Tag Archives: #politics

Adventures in Rage Kapitalism

29. XII 2020

Between 1996 and 1997, during the de-Sovietization of Eastern Europe, Albania was convulsed by the dramatic rise and collapse of several huge financial pyramid schemes. At the peak, the nominal value of the pyramid schemes’ liabilities amounted to almost half of the country’s GDP. About two thirds of the Albanian population invested in them.

Last summer, ten years after my first reading, I took a second shot at Peter Sloterdijk’s, Rage and Time[1]. While the first take was illuminating, the second round was nothing short of transformational — a pure bliss and an altogether new experience. The framework, which it laid down a decade ago, when put in the current context, has acquired visionary relevance. The book has aged marvelously. Like the best wine, it developed complexity and nuance, which I failed to detect originally.

Rage and Time was published in its original version in Germany in 2006 and appeared in the English translation four years later, in 2010. It was written while the economy in the developed world was booming and neoliberal hegemony remained uncontested, before any hint of the global financial crisis was on the horizon. As such, the book had been deprived of the new landscape of rage and the most interesting decade of its evolution. Nevertheless, it became a true testimony of the future. Solterdijk’s work laid a precise fundamental groundwork for what was to come soon after its publication. Post-2008 developments flow seamlessly as a natural extrapolation of the ideas expressed in the book, making it practically effortless to imagine what would have been the content of additional chapters had the book been written in 2020. This period is possibly the most explicit celebration of the book’s framework and a stunning “out of sample” confirmation of its main theses.

Sloterdijk’s argument begins with the observation that political parties and movements define a non-monetary banking system where they function like rage banks and operate as collection points of affects; they facilitate transactions with the rage of others in the same way monetary banks operate with the money of their customers. They provide a liaison between rage capacities and a desire for dignity. Their contract is based on a promise to their clients to disburse a return in the form of increased self-respect and a more powerful grasp of the future, provided the clients refrain from independent utilization of their rage. By doing this, they relieve their clients of the difficulty of having to take their own initiative, while nevertheless promising thymotic gains[2].

With these transmission mechanisms of rage in place, political developments in America and Europe nowadays can be interpreted as conceptually the same phenomenon that took place in financial systems of emerging post-socialist Europe some 25 years ago.

At the core of these developments reside continuous attempts to manage the crisis of legitimation of a system that has run its course with pyramid schemes of rage: Populist movements, which have emerged as a consequence of this crisis, have enticed people to deposit every last molecule of their grievances in rage banks run by the current Right Wing political parties. Their game plan is to appropriate those deposits and declare bankruptcy, in pretty much the same ways as regular banks did in 1990s Albania.  And who’s better suited for this job than a certified conman with an uncontested record of fraud and serial bankruptcies?

Surrogate capitalism

The main characteristic of pyramid schemes, what distinguishes them from traditional capitalism, is that they have a finite duration and irreversible collapse. Capitalism, which has booms and busts, crashes, and recessions, recovers because it has an elastic modus of fleeing ahead that includes creative behavior; it is capable of controlling tendencies that signal collapse[3]. A pyramid scheme, on the other hand has no inner mechanisms and patterns of behavior; it is a hollow project financed only by a continuous inflow of (gullible) newcomers who are willing to pay for an opportunity to take risk against empty promises. While those at the top could pocket sizable profits, the bottom echelons lose with certainty. It is the absence of transparency and information about individuals’ places in the hierarchy of the pyramid scheme that determines its extent and duration.

The underlying mechanism and logic of cash flows of a general pyramid scheme can be understood using a simple three-level example with Captain, Crew, and Passengers. Everyone has to recruit two new members, and each member chips in with $100, which is then distributed upwards. At the end, the Captain goes with $400, the Crew breaks even, and the Passengers lose their investment, a total of $400[4].

For a pyramid scheme to continue to work, it’s expansion must not stop – once it stops, it is over, all the funds have already been distributed and no new are coming in. Because of that, the scheme is a catastrophic process of finite duration — its collapse must occur because the number of new recruits, which are essential for its financing, is required to grow exponentially and very quickly the number of newly recruitable players is exhausted — all newcomers who can be recruited are already on board.

The inevitable collapse occurs either suddenly or it needs to be brought about consciously because the number of momentarily recruitable players necessarily becomes zero after only a few rounds, which is why even with good camouflage it is hardly possible to extend a game longer than a few years.

