the interstices

In a letter to a friend that serves as the preface to Francois Laye’s French translation of Book of Disquiet, Pessoa writes that “life bothers me almost noiselessly, in little sips, by the interstices.”

Pessoa’s heteronym, Bernardo Soares, whose reflexions constitute the Book of Disquiet, is, like Pessoa, a clerk and a poet. I’ve already broached the juxtaposition of commerce and poetry in my previous post. The literature of the clerk is created in the interstices of the system of world trade. The Daoist element in modernism consists in looking, with a poet’s consciousness, upon the clerk’s routine.

‘I know very well that the day when I am named the chief accountant of the firm Vasques and Company will be one of the great days of my existence. I know it with a bitter and ironic anticipation, but also with that intellectual advantage of a certitude.”

In contrast to this note of the deepest resignation – the resignation of Kierkegaard’s Knight of Faith, whose life is consciously devoted to an all embracing lack of faith – there is the note entitled Absurd Axioms, which begins:

To become the sphinx, even the fake sphinx, to the point of no longer knowing who we are. For, in fact, we are nothing other than the fake sphinx, and we really are ignorant of who we are. The only way to find ourselves in accord with life is to be in disaccord with ourselves. Absurdity is the divine.

To found theories by a patient and honest reflection for the sole purpose of combating them afterwards - to act and justify our actions by theories which condemn them – to trace a path in our lives for acting, consequently, in the inverse direction of the path. To effectuate all the acts, to assume all the attitudes of something that we are not, that we do not claim to be, and that we, further, don’t wish others to imagine that we are.”

This is the credo of the circulation worker on the brink of the alienation that defines his place in the system. I am indifferent to whether the circulation worker is working in the post office for the government or the marketing department for a software manufacturer. These axioms are taken from one form of the real, which was discovered by Gogol (in the sense that Columbus discovered America – Gogol simply bumped into the already-there) as the eternal banal.

Literary reflexions that I want to put in relation with another genre of discourse – that of economic rationality.

I have misused the notion of the exchange matrix as proposed by Robert Clower in a famous 1967 paper about the efficiency of money as a mediator of exchange. There is an excellent discussion of this in Philip Mirowski’s The Reconstruction of economic theory. Clower’s images still adhere to the grand principle of neo-classical economics, which is that it is prices all the way down – the seismograph takes over the earthquake machine, and we assume equilibrium where there is none because otherwise, we don’t have a theory. The assumption of neo-classical economics cleans the ‘price’ of its dialectical character – not accidentally. Instead, all are given ‘endowments’ exogenously, and enter into the system – there is no room here for Pessoa’s realization that his life is caught in the interstices.

Still, the form of the exchange matrix is excellent. I view it as a kind of spread sheet – indeed, it is a spread sheet. It is one we all carry with us. The values by which we calculate change according to the frame we are operating in. And here, borrowing from Bataille, I would say that the economist’s view of rationality is really ‘limited’ rationality – the rationality that applies to a certain common form of the spread sheet, which applies to one level of social practices, in which the capitalist element is strongest. However, limited rationality does not define all rationality. The mistake economists make when, in dismay, they confront the discoveries of behavior psychologists - that, for instance, preferences aren’t transitive or invariant, and that rational choice makes a highly select use of real individual behavior – is to think they are witnessing ‘irrationality’. What they are witnessing is the rationality that comes with changing the options of the spread sheet – for instance, the preference tool. This is possible because the spead sheet consists of affordances. Rationality is defined in terms of the options that are checked – and in this sense, that is, in the sense that there are an indeterminate number of matrixes of exchange, we are dealing with ‘general rationality.’

I prefer not to

I was talking with A. last night about what I call clerk literature – or wastepaper basket literature. I hope she likes this post.

There is a lineage that goes from Lichtenberg’s Scribble book through Lamb, Baudelaire’s Fusées, Rozanov, Pessoa, and – supremely – Kafka, whose request to Brod to burn his papers was, as it were, a request from this history itself, over and above Kafka’s personality. The principle holding this literature together was enunciated by Bartleby – I prefer not to. This is, in the universe of the clerk, equivalent to Lucifer’s non serviam – it ties together the two elements of the scribble and the institution. If we can speak of an institutional consciousness, it is always a consciousness of the system. Jack Goody, in The Domestication of the Savage Mind, notices the importance of the list in all early writing that has been found in the Mesopotamia. Goody divides lists into three types: the list that is a catalogue of names, events and offices, which he calls a ‘retrospective’ list, and which can be thought of as a representation of work-flow; the ‘shopping’ list, or the list that includes expectations and items for future projects; and the lexical list – the proto-dictionary, the list that lists the elements of listing – sounds, letters, numbers. A very important list, according to Goody, in Mesopotamia. All three of these lists are dealt with and syncretized in the clerk’s office – viewing the clerk very broadly as one of the central types of ‘circulation’ worker, as Marx named them. The accountant’s task, for instance, is – for all of its spreadsheet cleverness – directly related to the functions invented in the Mesopotamian bureaucracies.

The clerk’s literature is a form of Western Dao – Bartleby’s phrase operates in this invisible tradition much as certain phrases from the Chuang Tzu operate to bind together the concept of the Dao. “Therefore a man who has wisdom enough to fill one office effectively, good conduct enough to impress one community, virtue enough to please one ruler, or talent enough to be called into service in one state, has the same kind of self-pride as these little creatures [the cicada and the quail who mock the giant flights of monster birds, etc.] Sung Jung-tzu would certainly burst out laughing at such a man. The whole world could praise Sung Jung-tzu and it wouldn’t make him exert himself; the whole would could condemn him and it wouldn’t make him mope.”

Sung Jung-tzu’s laughter, to be sure, is different from Bartleby’s inexpressiveness. But in the line of texts that extend from Lichtenberg to Kafka (and into the pit of which, I think, literature in the age of its de-institutionalization is being inexorably lead), there is a laughter that comes out when, for instance, Kafka read his stories out to his friends. Or in a letter to Felice, when Kafka told his fiancé that he was famous in his office for his laughter [Ich bin sogar als grosser Lacher bekannt] and gave the example of his inability to stop laughing when, one day, the president of the Insurance company made a speech bemoaning the accidents of workers and the trouble this causes for insurance companies. In fact, Kafka coulndn’t help laughing, nor could he even look away and disguise his face when the President made his speech.

Therefore (the phang ascended to) the height of 90,000 lî, and there was such a mass of wind beneath it; thenceforth the accumulation of wind was sufficient. As it seemed to bear the blue sky on its back, and there was nothing to obstruct or arrest its course, it could pursue its way to the South.
A cicada and a little dove laughed at it, saying, 'We make an effort and fly towards an elm or sapanwood tree; and sometimes before we reach it, we can do no more but drop to the ground. Of what use is it for this (creature) to rise 90,000 lî, and make for the South?'

Perspectivism, rational choice theory, and Blake

Lately, LI has been thinking about how to put together two theses in the Homo Economicus book. One thesis is that there is a multiplicity of matrixes of exchange even within modernity – and that the seeming hegemony of the money matrix, to the extent that it even defines the economic as opposed to the non-economic, is a phenomena that has certainly penetrated other matrixes – such as the complex gift and barter relationships of family, friendship and alliance – without fundamentally ‘commoditizing’ them. In one sense, my whole thesis is that there is a dialectic structure that governs the degree to which the hegemony of money, as reflected in the character of homo economicus, can actually dispense with other matrixes, since its survival is threatened by its monopoly of all spaces of exchange.

The other thesis is that rationality, as the economists define it, is linked to a realism that denies perspectives as anything other than representatives of ‘parts of reality’. Myself, I am a perspectivist of the ‘hard; variety – that is, I see no reason to put up with the idea that the parts of reality make up one reality. Reality, here, becomes a substitute for the God’s eye perspective – that point at which we can see the whole universe. Perspectivism denies that perspective can be constructed. It does not deny, it should be said, that certain processes might be shared among perspectives – say, a process for correlating statement and fact. Or even a process for ordering preferences. It simply denies that this formal characteristic has any substance. In other words, rationality within a perspective refers to the norms of the perspective, not to processes that transcend perspectives. Hard perspectivism contends that there is information in a given perspective – something that can be defined by simple axioms – that does not exist in other perspectives. In the clash of perspectives – which is the dynamic by which perspectives are made – this information can be completely lost – the way a passenger pigeon saw an oak tree no longer exists, for instance. I would not go so far as to say that different matrixes of exchange form completely different perspectives, but something similar might well hold – that is, that there is information in a barter exchange that can’t be transformed or translated into the money exchange. Etc.

In other words, I want to build a theory about economics based on this phrase of Blake’s:
How do you know but ev'ry Bird that cuts the airy way,
Is an immense world of delight, clos'd by your senses five?


Now, onto some reading notes.

