Archives for category: 1989 and the Global Financial Crisises.

Tin inca minte discursul cu care Basescu incerca sa ne convinga, prin ’98, ca nu aveam nevoie de autostrazi. Si asta pentru ca, atunci, l-am crezut!
Eram atat de pornit impotriva celor care il urmau pe Iliescu incat eram dispus sa cred pe oricine care li se opunea cu un cat de cat succes…
Atat de pornit incat n-am inteles, atunci, cat de mica era diferenta dintre Basescu, Iliescu, Nastase…

Pana la urma, singurul lucru care conteaza este respectul pe care il avem fata de cei din jurul nostru. In ce masura ii consideram oameni asemenea noua. Indiferent de ocupatie, culoarea pielii, limba vorbita…

Uite de-asta am fost nevoit aseara sa trec cu masina prin vad. Iarasi!
Era “standstill” intre Sebes si Alba Iulia asa ca Waze mi-a spus sa o iau la dreapta. Apoi la stanga si… pentru ca Waze-ul meu e setat sa ma duca pe orice fel de drum, am ajuns sa traversez un rau. Pe un pod improvizat din tuburi de beton.

De fapt, era un drum tehnologic. Aferent santierului viitoarei autostrazi dintre Sebes si Turda. “Viitoarei”…


Degeaba dam vina pentru necazurile de ‘acum’ pe ‘actuala’ guvernare.
Indiferent care o fi aceea.
Nimic nu se va schimba cu adevarat pana cand nu ne va veni NOUA mintea la cap.

Noi suntem cei care trebuie sa invatam.
Noi suntem cei care trebuie sa nu ne mai lasam invrajbiti.
Noi suntem cei care trebuie sa ne asumam greselile. Si prostiile pe care le-am facut. Noi, cu mainile si cu capetele noastre!

Doar asa vom putea merge mai departe.
Altfel, orice ‘miscare’ pe care o vom face va fi ‘la remorca’ cuiva.
Indiferent cui, in indiferent ce directie.

Pentru a ne putea hotari singuri destinul, pentru a ne putea deplasa, firesc – ‘inainte’, trebuie sa re-invatam ce inseamna cooperarea. Adica sa tragem cu totii la aceiasi caruta.

Altfel… vom da iarasi cu oistea-n gard.
Si iarasi…

Ce m-a apucat?!?
Ca doar n-o fi prima oara cand m-a scos Waze din tot felul de ‘incalceli’ din astea….
Ei bine, imediat dupa ce-am tras pe dreapta sa fac pozele alea, a oprit si o Dacie Dokker. Din care a coborat un OM.
“Veniti dupa noi. Sunteti pe drumul cel bun. Mai avem un pic si iesim in DeNeu”
“Multumesc foarte mult. Nu m-am speriat, doar m-am oprit sa fac niste fotografii!”
“A, OK… V-am vazut cu numar de Bucuresti. Doar localnicii stiu scurtatura asta si am crezut ca aveati ceva ‘indoieli'”.
“Va multumesc inca odata. Nu sunt foarte multi care sa faca asemenea gesturi.”

Adica se poate. Putem sa ne ajutam intre noi.
Nu ne costa nimic.
Iar impreuna putem muta muntii!

Sau traversa rauri.

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Classical economy sees the market as the place where demand meets supply and prices are born.

‘Relative’ economics, which hasn’t been written yet, sees the market as the place where people meet to offer their wares and to fulfill their needs. In order to meet this goal, people negotiate prices and adapt their behavior/attitude.

Classical economics sees the market as being either free or ‘non market’ – a.k.a. ” “planned” economy“: the one which “is heavily regulated or controlled by the government, most notably in socialist or communist countries.
As an aside, while I fully agree with the notion that communist countries – ‘popular democracies’, as their rulers used to describe them, had organized their economies around strictly centralized decision mechanisms, I cannot but wonder how would a classical economist describe Hitler’s economy? Or ‘crony capitalism’?

