Economic forecasters get it half right and half wrong. I don’t mean to say that on average the information they generate is reliable only 50% of the time. I mean that the presuppositional basis of their theorizing of the causes of the trends they imagine they are identifying is only about half right. What strikes me about people like Max Keiser and Eric Janszen is that they believe there is nothing inherently contradictory about ‘capitalism’ as a ‘logic’ of societal reproduction, but that the ‘logic’ in its current incarnation has been corrupted by excesses or abuses.
In their analyses, therefore, they spend much of their effort exposing the “large scale crimes” being committed by corporations and rightly insist that these ‘crimes’ or ‘excesses’ both engender and aggravate systemic instabilities. It’s not so much the rules of the game that make the game unplayable; it’s the gamers who cheat that take the fairness out of the play and so ruin the game for everyone else. So if you want to divine your future economic prospects, just watch what the grand scale cheaters are up to and try to ‘front run’ the likely macroeconomic effects of their frauds and machinations. The strategy is neither entirely nonsensical nor without promise, at least from the perspective of your own self-interest and providing that you have the necessary means at hand (which is to say, not only access to ‘privileged’ information, but also ‘privileged’ access to copious funds of capital, presumably in the manner that both Keiser and Janszen do. Furthermore, the ability to disseminate one’s opinions among market participants yields the additional dividends of self-fulfilling prophecies: if I’m invested in gold and silver and can convince my fellow money managers that these are going to be the next loci of asset inflation, no one should be surprised if, once the conviction takes hold in the heads of the significant market participants, the assets begin to inflate as was “predicted”).
But let us take one or two steps back so that we will be better able to jump into a critique of the craft of economic forecasting.
It is important to grasp the idea of society as being a “system” for otherwise one misses a crucial feature or dimension of what one is trying to understand: the ‘unconscious’ or ‘mechanical’ or ‘unintentional’ or ‘inertial’ aspect of society. Capitalism, for example, may be the name that we give to the kind of society we live in, but this does not mean that ‘capitalism’ is or ever was a work of intended social engineering. The ‘system,’ in other words, was not first conceived in people’s minds and then enacted or created according to a set of pre-existing intentions or designs, nor is the system, which really does exist, even now clearly delineated or mapped out in anyone’s understanding of it. It can be fairly said, as Marx and Engels and others have, that the system actually emerged by accident and certainly not by design. One day, there it was, and there it still is, more or less ‘fixed’ or ‘crystallized’ in its dynamics, both self-defeating and self-perpetuating. To be sure, Capitalism does foster a set of conscious intentions that are in their orientation ‘capitalist’ and even ‘pro-capitalist;’ but these intentions are for the most part ‘unconsciously’ fostered, and the system of social interactions that comprise Capitalism do not themselves necessarily square with the ‘capitalist intentions’ fostered by the system, neither those of the currently privileged who are intent on the preservation of the system for the sake of safeguarding their considerable privileges, nor the publicly and propagandistically professed intentions designed to quell the dissent and dissatisfaction of a broadly disenfranchised public.
Let me try to further clarify my position, first in more abstract terms, then by attending to more concrete instances or examples:
Abstractly speaking, then:
A society is a complex system of interactions between the individuals who comprise that society. You can only speak of a ‘system’ of interactions if there is a core of interactions (or sets of behaviors) that tend to repeat themselves in more or less the same fashion in the same contexts, day after day, year in, year out, consistently and predictably. But if people in a society tend to predictably repeat sets of behaviors or practices, clearly they have to a high degree internalized these modes of conduct as quasi automatic reflexes, which means that their personality structures — those ways of thinking, feeling, and behaving that tend to be automatic with an individual and thus ‘define’ the personality of that individual — have been shaped (deliberately or not, in whole or in part) to ‘fit’ or ‘correspond’ in a highly congruent fashion with their (proximate) social environment.
