Yves here. Blogger Sell on News echoes an argument made in ECONNED, namely, that “free markets” are a contradictory and incoherent construct, albeit from a different perspective. He also advocates another view near and dear to our heart, namely getting rid of economists (actually, that is overkill and will never happen. Keynes had it right: “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”)
By Sell on News, a macro equities analyst . Cross posted from MacroBusiness
Probably the most wicked intellectual subterfuge of the last three decades — and goodness knows there have been many — has been the pretence that democracy and markets are two sides of the same coin. Both have been extolled under the banner of “liberty”. “Free markets” are somehow the hallmark of democracy and they should be allowed to roam free, untrammeled by evil governments who never doing anything right. Any number of commentators, coincidentally funded by right wing think tanks, warned us that constraining markets represents an attack on basic freedoms. Such elision is, of course, rubbish; and in many cases deliberate deceit. In a market one dollar equals one vote. The more money you have, the more votes you get. In a democracy it is one person, one vote. You can only be one person at a time (except in Florida, it seems). With this in mind, I was intrigued to see a response from Rob Windt mid week about the aftermath of the Icelandic bankruptcy:
What happened next was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions and eventually driving Iceland’s leaders to the side of their constituents.
The Head of State, Olafur Ragnar Grimsson, refused to ratify the law that would have made Iceland’s citizens responsible for its bankers’ debts, and accepted calls for a referendum.
This, I would suggest, is real liberty at work. And it is probably an early example of what I expect will become an increasingly political debate, rather than a managerialist debate, about the direction of developed economies. As Jeremy Grantham in his fine piece pointed out mid-week, there has been an unholy alliance between corporate profits and government spending, something he said he “never saw as a faint possibility”. It turns out that business is not in a virtuous war with government; the only victim in America is the ordinary worker. One only has to see the film Inside Job to see how government and the financial system have worked in tandem, in large part because it is the same people playing both sides of the fence.
Grantham puts it down to childishness in the political arena, run by a president he calls “President No-Show”. I think it is not just a matter of maturity, it is a deeper and more pernicious political contest. At the heart of it is a question about the proper role of self organisation. Democracy is, or should be, a self organising system. So are markets. That obviously has advantages over central planning, but it also has potential dangers. The shortcomings are especially problematic in the case of financial markets, which are by necessity a system of rules. Allowing financiers to self organise the rules, means that they can do exactly what has happened — go a long way to destroying the system while enriching themselves to an absurd extent.
Thus they made up rules for everything: credit default swaps, collateralised debt obligations, derivatives on the weather, high frequency trading, more high frequency trading … you name it. Allowing that kind of self organisation is fundamentally absurd because in the end such invention of new rules rely for their validity on the underlying rules that must be set by governments and regulators (The Fed’s interest rate, the underlying cost of money, being the basic one). So when it is allowed to spin out of control, it will inevitably bring the whole system down, as it still threatens to do. Allowed to run amok, it becomes like the serpent that consumes itself.
Which is why the Icelandic example is interesting. The people, then the government, self organised and simply said: we don’t accept the bankers’ rules. “Why should they?” one might reasonably ask.
The Icelandic move is where we are heading. The rule makers in the financial system, who think they can make up rules as they go, are on a collision course with those who have to assent to the rules — the people and the governments they appoint. So far, it is mostly presented as a management problem — how can governments manage their fiscal and monetary levers — but it will become more than that. It will become a question about who has the right to set rules and possess power.
The outcome is not a foregone conclusion, even in democracies. Grantham argues that there needs to be more income distribution, a reversal of the money grab of the rich in the United States, in order to return to a more balanced form of economic growth. But that is by no means inevitable, indeed it is not even the norm. More normal is what happened in South America in the 60s, 70s and 80s where the middle classes were gutted and the rich ruled with increasing violence. As Grantham shows, America is heading the same way — its middle class has been progressively eviscerated for about 40 years, while corporations and the rich have thrived. The history of human behaviour tells us that, unless stopped, the powerful will enslave the weak and America is heading in that direction.
One thing that is needed is an understanding of the right place for self organisation and the wrong place for self organisation. The looters in London did some marvellous self organisation, pursued their liberty to smash windows. Did that make it right? Those who cleaned up the mess also did some marvellous self organisation.
The degree of self organisation does not tell us nearly enough. We need to look at how to set the frameworks in which self organisation occurs; after all there must be frameworks if it is not to be mere chaos. The role of civil society which fed such actions as the London clean up needs to be revisited. The downgrading, or monetisation, of civil society has been one more unfortunate consequences of four decades of market worship. And it is time to see slogans like “liberty”, “freedom”, nonsense about the “invisible hand” as the sleight of hand that they are. Such slogans may have made some sense during the Cold War, but that was last century. A seminal political contest is occurring and there needs to be a new understanding of the role of self organisation (not least because industrial self organisation along industrial-era lines will not be sufficient to deal with the problems of pollution that the world faces, they will make them much worse).
It also means, by the way, abolishing the so called discipline of economics. Disqualifying it on the grounds of its dismal history of spewing out self serving, circular arguments that have led us to assume that transactions come first and humans second, and that the civic and legal bases on which modern democratic societies depend are inevitable, a force of nature, and can be abused at will.
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“The Icelandic move is where we are heading.”
I certainly hope so, but has any other country shown similar decisiveness? I seems that the big banks have prevailed in the other countries, like Ireland and Spain (and the US), and the banks seem to be on a path to victory in Europe, too. So far, Iceland is only the exception that confirms the rule.
Dutch bankers’ bonuses axed by people power
http://www.guardian.co.uk/business/2011/mar/27/dutch-bankers-bonuses-axed-by-people-power
It’s nice that Iceland still has democracy and presumably no Supine Court. Here, unfortunately, millions of dollars equal millions of votes.
Unless it’s a pure mathematical identity, people have to take almost every economic pronouncement as pure opinion, and then look for the agenda.
A simple example is how often we hear that taxes are a killer. If that was truly the case, then explain why any state with a high tax rate doesn’t empty out. Explain why there isn’t a state with a tax rate of zero – all taxes. C’mon Texas, C’mon Arizona – let’s see how fucking commited you really are.
And all those libertarians who claim they should be exempt – even though I can smell their garbage and have pull over for their ambulance when their fat and lazy asses have a heart attack – until your footprint in my life is ZERO, you shut the fuck up!
If it’s only money that makes them productive, then keep taking their goddamn money away!
Wow! Traffic’s a bitch…
Yves,
You are giving up on one dollar one vote far too easily.
We need to separate industrial capitalism (production) from financial capitalism (financing).
Market discipline has worked much, much better on the industrial side of the economy. Enron, Worldcom, the dot coms were toasted by the market and rightly so. one dollar, one vote worked just fine. The investors were also punished accordingly. And the clowns running these companies discredited as they should have been.
This did not happen for Wall Street and the banks in 2008. Because the invisible hand if allowed to do its handy work in this case would have toasted our civilization itself.
We need to make our payment clearing system (yes our currency system) a public good (with no private money creation) like the services our military are a public good.
If that had been the case (public money system). We could have let these clowns (the private banks) go the way of Enron and Worldcom with proper punishment for the investors (in these banks) as well being meted out. There could not have been a better lesson for all of society on how not to behave than seeing investment bankers become taxi drivers.
And any resulting deflation from the collapse of any mis-matching maturity private banks (AKA as the shadow banking system) could have been simply handled by government by printing money and spending it or just giving it to people to bring the economy back to balance (no deflation).
As hard as it is to believe we still have tons of production capacity worldwide even with all this fraud, waste, abuse and mal-investments done by the bankers (yeah, yeah I know peak oil means we may not be able to use all this production capacity but that is a different issue).
Mansoor
“We need to separate industrial capitalism (production) from financial capitalism (financing).”
Capitalism is slavery. There is no hierarchy of worthiness between capitalists that means you are a better guy if you own a factory so opposed to a hedge fund.
Discussion of details around how to make the wheels turn the right way under any branch of capitalism is fiddling while we wait for the final fire. Your recognition of peak oil is missing it’s twin, global warming. Capitalism is not capable of dealing with global warming. The choice is capitalism or survival, not industrial versus financial capitalism.
What is Capitalism?
Since the Lehman Brothers, Inc. collapse I have noticed that the term “capitalism” gets thrown around in emotionally charged discussions. In these discussions and debates participants never define the term and assume we all know what it means.
Therefore I came up with a very practical, clear and precise definition of capital:
My definition will be by way of an example. The example is of a baker living in a Gaithersburg, Maryland who owns bread making factories and sells bread locally and nationally to supermarkets and other vendors.
1) Bread Making Factory = Capital Good = Capital (Not easily sellable as loaves of bread are but it is still obviously something of value, the baker cannot make loaves of bread as fast without it)
2) Bread = Product produced by the factory = Capital (Something of value, sellable or exchangeable into dollars)
3) Dollars = Money = Capital (most easily convertible to labor hours and raw materials needed by the baker’s factory)
4) Baker’s Knowledge of Making good Bread = Capital (the better his knowledge and management skills the more efficiently and higher quality bread will be made)
5) Baker’s Reputation of Making good Bread = Capital (Reputation facilitates trade and helps to get his bread to those who desire such things faster, better and cheaper than it would otherwise)
6) Baker’s Good health and Baker’s workers good health = Capital (I am assuming that cost of keeping the baker and his workers in good health does not exceed the value of profit created by selling the bread, note I am not specifying exactly how the good health is achieved)
7) A well functioning un-manipulated marketplace (from bakers point of view) = Capital = The baker must know how much bread to produce and how much to charge and he also needs a marketplace to make the exchange (receive dollars for his bread). The baker also learns about what other bakers are producing (in terms of quality) and he can use this information to at least try to keep up with other bakers. So marketplace = Source of knowledge and Information = Capital.
8) A well functioning un-manipulated marketplace (from consumer point of view) = Capital = The consumers need a place to go and exchange dollars for bread. The consumers would like to get the most out of their exchange. This occurs mostly via competition among bakers as they try to keep up or out do each other with respect to the quality and price of loaves of bread. Again market place = source of knowledge / information about what is going on with respect to loaves of bread = Capital.
9) Baker’s charity toward the local poor = Capital (raises the spirit of the baker and the community, you are smart enough to figure out why, also probably lowers crime).
10) Baker’s contribution to the local university = Capital (also raises the spirit of the baker and the community, again, you are smart enough to figure out why, produces a better more creative workforce for the baker’s factories), a workforce with a better knowledge is more creative and can think of more ways to improve the bread making and bread distribution process.
11) Protection of the Bread Maker’s factories provided by the local police = Capital (I am assuming that taxes are not so high that they outweigh the benefit that is received by lowered risk of loss due to potential theft and vandalism).
12) Local police’s ability to work with other police departments and state police to catch criminals who escape the reach of the local police = Capital (again, I am assuming that taxes are not so high that they outweigh the benefit that is received by lowered the risk of loss due to potential theft and vandalism).