‘Relative’ economics, which – I repeat, hasn’t been written yet, sees the market as being either ‘free’, ‘un-free’ – a.k.a. ‘captured’ or ‘cornered’, or ‘obsessed’.
Of course, there never was such a thing as a completely free market, only functionally free ones. And I’m sure most of you fully understand what I mean.
Also, it is clear what ‘un-free’ means. Any situation where a small number of people call all the shots for an entire market. It doesn’t matter a bit whether those few people are directly involved in the market – over which they ‘enjoy’ monopolistic power, or they are involved with – read ‘control the’, government. The determining factor here is the scarcity of decision makers and the chock-hold they have over the entire decision making process.
The ‘obsessed’ market is the most interesting of all. For me, at least.


Remember “Tulip Mania”?

As with many interesting stories, there are at least two sides attached to this one also.
One version describes the whole thing as a generalized folly which had ended only after the government stepped in while the other paints a considerably duller picture.
Only nobody denies the fact.

That for whatever reasons, tulip bulbs had been – admittedly for a relatively short while, on a par with houses. Value-wise.

Did it make any sense? Then?
For those involved, yes! Otherwise…
Could they afford it? Had they been affected when the bubble burst?
That depends on whom you ask… and whom you believe…

Does it make any sense now? Can we make anything out of it?

We can certainly explain what had happened.
Holland’s was the most affluent economy of the continent and the wealth was sort of spread around.
A lot of money was ‘sloshing’, a lot of people were looking for a way to ‘show of’ and tulips were the ‘thing of the day’.
Does it make any sense now? Retrospectively, no. Not for me, anyway.
Do we have an explanation for what had happened? You’ve just read a very condensed one. If you need a more elaborate version, try Veblen’s ‘The Theory of the Leisure Class‘.

Anyway, that’s the perfect example of an ‘obsessed’ market.
Where the agents are free to do what they please but are obsessed enough to act in sync. As opposed to ‘in concert’.

‘Obsessed’ means that all present look in the same direction and react in the same way.
Which might be a good thing – when a group tries to escape a fire.
Or a bad one, when the same group is trying to gather food from a forest. If all of them are looking, exclusively, for a single type of mushroom, many other sources of food are neglected.

In a really – as in ‘functional’, free market, people display a variety of behaviors.
Some suppliers are greedier than others, some are diligent, some are sloppy and others are dedicated craftsmen.
Some buyers are more ‘relaxed’, others ‘stingier’. Some know their way around the market, others are ignorant.
On the whole, a dynamic equilibrium is constantly negotiated among all these ‘free’ agents. Simply because there is a variety of opinion.
When the market is ‘un-free’, the whole notion of negotiation and equilibrium disappears. The parameters are set by the ‘rulers’. And things go on only as long as the ‘rulers’ manage to maintain a modicum of normality.
When the market is ‘obsessed’, things become really interesting. The agents maintain their apparent liberty – at least for a while. Only they don’t actually use it. All of them act as if pre-programmed.

And somebody sooner or later notices what’s going on. And turns the whole thing to fit their own goal. Which is, almost always, not so different from the ‘general’ one.

Tulip Mania was relatively benign.
Nothing really bad had happened.

We’ve somehow managed to weather the recent financial melt down.
Which had been the consequence with our obsession with money as the ultimate goal.
Which obsession continues unabated.

Undeva în Romania….

Unul dintre motivele pentru care l-am împușcat pe Ceaușescu a fost ‘distrugerea satului românesc și a tradițiilor sale’.
Foarte mulți dintre copiii țaranilor care au refuzat atunci să-și părăsească rosturile s-au risipit acum în cele 4 zări ale pămîntului….
Și nu neapărat din cauza ‘mizeriei’. Cei de-aici aveau antenă de satelit!

The Baby Boomer experience hasn’t been the same across the world but, due to globalization, you, the next generations, share much more, experience wise, than what we did. Frustration, that is.
Having said that, I don’t think that blaming us, your ‘parents’, for everything you have to put up with, will solve much.

First of all, let me explain what I mean by Baby Boomers having experienced different things across different parts of the world.
Actually, it is fairly obvious that the American Baby Boomers had it differently than the Western European ones and that the Eastern Europeans had the almost opposite experience from the first two.
The American Baby Boomers had been raised by the absolute victors of the WWII, the Western European ones by those who had been saved – from both war and the subsequent misery, by the Americans while the third category had been ‘eased into the world’ by people freshly fitted with the communist yoke.

