Ghost dances of the superrich

George Marcus begins his comparison of the world of the Kaluli, in New Guinea, with the world of the rich, in Texas, by making a comment about the binary that has defined the modern project since the enlightenment:

“This paper is an effort to outline a major challenge (as well as opportunity) for a developing ethnography of modernity within anthropology through ironic reference to a traditional anthropological problem in the traditional arena of traditional society.”

Why an ironic reference? Because, since the philosophes, it is through irony that we understand the irrationality of dualisms – or perhaps I should say, their fundamentally conventional nature. The irony, for the philosophe, can both attack the superstitions upon which established power erects itself and, at the same time, distance itself from the rituals and schemas of the folk. When Forster writes about the frozen revolutions that have kept the serfs at an animal level, he is saying, on the one hand, that all non-democratic principalities rest on a crime against human nature, and, on the other hand, that the crime was successfully carried out – that, in fact, the serfs make sense of their world within the limits defined by the masters. This was a common enlightened view. Another German radical of the time, the influential historian August Schlözer, who conducted a passionate campaign against Leibeigenheit – “ownership of bodies”, i.e. serfdom, also concluded that the struggle for liberation had to start at the top. In a fascinating essay on serfdom and honor by David Martin Luebke, Luebke, while conceding that Schlözer burned the connection between slavery and serfdom into the consciousness of enlightened public opinion, claims that he still “underestimate[d] the fundamental role of social perceptions in the formation of early modern popular politics” – that, in other words, Schlözer didn’t see that his conclusion, that triumph of an educated brain, was being made by the serfs themselves. made the connection As Lenin would put it in 1905, a revolutionary party had to be the vanguard of the working class – and not depend on the spontaneous order of liberation dreamt up by the working class itself. The recent upsurge in studies of popular “resistance” – in which resistance quickly becomes an inflated term that applies to Britney videos and Batman movies – is, on the face of it, an attempt to reverse this long tradition. However, it almost always turns out that the ‘resistance” extracted is secondary to the theory applied – with little regard for the semiotic unit itself. Resistance becomes the booty brought home in triumph by the critic, who demonstrates not so much the expression of the ‘people’ as the amazing elasticity of the theorie du jour.

Which is another way of saying, when the people write the text, you can fuck with it any way you want to – including supposing that the people are writing the text.

But what if one supposes that the writers of the text, the managers, the bourgeoisie itself, while pitted against superstition and promoting the making of universal history in every household, are themselves hostages in a ghost dance?

But let’s go back to Marcus. After posing the question in terms of the modern, he returns to the Kaluli, quoting from an anthropologist who did field work among them, Ed. Schieffelin:

“In talking about the people of the other world, the Kaluli use the term mama, which means shadow or reflection. When asked what the people of the unseen look like, Kaluli will point to a reflection in a pool or a mirror and say, "They are not like you or me. They are like that." In the same way, our human appearance stands as a reflection to them. This is not a "supernatural" world, for to the Kaluli, it is perfectly natural. Neither is it a "sacred world," for it is virtually coextensive with and exactly like the world the Kaluli inhabit, subject to the same forces of mortality .... In the unseen world, every man has a reflection in the form of a wild pig . . . that roams invisibly on the slopes of Mt. Bosavi. The man and his wild pig reflection live separate existences, but if something should happen to the wild pig, the man is also affected. If it is caught in a trap, he is disabled; if it is killed by hunters of the unseen, he dies. [1976:96-97]”

I’m sure Infinite Thought would be intrigued by the wild pig reflection. She always knew it!

About the Kaluli, Marcus makes a very interesting remark:

Phenomenologically, this unseen world is experienced through an aesthetic of sounds and sounding, as Steve Feld (1982) has re- counted. In the richly diverse sounds of the forest, the unseen world is always present for the Kaluli. What happens is always here and there, never being fully present. In this sense, the Kaluli would be Derrida's own model of Rousseau's primitive who defies logocen- trism: they live largely without the Western metaphysics of pres- ence, and thus represent the antithesis of the desire for self-suffi- ciency, for the unqualified and the unmediated. Yet, while known by the Kaluli in everyday life in an episodic, commonsensical, and fragmented way, the unseen world is systematically imagined in rit- ual (the Gisaro) and discourse through mediums who, roughly like an ethnographer, have been to this other world and have seen what ordinary persons can only hear traces of. Communication with the unseen world and authoritative interpretations of events in the here and now world of the Kaluli thus depend on the coherent vision of mediums, who at certain moments give presence and order to Kaluli culture by creating primarily visualized representations (rather than sounded evocations) of the unseen world within the fully sensed world of the here and now. (Marcus, 1989, 115)

The shadow world – it is such a natural term. We talk about the ‘shadow financial system” in the same way – as a wholly natural entity, with rather fantastic attributes. Having a superstitious belief that numbers are a power, we are all duly impressed that the shadow amount of derivatives in the world is 500 trillion dollars. And of course, if this amouth is caught in a trap, we are disabled: if it is killed on the OTC range, we die. Or so we have been told.

