The one quote by Mao Zedong that every American seems to know is this one, from 1938:

“Political power grows from the barrel of a gun.” 

A couple instances over the past week reminded me of this line. The more recent one was something Jeff Daniel’s outlaw character Frank Griffith told a child in the problematic Netflix Western Godless:

“There ain’t nothing scarier than a man with a gun. And there ain’t nothing more helpless than a man without one.”

The earlier instance was an older friend discussing politics on Thanksgiving. He repeatedly reached this conclusion:

“It all comes down to money!”

Why the connection? Because the more I listened, the more I understood that my relative had equated money to power so completely that his concept of money had achieved the kind of perverse moral clarity that most people ascribe to Mao’s statement to the sixth plenary session of the Central Committee of Communist Party of China. Never mind that Mao was wrong about practically everything else he asserted in that speech: As cynical, pragmatic political statements go, “Political power grows from the barrel of a gun” is about as pithy as you can get.

But here’s the problem with Mao’s quote, as well as my friend’s: While generally true as aphorisms, they’re also fundamentally misleading when it comes to understanding politics, money and power. Those resulting misunderstandings go a long way toward explaining why America is so wildly fucked-up at the moment.

The context of Mao’s statement — which came 11 years before the founding of the People’s Republic, at a moment when his revolutionary army was collaborating with the government against a Japanese invasion — was a rebuke to internal dissent. Sure, Mao tells his comrades, our long-term goal isn’t violence and warfare, and we’ll get around to abolishing all that eventually. But it’s only through violence that we can end violence.

Or, more to the point: Agree with me or you’ll be shot.

Of course, Mao never got around to putting down that gun, and tales of his brutality towards his own people are not generally overstated. In retrospect, we can classify Chairman Mao as a ruthless philosopher tyrant who managed to free his peasant nation from foreign influence and a corrupt aristocracy. But the gap between the backward Chinese state Mao left to his successors in1976 and the modern superpower led today by Xi Jinping is a textbook example in the limits of state brutality.

Scholars around the world argue about how best to characterize the modern Chinese economy, but everyone agrees that whether it’s some new form of communism or just some state-run form of capitalism, its outputs have transformed The People’s Republic into a global powerhouse.

The United States remains the world’s largest economy in purely nominal terms, but a more comprehensive valuation — called Purchase Power Parity — now ranks China No. 1, with the United States slipping behind the European Union to No. 3. And while the Americans and the Europeans appear hopelessly mired in cultural conflicts, Xi’s $900 billion “Belt and Road” international trade infrastructure plan is projecting Chinese power across Asia and Europe.

Lesson? Sure, political power may grow from the barrel of a gun — but political power based on pointing gun barrels at people eventually stagnates. At some point, real power — from military power to cultural power to economic power — is all based on producing stuff that people need. Once people run out of stuff you can steal, waving guns around tends to produce diminishing returns. If you’re wondering what that looks like, look up civil war in Sudan.

My friend’s concept of money suffers from a similar problem. His thinking — intellectually founded on periodicals from Hillsdale College and occasionally inflamed by conservative media nonsense — is strictly free-market gospel. What’s true and meaningful is what the market will bear, and even if that outcome is objectively awful, well… money is the ultimate truth. We can bitch about it, but there’s no arguing with it.

Besides, he insists, whatever persistent economic problems we face aren’t the result of capitalists doing bad things (because the market ultimately reveals bad actors), but of government interfering in the good things capitalists do. He sees the lessons of capitalism like I see the lessons of Lao Tzu: Money, like the Tao, is eternal, fluid and wise — and utterly beyond the strictures of transient human morality. The more you try to regulate markets, the worse things will be.

I’m occasionally jealous of such purely self-contained logic. We share a mutual dislike of the modern world, but while I’m often angry and depressed by what I see, my friend seems strangely at peace with it. After all, Money punished the Soviets, and in his mind it’s only a matter of time before Money punishes the foolish American liberals, too. Then everything will be fine.

The obvious problem is that my friend’s faith-based economics is founded on the notion that money is a real thing, connected to other real things, in a great web of real things and simple principles that cooperate in predictable ways to create what “real Americans” call “common sense.”

But that’s classical economics, where markets were supposed to reflect supply and demand. This is the financialized 21st century economy, where the people at the top of our pyramid are basically running a globalized Ponzi Scheme.

When money represents some generally accurate representation of supply and demand for goods and services, then finance is the fuel line that keeps the engine running, Once those connections can be profitably and legally broken, however,  the financial industry becomes a casino where the high rollers play with house money until everybody goes broke.

Today, the F.I.R.E. Sector — finance, insurance and real estate — accounts for 20 percent of America’s Gross Domestic Product. In 1947, that same sector accounted for just 10 percent of GDP.

In the spring of 2016, the U.S. Commerce Department reported that financial services alone — a sliver of that larger F.I.R.E. sector — accounted for 8.4 percent of GDP, up from 2.8 percent in 1950. And once you start distinguishing corporate earnings from GDP — which includes all sorts of surviving mom-and[pop-goods-and-services businesses — you really start to see how severely disassociated the finance industry has become from objective reality.

Think about everything America makes and sells, at home and abroad, and then consider this: Roughly $1 out of every $3 in profit  reported by U.S. corporations now comes from “financial services.” Here’s The Wall Street Journal:

The growth in finance over the past 60 years hasn’t, by and large, been a bad thing. While from the outside, what financial workers do — take money from one pot, skim some off the top, and put it into another pot — seems meaningless and, to some people, outright wrong, it does serve a purpose. Deploying capital to the places where it can be best used helps the economy grow. And since the financial sector bears some risk in doing that, it should get a piece of the pie.

But that only goes so far. New research by New York University economist Thomas Philippon suggests that the financial sector is enormously outsized. He finds that, despite all the advances in information technology since the 1980s, the financial sector has become steadily less efficient: All that it has been gained from increased computing power and vast communications networks has been taken away, and then some, “by increases in trading activities whose social value is difficult to assess.”

In other words, with each passing year, our financial economy becomes increasingly abstracted from our goods-and-services economy. Other industries struggle, but businesses that focus on “passing paper,” market speculation, and the exploitation of real estate bubbles continue to generate fast bucks — while contributing little to the overall health of society. Philiponn believes financial services should make up no more than about 6 percent of GDP, but whatever you think that target percentage should be, the point is that overvaluation in the financial sector typically leads to disastrous “corrections.”

So yes: A gun pointed at your head can convince you do all sorts of things. But money has even greater influence on human behavior — because money offers an incentive as well as a threat.

But what happens when there’s nothing left to steal? What happens when the economy crashes because laid off workers can’t afford to buy the products manufactured by their robot replacements? When bank foreclosures on homes no one can afford devalue the housing market to the point where trillions of dollars in “real assets” evaporate like liquid naphta exposed to sunlight and air? What happens when unregulated greed breaks the required stability of the business cycle?

That outlaw quote about our fear of a man with a gun and the helplessness of anyone who lacks one is a true observation. But what happens on that day when many men and women realize that the are no bullets left in the gun that’s been menacing them? Or that money can’t buy them happiness — but it also can’t buy them food, shelter or security anymore, either?

That’s a day we all should fear. Because there’s another quote on my mind these days, and it’s from Tom Waits:

We are all just monkeys with guns and money.”

What will be be without them?

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