Liberal Alienation

Max Scheler began his essay, the Bourgeois, written on the brink of WWI, with these words:

“

Among the many signs that show us the death throes of the life order under the power and direction of which we still live, I see none as persuasive as the deep alienation in the face of this life order that fills the best heads and strongest hearts of those who inhabit their own particular orders. The history of this alienation is still recent. I find the new attitude that I have in mind firstly – as one might expect – among the scholars and poets – worldly men might say dreams – as for instance Gobineau, Nietzsche, J. Burkhard, Stefan George.”

Scheler was impressed with the work of Sombert, Tonnies and Weber on the “capitalist spirit”, which he took to be a particular social mode of the life order. He sensed something new in the fact that these sober sociologists, surely, if anyone, the inheritors and promoters of liberalism in the German sphere, seemed to have arrived at conclusions that echoed those of the names in the above passage. Although he didn’t use the phrase, what Scheler was talking about was liberal alienation – a dissent, I would say, from the culture of happiness. In January I wrote a post analyzing the dissents, in the nineteenth century, from happiness triumphant, and I tucked them into three classes roughly corresponding to the traditional European tripartite class division – the pessimists who, keenly aware of the irrevocability of the decline of the aristocracy, attacked the ‘decadence’ at the root of that decline; the revolutionaries, who in the name of the working class attacked the bourgeois notion of the consumerist ideal, the salaryman bound in the circle of self-advantage; and then, a much more conflicted group, the bourgeois thinkers themselves – Hazlitt, Mill, Tocqueville, Heine. At the time I wrote that post, I hadn’t read Scheler’s essay, which nicely sets up my point.

So, it is time for me to do a few posts on this essay.

American Adam takes a header

Hyperreality is bullshit, in one way. Most people live, as I do, in the species crashing, bread eating reality for which you have to pay out of pocket most days. But it is real in another way. The form of life of the working class is another reality from the form of life of the superwealthy, and that form of life has gone down the class ladder, becoming a habit for millions of the middle class. Hyperreality has little to do with nerdy headsets and hyper real media, but a lot to do with derivatives and the pooling of mortgages. It has to do with the transformation of the economy by credit.

There is, supposedly, around 60 trillion dollars worth of derivatives out there. Now, that fact alone ought to crash the value of derivatives immediately. There isn’t 60 trillion dollars out there. It is like claiming that the distance from the earth to the sun is actually 400 million miles, if you simply leverage and compound it right. You can fold, spindle, and mutilate yourself, but the distance from the sun to the earth will remain 180 million miles (oops! see in comments below).

So what is that financial stuff made of? Well, it is a form of fiat money, made of collective belief. But the belief is itself leveraged. It isn’t belief in a nation. It isn’t a fetishistic belief in gold. It is simply a belief that a thing exists if it is traded. And if it is traded fast enough, disbelief will never catch up with it.

Bush’s presidency went rotten when two high towers in NYC were destroyed, and now we watch as another highrise, the Bear Stearns building, is, in essence, rifled, to bookend the reign of this man with the brainpower of a garbage fly.

I’d recommend my readers turn to Edward Chancellor’s Devil take the Hindmost for the entertaining account of the origin of derivatives out of the spirit of Goldwater’s America – or, actually, out of a deal between Lee Melamed, president of the Chicago Mercantile Exchange, and Milton Friedman to build a market for currency futures. At the time there was no market for such things, and strictly speaking, they were illegal. Friedman wrote a paper, for which he was paid by Melamed, justifying them – Nixon’s treasury department approved – and the International Money Market on the Merc was opened in 1972.

And so it was. In this American Adam’s fall, we sinned all.

ThomasVaughan puts it like this in Anthroposophia Theomagica: “ … his Fall had so bruised him in his best part that his Soule had no knowledge left to study him a cure, his punishment presently followed his trespass: “All things became hidden and oblivion, the mother of ignorance, did enter in.” This Lethe remained not in his body, but passing together with his nature made posterity her channel. Imperfection’s an easy inheritance, but vertue seldom finds any heirs.”

We’ve trusted the mother of ignorance. But her trick, that tricky bitch, is to not remain oblivion always. Sometimes there is the flash of what is inside. And it is nothing.

We have to get the veils up again, otherwise it will be pop goes the weasel.

PS – a lot of people out there in the heartland couldn’t sleep last night because – like me – they were worried about Alan D. Schwartz. He’s a mensch among menschen, the CEO of Bear Stearns, and according to this fluff piece in the NYT, a very well liked guy. A dancer? You talk about suave. A bridge player. Close personal friend of none other than Michael Eisner.