Marcus uses Schieffelin’s language for his own project. He has been doing field study in Texas, among the wealthy. Just as the Kaluli world gets on quite well with the infinite deferral of presence, and depends on a “discourse through mediums who, roughly like an ethnographer, have been to this other world and have seen what ordinary persons can only hear traces of,” so, too, the Texas wealthy have something out there called their “wealth”, a brother/sister shadow wild pig, with which they must communicate in some way. It is impossible for LI to resist quoting the ever mad Ben Stein’s column in today’s NYT in relation to these mediums:

NOT long ago, a woman in California called me for advice. She is divorced, with two children, and has a series of interlocking financial problems.

She lives in a lovely home in a stylish inland enclave. It has an interest-only mortgage of about $2.2 million that requires a payment of $12,000 a month, very roughly. It was last appraised at $2.7 million, but who knows if it’s now worth anything remotely close to that price.
The woman, whom I’ve known since she was a teenager, has no job or other remunerative employment. She has a former husband, an entrepreneur whose business has suffered recently. He pays her $20,000 a month, of which roughly half is alimony and half child support. The alimony is scheduled to stop this summer.
She has a wealthy beau who pays her credit card bills and other incidentals, but she is thinking of telling him she is through with him. She has no savings and has refinanced her home repeatedly, always adding to indebtedness and then putting the money into a shop she owns that has never come close to earning a dime. Now she is up all night worrying about money. “Terrified,” as she put it. She wanted me to tell her what to do.
What could I say? I did the best I could, but I had to tell her that she was on very thin ice.”

Cut away to Marcus:

“The ethnographic treatment of the Kaluli thus brings me to the very edge of a methodological and theoretical problem in the prac- tice of ethnography in societies of self-styled modernity and progress, to which I now want to turn. Unseen doppelganger worlds, the equivalents of that of the Kaluli, are equally as consequential for groups of ethnographic subjects in modern societies, yet they really are unproblematically capable of conventional definition and em- pirical investigation. What becomes of the focused, local order of culture in ethnographic research when it is understood in terms, like the Kalulis', of at least dual, spatially distanced, complexly con- nected, and mutually determined simultaneous worlds? Does the ethnographer remain, as he is obliged to do among the Kaluli, with here and now accounts of these worlds, or does he move to grasp them empirically and, in so doing, to reconfigure the fundamental ground upon which ethnographic narratives and representations of cultural order have traditionally been made? How does the ethnog- rapher in his/her own academic culture, rather than the Kaluli in their here and now world, handle a subject that is never definitively or self-sufficiently present anywhere, but is continually and partially constructed in parallel, simultaneous, but separate contexts?3 Such is a subject like the contemporary dynastic rich, among other late 20th-century Americans. The dynastic fortunes that I have studied in Texas over the past few years are complex creations of various kinds of experts and of lineages of descendants two to four generations away from founding entrepreneurial ancestors. A dynasty is commonsensically a family, but after much experience with this form of social organization, I find that it is primarily a fortune instead. Concentrations of old wealth, however, have no one particular locus or materialization; in short, they have no presence. Rather, a fortune has multiple, simultaneous manifestations within a variety of interconnected but isolated social contexts that encompass the long-term fates and daily lives of literally hundreds of people. In initiating my research, I followed common sense and took the family-literal flesh-and-blood descendants, and particularly those who seemed to be leaders or in positions of authority-for the dynasty. I soon discovered in their here and now lives the profound influence of the equivalent of the unseen world among the Kaluli-the complex world of highly spec- ialized expertise that through an elaborate division of labor, not only structured the wealth but, also, created doppelganger facsimiles of the descendants-roughly similar to the Mt. Bosavi wild pig reflec- tions of Kaluli persons-variously constituted as clients, benefici- aries of trusts, wealth shares in computerized strategies of invest- ment, and accountants' files. While the unseen world is richly reg- istered through sound and imagery in the here and now of the Kaluli, it distinctly is not among the descendants within dynastic families. Being true to the metaphysics of presence that shapes their individualism, they always presume that they are self-sufficiently in control of their lives, while being vaguely aware, more so than other Americans probably, that they are constantly being moved about and determined as bearers of wealth and credit in worlds of money and finance.”

The poetry of quotations overwhelms LI. Excuse me for a minute while I get my handkerchief – tears of sorrow and tears of laughter are leaking from my eyes. In the meantime, you can listen to this.