13) FBI (or equivalent thereof) = Capital (catch sophisticated and well organized criminals and cheaters and thugs and terrorists who can disrupt the bread making and the marketplace processes discussed above).
14) Military = Capital (Protection against international aggressors and thugs and enslavers and criminals who would screw the bakers in the land, take his bread and bread making factories, again if the cost is too high then this service may not be worth it).
15) A well functioning executive, judicial and legislative bodies to manage the various institutions of the land (like the military and the courts) and monitor large scale sophisticated cheating in the marketplace = Capital. Again if this service becomes too expensive then it is not worth it and actually becomes an impediment to the bread makers and consumers of bread.
16) Good relations with other nations and international peace = Capital (Baker’s output – loaves of bread can be traded for BMWs)
Mansoor
How does one legitimately own a factory? And why would one be selling bread anywhere beyond the region?
That’s as far as I read, since the initial unquestioned dogma is so deranged. I imagine the rest deteriorates from there.
So it is not possible legitimately own a factory?
Not so far as I can see. Please explain.
Every factory I ever heard of was built and run by many workers, while the capital came from nature and the work of workers. I can’t imagine what other ownership measure there could be.
Attempter,
“I can’t imagine what other ownership measure there could be.”
How about management skill and talent?
Mansoor
And what makes ‘management skill’ and ‘talent’ more valuable than other workers tasks and ‘talents’?
Of course, must be the holy right of self-defined leaders to lead our lesser beings. Because without them we are lost to wander the land.
The Paper,
“Of course, must be the holy right of self-defined leaders to lead our lesser beings. Because without them we are lost to wander the land.”
You are kind of right. The leadership talent (those who have it) can use to magnify the output of the talents and skills of lower levels to go in either direction (good direction like Steve Jobs and the iphone) or bad direction (Ken Lay — as in Enron).
What the “The leadership talent” craves is social status. Which is determined by rest of society (democracy).
Mansoor
Mansoor
Nice explanation, Attempter.
Mansoor, which is more valuable to nature, the mighty lion or the humble slug? Stupid question, right?
Which is more valuable to the market, a skillful manager or an unskilled worker? Complicated question, because we have the price system delivering information on value, supposedly via this thing called the free market. But because markets cannot be free, the information they deliver cannot be trusted. Hence the ‘value’ to the economy or company of the skilled manager as measured by wage is a measurement we cannot trust. In economics, the only market which delivers clear information about value is one fulfilling the criteria of perfect competition. The further away the market is from this perfection, the more distorted by things like monopolies and cartels the information it generates is. So, we can’t, in the absence of perfection, assess or measure the ‘value’ of a manager over a worker.
In my opinion we cannot measure value at all, since it, like beauty, lies in the eye of the beholder. The reason managers earn more than workers is because they are closer to the money distribution systems. They self-value themselves, via the so-called job-market (and in other ways), above ‘ordinary’ workers.
Furthermore, it is literally impossible to prove that a “skilled manager” can be solely responsible for a company’s success, as it is also impossible to determine to what precise degree a “skilled manager” contributed to that company’s success. They who control the data generated to make the assessments, and possess the skills to interpret that data and turn it into some justifying story (including colourful pictures called charts) decide too how much of the profit flows to which employees. The Invisible Hand does not enter into it. I’d love to watch a company of nothing but managers. That would be fun.
The expression here is: might makes right. Always has, always will. The question is this, how do we distribute the might, wield it, use it creatively? We are an inventive species, capable of destroying ourselves if we stay stubbornly attached to this preposterous story of the ‘elites’ being more ‘valuable’ than the hoi polloi. If we don’t learn a new organizing story, we will shortly be history. Nothing lasts forever, so it would not be too much of a surprise from nature’s point of view, but I for one love humanity and life generally, which is why I comment here.
Toby,
“Nothing lasts forever, so it would not be too much of a surprise from nature’s point of view”
So all our efforts are ultimately futile? Since (according to you) no matter what we do it all turns to dust anyway and we become extinct anyway. If that is case why so much “anger” on this blog? It does not matter (too much) anyway either way.
Mansoor
@Toby:
–“The reason managers earn more than workers is because they are closer to the money distribution systems. “–
Yep.
I like Attempter’s comments a lot and am very sympathetic to his (will assume he’s a he for now) perspective and agenda.
However, I would like to analyze some of Attempter’s rhetoric as it frequently appears here at NC. Let’s take the question, how can one legitimately own a factory, and the subsequent explanation that the only ownership measure he can conceive of is based on labor. Clearly he is making a point that he does not agree with the existing social/legal regime regarding assignment of property rights (i.e., the regime that allows someone to buy a bread factory with inherited wealth and direct the workers how and when to operate it.) I would guess that his stated failure to imagine what ownership measure there could be that would allow this is really a polemical device, as clearly he or she operates to some extent in the modern world as it is (has a computer, internet, email, at least, so as to be able to post here) and must surely understand at least some aspects of how the world works as it currently exists (indeed, his comments typically show much more understanding of how things work than is possessed by most). So the point of the device must be to display his fundamental disagreement with the existing property regime by refusing to acknowledge it and instead assert his own framework for property and justice. This framework to me looks like a proletarian/Locke-ish theory based on making something yours by mixing your labor with it (let’s call it the Attempter Theory of Property). This is rhetorically effective for Attempter because it is slightly shocking to have one’s assumed notions about property undermined in this fashion and it is also intriguing and leads one to ask Attempter exactly what he is talking about, as does Mansoor here today.
However,both the current operative ideology of property rights and the Attempter Theory of Property share a certain feature that I take some issue with: the notion that property rights themselves are sui generis, or that they exist as an actual fact of nature, rather than as some imaginary construct we humans impose on the world. Let us look at the concept of legitimacy, as in “How does one legitimately own a factory?” Clearly Attempter knows what the owner’s answer is, I bought the factory with my trust fund, and no doubt the police and the local chamber of commerce respect this and enforce it. In truth this means that Owner transferred inherited wealth, obtained some papers indicating the factory is “owned” by him, and, from that point on, our entire system is organized around protecting that ownership and enforcing it against all comers. I submit that there is nothing more to the notion of “ownership” and “property” than the prediction that the instruments of the state, in cooperation with citizens who also believe the legitimacy of existing property under our current system, will in fact act to protect and enforce Owner’s control of factory and workers. The Attempter Theory of Property attempts to undermine this legitimacy by imposing his own framework that produces a different answer to the “legitimate ownership” question (that legitimate ownership arises out of labor) but, although it may produce a more ideologically satisfying set of outcomes than does the current system, there is no more support in nature for this position than there is for any other, and it is just as arbitrary; in other words, the question of legitimate ownership is not a question about some essential feature of the object owned, it is a question about how society acts.
If you push hard enough on any libertarian, you get to a point at which, if they are intellectually honest, they will admit that their theory of property rests on some sort of natural law of property that precedes the state and therefore must be honored by it to be “legitimate.” To me, this belief is a form of religion. When confronted with the Attempter Theory of Property, I have a similar reaction—the belief that property is a fact of nature is no less constraining on how we organize a society if it comes from the proletariat than if it comes from the capitalist. Does Attempter not also in essence posit that these property rights have a more privileged status than other human laws, much as the libertarian does? The distinction between property rights as natural law vs property rights as a human tool for organizing society along even more fundamental values (justice, love) is important, because once we acknowledge that property rights are not a feature of nature at all but are a tool we can manipulate to produce desired outcomes, we free ourselves from a deep-seated set of constraints on imagining and working toward a society that honors and rewards all who work in it.
Quote: “How does one legitimately own a factory?”
By buying it from people “willing” to sell. If one group of investors saves up some form of value and then find sellers of capital and labor in various forms and organizes such purchases into a bread factory how is that evil?
You seem to assume that all wealth transfers are somehow coercion if they result in different levels of wealth.
Quote: “And why would one be selling bread anywhere beyond the region?”
Because it’s my freedom to do so. If people are willing to buy from me and I like selling bread to them then what right do the Anarchist terrorist thug have to stop me?
Quote: “Every factory I ever heard of was built and run by many workers, while the capital came from nature and the work of workers.”
Capital doesn’t come from nature. It is the mind that transforms and organizes nature on the basis of scientific principles which are discovered in the sovereign mind. The organizing intention of will guided by creative insight all matter simply remains in the non capitalized form.
Capital Value is doesn’t come absent the mind conceiving of a notion of value and therefore cannot come from any part of nature outside the nature of the human mind.
Quote: “The truth is of course the opposite. Freedom can exist only among peers. ”
BS. Freedom means I can either perform some action in the physical universe or I can’t. It has nothing to with getting approval from so-called peers.
A rich man has more freedom than a poor beggar because he can act on his will using wealth to achieving a level of physical well being and consumption that the poor man can’t because the poor man lacks access to that wealth.
You mean to say that equality can only exist among peers and the equality maximizes freedom.
Since absolute equality can’t exist because creative change requires that nonlinear unequal states exist in order to have dynamic change any increase in freedom requires that relation between the distribution take place between the one, the few, and the many. No society has or every will exist in perfect anarchy because the creative change is physical hierarchy.
Anarchism is the handmaiden of Oligarchy because the oligarch needs the anarchist to reject the legitimate authority of proper organization of society that opposes the illegitimate claims of Oligarch in defense of the nation. By making the utopian claim of “the many” existing in a steady state as a universal way of being for all of mankind the anarchist attacks the existing order and because all social change require dynamic processes which require the action of “a one” and therefore “the few” use the anarchist to oppose any “one”
with the proper ideas to organize the “many” against the illegitimate actions of “the few.”
The Anarchist is a useful idiot which why the history of anarchism is one of influence and sponsoring by the British Foreign Office and other institutions of the Oligarchy.
Virtue is found in the golden mean between the one, the greater, and the lesser. Society must be organized by this principle because all of nature is organized according this principle of trinity.
Of course, idiot modernists like Nietzsche know nothing of principles of building civilization and therefore will only act to destroy it as their job in the winter of our civilization. The Divine isn’t dead unless you kill it from your own soul and in that case it merely insignificant you that has died.
James, I don’t recognize propertarianism at all, in land, resources, infrastructure. Property is theft.
What I have in common with the real Locke (as opposed to the senile one who repudiated his own philosophy) is the recognition that actually working – on a piece of land, or with a tool – and nothing else, confers a right in it.
But this is only a stewardship right, a usufruct, a right to useful possession, operative only for so long as one is usefully possessing it, and only including what one can actually use. I’m not aware of anyone who calls this a “property” right.
Septeus7,
The libertarian argument starts to get wobbly when you try to explain original endowments, most important land ownership. Who owns land is ultimately theft, since it was originally not owned in our modern sense (as in older societies did not have a concept of land ownership, even if they would engage in battle with neighboring tribes about possession). So the original act of “ownership” is expropriation of land that was at best de facto owned in commons.
Attempter, I think you’re missing the point, which goes something like this:
Banker selling the factory owners debt as an asset class – this is NOT Capital.
Stock broker arbitraging stock in the factory – this is NOT Capital.