Albanian capitalist apprenticeship as a template of American right-wing politics

There is an unmistakable similarity between the Albanian transient apprenticeship in capitalism during the 1990s and the Right Wing populist attempts to crash the American political market in the 21st century. Sloterdijk’s detailed account of conditions that led to the Albanian crash transcribes almost verbatim to present-day America once conventional money is replaced with rage as political currency.

Albania has always held a singular position in Europe. Its history is an undeserved tragedy of Albanian people who had been innocent victims of circumstances created by geopolitical forces over which they had no influence. The country epitomizes physical, political, and cultural exclusion, with a heavy stigma of isolation and backwardness, similar to today’s North Korea.

Decades of systematic and absolute isolation have caused a gradual atrophy of general exchange mechanisms necessary for normal functioning of society[5]. And the more these mechanisms became necessary and urgently needed to keep up with the rest of the world, the more intense oppression had become, leading ultimately to their total disappearance and Albanian disconnect from the rest of the world. Albania was a failed state long before that concept existed. While the only thing at their disposal was time and patience, the world moved on leaving them light years behind and practically impossible to catch up. As Albania gradually learned to live without the world and the world without Albania, after more than half a century of total disconnect, reintegration became unachievable.

The excess population in America, the growing body of excluded white underclass, shares a similar destiny as Albanian folks — both have been the victims of systematic and irreversible exclusions and both have had their own Hillbilly Elegies:Like Albanians, who remained largely prisoners of their own past, the American white underclass felt equally cut off from luck, wealth, and privilege and its distribution for too long.

Their uprisings share a similar pattern as well. Like the newly minted Albanian capitalists of the 1990s, who were fed by grandiose phrases about their past, their American counterparts felt it was their turn to take part in the satisfying injustices of the affluent world. Both fell, naturally and expectedly, into the trap of their precarity and impatience. In the same way Albanians fell for the massive pyramid scheme in the 1990s, 20 years later, the American white underclass had fallen victim to the rage pyramid scheme of Right Wing populism following the same logic of the old-fashioned misconceptions and empty promises of capitalist alchemy.

Pyramid schemes have a strange effect on our minds: When easy money is readily available, we don’t ask for rationale, we take it; everyone sees themselves as perpetrators and not the victims.

Bundling rage deposits of the American excluded underclass into old and new (stillborn) right-wing narratives did it’s magic by saturating the public discourse with low-brow paranoia of deep state, assault on the 2nd amendment, right to life, and the fear of government control, while delivering the inflated thymotic premium in the form of worthless pseudo-nationalist pride as a surrogate for the old-fashioned white (male) supremacy. Although this was not a new development, it’s tempo, set by the last four years, was.

By normalizing corruption, Trump, with a lifetime of experience in fraud and embezzlement, demonstrated how to cash in more efficiently on the rage investments of impatient, gullible, and vulnerable constituents, by pretending to rais the stakes and by deepening the commitment of the Republican base, he drained the last atom of their rage, and after harvesting and monetizing it, declared bankruptcy. In that respect, he achieved in four years more than the GOP did in the prior 40 years.

And things went predictably wrong for all depositors, as they did for Albanian “investors” 25 years ago. Rage deposits were used to deliver lower taxes for the rich, while defaulting on all other promises to bring back manufacturing, healthcare, coal industry, immigration reform, the wall, healthcare debacle… Trump emerged as Bernie Madoff of rage capitalism and the movement became the rage version of the Albanian capitalist experiment.

By now, it is clear that the scheme is over; the pyramid has collapsed. COVID was Trump’s (and the GOP’s) Stalingrad. It outlined the contours of the bursting of the rage asset bubble and the crumbling of the Right Wing pyramid scheme. The result has been a replay of the Balkan opera buffa, which, if it hadn’t had tragic consequences, involving real people and human misery, would have been extraordinarily funny: Caged children irreversibly separated from their parents, massive economic devastation together with the rise of precarity, and the criminally incompetent mishandling of the pandemic with hundreds of thousands of unnecessary victims.

When reality becomes a parody of itself

Unlike Albanian “capitalists” who, after getting financially wiped out, got over it and figured out the obvious that a pyramid scheme is just a pyramid scheme, American comrades (self-proclaimed entrepreneurs, risk takers and believers in the “free-market” supremacy) seem to be immune to the same learning process. Their social metabolism works differently. The myth that there’s a first prize for everyone is still the basic axiom of American cultural ideology. The deep-rooted belief of the underprivileged that they are not victims, just temporarily embarrassed millionaires, is still the fundamental determinant of the American social identity.

