Notes on the Zona 1

LI, as we hope we have made clear, has been disgusted with Nader and the Green party for years. Yet, in 2000, we voted for Nader, under the delusion that the Green party was something more than a vanity movement that existed to keep Nader’s name in the papers. But we’ve never regretted that vote. We regretted that Gore ran a suck campaign and then, insanely, didn’t contest all Florida precincts immediately, demanding a recount.

Well, ho ho ho, it turns out that all the things Nader and the anti-corporation crowd were railing at – the failure to regulate the derivatives market, the failure to reign in corporate abuses, the use of lobbyists to stifle regulatory agencies that were warning about things like the abuse of accounting rules –well, they were all correct. It is like the 100 percent correct record. That’s nice. Meanwhile, the bipartisan oohing and ahhing over Maestro Greenspan has now started to settle in the national stomach a little badly, like a cannibal stew. Such, of course is the zona.

Read the WAPO account of the attempt by Brooksley E. Born to stop the oncoming train wreck.

"The meeting of the President's Working Group on Financial Markets on an April day in 1998 brought together Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert E. Rubin and Securities and Exchange Commission Chairman Arthur Levitt Jr. -- all Wall Street legends, all opponents to varying degrees of tighter regulation of the financial system that had earned them wealth and power.

Their adversary, although also a member of the Working Group, did not belong to their club. Brooksley E. Born, the 57-year-old head of the Commodity Futures Trading Commission, had earned a reputation as a steely, formidable litigator at a high-powered Washington law firm. She had grown used to being the only woman in a room full of men. She didn't like to be pushed around.

Now, in the Treasury Department's stately, wood-paneled conference room, she was being pushed hard."

Remember the days of yore, when economics would be pulled out of politics, and the private sector would chug along and do all the good things for the good little boys and girls? Sure you do. Uncle Thomas Friedman wrote a book about it. LI, in a prescient little review for the Austin Chronicle, reviewed said book.

The Spirit of the Ultimate Game

Come on pretty boy
Can't you show me nothing but surrender

Economists call it the Ultimate Game. James Surowiecki gives a good description of it:

“Take two people. Give them a hundred dollars to split. One person (the proposer) decides, on his own, what the split should be (fifty-fifty, seventy-thirty, or whatever) and makes the other person a take-it-or-leave-it offer. If he accepts the deal, both players get their share of the money. If he rejects it, both players walk away empty-handed.

The rational thing for the second person to do is to accept the offer, whatever it is, since even one dollar is better than nothing. But in practice this rarely happens. Instead, lowball offers are almost always rejected. Apparently, people would rather throw away money than let someone else walk away with too much. Other experiments illustrate the same idea. Essentially, people are willing to pay to punish those they think are free-riding or acting unfairly, even when doing so brings them no material benefits.”

The Ultimate Game has been known since the beginning of civilization. Among other things, the Iliad might be considered to be a poem about the Ultimate Game. Naturally, it is presided over by a divinity, in this case, the goddess Nemesis.

LI finds it curiously stirring that Herder turned to Nemesis in 1787, two years before the French Revolution (of which he was, to begin with, an ardent supporter – and even after the Terror, he never lost his sense that ultimately, the Revolution was a good thing), at the very peak of the culture of enlightened hedonism.

Classicists today still find Nemesis a puzzling figure. She was a double goddess, or a goddess with two aspects. Herder’s essay on Nemesis is an attempt to understand this mystery – and to understand it on behalf of bright Nemesis, the fair goddess, mother of Helen.

The psycho-social heart of his essay is about happiness and indifference. He tries to understand how one deals with another’s happiness and unhappiness. In particular, why is it that “we sympathize more immediately and strongly with the unhappy than the happy”?