Hedge Fund manager buying a CDS that the banker who is selling the factory’s debt as an asset will fail – this is NOT Capital.
Other Hedge Fund manager buying a CDS that the first hedge fund will fail – this is NOT Capital.
Mansoor,
Your breakdown makes the fundamental and common error of confusing capital with capitalism.
Wise use of capital is a way to maintain and improve the material standard of living for people. Capitalism, on the other hand, is a highly unstable system that, left to its own appetites and imperatives, will concentrate wealth and power based upon its self-reinforcing instability.
Without strong countervailing forces – a powerful labor movement, consumer protections, and effective regulation based upon a broad definition of the public good – capitalism inevitably reverts to its predatory/parasitic nature.
Without a collective superego and countervailing social forces, capitalism is an Id that will destroy itself and everything around it.
Nowhereman has it exactly right.I have developed a small business over a period of years and have discovered that it isn’t so much a question of the value of a certain person working a certain job…all employees and owners are valuable and necessary. When the giant corporation buys you out everything falls apart….the community aspect. What is critically missing in this country is a new set of and renewed enforcement of anti-trust laws .The megacorps have become so large and powerful that they have destroyed capitalism and any notion of a “free market”
The most incredible thing about “capitalism” is that it has never been practiced in it’s pure form.
I as an individual, using my knowledge and expertise, and recognizing a need, develop a process for making a product that will make life easier. (bread making is a good example because anyone with the ingredients, a recipe and an oven can do it for themselves. however, people are willing to pay for the convenience of having someone else do it for them).
Initially, I am able to provide the product myself to my limited “customers”
My product becomes successful, and the demand exceeds my ability to produce, so I hire someone who is willing to sell me his/her labor for a wage beneficial to both of us. (a wage that allows me, the employer, to make a profit, and the laborer a chance to make a “living”)
If this was simple, by adding an “employee” this doubles the workforce and should double the production. But it is never simple, is it. In order to double production I need to purchase more equipment, because two people working the same equipment can’t make more product that the equipment is capable of producing (this assumes that shift work is not a variable). So, from my earnings I save a portion to cover the eventuality that I may need to expand.
As the success of the business grows, and demand for my product increases, my workforce increases, and my “factory” increases. But also my requirement for raw material increases. As the “owner” of the business, I find my time spent not so much in hands on manufacturing, but in “managing” the processes necessary to keep the business functioning.
I think you might be getting my drift, which is, the more successful the business endeavor becomes, the more complex it’s structure naturally has to be.
This is all well and good, in a small community where an entrepreneur creates a successful business, providing jobs for local people directly and indirectly. The owner lives in the community and has the welfare of his workers at heart because they are his neighbors and friends, but the whole thing falls apart when a “corporation” buys the business. (hostile takeover, leveraged buyout)
The management now resides elsewhere, they have no connection to the community, “profit” not capital becomes the reason for existence, and the community loses. This is where America went wrong. Calling “Corporatist America” Capitalist is the biggest mistake everyone makes.
I’m mostly in agreement and appreciate this direction of thought.
I’m chewing on the idea that if the “financial system” collapses – who should care? I know it’s not so simple.
The only purpose of rhe financial system is to efficiently distribute capital – I notice that the financial system is consuming a much larger piece of the economic pie than ever before in history – and at the same time this incredibly complex and expensive system is responsible for producing todays economic chaos..Why do people think this system is so valuable?
If the “financial system” as we know it collapsed, all real “capital” will remain intact..all that will die seems like it might not only be causing more damage than good.
The only ultimate benefit of the “leveraged” system is to create more liquidity – The system has in effect been “printing money” instead of the government..
Jim E,
“If the “financial system” as we know it collapsed, all real “capital” will remain intact..all that will die seems like it might not only be causing more damage than good.”
A sudden collapse would cause “general trust between people” to evaporate. Would lead to far too much chaos. Maybe even a mad max scenario.
Mansoor
@Mansoor: Sorry to sound rude, but I choked on your item (2), “bread . . . = capital.” –If memory serves, the staff of life (bread) was around for a very long time before capitalism as a system reared its greedy head. Also, even if we say “to hell with history” and stick with your equation, we’d have to ask you to invent a magic, self-expanding bread; since it is an empirical fact that capitalism requires ever-expanding value, a circumstance known as “the accumulation of capital.” –Perhaps you could have recourse to religion; somebody told me that Jesus (of biblical fame, not the outfielder) could multiply bread (and sardines) at will. Dial 1-800-POPE.
solo,
I am trying to do here is to create a more useful and more practical definition of capitalism.
The way I see it anything of value is “capital”. Money (dollars) are just one form of it.
Capital accumulation in itself is not a major problem. Mis-use of capital is a major problem because it CAN be used to corrupt relationships and institutions.
If our money system was “controlled” by our government then the government could simply deficit spend and deal with low money velocity (deflation). We would not need such severe recessions and depressions to “reset” debt.
Mansoor
solo, you raise a more interesting point than you may realize.
Just what IS the relationship between the rise of bread (in the historic, not the yeasty) sense and the rise of capitalism?
I submit to you there is more of a connection than is commonly appreciated. “Bread” is a foodstuff of agricultural civilization, and the cradle of agricultural civilization–Mesopotamia–was also the cradle of most of the innovations that “capitalism” relies on, such as ledger accounting, debt, debt cancellation, interest rates, the setting of interest rates, the arithmetical systems needed to calculate all this, and of course the codes, modes, systems, and institutions required to put all of this into place.
Those were heavily grounded in the tripartite Indo-European cultural system of kings (more accurately, lugals, “big men”), priests, and warriors.
Bread–a wad of moistened, raised, kneaded, and baked carbohydrate extracted from grass species carefully agronomically bred to produce much higher than normal seeds–is a Neolithic innovation. Bread is not something that forest, or steppe, or savanna people prepare. Bread requires the establishment of large monocrops of grain, and that requires the establishment of an uber-system of agriculture as complex as accounting/finance/proto-capitalism. And as just about any Neolithic archaeologist can tell you, people didn’t eat bread because it was the best possible food for you. It was very likely a desperation food. (For the view on that, see Jared Diamond.)
There is no question that both settled and migrant humans ate various porridges and wads made out of plant seeds in various seasons. But the baking of bread per se goes bun-in-oven with the making of loans, the creation of debt, and a highly stratified society. If you doubt the latter, just look online for the Code of Hammurabi. A huge portion of it is obsessed with laying out all sorts of minutiae of who owns what, under what conditions, and how to get even when someone transgresses.
If you really want to rethink freedom versus markets, in other words, we have to go back a lot earlier than 6,000 years ago, when bread and capitalism first arose. Grain and money are two forms of the same thing, only you can’t eat money.
By the way, it was analogic representation of agriculturalists’ trading in grain, oil, and animals–i.e., pictures for counting–that gave rise to the systems of writing *and* accounting we still use today. We are so deeply immersed in these systems, that rethinking any of it becomes very difficult.
FYI:
http://michael-hudson.com/tag/ancient-near-east/
http://www.fordham.edu/halsall/ancient/hamcode.asp#text
http://magazine.uchicago.edu/1102/features/the_origins_of_writing.shtml
PS–Monotheism probably had something to do with all this, and as we know the first monotheism was female.
http://www.amazon.com/Birth-Origins-Agriculture-Studies-Archaeology/dp/0521651352
“There is no hierarchy of worthiness between capitalists that means you are a better guy if you own a factory so opposed to a hedge fund.”
The assumption here is that Labor “never” sees (or has never seen) any of the productivity gains from the capital and Labor input. This is not entirely true. Up till the seventies, Labor did see a larger from the productivity gains in efficiency. We did experience increases in Labor share. The trick is to get it back to what it was.
run75441 says
“The trick is to get it back to what it was.”
Yes. Rebalance. With money in its proper place.
Mansoor
Transparency as Brooksley Born suggested for the derivatives market, tax the crap out of non-labor intensive profits, place an emphasis on investments in Labor intensive profits, etc. Th fastest growing segment of the economy from the eighties till 2008 was Financial Services.
” The figures on profits are even more striking. For example, the financial services industry’s share of corporate profits in the United States was around 10% in the early 1980s but peaked at 40% last year. ” http://www.bis.org/speeches/sp081119.htm
Running out of time here
Mansoor, your expanded definition of capital is a good start. I think it only scratches the surface. For instance: how do you account for industrial/mining extractions; nuclear meltdowns; financial meltdowns; and toxic cleanup after the bandits have disappeared.
And where would you draw the line on Dylan Ratigan’s “Extractions”: bad trade policies (bad currency policies); a banking industry that doesn’t know what it is doing and doesn’t even think about the consequences; and taxation that accomplishes nothing for the greater social good?
It just astonished me that we have such a childish definition of capitalism. Please continue because in defining it, we also define the problems.
The hierarchy of worthinessness is different in different societies. In Japan, the factory owner would be held in more esteem if he created more jobs than the hedgie.
hey man, it didn’t work fine at all. Trust (essential) in stock markets was destroyed, investment professionals who didn’t buy into ‘earnings don’t matter’ were forced to resign to preserve their integrity, a generation of educated kids with no training or discipline in real jobs were seduced into pursuing millionaire status before age 25 or whatever, instead. VC money was freely handed around by the million-fold to anyone connected in the Ivy with a ‘business plan’ outline of an idea based on a little Internet technology (little known secret?).
All this while the PPT (Plumbers Protection Team) -that’s the head of the FED, TSY, Goldman Sachs, etc. were in full swing with all the tools they needed to bring about discipline,
Wiki
Definition of designee: nobody has to answer to no buddy.
Instead, the powers that be, listed above, chose to throw fuel on the fire.
Total corruption of the stock market complete with successful viral memes: ‘this is all so new, investment experience doesn’t count here’ and ‘earnings don’t matter.’
Just to bring you up to date, man.
man, the above is in response to your “… Enron, Worldcom, the dot coms were toasted by the market and rightly so. one dollar, one vote worked just fine.
LeeAnn,
“hey man, it didn’t work fine at all. Trust (essential) in stock markets was destroyed,”
You should not trust stuff in the creation so much (stock markets, entrepreneurs, leaders, etc). The amount of justice these can provide is very approximate any way (not perfect at all). And at times these institutions will have to be cleansed and disciplined (which won’t bring back the losses).
Mansoor
mansoor:
“We need to separate industrial capitalism (production) from financial capitalism (financing).”
Very true. Until an emphasis is placed on the former at the expense of the latter, the Labor Force is doomed and will cotinue to shrink.
As Jeremy Grantham in his fine piece pointed out mid-week, there has been an unholy alliance between corporate profits and government spending, something he said he “never saw as a faint possibility”.
If he’s being serious, then it looks like we have a nominee for historical ignoramus of the year. Although things are far worse than they used to be, when in the capitalist era has it ever not been like that? Look at the history of corporate empowerment going back to the mid 19th century, as just one example. State-backed imperial monopoly goes back centuries further than that.
And it is probably an early example of what I expect will become an increasingly political debate, rather than a managerialist debate, about the direction of developed economies.
