Shallow Equilibrium

31. XII 2023

And those who were seen dancing were thought to be insane by those who could not hear the music. (Friedrich Nietzsche)

Why does every good idea turn out bad? The French Revolution and liberté/égalité/fraternité morphed in a relatively short time into the reign of terror, the October Revolution to Stalinist purges and its subsequent euthanasia, Cuban denial of capitalism to extreme poverty and isolation. Despite its progressive agenda and rebellion against the conformism of the 50s, the 1968 uprising produced the socioeconomic conditions that gave birth to neoliberalism and institutions which evolved into a radical antithesis of its fundamental premises. Capitalism’s global triumph of the 20^th century gave rise to extreme inequality, poverty, and production of human misery where, after a series of endogenous crises that eroded its capacity to underwrite a stable society, resulted in the chaotic epilogue of its unwind with the realistic possibility of its descent into Fascist dystopia.

Every initially positive social change inevitably turns into a nightmare as if evil always manages to find its way unobstructed and without resistance. Good (and honest) acts always catch us by surprise. They are unpredictable because every good act is committed impulsively; it is not natural and spontaneous. Evil, on the other hand, acts naturally — we never wonder about it, we are surprised only if it is not realized. Evil is transient, it divides — people do evil things in order to survive or get ahead. Good is the essence of sustainability, it unifies, but represents the denial of (human) biology.

It appears that, almost without an exception, there is an evil bias in every social change. This is more a play of the laws of probability than the consequence of deep social laws or divine forces.The universe (both physical and social) evolves from less to more probable configurations. Bad/disorderly outcomes are always more likely than the good/orderly ones — entropy (in aggregate) always increases. Disorder prevails, but on occasions when local order arises somewhere, it can only happen if its creation ejects enough disorder elsewhere so that the aggregate entropy ends up higher. Order is an oddity — an unlikely configuration; it has a lower probability than disorder.

This systematic drift which tends to push the system in the wrong direction is showing up in full bloom at the moment. It is amplified by an additional component linked to the current intersection of economic and social crises.

Downgraded metastability

Economics is a linear science defined around an equilibrium determined by the mode of social organization. However, in capitalism, economy and society interact in a particular way. Capitalist economy erodes the social landscape on which it operates; it makes long-term concessions in order to finance its short-term successes and in that way erodes stability and compromises its longevity and survival.

The best illustration of this interplay is offered by the Covid pandemic. Unlike previous episodes of recessions caused by financial and economic wrongdoings which had social consequences, the pandemic was a social crisis with economic consequences. In the past, the heaviest burden of recession was carried by the lower social strata – after the recovery, they emerged worse off while the top rebounded and continued roughly even relative to their pre-crisis standing. During the pandemic, however, there was a total devastation of the social bottom. At the same time, with a large chunk of the fiscal stimulus landing on the balance sheet of the 20% wealthiest individuals and corporations, the very narrow and selected top recorded a triumphant rebound with unprecedented multipliers. Tesla, Apple, and the bulk of the tech sector more than doubled in record time. This was a spectacular bifurcation of wealth and social stratification which outlined the contours of the predatory and zero-sum nature of the oligarchic top and underscored unambiguously that the massive concentration of wealth is the main source of production of poverty – a qualitative shift not seen before in capitalism’s turbulent history.

So, here we are. When all is said and done, after a long sequence of crises, we are facing a paradigm shift and social change that could give birth a new equilibrium. But what kind of equilibrium should we expect? Here is a short recap to the vocabulary needed to navigate this landscape.

Equilibrium is the site where forces of restoration of order compete with those of disorder. Depending on the relative strength of those two forces, there can be several types of equilibrium.

Stable: The original configuration is regained after a disturbance — forces of restoration overpower those that take the system away from equilibrium. (e.g. residing in a valley). Unstable: Even the tiniest deviation from equilibrium is fatal – forces of restoration are too weak for even the weakest shocks – this equilibrium is not viable and the system leaves it permanently (for example, a ball on the top of the hill: when it starts rolling down, it never returns).

