Category Archives: Economics

America at 400: 1619-2019

30. XII 2019

Out of slavery — and the anti-black racism it required — grew nearly everything that has truly made America exceptional: its economic might, its industrial power, its electoral system, diet and popular music, the inequities of its public health and education, its astonishing penchant for violence, its income inequality, the example it sets for the world as a land of freedom and equality, its slang, its legal system and the endemic racial fears and hatreds that continue to plague it to this day. The seeds of all that were planted long before our official birth date, in 1776, when the men known as our founders formally declared independence from Britain[1].

America has always had a complicated relationship with its own history. The nation that was based on the ideas of enlightenment, and which gave us Declaration of Independence, The Emancipation Proclamation, May Day, International Women’s Day, Women’s Suffrage, Universal public K-12 education, The Marshall Plan, and Civil Rights Act, was also the birth place of some of the worst institutions of repression such as the genocide of Native Americans, slavery, Jim Crow, white supremacy, systemic segregation, McCarthyism, internment camps, and mass incarceration. But this is not what makes America special; after all, there is hardly any developed country that does not carry historical baggage of some sort. Rather, it is the deliberate effort to make sure that the underlying tensions remain unresolved, which makes its position unique. America has turned its back on some of its best achievements, and never showed the courage (or desire) to completely distance itself from some of the worst practices of its past. The very same rights and freedoms that it continues to champion abroad, the US has systematically denied to a large segment of its population at home[2].

The American political landscape has always reflected this ambivalence. To this day, the underlying ideology and its reality remain trapped in the multiverse of causal entanglement whereby ideology creates social adversity, which requires ideological adjustments, which in turn reinforces the very same social adversity it was meant to contain.

Race as strange attractor: The Centaur-state and the four peculiar institutions

No one has captured the inner contradictions of America’s parallel history better than Loïc Wacquant. He sees the current social and political developments as part of a particular continuum outlined by the Four Peculiar Institutions against the backdrop of a reshaping of the capitalist state[3]. The essence of the dialectics of neoliberalism is condensed in its obsession with a smaller state (always, except when it comes to the riot police). The consequence of that obsession, according to Wacquant, is the building of a Centaur-state, liberal at the top and paternalistic at the bottom[4]. The superficial maneuver of imposing the functioning of free markets to life as whole, with a hands-off approach to the corporate sector and the upper echelon of society, is complemented by a state that is fiercely interventionist and authoritarian when it comes to dealing with the destructive consequences of economic deregulation for those at the lower end of the class and status spectrum[5].

Wacquant’s deconstruction of the reconciliation of the inner contradictions of the Centaur-state puts the entire post-Reagan era of political carnivalization in perspective as the great neoliberal Aufhebung. The imposition of market discipline is not a smooth, self-propelling process: it meets with recalcitrance and triggers resistance; it translates into diffusing social instability and turbulence among the lower class; and it practically undermines the authority of the state. So it requires institutional contraptions that will anchor and support it, among them an enlarged and energetic penal institution[6]. Behind the clownish posturing of the new breed of political leaders resides a serious (and brutal) political reality and the more carnevalesque the politics becomes, the more repressive its penal system turns out to be.

This lays out the logic behind Americas intrinsic resistance to outgrowing its dark history and dealing with its legacy. This history begins in 1619, with the first slave ships docking the coast of Virginia. Its backbone is captured by the matrix of the Four Peculiar Institutions[7], which define the contours of the underlying carceral continuum. The most direct and intuitive perspective on the 400 years of America is offered by the second column of the Table: The root of it all is an insatiable demand for cheap labor; the history of America reflects this through the four transformational phases.

4Peculiar institutions

Four Peculiar Institutions

An unfree and fixed workforce was essential for the North American preindustrial economy. Slavery, as a relationship of domination, was used to fulfill a definite economic end: to appease the nearly insatiable appetite of the plantation for labor. The abolishment of slavery was more than anything a supply shock in labor. After slaves were formally free, a cheap and abundant workforce needed for the plantation economy had been eliminated. The true slaves deserted the South, attracted to looming opportunities in the North as the economy transitioned to its industrial phase, while the South experienced a decline (mechanization, urbanization …), which, when combined with cuts in immigration during WWI, resulted in an acute shortage of unskilled labor[8].

In response to these developments, capitalist industrialization and the plantation elite joined to demand political disenfranchisement and the systematic exclusion of former slaves from all major institutions. This was the period of Jim Crow rule. Backed by custom and elaborate legal structures, the economic opportunities were severely restricted (prohibited attendance of schools, churches, banished from the ballot box with a range of requirements, like residency, literacy tests, poll taxes or criminal offences).

The Ghetto was intended to have a prophylactic function. It was conceptualized as a separate Lebensraum for a group viewed as “physically and mentally unfit, unsanitary, entirely irresponsible, and undesirable neighbors”, while allowing, at the same time, to exploit their labor power (cheaply). In terms of its social functioning, the Ghetto was a logical sequel to slavery and Jim Crow.

The wedding of ghetto and prison: Hyperghetto

When the ghetto was rendered inoperative in the 1960s with economic restructuring and riots, which won blacks votes, the carceral institution offered itself as a substitute apparatus for the black community devoid of economic utility and political pull[9]. This was a way to prevent formation of a unified voice of discontent and convert the non-consuming segment of society into a profit center. According to Wacquant, African-Americans now live in the first prison society of history. The ghetto and the prison are now causally entangled — the two look the same and have the same function; they support and reinforce each other. The life in the ghetto almost necessarily leads to more criminal behavior. And in the prisons, which function effectively as graduate schools of crime, a “black culture” of outsiders is being reinforced by “professional” inmates, which eventually gets exported back to the street[10].

The ghetto and the prison are for all practical purposes indistinguishable, reinforcing each other to ensure the exclusion of African-Americans from general society, with governmental blessings. The prison should be viewed as a judicial ghetto and the ghetto as an extrajudicial prison. Taken together, these constitute part of a ‘carceral continuum’[11].

2019: Exit through the wormhole

How often do we tell our own life story? How often do we adjust, embellish, make sly cuts? And the longer life goes on, the fewer are those around to challenge our account, to remind us that our life is not our life, merely the story we have told about our life. Told to others, but mainly to ourselves. (Julian Barnes)

Capitalism creates crises, which it cannot wrest from. Recoveries from those crises are funded by social deficits, which grow bigger with each crisis. This became particularly severe during the neoliberal phase of capitalism. The Carceral state has been essential for the survival and sustainability of the neoliberal project and has had a triple role in that context: As a shock absorber and an insurance policy of capitalism against itself, as an engine of growth, and as a mechanism that reinforces its own toxicity. On one side, it offsets the unwanted side-effects of capitalism, while on the other, it creates new problems that reinforce the original ones.

The story of the Four Peculiar Institutions is not a chapter in American history; it is a book whose writing continues. It very much defines the present day (and future) of American politics, society and culture in general. It resides at the core of American culture and is the backbone of its history and economy.

Today more than ever before, America stands conflicted between two parallel histories and two atonal narratives, one starting in 1619 and the other in 1776. This ambivalence is deeply rooted in its constitution and it starts with the establishment of “progressive” America in 1776. Even before the US Declaration of Independence became an official document, the well-known statement from its second paragraph, we hold these truths to be self-evident that all men are created equal, was at striking discord with the social and political realities of the time as it appeared while slavery was in full swing[12]. The dual desire to define a new beginning without resolving the residual baggage of 1619 outlines the intentions not only to have two parallel histories, but more than that, to afford additional flexibility of the new Union. It remains one of the most striking examples of historical irony that the desire to save slavery was in the background of the American push for a new beginning in 1776. While the rest of the world was beginning to phase it out, slavery was still going strong on the “new continent”. America may never have revolted against Britain if the founders had not believed that independence was required in order to ensure that slavery would continue[13]. As a consequence, the issue of race and institutions that followed had become the foundation of the country, as two parallel flows of history unfolded.

The two orthogonal narratives have persisted largely as a result of the ideology America chose to embrace. Endemic exclusion, and the attempted modes of its management, which in the USA assumed a particular institutional systematization, has been a residuum of intrinsic incompleteness of these ideological choices. The two parallel histories have coexisted for centuries unphased by each other, pulling the country in two different directions resulting in an irreconcilable cultural rift, which rose to unsustainable levels in this century.

However, as capitalism ran its course and the 400 years of its reign are facing unwind, these two histories have suddenly become cognizant of each other. The ghost of America’s past resonates with the present-day neo-segregationism located at the intersection of the two parallel (historical) narratives. A Current snapshot of America reflects the peak of the tensions caused by this ambiguity — it is the moment when the two begin to collide and desire to either reconcile with or annihilate each other. As the two historical processes (1619 and 1776) are beginning to intersect, the underlying socio-economic configuration is opening a wormhole that short-circuits the distance between them. This is the coming out of Dark America and its encounter with its progressive twin. What had been the centuries-long illegible process is becoming instantaneously legible in light of the intensity of this encounter. It is the moment of enormous clarity – the reconciliation of the underlying contradictions, which has been suspended for centuries and is now being resolved during their synthesis into a single narrative.

Wormhole

 

The 2016 wormhole

 

The divided self or the anti-psychiatry of the American experience

The resurrection of the 1619 timeline and the collision of two histories come hardly as a surprise in the light of the socio-political developments of the last five decades. The whole republican strategy since the 1970s has been a white supremacist dog whistle. And, since the population has been growing less white, their anxiety has grown accordingly and, with it, their susceptibility to right wing narratives, no matter how ridiculous they became or how much they played against material interest of their constituents. Ian Hany López offers the best summary of the last 50 years of that politics: Government coddles nonwhites with welfare and slap-on-the-wrist policing; meanwhile, government victimized whites by taxing their paychecks and refusing to protect them from marauding minorities[14]. It is no coincidence that since 1972, no Democratic candidate has ever won majority of the white vote. In turn, 90% of GOP supporters are white and so are 98% of its elected officials.

What continues to reinforce the antagonism of African Americans is not so much the fact that political discourse continues to be centered on blaming them for their social dislocation, but the absence of the Four Peculiar Institutions and parallel American history from that discussion — their role has been deliberately and intentionally downplayed or outright omitted from it. By blaming the victims, the existing political narratives, both centrist and right wing alike, are confusing cause and effect. Whatever blacks are being blamed for is not the cause of their precarity, it is a result of centuries of systematic adherence to particular politics and policies. The “missing” history, from 1619 to 1776, without which the last two-and-half centuries are illegible, provides the background for the synthesis of the four centuries of America.

The impossibility of a meaningful consensual discourse stems from the fact that we cannot experience other people’s experience — we can only experience their behavior, which might reveal something altogether different from what they are experiencing[15]. When observed from the outside certain behavioral patterns might appear as irrational and self-destructive with their rhetorical articulation being a valid expression of the inner distress and, therefore, meaningful only from within their own situational context.

When seen through the perspective of the longer (American) history, 1776 had been an attempt at a new beginning. Subsequent years and centuries represent normative period, the birth of new standards of normalcy as something that has come to hold the highest cultural value, what we teach our kids to become and what they pass along to their kids. But, what is the value of normalcy? During the 20th century alone, normal men had killed more than 120 million people and if left unchecked, they will kill more. After almost two and half centuries, we have come to realize that normalcy is overrated.