Society, therefore, is both ‘outside’ and ‘inside’ the individual, and to the extent that this unity of the ‘outside’ and ‘inside’ translates into observable patterns of routine or ritualized interactions, society is ruled in part, but significantly so, by a kind of regulated or structured unconsciousness. A good part of the truth about ourselves as social creatures is that much if not most of what we do is mindless repetition, but without this mindlessness inherent in what we do as social agents, society as a stable and therefore intelligible field of life simply could not exist. People need to be able to ‘automate’ themselves (or be conditioned or have their conduct regulated by hierarchies of internalized rules or codes) to be contextually predictable to both themselves and others in their outward behavior, and in being ‘fixable’ in this way, they are also at the same time the physiological substratum that is the possibility, if not the inevitability, of the fixity of any and all institutions. With the fixity or persistence of institutions then comes the discernible ‘logics’ or ‘trends’ of interactions that comprise the living substance of societies: if you want to know what a society is about, you must pay attention to the actual results of its combined or imbricated institutional activities. Of course, because we are not merely conditioned automatons, but conditioned automatons potentially capable from time to time of reflecting upon the patterns of our conditioning, it is possible for us to grasp in dribs and drabs those ‘logics’ or ‘trends’ of behavior that are the form and substance of our collective life, and in so grasping them, finding ourselves potentially with the means of altering those ‘logics’ or ‘trends’ in desirable directions.
Speaking in more concrete terms:
Capitalistic society is like any other society in that it, too, comprises manifold institutions that exist and persist by virtue of human conditioning. Only under modern capitalism, conditioning is not merely or only the result of individuals having to adapt willy-nilly to the insuperable demands of their social circumstances, it is also and in a sense primarily the result of a well-funded and well-deployed educational (or socialization) campaign that, on the one hand, aims to decisively hold sway over the individual’s mind from cradle to grave and that, on the other hand, is expressly designed to inculcate ‘opinions’ and ‘attitudes’ and ‘modes of behavior’ that the ruling managerial strata of society deem useful to or supportive of the status quo. Under modern capitalism, the science of mass indoctrination has been invented and systematically developed in the non-threatening guises of pedagogy and the mass media, and it has unquestionably reached, even as efforts are redoubled in the furthering of its refinement, the heights of a historically unparalleled efficacy. Consequently, the truth about capitalistic society is that it is probably the most brainwashed or orthodox society ever to have existed. In this respect, with an overwhelming majority of individuals committed with a continuously reinforced inculcated unthinking tenaciousness to the precepts of its ideology, Capitalism is on the basis of the ‘freely’ consenting fealty of its servants well buttressed.
But if the institutions of Capitalism, and especially those in the form of its formal bureaucracies, are underpinned by well indoctrinated servants, what are the chances that what ails the system derives from ‘abuses’ and ‘excesses?’ Are the servants not performing their tasks as directed by their institutional overlords? And are the overlords really acting against their own self-interest in pursuing strategies of wealth acquisition that in fact deliver on their promise but seem to aggravate or undermine the general welfare of what Amin calls the ‘popular classes’?
Here, let us pause briefly to consider in simple terms the shape or form of the standard proclamation of both the practice and theory of what is the distinctive capitalist strategy of wealth creation and accumulation.
On the theoretical side of this proclamation,
Perhaps the first thing that we should note is that wealth is not money, but the things that in our social context money can buy. Another way of designating what in a capitalist context is understood by wealth is to speak of goods and services. The greater the store and variety of goods and services available to us, the wealthier we are in capitalistic terms, and it is the ostensibly stated goal of capitalistic enterprises to produce a steadily increasing volume of goods and services. But if the goal of capitalism is to produce an increasing supply of goods and services, and at any given moment in time productive capacity is theoretically speaking maxed out in terms of its means and available resources, then an increase in the existing productive capacity of social labor is actually the ‘real’ if unstated goal of capitalism.
