Dec 12, 2013
The Insider’s Economic Dictionary: C Is for Camouflage
Posted on Aug 11, 2013
By Michael Hudson
Client oligarchy: The ruling class of a “developing” (that is, backward) country that has been co-opted into serving U.S. and cosmopolitan finance capital in exchange for agreeing to IMF and World Bank “conditionalities” and permit capital flight (“free capital movement”) and un-taxing monopoly capital and other property, mainly for the benefit of foreign investors, including the client oligarchy via its own offshore financial accounts (see Offshore Banking Centers and Democracy).
Colonialism: A policy whereby a mother country underdevelops its periphery by imposing a double standard favoring industry, food self-sufficiency and high technology at home, and raw-materials production and low-wage manual labor abroad; and democracy at home, in contrast with client oligarchies in the colonies, whose loyalty and even identity lies mainly with the mother country and helps provide it with inexpensive raw materials and other products which it chooses not to produce at home. See Gains from Trade and Underdevelopment. Superceded by Dollar Hegemony.
Commons: Publicly held land and other economic infrastructure in the public domain, such as water, land, radio airwaves, forests and air, and natural monopolies such as transportation, power and telephone service, to be organized in society’s overall long-term self-interest rather than monopolized by private-sector rentiers. The idea of an inherent “tragedy of the commons” resulting from overuse often is cited as the reason why this policy cannot work over time. However, that ideological position does not reflect historical reality. The commons traditionally have been treated with a view toward long-term preservation of social integrity and balance.
Communism: In Marxist and Leninist terminology, the final stage of socialism in which the state is to wither away. But the outcome of the Soviet model turned out to be a Stalinist dictatorship by the party bureaucracy. Anti-government ideologues claim that this is the inherent fate of socialism, statist, or even mixed economies that wield public regulatory power.
Compound Interest: The exponential rate at which an interest-bearing loan or debt doubles under conditions where the interest is added onto the loan principle, earning interest itself. (See Doubling Time, Rule of 72 and Sinking Fund.) The basic doubling curve is described mathematically as y=x2. The phenomenon was known already in the Old Babylonian period c. 2000 BC by the term “interest on interest” (mash-mash). However, loan contracts were for a specified duration, and when they expired the creditor had to draw up a new contract to receive further interest.
Prior to 1972 it was normal for Latin American countries simply to borrow the interest charges due on their foreign debt each year. This practice now (2005) characterizes over 20 percent of home mortgage loans, in order to “free” debtors from having to pay the amortization charges (and thereby leaving their debts to continue to multiply rather than being paid off).
Conditionalities: The requirement by the IMF and World Bank that indebted governments sell off their public domain and public enterprises, and also deregulate their monopolies and markets in exchange for creditor nations rolling over their foreign debts and refraining from overthrowing their governments either by covert means or by force. Conditionalities are imposed mainly on hapless third-world debtors and the post-Soviet bloc, with the support of local client oligarchies. (See Washington Consensus.)
Consumer: A euphemism for wage earner, viewed in terms of spending power rather than earning power. Today, a consumer is a debtor, as consumption standards have been maintained only by running deeper and deeper into debt. (See equity withdrawal.)
Consumer economy: As part of the postindustrial service economy, employees and workers are referred to as “consumers” and proclaimed king rather than the exploited factor of production. But it is the advertisers and mass-market producers who occupy the commanding position in shaping consumer tastes. Television and radio as well as the printed media have been turned into advertising vehicles and only incidentally for the news or culture. Poll-takers have found that the most open to being influenced are youth, up to the age of 25; after that age, they tend to become cynical. This helps explain why adult programming has been largely ignored by today’s media, throwing into question the real meaning of participatory democracy.
Corruption: Progress in a direction that depletes society’s power to live and grow, e.g. as democracy is transformed into oligarchy. It may take the form of an originally useful idea gone bad or turned into a zero-sum activity. See Law of Unintended Consequences.
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