“And so the lightest kind of Nemesis was born, that is actually not envy, not jealousy, but a kind of indifference, that allows us no pleasing fusion with another. By raw spirits this breaks out in cold repulsion [Unwillen]; and the more the other shows off his happiness, the less he understands how to put a pleasing disguise over his advantages, the more he arouses, when not envy, yet repulsion against himself. For even those who would grant him his happiness, become indignant over the fact that he doesn’t enjoy it more wisely and know how to be measured in his enjoyment. This Nemesis lies in all hearts; it was even, as the Greek idioms show, the first that the language and mythology observed. It is, when it wildly breaks out, a daughter of the night, the companion of quarrels, hatred and schadenfreude; in brief, the Nemesis, who Hesiod describes in his Theogony as an evil Goddess. In noble spirits on the other hand, just this cold observation of the ethos of others in their happier hours preserves its pure essnce, and since it mixes neither with pain [Leide] or with pity [Mitleiden], it thus becomes the sharpest point in their scale of judgment. This is the good Nemesis, that looks on, cold and indifferent; but it also must be assuaged or reconciled, then it is an incorruptible judge of virtue and truth.

And how does one most honorable reconcile it? No otherwise than that one makes oneself the observer of one’s happiness and ethos; look there, the goddess with the measuring rod and bridle, who drives away black envy. She drives it away since she hats all passionate presumption and binds the presumptions of men with her bridle; and in this way alone does the good Nemesis defeat the evil one.” [141]

His biographer, Haym, writing in the 1880s, calls this essay an “archaeology of antiquity”. As LI has already pointed out, the appearance of an essay on Nemesis in the time period that saw the first fine extension of happiness from a mere passing feeling to both a norm concerning one’s total life and a norm concerning the political and economic arrangements of the social life already signals a certain dissent. This is Haym’s judgment:

“There is nothing so distinctive as the fact that just at this time, in the 80s, Herder was mightily grasped by this symbol. It is the symbol for the beautiful equilibrium into which with his being he committed his activity and art as a writer. This symbol could not have been predicted by the writing of his earlier period. After the thrusting and enthusiasm, the numerous incidents that lacked measure and that stepped over the line, in which his views, his appearance, his ambitious striving, his unbridled hate and love itself, his style, the whole way of being and art in which he moved, he was now at the point of recognizing the mean, adherence to noble forms, submission to necessity, to decorum, like Goethe, and expressed this with the appropriate words, as Goethe did with other words. He had to pay homage to Nemesis after his Sturm und Drang period had passed as Goethe had already, after traveling through Switzerland in 1779, wanted to erect an altar to Fortuna, Genius and Terminus.” (329)

the smell of cognitive dissonance in the morning

The Republican re-election plan, such as it is, has been to blame GSEs- Fannie Mae and Freddie Mac – for the subprime crisis. Meanwhile, the Republican administration’s new plan is – to make every bank a GSE! LI loves the smell of cognitive dissonance in the morning!

So, basically, the developed countries (save for China, the new home of the free market) have put their treasuries on the line. This will be an interesting game. As we pointed out before, the shrinking that is going to come will wipe out a lot, as in hundreds of trillions, of value, namely as the 550 trillion dollar pool of derivatives comes back to earth. Since nothing on earth – including the combined treasuries of all the richest nations – has that much money, the decision that is coming up is how to let it go. LI advises readers to check out the popping of John Law’s system for pointers. Or ... the Grimm’s tale about the Fisherman’s wife who wished to be God.

Nemesis and the Zona

- When Pompey was finally defeated, his head was cut off and sent to Julius Caesar in Egypt. Caesar buried the head in a spot of ground especially dedicated to Nemesis.

- Events keep fucking with LI’s general strategy. I should be writing about the varieties of eighteenth century hedonism. But I am watching the money culture blow up before my eyes, like a dream. Things I have written on this blog long ago about inequality and its effects, or the meltdown in pensions, etc., have leaped into the coldblooded half reality of the headline world.

- My brother Doug likes to say that I think I know all the answers. This is true. The prophetic vocation is in my bones. However, so far in my life, none of the answers have matched any of the questions anybody is asking. The answers were all torn from literature, a thing that has long been laid aside in that place where the dead bury the dead. These are tv washed days in the land of Cockagne, the artificial Paradise, and he not busy doing crack is busy lining his footsteps to the grave with asset based securities. I have watched the best minds of my generation discover that the mind is a ludicrous entity that the system could synthesize for itself, just as it could manufacture its own imagination from zeros and ones, its own virtual emotions (better than any felt by DNA based creatures), and its own cyber others to hate. Fuck off and die is written on my forehead, and yes, I’ve been looking forward to the latter part of that admonition. But I suddenly feel all relevant.