This is certainly a debate which will need to begin. This has long been nothing but politics, but there’s been no debate, just a unilateral assault by the rich and big corporations on the people, those who actually work, on civil society, on democracy, and on all freedom. This means the assault has been upon politics itself, to abolish them and replace them with direct administrative rule on behalf of corporations (globalization cadres like the WTO and IMF), wherever the corporations don’t exercise direct dictatorship.
The market ideology is simple: Only the rich and big corporate persons exist at all as citizens or even as human beings. They have infinite rights and zero responsibilities or risks.
Meanwhile human beings, except insofar as they have sufficient money, are not citizens or human at all, have zero rights, but do have infinite responsibilities to respect the prerogatives of their overlords. (The piece itself implicitly agrees, as we see with its drive-by attack on the uprising. More lies about alleged responsibilities of the poor to “society”. I’d say they have responsibilities to their own communities, and to their fellow impoverished elsewhere, but to nothing and no one else. Everyone else is simply part of a massive crime wave against them.)
The truth is of course the opposite. Freedom can exist only among peers. Obviously being peers includes rough material equality. By definition it’s impossible for freedom, contracts, etc. to exist wherever there’s a significant material or other power differential. If you’re on the wrong side of such a differential, you’re already disenfranchised and dispossessed. You’ve already had your freedom and citizenship stolen, and probably far more. You’ve already been stripped of your rightful society (this was at the core of the Greek political concept of tyranny: the tyrant was one who usurped the entire political realm by setting himself above others and making political peer relations impossible). You certainly can’t have responsibilities to things that don’t exist. And you certainly cannot have rights under such conditions.
So why not live up to our human responsibilities, our responsibilities to ourselves, our friends and families, our communities, our lost democracy, by asserting our right outside this criminal system, and wherever possible against it? Toward it and all who support it, indeed, we should mirror its purely mercenary policy.
“Ignoramus of the year” indeed. More stunning naiveté . . . or something. Grantham is like an economist, an expert arborist hopelessly lost in the Grimm forest. He really must get out of the ivory tower more often, take a few 101-level courses in history, sociology, and psychology.
Some time ago the US Chamber of
HorrorsCommerce had as their mission slogan “Less government in business; more business in government,” which some would call fascism, and we are so there. But for a major investment strategist to say at this date he never saw something so self-evident as even a faint possibility is taser-stunning. So many heads and so few baskets.Nevertheless, Sell on News closes well:
Attempter, sometimes you frighten me but I really like what you just said. I must be firing on all cylinders today because things are sounding so salient. Your “Freedom can only exist among peers” might be a concept the depth of which I managed to miss until now. Thanks. I’m pretty much with you. I guess I think we should take smaller, safer steps. Which, I admit, hasn’t been very successful yet.
Attempter, ditto to Susan. You’re giving voice to things which are frustratingly excluded from the conversation. I greatly value that.
P.S. Attempter, if you can provide a recommended link for further study on the greek political concept of tyranny, that would be greatly appreciated!
Actually, anything that speaks to why we enslave ourselves to tyranny would be even better. I’m assuming tyranny doesn’t work unless we enslave ourselves to it. Do we find a peace in doing that?
Thanks!
I haven’t read much about it online, but mostly in discussions in books, for example Arendt’s On Revolution. But you should be able to find lots of stuff by searching for terms like Ancient Greek Tyranny, Usurpation among the Ancient Greeks, Harmodius and Aristogeton (legendary tyrannicides), etc.
Why do we let ourselves be tyrannized? It’s a combination of stupidity (in not seeing one’s real economic interest), laziness, cowardice, along with the desire to escape from the responsibilities of freedom and remain infantile. And in the short run tyranny often does seem to provide a greater, cheaper material bounty (because it’s robbing others). The temporarily sated people don’t stop to think of how they’ll eventually have to pay the bill, with severe interest.
The goal is to take all the rightfully dissatisfied energy which is currently channeled into the escape from freedom and help it find its far more rightful and truly satisfying path toward true freedom.
Unfortunately for Icelanders – despite the rejection of the initial Icesave deal – their government hasn’t stuck it to their old banks’ creditors.
http://www.truth-out.org/new-york-times-reporting-misses-mark-iceland-prints-neoliberal-line/1311020651
A very good essay, thanks. I have been of the opinion since a long time already that we will see the result at the ballot box but it simply takes so darn long a period of time until it actually takes place and people of integrity will finally stand up to the financial institutions. Below I show you an email I sent to the Iceland President on Feb. 2 of this year, to show you how passionate I feel about it.
Quote
Dear Mr. President,
I admire your decision to veto the Icesave bill and consequently to allow the good people of Iceland to decide on this matter. Although I am an unaffected individual and Swiss citizen, it turns my stomach to see the politicians in Europe to send their own people into debt slavery instead of rejecting the idea of transferring the costs of bad investment decisions by banks and others to the tax payer.
You are a hero in my eyes and I wish you, dear Mr. President, all the best and good luck.
With best regards and great respect
Linus Huber
Unquote
Keep up the excellent work Yves and thanks for all these great articles.
We’re seeing the result at the ballot box, alright.
To wit, the news from Ames today.
Thanks for the item Yves.
I like the references to self-organisation. Unfortunately Sell On News seems to pull up short, like so many that hint at something beyond democracy and capitalism.
As attempter says “Freedom can exist only among peers”. Both capitalism and representative democracy are built on hierarchies and so will always tend to totalitarianism.
Self-organisation is the alternative to being slaves.
I agree, except that even hierarchies are groups self-organizing into stratified class arrangements they then justify with some ideology or other, the latest being ‘free markets’. Within the hierarchy there is restricted self-organization along the lines of; play along and hope to “Do Well”, or resist and risk being crushed.
Human social hierarchies have the unfortunate side effect of selecting for growth. Our corporations and nation-states, in combination with a ponzi-scheme monetary system, are addicted to infinite growth. This dooms them to collapse, only the cost of their growing is difficult to impossible to assess, not least because value itself is immeasurable. However, despite this self-destructive property there has been so much energy invested in these hierarchies, including cultural and intellectual, that changing to the only reasonably sustainable alternative–anarchy–cannot be accomplished smoothly. Certainly not quickly. Nevertheless, the ‘freer’ self-organization anarchy must deliver is something we are obliged to learn, and it will not be easy, assuming for a moment we are to accomplish this enormous task at all.
On a side note I’d like to point out that, in my opinion, there is no such thing as freedom, just as there is no uncaused cause. There are no actions, only reactions. Agency is an illusion, as is free will. Yet more embarrassing than failing to recognize this is thinking ‘free’ markets is a term that can possibly make sense, or refer to anything other than a cynical fantasy. To believe capitalism, which is about concentration of wealth to the ‘successful’ ‘winners’ in the ‘open competition’ of the ‘free’ market can be ‘free’ is to ignore the vast majority of reality. The only reason I can see that the word, the myth, the notion has such power over its meek adherents is that ‘socialism’ and ‘communism’ (also hierarchies) failed so spectacularly. Because the dominant global system is hierarchical, and therefore elitist, what alternative to capitalism could there possibly be? It ‘beat’ its ‘enemies’, case solved.
The alternative is direct democracy, or autarky, or anarchy, which is, as far as I can tell, the only social arrangement or mode which can foster and live happily with steady-state growth, which is the stage of development humanity, at the economic-ecological level, has reached. Whatever ‘growth’ we can force upon ourselves from here on in can only be seen as such by ignoring all increasingly costly “externalities”. As if there can be anything external to economic activity which is of the environment we all are part of.
(Any relation of Peter Kropotkin by any chance, Mikhail?)
Amazing what a six week holiday can do. Welcome back to the front line Toby.
Toby: “On a side note I’d like to point out that, in my opinion, there is no such thing as freedom, just as there is no uncaused cause. There are no actions, only reactions. Agency is an illusion, as is free will.”
George Christoph Lichtenberg: “That a false hypothesis is sometimes preferable to an exact one is proven in the doctrine of human freedom. Man is, without a doubt, unfree. But it takes profound philosophical study for a man not to be led astray by such an insight. Barely one in a thousand has the necessary time and patience for such study, and of these hundreds, barely one has the necessary intelligence. This is why freedom is the most convenient conception and will, in the future, remain the most common, so much do appearances favour it.”
John Brockman: “Man is dead. Credit his death to an invention. The invention was the grasping of a conceptual whole, a set of relationships which had not been previously recognized. The invention was man-made. It was the recognition that reality was communicable. The process was the transmission of neural pattern. Such patterns are electrical not mental. The system of communication and control functioned without individual awareness or consent.The message in the system was not words, ideas, images, etc. The message was nonlinear: operant neural pattern. It became clear that new concepts of communication and control involved a new interpretation of man, of man’s knowledge of the universe, and of society.”
John Brockman: “Traditional American intellectuals are, in a sense, increasingly reactionary, and quite often proudly (and perversely) ignorant of many of the truly significant intellectual accomplishments of our time.”
Free Will ? Think again… science, not philosophy
http://www.youtube.com/watchv=N6S9OidmNZM&feature=player_embedded#at=81
sorry, something wrong with that link, try
http://www.blinkx.com/watch-video/neuroscience-and-free-will/IyMMqjscBcRkeKWeA9VHAA
“Freedom, liberation, this must be the aim of man. To become free, to be liberated from slavery: this is what a man ought to strive for when he becomes even a little conscious of his position. There is nothing else for him, and nothing else is possible so long as he remains a slave both inwardly and outwardly. But he cannot cease to be a slave outwardly while he remains a slave inwardly. Therefore in order to become free, man must gain inner freedom.
“The first reason for man’s inner slavery is his ignorance, and above all, his ignorance of himself. Without self-knowledge, without understanding the working and functions of his machine, man cannot be free, he cannot govern himself and he will always remain a slave, and the plaything of the forces acting upon him. “This is why in all ancient teachings the first demand at the beginning of the way to liberation was: ‘Know thyself.’
“We shall speak of these words now.”
– GI Gurdjieff
Fascism and bolshevism are both based on impressing their ideas on others by force, and the result actually is domination by a small party at the expense of the whole population of a country. For instance, in Russia peasants and workmen, in whose name the revolution was made, are now in a much worse position than before, and suffer much more than they did before the revolution. It is all words and lies, and the country only suffers.
From this point of view all political activities destroying personal freedom are criminal. Work needs personal freedom.
-PD Ouspensky
Thanks for the article, Yves…and Toby, you are on fire today. Very interesting and well thought out comments. [Of course, I always think that when people write things agreeing with my pre-existing beliefs.]
But seriously, very well put. I especially liked the “Value Delusion” discussion above. I tried to make a similar point this week in response to a silly Costard comment, but I had neither the time nor the talent to explain my thoughts as well you did.
Of course, the “Value Delusion” cuts both ways, as many on this thread obviously don’t understand.
One other point. Wake me when we’re free of jealousy and greed. Then we’ll have “free” markets.
