Dope

"...the rise of capitalism involved the disembedding of production and distribution from all extra-economic institutions , led to the growth of an autonomous market economy that operated in terms of profit-maximisation, and even required the adaptation of essentially non-economic social relations and institutions to the demands of economic reproduction. Polanyi expressed this as follows:

"Instead of economy being embedded in social relations, social
relations are embedded in the economic system. The vital importance
of the economic factor to the existence of society precludes
any other result. For once the economic system is organized in
separate institutions , based on specific motives and conferring a
special status, society must be shaped in such a manner as to
allow that system to function according to its own laws. This is
the meaning of the familiar assertion that a market economy can
function only in a market society."

-- Bob Jessup, Regulationist and Autopoieticist
Reflections on Polanyi�s Account of
Market Economies and the Market
Society, New Political Economy, July, 2001

The rather long citation is issued as a warning: LI is not contending that the market nexus is the essence of society. Even though Polanyi's contention that there are economies without markets is, in our view, rather doubtful. Perhaps, as a cautionary measure, we should just maintain agnosticism on this perspective. At least, the conservative critique of this view, mounted by Douglass North and reprised in this essay about Polanyi seems to point to large empirical holes in the thesis that the market system arose only in Western Europe in the late eighteenth and nineteenth century, and that before that time there were ecomomies in which distribution had no market aspect.

The reader might say: the likelihood that Polanyi fanatics are going to flood your e-mail is about a million to one, so just relax, buddy. But we always operate on the prudent side, around here...

So, okay, LI has thought long and hard about regulation. Which speaks volumes about the vacuum in LI's head. Sexual fantasies eventually fail and fade, and we all lose our charms in the end, so: I've taken to thinking about regulation and governance. So sue me.

To speak of regulation is to speak of associations, institutions, and markets as the sites in which regulation is effective. It is not necessarily to speak of the state -- all associations, institutions and markets require some ordering, and this ordering is achieved by regulation enforced by some medium of governance. So, that's clear, I hope. We are going to speak of specifically state sanctioned regulation, because this post is supposed to be continuous with the last one, in which, you may remember, I laid out my disagreements with my friend X. about gun control. The aim, here, is to give some sense of the determining factors in the successful or unsuccessful state regulation of markets.

I'm going to use the term markets in an expanded sense -- markets, in my terms, will be taken to exist when a good or a service is possibly commoditized. That is, it can be exchanged. This makes it possible to talk of such things as the market in homicide, which is a service. That doesn't mean that all services or goods are marketed. Your kids could wash your car, because that is a family chore, or you can take your car to a car wash and have it washed. In one case, the act of washing the car is an extra-market operation, and in the other case it is a fully marketed service.

Given this expanded sense of markets, I'm going to use regulation as a term designating all acts by which the way in which goods or services are composed and offered are modified by the state. Traditionally, regulatory scholars, like Supreme Court justice Stephen Breyer, have concentrated on the state's regulatory role in allocating goods and services, with less attention paid to the state's role in enforcing transparency, for example. We are going to leave the categories of regulation up in the air in this post, since our concern is with the general factors that impinge on the regulation of goods or services generally. Our parochial point, re gun control or the drug trade, is to show how these factors lead to successful bannings, or mitigate against bannings. Our thesis is simple: if the state tries to ban a good or a service without consideration of its popularity, abundance, and the existence of networks that facilitate the good or services production and distribution, the ban has a high chance of being will inefficient, or pernicious to the preservation of civil rights, or counter-productive. We don't think that efficiency itself provides a metric that should determine absolutely the state's use of banning -- for instance, we think banning murder is probably inefficient, but we think the state should ban murder. However, when the ban is ineffective, injurious to civil liberty, and counter-productive (i.e, the objective of the banning is actually negated by the mechanism of the bannning), we think that banning shouldn't occur.

Oh oh. This is truly turbid prose. Soon I am going to reduce the readership of this site to one: myself. But I am going to do one more post on this topic, and then, I promise, we will return to our regularly scheduled progam, nude pictures of Britney Spears Live!