- All of which means that my bittersweet topic, the Human Limit, is now all the more pressing. It is just the time for sowing doubts about the entire direction of this here civilization.

- What are the roots that clutch?

- So: Herder’s essay on Nemesis, written in the 1780s, has been on my list of references for a while. Now that the Zona is blowing, it is time to address Nemesis – that limit to happiness itself. To start with, here is a quote about Nemesis from Mathew Grumpert’s book, Grafting Helen:

“

Aristotle asks at 5.5.17-20: what is it that holds the city together? and answers: the equitable exchange of disparate goods. That means, in essence, setting up equivalences between them: “all things that are exchanged must be somehow comparable. It is for this end that money had been introduced and... becomes... an intermediate[meson]; for it meaures all things. ... money “has become by convention a sort of representative of demand; and this is why it has the name money [nomisma] – because it exists not bey nature but by law [nomos]” E. Laroche, in “Histoire de la racine nem- en grec ancien” notes that in the earlest instances of nemesis, conventionally defined as blame, the term is always used to make a “value judgment” (1949:93), in both an ethical and economic sense. Both are central to the act of assessment at the walls of Troy, as the elders gaze upon the face of Helen (3.156) ou nemesis Troas (surely there is no blame if Trojans...). Helen is, indeed, a form of nomos, a powerful generator of equivalences, but ruthlessly pursued – like money – as a possession in her own right.

Helen as nemesis suggests the financial abuses described by Aristotle in the Politics: she provokes an economy fueled entirely by desire, as opposed to demand. And the face of Helen is, to use Aristotle’s definition of nomos, a “representative’ of desire, as opposed to demand.” (2001:61)

The Mangle of Inequality

Marx, that old mole under the boards, must be laughing. Under the detritus of the non-speak in the papers, this is clearly a business “correction” that points to the inherent crisis-prone strain in capitalism. Marx, of course, wasn’t the first to see that the tendency of the margin of profit of a commercial enterprise is to decline, but he had the larger vision of how that decline was embedded in society.

Apparently, however, nobody quotes Marx or alludes to Marx on TV. On TV, the recession just fell out of the sky. Such was LI’s conclusion, lying in a gigantic hotel room in Sarasota Springs, NY, the past couple of days, channel jumping the wasteland, looking for reports on the Zona. We’d traveled North to attend the wedding of our friend, S. The leaves were red, and the Yankees we met were kind, boisterous, full of family histories and drink. And those accents...I actually experienced that traditional ecodisaster, the pre-wedding limo party. I was a hit for suggesting we find some poor people and run over them (my best material always comes from Baudelaire, God Bless Him). S., of course, shimmered in her wedding gown on the day (and the crosshatched lace action of the back of the gown was, uh, quite phenomenal). Her husband, M., a professional massage therapist and part time punk rocker, assembled part of his band for the reception, and I hopped up and down to the music like a shaved ape escaped from some Pharma concentration camp where they were researching dopamine.

But in the late night off hours, I pondered the pisspoor state of political reporting (that political reporters are surprised that the campaign in October is about the state of the economy means that they really are braindead – did they read nothing about what was happening starting in January?) and watched the group fumble on the news stations to explain what was unfolding.

The place to start, of course, is the seventies. Suddenly, after thirty years, we are starting to recognize the shift that began to occur then. Let me remind you – the shift consisted of 1., the crushing of the bargaining power of labor; 2., the de-manufacturing of America – which was partly connected to the fact that manufacturing workers were the most militant, and partly the inevitable effect of the ability of capital to find other, cheaper regions in which to place factories; and 3, the dissolving of traditional constraints on credit.