A note on our last Marx post

"But the greatest and the deepest of all the historians of the Slavs is without contradiction Count Jan Potocki. He belonged to the generation of Stanislas-Auguste’s epoch, of whom we have told the tragic end. Having survived the fall of the Republic, he tried to console himself in researching the origins of the history of his country. To this end, he made long trips in Asia, Africa, and tried to penetrate into China. He left behind, it is true, only essays, studies and informal notes. We don’t see the general plan, the final ideas. But he was the first of all the historians of modern Europe to recognize the importance of the oral tradition. Niebuhr asked peasants and old women to explain the story of Romulus and Remus on the steps of Rome. Long before him, Potocki, in the huts of the Tartars, meditated the history of the Scythes.” –Adam Miskiewicz, Les Slaves, 124

That we are trying to read Marx not simply over, in a sense, the system he describes, but horizontal to it – horizontal to the people of the Cauca Valley, for instance – is a strange and probably impossible quest. But we, too, like Jan Potocki, the author of Manuscript found in a bottle in Sargossa, and Niebuhr, are anxious to hear the peasants and old women and Tartars explain the world of labor and money, production and circulation. We suspect that Marx’s dialectical materialism – a dialectics that has been abandoned outside, after having been fed milkbones in an overheated house in Jena, and left to scrounge for itself – will find the world of the classical economists and their successors a funhouse mirror reflection of the world it finds itself in. But what other mirrors are there?

The notion that pulses, vaguely and uncertainly, through this thread – a thread of blood, an artery, a circulation of ideas picked up God knows where and headed towards God knows what, for just as “the circulation of money, like that of commodities, begins at an infinity of different points, and to an infinity of different points it returns,” so does our theme – is that the erasure of being, the famous erased ‘is’, is the erasure of the human limit brought to you by our sponsor, universal history. And that the erasure is enacted in cash registers as well as love lives. But just as the is remains, all the same, potent and portentious, the human limit continues, somehow, to exist when it has been formally once and for all scotched from the earth.

Which leads us to a famous essay, The Problem of the Unseen World of Wealth for the Rich: Toward an Ethnography of Complex Connections by George E. Marcus. To tackle next.

Marx and the devil 2

Wendelin: “The devil is not the worst by far, I can deal better with him than with many people. He honors the elderly, his grandmother stands high in his regard, and that is a fine character trait. When he shakes hands he means it, one can see that he has had much to do with knights; he fills his end of the contract much more promptly than many an earthly dirty dealer. Of course, afterwards, on the delivery date, then he comes on the very minute. On the stroke of twelve, he grabs his soul and goes, with beautiful regularity, with it back to to his house in hell. He’s really a proper businessman, he is.”
Pfrim: I am too old, a satanic pact wouldn’t do me any good now, but when I was as young as you – my soul, I didn’t know what to do with my soul. -Nestroy, Hollenangst

–

“Just as exchange value, in the form of money, takes its place as the general commodity alongside all particular commodities, so does exchange value as money therefore at the same time take its place as a particular commodity (since it has a particular existence) alongside all other commodities. An incongruency arises not only because money, which exists only in exchange, confronts the particular exchangeability of commodities as their general exchangeability, and directly extinguishes it, while, nevertheless, the two are supposed to be always convertible into one another; but also because money comes into contradiction with itself and with its characteristic by virtue of being itself a particular commodity (even if only a symbol) and of being subject, therefore, to particular conditions of exchange in its exchange with other commodities, conditions which contradict its general unconditional exchangeability.”

What Marx means here by a general commodity is one so purified of its mortal nature, as a use value, that it has been entirely transfigured into a pure commodity, unsoiled by human hands. Particular commodities, on the other hand, like Goethe, have two souls within their breasts – longing to be exchange value, and ending up as use value. In fact, in their end is their justification, at least in one of the social spheres that, altogether, constitute the total society. Yet it turns out that the use value of exchange value embodied in money is involved in a self-referential bind – it can’t quite dematerialize itself. Like the money in Taussig’s story, quarreling in the cash register, money is always in the process of shedding its nature, which is to be an intensional object – dependent for its meaning and existence on a social attitude – and presenting itself as something independent and even autonomous. There have been many dreamers of a utopia of money, in which something would simply be recognized by all as a measure of value outside of all social relations – although, alas, this impossible object would have to fall into the world again if it is actually to be exchanged – that is, if it is actually to be of use. The flies in the spider web dream of the superfly that would deliver them. It is part of the fallen nature of money that, strive as we will to find that unit outside of the social that will operate immaculately inside the social, it always reflects the particular conditions of exchange.

“But on one side, exchange value naturally remains at the same time an inherent quality of commodities while it simultaneously exists outside them; on the other side, when money no longer exists as a property of commodities, as a common element within them, but as an individual entity apart from them, then money itself becomes a particular commodity alongside the other commodities. (Determinable by demand and supply; splits into different kinds of money, etc.)”

When Marx talks like this, of “sides”, what is he saying? Where do these sides exist? This question isn’t impertinent – that is, it isn’t as though the sides are ‘metaphors’ for a logic of, say, the spirit. Later on, Marx will make a note that he has to express these things less “idealistically”. But we can see that these sides are not arising in the kaleidoscopic turns of the Absolute spirit. They are happening in the here and now. They have an actual social existence – that is, the sides are performed. In a sense, this is what is happening in Taussig’s story of baptized money. But it is also what is happening when money exists as, so to speak, an infinitely deferred referent. The wealthy or enterprises concerned with wealth have, so to speak, assets in money, but the real existence of that money is another matter entirely. I’ll earmark, here, a thread I will go into later - I am going to reference another anthropologist, George Marcus, about existences visible and invisible in a future post – Marcus was fascinated by the invisible world of wealth among the American wealthy.