One way of compelling an increase in productive labor capacity – so goes the story of our capitalistic upbringing – is to create a situation wherein various producers of identical kinds of goods and services must compete with one another on an open market where ultimately the firm that produces and promotes its products at the cheapest possible price per unit of production ends up dominating the market. In this contest for market share, because the context is one wherein the winner literally takes all, less productive (or less successful) firms go bankrupt and more productive firms flourish. The result is a situation in which the overall productive capacity of society has been leveraged up, and the overall wealth of society is consequently increased. Capitalism promises, and it delivers – at least in theory and in this version of reality.
The truth both is and isn’t as the theory would have us believe. In the first place, the practice of capitalism predates or pre-exists the theory of capitalism. Yet this post hoc theory is articulated for us as though logically it is the underpinning antecedent of the practice, and not the other way around. In fact, however, capitalistic society spontaneously emerged (not by necessity, but quite incidentally) along with the development of money or banking, which was itself invented as a means of facilitating large-scale trades or exchanges between competing factions of traders scattered in different and far-flung regions. In other words, although capitalism was not pre-ordained to emerge on the heels of the development of ‘money based economies or money based systems of trade and commerce,’ capitalism could not have emerged without the appearance of the technologies of finance. The other fact that made capitalism as a mode of production possible, though it, too, in no way guaranteed the historical emergence of capitalism, was the gradual and tortured evolution of communal or public property, first into feudal modes of ownership and control, and then into the institution of private property per se. Without both the institution of money and the right to own productive assets, capitalism would never have emerged and is impossible.
But money and property rights did emerge, and in their wake, spontaneously and almost simultaneously, so did capitalism. The reason capitalism emerges as a competitive system of production and marketing is that in the era of its emergence, social power or control tends to be decentralized and dispersed. In other words, at the beginning of the game, there are many newly minted bourgeois (or competing coteries or cartels of bourgeois) who must vie with one another to increase or even simply maintain their capital fortunes in a time of rapid and tumultuous change. Because there are so many competing capitalist factions – that is, because there exists so much opportunity for further concentrating wealth and power – the imperative to ‘innovate production’ and make it more profitable asserts itself quite independently of any intention or desire on the part of those factions. For to exist as a wealthy man (or as a group of collaborating wealthy men) in an environment where one rich man (or group of rich men) is trying to outmaneuver another, and all the tactics and strategies are being transacted through the medium of money or its equivalents, and because there is a limit to how much labor can be physically squeezed outright, it is inevitable that innovating the technologies of the production process will be hit upon as one of the effective means of both maintaining and enlarging ascendant positions of social, political, and economic dominance.
So it isn’t that the early capitalist entrepreneur has a vision of creating more wealth for society at large, but that he is intent upon both staying rich and getting richer. If capitalism does in fact create more efficient means of production, engendering an admittedly prodigious proliferation of technological inventions, this isn’t, as the apologists and unwitting shills of the status quo believe and would have us believe, the overarching purpose of capital at the outset, but merely an incidental if spectacular side effect of the race to own everything.
Events bear out a thesis.
If the primary aim of capitalism is something other than raising rates of productivity, and if the heads of our dominant institutions are ruled in their decisions by this capitalistic logic, a logic that is other in its aims than what it publicly and formally professes – then the consistent ‘results’ of the system-wide policies enacted by the regime of capitalism should be something other than consistent increases in the overall rates of labor productivity in the real economy.
This is in fact what happens and can be observed to be happening.
Consider for example the rationale for the de-industrialization of America over the last 30 or so years. American production is moved out of the U.S. to countries like China because an opportunity for incomparably greater profit margins becomes compellingly obvious and practicable to corporations that, within the sphere of the U.S. economy, control both the downstream production of commodities and the upstream distribution channels of those same commodities. Labor is hugely less expensive in China than in the U.S., so the offshoring of production by the market monopolies is really an arbitrage play between the costs of labor in China and the U.S., all other things being equal. The strategy of ‘offshoring’ does not itself translate into increased rates of labor productivity, and in some instances may even have lowered those rates. In other words, the amount of ‘labor time’ or ‘man hours’ that were previously necessary to produce one unit of saleable commodities did not decrease by virtue of re-locating production in places where labor was hugely less expensive, although profit margins, to be sure, suddenly ballooned to the stratosphere.
