So sang Paul McCartney on the Beatles 1969 Album Abbey Road.
It’s a prescient description of where we are now, as the world economy collapses in the face of the Coronavirus crisis. The world economy never truly recovered from the Banks crisis of 2007-2008, and now the remaining financial capital has been spent (pledged as debt) for decades ahead.
For many years, we have used financial capital as the supreme index of well being in a society. Up to a point, this worked: it underwrote the credit and financial lifelines which underpinned economies. Nowhere was this more important than in the recoveries from recessions. However, if all this money is gone, you have to start thinking differently.
Well, a society has other sources of capital. Looked at in this way, a robust health system, well educated citizens and even strong defence forces are just as much part of a society’s strength, and the Good Life, as having a tertiary derivative market. There is an argument which runs that the neglect of these capital sectors after 2008, in order to save the bond markets, has played a major part in our current impasse.
A health sector with an excess of stored masks, gowns an hospital beds might look very poor on an accountant’s balance sheet, but as a centre of stored wealth, it makes very great sense indeed.
If all the world’s monetary capital has gone, as seems likely at this time, there is very little hope of rebuilding it. But we can rebuild massive stores of other capital to replace it. We shall return to this theme.
Talking point: Is that Mikhail Gorbachev standing behind Ringo Starr?
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