“A body of data and theory has been developing within psychology which should be of
interest to economists. Taken at face value the data are simply inconsistent with preference
theory and have broad implications about research priorities within economics. The
inconsistency is deeper than the mere lack of transitivity or even stochastic transitivity. It
suggests that no optimization principles of any sort lie behind even the simplest of human
choices and that the uniformities in human choice behavior which lie behind market
behavior may result from principles which are of a completely different sort from those
generally accepted. This paper reports the results of a series of experiments designed to
discredit the psychologists' works as applied to economics.” – Grether, Plott

So begins a rather puzzling paper on the phenomenon of ‘preference reversal’, “Economic Theory of Choice and the Preference Reversal Phenomenon” (1979). It is puzzling because, as has been pointed out by Daniel Hausman, the two economists who introduce, in sweeping terms, an examination of a series of experiments that seemingly contradict the central tenant of the neo-classical theory of choice end the paper by retreating almost totally from their introduction:

“The fact that preference theory and related theories of optimization are subject to exception
does not mean that they should be discarded. No alternative theory currently available appears to be capable of covering the same extremely broad range of phenomena. In a sense the exception is an important discovery, as it stands as an answer to those who would charge that preference theory is
circular and/or without empirical content. It also stands as a challenge to theorists who
may attempt to modify the theory to account for this exception without simultaneously
making the theory vacuous.”

As Hausman puts it, “It is almost as if they conclude, “Since these awful data cannot be discredited, economists should ignore them, although not without first congratulating themselves for possessing such a splendidly non-vacuous theory.” (207)

Plott and Grether’s paper concerns an experiment in betting.

“Individuals under suitable laboratory conditions are asked if they prefer lottery A to lottery B as shown in Figure 1. In lottery A a random dart is thrown
to the interior of the circle. If it hits the line, the subject is paid $0 and if it hits anywhere
else, the subject is paid $4. Notice that there is a very high probability of winning so this
lottery is called the P bet, standing for probability bet. If lottery B is chosen, a random
dart is thrown to the interior of the circle and the subject receives either $16 or $0 depending upon where the dart hits. Lottery B is called the $ bet since there is a very high maximum reward. After indicating a preference between the two lotteries, subjects are asked to place a monetary value on each of the lotteries.”

Now, according to standard theory, if Lottery A is preferred to Lottery B, then Lottery A should receive a higher monetary value than Lottery B. That is, revealed preference should be coordinate with true preference.

What happened was quite different. The majority of respondents preferred the lottery with the lower risk and lower payoff, but put a higher price on the lottery with the higher risk and the higher payoff.

Lott and Grether’s paper builds on an early paper by two psychologists, Lichtenstein and Slovic (1971), who have continued to work on the psychology of preference to build, with Tversky and Kahnmann, prospect theory. Lott and Grether varied elements from the earlier experiment – for instance, the set of subjects was selected from the economics rather than the psychology department – but the results were consistent with the kind of preference ‘reversal’ revealed by the psychologists.

“Needless to say the results we obtained were not those expected when we initiated this
study. Our design controlled for all the economic-theoretic explanations of the phenomenon
which we could find. The preference reversal phenomenon which is inconsistent with the traditional statement of preference theory remains. It is rather curious that this inconsistency between the theory and certain human choices should be discovered at a time when the theory is being successfully extended to explain choices of nonhumans.”

Since these papers were published, a lot of experimental work has been done on the way people form preferences, and most of it is incongruous with the way that economists say that people form preferences. It is found that people’s preferences can vary widely over time; that the independence condition – seemingly irrelevant circumstances that are added to binary choices – can change the choices; that the order of preferences can be intransitive, so that we can’t even predict, from a choice, what the optimal preference is – and so on.

The decline of confidence in the foundational axioms of rational choice theory and its descendents has led to the current interest in behavioral economics and prospect theory. I’d like to put this work in relation to a fascinating paper by Avrin Offer on the survival of the Gift Economy in modernity: “Between the Gift and the Market: The Economy of Regard”.

TBC

the liberal myth of the economy as a board game

“Only through the forgetting of this primitive metaphor-world, only through the hardening and rigidifying of the primitive capacities of human fantasy that flowed out originally in a hot stream of images, only through the unbeatable belief, this sun, this window, this table is a truth in itself, in brief only through the fact that man forgets himself as a subject and really as an artfully creative subject, does he live with some rest, certainty and consequence. If he for one moment could escape out of the prison walls of this belief, immediately his self consciousness would be over and done with. Already it costs him some effort to admit to himself that the insect or the bird perceives a whole other world than humans, and that the question, which of both world perceptions is more correct is a completely senseless one, since here we have to measure with the standard of the correct perception, that is, a standard that is not at hand.”

(Nur durch das Vergessen jener primitiven Metapherwelt, nur durch das Hart- und Starr-Werden einer ursprünglichen in hitziger Flüssigkeit aus dem Urvermögen menschlicher Phantasie hervorströmenden Bildermasse, nur durch den unbesiegbaren Glauben, diese Sonne, dieses Fenster, dieser Tisch sei eine Wahrheit an sich, kurz nur dadurch, dass der Mensch sich als Subjekt und zwar als künstlerisch schaffendes Subjekt vergisst, lebt er mit einiger Ruhe, Sicherheit und Consequenz; wenn er einen Augenblick nur aus den Gefängnisswänden dieses Glaubens heraus könnte, so wäre es sofort mit seinem "Selbstbewusstsein" vorbei. Schon dies kostet ihm Mühe, sich einzugestehen, wie das Insekt oder der Vogel eine ganz andere Welt percipiren als der Mensch, und dass die Frage, welche von beiden Weltperceptionen richtiger ist, eine ganz sinnlose ist, da hierzu bereits mit dem Maassstabe der richtigen Perception d. h. mit einem nicht vorhandenen Maassstabe gemessen werden müsste. – Nietzsche.)

The metaphor-world of economics is never more entangled in its antinomies – like a crippled spider in its own web – than when it comes up against the odd question of the distribution of wealth. The neo-classic mainstream exists, in fact, in a world that it only recognizes as an irritant on the way to the utopian moment when the market absorbs all its children in a heavenly rapture – but if it were entirely blind to the fact that the state, that enemy of the good honest corporation and firm, plays a major role in economics, it would face the danger of being merely comic. The liberal solution to the endless differing of market heaven is that the state exists to create a “level playing field”. Mark Thoma, who runs the excellent blog, Economist’s View, just published an article on income inequality that contains a canonical version of this notion:

“I’ve never favored redistributive policies, except to correct distortions in the distribution of income resulting from market failure, political power, bequests and other impediments to fair competition and equal opportunity. I’ve always believed that the best approach is to level the playing field so that everyone has an equal chance. If we can do that – an ideal we are far from presently – then we should accept the outcome as fair. Furthermore, under this approach, people are rewarded according to their contributions, and economic growth is likely to be highest.
But increasingly I am of the view that even if we could level the domestic playing field, it still won’t solve our wage stagnation and inequality problems. Redistribution of income appears to be the only answer.”

I wrote a little response to this paragraph on Mark’s site.

“I've never understood the popularity of this belief in America. It seems a contradiction in terms. How can you "level" the playing field, and at the same time allow any unequal outcome? These are in direct contradiction with one another. Any 'playing field' in which one of the players gains a significant advantage will be vulnerable to that player using some part of his power or wealth to 'unlevel' the playing field to his advantage. There is no rule of any type, there is no power that will prevent this. The problem is thinking of the playing field as a sort of board game. You play monopoly and you accept the outcome as 'fair'. The problem of course is that in life, unlike monopoly, you don't fold up the board after the game is over and begin it all again - in other words, the economy isn't a series of discrete games that are iterated at zero.
Thus, the whole "equality of opportunity" ideology has never made sense. If it succeeds, it will dissolve itself as those who succeed most make sure that we do not go back to zero, and that our idolized 'competition' is limited to those in the lower ranks - for among the wealthiest or the most powerful, the competition is, precisely, to stifle and obstruct competition in as much as it injures wealth or power.
To not understand the latter fact is to understand nothing about the incentive for acquiring wealth or power. It is as if economists truly believe that billionaires are searching for the next billion to spend it on candy, instead of seeing them as political players building a very traditional structure of status that will allow them the greatest possible scope for exercizing power, including helping their allies and family and injuring their enemies.”

I am not satisfied that I have spelled out the structural dilemma here. In trying to build an economy with a non-interfering state that only guarantees that the ‘playing field’ is levied, you are building, in reality, a massively interfering state. There is no point at which equality of opportunity will, as it wear, work by itself. This is because the economy does not exist as a chain of discrete states – rather, what happens in time t influences what happens in time t1. The board game metaphor, however, exerts an uncanny influence over thought here. From Rousseau to Rawls, the idea of an original position has, unconsciously, created the idea that society is like a board game. That is, it has beginnings and ends; a whole and continuous game came be played on it; that game will reward people according to their contributions. And so on. Here, classical liberalism still has a grasp on the liberalism that broke with it to develop the social welfare state. Both liberalisms, for instance, can accept that the price of an apple is not ‘earned’ by the apple, but both bridle at thinking the price of a man – his compensation – is not ‘earned’ by the man. It must have some deeper moral implication.
As we have discovered, the liberal hope, in the sixties, that the social welfare system would so arrange the board game of society that equal opportunity is extended to all, and so dissolve – was based on the false premise that the players all recognize a sort of rule in which they would not use their success in making moves to change the rules of the game. But this is to fundamentally misunderstand the incentive in this ‘board game’ – success consists precisely in changing the rules in your favor. It does not consist in getting rewarded for one’s contribution to the aggregate welfare of the players of the game. The billionaire is of a different kind than the saint. And each, to use Spinoza’s phrase, must continue in their being in order to be at all.
The anti-liberalism of the last thirty or forty years is rooted in this liberal blindspot. On the one hand, the liberal allows his rhetoric to be taken hostage by a pro-forma anti-statism – surely we don’t want the corrupt state to reward the lazy and unscrupulous! Thus, social welfare is presented with a wholly utilitarian justification – it exists solely to help the industrious and the respectable. So the liberal concedes that the protector state is a second best arrangement – and slides easily into bemoaning middle class ‘entitlements’, as if surely the middle class should stand on its own. On the other hand, the state engineered by the liberals does keep growing – it keeps growing because the middle class desperately needs it to maintain their life styles, and it keeps growing because the wealthy use it as a reliable annex to acquire various monopoly powers and as a cheap insurance plan.