Dope

My friend X., who lives in Memphis, is a tireless proponent of gun control. Actually, that understates her passion -- she believes in the most draconian form of gun control in the case of hand guns, namely making handguns the new Desaparecidos of the body politic, although she concedes some gun ownership to hunters. Now, as readers of this page know, LI has a jaundiced view of gun control, especially as it edges into gun banning. X. has been stirred up by recent events in Memphis. This year has beeen, to quote the Memphis Commercial Appeal, a "murderous year for children." Here's a list of "children shot:"

"Damien Woodard, 10, was killed by a stray bullet in gang-related shooting at 1267 S. Willett on April 14. Five men have been charged: Herman A. Parham, 17, Rodricus A. Johnson, 18, and Patrick J. Brown, 20, with first-degree murder; Patrick Parham, 18, and Jeremy Parham, 19, with facilitation to commit first-degree murder.

Marrqutte Mason, 9, was killed by a stray bullet May 26 at Deadrick and Bradley in Orange Mound in a gang- and drug-related shooting. Brian Keith Young, 24, was charged with first-degree murder.

Amber Jiles, 10, was fatally shot at 2473 Boyle on April 25. Joe Nathan Williams, 74, angry with Amber's mother, killed the child and wounded her mother, Michele Hopkins, 36. A police officer shot and killed Williams."

This is shotgun blast America, an endless movie of domestic brawls ending in shots through the head, blood splatter in junkie hallways, gang versus gang exchanges of fire, and so on. Pictures are rarely worth a thousand words -- why waste the words on em? -- but this site has a nice photo of what a bullet can do to your average stomach which will do more than LI can do to help you visualize the yaw, thrust and expansion of a missile displacing the tissue in its track. If you want the thousand words anyway, here's a nice little site to explore the effects on the corpore sanus (if not the mens sane) of that essential equation in criminal forensics, "KE = WV2/2g, where: W=bullet weight, V=velocity, g=gravitational acceleration."

LI recognizes X.'s disgust and anger about gunshot deaths, wounds, and threats. We disagree with her about gun control on both rational and irrational grounds. Let's get the irrational grounds out of the way first: we think that an armed population, whatever the price in gutshot and baby wounds, is a bulwark against tyranny. We have an intuition on this -- which is philosopher speak for saying, we believe this but fuck if we know why -- that our freedoms have a systematic cast that makes it the case that the elimination of one of them injures others of them. Now, if there is a compelling reason to eliminate one of them, so be it -- but by our standard, the harm done by eliminating the right to bear arms isn't made up for by the healthful effects ensuing from the disarming of a population. And plus, to balance the Memphis stories of civilian deaths, there is always the issue of the armed policia. As in the tendency of the cops to use unnecessary force and then need for some counterforce to vividly work against this tendency. X. concedes her disarmament strategy should apply to the police, but we think that is the most unlikely outcome of gun control as she envisions it.

These may simply be our manias. Let's get on to the more interesting, the more rational reason we oppose extreme gun control.

One way of putting it is this: X.'s perspective on gun ownership is that it is ultimately a question of public health. Given an epidemic of gunshot related deaths, we do the epidemiological work of looking for causes. Since the correlation between gunshot related deaths and guns is, uh, pretty irrefutable, we eliminate the cause -- the guns -- and so eliminate the deaths. It is an issue, in this perspective, much like typhoid, or AIDS, or influenza. A disease that spreads by contagion is contained by containing its carriers. Gunshot deaths are spread by gun possessors.

LI has a different perspective. Our claim is that gun control is an issue like that of heroin, abortion, and the perservation of endangered species -- that it has to do with the forms of regulation that can efficiently shape those behaviors that are expressed in the market, and those forms that grotesquely misapply to market behaviors by delivering regulation to structurally incompetent officers, or misunderstanding the demand side for a good or a service, or by blindly pursuing a particular agenda in spite of the fact that it is not working. And this is where our ideas about the wickedness of banning marijuana, or most drugs, and imprisoning the users and sellers of it, hook up with our ideas about the impracticality of banning guns.

