What happens is that economic malaise leads to profound social recession that affects society, workplaces, families, individuals that then feeds back into the economic stagnation.

Definancialization is the process in which excessive speculation, debt, leverage reverse, crushing the economy with malinvestment and legacy debt while the crony-capitalist Central State attempts to stem the resulting deflation with massive, sustained Keynesian stimulus (fiscal deficits).

What we're seeing in Japan is the confluence of three dynamics: definancialization, the demise of growth-positive demographics and the devolution of the consumerist model of endless "demand" and "growth."

Japan is the leading-edge of the crumbling model of advanced neoliberal capitalism: that consumerist excess creates wealth, prosperity and happiness.

What consumerist excess actually creates is alienation, social atomization, narcissism, and a profound contradiction at the heart of the consumerist-dependent model of "growth": the narcissism that powers consumerist lust and identity is at odds with the demands of the workplace that generates the income needed to consume.

One theme that weaves together this week's essays on Japan is the cultural/economic shift that is eroding the traditional Japanese corporate workplace.

Japan and the Exhaustion of Consumerism
The Hidden Cost of the "New Economy": New-Type Depression
The Future of America Is Japan: Stagnation
The Future of America Is Japan: Runaway Deficits, Runaway Debts

The younger generation of workers raised in a consumerist "paradise" are facing an economic stagnation that reduces opportunities to earn the high income needed to fulfill the consumerist demands for status symbols. Given the hopelessness of earning enough to afford the consumerist lifestyle, they have abandoned traditional status symbols such as luxury autos and taken up fashion and media as expressions of consumerism.

But the narcissism bred by consumerism has nurtured a kind of emotional isolation and immaturity, what might be called permanent adolescence, which leaves many young people without the tools needed to handle criticism, collaboration and the pressures of the workplace.

Narcissism is the result of the consumerist society's relentless focus on the essential project of consumerism, which is "the only self that is real is the self that is purchased and projected."

Christopher Lasch (1932 – 1994) wrote The Culture of Narcissism: American Life in an Age of Diminishing Expectations in 1979. The book's subtitle captured the angst of the 1970s; though rampant financialization and the Internet reinvigorated the U.S. economy in the 1980s and 90s, the subtitle accurately expresses the New Normal.

While his analysis cannot be easily summarized, he zeroed in on the ontological essence of narcissism: a fear of the emptiness that lies at the very core of consumerism.

Sociologist Daniel Bell's 1988 book, The Cultural Contradictions of Capitalism brilliantly laid out the contradiction at the heart of all consumer-dependent cultures:

This classic analysis of Western liberal capitalist society contends that capitalism-- and the culture it creates--harbors the seeds of its own downfall by creating a need among successful people for personal gratification--a need that corrodes the work ethic that led to their success in the first place.

In the modern iteration of the Cultural Contradictions of Capitalism, the narcissism that results from the focus on personal gratification via consumption cripples the person in the workplace. Ironically, the flattening of corporate management and the demands for higher interpersonal skillsets has eroded the security provided by the strict hierarchy of previous eras.

Instead of working less and doing easier work--the implicit promise of "endless growth"-- the work is becoming more challenging and insecure even as compensation declines.

If there is any personality that is unsuited for the "New Normal" workplace, it is the narcissistic consumer--the very type of person that our consumption-dependent economy creates, nurtures and demands. That is the new Cultural Contradiction of Capitalism.

"Personal gratification" is the driver of narcissism and consumerism, which are two sides of the same coin. Consumerist marketing glorifies the "projected self" as the "true self," encouraging self-absorption even as it erodes authentic identity, self-esteem and the resilience which enables emotional growth--the essential characteristic of adulthood.

Personal gratification is of a piece with self-absorption, fragile self-esteem and an identity that is overly dependent on consumerist signifiers and the approval of others.

No wonder Japan's "lost generations" are lost: not only are expectations of secure, high-income jobs diminished, the work is more demanding and the security and pay are too low to support the consumerist lifestyle that society has implicitly promised everyone who goes to college and works hard as a birthright.

Jesse recently wrote a brilliant, insightful essay, Empire of the Exceptional: The Age of Narcissism As he observes, narcissism has been on the rise for 30 years in advanced neoliberal economies.

In my analysis, this is the direct consequence of the supremacy of a consumerism that is dependent on financialization: an economy dependent on debt-fueled consumption to power its "endless growth" is one that will necessarily implode from its internal contradictions: debt and leverage eventually exceed the carrying capacity of the collateral and the national income, and the narcissism of consumerism leads to social recession, a crippling state of "suspended animation" adolescence and great personal frustration and unhappiness.

The ultimate contradiction in this debt-consumption version of capitalism is this: how can an economy have "endless expansion and growth" when pay and opportunities for secure, high-paying jobs are both relentlessly declining? It cannot. Financialization, consumerist narcissism and the end of growth are inextricably linked.

As I wrote yesterday, this leads to a dispiriting "no exit": It's as if there is a split in the road and no third way: some young people make it onto the traditional corporate or government career path, and everyone else is left in part-time suspended animation with few options for adult expression or development.

We need a third way that offers people work, resilience and authentic meaning. In my view, that cannot come from the Central State or the global corporate workplace: it can only come from a relocalized economy in revitalized communities.

Read the Introduction (2,600 words) and Chapter One (7,600 words) for free.

We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.

We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.

The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.

Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.

If this recession strikes you as different from previous downturns, you might be interested in my book An Unconventional Guide to Investing in Troubled Times (print edition) or Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One. The solution in one word: Localism.


Readers forum: DailyJava.net.



Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.

Of Two Minds Kindle edition: Of Two Minds blog-Kindle

---

"This guy is THE leading visionary on reality. He routinely discusses things which no one else has talked about, yet, turn out to be quite relevant months later."
--Walt Howard, commenting about CHS on another blog.

---

NOTE: gifts/contributions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Edward P. ($50), for your splendidly generous contribution to this site--I am greatly honored by your support and readership.

---

Or send him coins, stamps or quatloos via mail--please request P.O. Box address.

Subscribers ($5/mo) and contributors of $50 or more this year will receive a weekly email of exclusive (though not necessarily coherent) musings and amusings.

At readers' request, there is also a $10/month option.

What subscribers are saying about the Musings (Musings samples here):

The "unsubscribe" link is for when you find the usual drivel here insufferable.

Your readership is greatly appreciated with or without a donation.

---

For more on this subject and a wide array of other topics, please visit my weblog.

                                                           

All content, HTML coding, format design, design elements and images copyright © 2012 Charles Hugh Smith, All rights reserved in all media, unless otherwise credited or noted.

I would be honored if you linked this essay to your site, or printed a copy for your own use.

Terms of Service:
All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.