What the liberal seemingly can’t acknowledge is that a democratic republic, can only afford the ‘board game’ of private enterprise if the state uses its powers not simply to redistribute or to produce, but to limit – that is, to hedge in and countervail the vested influence of the wealthiest. Thus, the democratic state taxes not only to provide income to the state, or to redistribute money to the less ‘worthy’ – it also does so to materially weaken the wealthiest. Otherwise, the wealthiest will rather quickly take over the state and make a mockery of democracy.
Taxation is the guillotine by other means. Joseph de Maistre once wrote that the compact between god and the state is sealed by the blood shed by the hangman. Wrong about god, de Maistre was certainly right that all social contracts are sealed in blood. No democracy can survive if it forgets this fact.

personal myth and character

I have written before about the concept of the personal myth – the use of a ‘well-knit’ self generated autobiography as a screen developed against inconsistencies, neuroses, traumas, or the everyday thorns and pricks – that was developed in a paper by Ernst Kris in the fifties. This is what I said about it in an earlier post:
myths
Ernst Kris was a Viennese art collector, historian, and psychoanalyst who taught Freud to the great Ernst Gombrich. When he died in 1957, he left behind a large reputation. Even in the seventies, when his papers came out, a review came out in the New Republic. One of his papers, from 1956, left a phrase that has been lifted, since, by many - especially Jungian analysts: the personal myth.

“Kris found that certain patients when routinely probed about their pasts were able to respond with detailed, fluent, and highly consistent autobiographies embracing all their past history. Now this is somewhat unusual because most people do not usually have ready access to a well worked out autobiography in which themes of different lifetime periods are highly consistent with one another and smoothly extend across the lifespan. During the process of analysis, Kris determined that these personal myth autobiographies were in fact being employed as part of the process of repression to keep from consciousness other traumatic autobiographical knowledge. For example, in one of his cases he eventually discovered that the myth, which included the patient leaving home when 16 years old, was in fact incorrect and the patient had actually left home when 18 years of age. The missing two years, it later transpired, referred to a period in which a sequence of events had repeated (repressed traumatic events from earlier in childhood and the myth, by editing out the memories of the repeated events, was able to maintain the repression.

Kris proposed that personal myths constitute a central part of the self but that in the nonpathological individual the myths are constantly changed and updated. (Collins, Theories of Memory, 113)

Of course, in the late eighties, this whole matter of repressed memories of trauma led to mythmaking in the moral panic mode. LI has no patience for that. Leaving aside the dubious claims of the repressed memories crowd, Kris’ notion does seem intuitively right: there are individuals who have the story of themselves down, and there are those who seem oddly unprepared for their own history, as if consisted of information that they hadn’t studied. As a writer, I hugely prefer the former type of person, and have always found the latter puzzling. Of course, as a quasi-pathological type of individual myself, I am ever ready to believe my own lies – but the interesting twist in Collins summary of Kris is that the non-pathological constant changing and updating of myth leads to – well, to those puzzling, inconsistent myths with which we are greeted whenever we look seriously into Greek or Indian or Egyptian or any kind of rich mythological data base. Or, for that matter, even into something as simple as the facts in Jesus’ case, which are shuffled differently in the different gospels.

A recent book by Sophia Heller, The Absence of Myth” takes a self consciously ‘deconstructive’ approach to personal myth:

“Personal myth represents a particular response to the collective loss of myth and religious meaning. Though it may profess otherwise, the personal myth approach does not and cannot seek to remedy this absence because it utterly depends on it. Its philosophy basically says that what the collective has lost, the individual can and should reclaim. And how one reclaims myth and meaning is through knowing and telling one’s personal story. However, what separates a personal myth from a mere autobiography, biography or memoirs is the underlying belief or hope that if a personal story is contextualized within myth, it carries an archetypal and numinous significance and, as such, is elevated and geared to replace the metaphysical void created by the departure and death of the gods.” – Sophie Heller, The Absence of Myth

For Heller, myth is myth – she is unwilling to countenance the metaphorical transfer of myth to a world view that depends on truth claims. “What makes a myth a myth is, in part, the fact that it is absolutely true because it is real.”

…
If we provisionally take it that Heller is right, and that personal myth is a sign of the breakdown of myth, then we have a different angle from which to look at what Engels called the uprooting of a population from ‘apathy’.”
Now that I am thinking about the myth of the homo economicus, I am wondering whether these notions of myth apply – whether, in the same way that the personal myth papers over a repressed memory, the myth of the homo economicus is a way of creating a tight-knit structure that conceals an ancient act of repression.

Kris’ 50s paper was simply one in a series going back to Kris’ days in Vienna as a psychoanalyst and art historian. In particular, the idea that a personal myth takes the place of – substitutes for – memory seems forshadowed in a paper Kris wrote about biography, that was published in Imago in 1935. In this paper, Kris sought a way of penetrating into the idealized picture of a life produced by a biographer by using ‘philology’ – that is, by having a statistical sense of the way certain formula are used by biographers in different biographies. These biographical formulas emerge again and again – and one is tempted to say that they are borrowed, or that there is a sort of fund of formulas to which the biographer returns to fill out his picture of the subject, for “In fact the criticism of sources has long proved that such typical reports – I will call them simply the formulas of the biographer – in ancient times were also put in places when the biographer was not aware of anything about the life of the hero, and couldn’t know anything”:

“Out of this supposition I can effortlessly derive the principle of the investigative method that I am suggesting to you. It deals with the interpretation of biographical formulas without reference to their truth content, although even in this perspective the formulas are instructive; they strive after greater proximity to life and always have the effect of ‘credibility’; one can speak of their ‘plausibility’. As our introductory finding, however, what is solely important for us is the question of their consistent application by the biography.” (1935)

Of course, I am moving, here, from personal to public myth, and from autobiography to biography. This step may seem trivial or neutral, but in fact it is conditioned by a phenomenon Freud writes about in an 1898 paper, On Screen Memories – Ueber Deckerinnerungen – which I’m going to write about next.

Fair, Forum, Market

I have been thinking about Turgot’s entry on the Foire in the Encyclopedie ever since I read Rosanvallon’s analysis of it in his book on the idea of the market, The Capitalist Utopia.

The Turgot text is treated under the heading of the new geography envisioned by the classic economists – a geography defined by prices. This geography does not lend itself to a map listing nation states – with their different colors – but rather to a map of interconnected hubs, which Adam Smith called the ‘extension of the market.”

Rosanvallon locates this historic moment otherwise than, say, Harold Innis, who was similarly fascinated by the penetration of the price system.

“With the great discoveries, the occidental world is exteriorized. The establishment of colonies was one of the principle forms taken by this exteriorization. In the 18th century, liberalism was translated principally, in contrast, by a sort of return to the interior. Stewart is the economist who best understood how to philosophically express this.” And Rosanvallon lists the three stage theory of Stewart: 1., the birth of commerce, in response to local needs – such as food; 2., foreign commerce, in which the nation is exteriorized, which is characteristic of the occident from the 13th to 18th centuries; and finally 3, domestic commerce. “The nation pulls itself together from the point of its exteriorization in the world in order to return into itself. This return can’t be effected except at the cost of a internal differentiation; thus, there is a parallel operation of differentiation and cohesion that comes about. The nation has to discover an organic form in the bodies of the state and the professions.” (95)

It is within this framework that Rosanvallon wants to put the essay by Turgot on fairs. Myself, I translate what Rosanvallon is driving at here into an old thematic in LI and in the Human Limit – that what happened, so to speak, on the frontier of the Occident – in the colonies, particularly in the Trans-Atlantic world – mirrored processes happening in the internal culture of the Occident. The equivalent of the savage and the peasant allowed for this mirroring – although one should, perhaps, remember that mirrors do not always aim at exact representation – they deform, and one mirror, in telescopy, must correct the other. While the priests in small towns in the Pyrenees region where Lahontan came from were persecuting booksellers who sold forbidden science books, Jesuits on the other side of the world, in Quebec, were impressing the Hurons with the science of Christendom – notably, Galileo.

TBC.

AMIE

This is the worst thing I'll have to write on this blog...

I’ve been debating with myself this week about this post. In the end, I need to say something.

Amie, who contributed to LI and whose friendship over the last four years has been one of the important things in my life – Amie died in September.

I learned this at the beginning of the week, and I am still in shock. Supposedly you can tell the weather of centuries ago by sawing down a tree and examining the tree rings – they register all the disasters. I feel like some similar organic disturbance has happened in me since I received word of her death. If you saw me in half fifty years from now and examined the innards, surely some mark, some trace – Amie would love the word trace – will make it obvious that something happened Christmas week, 2010.