The only way to forget the traumas of history is to do away with normalcy and embrace madness in order to be healed and find salvation. According to R. D. Laing, one of the founders of anti-psychiatry, madness could become a transformative process — travelers could return from the journey with important insights, and may become wiser and more grounded persons as a result[16].

If the human race survives, future men will look back on our enlightened epoch as a veritable age of Darkness. They will presumably be able to savor the irony of the situation with more amusement than we can extract from it. The laugh’s on us. They will see that what we call “schizophrenia” was one of the forms in which, often through quite ordinary people, the light began to break through the cracks in our all-too-closed minds[17].

[1] The 1619 Project, The New York Times Magazine, August 18 (2019), Ed. Jake Silverstein

[2] Loïc Wacquant, Deadly Symbiosis: When Ghetto and Prison Meet and Mesh, Punishment & Society 3, 95 (2001) & Punishing the Poor: The Neoliberal Government of Social Insecurity, Duke University Press Books (2009)

[3] ibid.

[4] ibid.

[5] ibid.

[6] ibid.

[7] The remainder of this section is, for the most part, the description of the functioning of the Four Peculiar Institutions entirely in Wacquant’s words and thoughts either as a direct quote (italicized text) or paraphrased (regular print).

[8] ibid.

[9] ibid.

[10] ibid.

[11] ibid.

[12] The phrase “all men are created equal” has received criticism from elitists and traditional conservatives. Before final approval, Congress, having made a few alterations to some of the wording, also deleted nearly a fourth of the draft, including a passage criticizing the slave trade. At that time many members of Congress, including Jefferson, owned slaves, which clearly factored into their decision to delete the controversial “anti-slavery” passage. In 1776, abolitionist Thomas Day wrote: “If there be an object truly ridiculous in nature, it is an American patriot, signing resolutions of independency with the one hand, and with the other brandishing a whip over his affrighted slaves.”

[13] By 1776, Britain had grown deeply conflicted over its role in the barbaric institution that had reshaped the Western Hemisphere. In London, there were growing calls to abolish the slave trade. This would have upended the economy of the colonies, in both the North and the South. The wealth and prominence that allowed Jefferson, at just 33, and the other founding fathers to believe they could successfully break off from one of the mightiest empires in the world came from the dizzying profits generated by chattel slavery. In other words, we may never have revolted against Britain if the founders had not understood that slavery empowered them to do so; nor if they had not believed that independence was required in order to ensure that slavery would continue. It is not incidental that 10 of this nation’s first 12 presidents were enslavers, and some might argue that this nation was founded not as a democracy but as a slavocracy. (Nikole Hannah-Jones in The 1619 Project)

[14] Ian Hany López, Dog Whistle Politics: How Coded Racial Appeals Have Reinvented Racism and Wrecked the Middle Class, Oxford University Press (2015), and Race and Economic Jeopardy for All: A Framing Paper for Defeating Dog Whistle Politics,
http://www.ianhaneylopez.com/wp-content/uploads/2016/01/race_and_economic_jeopardy_framing_paper.pdf

[15] R. D. Laing, The Politics of Experience, Harmondsworth: Penguin (1967)

[16] ibid.

[17] ibid.

Male trouble and the rise of the disillusioned perspective

22. X 2018

The disillusioned perspective distinguishes continually between life as we want it to be and life as it actually is. Conversion is a transparent attempt to lend meaning to the meaningless, possibly only through self-delusion, that is by allowing illusion to trump disillusion. (Karl Ove Knausgaard)

It is the eleventh hour for white American males. This, once dominant and privileged majority has become a collateral damage of capitalism’s global triumph, beaten in just about any game that matters, even the ones they invented, they are joining the ranks of excess population facing a threat of irreversible social displacement and marginalization. Tired of self-abuse, anesthetized by drugs and alcohol, angry and armed with guns, but feeling powerless, a growing number of American white men is taking permanent residence in the center of the disillusioned perspective, in desperate search for conversion, looking for a savior who will restore their lost dignity and self-respect, and reclaim, on their behalf, what they always considered rightfully theirs, the basic white male privilege.

In that quest they have fallen victims to predatory seduction of anarcho-capitalists and global kleptocrats. These merchants of regressive nostalgia and self-proclaimed guardians of traditional values, who celebrate the idea of privatized utopias of gated communities, do not really need the white male precariat as such, but are ready to offer them whatever leftovers they don’t need, in exchange for an exclusive right to manage their rage capital and for their voice in the ballot box. And white American males will take it and will fall under the spell of magical thinking of the Third-World-esque political pornographers just because, stripped of all other alternatives, the male precariat has found itself lost in the blind alley of the disillusioned perspective.

The stories we tell ourselves and the stories behind stores: The emergence of male precarity

American men have been the unintended victim of the policies and socio-economic changes of their own creation, which saw their culmination in the ultimate downfall ten years ago. Although the prophets of supply side economics continue to insist that we are deep into the recovery cycle, a minimal dose of common sense points in the opposite direction – the economy and, especially, society have never fully recover after 2008 — the crisis appears only to be deepening.

Here’s one way of slicing it. Conventional civilian unemployment rate represents a fraction of the labor force that is not employed. It is a superficial (and distorted) way of assessing the state of economic health, the official statistics reported and referenced in the media and public discourse. It is compared here with the fraction of the US male population of working-age without a job (not including the people that are currently in prisons, so that its rise does not get confused with the explosion of the incarceration rate).

Joblessness never stops for American men

UR M vs ConventionalThe histories of these two measures of unemployment share the same cyclicals: Their rise in recessions and decline during recoveries always takes place in a coordinated way. However, their structural parts are different. Although during each recession conventional unemployment peaks, it always returns to its “normal”, pre-recession level, somewhere in the 4-5% range. Male unemployment, on the other hand, follows a steady upward trend. For over a half a century, since 1960s, every six years the unemployment rate of American men has increased by an additional 1%. For them, there is no “normal” unemployment – every recession creates a new, higher, normal unemployment rate they are required to tolerate.

In every recession, the social costs of recovery have been financed by the rise of male precarity. And those social costs have accumulated to the point where they no longer can be ignored. The current male unemployment rate is around 14%, about 10% higher than in the 1960s. This is the unemployment gap that captures the level of male precarity. Nearly 10 million American men[1] are currently without a job (in the 1960s they accounted for about 1.5mn), and with them probably another 10+ million of their immediate family members and/or dependents who are affected by that condition.

When compared to the unemployment of women, which shows exactly the opposite trend, these numbers highlight the problem associated with the male condition. Starting with the 1960s only a small fraction of women worked and their unemployment rate was in the 60% range. It has since declined down to 25%, with a noticeable inflection in the 1980s, a consequence of significant socio-economic changes, shift of focus from manufacturing to service economy, women’s liberation, and a general emancipation trend.

Two opposing trends: Unemployment of American men and women

UR M vs F

As male unemployment tripled in size since the 1960s, female numbers declined to less than half of their initial value. All progressive forces, like general education, emancipation, or new technologies, which had been embraced initially as possibilities for improvements in the working conditions, leisure, and higher quality of life, eventually became new techniques of control and created the world of perpetual underemployment. These developments have inspired a massive wave of anti-progressive sentiment and emerged as the foundations of the disillusioned perspective, predominantly, of American white men.

Male precariat and the excess population

Over the course of six decades, American men have become the main constituents of what Zygmunt Bauman has identified as the excess population: The volume of humans that are made redundant by the global triumph of capitalism has grown so much that it exceeds the managerial capacity of the planet. They cannot be re-assimilated into the “normal” life pattern and reprocessed back into the category of “useful” members of society.[2] This has emerged as the most challenging test of the existing socioeconomic paradigm, with no hint of possible solution in sight.

There are several shades of excess population. At the extreme end of the spectrum reside criminals and chronic outsiders, for whom there is no place within the boundaries of the enclosure inside which an economic balance and social equilibrium are sought[3]. These people are transported outside of the enclosure, either sent to prisons, or confined to life in hyperghettos without access to traditional citizens’ rights.

The unemployed represent those who escaped transportation and remain inside enclosure; although temporarily redundant, they are earmarked for recycling and rehabilitation. However, all that changes once the drainage of the surplus of humans is blocked. The longer the redundant population stays inside and rubs shoulders with the useful and legitimate rest, the less the lines separating normality and abnormality appear reassuringly unambiguous. Assignment to waste becomes everybody’s potential prospect – one of the two poles between which everybody’s present and future social standing oscillates[4]. As unemployment becomes chronic, the ranks of those who permanently drop out of the labor force swell and they become a burden to the society. Their temporary status comes under review and they face potential permanent exclusion.

American males have been falling through the cracks for decades. Angry and growing in size, they epitomize the excess of population, a burden to the society for which there is no solution. And when under pressure of persistent hardship all the energy of young age wears down and body and soul capitulate, they become a part of the “dark statistics”. Mortality of white American males 45-54 — the age when the emotional and physical immune system gives up — is on the rise, while everyone else’s condition (including that of Hispanic Americans) is improving.

The three horsemen of the white male apocalypse

Mortality

What accounts for this dispersion is hardly surprising. While the biggest killers, such as lung cancer have been on a steady decline, death due to poisoning (read: “drug OD”) has more than tripled, suicide rate (i.e. depression) doubled, and death due to chronic liver diseases (alcoholism) increased by 50% since the beginning of the century. Together with prisons, as graduate schools of crime, drugs, depression, and alcoholism are the three main ideological tools for drainage of the excess of population.

Dark America: Nonsense with a purpose and political pornografication

Populism has become the ideological response to the disillusioned perspective, an attempt to lend meaning to the meaningless, to trump disillusion through self-delusion. When process of growth and change becomes chaotic and overwhelming, individuals experiencing such episodes feel that their sense of identity is breaking down, that their old values no longer hold true and that the very ground beneath their personal realities is radically shifting. This is the point at which the new identity politics inserts itself.

Joblessness of men, predominantly whites, has been the cause of multiple side-effects and various forms of social vulnerability. With time, white men’s social dislocation created a fertile ground for a simmering resentment towards those superficially perceived to have been the causes of their job losses, and with it, their social status and, ultimately, self-respect. This made them receptive to the predatory politics of right wing populism. Instead of questioning capitalism’s responsibility for its crimes, their discontent was articulated in a displaced mode, as a cultural struggle.

The main culprits of their condition have been (mis)identified as women, minorities, immigrants, globalization and emancipation in general. Misogyny, resurgent racism, and xenophobia emerged as major mobilizing forces of the conservative right, championed by the NRA, right-to-lifers, and white supremacists, and fortified by the alliances with the vulgar materialism of Christian fundamentalism in the background. These became the voices of the disillusioned perspective that outline the contours of Dark America, which found its way to the ballot box in 2016. Such distribution of factors and their misidentified causes could struck resonance with the fundamentalist narratives and paved the way for a full blown relapse towards strict patriarchal order inspired by nostalgia for times when social coherence was firm and stable due to rigid family structure and racial segregation.

This is where Christian fundamentalism meets its lost Islamic twin and other monotheistic siblings. Nothing illustrates better this civilizational relapse than the words of Mark Harris, pastor turned Republican nominee for Congress in North Carolina’s 9th district. This otherwise marginal and utterly insignificant individual, has distinguished himself by repeatedly questioning the health of women’s pursuit to prioritize their careers and independence over their biblical “core calling”. His colorful sermons condense the core republican views in an unedited form:

Wives, please hear me this morning. You’re not to ever submit because your husband demands it, but you do it because the Lord ordained it. Now ladies, you can rebel against that command, but just please understand you’re not rebelling against your husband, but against the Lord … submission is not about inferiority in any way, any shape and any form. It simply reflects a God-ordained function of things.

