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According to Paulo Arantes (in case you were wondering, no, i do not know who he is, i just saw him on TV once and he spit that pearl of wisdom out), so, anyway, he says we live in a “sociedade totalmente administrada pelo capital”, which i translate as a society completely managed by capital.

That will not come as a surprise to my loyal readers, but i don’t buy this one.

It is not that society is “completely managed by capital”, the question is that capital grows faster than traditional subsistence could — it is not capital that conquers new spaces, it is US who long for capital-like growth rates everywhere. In other words, it is not the unending hunger of capital that caused it to become so important, it was society itself that used every means available to apply capital everywhere.

The real issue is that capital works through this most powerful of the ars magica, the compound interest.

It is strong voodoo shit. Really strong. If you get 3% over 1$ you get rich over 5 years. And if the dollar-sign over there makes it seem rational to you, imagine it could apply to something else, anything else, like violence for instance.

Imagine today you can give one punch to an enemy. Now imagine that you can “apply” this one punch at 3%/month over some two or three years, and after that you can crush him to dust.

Obviously no one gets 3% interest easily, but even the meagre 0.6% that any bank can give you if you go there and put a little fight over with your manager, even that can work wonders over longer periods or with constant injection. I must stress that the numbers are amazing, i think everyone should take the time to learn to calculate compound interest and toy with it a little to see what i mean.

3% is actually TIMES 0.03, which seems pure garbage, pure uselessness, but play around, see what happens if you enhance time, if you enhance interest, if you enhance the initial amount, or if you diminish those, or enhance ones and diminish others, play around.

The thing is seducing. So seducing, indeed, that it is very easy to want everything to work like that. Sometimes it might become even a pain that, say, love cannot work like that — she loves you now, she will love you more in the morrow. But no, no, you need to keep on feeding that love, and if you are not careful tolerance sets in (as in drugs) and you have to give bigger and bigger gifts.

So it comes to pass that soon we want to practice compound interest in every possible circumstance. And, although capital is not the only way to achieve this, it is simple, it is a very simple way to achieve conpound interest rates. Thus, when people have their way, capital rises. But it is not capital that is managing the whole of society, it is just that people are managing society through this tool capital. Maybe one can even make the case that it is being overused now, but even that, i guess, is not so clear cut.

2 Comments

  1. 3% interest is multiplying your base by 1.03, actually, each time that the balance is assessed. (Multiplying by 0.03 would make the capital diminish very rapidly.)

    I suppose you could also multiply by 0.03 and then add the result back into the principal, but it’s a shortcut to just multiply by 1.03.

    This, by the way, is what is called exponential growth. Since the base principal increases with each iteration, the growth accelerates over time.

    That’s why compound interest is inflationary; exponential growth will approach infinity with time, but we live in a finite world. The two don’t play nice together.

  2. Tesh, man, you certainly do know much more about the world than i do. I do not know whether the world be finite. Have you seen it’s end? I for what it counts have seen some things that are surely “of this world” that are inflationary. Enzymes and life, for one. And the atomic bomb. So well… Sarcasm apart, i guess you are just trying to find elaborate ways to say that capitalism is bad, well… don’t! Go for the real thing: say “Capitalism is BAD! It is morally despicable!” Say it fully. You feel better. As for me, i would like to explore new ways to correlate “compound interest” with “the world”, i do not AT ALL think all the possible interactions have been put to test…


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