katie on Thu, 18 Mar 1999 03:49:54 +0100 (CET)

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Re: <nettime> Soros: The Crisis of Global Capitalism (Review)

3/17/99 we 4:24 pm mst

(all quotes are from Doug Henwood)

jeez, this is good.  In particular:

"But it's a bad principle to rely on liberal billionaires as a substitute
for politics. "


"Those technical objections aside, Soros shows no interest in
investigating where all that money that flies so famously around the world
comes from. It comes ultimately from the uncompensated labor of workers:
interest paid to creditors, dividends paid to shareholders, and the giant
salaries paid to senior corporate executives. There's a widespread
tendency to project a lot of social guilt about capitalism onto particular
aspects of it, especially finance. Even though financial capital can be
traced back to its origins in production, the trade in money itself is
made to bear all the moral guilt of the pursuit of profit. This is a
staple of populist and localist Economics, which treats finance as some
malignancy that has grown on the otherwise healthy body of production.
Similarly, lots of pundits and cultural theorists see finance as a world
of its own, divorced from the real, racing around in circuits of its own
making. In part, yes, but only in part; their roots are ultimately profits
made in production."

as far as i know, there is no current leftside proposal for a better
money, i.e., equitable and stable money.  And while many of the leftside
analyses or critiques of rightside market theory are exactly on point and
vraiment juste, their lack of a proposal for a better money leaves them
without a program of action.  Their old program which failed singularly,
was large centralized forced government management and redistribution. 
And in the absence of a new theory of money and new economic organizing
principle, they can do no more than rail and wait for the dinosaur to
fall, or for it to metamorphose into a benign goddess, (this would be an
unlikely outcome). 

furthermore, they seem wedded or perfused with the quite old and dated
concept that large numbers of workers are involved in production these
days.  this is simply not true. 

just as agriculture has dwindled from requiring over 50% of the entire
population to feed the whole, to its current 5% engaged in primary
agricultural production to feed the same whole; so have production
percentages dwindled in manufacturing. 

so their concept of the production worker base as the legitimate and
sufficient group with whom the capitalists "should" share, is simply out
of time with the current economic reality. 

but he is right, probably 100% right, in that change in the base paradigms
of property, property rights, and human entitlement by virtue of being
alive, and the right of the group to moderate individual lust for endless
acquisition and reproduction---will not, cannot occur without the most
extraordinarily painful and complete crash of the current model. 

and this change will, more than likely, come in the form of a new
religion--since usually it is only in the verity of religion that great
masses of people will give up so many old memes. 

these two eletters criticizing Soros' new book, (from Doug Henwood 
and Felix Stalder) are important to me in that they support my belief 
that free market theory is in its true nature, a free market theology. 

"Soros is said to think of himself as a social democrat, but now and then
his latent streak of ***market fundamentalism*** shows."

this fine word, "nonergodicity", finally gives a proper and respectable
handle to hold onto the insight that economics is not a "science", no
matter how dismal, but rather a religion or a meme---i.e., a thought
construct or shared cultural agreement about how we are going to play this
particular game, and what the rules shall be. 

"A leading post-Keynesian, Paul Davidson, has the honor of having his
trademark concept, (non)ergodicity, lifted without acknowledgment. Soros
observes that economists have aped physicists in their attempt to describe
universal laws that drive a system back towards equilibrium if things go
out of whack. "A pendulum comes to rest at the same point however wide it
swings; it is this 'ergodic' principle that allowed economic theorists to
establish timelessly valid rules about the equilibrating role of markets."
But economies, like most social systems, are nonergodic -- they don't
follow a predictable path dictated by objective laws."

and the mechanism of this nonergodicity is another fine word
"reflexivity", which is a form of ordinary word magic, such as we see in
advertising and religious texts.  And it means that what we are led to
think about money and markets and economics, will effect those same money
and markets and economics over time.  And the effects will not be
rationally certain, but merely statistically predictable---until places of
disjuncture occur.  So we might say that reflexivity has a certain quality
of an algorithm or mathematical equation, which is pretty funky and not at
all smooth and precise, but whose main direction can be assessed, until
the algorithm fails.  Furthermore, the algorithm is unable to predict its
own failure. 

"Central to Soros Thought is the notion of reflexivity -- the feedback
between thoughts and events that makes history so volatile. Soros says
he'd use the word dialectics, except for all its unpleasant Hegelian and,
worse, Marxist baggage. But it's not really a theory of contradictions
moving history forward -- it's more like the oscillation between
opposites: reflexivity is another word for getting carried away with

this is further evidence or analysis, at least, which supports my belief
that free market theory is really a religious dogma, whose swings and
tides are controlled by the interactions of the severity with which the
meme is imposed versus the reactions or consequences as it plays out in
the lives of believers and helpless victims. 

"He's more ambivalent about capital controls: countries like China that
restricted capital inflows have weathered the Asian crisis far better than
those that didn't, like Korea. But the concept clearly makes him
uncomfortable; he hopes that his credit insurance scheme would make them

this is very good hard evidence that free market theology as a deus ex
machina, and an impartial and fair (in almost a greek sense of fate or
destiny) "hand of the market", is in fact a total crock of shit. 

"Constraining capital

Soros plays with the idea of capital controls, but it obviously makes him
nervous, like any member of his class. When John Maynard Keynes and Harry
Dexter White designed the Bretton Woods fixed exchange rate system in the
mid-1940s, they were adamant that keeping the lid on cross-border capital
flows was the only way for countries to have sufficient freedom to promote
full employment and other benign economic policies. 

Subsequent events have proven them right. But that doesn't make bringing
back capital controls a political cinch."

so, we have placed our economic future on a religious meme, supported by
spurious and selective mathematics, and the weight of cultural inertia. 
one thinks of the babylonian astrologers whose forecasts were accorded
policy-making authority.  However, in distinction to free market theology,
the astrologers were at least deriving their forecasts from ergodisic and
stable systems--namely, the movements of the stars. 

(Kathryn Vestal)

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