Yet the X-ers and the Milennials have a very common Weltanschauung, on both sides of the Atlantic.

The Internet explains only half of what’s going on. Yes, the ‘coordination’ that bind all the X-ers and the Millennials has happened through the Internet but is due to the entire Euro-Atlantic region being under the same ‘spell’.

And You, X-ers and Milennials, blame us, Baby Boomers, for the present situation.

Which, in a way, makes a lot of sense.

As a matter of fact, I, and many around me, used to put a lot of blame on our parents for the damages inflicted on all of us by the onset of communism in Romania.

Then I realized three things.

That it could have been far worse.
That each generation has to face the mistakes committed by previous one but tends to brush aside the accomplishments  inherited from their parents.

The biggest of which, Baby Boomer accomplishments, being the fact that we have somehow managed to keep ‘cool’ the WW we have inherited from our parents.

OK, unlike our parents, we’ve somehow ‘lost the peace’… that’s on us, indeed.
Those who had won the WWII  had been wise enough to help the nations which had happened to be on the losing side.  Which process didn’t take place – not on the same scale, anyway, after the fall of the Iron Curtain.
Those who had lost the WWII had been wise enough to learn something from being fooled into following the fake prophets that had brought them so much misery. And to assume their part of the blame. Again, this has yet to happen in the former communist countries.

And the third thing that I’ve learned is that no generation, however enlightened, will ever be able to stray very much from the previous one. It can, sometimes, understand and avoid a few of the mistakes committed in the past but will always be ‘tugged back’ by the ‘ways of the past’.

Is there any way out of this historical ‘vicious circle’? Preferably one that will conserve the benefits brought about by the virtuous circle spinning in parallel with the vicious one?

I’m afraid there’s no ‘one size fits all’ remedy.
Each generation has to open their collective mind and select what to take over and what to fix from what they have inherited from their parents.
Specially now, when so much of the whole world is almost in ‘sync’.

Autumn of 2008.
The Bucharest Stock Exchange assembled a conference for the investors where some relatively junior guys working for the ‘Global Banking Establishment’ tried to uplift our mood by outlining their bosses’ envisioned reaction to the crises. Something which would later be known as  ‘quantitative easing’.
I asked one of them:
‘The current crises is the straight consequence of money having been used improperly. Are you sure that throwing a fresh amount of it on the market would make things any better?’.
‘Well, nobody has come yet with a better idea…’

Almost ten years later, it seems that ‘throwing fresh money at it’ did revive the market.
Dow Jones has climbed through the clouds, unemployment is low, inflation is low, interest rates are also low…

Some 120 economies, accounting for three quarters of world GDP, have seen a pickup in growth in year-on-year terms in 2017, the broadest synchronized global growth upsurge since 2010.“, according to the IMF.

Only the very same words could have been used to describe the 1990’s…

But there is something that at least some of us have noticed.

income-inequality-08

©Elliot Wave International (www.elliotwave.com)

Both major economic crises which have scarred us in less than a century have been closely predated by spikes in ‘income inequality’.

To make things worse, we are confronted by yet another fast moving development which pushes us towards uncharted waters.
Large scale replacement of ‘human capital’ by industrial robots, some of them driven by ‘artificial intelligence’.

Reaction has been mixed.

Some of the very rich have pledged to make available to charity important chunks of their estates while other ‘concerned parties’ promote  heavier involvement of the government – ‘guaranteed universal income’, etc., etc…
All these in the name of an illusive ‘equality’.

‘On the other side of the isle’, where inequality is seen as being not only natural but also harmless, people are happy with what’s going on and see no problem in everything continuing to march to the same beat.

I argued earlier that ‘heavy involvement of the government’ has already been experimented. And failed. Check the fate of every communist dictatorship.
Actually, check the fate of all dictatorships.
You’ll find that whenever a society becomes too centralized, that thing alone considerably diminishes its survival chances.
Same outcome whenever people in a group/community evaluate things using a single yardstick/from a single perspective.
To make things worse, the speed of the degenerative process becomes catastrophic when decision making becomes centralized while the reduced number of decision makers are partially blinded by too many of them using a single yardstick to do their job.

We are fast approaching that situation.