These events occurred in response to the most serious crisis in capitalism since 1945. Galbraith’s New Industrial state, the liberal Keynesian economy, had created structures that were supposed to resolve such crises. These included the management of aggregate demand by the state, the moderation of labors’ older, utopian demands for a slice of the power in return for a steadily rising paycheck, and management’s movement away from optimizing profits in exchange for lessened volatility. The Keynesian moment unwound for a number of reasons – labour, with increasingly less interest in the political dimension that originally animated unions, became much more vulnerable; the government management of aggregate demand, combined with the government dependence on War, had finally unleashed inflation; and the ROI of the Fortune 500 corporations was finally causing an investor revolt. However, of the three factors I am listing in the shift to the new, Reagonomic paradigm, one and three seem oddly disjoint. How is it possible to diminish the bargaining power of labor – which results in the stagnation of wages – and at the same time dissolve traditional constraints on consumer and other credit?

Of course, from the neo-classical point of view, that makes a lot of sense. Instead of the government actively managing aggregate demand, the private sector, with a freer credit market, can take over. And in fact, even if wages stagnate, household incomes rise. The house itself as an asset appreciates, for one thing; more investment vehicles are made available to the public, for another thing; and finally, there is the great entry of women into the labor market.

Credit, then, is the keystone. It is from this moment on that the financial services sector, which had been relatively unimportant in the Keynesian regime, returns in force. It is what I would call the mangle of inequality – playing on Andrew Pickering’s term, mangle of practice. Contemporary capitalism in America has to effect a straddle – the economy depends on consumption, and yet, the majority of the consumers engross less and less of the productivity gains accrued by the system. Freeing the financial markets had two effects – one was to re-vamp the consumer’s financial horizon. Instead of worrying about making a wage sufficient to live the good life, the consumer worries about making a wage sufficient to have a good credit history – which is the magical key to the world of cars, plasma screen tvs, houses, and all the rest. The other was to make the consumer a shareholder in the system. For simplicity’s sake, call this the 401k world – that stands at the symbolic center of a system by which the ordinary person was hooked into the market. And the market could, consequently, use vast flows of capital to keep easing credit. A virtuous feedback, so to speak.

It had another, symbolically resonant significance. The triumph of the state in the 20th century was in providing for retirement. The state successfully created, within a capitalist economy, a mass ability to finish one’s life without poverty or utter family dependence. It was the template for the structural goods that the state, in a mixed economy, could provide – when the demands of distributive justice could not be aligned with the price creating market in a good or service. Consequently, social security has earned a special hatred from the right. The American system of encouraging private investment was meant, on the surface, to complement social security, but the ultimate aim was always to replace it.

The mangle of inequality, then, was not – as in Marx’s time – a head to head confrontation between classes. It is a more complex machine, in which class interests are blent so that head to head confrontation is systematically differed. The political triumph of the system is that the blending disenfranchised populism, since it became unclear who would really benefit from populist practice.

These are the roots that clutch. Fast forward to yesterday’s NYT article about Alan Greenspan, and notice the graph about the derivatives market. Notice that, supposedly, the world added 400 trillion dollars worth of value in the last six years. At least in the derivatives market.

This is, of course, entirely spurious. But the logic of the mangle of inequality has driven that financial bubble, and its effects are going to be real. We should not be comparing our situation to the Great Depression. This Zona goes back to John Law’s system. And just as Law’s system produced numbers incompatible with the real world, so, too, has Greenspan’s system. It is about to fall. We are about to see the melting away of 400 trillion dollars, give or take a penny.

The mangle tells us something about what comes next. In the past, recession has been economic sector oriented, which often means region oriented. We’ve seen in with industry and agriculture. The most malign effect of this recession, however, will be concentrated on an age demographic: the over 60s. Their entire world was built on the credit system I have outlined. Ironically, the elites, chattering away about “reforming” social security, never noticed that the real weakness in the retirement system is in the private “complements” to social security. Pensions are already underwater, and have been for some time. Having hooked the generation that was thirty to forty during the Reagan years into the financial system, the policymakers, economists, rightwing think tankers, and the vast sales forces of the financial system brought in the kind of capital that allowed for the speculative bubble. The bubble bursting, that money won’t be there any more. And the over 60s aren’t going to like it.

As for Marx, well, who is that knocking at the door?