Toby ( or attemper or anyone),
Two questions: 1) free will is one method to judge the properness or goodness of human action via responsibilty. If you dethrone it, what will you replace it with? 2) Why—and this question goes back to the original post and beyond—does everyone, including the contributers of this blog, Yves, Harrison, etc., with the exception of Phil, invoke “economic growth” as a good thing? To me, it seems like population growth: a good idea at one time (I guess), but unless we start populating the rest of the galaxy, something that should be discouraged.
I apologize if my questions seem confusing but I am confused.
1. Free will is, scientifically, a false idea. It’s been proven that consciousness lags behind the neurotransmissions that initiate and action.
2. Philosophically, free will is an illusion in an absolute sense. Like Nietzsche said, there’s only strong or weak wills along some vector toward some goal. So the question is what’s the goal, and what’s to be the point of freedom. That’s the only way in which the concept freedom has any content. The goal is judged according to other measures, generally moral ones (or immorality masquerading as morality, in the case of “the market”).
(The bourgeois fetishization of negative freedom is of course really a camouflage for might makes right according to the imperatives of concentrated wealth, i.e. the eradication of all human measures of freedom, which was the occasion for this OP.)
3. Even if for whatever moral/theological reason one preferred to believe in free will, what could be the meaning of that under nascent totalitarian feudalism? How absurd to say that someone in chains has “free will”.
In that case, and if one really can’t find one’s way to judge acts according to humanistic morality, then it’s better to just arbitrarily select a measure and judge according to it, as long as it’s different from and counter to that of the criminal elites.
“1. Free will is, scientifically, a false idea. It’s been proven that consciousness lags behind the neurotransmissions that initiate and action.”
Sorry can’t agree that it’s a ‘false idea’. It’s a useful concept. Yes, consciousness lags, as illustrated in the link I just posted above. However, what that shows is that we don’t understand how brains and consciousness work. In the everyday, practical world, we all make choices, and even if, ultimately, that sense of choice is illusory, we still have no choice but to use what we’ve got… and choose, and decide… within whatever the limits are.
Attempter, if free will doesn’t exist then the standard for determining what individual actions are good and bad and who—if anyone—should be responsible and thus rewarded or punished for actions is determined abitrarily by the group? If so, what is preventing that from becoming might makes right?
By the way, I am not arguing that people’s actions are somehow outside of cause and effect. Presently, I take the Aristotle idea that free will is primarily a choice (irony there) of beings with the capacity to reason: “man as rational has free will”. In that sense my view is like wb’s.
1. Just because the potential strength which may suffice to impose might makes right is maybe always present doesn’t mean that every framework of judgement would in fact impose it. Economic and political democracy would not, except upon the incorrigibly psychopathic who refuse to live as human beings and insist upon trying to destroy democracy.
2. Decentralization and relocalization of all economic and political power would greatly cut down on any latent potential for tyranny in the first place, as wealth and power would be unable to concentrate.
“1) free will is one method to judge the properness or goodness of human action via responsibilty. If you dethrone it, what will you replace it with?”
Human beings are hard-wired to distinguish between right and wrong. They were doing so long before philosophers developed the concept of “free will” in an effort to describe the world as they saw it. Thus, we have no need to accept dead philosophers’ description of “free will” as the prescription of how to run modern society.
So, any code that governs human interactions, i.e., society, no matter what it’s philospohical underpinnings, is going to describe what is right and wrong and reward those who adhere to it and punish those who do not? A society can’t exist without this? So in that manner personal (or your your parents or guardian) responibility for one’s actions with respect to that code is assumed in all societies? That does not prevent one from having different codes for different groups like lords vs serfs though. Interesting. Perhaps arguments such as over free will relate to the _degree_ of personal responsibility or in the forming of the code itself, so ideas of dead philosophers are relevant.
“Human beings are hard-wired to distinguish between right and wrong.”
I agree, even a three year old child can tell if the birthday cake is shared out fairly.
However, for us adults, it get’s much more complex, and we need all the help we can get from philosophers, dead or alive, I mean, doing triage, if there isn’t enough, how do you choose who will live and who won’t ? That’s the kind of choice folks in the Somali refugee camps have to make.
So, any code that governs human interactions, i.e., society, no matter what it’s philospohical underpinnings, is going to describe what is right and wrong and reward those who adhere to it and punish those who do not? A society can’t exist without this? So in that manner personal (or your your parents or guardian) responibility for one’s actions with respect to that code is assumed in all societies? That does not prevent one from having different codes for different groups like lords vs serfs though. Interesting. Perhaps arguments such as over free will relate to the _degree_ of personal responsibility or in the forming of the code itself, so ideas of dead philosophers are relevant.
The problem I have with all philosophers, living and dead, is that their descriptive constructs, once accepted as true, become prescriptive. A philosophy is an engine, not a camera.
What strikes me about your questions regarding free will is that they sound very much like a version of “if you don’t believe in God, how can you be moral?” Just substitute “free will” for “God,” and you’re there.
The fact is that mankind was moral before it invented God, it was moral before it invented “free will,” and it will remain moral if it decides to give up both fictions. Indeed, once free of these fictions, mankind might recognize the many immoral things it has done but was blind to because the fictions were used to make immoral actions appear moral.
Tao, everyone who thinks is a philosopher because everyone needs a guide how to live. I don’t know of any human being that can live without a philosophy of some sort. I can understand your lament about philosophy that one danger is it becoming prescriptive, but that’s really about the person holding it, not the philosophy (unless the latter takes itself very seriously which I guess a lot do). A lot of people for whatever reason cement their philosophy in college, say, and then use it as a complete filter on the world. Actually we all do this but to different degrees. Anyone trained in a science, for example, hopefully views their beliefs in anything as fluid, updating them when new evidence or arguments arise. But that’s a myth too really because we are all human beings and it isn’t easy being one. Oh god, I don’t know. Who the hell started this thread?
I agree with Tao J, that we have an innate sense of morality, that predates all institutionalized religions, and that that innate sense gets co-opted by philosophies and religions.
But I also think that that innate ethical instinct, so to speak, is fragile and can be overwhelmed by the dark side of human nature. Hence we need philosophical or religious codes to help us along. But I agree with Tao J, it’s a messy, faulty business, no guarantee of perfection.
Dirk77, very good point, “everyone who thinks is a philosopher”, there’s really no escape, so we may as well strive for good philosophy, rather than settle for dogma or propaganda or slogans, (for example, moral philosopher, Mary Midgley), which can help sort through the historical tangle that we’ve inherited.
http://en.wikipedia.org/wiki/Mary_Midgley
“A lot of people for whatever reason cement their philosophy in college, say, and then use it as a complete filter on the world.”
Ah, but not all philosophies are equal. I favour Zen, which is a kind of anti-philosophy philosophy, designed to avoid getting stuck inside any sort of filter. Including Zen.
Zen people must make great scientists then. Anyways, I suppose science will settle a number of these questions eventually. Two thousand years from now we will all laugh at the foolish things we used to believe.
@Dirk77
Tao, everyone who thinks is a philosopher because everyone needs a guide how to live.
Not true. They just think they do. Human beings crave certainty, and they don’t care how they get it. Most of us just make shit up because it is comforting to do so.
And let’s be clear: all human beings think. Your statement “everyone who thinks” implies that not everyone thinks, which is a fallacious (and obnoxious) assumption. (FYI — you seem like a nice and thoughtful person, so please don’t take my criticism of your statement as a criticism of you.)
I don’t know of any human being that can live without a philosophy of some sort.
It all comes down to how you define “philosophy.” I define it as a static belief system that describes the world as it is and as it ought to be. Under that definition, I have no philosophy because I don’t believe the world is a static thing.
I can understand your lament about philosophy that one danger is it becoming prescriptive, but that’s really about the person holding it, not the philosophy (unless the latter takes itself very seriously which I guess a lot do).
That’s not a danger but a fact. Anybody who seeks to define a dynamic world as a static thing, and all Western philosophers do, prescribes how the world ought to be.
The cognitive biases of human beings dictate this outcome. Once we cling to a particular fiction about the world, we strive to make that fiction truth, even if it means lying to ourselves (or visiting violence upon others). And then we freak out when we can no longer deny the truth.
Anyone trained in a science, for example, hopefully views their beliefs in anything as fluid, updating them when new evidence or arguments arise.
Again, our cognitive biases, particularly confirmation bias, urge us to lie to ourselves at all times. As a result, we ignore “new evidence” that we’re wrong, unless and until we can’t.
The closest thing there is to the anti-philosophy I’ve adopted– and I adopted it long after adopting the moniker “Tao Jonesing”– is the Tao Te Ching (at least certaint portions of it), as exemplified by the following passage:
When people see some things as beautiful,
other things become ugly.
When people see some things as good,
other things become bad.
Being and non-being create each other.
Difficult and easy support each other.
Long and short define each other.
High and low depend on each other.
Before and after follow each other.
Therefore the Master
acts without doing anything
and teaches without saying anything.
Things arise and she lets them come;
things disappear and she lets them go.
She has but doesn’t possess,
acts but doesn’t expect.
When her work is done, she forgets it.
That is why it lasts forever.
Tao: Not to disagree per se, but just to point something out that might seem trivial but isn’t. When you write
the point that you’re ignoring is that there is a difference. Namely, because under the spell of that idea (this applies to all ideas, not just the things you call ‘illusions’ or ‘fictions’ ;)) people behave differently. Therefore, the idea does something, even if it is something you think is unhelpful.
Here too I would simply point out a few philosophers who did not view the world as being static: A.N. Whitehead, Bruno Latour, Karl Marx (now, this last one obviously comes with a huge caveat, because pretty much the entire Marxist tradition after Marx did take his historical analysis to be a-historically true. Still, it is quite possible to develop a dynamical theory out of his work by seeing how he himself analyzed these situations. For a decent (if perhaps somewhat introductory) lecture on Marx’s method, see this.).
Tao Jonesing ,
Lao Tzu left no guidance on how to deal with bad bankers.
Mansoor
Tao, I suppose people seek to come up with a philosophy they can regard as static because they are animals too. Our cat as far as I can tell is all about pattern recognition: sees a pattern X times then develops a response. And gets upset if things happen that he can’t recognize from his present bag of patterns. A person applying his static philosophy as a filter is working at a higher level I guess but the principle is the same: sees a pattern, evaluates it according to his innate core plus his philosophy, says “oh yeah” and then moves on, and then goes to do something he enjoys. Until he runs into trouble as you say. Your words remind me of Feynman who declared his hatred of “Philosophy” and had, from what I can tell, a very dynamic world view. To me that dyanimc world view was a philosophy too, so maybe we are mincing words. Thanks everyone for your thoughts. I’ll try to set my filter on low and continue to think about them.
Toby:
Might I point you towards Bruno Latour’s work, and especially Reassembling the Social?
What you’re looking for, in any case, is a relational definition of freedom/agency. I posted a few quotes here, as my replies keep disappearing into the void here.
Yes, direct descendant. My first name is from my uncle M. Bakunin.
Like your thinking!