Extreme wealth polarization means that economic resources become concentrated in very few hands. Hence economic decision making.
And since policies cannot be put in place without resources…

The funny thing is that this concentration of power/decision making take place regardless of property remaining private or communism taking over.
As long as those who control the whole system are too few, ‘who owns it’ makes no difference.
Absolute monarchies faltered in the very same way as their communist successors.

It doesn’t matter whether an universal basic income would be supported by a tax exacting government or by a small coterie of ‘concerned investors’, sooner or later any such arrangement would become sour.

One other thing.
Claims for equality might become so deafening as to impede clear thinking.

Just as money is a very good tool/servant but a lousy goal/master, equality is a commendable goal but a lousy tool.
Human beings ‘work best’ as autonomous individuals who cooperate freely inside what has been described as ‘free market’.
Whenever that market was cornered, either from outside – by the government, or from inside – too many of the players acting in ‘concert’/sync because they had been ‘mesmerized’, remember the ‘Tulip mania” of yore? – it had faltered. Sometimes abysmally.
Attempting to fit everybody in a ‘one size fits all’ mould would be catastrophic.
Just as catastrophic as when less and less people can develop and express their true potential. Remember that we haven’t changed, biologically, during the last 50 000 years or so. But, generation after generation, we’ve been able to do more and more things simply because each generation made it easier for the next one. Most of the times, anyway.
Let’s not change this.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

From a friend’s FB wall:

“African proverb:
Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will starve to death.

It doesn’t matter weather you are a lion or a gazelle.
When the sun comes up, you better start running.”

(from The World Is Flat, by Thomas L. Friedman)

It seems that the modern world is gradually becoming more and more ‘African’.
We’re so busy running ourselves out that we’re failing to remember the essential.

That we’re people.
Neither gazelle nor lion!
And that most of us have long ago left the jungle and now live in cities!

How about ‘taking five‘ from our incessant quest for trinkets and use the time to remember “togetherness”?
As in “communion”?

In the civilized world, ‘Dog eat dog’ was supposed to be an exception, not an everyday occurrence…

Ruthless acquisition or competition, as in With shrinking markets, it’s dog eat dog for every company in this field. This contradicts a Latin proverb which maintains that dog does not eat dog, first recorded in English in 1543. Nevertheless, by 1732 it was put as “Dogs are hard drove when they eat dogs” (Thomas Fuller, Gnomologia).”

PS.
After reading this, my son pointed out that lions are the only cats which hunt cooperatively on a constant basis.
Could this be the reason for which they are seen as the royals of the animal world?

A huge, and growing, number of people, of all ages and from all social strata, are mad about capitalism.
They see it as the ultimate cause for the misery and unhappiness too many of  us seem unable to escape.
On the other hand, a very vocal and very influential group, most of its constituents belonging to the mature section of the society, keeps  saying that ‘greed is good’.

What’s going on here?

Human minds, yours and mine, have to deal with information belonging to two, actually three, categories. I’ll leave aside the third one – ‘details’ concerning the innards of our bodies.
We have to deal with facts and with impressions/opinions/sentiments.
The facts happen or are ‘perpetrated’ and impressions/opinions/sentiments are felt and/or expressed.
We find out – or are told – about both facts and impressions/opinions/sentiments
Simultaneously, what’s going on around us elicits an emotional response from us, drives us to formulate impressions/opinions and, sometimes, to react. A.k.a, to commit other facts.

In fact, our present situation is the consequence of the accumulated facts ‘perpetrated’ by our predecessors. And, to a smaller but significant degree, by us.

This whole introduction was meant to explain the fact that we are here as a consequence of what we did during our earthly existence, including under ‘capitalism’, and that our impression/opinion/sentiment about capitalism will shape our future. And that of our children.
I’ll make a small intermezzo here and address myself to those of you who believe that our fate is determined by ‘God’.  “No one has ever seen God; if we love one another, God abides in us and his love is perfected in us.” 1 John 4:12

Now please let me make a very short recap of how we got here.