“But there’s some truth to the old aphorism that a financial firm’s assets go out the door every night. Citing people involved in the deal talks, The New York Times said Monday that up to a third of that work force may not come back, involuntarily.
Still, JPMorgan is trying to retain some of that human capital all the same. Up in the air, however, is whether the bank will retain one of Bear Stearns’ most valuable assets of all: its chief executive, Alan D. Schwartz.

It’s notable that in announcing the deal Sunday evening, JPMorgan made no mention of what would happen to Mr. Schwartz or other senior executives if the deal goes through. Bear Stearns has been similarly mum.
JPMorgan has floated a couple of ideas about how to retain Mr. Schwartz, according to people involved in the talks. One idea is to make him a vice chairman and, unofficially, a deal maker at large who can parachute into different situations. Such a position would similar to the post held by James B. Lee Jr., the JPMorgan banker known as Wall Street’s money man.”

So – how are you going to keep a multi-talented guy like this? He’s probably looking around, and let’s face it, he may suffer a little emotionally from presiding over the fall of Bear Stearns, whose value went from 80 dollars a share to 2 dollars per under his golden leadership in the last two months. So, given that the tax payers are making the loan here, and the vig is like whatever you say, JPM – perhaps we could set aside a hundred million, carrying around money for Mr. Schwartz. It would be sweet. Maybe we could have a photo op of Treasury secretary Paulsen, all smiles, writing the check.

I love these people. I really love these people. America does give a guy a second chance is all I have to say.

For Amie

And, just to add further to the sweetness of Amie's day, here's the headline in Figaro:
François Bayrou battu à Pau

Getting the dead bodies out before mom comes home

I have had no time to blog decently lately. But I have noticed a certain thing, a certain panic point spread between the political blogs, all eyes on the prize and the Obama Clinton slug orgy, and the financial blogs, where everybody is on code speedy, fleeing the Wall Street Chernobyl. Interesting discrepancy, there. It is the equivalent of slow motion in the flicks – the bullet travels ever so slowly towards the body. And so it is with this, the dramatic and entertaining part of the 3 trillion dollar recession.

The strategy of the Fed is a lot like the strategy of the guy who disposes of bodies in Pulp Fiction, although you have to imagine that guy trying to cover up for the St. Valentine’s day massacre. How does the Fed take out the dead bodies in full public view while pretending that nothing is happening? Very carefully. Some third party action here, a casual announcement that it is opening up half of its resources, 400 billion dollars, as a sort of charity fund for predatory meta-lenders there. And it is treating the dollar like skeet, of course –let’s shoot that value down and treat the American consumer to some real, good old fashioned inflation – ein bisschen Weimarmusik, if you will. Later on, maybe we will all sit down and try to figure out why the economy was put in the hands of Milton Friedman's mutant ejaculate. Fun while it lasted, boys!

Here’s the grit in the grift: if you keep saying shit that turns out not to be true and it turns out to be not true the very next day, it can get embarrassing. If you say we have no liquidity problem one day and the next you say, oh, did I say liquidity? I meant to say liquids – we have plenty of liquids here in the Boardroom. Single malts galore! Then people begin to suspect you not only don’t know your shit, you never knew your shit. Now, you can tell the yahoos and suckers out there almost anything – the last eight years have shown that. But the slightly more elevated yahoos and suckers who are aspiring to the yacht class get all panicy when they realize they have serious money in the Liars Club. Hence, they rush in to get it out. They start to shake the very bones of the system, moan, groan, and shit in public. It is very hard, in the midst of this freak show, to discretely dispose of the victims.

All of which leads me to this quote from Chernow’s biography of J.P. Morgan:

The 1907 panic would be the last time that bankers loomed so much larger than regulators in a crisis…

“The panic was blamed on many factors – tight money, Roosevelt’s Gridiron Club speech attacking the “malefactors of great wealth,” and excessive speculation in copper mining and railroad stocsk. The immediate weakness arose from the recklessness of the trust companies. In the early 1900s, national and most state-chartered banks couldn’t take trust accounts (wills, estates, and so on) but directed customers to trusts. Traditionally, these had been synonymous with safe investment. By 1907, however, they had exploited enough legal loopholes to become highly speculative. To draw money for risky ventures, they paid exorbitant interest rates, and trust executives operated like stock market plungers. They loaned out so much against stocks and bonds that by October 1907 as much as half the bank loans in New York were backed by securities as collateral – an extremely shaky base for the system.”

Pikers! in our new supersystem, places like Carlyle Capital thought nothing about being leverage 32 to 1 - keeping money as a sort of white elephant being so fucking passé.