I can’t accept her death. Not when, after all the storms she had passed through, she was finally entering into the sweetness of life. I can’t accept this flaw in the structure of the universe. There’s a moment in The Man Who Was Thursday when the hero, Syme, describes the strange sensation of being in a world where everything is not quite right – where the tree seems, somehow, like the back of a tree, and the sky like the back of the sky – when we see that the world really is seen through a glass, darkly. Some people never experience these moments, I think – and some forget them quickly. Amie’s death has opened up that world to me this week, because I think that it is impossible that this could be the world in which Amie died. I do recognize this world. But I don’t accept it – I want to chew it up and spit it out of my mouth.

My friendship with her was impossible. I think we started writing to each other in 2006. I have perhaps 200 emails from her of varying lengths, all written with her mixture of elegance and utter intensity – Amie always pressed as hard as she could against life, like she was trying to force a jammed door. For me, she was an almost perfect email partner – I felt that we were collaborators on a vast intellectual enterprise, for which I really do not have a name. Perhaps it is merely the enterprise to tear down all the blinders between the simple act of putting on a sock and poetry. And we both felt strongly that we were struggling in an evident wreck of a culture that has tried to purge poetry from every pore of its being in preference not to the sock, for that would be simply one of the masks of poetry – but to making it on the cheap and selling it at a profit and skipping the whole experience of putting on a sock. In the infinite web of badly made socks and the human drain of 10 hour days, the world is clearly damned unless of course there are crazy corner souls to save it.

I came to Paris to live with A., in September of this year. I came for A. alone - whether Paris or Nome, I didn't care. However, I fully expected to meet Amie at last. I was so close to her, and yet I don’t even know what Amie looked like – I never asked her for a photograph. I liked our ‘blind’ friendship, I liked being compagnon de route in the night, so to speak. She did too, I think. And when she ceased emailing me, I didn’t know what to think. Amie was never afraid of the large things – but could she have been afraid of meeting me at last in the flesh? That is what I thought.

It never occurred to me to think that she was dead. How could I ever think that?

Two quotes for Amie. One is from a letter she wrote to me. In it, she quoted a favorite passage in Cixous and added a comment:

”’L'orange est un instant. Ne pas oublier l'orange est une chose. Rappeler l'orange est une autre chose. La rejoindre en est une autre. Il faut au moins trois temps pour commencer à comprendre l'immensité infinie de l'instant.”

I remember leaving a hospital in Paris, sitting in a park and eating an orange, the joy.”

The second is from The Man who was Thursday:

“Why does each thing on the earth war against each other thing? Why does each small thing in the world have to fight against the world itself? Why does a fly have to fight the whole universe? Why does a dandelion have to fight the whole universe? … So that each thing that obeys law may have the glory and isolation of the anarchist. So that each man fighting for order may be as brave and good a man as the dynamiter.”

Too many notes - on the edge of crankitood

Rewriting and expanding the last post:

How does a heuristic fiction to become, at last, a policy norm? What are the existential consequences of an economic system based on the eventually substitutability of all things, relations and people? These are the questions that guide me with the uncertain light of a flickering torch as I go down into the undergrounds of history.

I am taking as a point d’appui the idea that something happened at the beginning of the modern era – something described, felicitously, by Adam Smith as a revolution of public happiness – and yet it is a revolution that happened, so to speak, behind the back of the revolutionaries, and indeed, of all actors:

“A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.” WoN, Book 3, Chapter IV)

This citation comes from Smith’s chapter concerning the relations of the city to the country – another twist in the contrast between the great and little traditions with which we are setting out. Smith is describing this from a post-revolutionary position, in which the ridiculous – vanity – is contrasted with the much less ridiculous (acting merely from a view to their own interest). We have not yet reached the point at which the pedlar principle has become the basis of human rationality. We have certainly reached the point at which the system contains something above and beyond the intentions and views of its agents. This is an important and paradoxical point – for try as the classical economist will to reduce society to the individual, something doesn’t reduce here – call it progress, call it the market, there is an emergent, here, which is only honorifically attributed to ‘individuals’. This is in Marx’s mind when he writes:
“The secret of the commodity form thus consists simply in the fact that it projects back to Man the social character of his own work as the objective character of the product of labor itself, as a social natural property of this thing, and derivatively the social relationships of the producers to the collective labor as an social relationship of objects existing externally to them.”

What Harold Innis called –from the standpoint of neo-classical economics – the “penetrative power of the price system” was at its work of ‘eating’ the older system of status, to use Henry Maine’s terminology. The revolution in public happiness, of course, has its victims – how to separate the washerwoman’s enjoyment of tea in her sugar from the tortures of the slaves who grew and milled it is one of those finer moral questions that will haunt the West – but that revolution there was was certainly a fact that swam within the awareness of the Enlightenment philosophes. August Ludwig Schlözer, an eighteenth century German historian, celebrated Erfindung – invention – in his Weltgeschichte over war or monarchy. Erfindung, for Schlözer, reaches into the very nature of man, who is “by nature nothing” and becomes everything through ‘conjunctions”. “If he comes into the wilderness and grows up among sheep, he will become a sheep, eat the herbs sheep eat, and bleat like a sheep. If he comes into situations in which he meets the image of his creator, that is, where his reason is awakened, he will move away from the step on which he has up till now stood near the beasts and will either climb outwards and ennoble himself or will sink down and abase himself.” (58) For Schlözer, telling the true story of history – a story that is, indeed, the story of the Wealth of Nations – is itself a matter of awakening the public “out of a slumber in which our education has rocked us’ – “since we regard coldly a piece of bread, a printed page of paper, a pocket watch, a correspondence, a map of the globe, and a thousand other things whose current perfection demanded an uninterrupted progress of the human spirit from discovery to discovery over many centuries, and whose sum contains the ground of the actual culture of European human history, simply because we have seen it from childhood on, and enjoy its daily consequences.” That awakening is to the power of the revolution of public happiness that is immanent in history – a history that is officially written as if it were about kings and battles, the ‘death games’ of humans, when in actuality these are merely the “hooks” to which we hang history’s chronology. For Schlözer, true history would trace the advent of, for instance, ‘brandy [and] the potato in our part of the world”; these commodities – and others like tea, chocolate, coffee and sugar – made a tremendous difference between the man as sheep of savage times and modernity.
I will quote an earlier post at this point:

"Addiction is an illness of exposure. By and large, those who have access to junk become addicts." - William Burroughs, With William Burroughs: a report from the bunker [109]

In Sweetness and Power, Sidney Mintz tracks sugar from the cane plantations in Sicily and Egypt in the fourteenth century to the Canary and Azores islands (where the Spanish and Portugese developed the prototype of intensive sugar production with a mix of slave and free labor) to the Caribbean. Sugar cane was brought by Columbus, that divine, diabolical harbinger, to the Caribbean on his second voyage. The Spanish attempts to grow and process the sugar cane were not very successful, especially compared to what the Portugese did in Brazil. But the suggestion was, as it were, in the air; it was taken up by the Dutch and the English in the mid seventeenth century, long after the Caribs had vanished, the way blood, bones and skin massively vanishes – pushed into the vanishing act by the European magicians with their white magic.

It was after the mass cultivation of sugar cane on Barbados and Jamaica and – by the French – on St. Domingue that sugar became more than a medicine or a luxury good in Europe. As Mintz puts it, it became the first “exotic necessity” “… by 1750, the poorest English farm labourer’s wife took sugar in her tea,” as R.J. Davis wrote [quoted in Mintz, 45]

David Courtwright, in Forces of Habit, includes sugar with tea, tobacco, coffee and chocolate as the commodities that produced what he calls the ‘psychoactive revolution” of the eighteenth century. All operated, in one way or another, to alter moods. These exotics were intermingled with each other as well – as for instance, tea and chocolate with sugar. For Europeans, they produced, over a hundred and fifty year period, a radically altered physiological environment. Courtwright surveys the impressive statistics of sugar use in England, always the main consumer: “The demand for sugar was phenomenal. During the eighteenth century, the annual growth rate rose to 7 percent, and during the nineteenth century, when beet sugar roduction also became a factor, to 20 percent. The British possessed Europe’s sweetest tooth – and perhaps the continent’s worst teeth. Their per cappita consumption rose from 4 pounds in 1700 to 18 pounds in 1800 to about 90 pounds in the decade before 1900.” [28]

I like to think, here, about De Quincey. The incident that led De Quincey to opium was a tooth ache. He calls it a rheumatic tooth ache, which I think is De Quincey laying it on thick. But could it be the tooth ache of a boy of privilege, who, indeed, enjoyed that new environment of sugar products? De Quincey’s father was a merchant, and once, in a bout of virtue (for he seems to have been a good man), he forbade sugar at the table, in sympathy with the Evangelical crusade against slavery. This was in the 1780s – but man is as grass, as we all know, and bends with the wind, and the De Quincey’s did live in high style, and Thomas’s father did, after all, do a lot of trading with the West Indies.