I’ll be using ‘scientific’ information. I know that some of you will find it ‘unreliable’.
The following questions are meant to help you decide ‘on whose side are you’.
Did you ever travel in a plane?
Were you, or a family member, ever saved by modern medicine?
Do you use the internet?
Are you aware that planes, medicine and internet have been brought to us by ‘science and technology’?
I agree with you that individual scientists are prone to making mistakes but will you agree with me that planes most often than not reaching their destination, medicine not killing all its patients and internet being used by so many of us are strong indications that science and technology, on the whole, are ‘right’?

Let me go on.

We, Homo Sapiens, have two close cousins. Pan Troglodytes and Pan Paniscus.
The common and the pygmy chimpanzee. The latter also known as ‘bonobo’.

The differences between the regular chimpanzee and the bonobo are very important for those studying ‘capitalism’.
You see, both are social animals which live in close groups – like us, humans.
Chimpanzees are ‘authoritarians’ by definition. They follow a strict hierarchy – as long as the alpha male is able to impose it – and the leader harshly punishes any misdemeanor. Fights between chimpanzees are rather common and sometimes they end up with the death of one of the opponents.
Sex has a strict reproductive function and the dominant male sometimes discourages ‘his’ male ‘subjects’ from copulating with ‘his’ females.
Bonobos are democrats by excellence. When a male becomes too aggressive a few females – who are individually smaller and weaker than the males – band together and ‘knock some sense into his head’. But this instances are rare, more often any disputes are solved through sex. Yes, sex. The bonobos share our ‘ability’ to have sex, homosexual sex even,  “in a social context, with the same benefits as humans, such as stronger bonding and social hierarchies. It also has been seen to maintain a more peaceful environment amongst their community as aggression amongst the males can be vented through sexual acts.

What both chimpanzees and bonobos have in common is the fact that they have multiple sexual partners – which makes it impossible to know, bar a DNA analysis, who is the father of a certain baby.

I’ll come back to this in a short while.

After coming down from the trees of our early childhood and after having learned to run – as a manner to chase pray and to escape danger – we ‘discovered’ our ‘free’ hands.
And started doing things with them.

One other small thing was ‘the cherry on the cake’. Our ability to articulate sounds.

I don’t know when our brains had started to grow. Before or after we had started to hunt cooperatively, using weapons and verbal coordination. Does it really matter for the problem at hand?

Fact is that at some point in our history we were in possession of certain attributes and certain abilities. Big and flexible brains, the ability to walk using only two limbs – freeing the rest for other uses, the ability to communicate meaningfully with the rest of the gang and the ability to vent our frustrations through sex.

From here, our evolution has been very fast. Determined exclusively by the geography of the places where we happened to live. In the prairies we learned to raise animals and became herders, near rivers we learned to till,  seed and harvest while in the Arctic and in the jungle we remained hunter-gatherers.

The herders and the agriculturalists developed in two different directions.
The herders adopted – unwittingly – what is now called ‘the extensive way of development’ – by increasing the size of their herds – while the agriculturalists have tried to maximize the output of their limited plots of land.
The herders – being on constant move – have coalesced later into states, or never, while the agriculturalists had done it earlier. For reasons pertaining to labor productivity and the administration of justice.
In a herding environment there is no ‘police’ to turn to so individuals tend to fend for themselves. Some coalitions of tribes did organize annual meetings – Loya jirga  and Kurultai being but two examples – where ‘things’ could be discussed and settled but it was more often that people had resorted to a vendetta like justice.
In an agricultural environment things are more stable and a different set of demands have to be met.
Herders have very few property other than their stock and relatively little trade is exchanged among the members of the community.
Agricultural economy works differently. Higher productivity means the division of work is way deeper so trade is a lot more intense in this environment. This calls for ‘police protection’ which, in turn, calls for a relatively stronger state. Anyway, a stronger state was already needed since a richer, and sedentary, agricultural community is way more attractive for ‘thieves’ than a constantly traveling band of herdsmen.

A community which has a powerful group of professional fighters – ‘police’ and/or ‘army’ – is prone to become, sooner rather than later, an authoritarian regime. Where the ruler imposes his will over the entire community.
If we look closely this is what had happened all along human history. All states which depended heavily on agriculture had become authoritarian regimes. From Ancient Egypt and Sparta to the Medieval France and from the Aztec and Inca empires to China, on either side of the globe.
The problem with authoritarian regimes being that they inevitably fail. History doesn’t offer us a single example of an authoritarian regime which had been able to survive his own increasing weight. Rome was crumbling long before it was finally sacked by Odoacer, the American empires so easily conquered by the Spaniards were riddled by superstitions and by individual people being unable to think for themselves – living under terror tends to have that effect on those who survive – and there are countless more examples.