In our next post, we will present a picture of regulation that, we modestly think, is globally unique, even if it is composed of elements that have already been mulled over by economists and lawyers. Unfortunately, both groups seem to believe that theory should start over at every moment, rather like the short term memory loss guy in Memento. Our perspective is that we've learned a lot about regulation in the last eighty years, and we should throw out those parts of regulatory theory that don't apply. But ... we are stepping on our next post.

So, readers (this should squelch our readership for the rest of the week), tomorrow and maybe the next day, look for a super-exciting discussion of Coase's theorem and the paradox of organizational knowledge on this station. Oh, and for those of you looking for Britney Spears naked (a phrase which will now enter the search machine mafia), you are in the wrong place.

Remora

Burning down the house.

Everybody knows that modernism's over, everybody knows the good guys lost -- to cite, with a small change in wording, Leonard Cohen. The abstract expressionists, and their successors, were willing and eager to do what they did for the price of the paint. The adventure, the beauty of it, the reason you'd hock your body, the reason you'd let yourself become a laughingstock at the family reunions, was that painting was dearer to you, as a painter, than heroin is to a junky. It was the stuff. Then the money came down, and at first that was all right. But money comes attached by a million spiderweb-like strings to money-men, and that isn't all right. Not eventually. American art would have been better off, in the last twenty years, if it had been traded by crack-heads and curated by homeless alkies. Alas, it was traded by Saatchi's and housed by such confidence men as 'Tom' Krens, the Guggenheim's director. Deborah Soloman's NYT Magazine story about Krens would do Hans Haacke himself proud. Unfortunately, Haacke has no sense of humor. About Solomon, one should be cautious -- her byline says that she is working on a bio of Norman Rockwell, about which LI's views are pretty clear: I would rather look at the toilet paper hanging on the roll in my bathroom than anything Norman Rockwell ever, uh, what is the word? created? And her let's-all-be-populists now ending is pretty insane -- she has just spent the entire article buzzing among money men from Cleveland, but suddenly they represent vox populi? I don't think so. But to LI's ears, the quotes in this piece are priceless. This is one of the trustees giving us his very raison d'etre:

''People who want to be socially established are attracted to the Met board, but people who want to have fun are attracted to the Guggenheim,'' says Stephen Swid, chairman of Knoll International furniture and a longtime Guggenheim trustee. ''The Museum of Modern Art has David Rockefeller, who sits down with the trustees -- $5 million, $20 million, that's what they give. You have to understand that David Rockefeller is an American icon. But we're like from the shtetl.''

Here's Peter Lewis, the chairman of the Guggenheim, in all his beefy glory:

''I buy pictures,'' Lewis protested. ''Don't call me a collector. I really don't know about art. I love creativity. I love artists, their lifestyle and attitude. How does a businessperson from Cleveland who doesn't want to read books about art connect with the art scene?'' Suddenly, with a quick apology, he removed his artificial leg and placed it across his lap, explaining he felt more comfortable that way. Asked how he lost a limb, he replied dismissively, ''Oh, just doing stupid macho things.''

Here is another wondrous quote from Lewis, explaining why Guggenheim has become, as Solomon says elsewhere in the article, parodying Malraux, a Museum with Walls only. Lewis forces us to ask: are these people real?

" 'Tom resonates more with buildings than with pictures,'' Peter Lewis told me."

Resonance should be confined to the viewing of porn, where it is appropriate. If only LI could find a similar way to fast forward through the endless reel of truly disgusting capitalists, in this, the age of the Jurrassic plutocrat!

Remora

"...the faces change back to black and white cartoon old men, obscure members of the cosmopolitan night." -- Jim Carroll, The Basketball Diaries


Unfortunately, the cartoon old men and one woman LI has to talk about this morning are less obscure than they should be. The cosmopolitan night they belong to is called the Supreme Court, and they are called judges. These sad-sacks are up to their usual tricks -- allowing, on the one hand, the state to practice its most egregious tyrannies on the subaltern population of the young, the poor, and the feckless, the clipped angels among the faceless many, while on the other hand chipping away at the limitations placed, however imperfectly, on the natural malefactors of great wealth, aka entrenched corporate power.