Mintz, in his analysis of the double triangle of the trade in sweetness (slave labor to sugar to England back with goods sent back to Jamaica, and commodities from England to Africa for slaves to the West Indies for sugar production), argued that we should look to the sugar plantations, rather than to Europe, for the development of the first factories. This, of course, contradicts an old account, by the Marxists and Weberians, that free labor was a condition for the development of the factory. According to Mintz, the sugar plantations worked under extreme time constraints, and divided the labor into a sort of assembly line, with the slaves cutting the cane and other slaves assigned semi-skilled tasks boiling the cane and refining the sugar. This required a certain number of skilled supervisors. It was horrendously hard labor, and proved to be a man-eater: “From 1710 to 1810, Barbados, a mere 166 miles in area, received 252,000 African slaves. Jamaica, which in 1655 had been invaded by the British, followed the same pattern of ‘economic development’; in the same 109 years, it received 662,00 slaves.”

The plantation owners fretted about their kidnapped and abused stock, always dying on them. Unlike the less work intensive tobacco estates in the Southern U.S., this slave population never fully reproduced itself. It would fail to until the slaves were liberated, in fact. Thus the giant trade in human blood and flesh, those white lips and sharp fangs on Africa’s throat. As one model of work is developed for Europe, another model of transport and labor is developed for Africa – which will, in its time, be emplaced in Europe. Hypnogogy on the periphery, creeping in.

The sweetness, the drugs – oh, we don’t have to dig deep to find, under the surface of the artificial paradise, the piles of bones. But it is important to see that the paradise a-building in the sugar stats is not only what comes to surround us, but what we come to be. The Mordspiel is at work deep in the interior. And, as in a cartoon of a robber hiding in a cartoon cave, the cops are soon to follow. The commodities are now in motion. What only the Gods could once pluck is now cut, harvested, tapped, boiled and barged across the entire face of the godless globe.

Which only goes to show that hophead history is not merely a suburb of universal history. Hopheads have witnessed, with all the sorrows of young Werther and every suicidal lover, that their accept no substitutes passion was doomed in the accept all substitutes world.

New pains, new pleasures, new worlds, new cravings. The catchers of men are learning about the bodies of men.

NOTES ON HOMO OECONOMICUS

My next section, in my intro, should focus on the question of the relation of what was developed, at first, as a heuristic fiction to become, at last, a policy norm. That is, there is a historical moment, here, that is described, felicitously, by Adam Smith as a revolution of public happiness – and yet it is a revolution that happened, so to speak, behind the back of the revolutionaries, and indeed, of all actors:

“A revolution of the greatest importance to the public happiness was in this manner brought about by two different orders of people who had not the least intention to serve the public. To gratify the most childish vanity was the sole motive of the great proprietors. The merchants and artificers, much less ridiculous, acted merely from a view to their own interest, and in pursuit of their own pedlar principle of turning a penny wherever a penny was to be got. Neither of them had either knowledge or foresight of that great revolution which the folly of the one, and the industry of the other, was gradually bringing about.” WoN, Book 3, Chapter IV)

This citation comes from Smith’s chapter concerning the relations of the city to the country – another twist in the contrast between the great and little traditions with which we are setting out. Smith is describing this from a post-revolutionary position, in which the ridiculous – vanity – is contrasted with the much less ridiculous (acting merely from a view to their own interest). We have not yet reached the point at which the pedlar principle has become the basis of human rationality. We have certainly reached the point at which the system contains something above and beyond the intentions and views of its agents. This is an important and paradoxical point – for try as the classical economist will to reduce society to the individual, something doesn’t reduce here – call it progress, call it the market, there is an emergent, here, which is only honorifically attributed to ‘individuals’. This is in Marx’s mind when he writes:
“The secret of the commodity form thus consists simply in the fact that it projects back to Man the social character of his own work as the objective character of the product of labor itself, as a social natural property of this thing, and derivatively the social relationships of the producers to the collective labor as an social relationship of objects existing externally to them.”

What Harold Innis called –from the standpoint of neo-classical economics – the “penetrative power of the price system” is ‘eating’ the older system of status. The revolution in public happiness, of course, has its victims – how to separate the washerwoman’s enjoyment of tea in her sugar from the tortures of the slaves who grew and milled it is one of those finer moral questions that will haunt the West – but that revolution there was was certainly in the awareness of the Enlightenment philosophes.

TBC

Costs of the bank bailout

Japan was the first of the industrial economies to emerge from the Great Depression. This was due to many factors: getting off the Gold standard, Keynesian-like government policies to drive up private demand, and of course the expansion of the Japanese Imperial Military, which combined with the industrial cartels – the zaibatsu – to revamp Japan’s industrial base.

Of course, these Japanese policies had a cost: war in China, millions dead, the war in the Pacific, the bombing of Japan, Hiroshima, Nagasaki, etc.

But the technocrat and his followers simply bracket the paltry negative externalities.

I thought about those externalities reading John Cassidy’s assessment of Lawrence Summers stint as Obama’s economic guru in the New Yorker. Now, I like John Cassidy, but here he gives vent to the sort of praise for ‘saving the system’ that, of course, takes it as unquestioned that the system should be saved. More, that is blind to the consequences of saving the system.

You can tell the apologetics are going to start when we are told – as the liberal venders of Obama’s dog food love to tell us – that TARP will make a profit. This, of course, is like saying I can make a profit by lending you, with one hand, a thousand dollars at five percent interest, and with the other hand, lending you one hundred thousand dollars at zero percent interest. We know why TARP was repaid – basically, the Fed took 3 to 6 trillion dollars and injected it at superlow interest rates into the financial system.

John Cassidy himself knows this. But he doesn’t know how much it cost the system – the system of democratic governance – to operate in the highhanded, semi-legal, and plutocratic way that “saved’ us from Depression. In fact, he doesn’t consider it. This is the way he defends Summers – long quote:

“Let’s be honest, though. Back in late 2008, President Obama didn’t bring in Summers for his television face or his ability to make nice with David Brooks and George Will. With the credit markets frozen and the economy in free-fall, the President-elect ignored the counsel of some of his campaign advisers and hired the controversial professor to guide him in the right policy direction. Did Larry do that? Ultimately, this is the criterion on which he deserved to be judged.
With the unemployment rate still close to ten per cent, the consensus view, as reflected in the results of the midterms, is that President Obama’s economic policies have failed. But think back to the collapse of Lehman Brothers, and what could have happened. Between September, 2008, and April, 2009, the stock market fell more sharply than in the six months after Black Tuesday in 1929. Global trade declined more rapidly than in the first year of the Great Depression. Companies were shedding jobs at a rate of seven hundred thousand a month.

Summers, to his eternal credit, was one of the first mainstream economists to understand what was happening. The carnage on Wall Street had unleashed a series of vicious cycles, which were wreaking havoc throughout the economy. In the financial markets, falling asset prices were leading to margin calls and more forced selling. In the housing market, the rush of foreclosures meant there were more unsold homes on the market, which was putting more downward pressure on prices. And on Main Street, ordinary Americans, shocked at the sight of Wall Street imploding, were spending less and saving more, which, in turn, was prompting firms to lay off more workers.

To anybody running a business or managing a Wall Street trading desk (or anybody who knew their Keynes), the downward spiral was glaringly obvious. But many academic economists couldn’t or wouldn’t see it. They remained committed to the view of the economy as a self-equilibrating mechanism that would rebound of its own accord. Some economists criticized the Fed and the Treasury Department for doing too much to help Wall Street. Others argued against an aggressive stimulus program, saying it was unnecessary. In his column in the Financial Times, and later, in internal Administration debates, Summers vigorously supported both of these policies, which did, eventually, halt the downward spiral.

“Had it not been for President Obama’s willingness to support a sufficiently aggressive response—from the late stage of the presidential campaign to his first days and months in office—I have little doubt that we would be looking at a vastly different world today,” Summers said in his remarks to the Economic Policy Institute. “His stalwart advocacy of efforts to support the economy through the Recovery Act, to rescue the financial system, to ensure the health of key industries, and to maintain stability in the global system halted the vicious cycles in less time and at less cost than virtually anyone thought possible.”

Yes, these remarks were self-serving. As far as I can see, though, they are an accurate statement of the historical record. The blanket government guarantee to the financial sector stemmed the panic selling on Wall Street. Rock-bottom mortgage rates and various anti-foreclosure programs put something of a bottom on house prices. And the $787 billion federal stimulus program helped offset falls in spending on the part of consumers, corporations, and state and local governments. Yes, we can argue about the precise impact of the stimulus on spending and jobs, but it defies the laws of arithmetic to argue, as some prominent conservative economists do, that it had no effect at all. (As for the critique from the left—that the stimulus program was too small—in retrospect, it may well be correct. But I doubt a few hundred billion dollars of extra spending over three years would have made much difference to the economy’s overall path.)

And what was the cost of these policies? The hated TARP bailout will almost certainly turn a small profit for the taxpayer. The stimulus program raised the deficit, but not by as much as many people think. The recession caused most of the increase: spending on unemployment benefits and other social programs increased, and tax revenues plummeted. (Perhaps the biggest cost of the monetary and fiscal rescue packages is a largely invisible one related to the Fed’s emergency lending programs. In extending cash to to virtually anybody and everybody at near-zero interest rates during the height of the financial crisis, the Fed has created the expectation that it will do the same thing next time around—an expectation that is sure to influence behavior in the years ahead.)”