Is it profit, then, and not increases in society’s collective labor productivity, that prima facie appears to be the sine qua non of capitalism or private enterprise?
As pertains to the example of the offshoring of American production, to emphasize ‘the bottom line’ as the driver behind the strategy is actually a gross misreading of what is going on.
In order for the strategy of offshoring to work, the corporations involved need to have a pre-established stranglehold over the market distribution end of the commodity cycle. No company that was not already well entrenched within the U.S. market could have successfully pursued the strategy of offshoring to increase its profit margins. The strategy is only practicable for businesses already wielding monopolistic sway at virtually all points of the production and distribution cycle of its proprietary products.
It is monopoly that is the end game of capitalism, and profit is merely one of the means or strategies by which monopoly is achieved. Other means go by the names of influence peddling, the threat of war, short selling, market manipulation, high frequency trading, control over money issuance and its allocation in the economy, etc., etc.
And monopoly is nothing if not the actual if tacit ownership of a significant portion of an economy, if not the outright ownership of that economy in its entirety.
But indeed, if capitalism can be said be the servant to a single overriding purpose, it is to the unending accumulation and concentration of social, political, and economic power into the fewest hands possible. Capitalism, to speak in Nietzschean lingo, is the will to an infinite accumulation of earthly dominance and power. If you don’t get this, you don’t get the logic of capital accumulation. Monopoly is the direction of the movement of capitalism, and that is the place it goes. Single mindedly. Unthinkingly. Remorselessly.
Samir Amin writes “. . . that we have entered in a new phase of monopoly capitalism. It’s a qualitatively new stage, given the degree of concentration of capital, now condensed to the point that today monopoly capital controls everything.”1 Market forecaster Jim Willie writes that “[m]any analysts naively believe the USFed can monetize whatever ails the system. Not so, when the biggest credit market in the world (USTBonds) is involved.” 2
Amin is right, Willie is wrong.
The capitalism of what Amin calls the ‘Imperialist Triad’ (the U.S., Japan, and Europe) “…controls each and every one of the capitalist economic activities, even those that preserve an appearance of autonomy.” 3 The implication of Willie’s claim is that the biggest credit market in the world is so big that not even the U.S. can control it. Actually, it can. The American dollar is hegemonic, and so long as it remains so, the monetization of the American Government’s debt is a not an issue. The analysts who believe this are anything but naïve. Holders of U.S. Treasuries may not like the monetization process, but tough on them until they can counter the American military with a credible challenge and establish an alternative to the American Dollar as the world’s reserve currency.
Yes, the trend forecasters are right: the game is rigged in favor of those doing the rigging. But the rigging is the game, and that is the part that many forecasters don’t seem to get. Capitalism is about power and control, about changing the game in the middle of the rules, or the rules in the middle of the game, exactly as circumstances may dictate.
Rob Kirby, another trend forecaster, concludes a piece by writing that “[t]he U.S. Bond market has been “gamed” beyond belief and the only institution in the world with the means and motive to conduct this business is the U.S. Treasury [ESF] in conjunction with/acting through the New York Federal Reserve. As such, U.S. bond pricing and interest rates are set 100 % arbitrarily and today represent the BIGGEST FINANCIAL HOAX ever perpetrated on mankind.”4 He is, of course, right. Revealingly, his article borrows from another article entitled Intelligence Czar Can Waive SEC Rules. The material reads as follows:
“President George W. Bush has bestowed on his [then] intelligence czar, John Negroponte, broad authority, in the name of national security, to excuse publicly traded companies from their usual accounting and securities-disclosure obligations. Notice of the development came in a brief entry in the Federal Register, dated May 5, 2006, that was opaque to the untrained eye.”