When put in context, the message is clear: Emancipation is a sin, modern women are the offenders, getting ahead of men is a rebellion against God’s order of things. “So get over this inequality thing — because that’s not the point of submission,” he concludes.

By retreating to their households and assuming the subordinate role of housewives, women would exonerate themselves from sin and, at the same time, participate in an economic and social reform[5]. Youth crime would decline, as would unemployment when women, grateful for an opportunity to please God, begin to leave the workforce to care for their children. The problem of excess population and unemployment (together with budget deficit!) would be solved in one stroke – here is your conservative fiscal policy right there.

This is one of many techniques of submission of women, the main ideological pillar of right wing identity politics, populist and mainstream alike, which speaks directly to, and resonates strongly with, their sole constituency who are, at the same time, the main victims of its ideological predation – the white male precariat.

Unlike intellectuals, who experience the world with their brains, poor and uneducated arrive at their convictions through their empty stomachs. One cannot confuse them by opening new horizons or perspectives[6] (e.g. with the empty promises of centrists’ narratives). However, they remain blind to conversion. The disillusioned gaze sees through everything, sees all the lies and the pretenses, the only thing it doesn’t see is its own origin, its driving force[7]. White men are at the end of the rope; they have fallen victims of their own creations. And that is the biggest irony of this otherwise unhappy and depressing story.

 

[1] There are currently around 60 million men and about 70 million women age 25-54 in the US

[2] Zygmunt Bauman, Wasted Lives: Modernity and Its Outcasts, Polity (2003)

[3] ibid.

[4] ibid.

[5] This reform would go along the same lines as described by Michel Houellebecq in Submission

[6] Reflections of the SS Standartenführer Heinrich Steinbrecher, in How to quiet a vampire, B. Pekic, Northwestern University Press (2003)

[7] Karl Ove Knausgaard, Michel Houellebecq’s Submission, NYT (2-Nov-2015)

A decade of counterfactual reality or how to quiet a vampire of history (15 September 2008, ten years later)

15. IX 2018

If history doesn’t manage to exhaust the possibilities of the direction it’s taken, if it’s forcibly prevented from unleashing everything, even its most monstrous forces, sooner or later it’ll return to seek out its curtailed right, its insane continuation. Had Adolf Hitler been killed, had the natural course of history been upset and halted in July 1944, we would have yet another national socialism today, or we’d at least have to defend ourselves from it. Hitler wouldn’t have been defeated, rather his certain victory would have been thwarted[1].

On this day, ten years ago, we witnessed an event in the true sense of its meaning: the event that changed the order of things and divided the time into before and after. With government intervention and bailouts, we had interrupted the flow of history and interfered with its course. By throwing a lifeline to the system, which had been spontaneously self-destructing, we had created conditions for alternative counterfactual history. $7 trillion was the price that had to be paid for suspending the crushing force of gravity that would have otherwise caused the collapse of the entire capitalist system and which has resulted in a downgrade of present reality to counterfactual.

We thwarted the system’s self-annihilation. Instead of allowing this process to complete, Lehman’s ritualistic collapse laid the foundation for system’s resurrection and reinforced the imperative of its ultimate triumph. The rescue package laid the ground for the narrative according to which we needed more of the same — what caused the system’s “temporary” collapse was interpreted as our unwillingness to set it free to blossom fully. The systems imminent demise was, thus, magically converted into its thwarted victory. Ten years later, it resurrected and came back to claim its curtailed right. Today, in its afterlife, we have to defend ourselves against its ugliest and most monstrous incarnation.

And the vampire in us now has an alibi; the American national pride has invented its scapegoats: Immigrants, atheists, pacifists, homosexuals, international trade agreements, NAFTA, regulations, Chinese, Mexicans, teachers, football players, Planned Parenthood, alternative energy sources, progressives, education, science, climate change, facts and truth and other elitist concepts. And, like bad students, we will have to repeat the entire tragedy from the beginning. This is the new counterfactual reality.

In its infinite unwisdom, the high priests of ideology knew that what is imminent, cannot be prevented, it could only be postponed. If in 2006, during the peak of the housing bubble and only two years before its collapse, we knew what we know now, we would have done exactly the same. So, Lehman was not saved – it was allowed to collapse; this was the ritualized assignment and acceptance of guilt aimed at diverting the blame– and this fact, precisely, is what exonerated the system as such.

Here is Konrad Rutkowski, one more time: It is senseless to attempt to crush an order that is based on a consistent ideology. To disappear, it must completely exhaust the last bit of its historical energy. It must die like an old man whose sinful life has extinguished his reproductive energy and even his instinct for the survival of the species[2].

 

[1] Fourth letter of Konrad Rutkowski, in How to Quiet a Vampire, B. Pekic Northwestern University Press (2003)

[2] ibid.

Erectile alchemy and bubble addiction

12. IX 2018

Priapism, named after Priapus, the Greek god of fertility who sported an oversized, eternally-erect penis (so large, in fact, he used it to frighten away anyone who tried to plunder his gardens), is a condition that causes persistent and sometimes painful erections, which last for four hours or more without sexual stimulation. Apart from ED pills, anomalous blood flows in and out of the penis can be caused by a range of disorders and diseases, like sickle cell anemia, leukemia, multiple myeloma, and penile cancers, or abuses of certain prescription medications, alcohol, and some illicit drugs. Priapism can cause serious complications. The blood trapped in the penis is deprived of oxygen and can damage the penile tissue. An erection that lasts longer than four hours is a medical emergency. Untreated priapism can result in damage or destruction of penile tissue and permanent erectile dysfunction.

Economic bubbles have had a special place in American culture for the last 50 years. They encapsulate the essence of the ultimate male obsession: Everything has to be pointing skywards, from male reproductive organs to luxury condo towers, to economic growth, stock market charts and the yield curve. Bubbles hold the key to understanding the essence of American political conservatism and its ongoing transformation.

Behind this fetishized fantasy is the troubling decline in productivity growth (and economic potency in general), together with desperate attempts to bring back good old days, with governments ready to deliver temporary libidinal surrogates of any sort irrespective of their long-term consequences.

During the post-war decades, America, at 3% productivity growth, was open and welcoming, promising (and delivering on that promise) to enlighten and enrich the lives of anyone who took part in the great American project. The economic potency in those days was palpable. Each generation was doubling its standard of living; libidinal forces were abundant, optimism unshakeable, and belief in a better future consistently gratified and rewarded.

After years of misguided interpretation of the theory of comparative advantages, the American locomotive jammed in 2007. The America of today, with 1% productivity growth, has become a get-rich-quick-if-you-can landscape, xenophobic, polarized and libidinally disinvested, with rampant inequality and the highest rate of incarceration on the planet, where every subsequent generation is practically guaranteed to be worse off than its predecessor, and where 96% of people that are born poor remain poor. In today’s America the future looks more like a threat and less like a promise.

Bubbles

Productivity growth (5Y moving average) and bubble economy

The two bubbles of the late 1990s and early 2000s, which briefly interrupt the monotonic decline in productivity growth, announce the beginning of a new era. The Internet bubble is not without merit — it presents the arrival of a genuine technological innovation and a paradigm change — an entirely novel production process, and introduces cognitariat as a new social class. However, its biggest shortcomings are related to the creation of a new mindset: an overnight lottery winner as a new type of entrepreneur and a general change of direction in the political economy. The second, the housing bubble, is much closer to the traditional definition — overconsumption financed by debt. It bears direct responsibility for the utter impotence of the third, and the largest of all bubbles, the government debt bubble, and for the current predicament. Even after nearly a decade of unprecedented government subsidies and budget deficit spending, productivity growth has descended (and still remains) below 1% (the lowest post-war levels), just as it was declared that the economy was on the way to recovery in 2015. The effect of the entire $7tr bubble remains largely undetected by the basic barometers of economic wellbeing. It is precisely the extended duration of the housing bubble, mistakenly identified as a sign of economic potency, which has compromised the hopes of a robust recovery. The current flaccidness of productivity stands as a reminder of the fallacy of the underlying political economy.

Bubbles economy as an ideological core

However, despite their repeated failures, we still seem to be unable to shake off our bubble addiction. Bubbles sit at the core of the right wing populist delusion — no longer a political movement, but a state of mind. This pastoral fantasy has evolved into full-blown alchemy, which continues to insist without any base in reality and against common sense – and economic orthodoxy is reluctant to disagree — that in order to live happier and more meaningful lives and secure prosperity and a better future, all we need is a new magic pill.

Millions of angry gun-wielding Podunk residents, the excluded who represent the excess of the population and now live at or below the poverty line, have become the most vocal cheerleaders of the existing stock market bubble, disguised as the economic boom. They use it to rationalize the toxicity of their favorite ideology and see no reason to be concerned about the true source of their short- and long-term hardship and erosion of quality of life.

Their ignorance is not merely the absence of knowledge, but an outcome of cultural and political struggle. The current political economy has morphed into agnotological[1] capitalism – the systematic production and maintenance of ignorance as a major feature that enables the economy to function by allowing the creation of bubbles. In its background there is a programmatic effort to eliminate the potential for dissent. This effort relies on the creation of systemic unknowns where any potential “fact” is always already countered by an alternative of apparently equal weight and value, which renders engagement with the conditions of reality contentious and a source of confusion. In this way, participants in bubbles remain unaware of the imminent collapse until after it has happened.

Erectile alchemy

Bubbles are economic erectile pills — false signals that something can happen out of nothing. They have a special allure, in the same way Ponzi schemes do – when easy money is readily available, we don’t need a rationale. Economic bubbles have become a juncture where erectile fantasy has become the main cultural dimension. The surge in transient virtual wealth they create is the extended erection we read about on ED pillboxes. The duration of extended bubbles is their most troubling aspect; the longer they last, the bigger the damage they create. So, why does the obsession with bubbles still persist?

According to medical statistics, priapism brought on by erectile dysfunction drugs is extremely rare — more than 100 million erectile pills are sold every year with fewer than 100 cases of priapism reported; that is less than one in a million. However, it is quite possible that there are many more cases of extended priapism caused by the ED pills than medical statistics show. They are just not being documented. If anything, the warning itself could be seen as a clever advertisement incentivizing the users to look for those “gold nuggets” that would trigger one such episode. Why not? Who would complain about having too much of a good thing? “If I get a four-hour erection, I’m not calling a doctor, I’m calling my friends”. Reporting protracted erections would be the most un-American thing to do.

And this is the actual point where the erectile fantasy of bubble economy will meet its maker. Do we not need libido first? Erection will come by itself after that. Or will it? This issue is, and will remain, the central theme of the ongoing political struggle for decades to come. The future of our civilization depends on its outcome. Pills, no matter how different and potent, will never work in the long run, and they have consequences.

 

[1] The concept of agnotology was first introduced by Robert N. Proctor as the study of culturally induced ignorance, particularly the publication of inaccurate or misleading scientific data. In his book, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, Verso (2013), and numerous interviews and essays, Philip Mirowski argues usefulness of agnotology for explaining the post-2008 socioeconomic transformation. This paragraph is largely a summary of his thoughts on the topic.