Well, we will see what tricks in the body removal trade the Fed will come up with next week. This is the new, ”please don’t notice you are in a recession and your 401(k)s are crap” recession. There’s even a Faulknerian note – Birmingham, Alabama is rapidly becoming a sink hole as the stock market plunging done by the good uber-Christian city managers there have lost more money than anybody knew one midsized city could lose.

So this song goes out to my Birmingham Alabama buds who obviously were doing this whilst planning Jefferson County bond issues!

I love a millionaire

Lust corrodes my body
I’ve lost count of my lovers
but I can count my money
forever and forever…

Our far flung correspondent, Mr. T., being a hard boiled New Yorker, is ho humming Nostradamas’ prediction that Bear Stearns is toast. As he sees it, it just means someone’s going to get lucky at the fire sale – shed no tears for the scapy, déclassé financial house as it gets that look on its face like the wicked witch of the West after Dorothy slopped the pail of water on her.

Hmm. I can never impress the wise guy crowd. You Gothamites! eating raw steel spikes for breakfast. They talk out of the side of their mouths up there, and never say howdy.

Unfortunately, there is no video for the most appropriate song for today – the Mekon’s Soldier from the Retreat from Memphis album, which I’ve quoted before.

But here’s a link to the second most appropriate song for today – which is a song that stands outside from the society of men in chains, and men who hang themselves in chains. An impossible dream of the past!

Men of chains

“The Roman law as to the payment of borrowed money (pecunia certa credita) was very strict. A curious passage of Gellius (xx.1) gives us the ancient mode of legal procedure in the case of debt, as fixed by the Twelve tables. If the debtor admitted the debt, or had been condemned in the amount of the debt by a judex, he had thirty days allowed him for payment. At the expiration of this time, he was liable to the Manus Injectio and ultimately to be assigned over to the creditor (addictus) by the sentence of the praetor. The creditor was required to keep him for sixty days in chains, during which time he publicly exposed the debtor on three nundinea, and proclaimed the amount of his debt. In no person release the prisoner by paying the debt, the creditor might sell him as a slave or put him to death."

This story, under the entry Nexum in William Smith’s Dictionary of Greek and Roman antiquities, is of interest not only for the amusingly suggestive idea that the creditor was named an addictus, but for the idea that the chains worn by the debtor were simply the visual and material endpoint of the chain he had invisibly agreed to wear when he took on debt. Nexus comes from necto, to bond. The nexum is often coupled with mancipium, sale, which is of course at the center of emancipation.

The image of the man in chains is a powerful one. Dickens, that great instinctive mythmaker, brilliantly switches the chains to the addictus in A Christmas Carol:

The bells ceased as they had begun, together. They were succeeded by a clanking noise, deep down below; as if some person were dragging a heavy chain over the casks in the wine-merchant's cellar. Scrooge then remembered to have heard that ghosts in haunted houses were described as dragging chains.

The cellar-door flew open with a booming sound,and then he heard the noise much louder, on the floors below; then coming up the stairs; then coming straight towards his door.

"It's humbug still!" said Scrooge. "I won't believe it."

His colour changed though, when, without a pause,it came on through the heavy door, and passed into the room before his eyes. Upon its coming in, the dying flame leaped up, as though it cried, "I know him; Marley's Ghost!" and fell again.

The same face: the very same. Marley in his pigtail, usual waistcoat, tights and boots; the tassels on the latter bristling, like his pigtail, and his coat-skirts, and the hair upon his head. The chain he drew was clasped about his middle. It was long, and wound about him like a tail; and it was made (for Scrooge observed it closely) of cash-boxes, keys, padlocks, ledgers, deeds, and heavy purses wrought in steel. His body was transparent; so that Scrooge, observing him,
and looking through his waistcoat, could see the two buttons on his coat behind.”

Now, nexum wasn’t the literal Latin for chains – but as the transaction it named could all end in chains, the figurative here is like Marley’s ghost – the nexum is transparent, and you could look through it to the chains wound about the exposed debtor.

In philosophy, the notion of the chain of being is well known, especially since A.O. Lovejoy’s book. However, Lovejoy was a traditional intellectual historian. He wasn’t one to ask about the shifting between the material and the figurative, that interplay which, of course, is as ice cream and pie to a deconstructionist minded guy like LI. However, though we have pored in libraries over various books on archaeology and anthropology and ancient history, we still have not come across an account of the invention of the chain. The wheel, writing, bronze, the chariot – you can always find speculative accounts of these things. The chain, on the other hand, seems to have been forever familiar. In the Iliad, Book 8, one of the most famous references to chains occurs in Zeus’s flyte:

“Now Dawn the saffron-robed was spreading over the face of all the earth, and Zeus that hurleth the thunderbolt made a gathering of the gods upon the topmost peak of many-ridged Olympus, and himself addressed their gathering; and all the gods gave ear: "Hearken unto me, all ye gods and goddesses, that I may speak what the heart in my breast biddeth me. Let not any goddess nor yet any god essay this thing, to thwart my word, but do ye all alike assent thereto, that with all speed I may bring these deeds to pass. Whomsoever I shall mark minded apart from the gods to go and bear aid either to Trojans or Danaans, smitten in no seemly wise shall he come back to Olympus, or I shall take and hurl him into murky Tartarus, far, far away, where is the deepest gulf beneath the earth, the gates whereof are of iron and the threshold of bronze, as far beneath Hades as heaven is above earth: then shall ye know how far the mightiest am I of all gods. Nay, come, make trial, ye gods, that ye all may know. Make ye fast from heaven a chain of gold, and lay ye hold thereof, all ye gods and all goddesses; yet could ye not drag to earth from out of heaven Zeus the counsellor most high, not though ye laboured sore. But whenso I were minded to draw of a ready heart, then with earth itself should I draw you and with sea withal; and the rope should I thereafter bind about a peak of Olympus and all those things should hang in space. By so much am I above gods and above men."

Macrobius’ comments on this passage are the locus classicus of the chain of being – for, in his Neo-Platonic way, Macrobius metaphorized and metaphysicalized the chain simultaneously. Lovejoy seized on the passage in Macrobius as his starting point:

“When, for example, Macrobius, in the early fifth century, gives, under the guise of a commentary on a work of Cicero’s, a Latin abridgment of much of the doctrine of Plotinus, he sums up the conception in a concise passage which was probably one of the chief vehicles through which it was transmitted to medieval writers; and he employs two metaphors – of the chain and of the series of mirrors – which were to recur for centuries as figurative expressions of this conception:

Since, from the Supreme God Mind arises, and from Mind, Soul, and since this in turn creates all subsequent things and fills them all with life, and since this single radiance illumines all and is reflected in each, as a single face might be reflected in many mirrors placed in a series; and since all things follow in continuous succession, degenerating in sequence to the very bottom of the series, the attentive observer will discover a connection of parts from the Supreme God down to the last dregs of things, mutually linked together and without a break. And this is Homer’s golden chain, which God, he says, bade hang down from heaven to earth.”

Now, I spy with my little eye a curious thing. The curious thing is that the divine order of being uses, as its organizing metaphor, an instrument associated with debt slavery and capture. It is said that the Roman armies traveled with chains for their prisoners of three types, iron, silver and gold, which corresponded to the prisoners they expected to take, with Princes and Kings getting the gold chain. To conquer was not just to abolish the property relations holding in the conquered territory – the law of res nullius exposed all to the chain, to the property one holds in oneself.

Well, I haven’t gotten to Livy’s men in chains running in the streets of Rome, where they ran and ran until they appeared in Rousseau’s essay on social contract – but I’ll get there some day. I am struggling with work, at the moment, and barely have time to do research! Sorry, sorry, sorry.

To finish off, a quote from Henry Maine:

“The Law of Warlike Capture derives its rules from the assumption that communities are remitted to a state of nature by the outbreak of hostilities, and that, in the artificial natural condition thus produced, the institution of private property falls into abeyance so far as concerns the belligerents. As the later writers on the Law of
Nature have always been anxious to maintain that private property
was in some sense sanctioned by the system which they were expounding, the hypothesis that an enemy's property is res nullius has seemed to them perverse and shocking, and they are careful to stigmatise it as a mere fiction of jurisprudence. But, as soon as the Law of Nature is traced to its source in the Jus Gentium, we see at once how the goods of an enemy came to be looked upon as nobody's property, and therefore as capable of being acquired by the first occupant.

me and my nostradamus

In other news – LI’s estimate of a three trillion dollar recession is the same sum talked about in Martin Wolf’s new Financial Times column. We get to that sum in different ways – Roubini, who Wolf quotes, comes, as it were, from the grassroots up, estimating the fallout from an extreme estimate of mortgage failures, whereas LI came to it from the top down, taking the figure of the excess of consumer spending and borrowing over income over the last ten years. Well, my fine readers, there you go – whilst some might take this for amateurish wankery, others will find my figures to be eerily prescient. Why? Because every night, the ghost of Nostradamus visits me and whispers sweet apocalyptic nothings in to my ear.

It is the only way to do predictions, man. Oh, one other thing Nostradamus told me: Bear Stearns is toast. Or was it that he said all men will turn to toasteating as the Angel of Death, looking remarkably like Gloria Graham playing in a movie that prefigures Elliot Spitzer’s downfall, sounds the last trumpet? I couldn’t quite understand the lang d’oc he was muttering in.