Stable and unstable equilibria

Metastable: The system is locally stable, but can be destabilized by sufficiently strong shocks. A dimple on the top of the hill is a landscape with metastable equilibrium. Standing up is a state of metastability: If we are pushed slightly, we will remain standing. However, if the push is sufficiently forceful, we will fall.

Metastable equilibrium

In its late phase, capitalism has degenerated into a state of downgraded metastability. Normal conomic business cycles consist of booms and busts with cyclical crises. In general, recovery from each crisis is financed by social deficits. So, after a while, crises become deeper and social deficits bigger demanding a heavier hand in handling them. In that sense, the economy interacts with the society and in that process, it constantly erodes the social landscape which determines the equilibrium. In particular, when cumulative social erosion becomes so massive that it demands a social change, in the interregnum before the actual change takes place, the system is operating near the bifurcation point experiencing a contestation of multiple equilibria corresponding to possible final destinations representing the anticipated social changes. In that regime, forces that take the system away from a local equilibrium are comparable to or weaker than the restoring forces. At that point, all possible social configurations have similar probability of being realized — the system operates around the shallow equilibrium.

Bifurcation point and shallow equilibrium

Near the shallow equilibrium, the system loses its robustness – it becomes vulnerable to seemingly benign shocks, which can produce sizeable effects of long duration and consequences leading to positive feedback and endemic instability. In this configuration, social stability can be threatened further with (normally insignificant) low probability disturbances and trivial public communications maneuvers like conspiracy theories, abuses of free speech or a general arbitrariness in informational dissemination which can disrupt society’s normal functioning.

The four paths

The onset of capitalism’s gradual unwind started in the late 1980s as a loss of equilibrium after the collapse of communism. The more convincing signs of the immanent exit from capitalism began to show up at the beginning of this century with new monopolized modes of production and contraction of the reserved pool of labor amplified by the emerging new technologies leading eventually to increased precarity and further social deficits. These trends were further reinforced with the GFC in 2008, which further eroded the fragility of political legitimation of the system. What followed was the widening scope of the crisis of permanent exclusion and the prospect of the emergence of failed states in the developed world as the excess population – those who could no longer be reintegrated into the normal rhythms of society — began to approach the critical mass.

The tensions of the last decade were accelerated by the collapse of liberal democratic mythologies which underscored the active quest for new myths in the midst of that crisis. Everything that used to mobilize the libidinal forces of the developed West is now dissolving in light of the devaluations of these myths, while waiting for new ones creates a troubling disequilibrium.

The preview of the four paths into the future might very well be a prelude to the most radical and, at the same time, the most significant transformation of capitalism after the industrial revolution. It is an announcement of the socioeconomic blowback, the arrival of times where social deficits will have to be reconciled and managed.

The three paths that were identified by Immanuel Wallerstein[1] should be seen as the attraction centers which will define the dynamics of socio-economic developments in the next decades. Democratic fascism: A  semi-inclusive, cast-like division into two strata where 20% of the world keeps the remaining 80% in submission – an old wine in new bottles already tried out with different ratios that had failed because of the flawed math; Neo-feudalism: An exclusive, highly inegalitarian world of parcelized sovereignties (an equilibrated form of the current times of trouble), with consolidation of fractionalized structures into bigger entities with highly vertical structure, like multinational corporations, global crime syndicates…, but without endless capital accumulation as the mainspring. Egalitarian utopia: Decentralized, inclusive system achievable through political sophistication and technology; not necessarily socialization of poverty, but geared towards egalitarian distribution. Its legitimation is supported by evidence that short-termism leads to undesirable long-term outcomes.

The fourth path

According to Wolfgang Streeck, capitalism is collapsing under its own weight, dying from the overdose of itself, from being too successful, it is disintegrating, but not giving way to a better alternative. As an economic system, capitalism is showing an advanced decline in capacity to underwrite a stable society. What is likely to follow after such a disintegration of a system is a prolonged period of social entropy and disorder[2]. Out of all possible paths, this is the most radical outcome, one that is without a historical precedent and one we seem to be least prepared for. It corresponds to the Interregnum, disintegration of society as such — a perpetual anotherhood of undead capitalism, pregnancy without childbirth — a trajectory where the times of trouble continue indefinitely.

