Held in Reserve

Modern economic analysis tells us that there is no savings (no reserve) because we are a consumer society.

The value of the prudent regulator is objectively identified by modern economics primarily as a consumer--a spender rather than a saver making enough money to hold value in reserve. Instead, the missing value is held, and measured, in the form of personal wealth--private property possessed by the upper class who, as consumers, provide income on demand for the lower class who, as labor on demand, do not, for the most part, make enough to save for investment, or prudently regulate.

Measuring value as a consumer implies that labor is value derived from capital (consumed on demand) rather than capital derived from labor. Regarding labor as an integral value implies class warfare, and that, as reactionaries are quick to posit, is a moral hazard that threatens civil order.

(Here we discover how power is structured with consumer demand, which according to free-market economics rules civil society with the consent of the governed. Power is modeled with a demand dimension to build an elite power structure--filled with the best and the brightest--that appears to have the pluralistic legitimacy of a popular consent.

The on-demand dimension is a means for elite recruitment. With labor value dependant on discretionary income, which is governance by consent, the capacity of the upper class to demand its value is, well, consumer driven. It is consumer-driven governance by elite consent. Class mobility, loyalty, and compensation of upper-class laborers, like the big salaries and bonuses of corporate CEO's, is value derived from consumer demand.)

In order to maintain civil society (by consent of the governed from the top down), labor value (wages and salaries paid to demand products and services produced by investment of capital) is value (neo-classically derived) to be minimized by highly technical, bureaucratic processes and authorities (like the Federal Reserve and the investment-banking system). Through these highly structured processes and authorities, labor value is minimized. It is value held in reserve and administered with minimal, if not inscrutable, accountability, except, of course, what is demanded from the top down. It is value minimized, except when recruiting the labor to minimize the value.

Labor, primarily valued as either consumed or not consumed to produce savings, is value deliberately minimized to exact detriment. The exception is, of course, elite recruitment. In that case, labor value is maximized with a class identity that is typically anti-labor and pro-consumer since that is what the upper class, with the power of discretionary spending, demands.

Value demanded from the top down is, you see, value held in reserve, which according to reactionary philosophy of risk management is our civilized "identity" (as Ayn Rand would describe it, for example). So, demand from the bottom up is uncivil behavior--it is class warfare.

In order to secure civil society, it is necessary, conservatives maintain, to minimize labor value with large, reactionary, political structures (like large, economy-of-scale corporates) from the top down. Economies of scale effectively control the ability to demand investment, or the ability to prudently regulate (the missing value we call "savings"--the private property classically referred to as "the means of production," or capital investment). Without labor value being fully included in the capital invested, however, the result, as we see time and time again, is deficient demand--economic contraction, or what is classically described as "overproduction."

We no longer refer to overproduction because it smacks of Marxist analysis, which is classical economics. No, we use neo-classical analysis in which the way things are (Rand's objective reality) is "on demand"--by popular consent (the empirical means of the prudent regulator that ensures civil society with productive capacity through private ownership of the means of production). The more savings labor has, the more it owns the means of production and profits from the capital invested in the form of income that is "the wealth of the nation."

Hence, capitalism resists the value of labor (the empirical value of free-market economics) at all cost and clearly (objectively) identifies the classical risk proportion we neo-classically derive. If the value of labor is not systematically reduced (consolidated, or marginally compressed, through the business cycle), the surplus value (the labor-saving means of production) will not distribute to the upper class.

According to conservatives, if surplus value (labor savings) does not distribute to the upper class (and cause overproduction, what they refer to as "adding supply"), the result will be civil disorder--kind of like we see now with worldwide protests but, ironically, without the distribution (the savings) reactionaries predict will cause it.

It is important to understand that labor-saving capital investments are used to reduce the value of labor and increase the profit margin. The demand reduction that occurs--overproduction--results in what modern, business analysts call "margin compression."

While it may not be readily apparent, when analysts refer to margin compression, they are referring to the measure of labor-saving value that did not accrue to labor, which is the systemic risk--the quantum value--demanded and consumed in dark markets with devices called "derivatives." The value derived, you see, is not the value consumed by labor, which is what Marx and other classical economists referred to as "surplus value."

Value held in surplus--in reserve--is then used to demand consumption of the risk which is systemically endowed with labor savings. When Bain Capital, for example, buys an existing firm with what is called a "leveraged buyout," loads it with debt, lays off employees, and deducts the interest on the debt from its taxable income, equity is being transformed into debt with the assistance of public finance. Labor equity is effectively swapped for risk which is then hidden in dark markets. In the dark, the value is swapped even more, rather than invested to expand the economy. The economy then contracts and the money borrowed has thus been used to gain a profit by causing loss in the form of a "default swap."