The culture of happiness, that is, the culture in which the ideal is given as either the individual pursuit of happiness or the collective’s pursuit of happiness, presupposes a certain interchangeability of happiness, a certain harmony that would make all happinesses consistent one with the other. At the same time, the real conditions for growth – the overcoming of the human limit upon which the pursuit of happiness is premised – is dependent on a system in which the opposition of happinesses are understood as the drivers of growth. This is a “contradiction” in the Marxian sense – not of logic, but of elements within a total system.

“The dissolution of all products and activities into exchange values presupposes the dissolution of all fixed personal (historic) relations of dependence in production, as well as the all-sided dependence of the producers on one another. Each individual’s production is dependent on the production of all others; and the transformation of his product into the necessaries of his own life is [similarly] dependent on the consumption of all others. Prices are old; exchange also; but the increasing determination of the former by costs of production, as well as the increasing dominance of the latter over all relations of production, only develop fully, and continue to develop ever more completely, in bourgeois society, the society of free competition. What Adam Smith, in the true eighteenth-century manner, puts in the prehistoric period, the period preceding history, is rather a product of history.”

The all-sided dependence of the producers – in this way, the people come into history. In this way, the caterpillars begin to develop wings. In this way, universal history is born. This is one of the contradictions that gets in the throat both of capitalism and Marxism. There is, on the one hand, an all-sided dependence that breaks man out from the condition of idiocy, of private servitude and local superstition, in which he had been bound. But how does this happen? It happens through the division of labor, and the de-personalizing of the routine of labor. Just as with the peasants of the Cauca valley, the dominance of exchange value over all other market systems – of which we now have an extensive anthropology, thanks to Polanyi – produces not the all sided perfect man, using Forster’s capacity for perfection, but an all-sided wage laborer – besieged, as it were, on all sides. Where you gonna run to where you gonna go? Well the rock won’t hide you, and the rivers are bleeding. And after the revolution, what is to become of your all sidedness?

“Just as the division of labour creates agglomeration, combination, cooperation, the antithesis of private interests, class interests, competition, concentration of capital, monopoly, stock companies – so many antithetical forms of the unity which itself brings the antithesis to the fore – so does private exchange create world trade, private independence creates complete dependence on the so-called world market, and the fragmented acts of exchange create a banking and credit system whose books, at least keep a record of the balance between debit and credit in private exchange. Although the private interests within each nation divide it into as many nations as it has ‘full-grown individuals,’ and although the interests of exporters and of importers are antithetical here, etc, etc., national trade does obtain the semblance of existence in the form of the rate of exchange. Nobody will take this as a ground for believing that a reform of the money market can abolish the foundations of internal or external private trade. But within bourgeois society, the society that rests on exchange value, there arise relations of circulation as well as of production which are so many mines to explode it. (A mass of antithetical forms of the social unity, whose antithetical character can never be abolished through quiet metamorphosis. On the other hand, if we did not find concealed in society as it is the material conditions of production and the corresponding relations of exchange prerequisite for a classless society, then all attempts to explode it would be quixotic.)”

Yes, let’s read that last sentence again. In another post.

Marx and the devil

“He’d sell his soul for gold, and he’d be right, for he’d be exchanging dung for gold”

– Mirabeau on Tallyrand.

The great myth under which modernization understood itself in Germany was an old chapbook tale about an obscure professor selling his soul to the devil – an old story indeed. The professor, Faust, was taken up by Goethe and placed at the center of a poem which touched the thoughts of every German intellectual in the 19th century, including, certainly including, Karl Marx.

Meanwhile, as we pointed out in our last post on this topic, Michael Taussig found that the introduction of a fully monetized exchange value economy in the rural community in Colombia that he chose to study in the 1960s was interpreted by the myth of selling a soul to the devil. Why this convergence of sense-making narratives?

Taussig suggests that we can use Marx’s notion of commodity fetishism to explain how, spontaneously, a “primitive Marxism” springs up among the people. One wonders, however, if the direction of the interpretation can be reversed as well. Could we explain Marx from the direction of the people of the Cauca Valley? Could it be that Marx’s method reflects, unconsciously, the observation of the work of the diabolic in the capitalist system? Can we read backwards – the witch’s direction – here?

First, this is what Taussig writes:

“Rather than dismissing these responses as "traditional" or irrational, the approach adopted in this essay is that it would seem to be more true to the facts as well as more enlightening to consider these reactions as outcomes of a clash between a use value orientation and an exchange value orientation, thus viewing them as the beginning of a potential critique of capitalism. They provide us with insights into the irrational basis of our own economy and stereotype of homo oeconomicus, and can be usefully considered as illustrative of a form of "primitive Marxism."