That was for
Toby says:
August 13, 2011 at 6:24 am
http://www.nakedcapitalism.com/2011/08/freedom-versus-markets.html#comment-444128
Self organization provides a great mechanism for efficiency, evolution and strength at difficult times. The self organizing relies on rules, i.e. a policy, that the whole organization abides by. For umpteen years, the US, and for that matter the world’s, markets performed with the policy agreed to. That reality has changed several decades ago, when some of market has instituted their own policy thereby deviating from society’s policy.
In a democracy, the justice system and regulators are in charge of enforcing society’s policy. The US justice system has slowly but obviously started to allow market sub-organization to play according to their own separate policy. Politically, the justice system started to tilt way to the right. That was culminated by the Supreme Court decision, logically laughable, that companies are also citizens. That was the coup de gras.
Economist actually have very little to do with it. A society that has more than one policy is not a democracy. Since one of the policies, the market one, works against the original policy, citizens pay the price. When the citizen’s elected government views the market policy as valid and significant, citizen lose even more and may get to where we will be in a year or two.
When the Postal Service goes postal and pretends to be Chase or Citi, wants to fire 120k workers and take away workers’ pensions, we get to a tipping point. If Obama allows that to happen, he will nullify the citizen’s policy and adopt a single market policy for all.
In simple English, this returns slavery for everyone.
It is actually spelled “coup de grace”.
Mr Muller;
I prefer the Hispanic “Golpe.”
I think I like coup de gras: the take over by the fat cats.
Ah, coup de foie gras!
The coup of the fat cats who consume abused lower beings. Perfect!
Your, not humble, but defiant, commenter wants to share his personal experience with closed industries.
In 1998-1999 I invented an alternative bicycle saddle where I and one of my satisfied customers were quoted in a 2002 Wall Street Journal article, my invention was included in a series of government (NIOSH) studies related to male sexual dysfunction that resulted in a 2009 NIOSH Workplace Solution recommending the usage of no-nose saddles, according to a San Antonio police department representative in March 2007 54% or 24 of 48 of the police bike patrol were currently riding my design, two bicycle police officers have written articles for the International Police Mountain Bike Newsletter, the second of which was referenced in a June 2011 Science section article in the New York Times.
And the paperwork is at the Patent attorney to try and sell or license my patent. so this is self serving as hell but fuck them. I have a damn good design and the industry successfully continues to convince the public that my design is crazy. After 13 + years the business has yet to make a penny or buy me more than an occasional meal and some bike maint.
The industry press and online sites have all ignored the latest NYT article….you could hear a pin drop. I haven’t even had the NY Bike Snob call my design a toilet seat again, yet, so I gues ther is blessing ther somewhere.
We have a broke system folks and it is top to bottom, stem to stern.
Laugh the global inherited rich out of control of our society.
I thought of a way to arrange a high-speed rail system in such a way that a train ride is non-stop for every single passenger.
I put it out there because its clever, but I know it will never go anywhere because of the arrayed interests against something so efficient.
I see a very large bowl of spaghetti.
You’re thinking of air travel.
Psychohistorian, always enjoy your contributions here. I saw the noseless bike seat article and clipped it to show my bike riding friends at work. One of them said that he had actually ordered one years ago and rode a few weeks with it, but couldn’t overcome his perceived loss of control. It’s still hanging in his garage. Not sure what the answer is here, the habits and neural pathways that are established make change so difficult. My habit is to blame the institutions but that isn’t always justified.
Dear psych;
I feel your altruistic pain; “No good deed goes unpunished.”
Have you hit the International Patent search level yet? My Dad spent money and stress with a very simple but clever plumbing product he designed. This in the early ’70s. When he got to the International level, voila, a ‘similar’ patent turned up in France. So, since he had a small factory owner interested in production by then, he writes off to the Frenchman asking for the North American rights, details to be hashed out later. The quite friendly French inventor writes back. “Sorry mes amis, but a large American plumbing supply manufacturor has bought up the patent and is suppressing it. Bon chance.”
Having seen my Dad go through a Shakespearian Repertoire Companys full range of emotions over this I salute you for your equinamity in the face of Evil.
I feel your pain! The insightful and prolific Steven Olson of St. Paul, Minnesota has patented
http://www.google.com/patents?id=T2QKAAAAEBAJ&printsec=abstract&zoom=4&source=gbs_overview_r&cad=0#v=onepage&q&f=false
US patent no. 6,368,227 — I kid you not!
Olson is furious at not having received a penny in royalties. ‘We’ve raised a generation of juvenile scofflaws,’ he fumes.
But a smart aleck kid named Johnny, who plans to become an attorney when he grows up, points out that due to bad drafting of the patent, it does not apply to manufactured swing sets — only to ‘substantially horizontal tree branches,’ which constitute a tiny share of installed US swing capacity.
Personally, I’ve invented a novel method of walking and chewing gum at the same time, which I’m not presently at liberty to disclose.
What “sexual dysfunction” do you refer to? Noboner-itis? Five-hour-boner-ities? Blue balls? Balls-drop-off symdrome? Gee-my-nads-itch-terrific?
I can think of many alternative hypotheses to your assertion that (whatever) happened, happened because of the bike seat design. For example, the clothes these guys wore when riding a bicycle with conventional seat design didn’t work well with that seat. (Cops, and especially bike cops, do tend to wear tight pants.)
So you might have a market for, say, a special saddle for bike cops just as the inventor of a new tactical holster might have a special carry mechanism for other LE specialties.
But if things are as you say, every guy who ever rode a bike regularly would be walking around with whatever “dysfunction” you assert the seats cause. That’d be a lot of wacky wingwangs and busted balls. Plus the Tour de France would be a big bowlegged mess.
Absent evidence to the contrary I must doubt that the entire bike seat industry is out gunning for you. That sounds like the sort of syllogism-with-missing-middle-term-so-let’s-blame-The-Man thinking that too many people leave TESC saturated with.
You might consider the possibility that your idea wasn’t good enough to warrant whatever attention, investment, and market share you feel entitled to. You might go invent some more stuff…and like straws flung in the air, see which ones go which way in a stiff breeze. Instead, you speak of one invention, and your opprobrium that it wasn’t your ticket to someone paying you for your intellectual property, and you licensing it, or whatever.
The idea that your invention was brilliant because a few people liked it, and some people published articles somewhere, and you say so, is precisely why autarky cannot work:
There are too many people running around who want fast results in line with their expectations, not in line with their efforts. They have an idea in their head whose brilliance is transparent to them, and they expect everyone else just to fall in line.
That social and economic autism doesn’t just apply to corporate speculators. In every system there are people who feel they deserve more than the next guy–you should surely be aware from that, having spent time at Evergreen, where a big part of the lefty philosophy is that if a union laborer spends 30 years up to her knees in shit and slime as a plumber, and buys a house, and has a car, any self-proclaimed “anarchist” or person with melanin or Trustafarian on food stamps is entitled to barge in and steal all that, because the worker **stole** their wages from everybody else. (“You have more! I’m entitled to it!”)
My point is that the seeds of selfishness and entitlement do not have their origins in corporations, banksters, and other sociopathic institutions. They have their origins in the human character. These institutions simply exploit that tendency in people, focusing it, automating its gleaning, and proliferating it. In gunning for these institutions–and I am of the view we should–we’ll only replace them with the same thing, if we apply the same sort of selfish, entitled, and petty thinking.
Compass rose,
“There are too many people running around who want fast results in line with their expectations, not in line with their efforts.”
Even great efforts may not pan out as expected or anywhere near expected. Such is reality.
Mansoor
“The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered”…
What I do not understand is where this idea arose from to begin with. To me it seems so anti-natural, so criminal! It never happened before, it has no real precedents.
Dear Maju;
If one accepts the Christian Doctrine of Original Sin, such self serving and cupidity is only to be expected. A short perusal of the modern history of ‘Prosperity Theology’ will point the way.
If one does not accept theological doctrine as a ‘given,’ recourse to the Theory of Entropy should give one all the intellectual support needed. When everything ‘naturally’ falls apart over time, where is the surprise when human constructs, like morality and ‘good governance’, follow suit? (Love those gambling metaphors.)
The quote you open with can also easily be used to describe Wars of any and all kinds throughout human history. All you need is class divisions and an unequal distribution of power.
Look no further than the NY Federal Reserve and Wall Street that gained control of the investment retirement funds of the states. This at a time when they’re main interest is in privatizing Social Security and the states are trying to put people into SS because of failure of present marketing system. Think of bail out of car companies; profit was in having the government pick up the retirement and health care and permitting export of jobs. Great system we have developed thru deregulation and free trade.
“How about management skill and talent?”
BWA-HA-HA-HA-HA-HA! Stop it, you’re killing me!
Has anyone played a simulation game called Star Power? I was involved with it in HS in the ’70s. It is an encounter group game about power. From the web site:
” What Do StarPower Participants Learn?
Power is a taboo topic for most people. Yet, it profoundly affects the way we do business, manage organizations, and relate to those we are supposed to serve.
StarPower is used in cultural diversity programs, management training for younger managers on the “fast track”, training on the proper use of power for such diverse groups as police officers, doctors, gangs, supervisors of factory workers and their managers.
StarPower helps participants:
Understand that power must have a legitimate basis to be effective.
See and feel the effect of disempowerment.
Realize that sharing power can increase it while hoarding or abusing power can diminish it.
Understand the effect that systems can have on power.
Be aware of how tempting it is for well-intentioned people to abuse power.
Understand that there are different kinds of power.
Personally experience and discuss the excitement of power and the despair of powerlessness.
As part of management training, StarPower illustrates how power affects performance, motivation and behavior. In diversity training, StarPower provokes discussion surrounding bias and gender, and helps examine how power manifests itself within a diverse organization.
What Happens in StarPower?
StarPower participants are challenged to progress from one level of society to another by acquiring wealth through trading with others. The first two rounds Simulation Contents…are very sociable. People are laughing, talking, and having a good time exchanging chips. Then the wealthiest group gains power.
Barriers spring up between the various levels of the society. Communication gets strained. The group that has the power often tries to protect their power through illegitimate means. The others respond by giving up, organizing, or overthrowing the power group. After the simulation winds down, participants discuss power in safe, yet revealing, ways.”
It is really a simulation, a game set up as a market based society using chips of different values. Once the rules are explained the trading goes on, and invariably, simply by following the rules, the most valuable and then almost all of the chips fall into the hands of a small group, who then proceed to set up the rules to benefit them, at the cost of everyone else. It got ugly when I played as a teen. Imagine in real life how ugly when a tiny group dominates the overwhelming majority with real power.
http://www.stsintl.com/business/star_power.html
http://en.wikipedia.org/wiki/StarPower_%28game%29
Mr Tioxin;
Sorry, I was on the ‘spur’ track. The crowd I hung around with were the types that subscribed to “Strategy and Tactics” and read lots of ‘Memoirs.’ Some of my old friends did indeed make it into the “Realm Sinister.” I ended up trying to figure out what this “Life” business was all about. The rest is (non)history.
This really is a gutless post written with alligator arms.