A ruling yesterday is typical of the Court's absolute decrepitude. The court ruled that schools could arbitrarily order drug tests -- in other words, have access to the bodily chemical infrastructure of -- students. And so, a right that inheres in the governance of the modern nation-state -- the right to be educated -- is turned into a gun against the educated. Here's a couple of grafs in the NYT:

"In emphasizing the "custodial responsibilities" of a public school system toward its students, rather than the details of how the program was organized, the majority opinion by Justice Clarence Thomas appeared to encompass random drug testing of an entire student population.

But one member of the majority, Justice Stephen G. Breyer, who wrote a concurring opinion while also signing Justice Thomas's, said it was significant that the program in the Tecumseh, Okla., school district "preserves an option for a conscientious objector" by limiting the scope to students in extracurricular activities. A student "can refuse testing while paying a price (nonparticipation) that is serious, but less severe than expulsion," Justice Breyer said.Students who are found to be using drugs at Tecumseh High School are barred from their activities and referred for counseling, but are not otherwise disciplined or reported to the police. The policy was challenged by Lindsay Earls, an honor student active in several activities who is now attending Dartmouth College."

There is the outrage, this band of carcasses with their martinis at home, their drinks for dinner, pissing on the kids, and there is its conjunction with the greater outrage, the continuing war on drugs. There seems to be a misperception out there that the war has moderated on, at least, the most common of those drugs, marijuana. Wrong, captain. Drugwar lists some very interesting stats on its site:

"In 2000, 46.5 percent of the 1,579,566 total arrests for drug abuse violations were for marijuana -- a total of 734,497. Of those, 646,042 people were arrested for possession alone. This is an increase over 1999, when a total of 704,812 Americans were arrested for marijuana offenses, of which 620,541 were for possession alone."

LI must admit, the left is not the counterforce it should be to this incredible and sick machinery. The best arguments against the day, the year, the decade, the two decades, the half century of infamy encoded in 704,812 marijuana arrests have been flung out by libertarians. James Bovard has a nice article on the Future of Freedom site. He is especially acidic about the current administration's cute idea of linking one losing war -- on drugs -- to its current idee fixe -- a permanent war on terrorism. Bovard points out that the war on drugs, unlike the war on terrorism, is a war on the laws of the market:

"But how will the DEA change the laws of agricultural economics that encourage farmers to grow crops disapproved by the U.S. government? Afghan farmers can easily earn ten times more from growing opium than from growing wheat or other crops. The effort to persuade Third World farmers to abandon illicit crops will be about as successful as trying to persuade stockbrokers and law-firm partners to abandon their high-paid jobs, move to Mexico, and scratch out a livelihood assembling toilet brushes for sale at Wal-Mart.

"If the Bush administration is really serious about defunding terrorist groups, it should summon the courage to look at drug laws themselves. The falling price of cocaine and heroin in recent decades is proof of the failure of drug warriors to close the borders. Federal officials have admitted that the government fails to interdict up to 90 percent of the drugs being smuggled into the United States. This failure rate is absolutely intolerable when illicit drugs finance terrorism. "

LI has a theory about how to look at state actions like banning products (marijuana, or handguns) or services (euthenasia, robbery, murder) should be seen within the framework of effective and ineffective regulation of markets. We should post that theory one of these days -- as far as we know, it is our original contribution to political philosophy.

Remora

Poor Business Week chose the wrong day to headline an optimistic forecast by a Morgan Stanley Investment "Strategist" Barton Biggs. As WorldCom basically takes itself off the field, here's what Briggs -- a man BW bills as usually "dour," in order to give credence to his pap - has to say:


"Since its 2000 peak, the Nasdaq has fallen as much as the Dow did from 1929 to 1932, notes Biggs. And it has dropped more than Japan's Nikkei index has since its high in 1989, he adds. "The pattern of the equity markets since last summer has been classic," says Biggs, in foretelling that a double bottom is about to happen -- or has already begun.