After being robbed by one pyramid scheme, they rush straight into another, as if nothing happened — same type of scam, organized often by the same person who robbed them the first time (or by his cousin); it doesn’t matter, there are always rubes to be recruited. There seems to be a culturally conditioned chronic delusion about the wealth alchemy that pushes the entire nation to aspire to become instant millionaires, which prevents them from resisting a scam, even when it is transparent and clearly defined as such[6].

The last decade stands as the final stage of the transformation of the American psyche, from Protestant ethics of hard work to compulsive risk takers and lottery winners, a residual of the gold rush mentality that has mysteriously survived centuries of reality checks. This is the something for nothing mindset that has been going since the discovery of the New Continent. It received strong reinforcement and entered an accelerated phase by the Silicon Valley paradigm. The attempts to contain the psychological fallout of that episode have defined the social tensions of the new century.

Like the biological immune system of Native Americans, who early settlers decimated with diseases, which for the newcomers were not lethal, but proved so for the natives, the contemporary American social immune system remains permanently compromised.

The holy grail of this ideological affliction is the belief in the sovereignty of luck: 1) There is a first prize for everyone and 2) Who wins is right and who loses should not complain[7]. If a person commits a crime and gets away with it, instead of condemnation, society responds with: “Good for him”. This transposes ex-ante any transgression as another failed attempt to realize what is rightfully yours, and thus blurs the boundary between right and wrong. There is no room for ethical judgment – hurting people or doing social damage, is not assessed in a broader context of ethics and general system of values, but is, at most, taken as an error in calculation.

The unwavering emotional investments in the ideology of meritocracy and, at the same time, inability to understand subtle differences between capitalism and pyramid scheme prevents them from being able to resist and defend themselves against fraud. Capitalism is prepared to put up with every form of irrationality as long as conditions for its technical rationality are preserved. And because of that, American self-declared libertarians and defenders of the “free-market” capitalist value system, as much as they believe in the power of rationality, fail it repeatedly. There is a little Albanian capitalist with a learning disability under each MAGA hat, all 74 million of them.


[1] Peter Sloterdijk, Rage and Time, Columbia University Press (2010)

[2] ibid.

[3] ibid.

[4] In a four-period pyramid scheme passengers can be divided in to 1st class (4) and economy class (8). The latter lose all their money (total $800), while former break even, crew divides $200 and captains takes $600. With a more realistic branching number, where each participant has to recruit ten new members, we realize that pyramid schemes can have only a handful of levels. A twelve level pyramid scheme with this branching already exceeds the entire human population.

[5] For more than half a century, Albania was completely sealed – nothing could come in and nothing could get out. They had no political allies or sympathizers. There was no cultural exchange with the rest of the world and no flow of information. That was the vision of their political leadership, imposed on the entire population with considerable force. Albania was a poor country doomed to endure its isolation alone relying solely on its meager resources. The net result was an incredible poverty, both economic and cultural.

[6] The latest example of the post-election scam is just another data point. After realization that there are more than 70 million rubes ready to participate and invest in an already bankrupt project, the number that stunned even its creators, the new scheme started while the ballots were still being counted. Trump already raised several hundred millions after his defeat in terms of donations for “legal” costs, “Patriot League” and “Elite Club” memberships from the people who just didn’t want to see the small print informing them of a true trajectory of their donations.

[7] Ibid.

Turmoil and Tinfoil

17. XI 2020

Woke up this morning, decided to kill my ego, it ain’t ever done me no good, no how. (Sturgill Simpson, opening verse of Just Let Go)

Triple negatives exist only in country music and in statistics. While their deployment in everyday language is considered excessive and, outside of the bible belt, rejected as stylistically undesirable, musical lyrics sometime require them for rhythm or rhyme. In statistics, on the other hand, triple negatives play a specific role and are encountered regularly. They are there to prevent us from overstating a statistically significant result as certainty.

Statistical inference is based on drawing probabilistic conclusions based on the analysis of a finite sample of data. The sample that we work with is our universe, but although it can be representative, it never contains all information. Because of that, there is always residual skepticism that we didn’t see it all and have not taken everything into account. As a consequence, based on statistical analysis, it is unacceptable to say that something is true, but instead we have to settle for a slightly weaker statement that something is not false. In statistics, one cannot simply accept, but can only fail to reject. And that can be done only with a certain confidence level without which the statistical results are incomplete.