The author does not extend himself in any way. The closest he author comes to making a claim is: “Markets should not be allowed to roam free without restriction.”
Wow. Way to go on a limb there, Pseudonym Author.
The rest of the post is nothing but fluffy references to other commentators.
Even more frustrating is that he doesn’t even frame the issue properly. The ongoing debate b/w Left and Right (or whomever you want to insert as combatants) is NOT whether markets should be completely unregulated, but rather the degree of that regulation.
Even on the simple framing of an issue, the author in gutless fashion, frames it as a binary all or nothing statement so that he’s merely arguing with strawmen.
At one point, he actually does stumble on to
something interesting, when he writes: “The shortcomings are especially problematic in the case of financial markets, which are by necessity a system of rules. Allowing financiers to self organise the rules, means that they can do exactly what has happened — go a long way to destroying the system while enriching themselves to an absurd extent.”
But he doesn’t pursue it. He simply relinquishes his point of view to Jeremy Grantham.
Weak.
1. Free-Markets advocates do not argue for absolute freedom, any more than free-market skeptics argue for complete and total regulation. Yes, there are extremists on both sides, but by and large it’s a matter of degree.
Markets are not rules. Markets are an information mechanism. Consider another information mechanism–the internet. Specifically search engines.
Why is Google the best search engine?
Because Google recognized that Central Planning and information dissemination is a bad combination.
The information provided from a Google search is not actually provided by Google. No, the information is actually provided by other participants on the web, based on how sites link to one another. Google simply mines the site-to-site linkage and harvests accordingly.
Google works, not because Larry and Sergey are the ultimate arbiters. It works because the free marketplace of other websites decide what is relevant. Larry and Sergey merely provided the algorithm that counts the votes.
Google is a free market, as opposed to Excite or Ask Jeeves…which were centrally planned…and sucked accordingly.
Obviously, Google is not perfect. Far from it. But it’s the best; and until a better method comes along, we’re stuck with it. It’s the same way with Free-er Markets.
2. As for the “self-organization” of rules….Yes, markets do need an external source of regulation. Godel’s Incompleteness Theorem is instructive: No system is coherent without the rules of a “higher” system. Logically and mathematically unassailable. If you lament the disgusting and chaotic consequences of financiers making the rules as they go, then the Incompleteness Theorem is your best source of support.
But again, the rules need to be clear and simple. And they won’t be perfect. Perfect rules are like perfect maps…one to one scales that need rules and maps unto themselves, thus nullifying their status as rules and maps.
See the US Tax Code, or better yet…Luis Borges’ “On Exactitude of Science”.
Vapor:
“Google is a free market, as opposed to Excite or Ask Jeeves…which were centrally planned…and sucked accordingly.”
The great innovators were punks who basically picked up code from the floor, packaged it, got some lawyers, got some fundin’, and the rest is history and now they’re a part of the National Security State. Our 1s and 0s are there, evermore.
Well said, Dan Duncan. Particularly your subtle distinction between ‘free’ and ‘freer’ [or ‘freeish’] markets, since invoking the phrase ‘free markets’ has become a grave Thoughtcrime offense in these precincts.
After all, if one wants to harp on semantics, one constantly sees the word ‘deflation’ employed imprecisely, when our present situation is clearly ‘disinflation’ not ‘deflation.’
As for abolishing economists, a new subversive term is needed to replace the banned word. Something pejorative, such as ‘eCLOWNomists.’ Make them wear polka dots, orange hair and whiteface make-up whilst prevaricating on Bubblevision.
If successful, extend the ukase to politicians. ;-)
Well said, Dan D.
To abolish economics, we must rebrand its deracinated practitioners as eCLOWNomists.
Attired by law in polka dots, orange wig and whiteface make-up when they prevaricate on Bubblevision, eCLOWNomists will soon be as disesteemed as meth dealers, child molesters and members of CONgress.
Don’t forget the honking nose.
And just one other point about honking noses: they are really very inarticulate. Have you ever understood their honks to expound on the fact, and in any detail, that there is nonsense in the air. That is this: If the carnival-market is guided by its “information mechanism” it voluntarily follows an indecipherable syntax which makes no known logical sense. The object usually does not logically follow the verb. Etc. Carnival-markets collapse because their logic fails. Ponzi, I know. But why was it only Bernie who got caught? Unless…. another shoe is dropping.
And the size 15 floppy red shoes!
And the ICP tattoo that covers their entire face.
Dan,
I hate to sound like I’m plugging ECONNED, but you really need to read it. Your point 1 is not correct. Just as “efficient markets” has strong, semi strong, and weak form definitions, The problem is that (oversimplify a tad), “free markets” is used to mean roughly two ways. There is a libertarian anarchist position (and Milton Friedman’s son described him an a libertarian anarchist, this is Friedman’s position) that there should be no government constraint on business, nada. Government should consist only of courts, defense, and (maybe) police. Even Adam Smith was a big advocate of public education, something this group opposes. So for them, contra your assertion, there should be absolutely no rules. Private parties contract freely. If someone wants to sell rat poison as baby formula, caveat emptor.
The second weaker form is “free markets” = something like “markets generally do a good job, we should intervene as little as possible”. But that still means intervention is warranted, to assure safety, disclosure, restrictions on monopolists who can abuse their market power, etc.
The problem is that the strong form “free market” advocates use the popular acceptance of the weaker form of “free markets” as always and ever good to argue for their extremist fantasy. And you see constantly in the media how any time the idea of regulation comes up, it is depicted as bad for “free markets”. Barf.
I think the issue is that the choice is: free, unfettered anarchistic markets; or, fair markets with rules and policemen.
Which do you want?
History seems to show that unfettered markets implode in financial disasters while firmly regulated markets seem to endure so long as there is a political will to police them.
Our current morass is motivated by a combination of naive, screwball thinking coupled with blatant fraud. Fix the fraud and soon you will see that naive thinking is rather like a fictional wardrobe from Brooks Bros. And by the by, does anyone wear sack suits anymore?
And the thought error emerges like an explosive fart in a Trappist monastery with your simple restating of the question.
For no one questions that there must be markets, with all that implies.
It’s kind of like saying systematic war-related rape is OK, depending on who the perp and victim are. (Hey, it’s just an exchange of power, i.e., of energy!)
Or there are some kinds of hyena-pack attacks that aren’t as bad as others. (Hey, it’s just an exchange of calories, i.e., energy!)
We can’t bipolarize our way out of this one (“If it were only Pole B instead of Pole A, suddenly exchanges would all be equal, fair, and just!”).
Markets by definition are exchanges of some sort of value. You can’t have an exchange without inequality.
The question is, what role inequality ultimately gets to play in the system. How far it’s allowed to go. How it is possible to oversee the exchange, and make sure that the same people aren’t giving and giving while the same others are taking and taking. And how to pummel anyone exploiting inequality, rather than using it as an engine of more exchange.
(This goes to the heart of the “trickle down” thing–yeah, move all that money to the top, it’ll create jobs. Yeah? We’ve been doing that for 30 years–where are the fucking jobs? Why are the fucking water and gas mains exploding? Why do working class homeowners have to keep paying property taxes on top of all the other kinds, while the corporate and billionaire tax share is at an all time low? The richer the fewer get, the fewer jobs there are and the more money is parked, not working, just frozen in, and freezing, inequality like Han Solo in carbonite.)
Part of the reason we’ve got such unequal markets is that people have tacitly subscribed to the idea that unequal markets are OK. Any of us who expects to make money for doing shite all–such as parking or moving pixels named Cash we already have–believes that. Anybody who has bought into the “intellectual property” model believes that.
The fault, dear Brutus….
But having said that, I’d settle for repatriation of offshored funds to be invested in a US public infrastructure bank lending at 2.0, plus taxing speculative wealth, pollution, and waste rather than labor. I’d settle for stiff taxes on any stock market transactions that are moved in under 28 days. Throw in a new national currency, interest free and with debt cancellation every 7 years, and limiting public sector pensions to 80% of each state’s median income…. And a free toaster oven for the most creative recipes using Donald Trump as the main ingredient. Just for fun.
Dan, I’d really recommend Michael Hudson’s ‘Trade, Development & Foreign Debt’ based on your comment. This is the final paragraph:
“All economies are planned, and all markets are structured. The key to understanding their dynamics is to ask who is doing the planning and structuring, and in whose interest countries will place decision-making. Will it be in the hands of elected officials with a clear empirical knowledge of reality to guide their national economic laws, or in those of academics serving special interests as they turn theories of international trade, lending and debt into a disinformation system?”
I think Karl Marx was right. Capitalism will collapse. The Oligarchy will extract so much capital from the workers that they will not be able to buy their products. The oligarchy will then tighten further and further causing collapse. Capitalism was created by man and it can be destroyed by him also.
Throw out economics — replace it with political economy. Surely that’s where the thrust of the author’s article should have led.
Philip, I rely on you for more than 2 sentences.
This post is why I come to read Naked Capitalism. There is so much propaganda and self interest around that what the real Financial Crisis is about is not clear.
My belief is that a lot of investors made bad bets thanks to deregulation and Credit Default Swaps. This crashed Wall Street and the Banks. American and European Banks were saved from collapse by an infusion of taxpayer monies. The economic crash decimated the governments’ revenue resulting in severe deficits. Rather than taking a haircut on their bad debt, the bankers and investors (The Elite) are pushing Austerity and Deflation to appreciate their remaining wealth.
All of us who depend on the government protection and services are being assaulted while in an information deficit daze.
Not many people are able to draw the connection from the Financial Crisis to explosive military spending in the last decade. Not sure whether this is ultimately a propaganda victory from the press, or whether it is too disturbing to admit publically.
It’s terribly distressing to listen to angry people who have lost their houses and jobs, but still believe it is ok for the US to outspend the rest of the world on weapons, and engage in 4 or 5 wars for control of land and resources, The homes and jobs that victims have lost were used to finance the major war crimes this country has an is committing. Ultimately the purveyors of financial violence will be held to account.
I’m responding to everyone today… it must be the wine. But I cannot let your comment go without mine. I wish that people would connect the dots too. Our military establishment just pats us on the head and says “Don’t you worry.” But I worry. I see no rhyme nor reason to our aggression. I feel ashamed. I wan’t it to be discussed in an open forum and I want it to change.
The military has always operated hand in glove with the financial establishment.
Thank you, IraqVet.
You make the most important point of all for America’s future. The US spends an excess 4% of GDP on maintaining its global military empire, versus what it would cost simply to defend its own borders in a peaceful neighborhood.
Compounded over decades, this immense malinvestment has systematically hollowed out and impoverished a US economy which produced half of planetary GDP in 1945.
The musclebound US military empire is the single worst investment in human history.
You quoted the fecitious GDP lie, these are the sounds and smells of the tripe that pours forth from pro-industry DC Tinker-Tanks. Whenever the Pentagon Inc is threatened with a smigden of financial responsibility, bought and sold legislators start to hurl the GDP fairy dust and horseshit. We spend far more on “Defense”, conservative pathology aside.
