Due to international pressure, some 1500 institutional investors with $40 trillion in assets have committed to fossil fuel divestment. Private equity firms are buying up those dirty assets. Private equity firms are now the biggest emitters of greenhouse gases: - PE-backed Hilcorp is the biggest emitter of methane in the US, producing 50 percent more emissions than ExxonMobil. It bought polluting assets in Colorado and New Mexico from ConocoPhilips for $3 billion in 2017. It bought BP's dirty Alaska operations for $5.6 billion. - PE-backed firm Trans-Niger Oil and Gas bought a Nigerian oil field from Royal Dutch Shell in 2021, and planned to triple production. - KKR bought all of ConocoPhillips' drilling assets in Wyoming in 2020. Since 2010, private equity has. invested $1.1 trillion in energy deals - double the market value of Exxon, Chevron, and Royal Dutch Shell combined. Only 12 percent of the deals have been in renewable power. > The upshot is that some of the most irresponsible emitters of greenhouse gases are shifting into the shadows, operating with minimal public scrutiny, with no comprehensive disclosure of either holdings or environmental impact. Half the money invested by PE firms comes from the pension funds of workers. Foundations like Ford held nearly $1 billion in PE investments in 2020. Harvard's $53 billion endowment fund was 34% aallocated to private equity, and 33% to hedge funds. Princeton allocated 42 percent to private equity. University of Michigan allocated 42 percent to private equity. ### Chapter 10 - The First Duty of Government Is to Protect Wealth: The Myth of the Free Market and Takings According to Quinn Slobodian in Globalists, neoliberalism "was both an ideology and a project to restore class power". Neoliberalists were upset by the waves of decolonisation and collective bargaining that arose in the aftermath of 5 revolutions (Ottoman, Chinese, Russian, Hapsburg, and Hohenzollern) and 2 world wars. They divided the world into the political and the economic. While politics was turning democratic, they sought to establish an "invisible economic empire" (as termed by economist Moritz Brown). They relied on John Locke's idea that the role of government was limited to providing security and protecting property rights. > Their borderless economic empire, Slobodian wrote, was one “in which the investor and the corporationand not the citizen or refugee—was the paradigmatic rights-bearing subject.” > What neoliberals envisioned was a utopia for capital. They were patient in its pursuit, not confining themselves to the politically possible. As Swiss economist Michael Heilperin wrote in 1947, we must “seek goals which may appear unattainable … until they have actually been reached.” For example, they wrote first drafts for international investment laws that seemed impossibly ideal for investors, yet ultimately became global norms. International investors gained power over national governments, using investor-state dispute-resolution mechanisms to sue and defeat laws that hindered profit taking. > In system design terms, it was through the infrastructure of the International Monetary Fund and the World Trade Organization that neoliberal policies were imposed on much of the world. Most remarkably, neoliberalism was adopted even by parties once on the left, including Democrat and Labour leaders like Jimmy Carter, Bill Clinton, Tony Blair, and even, to a depressing extent, Barack Obama, who after the 2008 meltdown bailed out banks while leaving government and homeowners to shoulder the losses. > [!NOTE] The Myth of the Free Market > Democracy is to be subdued, for it is the enemy of the independence and power of wealth. There shall be no limits on the field of action of corporations and capital. We call this a "free market". > The term free market—along with free trade and free enterprise—purports to show capitalism as the handmaiden of democracy, evoking that democratic value of freedom. In truth, the story of the birth of neoliberalism lays bare how the free market myth arose directly out of fear of democracy, as an effort to protect wealth from the policies a majority would choose. > [!NOTE] The Myth of Takings > The first duty of government is the protection of wealth. The US Constitution prohibits “takings” from the propertied elite, while that elite may take from others at will. > Protection against takings of property has a long pedigree in **British law**, which is the **root law for global capitalism**. This protection was asserted by barons on the field of Runnymede in 1215, as the king was forced to sign the Magna Carta, ensuring that land granted by the monarch became the permanent private property of the landed class, no longer subject to being retaken at the whim of the crown. > > Property law, in its origin, is the law of the possession of land, which is considered “real property,” or today, real estate. In agrarian society, land was the foundation on which the great estates of upper-class privilege stood. The law of land possession deeply shaped British society, infusing the British constitution to such an extent that the constitution at times seems, as Frederic William Maitland