Rentism, oligarchic repositioning, and the crowning of the techno-feudalism

Democracy implies that people share common values and interests. But, in an economic system that fosters high concentration of wealth and greater inequality, there are fewer common interests. Neoliberal politics has managed these tensions by engineering a cultural divide and culture that no longer serves to shape consensus but to continue to polarize. In this way, democracy has become less viable as a political system. This program has created a positive feedback loop that has continued to reinforce divisiveness as a political management tool. In the end, the society has expressed the desire to change away from democracy because division has become unbearable.

There is a considerable will and capital aimed at steering the postcapitalist world towards a configuration of fractionalized sovereignties resulting in a neo feudal mode of social organization. The actors behind these efforts are driven largely by the opportunities that such reorganization offers/promises rather than any concrete ideological motives. Conservative think tanks and political fringe organizations have already worked out a rather detailed plan of how to dismantle and reorganize the remnants of the capitalist state in order to position for the transition to the new social configuration and are waiting on standby to place their candidates in positions from which they can represent their interests with maximum efficiency. They are following closely the template of dismantling of the state apparatuses in post-communist countries and their planned metamorphoses into failed states. Ironically, the most vocal opposition to this program have been not the Progressives, but the political Center, which has been driven into an uncomfortable coalition with the progressives. They are the defenders of the compromised and outdated neoliberal capitalism and believe in the possibility of its salvation. Blinded by capitalism’s great run and biased by the absence of a clear vision about alternatives, these addicts of the status quo see the current predicament not as the endpoint in capitalism’s evolution, but as yet another cyclical crisis.  

While on the surface it appears that the spectacle of the current Republican presidential candidacy is the main worry for the political Center, this is only a temporary distraction. The problem runs much deeper. The background forces of the far-Right supporting the neo feudal alternative would be ready to embrace any viable candidate for the occupancy of the highest office that would facilitate implementation of their plan of transformation. The 2024 elections are just the first round of that battle which is likely to continue in the years to come.

The demented ideas of the plan for the Right-wing takeover have been outlined in Project 2025. The specter of the autocratic visions of that project as a blueprint for a turbo charged MAGA agenda goes beyond the immediate electoral prospects of the current candidate. As Jeet Heer argues the recent The Nation article, Even if [Conservatives] lose in 2024, at some point another Republican president will reside in the White House. And, the hope is that, they will almost certainly enact the autocratic policy vision of Project 2025, with the help of the radicalized think-tankers who now staff GOP institutions. The Project 2025 agenda to undermine the civil service is already being echoed by other Republican presidential hopefuls[3].

But things are much more non-linear. For example, as the article points out, American Compass, a think tank that contributed heavily to Project 2025’s section on labor policy, is getting funding from some extremely wealthy progressive donors with an aim to blend current conservative vague rhetoric of economic populism with actual policies. These are liberal players aiming to defeat left leaning policies from the center primarily targeting the position of labor. This play from both sides strengthens the Right by giving it more respectability than they currently enjoy. It helps elevate Right-wing ideas as being normative by creating a false consensus backed by wealth and distracts attention from their manifest undermining of democracy[4].

What resides behind these initiatives is the rapid takeover of the new modes of production that are encountering resistance from the old and antiquated social structures. Effectively, we have already entered the technofeudal zone. This transition is a slightly distorted mirror image of the transition from feudalism to capitalism that took place in the late 18^th century, which was driven by the shift of power from the owners of land to the owners of machinery, steamships, and electrical grids, and the shift of wealth creation from a rent accumulation to profit making. Current, technologically spiked reversal of this process consists in replacement of the feudal lands with digital platforms and shifting corporate profits to platform-owners’ rent[5].