Don Giovanni, a cenar teco
M'invitasti e son venuto!

the zona

Ah, there is nothing so fine as comments sections. The NYT and the Washington Post have been filling up with indignant comments since Paulsen’s Wall Street Cargo Cult plan – (buy holy objects, wait until spirit appears, sell again) – shocked the complacent American householder. And, surprisingly, from shore to shore, they’ve been hardworkin’ savin’, scrimpin’ and so squeakily virtuous that heaven looks down in envy! Who would have guessed? All the time I thought it was the householders that elected Bush twice, looked on with bloodlust and shiteating grins as we invaded Iraq, took out 800 billion dollars in home loan equity, and watched with greed and no inclination to question as housing prices became the little guy’s stockmarket – bound to go up! Are these the same people who resided in a country most known, for the last eight years, for its trade deficits and its charming deal with China – buy our T-notes and we will buy your bloodspeckled plastic toys! I musta been livin’ in the wrong country.

And now, of course, the bills for the fun filled political vacation come due. When Schwarzenegger was elected governor of California, the first thing he did was Charge IT! – to a round of cheers from those scrimpin and savin’ burgermen, working all day, thinking of Jesus Christ all night. After all, why pay for the structures you need every day when – as Mr. Magician said in that beautiful Christmas Classic, It’s a Wonderful Reagan-y Kinda Life, – the magic of the marketplace makes lower taxes bring in more revenue! We owe it to ourselves! We can’t surrender to terrorists! We can’t return to the days of tax and spend! Class warfare! As the man says:


Quelli che son dentro la merda fin qui, oh yeah
Quelli che con una bella dormita passa tutto anche il cancro, oh yeah
Quelli che, quelli che non possono crederci anche adesso che la terra e’ rotonda, oh yeah, oh yeah
Quelli che hanno paura del aeroplano, oh yeah
Quelli che non hanno mai avuto un incidente mortale, oh yeah
Quelli che non ci sentiamo
Quelli che a un certo punto della vita ci vorrebbe una arma segreta, ostia, oh yeah

I’m sure there are whole sections of Abu Ghraib that are on lockdown, so intense is the sympathetic weeping for those who trying to sell their McHummers, those calling in about the “minorities” getting special deals from the government and hasn’t this brought the whole fuckin’ thing down, those who have to eat out less, those who have to tell their kids, we’ll go to the dentist next year... oh yeah!

You can tell LI is deeply, deeply moved. I like the timing of the California plea (dear Santa, send us Eight billion dollars and we promise to be good all year!) as the Cargo Cult bill is signed by the Great Fly himself, going out of office in high drama – tough and weathered, a cowboy who has brought us Victory with a V, not white flags with a W, in Iraq – and don’t you feel so much freer? Constipation gone? Song in your heart? Perhaps you are triphoping down HangSaddam Avenue this very afternoon! I know I am.

This is the Zona. The “ghost wind.” The Fore have a long history with the Zona. When it blows, the victims of kuru tremble. Others pile up leaves, dirt and excrement and carefully store it in their huts, thinking that it will turn into metal. The Zona is in control here, people. I am merely its scruffy little pissant prophet.

I, the substitute 2

“All planned out human sacrifice ceremonies betray the God to which they are consecrated: they subordinate him to the primacy of human goals, dissolve his power, and this deception of him is seamlessly transposed into that which the unbelieving priest performs on the believing congregation. Cunning arises in the cult. Odysseus himself functions as both the victim and the priest. Through calculation of his own obedience he effects a negation of the power to which the obedience is pledged. So he redeems his fallen live. But in no way do deceit, cunning and rationality stand in simple opposition to the archaic element of sacrifice. It is only that through Odysseus, the moment of the deception in sacrifice, the most inner ground perhaps for the pseudocharacter of myth, is lifted into consciousness. It must be a primeval experience that the communication with the gods through sacrifice is not real. The sacrifice of the substitute, glorified by new fashioned irrationalists, isn’t to be separated from the divination of the sacrificed, the deceit of the priestly rationalisation of murder through the apotheosis of the chosen. Something of such a deceit, which still lifts the picked person to the bearer of divine substance, can be traced from then in the I, that has itself to thank for the sacrifice of the moment to the future. Its substantiality is an appearance like the immortality of the slaughtered. It isn’t surprising that Odysseus seemed a divinity to many.” – Adorno and Horkheimer, The Dialectic of the Enlightenment (my translation)