 

Complexity curse: From low productivity to social fragmentation

3. IX 2018

Sooner or later, everything turns into shit (2nd law of thermodynamics)

Economic productivity is one of the most important indicator of the wellbeing of a society and a fundamental determinant of its standard of living. It determines how prosperity is metabolized and how quality of life improves with time. Productivity is defined as the quantity of output produced by one unit of an input within one unit of time. An increase in physical productivity causes a corresponding increase in the value of labor, which raises wages. This is why having an education or on-the-job training is sought after by employers; it increases the productivity of workers and makes them more valuable assets to the firm.

Here is an example of how it works in practice. An employer offers you $15 to dig a 25 square-foot hole in his backyard. Suppose that you have insufficient capital goods (your bare hands or a spoon), and it takes you three hours to dig a hole to his specifications. Your labor output is worth $5 per hour. If you had a shovel instead, it may have only taken you 30 minutes to dig the hole; your labor output just rose to $30 per hour. With a big enough crane, you may have been able to dig it in five minutes with a labor productivity of $180 per hour. It is clear how the quality of life of a crane owner, which is a direct consequence of his high productivity, differs from the rest of the crowd.

Economic productivity is the source of libidinal forces, the alpha and omega of economic potency, and the ability to better the human conditions. It regulates social entropy, defines the arrow of time, shapes our expectations of the future, and provides mechanisms that sustain our capacity to desire. Abundant productivity enables future generations to live better than the previous ones. Low productivity, in contrast, means both short- and long-term hardship and erosion of the quality of life.

For almost half a century, productivity growth in developed world has been showing a troubling secular trend. In the last decade, developed economies all have entered a stagnation trap from which they seem to be unable to find a way out. This is illustrated in the chart, which shows the history of productivity growth in the US. The bold red lines indicate long-term averages across different regimes. Except for a relatively short period of two successive transient bubbles (internet and housing), there is a clear decline of the average from 3%, in the post-war decades, to 1% in the last ten years.

Productivity Anotated

US productivity growth (5Y moving average)

The decline in productivity growth has profound social implications. A 3% productivity growth, as seen in the two post-war decades, means that the standard of living doubles for every new generation[1]. In contrast, a productivity growth of 1% requires three generations to double the standard of living. However, if we take into account the rise of living costs, in an economy with 1% productivity growth each subsequent generation will have less of everything than its predecessor. It is particularly interesting that productivity growth has been descending to a near all-time low in the last five years, to below 1%, just as it was declared that the economy was recovering from the post-2008 recession. This point in itself deserves special attention.

The death spiral of productivity growth is an example of Tainter’s law, a general pattern whereby investing in complexity inevitably generates decreasing marginal returns for the systems that uses it. Insisting on the same methods, even when they have ceased to work, sets a civilization on track for collapse[2].

This is the essence of Tainter’s argument[3]. A civilization forms when some benefit accrues from greater complexity[4]. Benefits of complexity are realized through cooperation – the proverbial “whole is greater than the sum of its parts”. However, in the initial stage, although benefits of increasing complexity rise, during their evolution, complex systems spontaneously generate endogenous mechanisms of self-sabotage.

Tainters Law

Tainter’s Law

The primary source of self-obstruction is the new protagonist that emerges on the scene: the coordinator[5]. He is the guardian of the new paradigm, which champions complexity as the main and, ultimately, only strategy. The marginal benefits of complexity eventually begin to decline. Beyond a certain point, their intensification produces less additional benefit, putting its beneficiaries to more and more stress. But, as the community/organization now only knows how to use a single strategy, a superstructure is in place that cannot be gracefully abandoned. In the last phase, as benefits of additional complexity taper off, vast resources need to be invested in entirely unproductive ways, such as desperate attempts at regime legitimization: The competitive monument building, or the lavish parades held for each new, short-lived emperor. Eventually, the burden of civilization becomes greater than any benefit it provides and the society collapses[6].

Destruction of cooperation and self-sabotage in corporate organizations

Yves Morieux, offers an illustration of how the last phase of complexity is realized in the current context of developed corporate structures[7]. Behind persistent declining trend in productivity are the three basic tenets of corporate management that act as the main pillars of self-sabotage: Performance, Transparency, and Accountability.

Transparency implies audits and compliance — where does my role start and end. Accountability creates conditions for failure (in a compliant way): Who is accountable? Instead of creating conditions to succeed, we obsess on knowing who is to blame in case of failure. Performance: People put energy and effort in what can be measured, i.e. their individual performance, but not in cooperation.

However, cooperation is how you allocate your effort. Cooperation means taking a risk by giving up the ultimate protection, your own performance, to enhance the performance of those to whom you are being compared, for the sake of cooperation, in order to achieve the optimal result[8]. People are continuously being discouraged and disincentivized to cooperate. If when they cooperate, people were worse off, why would they cooperate? The three basic tenets of corporate management are doing injustice to effectiveness. The more complex the system becomes, the more structures we add that emphasize the three tenets. They trigger a counterproductive multiplication of interfaces that not only add people (non-productive ones), but also create obstacles. The more complicated the system, the more difficult to see what is happening. So we need meetings, reports, conference calls, etc.: people spend 40-80% of time wasting their time[9]. This is the politics of deliberate sub-optimality.

MBA nation or cannibalization of the social landscape

The false premise, which has become the defining characteristics of American politics and, to some extent, the culture as well, has been that a society is essentially the same object as a corporation, just a bigger one, that skills you learn in an MBA program are the same skills you need to manage a society, and that successful corporate managers are, by default, also good national leaders. However, this is not the only social damage of this fallacy. When applying the lessons from corporate culture to society, one inevitably also imports the underlying mistakes of that culture. And so, in the same way a rising complexity creates its own mechanisms of self-sabotage, the essence of the neoliberal approach to social organization is inhibiting the mechanisms of social cooperation. Social atomization, the cult of individuality, the creation of homo economicus as a model citizen, competition as the only and ultimate criterion for everything, the obliteration of welfare, the destruction of empathy, and the entire conservative system of values, all of these structures are instruments of social fragmentation and annihilation of the tissue that makes society different from a collection of individuals. All this leads to barbarization of the social landscape with the degree of polarization that has reached the point where political consensus is no longer possible and democracy no longer works. Politics has become a problem instead of a solution. The net result? The quality of life is already deteriorating and this trend will be reinforced with each subsequent generation as the whole continues to shrink smaller than the sum of its parts.

Under the crush of social entropy, with its ever-increasing complexity as the only strategy, we are facing the same destiny as many civilizations have in the past. The future has already become impossible and without the clear picture of the future, the present cannot take off. Like the boy in Kafka’s story, A Country Doctor, our social and economic system already inhibits the world of undead. Rising complexity is the fatal wound depriving it from the capacity to die. Only when that wound heals, will the system be able to collapse.

 

[1] If one generation is about 20 years, then (1.03)20 ≈ 2

[2] Yves Morieux and Peter Tollman: Smart Simplicity: Six règles pour gérer la complexité sans devenir compliqué, Manitoba (2016)

[3] Joseph A. Tainter, The Collapse of Complex Societies, Cambridge University Press (1990)

[4] The term complexity is generally used to characterize something with many parts where those parts interact with each other in multiple ways, culminating in a higher order of emergence greater than the sum of its parts.

[5] Akshay Ahuja in Dark Mountain Project (19, March 2012)

[6] Akshay Ahuja, ibid.

[7] Yves Moreieux, ibid.

[8] Yves Moreieux, ibid.

[9] Yves Moreieux, ibid.

 

 

The age of unreason

25. VII 2018

The village of Hollywood was planned according to the notion

 people in these parts have of heaven. In these parts

 they have come to the conclusion that God

 requiring a heaven and a hell, didn’t need to

 plan two establishments but

 just the one: heaven. It

 serves the unprosperous, unsuccessful

 as hell.

(Bertolt Brecht, Hollywood Elegies)

According to Foucault, the basis for civil society is the idea of a redistribution/recentering of the governmental reason. In pre-modernity, the idea of regulating, measuring, and so limiting the indefinite exercise of power was sought in the wisdom of the person who would govern. Wisdom implied governing in accordance with the order of things, with the knowledge of human and divine laws. But, as modernity entered the historical scene, roughly from XVI century on, exercise of power was no longer adjusted in accordance with wisdom, but according to calculation of force, relations, wealth and factors of strength. The modern forms of government technology could be described as control of government by pegging it to rationality.[1] Modernity, since the nineteenth century, is marked by the emergence of four modes of governmental rationalities, which in subsequent two centuries overlap, lean on each other, challenge each other, and struggle with each other. They represent art of government according to: 1) truth, 2) rationality of the sovereign state, 3) rationality of economic agents and 4) rationality of the governed[2].

It is the fourth mode — the rationality of the governed as the regulating principle of the rationality of the government – that was responsible for the rise of neoliberalism and Homo Oeconomicus as the new political subject and, with it, the emergence of economics as the ideological metalanguage in the second half of the twentieth century.

The trap of rationality and the search for unwisdom

Neoliberalism disseminates market values into every sphere of human activity. People are seen as specs of human capital which needs to appreciate and get reinvested by making proper choices (mate, education, job,…). It provides direction without meaning in directionless environment of postmodernity. (Wendy Brown)

Rationality is a wonderful thing. However, when coupled with competition and when the two are elevated to the highest principle of human existence – when everything in life is reduced to rational decisions in a competitive environment – it becomes a spectacularly efficient mechanism of exclusion. Sooner or later, the symbiosis of the two create a winner-takes-all environment where every failure to make a right decision has dire consequences.

With competition, the number of right paths is shrinking and the number of wrong ones proliferates. Every wrong turn is punitive and potentially fatal. In the kingdom of rationality, bad decisions become self-reinforcing. One wrong turn reduces subsequent maneuvering space and forces another suboptimal choice until there are only wrong choices, all the good and rational ones had been taken by competitors.

The number of those who have failed rationality test grows exponentially with time. They are the excess of population. They hate rationality passionately and resent reality they have been served. The real problem is the unforgiving aspect of progress, the persistent depletion of the safety net and the ultimate absence of cushion. Yet, the excluded are lured into an ideological trap that supports the narrative of systematic removal of that very safety net and, in that process, they continuously undermine themselves. They prefer anything, any alternative to what they have now, not matter how elusive, dubious, and unpalatable the reasoning behind it.

This self-sabotage is at the base of the frustration of a large segment of the population. From the political side this is perceived as an irresistible source of rage capital that is begging to be deployed and reinvested. For the excluded, refusal to yield to the forces of reason is the ultimate act of resistance, a sign of desire to liberate themselves from the tyranny of rationality.

The great U-turn and the politics of performative speech acts

Performative utterances are sentences which not only describe a given reality, but also change the social reality once they are pronounced, like “I pronounce you husband and wife”, or “The court finds the defendant guilty”.

When the number of those who have failed the rationality test is so large that there is no more place for them in the enclosure of prosperity and when they begin to present a significant political body whose voice can be heard in the ballot box, rationality, as a way of governing, has already exhausted itself – its toxic effects have taken over. At that point, the excluded will seek to abandon reason and, with a dash of nostalgia and a help of identity politics, elect a new prince. And this prince will be unlike any other before him. He will govern with unwisdom, and will have the courage to wear his unreason unabashedly as an ultimate virtue. He will create a new order of things, define new reality, and construct the world of unreason with rules that only he and his base will understand. The new fictions will become their articles of faith. Facts and truth will no longer have their old values and the wish for a coherent fictitious world will be satisfied.