We can start with a sentence in the last paragraph to find the error in this analysis – “in extending cash to virtually anybody and everybody…” No, that should read – “in extending cash exclusively to the biggest banks and the heart of the financial casino industry…’ For the government somehow missed extending loans at 0.07 percent to, say, 80 percent of the American public. In reality, doing so would have allowed them to exchange their old debts – at whacked out interest – for new ones at such low interest that they could breath, maybe save the house, maybe stay in college, etc.

This did not happen. And the system that was ‘saved’ is the system as Bushonomics created it, circa 2007 – poorly regulated, one of the most ghastly inefficient ways to transfer capital to socially valuable investment ever created, a monster that only a rentseeker could love. Politically, these moves set back ‘progressive’ politics – the kind of hopy-changyness that seem to hover like tinkerbell over Obama’s rhetoric – for a generation. Instead of a gamechanging moment in which we could reverse the vicious corruption of politics and the dynamic of income and wealth inequality that is squeezing the American public to death, we … had the Summers sit on our face.

The inability to see the larger damage of the government’s urge, in 2008-2009, to save the very richest people in the world is the inability to see beyond the economic order, such as it was, in 2007. Japan’s policies that got them out of the depression gave them a good ten years – which were harsh on millions of Chinese, of course. But eventually these policies had other negative effects – the death of millions of Japanese and the destruction of all Japanese cities. Sometimes, cleverly saving the system so that the numbers are shiny – look at that commercial paper unfreezing! – is not really clever at all.

I’m not sure where the bottom on housing prices is leading us, incidentally. Surely Cassidy is being a tad optimistic. Summers presided over an economic policy that has resulted in a once in a generation loss of wealth to most American families, which Edward Wolff estimates at 36 percent – meanwhile, the upper one percent income bracket dropped 11 percent. In other words, Summersian policy was more than 3 times beneficial to the wealthiest than to the rest of the country.
But the numbers only indicate a great cultural disaster. The dropping of all pretences about who is worthy and who is unworthy in the U.S. can’t simply be wished away by those looking at how the place is governed, how everyday life goes on, the amount of real liberty people have. At these qualitative costs will eventually tell.

suffering's gonna come

The sufferin’s gonna come – to everyone—some day


I have no time to write today or probably tomorrow, as I’ve been sick and now must edit for my meat.

But I did want to refer readers to Frédéric Lordon’s article, don’t destroy the banks, seize them in Le Monde.

I’m going to translate this paragraph:

To the question of how all of this is going to finish, the response is thus: badly. And this all the more so since the social bodies are beginning to rail seriously. Without doubt, the enchainment of facts is complicated to follow in its technical detail, but the picture of the whole is more clear to them, and all the world now sees perfectly well its disgusting colors.: 1) private finance is the author of the most gigantic crisis in the history of capitalism; 2) the banks only are able to force the public powers to support them by the fact that they occupy that neurological place in the structure of the whole of capitalism which permits them to enchain the social body as a whole entirely to their particular interests; 3) this situation which has all the elements of a perfect hostage taking should have guided the salvage operation of 2008, not only to closing more largely the game of market finance, but to recommunalizing the banking system in as much as precisely it is the fact of the deposit of vital common goods, to wit, the security of the public’s monetary accounts and the general conditions of the real economy: 4) infested by the representatives of the power of money, the states did nothing like that and gave their support for nothing, or rather for a double arm of honor, which firstly took the form of the maintaining of exorbitant remunerations and chiefly and more gravely, the application of the ruler of the markets to public finance, bled be it because they had directly saved the banks, be it to make up for the costs of the recession; 5) the splendid mechanisms of the capital market concur with a rare elegance in the organization of the wordst in rendering insoluble a crises of debts that they had themselves given birth to; 6) and this up to the point that this crisis becomes irremediably theirs once again, threatening a second collapse on the scale of 2008 ; 7) while ’Europe invents hastily new institutions proposed to come to the aid ‘of states’, there everyone sees well that it is a question of saving the banks for the second time. Thus, so to speak, for the second time too many – for we still want to know how the first time was swallowed so easily by the social bodies, decidedly, with an Olympian calm.”
All of which is indisputeable, and of absolute indifference to our rulers. It will take a long time to understand the latter – a long period of disinvestments, of alienation, of the refusal, finally, to identify with any of them.

three weeks that were heard around the world

It isn’t exactly the week that changed the world – but the astute observer must find the last three weeks fascinating. It has long been the case that the states within the developed world have encouraged, at one and the same time, the conditions for plutocracy and the advance of the protector state. It is a double movement that is only reflected in a distorted way in the issues about ‘deficits’ or ‘deregulation’ – since the plutocracy could only arise, as it were, in conditions that hid it from the social order, which had temporarily pivoted, after WWII, on ‘democracy’. Of course, this talk about democracy is loose – you will hear Americans go on and on about their ‘democracy’ without the least awareness that, up until 1965, America was anything but a democracy – it was, in truth, one of the world’s worst apartheid states.

However, the very fact that myth disguised this fact is a significant indicator of the hegemony of the democratic reference.

It has been clear for some time that the double movement of encouraging both plutocracy and the protector state – middle class ‘entitlements’ – was eventually going to come up against the limit of its internal contradiction. The only question was whether the plutocratic element was strong enough to overcome the inertia of the democratic culture and the desire of the majority of the population to retain its ‘entitlements’.

2008-2009 should be known, in the future, as a sort of unveiling moment. It is here that the rhetoric about capitalism and free markets were calmly thrown into the garbage can, as the real goal of the state – maintaining the plutocracy – proceeded in defiance of all rules, and against all the surface ‘ideologies’ of the supposed opposite political sides. The most conservative of American Presidents, Bush, and the supposedly progressive Democratic presidential candidate, Obama, made common cause in saving the wealthiest. Of course, due obeisance was paid to democratic rhetoric, and we were told that saving the wealthiest was ‘saving the economy’. The economy was near a ‘meltdown’. In reality, it was only the plutocracy, which had long dispensed with the role of investing in real social goods and innovations in the developed countries and had engaged in an orgy of much more profitable rent-seeking that was truly in danger.

The Anglophone countries were at the heart of the rise of the plutocracies. Not all of them have nurtured the combination of plutocracy/entitlement to the same extent, but in the UK, Ireland and the U.S., this combination has become the template around which all political actors gather.

It is against this background that the three events of the past month – Ireland’s takeover by the IMF and the unprotesting submission of the population to the world’s first case of a nation run solely to pay off bank bondholders – the UK’s decision to slash funding for education to a level not seen since the 19th century, while simultaneously continuing to backstop the bankers –and Obama’s decision to continue the Bush tax cuts while beginning the policy of decimating the Social security fund, in preparation for its future ‘reform’ – take on their significance. A population that has grown comfortable under the entitlements regime is non-plussed by the fact that the plutocrats are openly shrugging off the accountrements of democratic culture. But the struggle that put in place the entitlements is so long ago, and the institutions that guided that struggle are in such disrepair, that the population is, as it were, disarmed. The index of that vulnerability is the fact that the population turns, as though naturally, to the parties.

The political class in all Anglophone countries have long been recruited from professions that are ancillary to the plutocrats – mainly lawyers – and, in their day to day lives, the political class of all parties sees and establishes personal relationships with other plutocrat ancillaries. The political class – whether Labour or Tory, whether Democrat or Republican – is united in the policy that binds together the alliance of the government and the plutocrats. Blair and Obama, insignificant suits in themselves, become potent historical symbols by having been both the recipients of ambient anxiety about the structure of the economy and the great pursuers of policies that were the opposite of what their followers presumed. Obama is, at the moment, subject to a very personal rage on the part of American ‘liberals’ who have reached a point at which they are beginning not to accept the dogfood poured out by the usual media propagandists – the host of media personalities, bloggers, talking heads, and think tankers. The dogfood – usually wrapped around meaningless phrases about the most ‘progressive’ president of the last seventy years, or other kinds of hype – is beginning to stick in the throat. This is the moment that Marx speaks of in the German Ideology – the moment of the ‘unbearable’.

Yet, it is hard to see what will reverse the trend towards plutocracy. I suffered the illusion, in the 00s, that the plutocracy was somehow Bush’s ‘fault’ – that the Bush regime, with its faint odor of an illegitimate coup, its corruption, its gathering together of the very worst of the media messengers and gray eminences, was somehow causing the plutocratic tilt. The salutary experience of watching a very different president, Obama, advocate for the same policies makes one think. Perhaps it doesn’t matter what pony you bet on if they all race around the same circular track.

Notes written in the Haifa coffee shop, Tangiers.

