Friday, April 01, 2011

funny capitalism

There is a funny little op ed piece in the Guardian by Dominic Rushe on the ratings agencies. Moodys, Standard and Poor and Fitch have all threatened not to rate European economies if they are held liable for faulty ratings.

Supposedly, this will be a disaster. Who, after all, will loan to Greece if Moodys isn’t the angel at the lender’s ear, whispering the point spreads based on – well, it is hard to say what it is based on. It could be based on the national debt, and the ‘lack of political will’ to cut back on deficits. But during a downturn, deficits are in fact the weapon of choice for managing an economy that is under capacity until biz cycle magic strikes and the private sector (that much misnamed mishmash of corporations and small businesses) comes roaring back. Roaring, by the way, is a finance journalism word, meant to evoke lions and such, turning the pinheads in pinstripes into masters of the universe. Of course, they are really simply rentseekers who have found nothing better to do with their lives than extracting points from capital flows, which makes them externally rich and internally null. But that is as may be.

I wonder if the EU will – poked by Merkel’s need to appeal to the German electorate – bring down the hammer. It should. Ratings agencies are jokes, and the EU could easily set up a rating agency itself. The very idea of a rating agency is antithetical to the market – it creates a non-market price, against which the market prices are then pegged. This is of course an incitement to dysfunction and corruption, and its only justification is that, without the ratings agencies, investors would put their money in overpriced assets. For instance, they would, worldwide, put trillions of dollars into mortgage backed securities that would all collapse in synch. … oops!

It is a funny world, this new capitalism. Banks become customers of rating agencies, who oblige banks by adjusting their ratings for crap investments so that banks can unload these crap investments in a game of swap. Then the game stops, the banks go bankrupt, and the governments plug the gap by supporting the banks. For instance, through the Federal Reserve, the government in the U.S. supported the banks to the tune of 9 trillion dollars in loans at below 1 percent interest. Banks, being run by geniuses, figure out how to make money on 9 trillion at 1 percent interest, but in the meantime economies slump. The rating agencies then oblige the banks who are buying bonds – that is loans to governments – by downgrading governments, so banks can collect a bigger vig. Why does this happen? After all, governments don’t need a private bond market at all – they could easily establish a collective interstate supported loaning agency that would provide all loans to states. But the banks would not like that. What we have, then, is a world in which the rich: benefit from their de-regulated investments; receive free insurance in the form of state supports; receive below par loans that they can loan out at above par rates; and possess a tool, the rating agencies, to pare back government transfers to the less wealthy. It is almost like democracy has turned into an oligarchy that rewards the richest and the political class that is close to them, regardless of party. Hmm, perhaps that Egyptian democracy movement needs to spread.

Tuesday, March 29, 2011

style, nihilism, substitution

Three lines of thought.

a. The first is the need for style. In the 18th century, the 17th century battles over style were, seemingly, at an end. The principles of good writing, or the plain style, seemed as clear as the principles that governed reason. Enlightened self-interest and enlightened communication were of the same metal. But the vogue for sensibility and the Romantic movement at the end of the 18th century turned the ideal of enlightened communication on its head. Rather, communication under the sign of sensibility was a search for style.

b. One of the key moments in Jacobi’s letter to Fichte is an exercise in style – a willed confusion, instead of the accidental confusion of the willed clarity that motivated transcendental philosophy. The latter, for all its clauses and pauses, was accumulative. But Jacobi’s style is anything but accumulative. Nor is it critical in the normal way – that is, taking apart the conclusions and analysis of Fichte. Rather, it is ludicrous.

“Since outside of the mechanism of nature I meet nothing but miracles, secrets and signs, and since I have a terrible repulsion in the face of nothingness, the absolutely indeterminate, the thorough void (these three are one: the platonic infinite!) especially as the object of philosophy or the purpose of wisdom; yet, as I seek to ground the mechanism, as well the nature of the I as of the Not-I, I arrive at a mere nothingness-in-itself, and in my transcendental nature (personally, so to speak) am in this form inducted into, gripped by and taken up by it; just in order to empty out the infinite, I have to want to fill it up, as an infinite nothingness, a purely-wholly-and-completely-in-and-for-itself, if it were only not impossible!! – since that is the way it is with me, I say, and the Science of the True; or more precisely, of which the true science is composed; I don’t know why I should as a question of taste prefer my philosophy of not knowing to the philosophical knowing of nothing, if only in fugam vacui. I have nothing against me than Nothing; and even chimeras could measure themselves against that.

Truly, my dear Fichte, it will not bother me if you, or whoever, want to call this Chimerism, which is what I maintain against Idealism, which I chide as Nihilism.”

c. What kind of nothingness is it that has found its moment and lept, here, on Fichte’s page, crystallized in nihilism? Nothing seems, of all things, the clearest – it is nothing, and there is nothing to say about it. Yet in the 19th and 20th century, nihilism – the faction of nothing – has appeared on opposite sides of the conceptual ledger, now pointing to the destruction of the economic, social and moral system – a la Netchaev and his kind, terrorists who strike in the name of the negative (as Belinsky said, Negation is my God, although he immediately jumps to the positive by naming dissidents like Luther, Voltaire, and Byron’s Cain – not, in the end, the party of nothing). And yet there was another tradition which, though identified as nihilists themselves, saw that the party of nothing was in the dark heart of the system, the patchwork order of bourgeois norms that had, supposedly, replaced the old order. “Replaced”, however, is a big, big word. In reality, as long as the nineteenth century order was agricultural – and up until the end of the century in every country except Britain, the majority of the population was still rural – the old order was still alive. Or perhaps it is best to say that the energies in the struggle between the orders were in flux, shifting slowly towards a bourgeois order that was shaped by the struggle. Marx was prescient in announcing the industrialization of agriculture, but he was a century early.

And finally, we should look more closely at the repulsion, the Abscheu, that Jacobi felt at the particular nothingness of the endlessly indeterminate. Isn’t the money economy, isn’t the capitalist genius for finding substitutes for every commodity and service, a form of endless indetermination?

The ethics of integrity or the Baker at Dachau

    Throughout the 19th and 20th century, one stumbles upon the lefthand heirs of Burke – Red Tories, as Orwell called them. Orwell’s inst...