In the kingdom of unreason, power will derive from a way of using language rather than from a system of ideas[3]. The first phase of the uprising will consist of a linguistic revolution. Performative speech acts — the pronouncements that change reality by their mere utterance — will enter the vernacular and shape political and social reality. This is where self-intoxication begins. By repeating and ritually solidifying lies, those who tell them and hear them may, after a while, embrace them as articles of faith. As soon as falsehood has become part of a group identity, it generates new obligations which can be neglected only at risk of showing weakness or, worse still, a treasonous attitude. [4]

Slide2

Unwind of enlightenment and the great U-turn

In a strange twist of fate, emancipation, which marks transition from wisdom to rationality and gives rise to enlightenment as the public use of reason, in the late stage of neoliberalism, it creates conditions for its own demise that lead to its forced unwind and a historical U-turn. With the rise of unreason, populism takes over and becomes neoliberalism’s counterpart in its afterlife.

Unreasonable people cannot be governed by reason. They require a leader who appeals to their irrational side and who, therefore, has to display unreason himself. A different principle is required for governing such masses, a mirror image of neoliberalism’s “governing through freedom”. Unreasonable people are governed through unfreedom.

But this, like any other, detachment from reality cannot be anything but short-lived. The question is not if, but when. The leader will sit in his big car, get on a highway and drive against the traffic. His car will have only one pedal: gas. Like his followers, he believes that everyone else is driving in the wrong direction. Many drivers will move to the shoulders to avoid the collision, but, as he continues to accelerate, there will be a slow-moving trailer trucks that will not be able to maneuver fast enough and, at the end, the fanaticism and the speed will consume their creator. There ain’t no way around it.

 

[1] Michele Foucault, The Birth of Biopolitics: Lectures at the Collège de France, 1978—1979, Picador (2010)

[2] Ibid.

[3] Albrecht Koschorke, Adolf Hitlers “Mein Kampf”: Zur Poetik des Nationalsozialismus, Berlin (2016)

[4] Ibid.

The poverty of technology and the technology of poverty

14. IV 2018

Charles-Avery two dogs

It was one of those rainy and damp days, I was finding my way out of the F-train subway on Bergen St. in Brooklyn. On the mezzanine level, in the corner of the stairwell, I noticed a young man, couldn’t have been much older than 30. Rain was slowly cascading into the subway, small puddles forming everywhere forcing him into an uncomfortable squat instead of a sitting position. His appearance was modest; he looked tired and lonely, but not destitute. There were none of the signs of physical neglect usually seen in homeless people – he looked like someone who had access to a bed and sanitary facilities. There was a money tray with a few coins in front of him indicating that he had been there for some time. The man seemed relaxed and disinterested in making eye contact with passersby. He appeared preoccupied with what was happening on his iPhone, most likely Instagram or the traffic on the social networks.

Panhandlers with smartphones are unusual sight – it is not just the price of the accessory that is at odds with their social status, but the entire protocol: the price of connectivity, how they pays their bills, which assumes a checking account; purchases of apps, which requires possession of a credit card suggesting some king of credit history… Things just don’t add up. However, as much as the two were an odd combination, it was difficult to dismiss the thought that, on some level, they shared the same causal connector, and they stand as two representations of the same underlying cause of social degradation. While poverty is a consequence of the system’s inherent urge to cannibalize itself, tech, on the other hand, has become the other face of resistance to change.

The panhandler and the smartphone together unify the worlds of thrift store shoppers and the high tech of Silicon Valley. The following chart brings us closer to the origin of this unstrange connection. It shows three price histories representing roughly three different social segments of the stock market. Dollar Tree is a chain of discount variety stores in the US. It sells an assortment of everyday general merchandise; it is a lower end version of Walmart, with most goods priced at or below $1. It is the place where poor folks buy their stuff. Since 2001 (the perception of) the value of Dollar Tree has increased by 11 times, while during the same time Apple, which needs no introduction, has had a 140-fold rise. For comparison, S&P or other benchmark stock indices have grown “only” 2 times.

The coordination between two histories is not a story of correlations in the sense normally used in statistics, but of a different type of commonality, the most interesting point being not their mutual causation, but the timing they share. Between 2008 and 2009, S&P index –the “social median” of the stock market– lost 50% of its value. It took four years for it to recover. In contrast, Dollar Tree, the poor man’s outlet, starts its big takeoff in 2008 with the stock price practically quadrupling during the subsequent four years. This timing and trend are in synch with all other measures of rise in poverty[1]. This is also the moment when Apple’s explosive rise begins.

DLT

The poverty of digital nations: Silicon Valley meets thrift shop

While the middle of the affluent sector of society (S&P world) advanced in “moderate” steps, the wings on both sides have outpaced it by a wide margin. Two seemingly different entities on opposite sides of the social spectrum – the beneficiaries of growing poverty and of the technological boom — register a common inflection point around the time of the deepest financial and social crises in modern history.

Dollar Tree’s success in the last ten years has been a function of demand created by an explosive supply of poverty; Apple’s rise has been an indirect beneficiary of its side effects. As social reality was disintegrating, the void it created was filled by its virtual surrogate with Apple acting as the main subcontractor in the process of digitalization of social relations. This ties the panhandler and the iPhone together as a result of centrifugal forces of social fragmentation and the disappearance of the middle into the extremes.

The poverty of technology: Rent economy cannibalizes itself

As the economy transitions from material to immaterial, innovations become its main focus. If one can come up with a technological innovation that enables him or her to manufacture a product for 10 cents and sell it for over $200 on a sustained basis, all subsequent profits will be reinvested in that direction. In markets with strict intellectual property laws prices are no longer commensurate with production costs, but contain a scarcity premium. In this way, innovation becomes a source of Rent.

Rent is the most irresistible source of income. At the same, time it is economically and socially intolerable. If someone somewhere is paid without doing any work, then someone somewhere works without getting paid. Rent economy is a voluntary slavery. Employment becomes the right to be exploited and unemployment is denial of that right. However, when there is no need for labor, and freedom is a constitutional right of every citizen, there are slaves without masters roaming around without anything to do. They become the excess of population.

Irresistible resistance to change

In the past, technology always generated new demand and forced people to reinvent their skills to accommodate for the new needs. This is no longer the case. Modern technology destroys more jobs than it creates. As such, it has become the main destabilizing force. Its basic commodity is immaterial – it costs nothing to produce an idea. If labor is the main cost of production, relocating the production centers to regions with the cheapest labor becomes the dominant mode of profit maximization. In this way, low production costs abroad create precariat at home.

Profit chasing leads to geographic displacement and social and cultural dislocations. Through their deterritorialization the elites lose their social footing. Their riches decouple from the well-being of society. The Keynesian bond, which used to tie the profits of the rich to the wages of the poor is severed, cutting the fate of economic elites loose from that of the masses. The possibility, provided by a global capital market, of rescuing themselves and their families by exiting together with their possessions offers the strongest possible temptation for the rich not to be interested in the social impact of their actions[2].

This is not sustainable in the long run. Once the exploitation becomes global and all alternatives are exhausted, the system has to collapse. The main question is: Who can act as an agent of change? Who represents the new social archetype of post-capitalism — a descendent of the medieval knight in feudalism or bourgeoisie in industrial capitalism?

Paul Mason has argued that a composite picture of that type would correspond to a Universal Educated Person. Their skill set is a fusion of managerial and intellectual abilities. Such a person needs to be a bearer of the new social relations inside the old, interested in engaging in political discourse with the intention of triggering change on the social level, and appear in large numbers. Currently, the “T-shirted bourgeoisie”, although fitting the description of a universal educated person with the right skills, does not want to reconfigure the system – rather, they favor a monopolistic structure and extraction of Rent[3], without much regard for the long-term consequences. Instead of being guardians of the future and sustainability, Silicon Valley billionaires prefer to invest in doomsday bunkers and property in New Zealand.

The technology of poverty and society of tiredness

When production is immaterial, everyone already owns the means of production. This is the main difference with respect to industrial age when material production defined the tensions between capital and labor. In cognitive capitalism, we are talking about, what B. C. Han calls the Achievement society, where everyone is entrepreneur of themselves, the exploiter and the exploited, the master and the slave, at the same time. Everyone is trapped in the auto-exploitation out of which there is no escape through resistance or uprising, but through internalizing his or her discontent through withdrawal and depression[4]. Zygmunt Bauman sees this as a social death spiral: The uncertainty of the Achievement society is a powerful individualizing force. It divides instead of uniting, and since there is no telling who will wake up the next day in what division, the idea of ‘common interests’ grows ever more nebulous and loses all pragmatic value. Contemporary fears, anxieties and grievances are made to be suffered alone[5].

The society of achievement is generating tiredness and exhaustion. This is a solitary and divisive tiredness with separating effect[6]. Digitalization of social relations is a response to this state of affairs. It fills the vacuum created by achievement society by providing a virtual supplement that makes isolation bearable by satisfying our ontological resistance to isolation. Social digitalization creates contours of a community; it transposes, to use Peter Handke’s terminology, I-tiredness into We-tiredness[7] while, at the same time, reinforcing isolation by creating a phantasmatic layer and illusion of self-sufficiency. Infinite plasticity of the digital society – ability to be shaped at our will — is intrusive and invasive: One can be anything one desires by creating an avatar and digital persona of any shape, form, and ability. This is virtual doping: It makes possible to achieve without achieving[8].

Social digitalization makes it possible to conceive of a community that requires neither belonging nor relation. The existence of a community, albeit virtual, results in an immanent religion of tiredness, one that needs no kinship. This is where smartphones come in. Here is Frankfurt School and B. C. Han, one more time:

Every technology or technique of domination brings forth characteristic devotional objects that are employed in order to subjugate. Such objects naturalize and stabilize domination. Devotion means submission to obedience. Smartphones represent devotion – indeed, they are the devotional objects of the Digital. They work like a rosary, which, because of its ready availability, represents a handheld device too. Both (the smartphones and rosary) serve the purpose of self-monitoring and control. The smartphone is not just an effective surveillance apparatus; it is also a mobile confessional. Facebook is the church – the global synagogue of the Digital. “Like” is the digital “Amen”[9].

 

[1]Since 2008, the number of people on food stamps has almost doubled – there is currently around 50 million people on food stamps in the US. During the same period, the fraction of the population living below poverty level has increased from 12% to 15%. These are just continuation of the long term secular trends underscoring the social fragmentation of the late 20th century. For the bottom 90% of Americans, living standards have not changed since 1970s. In contrast, for the top 1% they have risen 5 times and for the top 0.01% by 10 times in the last 50 years.

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

[3] Paul Mason, Postcapitalism: A Guide to Our Future, Farrar, Straus and Giroux (2016)

[4] B. C. Han, Psychopolitik: Müdigkeitsgesellschaft Burnoutgesellschaft Hoch-Zeit, Matthes & Seitz Berlin (2016)

[5] Zygmunt Bauman, Wasted Lives: Modernity and Its Outcasts, Polity (2003)

[6] Peter Handke, Versuch über die Müdigkeit (in Die drei Versuche), Suhrkamp (1998)

[7] Peter Handke, ibid.

[8] B. C. Han, Psychopolitik: Neoliberalismus und die neuen Machttechniken, Fischer (2015)

[9] B. C. Han, ibid.