Say what? If you’re responding to me, you obviously didn’t get my point.
“Freedom?”
That’s a mute point since we have government backed and enforced competitive counterfeiting as our money system.
The only “freedom” we have had has been for bankers at the expense of everyone else.
The case of Iceland repudiating liability for the bankers’ debts is hardly a case of democracy vs capitalism. It is certainly not a case of democracy vs free markets. The idea that the state has any liability for privately contracted debts is anathema to any free marketer.
So how should we characterize the democratic repudiation of the liabilities of the bankers? The attempt to hold the state liable is an abuse of democracy by a faction. Madison was well aware of the problem of factions, special interests. The current crisis should have prompted a relentless examination or the role of banks, and the rules governing banks, in our democracy. That’s it.
But for some reason, we cannot get around to that. I attribute it to the fact that the peaks of the American press are in New York City and the standard of living of the majordomos of the press could only fall if banking was seriously restructured. So as a corrective, the New York Times, Disney, Comcast, Viacom, and Time-Warner should be prohibited from publishing or broadcasting anything with political content. That would be democratic virtue in action.
Is there a ‘best work,’ documenting/describing the evisceration of the middle classes in Latin American in the 60’s and 70’s?
All good and well, Yves, but in the interest of drilling down to practical remedies, how much of the shenanigans do you think could be eliminated by (say) getting rid of fractional reserve lending–which many consider fraud–changing the mandate of the Fed, etc? I’d love to eliminate economics departments from universities, to believe Dodd-Frank will keep our financial system from melting down, and for a unicorn to fly in with my coffee every morning. However, without getting deep into ideology, it seems to me we could make a good start by killing some of the monsters we’ve created on our own.
It’s obvious to me all our problems are due to a genetic flaw.
We descended from Apes. The Ape social organization is neither one of passive herd animals like cows or sheep, nor independent libertarians and free market theorists like cats.
It is composed of clans of Apes dominated by the Alpha male Ape. These clans come in conflict with each other when seeking growth in the face of limited resources and girl Apes. Evolutionary attempts at breeding the Alpha girl Ape have fallen short as a fix for this basic flaw in Ape-Human DNA.
On the other hand, there does exist in nature the bird social organization. It is best understood when observing geese flying in the “wing” pattern. This is a peer-to-peer organization where any goose signals a change in direction with it’s wing tips, then this is picked up by the goose nearby whom either accepts the change or not, and in this way signals are passed among the flock and new directions are navigated. Other changes are sensed in the bird community, notably environmental warming and cooling, and migration timing is adjusted accordingly.
As a result of descending from Apes, all social organization throughout Ape-Human history in both economic and political organization are flawed due to being built upon faulty DNA.
However, better systems have been proposed by some insightful researchers of alternative DNA, most notably bird DNA.
Much detail has yet to be worked out, but a promising view is held by MMTers. They note that if we were birds, there is a bird feeder continually replenished by the Supreme Being(s) and all birds have equal access to this bird feeder. This is why birds seem so happy and sing all the time.
Food for much thought and discussion, methinks.
EO Wilson has said some stuff along these lines, how unfortunate it is for this planet that the dominant species is a meat eating primate (meat is high up the food chain and very costly in biological energy sense).
I just found some brand new research on bird theory, which set me off on this subject once again.
http://www.youtube.com/watch?v=qoVlcWvxffc&feature=feedf
The way things are going, methinks it won’t be long before we’re all gone and jellyfish and ants are the dominant species ( once again ).
http://green.blogs.nytimes.com/2011/08/12/film-on-climate-refugees-strikes-a-chord/
Cedric Regula, better outline of human nature from Sapolsky
http://www.youtube.com/watch?v=hrCVu25wQ5s
ok. He tells that us that the main difference between humans and animals is that we are better at appreciating plays and art (and I’ll add movies and books for completeness).
Then at the end he tells us the really, really big difference is our capacity for cognitive dissonance.
So he must agree that we can make believe we are Tweety Bird, ignore the fact our wings are clipped, and there are NOT really, really, big bad puddy cats in the house with us.
Just wondering about that.
Cognitive dissonance may have a bad conotation. craazyman likes to call it imagination. I suppose which term you should use depends on whether you can get whatever it is (still not identified in lecture either) to work right or not.
And this, Cedric, is why I have always been a bird, and a friend of birds, and never been comfortable in this Ape skin.
RE the unholy alliance between corps and govt, and the unholy alliances of the rich against all.
See this Blooberg piece today
Ex-Enron Trader Bankrolls Calif. Pension Change
http://www.bloomberg.com/news/2011-08-12/enron-billionaire-bankrolls-california-advocate-for-public-pension-changes.html
“John D. Arnold, a former Enron Corp. trader in Texas who became a billionaire by buying and selling natural gas, is bankrolling a group supporting changes to limit California’s pension-fund obligations”
“Supporting Changes”- that sounds tame and responsible, no?
Its a wonderfully contorted piece, from headline to end.
The headline caught my eye, and piqued my curiosity, “an Enron villian funding Cal Pensions? Odd.
Oops,no. Its a story about an Enron villain who became a hedgie and made his billions in 08 and 09. Hmm, another clever short I guess.
Now he finds he has nothing better to do with those billions than to fund the fight to steal pensions from the same folks his old firm stole from way back when.
“Enron, the Houston energy company that went bankrupt in December 2001, played a major role in California’s 2000-2001 power crisis, with traders bragging about “stealing money from ‘Grandma Millie,’” according to the state Justice Department. The company paid Arnold, whose trades had little to do with gas bound for California, an $8 million bonus that year, according to a July 2002 article published by the New York Times.”
“Arnold, 37, is a libertarian while his wife is a Democrat, Fritz said. Simonton said the Arnolds declined to be interviewed on their support for Fritz’s group”
re Fritz’s group, “In promoting a bipartisan legislative approach, she said, “I’m looking to avoid the fights we’ve seen in Wisconsin and New Jersey.”
I’m sure she is. There are 48 other states that need her help to protect against those grasping Wis citizens.
And finally this bit:
“The Arnolds pledged last year to donate a majority of their wealth, according to Giving Pledge LLC in Seattle. The couple said their foundation would be “an instrument to effect positive and transformative change” in a pledge letter. Similar vows have been made by Warren Buffett and Bill Gates”
Not sure I agree with BBGs similarity scake, but clearly the “Billionares United” movement is in full swing. I’m sure BBG meant to include the Koch’s in their comparables list.
Re your point: “We need to look at how to set the frameworks in which self organisation occurs;”
Seems to me these foundations are already doing just that, so we should keep an eye on how that self organization is working out for them.
Their “freedom” means freedom to worship at the idol of capitalist accumulation. As for capitalism = democracy, recall that the Nobel laureate of “Capitalism and Freedom” fame (one Milton Friedman) rushed to the assistance of the monster A. Pinochet, who killed Chilean democracy on Sept. 11, 1973. Also recall the great philosophical insight of the black-robed clowns on the U.S. Supreme Court, whose equation, corporations = persons = money = free speech, will live in the annals of corruption as absurdism of the first rank. “Not a one is free! Slaves all to what they own, want or fear” (Euripides)
I had a terrifying dream once about a society where people and corporations were allowed to donate money to the people who made the laws. It was so real I actually still believed it for a few momments when I woke up, I was 12 at the time and not too brite.
As we regress as a society I wonder what the euphemism for modern slaves will be “freedom impaired” “labor indebted individuals” That’s it! “LII’s
This piece reads like an advertisement for the Developmental State model of political economy. Isn’t making the market, in fact the whole economy, subservient to the will of the state precisely what’s gone on in China, South Korea, and Taiwan?
Fwiw, it really helped me sort thes issues when I learned from reading Steve Keen that there are always three primary actors: firms, workers, and bankers. After a depressionary reset firms tango with labor and bankers are small boring players who don’t cause much trouble. Gradually this changes as bankers slowly learn they can make more money lending to asset flippers in what evolves to be a full on Ponzi economy. We are here now. It’s fascinating to watch the world reaching this conclusion now, that the banks need to be brought to heel, but the three way dance keeps being presented as a two way struggle between capital and labor. The banks encourage this confusion.
Consider the huge market for criminalized psychoactive substances, and the startling paradox presents itself.The wealth extracted in both ensuring the existence of a market and alledging perpetual war against it is extraordinary,
but just business as usual. Could it be from this point, the endless war on drugs, that we can expect brutality to follow up the class ladder? Devil-take-the-hindmost so we can support a growth industry? Conspiratorial? Why sure! But our “leaders” have just decided that it’s probably better to drop dead after retirement.
Keynes did not “had it right”. His statement suggests that economists are as capable as dentists, just that economists are not as humble. In reality, economists are far from matching the general competency of dentists. Can you imagine what will happen to your tooth if your dentist is as capable in projecting the outcome of the dental operation he is performing on you as an economist?
Please reread, you have really misinterpreted the Keynes quote.
Milton Friedman is the one I am most familiar with to propagate this idea that democracy leads to free markets and vice versa, i.e. you can’t have one without the other. But I saw an interview of him about 10 or 12 years ago where he finally admitted that was not the case. He said that, looking at Singapore, he realized that the best system for free market economics was a benevolent dictatorship. “I just don’t know how to make sure it’s benevolent,” is how I remember his quote. Then he had that same stupid look on his face that Alan Greenspan had when he had to admit that he discovered his ‘philosophy’ was flawed. There was no question which Friedman preferred when given a choice between democracy and free markets. Don’t be surprised if the invisible hand is wielding a baton.
Too bad he didn’t listen to Hayek more, Hayek knew all along that a benevolent dictator was necessary, and explicitly stated that democracy was bad for the simple reason that it limited free markets…which was why he supported Pinochet so much…he also said that the only way to guarantee free markets was through constitutional action…seriously!
You’re being a bit harsh on Hayek – he supported democracy and is actually known as a ‘Social Democrat’ to some Austrians. He once remarked he was ‘not for laissez-faire’ and thought that markets were at their strongest when combined with political institutions and laws.
P.S. Xan, do you have a link?
Not just for the birds
http://jpr.sagepub.com/content/31/1/93.abstract
http://vbn.aau.dk/files/13003157/CCIS_wp_no._3
Yes. There is evidence that birds descended from dinosaurs. A virulent strain of birds does exist which combines the attributes of bird organization with predatory dinosaur DNA. This sort of species can travel globally and descend on clans of Ape-Humans, decimating them thru shear numbers much like in the movie “The Birds” by Alfred Hitchcock. And individually, they don’t eat much either.
But Ape-Humans do have the capacity to learn, so after a couple decades, in the interest of self preservation and propagating the Ape-Human gene pool, some have devised ways to use The Birds towards achieving their own ends.
But this is not particularly good news for present day Ape-Human clans in general.
Mr Regula;
Don’t forget the contributions of H. Neanderthalus, a near, (and, many suspect, intermarried,) member of the Ape Lineage. They displayed signs of “Mystical” thinking, and thus, in my opinion deserve to be classed as “Humans.”