A VIGOROUS RALLY. Given all these, "we have increased our exposure to equities," says Biggs. Assuming the September lows hold, as he expects, rallies of 15% to 20% are conceivable in the broad indexes in the U.S. and Europe, predicts Biggs.

In the U.S., he forecasts that over the short term, the Dow will climb to between 10,800 and 11,000, from 9,380 currently."

Biggs, and others of his ilk, gain income "strategizing' by doing such dumb and dumber things as bringing up comparisons between the Nasdaq and the Nikkei, as if these comparisons were some kind of argument. There might or might not be reasons to think, hey, these are comparable situations. But comparison itself, without analysis, is blind, deaf and dumb. And so would be any investor who listened to someone like Biggs. One could easily envision the Dow hitting 10,800, but not for any of the reasons given by Biggs. And, right now, one can as easily envision the stockmarket version of the gutter ball -- a constant trough, between 9 and 10 thou.

Here's the Washington Post, quoting a less dour, and more paniced, investment "strategist" about the current market:


"At Merrill Lynch, meanwhile, Bernstein has warned clients of a "considerable near term risk" that could see a further 10 to 15 percent decline in the major stock indexes. With the stocks of the S&P 500 still selling at 24 times their expected earnings next year, he said, "our view is that the market, even at this level, is still quite speculative." The historic average is around 15.

"The implications of further declines in stock prices are anything but positive for the broader economy. Although this doesn't suggest the economy will slip back into recession again, forecaster Sinai sees little hope that the economy can grow at the 5 and 6 percent annual rates normally associated with economic recoveries. His forecasts calls for growth rates at half that."

Business magazine circulation is way off this year. And headlines like BW's are the reason. As the biz media became a pipeline for the uplifting crap diffused by glorified bucket shop salesmen, they lost credibility with their readers. Until they take a tougher approach, who is going to read them? A shrinking pool of suckers and pr men, that's who.

Remora

Reader's mirage

Limited Inc was alerted to Bradford DeLong's weblog site today, when we came upon some comment about comment De Long had made about a recent William Greider article. Here are De Long's remarks about Greider:

"William Greider, writing in the Nation, hopes for a depression in the United States--for this would "deflate" the "smug triumphalism of Bush's unilateralist war policy" and be "a good thing for world affairs, since Washington couldn't run roughshod over others. He believes that such a depression could be triggered by "... financial scandals" which would lead "overseas investors... to take their money home... the declining dollar... [to] fall sharply... credit... [to] become suddenly scarce, since our debtor-nation economy relies heavily on capital borrowed from abroad, and... trigger an ugly downdraft in the U.S. economy." And then "the fashionable boastfulness about America... would implode."


Going to the article, however, one quickly finds that Greider is not "hoping" for a depression in the United States. He does, however, hope that the smug triumphalism of Bush's unilateralist war policy is deflated. His point is that economic policies that Greider thinks are taking us to the brink of depression will have the ironic effect of making America look inward, as so deflate the etc., etc. But noting that one expects an unexpected outcome from a bad thing isn't the same as hoping for the bad thing. In fact, Greider clearly describes his hopes, which are what they have been for some time: a populist economic policy that would strenghten the regulation of the financial industry, aim at ameliorating the inequality of incomes in the country, and would rid the private sector of its current problems with corrupt accounting and bloated CEO salaries.

Now, Limited Inc thinks that Greider's goals are good. We do think he is missing the boat on the effects of depression: the idea that nation's turn inward when their economies collapse isn't borne out by anything in recent history. But De Long's reading of Greider is so outrageous that we were tempted to dismiss the man completely. That, however, would be a mistake. De Long has an excellent analysis of stock valuations on his site, pointing out (as LI has pointed out long ago, somewhere -- was it a review? or one of these damn posts?) that the stock market, by traditional standards, is still overvalued.

"-Few people recognize how far out of whack the stock market still is today.
-There is still a large disconnect between current stock-market values and traditional valuation ratios relative to measures like earnings and dividends.
...
-Typically, over the last fifty years, stocks sell for about 30 times annual dividends and for about 18 times annual earnings.
-Today, however, stocks are selling for more than 30 times earnings, and more than 60 times dividends."