 

Lost in a dream of electoral dictatorship: America as a failed state

30. III 2018

They turn our brothers and sisters into mercenaries

They are turning the planet into a cemetery

The Military and the Monetary, use the media as intermediaries

They are determined to keep the citizens secondary

They make so many decisions that are arbitrary

We’re marching behind a commander in chief

Who is standing under a spotlight shaking like a leaf

But the ship of state had landed on an economic reef

So we knew he was going to bring us messages of grief

(Gil Scott Heron, Work for Peace)

American oligarchs have had an eye on post-Soviet Russia ever since the first days of communism’s collapse. Their fascination with its post-communist transformation continues to this date. In less than two decades, the country of chronic state-mismanaged scarcity, where everyone had to stand in line in order to maintain elementary standards of living, where the western middle-class lifestyle was just a pipe dream, and where getting rich was a crime, this very country became an oligarchic paradise producing practically overnight a stunning number of obscenely rich and disturbingly powerful individuals, who rose directly from the rubble of the dismembered Soviet state.

The DNA of a typical Russian oligarch reveals a hybrid of a communist apparatchik, a government bureaucrat, and a strictly small-time criminal – a sub-mediocrity in every aspect. Yet, these people became an embodiment of the ultimate American Dream. People who lived all their lives in isolation, who had no exposure to business know-how and had no place or opportunities to learn about it; people who lived close to what in America would be considered the poverty level, emerged as super-rich. These passive and utterly unremarkable recipients of the political lottery jackpot were graced with unimaginable fortunes just by sitting on the wrong side of the political crossroads at the right time. This realization has had to inspire both rage and jealousy, and at the same time corrupt the mind of every honest western constituent brought up on the protestant ethics of hard work.

The main message of the post-communist transformation of the Soviet Union has been that political circumstances, rather than demographics, are the key explanatory variables behind the resulting outcomes. State sponsored corruption, the residual of the old communist system, was the secret sauce, which added a special flavor.  Failed states create conditions of unimaginable business opportunities. This realization added a new dimension to the already existing American Right’s fetish of a smaller state. With the recent rise of right-wing populism, the idea of the failed state as a new paradigm of economic and social restructuring gained wider acceptance and stronger footing.

For quite some time, supporting or explicitly engineering a failed-states project, and creating a global disequilibrium that would force or accelerate a change, has been a signature strategy of American global politics in its late neoliberal phase. This project got new wind in the 1990s, capturing not only the post-communist Soviet bloc, but spreading also to the Balkans, Iraq, Middle East, North Africa, and beyond, while in the West it manifested itself through tensions between the global oligarchy and populist implementations of the neo-feudal visions of the world.

Oligarchic tromboning: Pimps, sultans and banana republicans. The anatomy of a political mancrush

The failed-state project abroad has been a special inspiration at home. A source of superlative profits for the American Military Industrial Complex, in Russia, in terms of the rise of riches of their new elites, the results have been nothing short of a miracle. So, why not try it at home? After all, over the last three decades, we have had enough practice with a number of controlled experiments that this would be a no brainer.

Current political developments in the US reflect precisely this logic. There is a concerted effort to preserve the wealth of a very small group of people or powerful institutions, while at the same time, introducing corruption as an integral part of political dealing and diffusing the obstacles to its normalization. This is the ultimate form of oligarchic refunctioning, where everything else — culture, politics, social well-being — becomes subordinated to the interests of an absolute minority. Plutocracy becomes indistinguishable from Kakocracy – a Faustian pact where the elites form a coalition with a criminal element, and together they establish the government of the worst.

Based on everything we’ve seen so far, the dismembering of the USSR has emerged as a blueprint for the restructuring of the American state. The Soviet Union, which after its breakup started as an essentially criminal enterprise and subsequently made a sharp turn towards an electoral dictatorship and sultanic oligarchy.  When seen from the perspective of plutocratic interests, the post-Soviet style social transformation is rationalized as a more efficient form of social organization than any emancipatory alternative.

This has been embraced as a preferred transformational path of the American right wing. The contours of Trump’s economy indicate a process of transition from the invisible hand to the invisible fist, where economic justice completely eliminates the last vestiges of social justice and takes it to the realm where economic interests of a few are the only ones in existence. While Trump has displayed an open disdain for the world’s leading democratic leaders, a mancrush on Putin notwithstanding, he has gone out of his way to show unreserved support and admiration for autocratic outliers such as Duterte (invited to the WH), Nursultan Nazarbayev, Xi Jingpin (inspiring praise for his lifetime presidency), (“Smart cookie” and a worthy adversary) Kim Jong Un, Abdel-Fattah el-Sissi (the quiet general, aka The Pimp), and the Sultan himself, Recep Erdogan!

When viewed in the context of a general oligarchic framework, the two trajectories corresponding to the post-Soviet and current American political repositioning, outlined in the figure, both show convergence towards the same destination corresponding to a sultanic oligarchy.

Sultanic

Oligarchy represents different modes of wealth defense. The interplay between oligarchic coercive power and their organization defines the four corners assigned to underlying political systems within which all political structures reside. Variations across oligarchies are two-dimensional with main axes defined by how oligarchs impose their will (e.g. are they armed or disarmed) and their mode of rule (e.g. individualitstic, collective or institutionalized). This results in four possible structures. All historically known political structures reside within these four corners. Unlike electoral democracies which are characterized as civil oligarchies, in sultanic oligarchy (lower right corner), oligarchs surrender a major part of their power to a single individual. One oligarch is more powerful than the rest (e.g. Suharto’s Indonesia, the Philippines under Marcos, or post-Soviet Russia under Putin). This is an application of the framework defined in: J. A Winters, Oligarchy, Cambridge University Press (2011)

The fourth horseman and the (im)possibility of emancipation

Corruption, this fourth horseman of the apocalypse, which has long been in hiding, is now making itself fully visible. Together with the three main systemic disorders – Stagnation, Redistribution, and Plundering of the public domain – it outlines the contours of the terminal destination of the current social transformation in the developed world.

Trump’s ambition has never been to become just a president, but a sultan. The deliberate display of his own corruption with the intent to normalize it and pave the way for its widespread acceptance, together with an emphasis on being above the law as part of his privileged position are reflections of his sultanic aspirations.

Wolfgang Streeck gives the best summary of erosive effects of corruption on politics and society. Converting public trust into private cash has become routine. Greed is no longer magically converted into public virtue, depriving capitalism of its last consequentialist moral justification. Stylizing owners of capital as trustees of society is losing any remaining credibility. Corruption is considered a fact of life as well as the monopolization of political influence by the self-serving oligarchic minority. As a consequence, pervasive cynicism deeply ingrained in the collective common sense is changing the functioning of the system. A political career is seen as an institutionalized opportunity for the well-connected elites and it is irrational to say no to these opportunities. Populism no longer serves to recenter the center, but is becoming a major destabilizing force. The system is ultimately facing a looming legitimation crisis – the existing social order is being rendered morally defenseless in possible future contestation[1].

The silver lining, if one is to be found at all, is that chaos, if administered in the right way, instead of creating confusion, could serve as a political “eye-opener”. This could force a transformation of the political subjects’ psyche, triggering a transideological moment when the political body desires to transcend the political confines faced with absurdity and obsolescence of the existing ideological framework and embarks on a path of accidental emancipatory transformation.

[1] Wolfgang Streeck, How will Capitalism End?: Essays on a Failing System, Verso (2017)

 

American corrida and the reconstitution of the state

24. III 2018

No one really ever liked the state, but the great majority permitted its powers to grow ever greater because they saw the state as the mediator of reform. But if it cannot play this function, then why suffer the state? But if we don’t have a strong state, who will provide daily security? (I. Wallerstein)

Social and economic cycles used to move together. This was many years ago. For over 40 years now, the two have fallen out of synch. After each recession, recovery had to be won by making social concessions — this was always considered acceptable expecting the economic advantages to feed back into society. With time, economic progress has decoupled from the well-being of society. Social deficits have grown so large that, unlike the economy, society can no longer recover. The last crisis has taken the form of an autoimmune reaction. We have reached the point of self-intoxication when inner contradictions of the system, which previously could be temporarily ignored, are taking over. The system has exhausted itself – it has collapsed under its own weight.

Overcoming the accumulated social deficit requires deeper social changes. At the root of this quest lies the breakdown of traditional social contract, which started more than four decades ago. In its original form it can no longer be used even as a rough outline.

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As divergence between productivity and income has increased, so has the distributional asymmetry of profits resulting in growing inequality, which after decades have evolved into the main destabilizing force. The problem with inequality is not the skew in wealth distribution between those who have some and those who have more (or much more), but extreme fragmentation of society into a rapidly shrinking minority of those who have everything and an exploding majority of those who have nothing. A shrinking middle class in developed economies has grown increasingly vulnerable to poverty while, at the same time, poverty has become a risky and unstable state. This led to new forms of precarity, social marginality, and stratification at the expanding bottom.

As a consequence, the cultural divide has reached such high levels that disputes can no longer be resolved through democratic process. Western societies are at the juncture where they need to develop alternative modes of social organizing and define a new social contract.

Craig Calhoun gives possibly the best summary of the singularity of the present political configuration: Western societies are at the intersection of economic and political crises, which presents the most dangerous development that could emerge from this situation. Erosion of implicit bargain by which people accept damages to society or environment in the pursuit of progress results in recurrent political unrest. Faltering growth brings disappointment to those with rising expectation and elected leaders seek to diminish public freedoms and quash dissent.[1]

There is an urgent need to reconfigure the capitalist state in such a way that harmonizes with the needs of both the economy and the society. This is a painful and politically risky maneuver that requires undoing centuries of institutional baggage. Reconfiguration of the state is the main event of this political moment; everything else is just a distraction.

The main objective of current populist politics is to decouple the two crises by any means. In its current iteration the strategy consists of preventing the lethal mix to be realized, by creating a distraction (economic, social, media, political, as much controversy as necessary…), while the state is being rapidly dismantled. But this cannot be a stable solution, only a way of buying some time. It is just the beginning of a long process of social transformation likely to take center stage in the next decades.

State and social insecurity: From welfare to penal pornography

The transformation that the state has undergone in the last 40-50 years can be characterized at best as inadequate or incomplete, lagging behind, and not adapting to, much deeper technological and economic changes.

The substance of capitalism is the meeting of capital and labor. Capital must be able to buy labor and labor must be attractive enough to be saleable. In that context, the main task (and legitimation) of the capitalist state is to broker this exchange — to see that both of these conditions are met. It must subsidize capital and ensure that labor is worth purchasing (it is healthy, properly trained in the skills and behavioral habits, and is able to ensure the strains of the factory floor). Legitimation crisis of capitalist state lies in transition from society of producers to society of consumers – the prime source of capital accumulation has moved from industry to consumer markets. State subsidies now render capital able to sell commodities and consumers able to buy them. Credit was perceived as a magic contraption in that context. Capitalist state now must assure the continuous availability of credit and the continuous ability of consumers to obtain it. The welfare state is now underfunded because the principal source of capital accumulation has been relocated from exploitation of labor to exploitation of consumer[2].

As the state was withdrawing from the welfare arena, the existing forces were pushing it to the punitive mode of its functioning. The poverty of the social state against the backdrop of deregulation elicits and necessitates the grandeur of the penal state[3]. This is neoliberalism in action: Subordinate all human activities to the laws of the market.

The unwanted byproduct of economic Neo-Darwinism, unwind of the welfare state, and the rising precarity has been the excess population — the surplus of humanity that is unwanted, inconvenient, and ultimately displaced[4]. There are more people who fall through the cracks than those who succeed — a growing segment of the population that can no longer be reintegrated into a normal functioning of society. These people are neither producers nor consumers.