Which raises the question: How is contracting with the devil derived from understanding a change in economic regimes from a “use value orientation”?

But to continue with Taussig:


“

This "primitive Marxism" was undoubtedly inherent in the outlook of the European proletariat in the early stages of the birth of the capitalist system, but has since been largely superseded by a new world view which regards the wage contract system, market pricing, and the institutionalization of profit and greed as natural and ethically com- mendable.1 In the light of this historical amnesia, which afflicts all social classes in a developed market economy, it is all the more important to dwell on the critique offered us by those neophytic proletarians in the Third World today, who are just entering the capitalist system with their goods and labor and who often appear to regard that system as anything but natural and good.2 In the Cauca Valley the sense given to the devil and his role in contracting wage labor is like the definition of the early Christian fathers as "he who resists the cosmic process," which in this context comes close to the idea of forcing things in the interest of private gain without regard to what are seen as their intrinsic principles (cf. Needham: 69-71).”

The “forcing” is an imposition from the outside. As I have previously remarked in my posts on the image of the limited good, Forster’s theory is incomplete, in as much as it neglects the attitudes of the powerful towards the peasant and vice versa. That attitude is, I claimed, mediated by the notion of sacred predation – the powerful have a divine sanction to take more than their share, but this sanction does not make them non-predatory. Rather, it institutionalizes their predatory status. The fall of this old ethos is recorded throughout the eighteenth century, masked to an extent in the rise of happiness as the social justification of the power structure. Taussig is talking about a culture moment that occurs, theoretically, as a result of the dissolution of sacred predation in the emergence of a new economic system, a new totality of social forces. But it doesn’t simply emerge – it is ‘felt’ as being imposed by something outside the social whole. Its exteriority joins it, archetypally, to images which exist (as portents?) in the old system. This is a thread expertly danced by Deleuze and Guattari in The Anti-Oedipus. We will dance it too.

But to return to Taussig, it is not the simple form of the contract with the devil that fascinates me as much as the “money as double” form – a story that hss striking resemblances with Marx’s treatment of money in the Grundrisse, and with Balzac’s story, the Peau de Chagrin.

According to the belief in el bautizo del billete (baptism of the bill), the Godparent-to-be conceals a peso note in his or her hand during the baptism of the child by the Catholic priest. The peso bill is thus believed to receive baptism instead of the child. When such a baptized bill enters into general monetary circulation it is believed that it will continually return to its owner with interest, enriching the owner and impoverishing the other parties to the deals transacted by the owner of the bill. The owner is now the Godparent of the peso bill. The child remains unbaptized, a cause of great concern since the child's soul is denied supernatural legitimacy and has no chance of escaping from Limbo or Purgatory, depending on when it dies. This practice is heavily penalized by the Church. The baptized bill receives the name-the "Christian name" as we say in English-that the baptismal ritual was meant to bestow on the child and is now referred to by that name. It is then set to work as follows. The Godparent pays the bill over as part of a routine monetary transaction, as when one pays for goods in a store. The Godparent mutters the following type of refrain:
Jose
Are you going or are you staying?
Are you going or are you staying?
Are you going or are you staying?”

,,, And here are Taussig’s stories, which have such a strong glamour that I, who have tried to understand the Satanic sublime as well as I can, fall before them and worship, first, their beauty. I am tempted to make some interlinear collage between this and Marx’s brilliant demonstration of the doubling to which social labor, embodied in the commodity that is raptured by money, which also embodies a social, exterior force, is subject. But let’s not muddy the track. Put your hands in the air like you just don’t care:

The bill, referred to by its name, is asked three times whether it is going to return to its Godparent or not. If everything works as it should, then it will soon return to its Godparent, bringing a large amount of money with it. This transfer is accomplished invisibly. A black middle-class family owned a corner store in the village. Halfway through the morning, when the wife was alone, she went out the back and then quickly returned because she thought she heard a noise in the till. Opening it she found all the cash gone. She then remembered that one of the customers had behaved peculiarly earlier that morning, and realized that someone had passed her a baptized bill. As soon as her back was turned, this bill had made off with all the money in the cash register. In a busy supermarket in the large city nearby, a shop detective was startled to hear a woman standing near a cash register chanting under her breath: "Guillermo! iTe vas o te quedas? ,Te vas o te quedas? ,Te vas o te quedas?" He promptly concluded that she had passed a baptized bill and was waiting for it to return to her with the contents of the register, and he immediately arrested her. She was taken away and nobody knows what happened thereafter. One of the few successful black store owners in the village was saved from a great loss only by a most unusual coincidence. Serving in his shop he was startled to hear a strange noise in his cash register. Peering in he saw two bills fighting with each other for possession of the contents, and he realized that two customers, each with their own baptized bills, must have just paid them over and were awaiting their return. This strange coincidence allowed him to prevent the spiriting away of his cash.”