The memo Bush signed on May 5, which was published seven days later in the Federal Register, had the unrevealing title “Assignment of Function Relating to Granting of Authority for Issuance of Certain Directives: Memorandum for the Director of National Intelligence.” In the document, Bush addressed Negroponte, saying: “I hereby assign to you the function of the President under section 13(b)(3)(A) of the Securities Exchange Act of 1934, as amended.”
A trip to the statute books showed that the amended version of the 1934 act states that “with respect to matters concerning the national security of the United States,” the President or the head of an Executive Branch agency may exempt companies from certain critical legal obligations. These obligations include keeping accurate “books, records, and accounts” and maintaining “a system of internal accounting controls sufficient” to ensure the propriety of financial transactions and the preparation of financial statements in compliance with “generally accepted accounting principles.”
So of course the system is rigged. It always was and always will be. So long as the system remains ‘this’ system. There was never a golden age of capitalism save for the capitalists themselves. And there never will be a golden age of capitalism in which everyone will be able to partake of the fruits of our collective endeavors.
So which way is the economy going? Toward more and not less concentration of absolute economic power unless revolution intervenes decisively. And revolution may or may not be in the offing. Most likely not in North America, Europe, nor Japan.
I expect currencies to be further debased; sovereign debt to become the bane of an increasing number of co-opted, subjugated nations; more frequent and bigger profit generating wars; the process of financialization to deepen and intensify; the nominal values of market assets to keep appreciating toward the sky; and the real economy to continue pressuring ordinary people, precisely as it always has. People with jobs will work just as hard or harder than before for less; and people deemed useless to the functioning of the machine will increase in their number and destitution.
Yes, I admit it: a tortured piece, but one perhaps fashioned after the image of a tortured world.
Because I don’t know when to quit, an afterthought:
Why speak of a capitalist aim or intention if the ‘system’ is actually inscribed in a structured and regulating unconsciousness? How does that work, the bit about being truly asleep while being truly awake? It works in this fashion: cognition has (at least) two dimensions. On the one hand, there is the ‘content’ of cognition and, on the other hand, there is the ‘form’ or ‘scaffolding’ of the cognition itself that makes the conscious elements in cognition perceptually prehensible.
Perception (or cognition or understanding, etc.) as a process, of course, is incredibly complex, but we can abstract from the process to a fairly good approximation of what is going on: if I ask you, a trained reader of English, to tell me what you see when I place this word – “DOG” – before you, you will reflexively, that is, without hesitation and well-nigh automatically say something like, “I see the word ‘dog,’” with all that this may imply in terms of what you understand about that word and how it relates to your experience of the world. But if I ask you what as an inexperienced reader of Arabic you see or understand when I put this word – “الكلب” – before you, you will be puzzled and stymied in your understanding of it because it doesn’t fit into any of your ‘learned’ and ‘per-existing’ strategies of perception or cognition for ‘de-coding’ language in printed form. From this simple example, it is easy to see that perception, the act of ‘seeing’ or ‘understanding’ in context, is grounded in a perceptual framework, a way of ‘seeing,’ that we have ‘learned’ or ‘developed’ in the course of our struggles to make sense of our world and that in the moment of any of our perceptions is ‘invisible’ to us as perceivers. That ‘invisibility’ inherent in what to us are moments of ‘self-evident’ disclosures to our consciousness is the ‘unconscious’ dimension in ‘consciousness.’ Human perception (all things intellectual, emotional, psychological, etc.) only happens within and through complex cognitive structures that in any act of ‘cognitive prehension’ remain invisible and external to the moment of conscious experience, even as they are the condition of possibility of that very experience. Thus all ideology or gestalt, on the basis of its presumptive cognitive framing, is unconsciously orthodox. Ideology only becomes other than ideology in those infrequent moments when the bearer of the orthodoxies throws the doxa upon the rack of critical reason for interrogation.