While the division between the city and the country has been noted as far back as Homer’s description of the race of Cyclopes in the Odyssey (“The Cyclopes have no assemblies for making laws, nor any settled customs, but live in hollow caverns in the mountain heights, where each man is lawgiver to his children and his wives, and nobody cares a jot for his neighbours”), it was Marx in the German Ideology first saw how the division functioned as a social structure: “The greatest division of material and intellectual labor is in the division of the city and the country. The opposition between the city and the country begins with the transition out of the barbaric state into that of civilization, out of the tribe into the state, out of the locality into the nation, and traverses all of history up to the present day (the anti-Corn Law League). – With the city we get at the same time the necessity of administration, the police, taxes, etc., in brief the community and thus politics in general. Here the division of the population into two great classes shows itself, which are directly based on the division of labor and the instruments of production. The city is already the fact of the concentration of the population, of instruments of production, of capital, of pleasures, of needs, while the country brings into view the completely opposite fact of isolation and separation. The opposition between the city and the country can only exist within private property.” In his work on peasant rebellions in the 1970s, James C. Scott took up this thread to explore what he called the slippage between the great tradition of the cities and the little tradition of the peasant countryside. It is in the city that theology, science, and modern economics is conceptually developed, and in the country that the little tradition, with local beliefs and cults (or from the city viewpoint, ‘superstition’), archaic modes of exchange, and a conservatism that adheres to older, outmoded strata of the great tradition reigns. The city sends the country its emissaries – its priests or doctors, businessmen or commisars – while the country sends the city its unskilled labor. The city establishes the order of progress in the Country, under the sign of ‘allochrony’ – even if the city and country are, in reality, synchronous, in the time of ideology, the city is ‘modern’ and the country is ‘primitive.’

According to this rough mapping, then, we should locate myth in the little tradition. It should be tied to the local cult, the village cosmology.

This essay, however, proposes to deviate from the outlines of this powerful conceptual grid, for I want to locate and trace a myth that emerges in the great tradition at the very heart of rationality itself: the myth of economic man. Homo Oeconomicus, which appears, as a phrase, for the first time in the writings of Pareto and Walras in the 1890s, has a long prehistory going back to changes in the system of production occurring in the late seventeenth century. In following this myth, I aim to blur the great lines laid down between the great and little traditions, and the tendency to interpret modernization – the creation of a vast monetized economy lubricating every transaction that holds together the treadmill of production – as, ideally, supplanting all other forms of exchange.

Busting the joint out

LI hopes, someday, to hammer with his little hammer and nails one little dictum into the American mind (that mountain of quivering balony, that Etna of bullshit): you can not indefinitely support an income spread a la 1900 and a social welfare network a la 1965. Yes, the neo-liberals will claim that the lion and the lamb can lie down together, and that a paradise of growth will infuse us all with the milk of human kindness and good medical coverage.

But besides the fact that growth, when one begins to examine the constituents out of which it is measured, seems to be a funny way of looking at human well being – and besides the fact that growth, inconveniently enough, was much better under the non neo-liberal bad times from 1945 to 1980 – there is, of course, a sort of blindness in this belief. It is as if the neo-libs want to defend the wealthy without ever asking themselves – why be wealthy?

After all, how many lunches can one highly overpaid CEO gobble in a day?

Wealth is power, and power is embedded in the social reproduction of classes. The wealthy need only use a small portion of their wealth to block upward social mobility – and they will gladly do so, if they can. Why shouldn’t they? Wealth, after all, responds to a positional as well as an accumulative logic. You don’t just ‘make a buncha money’ – you use that money to exert power. Which is to homo sapiens what the dew is to the daffodil.

All of which floods the mind in this, the second year of the Zona. As a Christmas gift, we were given the Federal reserve dump, Wednesday, showing how much they loaned and who to and with what interest in the 2007-2010 period. Of course, as Yves Smith has pointed out, they blatantly and illegally kept dark what they took for their loans – in other words, there is a pile of 885 billion dollars in collateral that the Fed, majestically, decided not to disclose to the unwashed. The Fed don’t work for the unwashed.

The numbers have a sort of operetta feeling – the comedy of Randian Wallstreeters running like, to use Dutch Reagan’s phrase, a Chicago Welfare Mother to the Fed should definitely be scored to Offenbach. Today’s Business Week contains this excellent quote:

“Magnetar Capital LLC, the hedge fund which profited from bets against mortgage securities during the financial collapse, participated in the program through Magnetar Funding II, which borrowed about $1.05 billion through seven TALF transactions.
“Magnetar participated in the program on the same terms as the hundreds of other participants in the TALF program, by Magnetar providing ‘first loss’ risk capital in these markets,” Steven Lipin, a spokesman for the Evanston, Illinois-based firm, said in an e-mail.
FrontPoint Partners, a hedge fund unit of New York-based Morgan Stanley, used the facility 48 times through its FrontPoint Strategic Credit Investments for a total of $1.09 billion.
,,,
“On behalf of clients, FrontPoint was an early participant in the government TALF program,” Steve Bruce, a spokesman for the firm said in an e-mailed statement. “With our clients, we were able to support the government in this important initiative.”

I’d like to support the government by taking out a 1 billion dollar loan for 0.0077 percent interest to. Please? I promise to be most patriotic.
This is even more rich for those of us Zona fans with that Long Term Memory – a most unpatriotic property. If there were an operation to get rid of it, I’m sure that , the Dems and Republicans would probably join together in bipartisan harmony to make it tax deductible.

But we remember Front Point from the excellent article by Michael Lewis about the firm that shorted the subprimemarket.
Here’s a quote to go out on. And, if I could only reproduce in prose what is so well done in cartoon, I’d like this quote to be read in a Woody Woodpecker laughing voice, please. The suckers are the American people, and if they don’t rise up and cast aside mock chains and the serious message mongers who insist on herding them into the killing stalls, they deserve what they get:

By the spring of 2005, FrontPoint was fairly convinced that something was very screwed up not merely in a handful of companies but in the financial underpinnings of the entire U.S. mortgage market. In 2000, there had been $130 billion in subprime mortgage lending, with $55 billion of that repackaged as mortgage bonds. But in 2005, there was $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Eisman couldn’t understand who was making all these loans or why. He had a from-the-ground-up understanding of both the U.S. housing market and Wall Street. But he’d spent his life in the stock market, and it was clear that the stock market was, in this story, largely irrelevant. “What most people don’t realize is that the fixed-income world dwarfs the equity world,” he says. “The equity world is like a fucking zit compared with the bond market.” He shorted companies that originated subprime loans, like New Century and Indy Mac, and companies that built the houses bought with the loans, such as Toll Brothers. Smart as these trades proved to be, they weren’t entirely satisfying. These companies paid high dividends, and their shares were often expensive to borrow; selling them short was a costly proposition.
Enter Greg Lippman, a mortgage-bond trader at Deutsche Bank. He arrived at FrontPoint bearing a 66-page presentation that described a better way for the fund to put its view of both Wall Street and the U.S. housing market into action. The smart trade, Lippman argued, was to sell short not New Century’s stock but its bonds that were backed by the subprime loans it had made. Eisman hadn’t known this was even possible—because until recently, it hadn’t been. But Lippman, along with traders at other Wall Street investment banks, had created a way to short the subprime bond market with precision.
Here’s where financial technology became suddenly, urgently relevant. The typical mortgage bond was still structured in much the same way it had been when I worked at Salomon Brothers. The loans went into a trust that was designed to pay off its investors not all at once but according to their rankings. The investors in the top tranche, rated AAA, received the first payment from the trust and, because their investment was the least risky, received the lowest interest rate on their money. The investors who held the trusts’ BBB tranche got the last payments—and bore the brunt of the first defaults. Because they were taking the most risk, they received the highest return. Eisman wanted to bet that some subprime borrowers would default, causing the trust to suffer losses. The way to express this view was to short the BBB tranche. The trouble was that the BBB tranche was only a tiny slice of the deal.
But the scarcity of truly crappy subprime-mortgage bonds no longer mattered. The big Wall Street firms had just made it possible to short even the tiniest and most obscure subprime-mortgage-backed bond by creating, in effect, a market of side bets. Instead of shorting the actual BBB bond, you could now enter into an agreement for a credit-default swap with Deutsche Bank or Goldman Sachs. It cost money to make this side bet, but nothing like what it cost to short the stocks, and the upside was far greater.
The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’”
And short Eisman did—then he tried to get his mind around what he’d just done so he could do it better. He’d call over to a big firm and ask for a list of mortgage bonds from all over the country. The juiciest shorts—the bonds ultimately backed by the mortgages most likely to default—had several characteristics. They’d be in what Wall Street people were now calling the sand states: Arizona, California, Florida, Nevada. The loans would have been made by one of the more dubious mortgage lenders; Long Beach Financial, wholly owned by Washington Mutual, was a great example. Long Beach Financial was moving money out the door as fast as it could, few questions asked, in loans built to self-destruct. It specialized in asking homeowners with bad credit and no proof of income to put no money down and defer interest payments for as long as possible. In Bakersfield, California, a Mexican strawberry picker with an income of $14,000 and no English was lent every penny he needed to buy a house for $720,000.”

WE SEE HENRY AND TWO HOODS from cabstand checking the cases
of liquor being delivered into the lounge. The entire room
is filled floor to ceiling with cases of whiskey, wine,
crates of lobster, and shrimp, and stacks of table linen
and sides of beef. The place looks like a warehouse.

HENRY (V.O.)
But now the guy has got to come up
with Paulie 's money every week,
no matter what. Business bad? Fuck
you, pay me. You had a fire? Fuck
you, pay ma. The place got hit by
lighting? Fuck you, pay me. Also,
Paulie could do anything. Especially
run up bills on the joint's credit.
Why not? Nobody's gonna pay for it
anyway.

EXT. BAMBOO LOUNGE - REAR ALLEYWAY - DAY

WE SEE cases of liquor, wine, etc., being carried out of
the rear door of the lounge by HOODS from the cabstand and
loaded onto U-Haul trucks.