When testing a hypothesis in a statistical context, statements like “This will happen with certainty” have no place; the strongest statement one can make is “This will happen almost surely”. For example, if all air in a room is evacuated and we release a small amount in one corner, after some time the air molecules will be evenly distributed throughout the entire room. Their distribution will stay uniform almost surely. This does not mean that the air molecules cannot find themselves all in one corner again – there is nothing in physical laws that prohibits that — it is just that probability of that happening is extraordinarily small.

Results of current Presidential elections, as they are an outcome of statistical measurements and inferences, thus, need to be expressed accurately. First the outcome needs to be framed properly. Although the bottom line is that after Jan-20-2021, there will be a new president in the White House, if one is to be precise, Democrats didn’t win – Trump failed in not losing.

And to be perfectly clear, despite all his maneuvers and PR stunts, Trump doesn’t really believe that he won – he just fails to reject that he didn’t lose. Of course, the subtlety of this difference completely eludes him. In his overdramatized “revolt”, which is really a money raising scam, he is being less delusional and more ignorant and confused.

While the claim of victory represents a statement of certainty and, as such, can be easily invalidated, the failure to reject is incomplete without giving the confidence interval about that statement and, in its incompleteness, it is deprived of its probabilistic context.  The official results of the Elections reject the fact that Trump did not lose with probability greater than 99.999%; Trump’s failure to accept the results is the complement of that – it has a probability, which is less than 1/1000th percent.

The consequence of the underlying incompleteness is that in the eyes of Trump’s innumerate followers, it opens an ill-conceived possibility of hope. The reality of the failure to reject is a very low confidence statement, one that has an infinitesimal probability of realization, at best less than a fraction of a 1/1000th of a percent[1].

While this is a probability that has no value for any practical purposes, when put in the context of the general Republican narrative of the last four years, the core of which had been based largely on conspiracy theories, with roughly the same order of magnitude probability of realization, it could have equal merit as everything else they have stood for. After all, more than 40% of Trump supporters are evangelical Christians who believe in the magic of thoughts and prayers and reality of miracles, which have even a lower probability of realization than Trump’s chance of successfully contesting the Election’s outcome.


[1] On Friday, 6-Nov, one day before the Elections would be called by the media, it was down to three states that remained to be counted: AZ, PA, and GA. Trump had to win all three in order to win. The probabilities of Trump’s victory in each state, which were at the time still called by different outlets were as follows: PA 8%, AZ 23%, and GA 12.4%. The probability of winning all three states (= product of the three probabilities) is 0.2%. Since then, with more votes counted, increased margins, dismissed disputes and further verification, the probabilities for Trump’s victory in each of the three states have declined precipitously and the joint probability of winning all three, which he would still need if his “arguments” are to hold, has dropped by several orders of magnitude.

Declownification of sovereignty

1.XI 2020

When the number of those who have failed the rationality test is so large that they begin to present a significant political body whose voice can be heard in the ballot box, rationality will already exhaust itself. At that point, the excluded will seek to abandon reason and, with the help of nostalgia and 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 constituents understand.

In this kingdom of unreason, power will derive from a way of using language rather than from a system of ideas. But this, like any other detachment from reality, cannot be anything but short-lived. The Prince 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 constituents, he believes that everyone else is driving in the wrong direction. Many drivers will move to the shoulder to avoid the collision, but, as he continues to accelerate, there’ll be a slow-moving trailer truck that won’t be able to maneuver fast enough.

Dialogue

30. IX 2020

The pinnacle of human evolution, the ultimate manifestation of civility, is the human ability to engage in a dialogue, to listen to & respond to the others. The structuralist deconstruction of mental illness consists of unwind of the evolutionary process. Mental illness is evolution in reverse. During it’s course, unwinding starts from the top by shutting down the ability to engage in a dialogue — the cacophony caused by the “voices” takes over; one is in constant dissensus with oneself, which incapacitates their ability to listen and respond. The regressive unwind proceeds step by step by shutting down other social & biological skills. Different mental illnesses differ by the terminal points at which the unwind stops.

Social changes that stem from cultural division follow closely the pattern of a mental illness. They start with political cacophony & degradation of the public discourse: There’s no more dialogue, just simultaneous monologues. The underlying social erosion is reflected in the level of destruction of democratic institutions & devastation of traditional forms of civility. Potential for barbarism is growing & bestialization of man is on the increase. The madness is set free. The society operates with a sanity deficit. Everybody is crazy & everybody has a gun.