Another one bites the dust

The zona landed at my place this afternoon. I may have to interrupt Limited Inc for a bit, although I hope not. My landlord wants 450 dollars in back rent which, long story short, I didn’t know I owed. Possible eviction looms – but such,such are the breaks! It will be hard to plug in this laptop into a sapling in a field.

However, while I’m still electrified: LI readers should check out the discussion between James Surowiecki and John Quiggin
about nationalizing banks, since it gets to the heart of a matter that has been obscured by the thousandfold murk of pundits and University of Chicago economists.

Surowiecki starts things off by putting all his cards on the table:

“Like Kevin Drum, I think that as the “nationalize now” meme has taken hold in the blogosphere, people are talking about nationalization “awfully casually.” One way this manifests itself is in the argument that the only reason people are skeptical of nationalization is because it’s “un-American,” when, in fact, I think people are skeptical of it for two big reasons:

1) Two years of financial crisis does not invalidate the general principle that private enterprise is typically better at efficiently allocating resources than government; and
2) the idea of the state literally determining which companies and individuals do or don’t get credit is, even to a non-libertarian, at least a little troubling.”

Quiggin keeps the discussion confined, unfortunately, to the technical question of the state of the financial services sector:

“What’s needed in the present case is not only to fix the problems of individual banks, problems on a much bigger scale than have been seen before (even in the leadup to the Great Depression, the financial sector played a smaller role in the economy than in the recent bubble), but to reconstruct a failed global financial system. It’s kind of like rewiring an electrical system in near-meltdown, while keeping the power on (this is possible, but tricky and dangerous). The job is likely to be much slower than the rescues mentioned above, and the institutions that emerge from it will be very different from those that went in.
But, contra Surowiecki this time, this only strengthens the argument for nationalisation. Financial restructuring is going to be a huge challenge, involving both a radical redesign of national regulations and the construction of an almost completely new global financial architecture. To attempt this task while leaving the banks under the control of discredited managers nominally responsible to shareholders whose equity has, in the absence of massive transfers from taxpayers, been wiped out by bad debts, seems like doing live electrical work while wearing a blindfold and standing in a pool of water.”

I commented extensively at CT. Arguments which I’ll repeat here.

“I like the way Surowiecki casts the terms of the argument. It is precisely the fact that, contra his Chicago-ish point of view, private enterprise did not do a good job of allocating capital which is the strongest argument in favor of a national bank.

Was the allocation of capital towards financial innovations and away from, say, energy innovations, and towards inflating assets, like homes, and away from infrastructure an accident of the system? I’d argue that it wasn’t. That is, I’d argue that the private enterprise system was caught in a trap in which it couldn’t profitably allocate capital in the most efficient way. The allocation of capital to the housing market was both inefficient and the best solution that the private enterprise system could come up with. Like all bubbles when they pop, the housing bubble is now being seen as one big mistake. It wasn’t – it emerged from a crisis in the system of the Great Moderation as a logical solution to the problems caused by the collapse of the tech bubble. And, in fact, it was entirely rational to bet that rising housing prices would still find a market with a population of homeowners who, in the nineties, seem to shake off the slowdown in the rate of income increases they’d suffered under Reagan and Bush. I believe the standard ratio for buying a house is that its price be three times the yearly income of the household. From what I read, nationwide, in the naughties, that ratio went to 4:1. If you look at the spread, you’ll see that this reflects, exactly, the stagnation of incomes over the last eight years. And that reflects, exactly, the cul de sac in which we sit with a system that has overemphasized free market solutions over the last thirty years.”

Now, an objection was made to my statement of the case by a conservative, who brought out the argument that conservatives have now been forced back upon. Basically, we are told, due to the government refusing to regulate Fannie Mac and Freddie Mae, this mess happened – so it is the government’s fault again.

I find this argument false in its details, but, more than that, misplaced in terms of the level of argument. In actuality, as conservatives happily pointed out in 2005, and as neo-liberals pointed out extensively in the nineties, we live in an economic environment in which business is freer to operate as it will than at any time since the 1920s. If this isn’t true, than of course we need some explanation of what happened to the Republican revolution of 1994, what happened to the innumerable references to the American model versus the European one, or what happened to Alan Greenspan, or what happened, indeed, to Greg Mankiew, one of Bush’s economic advisors in 2003-2004, who is now promoting the Fannie Mae story. Memory hole has never widened so suddenly or so fast.

So, let’s hypothesize that the conservatives, before the crash, were right – that is, their description of the general tendency of the American economy was right.