Companies like Amazon and Facebook have been operating away from the markets and they represent the new techno-feudal oligarchy. Their profits are not based on production, but on collecting rent from their platforms for selling other companies merchandize for which they charge a substantial margin, sometimes as much as 60%. At the same time, they distribute minimal amounts of their profit in terms of wages. Normally, for corporations of the Fordist economy these numbers reside near 90%. In contrast, for Amazon this is 1% and for Facebook 5%. This asymmetric accumulation of capital sucks money out of the system. The math is simple: If you get paid without working, then someone has to work without getting paid.Toxic concentration of wealth results in overproduction of poverty. But this is just one of the side effects of this transition. In addition to that, central banks have to print money to compensate for this secular decline in money supply, the action that becomes manifestly inflationary and inhibits saving, elevates uncertainty, and increases precarity further.

The fauna of Right-wing agitation: Lumpen billionaires and lumpen capitalists 

This transition to new modes of social organizing, and the underlying economic opportunities it could create, promises a huge return to early birds, the new emerging nobility of luck, which Sam Farber refers to as lumpen capitalists. They are the post-industrial version of original robber barons of the early America. They come from hinterland places like Grand Rapids, Wichita, Little Rock and Tulsa. Their fortunes derive from real estate, private equity, casinos and services ranging from private armies to chain usury. These lumpen billionaires are dependent on the domestic market, and indeed often on federal and state governments[6]. In the past decade, the far-Right wing of conservative politics gave national leadership, media attention, and political legitimacy to a plethora of far-right groupuscules, ranging from the “patriot” militias that started to emerge in the 1990s to the Q-Anon conspiracy theorists with their uprising culminating on Jan-6 2021 as the new Waco.

The vacuum caused by the ongoing collapse of neoliberalism and the shallow equilibrium that has emerged as a consequence, is the result of an inability to imagine the world without capitalism precisely by its most obvious victims, a Stockholm syndrome of a sort. Lumpen capitalists are seizing this moment to leverage on the buildup of pseudo-nostalgic sentiment to sway the conditions in their favor.

In this configuration, heterogeneous stages of social and economic development coexist simultaneously. As Alberto Toscano argued, desperate farmer, an unemployed worker or marginalized and/or bankrupt citizen are easily seduced by the ghost of history, which was suddenly released by the crisis, especially in a country with a substantial fraction of population with Fordist dependency[7] like manufacturing, mining, and other segments of disenfranchised subproletariat facing the prospect of permanent exclusion fostered by the new technological advancements and paradigmatic shifts in the modes of production.

This is the path to re-contextualization of the current American conservative utopia. In reality, Republicans are fighting for their bare life. Beyond concerns for their short-term survival, their only vision of the future is society as an atonal pseudo-totalitarian operetta without a key or meter, the kingdom of arbitrariness where words have no fixed meaning and actions no consequences. They are acutely aware of these changes and their long-term implications and have already begun their transformation process to reposition for the new modes of social organization and wealth distribution. The centrists are still in denial, fixated on status quo and beliefs that the old system of neoliberal capitalism can be salvaged with a face lift that could thrive in the new paradigm.

With the imminent unwind of neoliberalism on the horizon, power is back in vogue and the future looks increasingly more authoritarian.

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[1] Immanuel Wallerstein, Historical Capitalism with Capitalist Civilization, Verso (2011)

[2] Wolfgang Streeck, How Will Capitalism End?: Essays on a Failing System, Verso (2016)

[3] Jeet Heer, Why “Liberal” Donors Love Giving Money to the Extreme Right, The Nation (24 Nov 2023)

[4] Ibid.

[5] Yannis Varoufakis, Techno-feudalism: What Killed Capitalism, Melville House (to appear in February 2024)

[6] Mark Davis and Adam Schatz, Catholics and Lumpen-billionaires, The London Review of Books podcast and https://wiki.p2pfoundation.net/Lumpen_Bourgeoisie

[7] Alberto Toscano, Late Fascism: Race, Capitalism and the Politics of Crisis, Verso (2024)