Capital in the 21st Century
Directed by Justin Pemberton (2019)
Based on French economist Thomas Pikety’s book Capital in the 21st Century, this film features numerous sound bites by Pikety, US economists Joseph Stiglitz and Francis Fukuyama, and various other Western historians and political scientists.
Like the book, the film’s major theme is the grinding income inequality produced by capitalism. It begins with the immense social misery that started with the 17th century Enclosure Acts (which drove my European ancestors off the common land they shared)* and significantly worsened with the industrial revolution in the mid-1800s. According to Pikety, the only time working people received a significant share of the wealth they created was with the post-World War II industrial boom. During the 1970s, the the “financialization”** of western economies resulted in a significant increase in corporate profits at the expense of workers.
In my view, the major flaw of the film (and the book) is Pikety’s failure to address the role of private money creation in growing inequality. In most Western countries, 97-98% of the money in circulation (all but the notes and coins) is issued by private banks as loans.***
A monetary system almost entirely controlled by for-profit banks surely has far more impact on growing inequality that any other economic forces. As the filmmakers rightly point out, only 15% of current bank lending ends up in the productive economy (which banks view as too risky and insufficiently profitable), while 85% of lending goes into mortgage loans loans and speculative financial products.
Pouring massive amounts of new money into housing speculation is causing both house prices and rents to skyocket in most Western countries. This, in my view, is the primary cause of rampant inequality. In addition to fueling soaring homelessness, it leave low and middle income with less and less money for other basic necessities.
*”Financialization” is a term coined to describe the domination (starting in the 1980s) of western economies by “financial capitalism,” in which national revenue derives mainly from the sale of financial products, insurance and real estate (as opposed to manufactured goods).
**The Enclosure Acts were a series of laws that allowed wealthy landowners to privatize (enclose) land that peasant farmers previously held in common to satisfy basic subsistence needs.
***Contrary to popular belief, banks don’t issue loans from money deposited by savers – the vast majority of loans are created out of thin air subject to minuscule reserve requirements (usually less than 10%) imposed by central banks.
The film can be view free (for the next two weeks) on the Maori TV website