This, then, is what I would say:

“But, in essence, that is neither here nor there. In fact, the private sector acted as rationally as it could by pumping money into the housing bubble. In other words, it wasn’t some contingency that caused the private sector to misallocate capital. Nor was it interference from the government – in fact, the degree of government regulation diminished. Rather, the problem was one of structure. The private sector, contra the neo-classical model, doesn’t operate under conditions of full employment, and does operate within a business cycle that determines the investment landscape at any one time. In other words, it was due to the structure of the private sector that capital was allocated suboptimally and inefficiently. The conservative economic policies of the Clinton and Bush administration had retracted the kind of positive interference by the government to give the private sector the fullest possible space to maneuver. And the private sector took advantage of that space – in fact, in 2004, you would find conservative economists or publicists, like Mankiw and Larry Kudlow, bragging about how well it was operating. It was a boom. However, this boom depended on battering the bargaining power of labor so that there was no median rise in household income, while at the same time creating more credit for the median household to use.
The housing bubble, in other words, was the best solution the private sector, under the freest conditions since the 1920s, could come up with.
Now, those conditions are not going to be changed no matter how much money is poured into failing banks and hedge funds. They are only going to be changed by inflating incomes. This will not come about if business and commerce aren’t revived. But there are no sources within the private sector for that revival. Which is why liquidate liquidate liquidate will only lead to ever worse conditions. To revive the economy in this phase of the business cycle, command and control economics, using the power of the state to, for instance, capitalize a Reindustrialization facility, is the best and shortest way.
Again, the argument here isn’t whether the Democrats or the Republicans should have done x or y to regulate Fannie Mae. The argument is that the regulatory environment was the most business-friendly since the twenties, and the Free markets responded by allocating capital in those ideal conditions as the market decided was most efficient – that is, most profitable. it seems to me that you don’t get to test many economic models as well as we get to test the model of free markets lately.”
To put this as strongly as possible: the housing bubble saved our national ass in the post tech crash. It was deliberately intended to. The private sector was allowed to allocate capital with few strings attached. The mangle of inequality – that is, the increase in both the relative poverty of the median household and the increase in its buying power, or credit line – worked to create the necessary political atmosphere in which business could operate with less and less regulatory supervision by the government. The crash we are feeling intensely now was simply postponed a few years by policies that allowed ever more money to be made by the ever fewer. And the result is this disaster. But this disaster would have happened in 2003 without a deliberate policy of easy money and de-regulation. We are suffering through a structural contradiction that was bound to hit us one day or another.
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the Zona, Marx and the necessity of universal prostitution

Ah, I’ve been tearful all day – that was a beautiful speech by Obama. Those were beautiful crowds. But where are the ghosts of some half a million Iraqis? And what is the sound at our backs – the scuttle of rats in the alley? The fall of the market? The zona, phase 2?

Yes, yesterday the zona quietly settled in the UK. The Royal Bank of Scotland basically declared insolvency. This will (prediction prediction/here’s my malediction) be bigger, in the end, than the Lehman brothers. However, the oligarchy seems to be proceeding, robot-like, as though the financial sector could, somehow, be restored, like Dorothy waking up in Kansas. You were there! And so was my yacht! And my trophy wife! And the 40 room pad in Greenwich, Connecticut! And I never want to leave home again!

Of course, the problem is not that the banks aren’t loaning money to homeowners – it is that the homeowners incomes have been frozen or gone down since 2000. You don’t have to use a complicated equation to see what happened. Put this in your model – Homeowner A receives y amount of money per year in 2001. He receives y-x amount of money in 2004. However, he can buy much better cell phones with it, and great plastic tat at Walmart, and sign up for a teaser rate credit. In 2007, however, he has bought all the cheaper tat he could stand, he owes y x 4 for the new house he bought, and his income is still y-x. You figure it out. Then multiply by 80 million households. Quick, how soon then can you loan more money to Homeowner A to make all the mortgage vultures happy? Answer is: as much time as it takes to travel to the Alpha Centauri galaxy and back. Which is why, incidentally, TARP is not only a bank robbery, but it has created quite a large hole in the future, which has literally been mortgaged to a bank system that cannot pay back the loans. As in, can’t pay back that 7 trillion dollars in loans on junk assets our kindly Government has pumped out. When Paulson announced that the sky was falling, there was, admittedly, no alternative but to pass the bill – but it was precisely then that the alternative should have been floated. Dems should have gotten together to pass a bill capitalizing a national bank with the Tarp money, with a charter to finance industry and commerce in the U.S., until further notice. It is employment and increasing incomes that will repair the much shrunken financial services sector. Not all the Fed chits and all the T-men will build back the castles of ruin again.

…
Enough of the zona. Because I am broke and idle this month, I’m working quite a bit on the Human Limit. So, resuming the glowworm thread…

Let’s put our piton in this remarkable passage in the Grundrisse (wait for it) – especially as we are mulling over the first generation of Romantics. This passage – we can’t name it, give it a proper name, it comes from the flow of the notebook, Marx not as the systematic but as the notebook thinker, there’s no subsection for it - comes at the end of four or five pages the proceed out of the consideration of the utopian banking scheme of the Saint Simonians, as well as Proudhon’s idea of being paid directly for one’s time itself – the time-chit – instead of in money (wait for it). The passages I want to consider go from this sentence: “The dissolution of all products and activities into exchange values presupposes the dissolution of all fixed personal (historic) relations of dependence in production, as well as the all-sided dependence of the producers on one another,” which begins a consideration of the universal history (wait for it) and the universal subject (about which Marx says, later on: “The exchangeability of all products, activities and relations with a third, objective entity which can be re-exchanged for everything without distinction – that is, the development of exchange values (and of money relations) is identical with universal venality, corruption. Universal prostitution appears as a necessary phase in the development of the social character of personal talents, capacities, abilities, activities.” I hardly need to point out to LI’s readers that this could easily have come out of Baudelaire’s Mon Coeur mis a nu – and so we have two secret notebooks, written about the same time, converging on the same images. Vases communicantes indeed, man).