Calasso makes a sweeping thematic statement in The Ruin of Karsch, a book that was written in the shadow of the horrors of the seventies:

“History is summed up in the fact that for a long time men killed other beings and dedicated them to an invisible power, but after a certain point they killed without dedicating the victims to anyone. Did they forget? Did they consider that act of homage futile? Did they condemn it as repugnant? All these reasons had some sort of bearing on the matter. Afterwards, nothing remained but pure killing... (135)

Calasso is writing to tease out the infinite subtleties in the system of war which, in his view, is the real name of modernity. The economic system, whether managed by the private sphere or commanded by the state, exists in the void left by a mechanical and blind system of human sacrifice that no longer has any belief in any invisible power that could explain the compulsive bloodletting. Although this seems to be miles away from the rise of the happiness culture, the two develop in tandem, one with the other.

The substitute in the sacrifice, as Adorno and Horkheimer point out, is both a trick of human rationality, played on the invisible power, and the first step in the long undermining of the need for sacrifice.

Now, it might seem, at first glance, that nothing could be as repugnant to a society organized around the image of the limited good as sacrifice. Sacrifice would seem to violate the assumption that resources are so distributed that the acquisition of them is a zero-sum game. What I have, you don’t have. And this is the genius of sacrifice, its tie to power and wealth and essentially predatory and contingent qualities. As we pointed out in a number of posts, wealth as treasure is wealth as accident – wealth as a thing that comes purely from the exterior, a sign and symbol of it. And that exteriority marks treasure as a part of power, which is that into which all exteriority is merged. If Adorno and Horkheimer are right, then the logic of sacrifice is shaped by these social assumptions. Sacrifice is the symbol of predation, and the predatory portion that goes back to the predator. The predator’s claim is, essential, to ownership of everything, and that claim is the basis of the invisible order of things. The portion sacrificed is the substitute for that all, against the impossible realization of the predatory power’s claim – which would be the end of the world. Death is of course the predator’s triumph, and it is this which the sacrifice wards off for a little while.

Bataille’s idea is that sacrifice defines the sacred and the accursed. The social correlate, here, is treasure and waste. Between the two there is a strong bond. The substitution of waste for treasure, or the magic that makes waste into treasure, or the secret power of waste – these are all deep fairy tale motifs. The substitution of treasure for waste, on the other hand, this was the great Christian paradox of God’s sacrifice of his son. It is such a mad gesture that the first become last in its aftermath, and the world is turned upside down. Theologians, of course, spend centuries turning the world back upright, but the idea of treasure substituted for waste still emits a powerful revolutionary frequency below the official discourse.

LI’s notion, then, is that the substitute has different meanings in the two regimes sketched out by Calasso’s sweeping gesture – the regime in which sacrifice has a meaning, and the regime in which sacrifice turns into futile superstition. Thus, the moment that the substitute is no longer a marker in the intricate transactions by which pure exteriority is appeased with its share, it is, in a sense, freed. First as a character, then as a personality, first as an autonomous subject, then as a sociological object. In the atmosphere of liberty, the substitute seems to disappear entirely – for what is liberty but the absolute uniqueness of the individual? But in that ephemeral moment, the stress of the purposelessness of the unique individual on the system forces the return of the substitute as the subject –its transit through the tropic of liberty returns it to the system freed, more practically, from the mark of the sacred, and ready to get to work. The lack of that substitute within disturbs what Tolstoy calls the animal personality, and there has to be a substitute for the missing substitute – there must be, for instance, self-interest – or there looms the menace of social rejection, various deaths in the madhouse. These are the stakes of transgression, and why, for Bataille, it bears the impress of that unbearable moment when the substitute, in the triumph of rationality over all exteriority, all invisible powers, disappears.