The response of the state has been to segregate the nonproductive, non-consuming, social element either through their permanent exclusion (e.g. opioids, or other forms of social marginalization) or turn them into profit centers through incarceration (e.g. private prisons). The state has effectively switched from its welfare to the punitive mode of functioning signaling the emergence of carceral state as one of the defining characteristics of the late-stage neoliberalism.

However, no solution has emerged from these, essentially ideological, maneuvers, which have only exacerbated the problem of excess population: The volume of humans made redundant by capitalism’s global triumph grows unstoppably and comes close now to exceeding the managerial capacity of the planet; there is a plausible prospect of capitalist modernity choking on its own waste products which it can neither reassimilate or annihilate, nor detoxify[5]. This has resurfaced as the main problem of neoliberalism that does not have a solution inside the existing paradigm.

The rising social antagonisms and tensions are rapidly becoming a cause of additional loss of social cohesion with precarity and hopelessness on one side against discomfort and entrenchment of the privileged on the other. Growing rage capital is being harvested by right wing populism. Growing discontent is used as the lever arm to reconfigure the sate to a more radical form of carceral, militarized entity with enhanced punitive mandate and further dismantle the vestiges of the welfare state. At the same time, under the pretext of economic and fiscal reform, there is a concerted effort to shake up the constitution and push the system towards a more efficient structure that fosters easier oligarchic repositioning.

The matador enters the rink

In the final stage of corrida, the tercio de muerte (part of death), the matador re-enters the ring alone with a small red cape (muleta) in one hand and a sword in the other. The faena (job) consists of the entire performance with the muleta, in which he uses his cape to attract the bull in a series of passes, both demonstrating his control over it and risking his life by getting especially close to it. Faena ends with a final series of passes in which the matador with a muleta attempts to maneuver the bull into a position to stab it between the shoulder blades and through the aorta or heart (estocada).

Inside the existing neoliberal paradigm, we have already reached the dead end when there is nothing else that could be done. The only thing that remains is to reinvent the status quo through distraction. This brings us to the present moment. Like traditional Spanish corrida, dismantling of the state has assumed a highly ritualized process. In the words of Sylvère Lotringer, it is ritual without the sacred, the tragic without the tragedy. While populist campaigns have masked themselves as de-oligarchification movements centered on their anti-global sentiment, the American version has acquired a distinct flavor. The most recent attempt at transformation is nothing else but an oligarchic repositioning, an attempt to avoid a change by diversion. Trump’s right-wing populism, in fact, is a rearrangement of the oligarchic modes of economic and social functioning.

This is precisely the transformation that took place in the post-communist world in the 1990s. Trump’s cabinet nominations, selection of his advisors and his appointees reflect a desire to engineer a collapse of the state institutions — create new initial conditions resembling a failed state – and rebuild new structures on its rubble. As such, 2016 represents a regressive move towards a more primitive oligarchic structure.

This is the final stage of the American corrida — after wearing the bull down, the matador has entered the arena in 2016. Presidential tweets, the penchant for scandal, controversies, pathological lies, being consistently on the wrong side of every dispute and argument, flirting with constitutional crisis, everything…. All this is the red cape (the matador’s muleta). His job, (the faena), is at the same time to distract public attention, test the system’s resilience, wear down the public and bring state institutions to their breaking point before delivering the final blow (estocada) to the constitution, democracy and the American state.

Contrary to the naïve and misguided belief that Good always triumphs over Evil, history is on no one’s side. The outcome is ultimately binary. Who will be taken out on a stretcher, the matador or the bull? And whom will be the crowd cheering for?

[1] Craig Calhoun, in Does Capitalism Have a Future? Ed. I Wallerstein et al., Oxford University Press (2013)

[2] Zygmund Bauman, Liquid Times, Living in the Age of Uncertainty, Polity (2007)

[3] Loïc Wacquant, Punishing the Poor, Duke University Press (2009)

[4] Zygmund Bauman, Wasted Lives, Polity (2012)

[5] Zygmund Bauman, ibid.

 

One hundred years of solitude (in hindsight): 1917 — 2017

7. XI 2017

In Andersen’s fairy-tale “The Red Shoes”, an orphan girl is given a pair of magical shoes by her rich adoptive mother. She wears them to church where she pays no attention to the service and, when her mother becomes ill, the girl deserts her, preferring to attend a party and dance in hear red shows. An angel appears to her and, to punish her vanity, condemns her to dance even after she dies. The shoes begin to move by themselves, but they can’t come off.  The girl finds an executioner and asks him to chop off her feet. He does so and the girl receives a pair of wooden feet and crutches. However, the shoes continue to dance even with her amputated feet inside them. The red shoes are embodiment of an undead partial object, a pure libido which goes beyond persistence, not an interpolation between the living and the dead, but more vigorously alive than ordinary mortals — it insists on repetitive movement of dancing irrespective of the well being of the host to which it is attached[1].

Communism had to die twice. The first, symbolic, death occurred after the fall of the Berlin wall. Its second, material, death was announced after the first Iraq war when the Soviet military machine was outclassed and rendered obsolete by the far superior western war technology. But, communism could not die yet. Symbolically dead while “biologically” alive, communism still inhabits the world of undead. Although it was eventually buried in the countries where, after their initial breakup, states got reconstituted — in many places the red shoes continue to dance on.

What went wrong with the communist idea and how did liberté, egalité, fraternité become a totalitarian nightmare? Communism’s biggest sin was its vanity — an obsessive conviction that it could take uncertainty out of life as such. To accomplish and maintain that task requires an extraordinary amount of violence. Both excessive determinism and excessive force compromise system’s robustness and deprives it of valuable information, which prevents formation of adaptive mechanisms necessary for its survival.

Nomenclature of the early communist state saw their ideas as having strong scientific legitimation and maintained their conviction that loss of political power even temporarily would have been a betrayal of their historical mission. Thus, any opposition had to be inhibited and gradually eradicated. The suppression of unofficial organizing, and information that such process generally provides, left the leadership essentially blind to whatever was happening in their back yard. The red shoes began to dance. While sciences, engineering and technology had to remain competitive in order to keep up militarily with the West, communism completely neglected social sciences. A vocabulary for describing social and political conditions and adequate description of social reality never properly developed. In the face of perpetual conflict with reality communism fostered a continued state of cognitive dissonance. It erected its own boundaries to protect itself from contamination from the outside and in extreme cases morphed into a cult following. The accumulation of its shortcomings, which remained undiagnosed for a very long time, was allowed to self-reinforce. Like most other totalitarian ideologies communism remained non-adaptive, not allowing any feedback to penetrate its boundaries. It lacked a corrective and when the end came, it was unable to transform or defend itself.

Eradication of uncertainty breads ignorance which leads to paranoia and escalates oppression. These inhibit risk taking and creativity and negatively impacts economic growth with a loss of competitive edge in global marketplace. In the long-run, the system becomes fragile. As it tries to adjust to such environment, change takes the form of positive feedback. Oppression mobilizes enormous resources to keep control of its allies and political subjects and effectively turns them into its hostages. Attempts to express growing discontent require a heavy hand rule which in turn reinforces the hostage syndrome and brings about further escalation of discontent and additional loss of competitive edge. At that point, legitimation becomes the system’s biggest problem and requires mobilization of all resources, primarily aimed at glorification of the system. But, by then the oppression is the only thing the system knows how to deliver. It is the only strategy, and very expensive one — only extremely resources-rich countries can truly afford them. When existing resources are fully exhausted, the system collapses.

Because of its shortcomings, communism in its mutated form was indefensible. It required enormous resources and force to keep it alive and that was in no one’s interest. At the end, it did not work for anyone and in most places it was dissolved practically overnight. Although most communist states, one by one, declared themselves as capitalist, the transition period, after the formal breakdown of communism, appeared as building of capitalism without capitalists, at least on the surface. In an essay that could be considered as a sociological version of Orwell’s Animal Farm, Immanuel Wallerstein[2] compared the communist states to factories seized by a labor union during a strike. If the workers try to operate the factory themselves, they inevitably have to follow the rules of capitalist markets. The narrow circle of those making managerial decisions would cut themselves off from the larger group and evolve into new ruling elite and it was only a matter of time when they would no longer feel compelled to disguise the reality. This is “the iron law of oligarchy”. The factory would then revert to being a normal capitalist enterprise.

The communist supernova exploded in the center of the global geopolitical landscape. In countries where it took place, collapse of communism unfolded according to four scenarios, not two, contrary to the still dominant one-dimensional, cold-war view, which divides contemporary political systems into totalitarian and democratic. The evolution of the Soviet Union, socialist north (Poland, Czechoslovakia, Hungary and DDR) and the Balkans went in four different directions. The four underlying trajectories that marked the transition period highlight the four attraction centers of the general political landscape and outline the corresponding oligarchic modes.

Comparative politics of social change and coordinates of wealth preservation

Traditional approach to problematic of geopolitical change relies on the assumptions that the dominant dimension of country’s political actions is geographically conditioned. However, recent contributions to this view are based on the observation that there is another, complementary determinant defined by different modes of wealth protection which has been the central force behind political changes throughout history. This is the orthogonal dimension of political change; it assumes the wealth concentration and its defense as the fundamental ingredients, often independent of geography. Thus, oligarchy as the politics of wealth defense emerges as a candidate for a unifying framework for describing different modes of political structures and geopolitical flows, especially during their formative stages. Different political systems and forms of social organization are efficiently summarizable in terms of simple oligarchic structures.

Two aspects define the building blocks of oligarchic landscape: Oligarchs & Oligarchies, wealth defense & their means. Oligarchs, in the generalized sense used here, are defined as individuals endowed by enormous wealth which both empowers and exposes them to threats. Because to that, wealth defense becomes their primary objective for which they can mobilize considerable resources. Oligarchy represents different modes of wealth defense. The interplay between oligarchic coercive power and their organization defines the four corners assigned to underlying political systems within which all political structures reside. In general, extreme concentration of power or material inequality result in political inequality and particular oligarchic structures describe different modes of wealth and power defense. Property claims and rights can never be separated from coercion and some kind of violence. Variations across oligarchies are two-dimensional with main axes defined by how oligarchs impose their will (e.g. are they armed or disarmed) and their mode of rule (e.g. individualitstic, collective or institutionalized). This results in four possible structures, the four oligarchic corners that represent cognitive coordinates of our framework (Figure). All historically known political structures reside within these four corners[3].

Oligarchy Simple

From: Jeffrey A Winters, Oligarchy

Starting with the origin (lower left corner), in warring oligarchies a connection between violence and property defense is most direct. The illustrative examples are African warlords or medieval Europe. Oligarchs are individually involved with unstable transient alliances. The mechanism between wealth and power is circular — coercive capacities exist for wealth defense and wealth is deployed to sustain coercive capacities.

In a ruling oligarchy (upper left corner), individual oligarchs surrender a major part of their power to a collectivity of oligarchs. Oligarchs as a group are more powerful than any single oligarchs (examples: mafia, ancient Rome, State cities).

In contrast, in a sultanic oligarchy (lower right corner), oligarchs surrender a major part of their power to a single individual. One oligarch is more powerful than the rest (e.g. Suhartos Indonesia or the Philippines under Marcos).