observed in his nineteenth-cen-tury Constitutional History of England, “but an appendix to the law of real property.” > Protection of property was vital to the founders of the United States as well. It was a concern they threaded through the US Constitution, as they sought to protect private property—including their own landed estates, their slaves and plantations—from takings by a politically empowered yet economically dispossessed majority. “The first object of government,” wrote James Madison in Federalist #10, is protection of the “diversity in the faculties of men, from which the rights of property originate.” In short, the first object of government is protection of property. > > Most egregiously, the Constitution protected property in slaves, prohibiting Congress from outlawing the Atlantic slave trade for twenty years; adding a fugitive slave clause requiring the return of runaway slaves; and empowering slave states through the chilling clause counting the enslaved as three-fifths of a person in political representation. > > Beyond slavery, protection of property was enshrined in the principle that only property owners could vote—a principle broadly embraced at the time, though not written into the federal Constitution because voting qualifications were delegated to the states. When the Constitution was written, for example, New York State limited voting to those with an estate of one hundred pounds. That meant that in 1790, only twelve hundred people out of a New York City population of thirty thousand possessed the wealth to vote. A landed aristocracy controlled elections > Deeply consequential for our own day was the design of the Senate and Electoral College, which insulated against direct majority rule and protected the disproportionate power of slaveholding states.²³ This was a conscious protection of wealth. During debates on the Constitution, Madison argued the Senate should be constituted so as to “protect the minority of the opulent against the majority.” > Certainly it’s vital to protect private property. No one who owns a house or land or a business would like to see it taken. There is wisdom in how the founders protected property, as in much that they did. > > But their view of taking is incomplete until we observe how they were blind to their own takings from others. The estates they jealously guarded stood on land taken from Native Americans. The African slaves they recognized as property were brutally taken from their homelands, their very bodies taken from their own control. > > The fear of takings by the wealthy tends to be a one-way fear. It fails to acknowledge how wealth often comes through taking from others. The British lord of the manor had always taken from the peasants. Brothers and husbands took the property of sisters and wives, who could own nothing. > Taking is a matter of perspective. It’s a matter of bias. And too often, taking is the essential action of our capital-centric property regime. > We see this in private equity buying up rental properties and raising rents. Corporations taking from workers the increases in productivity their labor creates. Hedge funds operating dirty fossil fuel assets, taking from the biosphere its ability to sustain life. > > From the perspective of capital, all of this isn’t taking. It’s “wealth creation.” > In essence, the free-market concept is a fig leaf. It’s an ideological shield, designed to protect the real action, which lies deeper, in the power of wealth, free and safe in its own invisible empire, where it remains infinitely hungry for more. Neoliberalism is the cheerleader of the machine of extraction. Wealth extraction is the real game. ### Chapter 11 - Extraction in the Extreme: How Financialization Drives Today's Crises > We lack the standard conceptual frames to help us grasp what’s really going on here. The significant activity in the system now falls outside customary measures like GDP. Even Thomas Piketty’s widely heralded Capital in the Twenty-First Century, cited in chapter 7, focused only on the capital income that shows up in GDP. But GDP is an inadequate measure for a financialized economy. Since 1980, the truly staggering upward leaps of wealth have come from elsewhere—from capital gains that remain “unrealized” (not cashed out): the gains in the asset prices of real estate, stocks, and bonds. > We still discuss capitalism as a system of production and consumption, and this may be how the system is justified, but it’s no longer how it functions. The system now drains income flows from production and consumption to support higher asset valuations. > With the world facing unprecedented crises and forms of collapse, with politically energized young people having voted en masse for socialists like Bernie Sanders and Jeremy Corbyn, with dispossessed people of color on the verge of coalescing into new democratic majorities, with climate change threatening the growth imperative built into capitalism—and with all of this occurring even as the shield of neoliberalism has begun to fray at the edgesnew approaches to wealth protection desperately needed to be found. > > The old neoliberal Röpke was right. To protect the wealth