Usually, writers who notice this fact then become all alchemical about technical analysis, the bogus but influential school of analyzing stocks used by a certain truly reactionary species of contrarians. Actually, the traditional standard isn't the expression of natural law: it is rather the expression of accumulated expectations, given a history of productivity gains, inflation, competition with other investment instruments, etc. The New Economy model basically boiled down to the argument that current valuations are rational. The rationality goes something like this: the technologically abetted gains in productivity, and the instances of metastizing growth (for instance, among tech companies from the eighties to the late nineties) has made the 30 times earnings, and 60 times dividend metric more reasonable. This argument also includes, as a subargument, the sub voce dismissal of dividends as an archaic remnant of an earlier era of stock investment. This argument points to the increasing tendency of investors to buy stocks specifically to sell them in the short term, rather than benefit from splits and dividends in the long term.

While De long doesn't go into the ins and outs, here, I have to give him credit for laying out the issue. So -- I can't totally dismiss him as a reactionary slug. He's too smart a reactionary slug to really believe what he wrote about Greider -- it was, I think, an immediate reaction to his impression of the article. LI knows that situation: sometimes, the impression of what one reads is different than what one has really read. Call it: reader's mirage.

In Beyond Good and Evil, Nietzsche wrote that the various schools of philosophy can be reduced, in the end, to the �blind and involuntary memoire� of certain philosophers � thus, in one of the great ironies of intellectual history, surrendering the discipline to the corruptions of vulgarity. The leveling impulse, of which Nietzsche made himself the greatest foe, insinuated itself into his method at its moment of greatest acuteness. And, after all, what is this vulgarity, this personalization of the abstract, but one of the masks of nihilism?

Granting our disagreement with Nietzsche�s disingenuous equation between �the life� and �the thought�, LI thinks it has a certain pertinence, transposed to the the mystery story. A mystery, from our perspective, is nothing more than the hidden autobiography of its investigator.

And this, reader, gets us to the self-infatuated self who is writing to you here. LI has a habit, at least on this site, of transforming every text we reference into a mystery. Under every text we discern -- whether due to our paranoia or our acuteness - the hidden labyrinth in which motive, like the Minotaur, lurks. This is how we hook up with Nietzsche -- because we take that motive to be death drive of nihilism, the leveling impulse to which, eventually, all that is beautiful and alive is sacrificed. We take this personally. We know why we are alone in this culture. We know that solitude is a process of attrition. We know that LI is becoming, daily, a little more lunar.

Yet still we venture into it: the news, the think piece, the movie, the web site. Our own implication in the labyrinth is a performative act � by entering it, we co-create it. We connive at it. If we could leave it, if we weren�t continually wasted in the center, we would destroy it. If mystery is autobiography, its solution is the transcendence of the self. So far, this is not a stage we've ever achieved. Narcissism, narcissism every day.

So: these are the rules of the site. The irrepressible autobiographical impulse rules here, and the reader knows to watch for the silvery, ephemeral flash of experience, which ultimately governs the supposedly neutral instrumentation of argument.

Everything, however, depends on our ability to play this game with a modicum of competence. Lately, we have more and more reason to suspect that we have lost that ability. While our writing becomes more and more convoluted, its justification becomes more and more remote. Why are we doing this? We�ve been reminded of this by M., a friend of ours who lives in Mexico. M. is a highly intelligent, well read woman. If we have an ideal reader in mind when we write, it has to be M., or someone like her. Our last posts were written with a certain joy. We�ve become so bitter that there is a liberation in it: the acte gratuit of the court jester hanging himself. We thought M. would appreciate this, so we put together the two posts on Angola and sent it to her.

Her reply was crushing. We aren�t going to reprint the entire thing, but here is how M. begins:

�Who are the readers of your posts? Do they all have PhD's in international relations? I am afraid I'm more like the beast with the calm regard... I don't know the names, I don't know the people... I'm glad to read your posts but they send my head reeling.�

Our failures have ceased to amuse. Why are we writing this?
I can�t go on. I�ll go on.