Civil oligarchies (upper right corner) represent the most significant political innovation, never seen in history before creation of the modern state. Here, oligarchs surrender a major part of their power to an impersonal and institutionalized government in which the rule of law is stronger than all individuals. While this protects property, wealth defense does not stop there; its focus merely shifts to income defense – the effort to deflect the potentially redistributive predations of an anonymous state – where all resources are now mobilized. Electoral democracies fall at the end of the oligarchic spectrum. While their activity remains heavily constrained by the law and by the democratic process — they do not control the law, but obey it — in most cases different sectors of income defense industry give access to various modes of oligarchic actions. There is, however, no necessity for a civil oligarchy to be electorally democratic (e.g. Singapore or Malaysia)[4].

Saying goodbye to all that: Anatomy of the perverse unwind

The partial downfall of communism has been both celebrated and mourned. The most puzzling aspect of this process was its largely peaceful character and swift resolution in the hardline centers and violent and protracted unwind in states where communism saw its most liberal and flexible implementations. In Europe alone its departure from the political scene caused tectonic changes that made all theoretically informed models crumble. Former Soviet Union, Czechoslovakia and Yugoslavia are now 28 different countries (24 legitimate; 4 with limited international recognition) and a fluctuating number of statelets constantly changing number of territories seeking the status of sovereign state or trying to be attached to another already legitimate entity. Ten poorest countries and failed states all emerged from the former communist block. In Poland, Hungary and DDR state was not dissolved. These countries were absorbed by Europe and transformed along the lines of civil oligarchies. In USSR, Czechoslovakia and Yugoslavia, dissolution of the state caused variable outcomes and defined radically different trajectories.

Oligarchy Breakup

North: Civil oligarchies

To a large degree, each country of the north had something different going on, which made it interesting for the West and an easy candidate for integration into EU. Poland, with its large population, was a big labor force and consumer. Czechoslovakia, in its pre-communist days, was already a well developed country with considerable economic potential that could be relatively easily revived given their mentality and habits. The course of the last 50 years, a historical digression, could have been reversed. DDR was really never fully separated from the West Germany and in addition, it was ready to be absorbed and subsidized during the transition. Euro zone recognized strategic significance of the periphery and rushed to bring in Rumania and Bulgaria. In terms of nominal GDP per capita[5], north post-communist countries are ranked close to peripheral Europe together with Baltic States with Estonia, Czech Republic slightly below $19,000, and Poland near $13,500 defining the upper and lower bounds of the range. In the last ten years, north post communist and former Baltic states almost all have recorded a steady double digit annualized increase in GDP per capita, with Slovak Republic growing from $6,187 in 2003 to $17,706 in 2013 at an average annualized rate of 11%, Poland at 9%, Czech Republic at 7% and Hungary at 5%, while Baltics grew faster than 10%.

The main diagonal: Soviet Union between ruling & sultanic oligarchies

The rationale behind vastly different character of the breakup of different socialist regimes and the dissolution of the corresponding states can be understood by highlighting the difference between the underlying structures of those states. In empire different sectors of periphery do not interact with each other, only with the center. In a federation, they do. In confederation there is no center. The main characteristic of the dissolution of the Soviet Union was that the breakup was amicable. It was a consensual dissolution of the state, but relationship between the center and periphery was preserved. Prior to that, the state was preserved, but obsolete – couldn’t function under existing conditions but ethnically and historically was unambiguous. Gorbachev accelerated the process and to a large extend defined the direction of its change. Yeltsin settled for less state, but by shedding the periphery, gained more reform and more power. It was a compromise, the second best solution after the Soviet Union entering the capitalism as a big, unified player[6]. Yeltsin vs. Gorbachev clash was confined to the center, while periphery remained untouched. Unlike the Balkans where new states (with exception of Slovenia) didn’t have control of their territory – states fell apart while borders were unspecified. For a time Soviet internal borders swelled into sovereign state borders (structures of power) and it seemed they will remain untouched.

Officially never recognized structure of political power relations defined the rules of game when it came to the grabbing of reach resources (“privatization”). The net result was that an enormous state owned wealth had ended in the hands of a few who commended the decision making process. What happens with the secret police and ideological inquisition when the state falls apart? They have to become some form of organized crime force. The crime infiltrated in the vacuum. Army, whose primary mandate was external, defined through the Warsaw pact membership, remained on the sidelines. It was not a political force during the transition.

Majority of Asian Soviet states remained like satellite states with ties to Russia. While some still function like communist, pseudo-totalitarian systems or electoral dictatorships, resources rich states have shaped themselves along the lines of sultanic oligarchies with high number of Russians still there. The consensual breakup was orchestrated in such a way that formal sovereignty was respected in exchange for military and economic dependence on Russia and comfortable position of Russian minorities there. When after a while this dependence was questioned (Armenia, Ukraine) it automatically entailed revoking of recognition of sovereignty and Russian army more or less openly intervening in formally internal clashes.

At nominal GDP per capita of $14,591 and annualized growth rate of 17% in the last ten years, Russia sits above the rest of the southern European and post-Soviet states, but below the Baltics and post-communist north. Within the group of Asian former Soviet states, there has been a significant bifurcation between the resources rich states and the rest. Kazakhstan has been the best success story with GDP at $13,509 and the most aggressive growth of 21% in the last ten years, followed by Azerbaijan at $7,900 and 24%. Turkmenistan remains in the middle with $7,157 and 12%, while Uzbekistan at $1,878 and Tajikistan at $1,045 remain on the other side of the spectrum and below any of their European counterparts.

The Balkans: Warring oligarchies

Unlike the Soviet Union where the structure of the empire de facto remained preserved, in the Balkans there was no clear breakup scenario, especially in Yugolsavia which functioned as a confederation. Another dimension made the breakup problematic for it. For example, while in Czechoslovakia the primary target was socialism, in Yugoslavia it was the territory, which remained ambiguously defined. As a confederation of equal republics, without a clearly specified center, it lacked incentives to identify common ground. The state fell apart. Historical and demographic parameters were mixed and ambiguous except in the two westernmost republics. The breakaway states had only partial sovereignty with incomplete control of their territory and at the same time ambitions for territorial enlargement.

Conflicts over future borders escalated into the game of dismemberment followed by territorial disputes. Breakaway republics were more or less ethnically mixed and had not had full sovereignty of their territory after the breakup. As a counterweight to the army, whose main mandate was internal, basically around defending the constitution and, therefore, the integrity of the Federation, local militias were organized by the new republics. The stakes were high as state assets were offered on fire sale to a few privileged who had an access to power and information, which defined highly parcelized sovereignties and set terrain for formation of warring oligarchies with territorial claims as the main agenda together with all the side effects of that environment, instability, shifting alliances, extreme violence and ethnic purges. What followed was the mode of land-grabbing and property claims with multiple warlords and local militias going against each other, the landscape akin to warlords of medieval Europe.

Except for Slovenia with GDP per capita at $23,317, but slow growth of 4.6%, characteristic only for highly developed European countries, which has done slightly better than Czech Republic in this metric (and ahead of peripheral Europe), all other former Yugoslav republics are on the list of 10 poorest European countries with GDP per capita below $6,000. Their GDP ranges from $2,200 to $5,900 accompanied with persistently slow growth in the past ten years. In all of them the state still remains the “only business” – no new market venture is possible without consent and some form of the pay-off to the political elite.

What next?

Contemporary geopolitical discourse still views the world as us & them, free and totalitarian systems, a division largely a legacy of the cold war and everything that happens on that landscape is seen as a result of tensions between these two “extremes”. According to that narrative, dictatorship is the worst outcome of social evolution and all societies should strive towards democracy while progressive forces should be united in unconditionally supporting every effort to topple dictators. The post-communist experience, 25 years after its symbolic downfall, demonstrate that such a simplified framework is a poor approximation of reality. It shows rather unambiguously that there are far more extreme alternatives to dictatorships and that, in some cases, their dismantling could be a turn for worse or much worse.

Communism fell apart because it didn’t work for anyone and no one wanted to defend it. This is a qualitatively different situation from what late capitalism (and Western democracies) is currently facing. Extrapolation of the capitalist experience so far indicates that it is working for a progressively smaller segment of its population. At some point, its main problem will have to become its legitimation in the context of liberal democratic mode of social organization. The powerful minority, however, has the means to defend the system as long as it works for them and that will require a heavier hand as the discontent of the excluded rises. The only peaceful consensual transformation could happen if capitalism stops functioning for capitalists (e.g. inability to externalize the costs further).

The same way communism could have been a nominally well conceived idea that went wrong (in practice), democracy could be drifting away from its basic principles and gradually evolving into its antithesis. It has been largely recognized by the Western democracies that force is an inefficient form of rule. Power is an embarrassment – no one wants to claim it and it refuses to dominate. That is why advanced societies do not rely on force, but governmentality. Ideological innovations will be needed for their survival with a search for new forms of power.

In the meantime, as discontent of the excluded grows, capitalism could begin to move against democracy. This means that there could be a growing need for adjustment of either democracy or capitalism (or, most likely, both). What makes exact prediction regarding the new forms of social organizing especially difficult is that resilience towards redistribution of wealth remains firm in place with revolutions becoming obsolete as wealth is no longer only material.

There are several logical directions along which this transformation process can take place. The four corners define a rich set of possibilities; there is a vast territory that they inscribe. The four attraction centers are not necessarily the only stable configurations. In principle, civil oligarchies could begin to move looking for a new domicile in the field. It is reasonable to expect that some lessons from the breakdown of communism will be absorbed in that process. After all, capitalism owes its vitality to its adaptability. While the final destination is a long- or very-long-term project, the underlying direction and trajectory should have significant impact on the immediate future.

If there is one lesson to draw from a century of communist experience, it is that ignorance by design is the trap any hegemonic ideology faces. In its search for legitimacy, late-stage capitalism is committing the same mistakes that communism did in its early days. And every time history repeats itself, the price goes up. The spectacular display of systematic anti-scientific bias, war on facts and knowledge in general, together with eroticization of stupidity, which in the last decades has reached alarming proportions, have all created a Sachzwang – a factual constraint residing in the nature of things that leaves no choice but to perpetuate the existing conditions that are spreading throughout the neoliberal West. This desperate move to engineer legitimacy for an indefensible order of things, which consists of choosing to adjust reality to the underlying ideology, instead of the other way around, boils down to deliberately giving up adaptability of the system – its most valuable strength. That alone is bound to become the main source of positive feedback, which compromises the system’s robustness and undermines its long-term stability. This inherently suboptimal strategy is a one-way street, the same one that led to communism’s ultimate demise. After all, facts always matter, even if we don’t like them.

 

[1] S. Zizek, Less than Nothing, p.548, Verso (2013)

[2] Immanuel Wallerstein, (1973)“The Rise and Future Demise of the World Capitalist System” reprinted in the Essential Wallerstein (New York: New Press, 2000).

[3] Jeffrey A. Winters, Oligarchy, Cambridge (2011)

[4] Ibid, Ch. 1

[5] All numbers refer to the 2013 IMF WEO data measured in units of 2013 USD

[6] Instead of rationally bargaining on superpower advantages for a more honorable collective inclusion in the world capitalist hierarchy, the nomenklatura squandered and cannibalized Soviet assets in a panicked rush to protect the individual oligarchic positions against Gorbachev’s purging and the prospect of popular rebellions. It was an embarrassing political failure of Soviet elites to act together in the pursuit of their best historical opportunity. G. Deruluigan, (2013), p.123. in Does Capitalism Have a Future?, Oxford University Press ( 2013)