Capitalism is a magic trick. Through sleight of hand obfuscated by the charismatic voice and flourishes of the illusionist, the doubts as to the superiority of this economic system over any other possibility disappear. The illusionist reaches into his hat and pulls out the profit motive. The profit motive is the great and mysterious force that binds capitalism. An ethos of greed supposedly needed to incentivize people to work. The wage laborers work and work, but somehow the profits evade them. The illusionist opens the trap door and there are the workers’ profits. But in modern globalized capitalism, the traditional exploitation of labor is just one of the many magic tricks that the illusionist can perform:
The nonfinancial corporate sector has deleveraged even less than households. Instead, companies have taken advantage of low interest rates and plentiful liquidity to take on more debt to buy back equity to support share prices, pay larger dividends, and hoard cash. In the United States, corporations have expanded their debt relative to GDP by 14 percent…As a result, corporate leverage (the ratio of net debt to GDP) is higher than at this point of business cycle than in recoveries from previous recessions. That does not bode well for a quick escape from the depression if interest rates on debt start to rise. Michael Roberts’s The Long Depression (pg. 109-110)
I generally do not write about international law on here because (1) I have 0 training in it and any knowledge comes from my own independent study; (2) because there is a strong presumption of comity in international common law between nations such that many of the issues that I talk about, especially with finance, wind up applying internationally (with obvious notable exceptions like Venezuela). But I had heard a lot about the 2016 UN Conference on Trade and Development so when my law library received a copy of the corresponding report on investment I thought it might be worth making an unusual departure into this mysterious realm.
What peaked my interest was that the UN Conference on Trade and Development is remarkably different from most UN and international institutions that govern economic policy and regulation (the IMF, World Bank, G20 summit, etc.). It is considered to be about as Left as you can get with such an institution in the present world and countries of the Global South have had some, albeit limited, success in defending their interests there to the chagrin of the more powerful and prosperous nations (for my purposes here I am excluding China and India who now inhabit the awkward position of wanting to utilize their former colonization politically while also wanting to surpass the United States in dominating capitalism and perpetuating their own forms of imperialism, especially in Africa).