machine, it had become necessary to create authoritarian government. It had become necessary to eradicate rabies democratica ### Chapter 12 - A Society Half Plutocratic, Half Democratic: The Crisis of Democracy ### Chapter 13 - Breaking the Trance > The strongest power on earth, in the longer run, may not be extractive capital, that rickety set of overblown claims by a tiny elite that must relentlessly grow or collapse. Life, the planet—that’s the ultimate force, the force that flows through us, that is us, including our minds, our hearts, the force of us when we think together and act together to protect what we cherish. > > “Gaia is a system of wisdom, sharing, caring,” Kate said to me. “It’s much more egalitarian, it’s a community.” It’s a system much like democracy. > Corporations sell dirty assets, private equity buys them. Unions gain power, employment is disaggregated into Uberized bits. The various regulations and interventions we try, the system flows around them. > > Where the soul of the regime lives is in the idea of the regime. What’s in control is the paradigm of wealth extraction. > > Paradigms may seem harder to change than anything else, Meadows wrote. “But there’s nothing physical or expensive or even slow in the process of paradigm change,” she continued. “In a single individual it can happen in a millisecond. All it takes is a click in the mind, a falling of scales from eyes, a new way of seeing.” > > The place to begin to transform the extractive economy is at the level of our own mind. This is where we stop participating. This is where the system begins to lose its grip. This is where we begin to win. ### Chapter 14 - PRANKS, NEW NAMING, AND OTHER SUBVERSIVE ACTS: Helping Others to Awaken > Renaming helps us to see the water in which we swim. This is what feminists did in the 1970s with the invention of Ms., a neutral alternative to the traditional Mrs. and Miss, which identify women by their relationship to men. It’s happening in the abortion debate, with new terms like reproductive freedom, reproductive justice, and forced pregnancy—all of which reposition the dialogue in powerful ways. ### Chapter 15 - The Democratic Economy > In a new paradigm for the economy, the first right relationship is that between the political sphere and the economic sphere. It’s a vision of a democratic economy in support of a democratic polity. > > Investor rights no longer eclipse all other rights. Labor comes before capital, with worker income no longer a cost to be minimized. In the way debts are handled, there’s an imperative for non-humiliation and caring, not ruthlessness. ### Chapter 16 - Democratizing Finance ### Conclusion > THERE’S A REASON that wealth supremacycapital bias, property bias—has lagged behind other forms of bias in being recognized. The end of a property regime is the end of a way of life. The end of the property regime of slavery and plantations was the end of a way of life in the American South. The end of the property regime of imperialism was the end of an age. > > A way of life on our planet is ending. Whether we find our way out of the chaos to positive system change remains to be seen. > To continue its dominance, the centerless mind of capital extraction requires our acceptance of its normality, its legitimacy. We have the power to withhold that legitimacy. We have the power to see and name what’s really going on, and to call out the extractive system’s disastrous consequences. > > Solutions will shift and change. But once we understand the problem of wealth supremacy, we’ll be better able to chart our course through the turbulence ahead. There’s no guarantee of success. Not even a likelihood of success. But system change doesn’t start by asking: Is transformation possible? Instead we ask: Is it necessary? It’s here we begin. --- [Don Herzog](https://www.amazon.com/Don-Herzog/e/B001H6WZAO/ref=dp_byline_cont_ebooks_1) Poisoning the Minds of the Lower Orders --- The most important first step is to see clearly. Capital bias - our system is designed to favour capital A wealthy person has "high net worth". An income statement labels an addition to capital as a "profit", and addition to labour as an "expense". The goal of every company is to increase the former, and reduce the latter. Moral capitalism is as impossible as moral racism. Capitalism is a continuation of imperialism. Politics turned to democracy, but it's always under threat, because we never democratised the economy. Empires of the past were based on control of land. Since industrialisation, wealth has shifted to factories and capital. The new empires are portfolios of assets. Myth of maximization - no amount of wealth is never enough Wealth creation should actually be called wealth extraction. Portfolios continue to extract wealth long after people have died. Myth of fiduciary duty - sounds completely plausible and unquestionable - duty of care and loyalty - returns to capital matters, nothing else matters "Non-proliferation treaty for billionaires"! # Quotes > We live in capitalism. Its power seems inescapable. So did the divine right of kings. Any human power can be resisted and changed by human beings.   — URSULA K. LE GUIN