On the other hand, herders and those who trade in wares  made by others tend to behave ‘democratically’. Simply because herding and trading asks for a more individualistic and quicker thinking person. Compare Ancient Athens to Sparta, Medieval England and her Viking traditions to Medieval France and her Romanic reminiscences.
And also the democratic precursors I’ve already mentioned. The Mongols had their Kurultai, the Afghans their Loya Jirga.

By looking closely at all these examples I’ve reached the conclusion that people ‘yield’ better results whenever they enjoy as much individual autonomy as possible in a given situation.

The authoritarian Sparta had time and time again been beaten by the democratic Athens.
Athens had been destroyed as soon as it had lost her democratic status – Pericles was a dictator, you know…
The Roman Empire had been build as a democratic Republic and had started to crumble as soon as it was run as a dictatorship.
Slavery used to be a just as widely spread institution in Europe as it was in Asia at a time when Europe was extremely backward compared to Asia. Slavery had remained widely spread in Asia until recently while in Europe it had almost but disappeared since the VI-th century. Now consider the differences which existed between Europe and Asia around 1900…

The Soviet Union had crumbled under the combined weight of the apparatchiks while the US had become, for a while at least, the sole hegemon.

Now some people want to give up capitalism!
And replace it with what?

But what exactly is capitalism?

We currently use the history as it had been ‘layered’ by Marx.
He had done that using his preferred criterion: ‘who owned the “means of production”‘.
According to him we had three main historical stages and one bright future.
‘Slavery’, ‘Feudalism’, ‘Capitalism’ and ‘Communism’.
We already know that Communism has failed, abysmally, so let’s see what Marx might have overlooked.

‘Slavery’ means that the owner has every right over his possessions, even when those possessions are other human beings, while the ‘possessed’ individuals have absolutely none. A slave had no more rights than a modern day hammer. I can do whatever I want with my hammer – except using it to kill someone – just as I could have done with a slave in Ancient Rome. Including burning both of them, alive!
Can we speak of any autonomy being enjoyed by the slaves? Other than that extended, ‘haphazardly’, by the owners?
And you know what? The people were OK with all that. They simply thought that ‘that was how it was meant to be’. Until Spartacus had a different opinion…

‘Feudalism’ means that the king has every right over everything under his domain, including that of burning alive any of his subjects. But he was the only one to enjoy such  rights. A marked improvement over slavery!
The lords acted as the trustees of the king. They were given certain pieces of land, or other ‘perks’ – to collect a tax at a river crossing, for example – but not the right to dispose at their will of those living on the land at their disposal. And, at first at least, the lords were not entitled to sell those lands – only to bequeath them to their children, or other relatives, and even that was subjected to royal approvement.
A marked improvement – individual autonomy wise – from what was going on when Slavery was in full swing, at least for the commoners, but still far from what we have today. Ordinary people could not own much of anything, usually they could not live where they chose or exert the ‘profession’ they  liked without somebody allowing them to, etc., etc.,… Trade was also tightly ‘regulated’, whenever some merchandise was traveling from one place to another a lot of ‘right of way taxes’ had to be forked out towards various landlords.
The landlords, and the king, were also the ‘keepers of justice’. OK, they usually followed the ‘rule of the land’ but they were also able to ‘bend’ it to suit their will.

Not quite harsh as ‘slavery’ but still a very authoritarian regime, right?
Remember what I said about authoritarian regimes? That they tend to buckle under their own weight? As the French Monarchy did during the Revolution?

Now, who would initiate anything while living under an authoritarian regime? Where everything has to be ‘approved from above’? Specially when that ‘anything’ was an untried novelty or, God forbid, something that might have produced the slightest controversy?
Well this is exactly why authoritarian regimes have very little ability to innovate/adjust to external change.

Now that we’ve learned how authoritarian regimes dig their own graves – by insisting that there is only one correct way – ‘theirs’ – and that nobody may cross certain limits – those that have been drawn by ‘them’ – let’s examine what ‘capitalism’ looks like.