Here’s the passage (just a second) that caught my eye:

“Universally developed individuals, whose social relations, as their own communal [gemeinschaftlich] relations, are hence also subordinated to their own communal control, are no product of nature, but of history. The degree and the universality of the development of wealth where this individuality becomes possible supposes production on the basis of exchange values as a prior condition, whose universality produces not only the alienation of the individual from himself and from others, but also the universality and the comprehensiveness of his relations and capacities. In earlier stages of development the single individual seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself. It is as ridiculous to yearn for a return to that original fullness [22] as it is to believe that with this complete emptiness history has come to a standstill. The bourgeois viewpoint has never advanced beyond this antithesis between itself and this romantic viewpoint, and therefore the latter will accompany it as legitimate antithesis up to its blessed end.)”

Marx, of course, has more than an honorable place in the history of the overcoming of the human limit – he is, in a sense, its clearest theoretician. More than any other thinker of the nineteenth century, he sensed the shape of the web that was being blindly woven by the colonial offices, the businessmen, the political economist, and the rentier, and he saw what they couldn’t see, the pattern of Nemesis that was impressed upon the weave. But this was not a vision that appalled him – on the contrary, when in the utopian mood, he saw in this work the product of the discovery that there was no human limit. When in the utopian mood … and against this, with the eye that Shestov claims is given by the angel of death, who has a thousand eyes, to those they come for whose time, it turns out, has not arrived – he writes of the dissolution of the human limit as a system of “universal prostitution”. It is the third eye that leaps out of the intricate jumprope rhymes of the dialectic and looks about in this world and sees the ruins and the small pleasures, the pleasure in smallness, which is what is being taken away forever.

Yet seeing this loss for what it is, Marx still connects resentment over it, mourning, – which is to some extent what LI has identified with the great reactionary theme of irrevocability – with a romantic point of view that he feels is discredited and unreal from the outset. It is a point of view that depends upon the bourgeois point of view to which it forms an antithesis. It is a parasitic existence that denounces conditions that it practically exploits. The romantic point of view would unwind history, undiscover the new world, and return to the giants – “the single individual [who] seems to be developed more fully, because he has not yet worked out his relationships in their fullness, or erected them as independent social powers and relations opposite himself.” The characteristic of that erection of independent social powers and relations is found precisely in money. The romantic point of view longs for another kind of independent power, the power of the gods, the power that antedates the discovery that there is no human limit and emerges as a protest against the world in which man is made a “universal” in relation to the great world universal-maker: money.

One should ask, however, whether Marx is right to connect this romantic viewpoint exclusively with a dissident faction of the bourgeoisie. I, too, am emphasizing nests of gentle folks in my history, but in actuality, many of the romantic themes transform popular, grass roots themes and conceptual schemas – touch, as it were, on superstition, that lose system of beliefs which it was the point of the enlightenment program to overcome. In fact, as a sort of check on the emergence of attitudes that come with the advent of universal history, we have interesting anthropological data which is uncontaminated by readings of Ruskin or Tocqueville. In a famous paper, The Genesis of Capitalism amongst the South American Peasantry: the Devil’s Labor and the Baptism of Money, Michael Taussig wrote this about a population he did field work among:

In the southern extremities of the Cauca Valley, Colombia, it is commonly thought that male plantation workers can increase their output, and hence their wage, through entering into a secret contract with the devil. However, the local peasants, no matter how needy they may be, never make such a contract when working their own plots or those of their peasant neighbors for wages, It is also thought that by illicitly baptizing money instead of a child in the Catholic church, that money can become interest bearing capital, while the child will be deprived of its rightful chance of entering heaven.” (Comparative Studies in Society and History, Vol. 19, No. 2 (Apr., 1977))

Taussig explored popular sense-making of the effect of the implantation of the regime of capitalism – a good developmental project – on a primitive peasant culture. We will remark more on Taussig’s essay in our next post.

The Era of the Great Fly, 2000-2008

Amie suggested I write something about the inaugural. Which I am watching among tears – for relief for the end of the era of the Great Fly, and actually naïve delight in Obama, or rather, the crowd gathered hopefully to listen to him.

"For in that day every man shall cast away his idols of silver, and his idols of gold, which your own hands have made unto you [for] a sin."

Here’s the playlist for Social Democracy:

Higher Ground

Jammin

The Message

You gotta Serve somebody

Evolution Revolution Love

Walls come tumbling down

Rebel Girl

Bongo Bongo

Sinnerman where you gonna run

Tupelo