A visitor from before the 20th century would be stunned to see the extent to which the world is now dominated by materialism. It has many dimensions.
One is scientific materialism — considering everything, including the human mind, to be just matter. Another is financial materialism, assuming money to be what defines everything else.
That visitor from an earlier time would be stunned to see how much we understand the world using monetary measures. Finance has come to be considered the first reality, not defined by, or reflecting, reality. The cart has been put before the horse.
To see how this creates distortions, consider the measure Gross Domestic Product (GDP) which is taken to be a reliable measure of national wellbeing. GDP is a measure of transactions, how fast money changes hands. It is not a measure of quality of life. For instance, there tends to be an increase in GDP whenever there is a natural disaster because more money changes hands to pay for repairing the damage. A disaster does not improve quality of life.
GDP does not address health, crime, poverty, family breakdown, the state of the environment or the state of civil society. It also does not measure the effect of technological innovation, which is what has the greatest impact on quality of life.
Some of the technology now available in a car, for instance, would have been extremely expensive 30 years ago, if it was even available. That technological advance does not appear in the price, however, because the car companies absorb any cost because it is the price of being in business. It means the technical advance does not appear in the monetary exchanges.
The massive efficiencies produced by technology over the last few decades tend not to be measured in the monetary system. For example, in the 1950s, to be a poor child often meant your parents could not afford to buy you shoes. To be poor now rarely means that, because, as with most consumer goods, the cost of production has plummeted. Those efficiency gains are not evident in the transactions.
“We are being imprisoned by our own creation, and those who control the system, financiers, increasingly rule us.”
Another instance of how financial materialism distorts our view of the world is the claim that the poor in some countries live on less than five dollars a day. What this indicates is that the poor in these countries are outside the monetary system; in a developed country it would be impossible to live on such a small income. In less developed countries, much of the economic activity does not appear as a transaction. That does not mean it does not exist.
The situation in developing economies would be closer to the experience of our visitor from another century. Most of the economic activities that our time traveller would have seen would not have been subject to transactions.
According to Geoff Mulgan in Connexity, at the end of the 20th century, 90 per cent of the world’s population lived within a market system, compared with only 40 per cent in the 1970s and ten to 15 per cent at the end of the 19th century. In Japan in the 1860s only five per cent of the population was engaged in wage employment; now the majority of the working population conducts its activities within the transactional system.
Rampant financial materialism has not just led to a distorted and unhealthy view of what is valuable and what matters in society. It is leading us into a trap of our own making. The financial system is a human creation, artifice. By allowing the artifice to be considered reality and relegating actual reality to a subordinate position, a situation not unlike that depicted in the film The Matrix is being created. We are being imprisoned by our own creation, and those who control the system, financiers, increasingly rule us.
There also is a crossover with scientific materialism. Finance is based on mathematics, which is becoming dizzingly complex. From the 1990s it was the mathematics of risk pricing, which led to the creation of a massive pool of derivatives (US$700 trillion of money ‘derived’ from conventional transactions) and the global financial crisis.
The next step has been the complex mathematics that underpins Bitcoin. It has meant that finance increasingly looks like physics — another illusion because human behaviour is never as predictable as the physical universe.
The result is that we are mired in a matrix of materialism. One is reminded of Morpheus’ line: ‘The Matrix is everywhere. It is all around us. Even now, in this very room … It is the world that has been pulled over your eyes to blind you from the truth.’
This article first appeared in Eureka Street on 26 January 2018