People usually associate capitalism with ‘money’.
Not even Marx had made that mistake. In his view ‘capital’ was everything that could be used to produce something: land, tools and raw materials and capitalists were those who owned that ‘everything’.
What Marx had forgotten to mention – or to understand – was that ‘merely’ owning something was never enough.
In order for ‘something’ to be truly ‘productive’ somebody must use it.
And in order for somebody to embark on an enterprise more complex than his ‘cooking his next dinner’ that somebody must be reasonably convinced of two things. That nobody would try to rob him of whatever he was going to do and that he will be able to trade the results of his work for anything he might covet.

See what I mean? For capitalism to flourish it is not enough for people to own things. People must be able to freely transform those things, according to their skills and abilities, and to trade them at their will.
In this sense capitalism needs to happen under the rule of law and its wares must be traded on the free market.

Then what went wrong? According to what I have written until now, everything couldn’t be better.  A considerable number of us do live under the rule of law, the markets are reasonably free in a considerable number of states… then why is so much unhappiness oozing from almost everywhere?
And how long are we going to remain steeped in it? To what consequences?

To be continued.

Each of us tries to deliver themselves from the misery of this world.

We attempt that at the intersection of three realities.

The ‘hard’, the ‘virtual’ and the ‘socially constructed’.

The ‘hard’ one is what Marx called ‘the objective reality’. Whatever exists outside our individual minds. Whatever doesn’t need any confirmation from any of us.
For instance, a rock can very well lay on the bottom of the sea without any conscious agent being aware of its existence. No one might ever become aware of its existence but that actually doesn’t matter. Same thing goes for a man made piece of furniture. The original craftsman might die, the owner also,  and the ‘thing’ might be forgotten in a warehouse – or attic – without its existence, ‘in the hard reality’, being jeopardized in any way.

The ‘virtual’ one is whatever each of us makes of what happens around them. It consists of three, separate yet interdependent, ‘ingredients’. The ‘perceived’ realities, the ‘intended’ realities and the ‘engines’ that make all of them possible – our conscious selves.
I’m speaking of ‘realities’ because each of us is different from all others – hence ‘sees’ slightly differently from all others, cannot inhabit the same place in space – hence ‘sees’ the world from a slightly different perspective, doesn’t have the same goals – hence entertains different intentions.

The ‘socially constructed one’ comprises the aggregate consequences of our efforts. Intended and unintended. Known to us and unknown by us.  Belonging both to the physical and metaphysical realms. As in both the Egyptian pyramids and language being parts of the socially constructed reality.

Please note that the first and third ones are ‘objective’ in Marx’s terms while the second in purely subjective.
It is also worth noting that the ‘hard’ reality is not immune to our efforts and that the ‘socially constructed one’ becomes ‘harder’ with the passage of time. The pyramids dotting the banks of the Nile constitute a very good example of our ability to change the ‘hard’ reality while the Catholic Church – one institution among many – is a good example of a metaphysical construct resilient enough to survive for two millennia.

Another very interesting ‘social construction’ is the concept of liberty.

I find it very interesting because it is simultaneously ‘objective’ and ‘subjective’, ‘natural’ as well as ‘man-made’.
It is objective in the sense that it continues to exist no matter how many individuals subject themselves to abject spiritual slavery.
It is subjective in the sense that each of us understands freedom in their own way.
It is ‘man made’ in the sense that we have coined the concept and minted the words used to describe it.
Yet it is ‘natural’ since we all are made of flesh and blood and need to breath in order to stay alive. And yes, it is us who have invented the dog-collar and the leash we use to restrain the liberty of our dogs. Exactly because it is natural for them to try to be as free as possible.

Since this is but a blog post I’ll fast forward to what I had in mind for today.

The free market.

Which is, evidently, a socially constructed institution.
Supposedly, a place which miraculously transforms “private vices” into “publick benefits“.

Well, I’m afraid that those who have convinced themselves that ‘greed is good’ have understood nothing of Bernard Mandeville’s stark warning.

A market may be fueled by ‘greed’, or even by (evil)’vices’, but it is the freedom of those who partake in that market which keeps everything in check.