HENRY (V.O.)
As soon as the deliveries are made
in the front door, you move the
stuff out the back and sell it at
a discount. You take a two hundred
dollar case of booze and sell it
for a hundred. It doesn't matter.
It's all profit.

INT. BAMBOO LOUNGE OFFICE

HENRY, JIMMY and TOMMY are standing around the small
workman's table. There is no desk. The office looks denuded
of furniture. A LAWYER is going over papers.

A terrified, unshaven SONNY BAMBOO is seated behind the
desk. The LAWYER is showing him where to sign.

HENRY (V.O.)
And, finally, when there's nothing
1 left, when you can't borrow
another buck from the bank or buy
another case of booze, you bust
the joint out.

The book is rejected, and LI is bummed

Well, the agent to whom I sent my proposal letter had one his factotums respond that it wasn’t the type of project for the agent’s “list”. No explanation, but I imagine that the factotum was the one assigned to the task of delicately warding off the cranks. And, admittedly, I am a crank.

Well, fuck it. I was bummed for a bit. But I still think that this small book works – it would be an excellent intro to my larger, more flou happiness book. If – I told myself, awake in the hollows of 3 a.m. as the snow began to really accumulate on the streets of Paris – if I just made a first chapter, some 10,000 word consideration of how, a, we moderns have come to at least accept the myth of homo economicus, and b., how economics, in its policy designs, has tried to impress the character of homo economicus upon capitalist societies.

Unfortunately, the story I want to tell has more than just one linear narrative – because in telling this story of the moderns, I am concerned to show that the moderns do not, contra the intellectual historians and the economists, make up one homogenous mass – that in fact in the everyday life of contemporary societies a number of exchange matrixes are in play – and in fact must be in play for capitalism to be liveable.

From the question and the thesis springs my drama – how HE has been fostered in society, and variously resisted by imagination armed.

So these are the elements I need to put into my first chapter.

Ireland and Pareto

Ireland and Pareto

It is a tale often told by the economist, this one of Pareto optimization. The tale goes that, in the Pareto optimal state, we reach a sort of distributional heaven, in which no person can gain any utility without that gain being made at the expense of somebody else in heaven. But the tale contains a paradox, of the kind associated with Zeno. To advance to this state, we must move through Pareto superior arrangements. These arrangements subtly reverse the terms of the optimum. A Pareto superior arrangement is one in which one party – or shall we say the owners? – may gain utility, but without any other party in our heaven losing it. This, we are assured, improves the entire set – all of heaven rejoices when one sinner is forgiven – or when one of the archangels receives a nice golden parachute and stock options amounting to 400 million dollars.

This, of course, is the neo-liberal heaven on earth, and the dispensation by which our rulers rule us. It is, however, a curious idea. For one thing, the ‘gain’ of utility seems to come ex nihilo – surely we are far removed from the labor theory of value here. Ex nihilo, in bureaucrat-speak, is exterior – it is an exogeneous gain. If it were, after all, endogenous, then we would have to ask about who created it, which would lead us to the question of whether, indeed, the other party wasn’t losing utility here. Which brings us to the other perplexing moment in this paradise. For the assumption, here, seems to be that there is no future - it is all present states. Heaven indeed! We transcend time, in Pareto superior states. For the inequality that must hold between the parties is eternally static.

But if our heaven is not in eternity, but in the sublunar flux of time – if all things in this heaven are mutable – then we see that, indeed, what looks like no skin off the nose of the drudge – what does he care if the boss makes his 400 million, as long as the drudge himself makes enough to buy the entertainment center, the car and the house on easy credit terms of 9 percent per annum (with the creditor holding the right to readjust interest at any time)? – might actually not be such a good deal. Heaven has a flaw. The devil’s disciples, from Machiavelli to Marx, have noticed it. The flaw is called power. In fact, a part of the 400 million dollars might well be used to block the poor drudge’s socially upward mobility, by making the cost of entry into a higher class too expensive – say, by making college tuition too expensive, or dentistry, etc. The boss may use part of the 400 million dollars to make tax loopholes for himself, to be paid for by either closing off social welfare programs that benefited the drudge (who will be scolded for his ‘special interests’ and his unwillingness to “share the sacrifice”). Or – and such are the wrecks of mutability – there may come a time, a horrible time, called a slump. Yes, in heaven on earth, it may be that the business cycle is not abolished, even if the economist angels have announced that God, that is, the free and competitive market, has abolished it.

We are testing the effect of creeping from one Pareto superior position to another in Ireland. Here, indeed, the gains in utility seemed to be exogenous. A low corporate tax brought in companies from outside the country. And then, look at how easy credit terms were offered through banks that were flooded with cash from foreign investors! Why, drudge and millionaire could dance to the pleasing pipes of some Celtic Tiger rock band and lay down, afterwards, in one another’s arms, like the proverbial lion and the lamb.

But it turns out that, while the lamb was asleep, he was being trussed up, and now he wakes up to discover, to his horror, the boiling pot and the butcher’s blade. For it is the drudge, the lamb, the one who was gaining utility in spirit whenever his boss’s board of directors gave the boss another raise, who is going to be sacrificed in the feast. Pareto superior states, it turns out, are heavens for the peculator, and they end in fricassee for the drudge. Who doesn’t understand, and turns to the economist who proclaimed the end of the business cycle. Only to hear that now the business cycle must end by the drudge, a., paying for all his boss’s parties, and b., lowering his wages and paying the debts (the not so easy credit term debts) that the economist, just last week, was telling him was the great reason he was the most fortunate drudge in all of Emerald heaven!

And the poor drudge turns to the right (where the words are the same) and the left (where sympathetic leaders should that the drudge has been mishandled, but (sotto voce) that really, there’s nothing one can do, and we do depend on the boss for all good things in life, don’t we?) and discovers that not only is his credit worthless, but so is his vote!

One of Pareto’s admirers wrote an article – oh, I should find the buckos name – to defend the great man from the accusation he was a fascist. The accusation comes from the fact that, at the end of his life, Pareto embraced Mussolini. The admirer wrote that Pareto was a great lover of liberty – of entrepreneurial freedom! – and thus, the fascist business was all a misunderstanding. But, he also wrote, Pareto also hated democracy.

The love of liberty, the hatred of democracy, stir a little and you get Pinochet. Or Klein’s shock doctrine. Or the current state of Ireland, as the drudges are auctioned off to the bankers.

Harpagon 1

The miser is a figure, a character, who exists, in the ancient world and the early modern world, in terms of comedy and vice. He is usually old. He is usually miserable. In terms of Simmel’s schema of money, he is perverted in a key way: he has forgotten the function of money as a means, and in this way, he has forgotten the ends of life.

“When one wants to grasp human fate in the schema of the relationships between the wish and its object, one must say that money, in relation to the stopping point in the series of ends, is really the most inadequate, as well as the most adequate object of our desire.”

Moliere’s miser, Harpagon, can certainly be seen from this side of things. If we look at the sexual objects of desire in play, here, from the beginning we have two secret love matches - of Harpagon’s daughter and son – that contrast with Harpagon’s own overt desire for his son’s choice, Mariane, a space that has been opened by a fact mentioned in the very first scenes – the mother in this household has died. Elise replies to her brother Cleante’s recital of griefs received from their father, Harpagon:

“It is really true that, every day, he gives us more and more reason to regret the death of our mother, and…”

At which point she is interrupted by Cleante who hears the voice of their father.

The death of the mother/wife is both the occasion of the removal of a certain limit to the existential perversion that now characterizes Harpagon – his avarice – and allows the father, an old man, to reverse the natural order by seeking to marry a young woman, Mariane. I want to make a little more business of this competition between the love match and the old man’s money – but I’ll do that later. At the moment, let’s note that the mythic background, here, of an underground god raping a young woman – Pluto/Persephone – fits with certain features of Harpagon’s character that seem borrowed from Aristonphanes Ploutus – the ragged clothes, for instance. And, in particular, the buried treasure.

Harpagon’s two-fold perversion has one source – forgetting the ends of life. Sexually, the end of life, in the seventeenth century, is reproduction. Ever more life. Similarly, the end of money, as Boisguilbert will show in 1690, is commodities – use values.

Simmel interprets this curious synthesis of sterility and desire as the logical result of making a sort of category mistake – mistaking the absolute means for the absolute end:

“If therefore the mediated character of money has the effect that it emerges as the abstract form of pleasures that one does not yet enjoy, then the valuing of its possession in as much as it is not expended preserves a coloring of objectivity, it costumes itself with that fine charm of resignation, that accompanies al objective end goals, and combines the positivity and negativity of enjoyment in a peculiar unity that words can hardly express.
Both moments achieve in avarice their most extreme tension with each other, because the money has an aspect like an absolute means to unbounded possibilities of enjoyment and at the same time as the absolute means can still be completely untouched in its function as the unexploited possession of pleasure.”

Simmel is touching, here, on the ascetic life style of thrift that Weber will later emphasize – and yet the miser does not seem to be a normal bourgeois, even if his character does enter into all descriptions of the bourgeois up to the twentieth century. And even, among outlier fortunes – for instance, those having to do with suddenly gained primary product wealth, like the Texas oil billionaires of the 19302-1960s - the miser figure pops up again, in all its archaic glory, as does its companion, the spendthrift.