The Paper Economy
by David T. Bazelon
Random House, $6.95
The American economy has changed drastically in recent decades: the population has expanded greatly; the labor force increasingly favors white-collar occupations over traditional factory work; automation makes possible greater production, but means fewer jobs; and a fifth of our society barely manages to meet its minimum needs.
Why have we drifted into this situation? It is David Bazelon’s challenging thesis that much of our trouble stems from the traditional confusion between making goods and making money. As Thorstein Veblen demonstrated seventy-four years ago, there is no necessary agreement between the two objectives. Our industrial system has the capacity to provide the material means for a good life, but our economic structure has never made full use of this capacity. Even today the difference between what we can produce and what we do produce amounts to $1,000 per person, or roughly $185 billion a year.
The major concern of those who control our industrial plant is money, and money can be gained in ways that have little to do with moving products along the assembly line and on to consumers. Instead there are available to “industrialists” a variety of financial techniques which they can manipulate to extract new money from old money without necessarily adding to the country’s real wealth: this is what David Bazelon calls the “Paper Economy.” This is the system by which the corporate elite—the managers of our technology—lives.
The paper economy, simply enough, is that complex of pyramided values on which corporations, banks, investment trusts, stockbrokers and finance companies subsist. In this world a two-point rise in the market creates the same sense of satisfaction that marijuana creates in another. These men hunger for money, but not, as Bazelon puts it, the money that buys a pack of cigarettes or builds the factory that makes the cigarettes, but for “pure” money, money that buys other money but that will never be spent for anything else. Thus money in the traditional sense, as a medium of exchange, becomes less important than money as a standard of deferred payment, for it is the latter which is vital to a society always looking toward greater accretions in future paper values. As this high aim is attained, the paper economy tends to make gold and other forms of standard money redundant.
Why this absurd situation in which fiction is substituted for reality? Bazelon turns to the idea of property in our time and reveals with stunning clarity the alterations that have taken place in its structure. Before the Civil War, and before corporations began to fill the economic landscape, property corresponded to things—to corporeal objects, as the lawyers might say. In the colonial period and through the age of Jackson such property guaranteed freedom and independence, for you couldn’t knock a man down or deny him the right to vote if he owned a horse and a homestead. But with the rise of the corporation property and ownership split apart. The discovery of the …