When the savings is consolidated into risk-value--the gamma-risk proportion that is detrimental to everybody--the value ultimately consumed is a dead-weight loss. The result of this risk-value is, predictably, civil unrest, with warfare being the scenario in the worst case.

The loss, as Marx explained, for example, is to be expected of capitalism. So when we hear neo-conservatives denouncing as Marxist any call for a more adequate distribution of wealth, while at the same time marching our forces off to war, they stupidly confirm what is so vehemently denounced--something that is characteristic of power that is too consolidated.

The risk of loss is fully assumed in priority, it's just a matter of when, but by ensuring a free market in priority, the labor savings--the gamma-risk proportion--goes from catastrophic detriment to an overwhelming benefit that accrues to everyone. We go from a philosophy of privation that demonstrates power from the top down to a philosophy of privatization from the bottom up that is neither deprivationally Marxist or capitalist with value held in reserve. That is, value that is "savings and investment" does not result in demand reduction because it accrues to labor in the form of integral rather than derivative value, which is exactly what capitalists do not want and thus falsely attribute the detriment of minimizing labor value (demand reduction that is classic "overproduction") to "the paradox of thrift." By not reducing labor value to its derivative consumption, the paradox "naturally" resolves.

The more the value of labor is reduced, the more capital is available for investment. So, mistakenly, we are always engineering markets to accommodate capital and investment strategies, like free-trade agreements that serve as accoucheur for global economic development and ever-larger economies of scale, to reduce the value of labor.

While minimizing the value of labor is supposed to increase supply and reduce consumer prices to the benefit of consumer demand, the result is a demand deficiency that expresses as a liquidity crisis (insufficient income to demand the supply to be consumed). The neoteric, economic measure of integral value (consumer demand) results in the classic crisis of overproduction, which is the opportunity to consolidate assets, wealth, and power.

With opportunity comes risk. So, the more frequently we cycle into recession, the more wealth and power can be consolidated over time (and the more risk is consolidated and packed into the policy space that governs the crisis proportion, like central banking, which manages the surplused value--consumer value in the form of capital--held in reserve). With higher frequency, the policy space that governs the risk becomes saturated with the selfish imprudence of capitalism rather than the self-interest of the prudent regulator. Value that derives from a free market--providing a sufficient, fully legitimate, peaceful and prosperous, income distribution (wages and salaries paid)--is insufficient to demand it. The value demanded and consumed, then, is debt, which depletes savings (the ability to pay the debt) and results in liquidity crises.

The ability to pay the debt is fully liquidated, or at least liquidated enough that the only funding available to pay the principle and interest are those who own the debt and thus are not expected to pay it. This is what capitalism is...this is what it is expected to do: liquidate equity (the ability to pay--the reward) into debt (the inability to pay--the risk that is integral to, but at the same time derives from, the reward). The lack of payment is "the risk"--the risk of default which, neo-classically, is swapped to hide the extension of the risk proportion until it reaches a critical mass within the policy space (the risk goes gamma). If the mass is not deconsolidated its reactionary tendency becomes critical (a gamma burst--the fully assumed risk of loss--will consume the consumers). The natural condition is indeed, as Nietzsche says, well beyond our notions of good and evil.

Nature doesn't care about the right ideology, it just does what comes naturally. Doing the right thing is left up to us, it's called "free will." The consequences experienced (the empirical value of what we freely will or will not do), consciously enjoyed or suffered, is the measurable difference between good and evil (Keep in mind, detrimental value derived and hidden in the future, with the risk of loss fully assumed in priority, or held in reserve, is not a function of probability that exculpates the risk by misattributing it to the "objective," natural order of things. It is a function of ignorance and full-blown stupidity--psychosis of consolidated power that regards a consensual critique of fundamental misattributions as insubordination).

The power to avoid self-consumption (self-determination) is being held in reserve. It is intentionally alienated, technically "sequestered," from its prudent regulation, depriving us of the direct accountability (the wisdom, the power, and the providence) that comes with the empirical confirmation of a popular consent (what ensuring a free market provides in priority). We have the power to self-determine if we deconsolidate its critical mass and unleash the power of the prudent regulator...what the free market is, and what capitalism obviously is not.

To control the impending reaction, "We" need to actively seek risk instead of hiding from it...what holding it in reserve (allowing for its continued accumulation) will not do because that is what it cannot do.

By occupying the critical policy space, in which the "critical mass" (popular consent) naturally exists, "We the People" can turn the moral hazard of selfishness into the peaceful prosperity of self-interest, prudently regulated by the freedom to choose in a free and open market where opportunity is created for ourselves, independent of the so-called "job creators."