The communist centrally planned economies were also fueled by individual lust for power. They failed simply because no small group of people is smart enough to master such complicated matters nor humble enough to see/accept its limitations.

The very same lack of freedom has produced the financial crises of 2008.

‘Greed is good’ is nothing but a rationalization of the current obsession with monetary rewards over the very shortest time frame coupled with a blatant disregard for the longer term consequences of our actions.

And as any drug addict can confirm – whenever they are not ‘feeling high’, entertaining any obsession means loosing one’s freedom.

In reality, actually free markets are fueled by trust, not by greed.
And (self)governed by the fact that each participant is free to define/pursue its own interest and react to anything that is happening inside the market’.
Unfortunately, current markets are no longer free. Not that much because of governmental intervention but mainly because too many of the participants are blindly chasing the same narrowly defined ‘interest’.

“But man has almost constant occasion for the help of his brethren, and it is in vain for him to expect it from their benevolence only. He will be more likely to prevail if he can interest their self-love in his favour, and show them that it is for their own advantage to do for him what he requires of them. Whoever offers to another a bargain of any kind, proposes to do this. Give me that which I want, and you shall have this which you want, is the meaning of every such offer; and it is in this manner that we obtain from one another the far greater part of those good offices which we stand in need of. It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”

Smith’s words could not have been any clearer. Each of the participants to the free market wants something different from the market and each of the participants trusts the others to provide those different somethings – as long as the buyers can satisfy the sellers, of course. Nobody gets robbed while everybody gets whatever specific things they had come for.
In modern terms this would have been described as an ‘everybody wins’ situation.

Compare this with the contemporary mantra.
‘Profit maximization’.
Everybody chasing the proverbial ‘fast buck’
‘Enjoy the moment’ & ‘forget about tomorrow’.

And we continue to kid ourselves about the ‘freedom’ of our markets…

Even funnier is how we have twisted Mandeville’s warning to fit our own narrative.

“Millions endeavouring to supply
Each other’s Lust and Vanity …
Thus every Part was full of Vice,
Yet the whole Mass a Paradise …
The bees, however, are not satisfied to have their viciousness mixed with their prosperity. All the cheats and hypocrites declaim about the state of their country’s morals and pray the gods for honesty. This raises the indignation of Jove, who unexpectedly grants the hive its wish.
BUT, Oh ye Gods! What Consternation,
How vast and sudden was th’ Alteration!
As Pride and Luxury decrease,
So by degrees they leave the Seas.
All Arts and Crafts neglected lie;
Content, the Bane of Industry,
Makes ’em admire their homely Store,
And neither seek nor covet more.

In this way, through the loss of their vices, the hive at the same time lost all its greatness.

Now comes the moral:
THEN leave Complaints: Fools only strive
To make a Great an Honest Hive.
T’ enjoy the World’s Conveniencies,
Be fam’d in War, yet live in Ease,
Without great Vices, is a vain
Eutopia seated in the Brain.

Fraud, Luxury and Pride must live,
While we the Benefits receive. …
So Vice is beneficial found,
When it’s by Justice lopt and bound;
Nay, where the People would be great,
As necessary to the State,
As Hunger is to make ’em eat.

Apparently, Mandeville’s verses do not make much sense.
Why would a hive which had successfully purged itself off all vices find itself in a far worse situation after the cleansing?

Let’s first try to understand what those vices were.

Millions endeavouring to supply
Each other’s Lust and Vanity …
Thus every Part was full of Vice

Let me remind you of the fact that Mandeville had lived, and written, during the same period when the Puritans were trying to impose their strict moral code on the rest of the British society. And for the Puritans any attempt, made by ‘millions’, to supply ‘each other’s lust and vanity’ (a.k.a. various personal needs and fancies) was ‘vicious’ in itself.

The point of the whole thing being that it was not the absence of vices which had brought down the hive but the obtuse single-mindedness with which the vices had been banned. A line of thought very much the same with Durkheim’s ‘normality of crime‘.

And not very much different from our current obsession with (short time) profit!

 

 

No matter what opinion each of us entertains about ‘alternate reality’, fact is that none of us is able to grasp all relevant aspects of even the most basic concepts.

Growing under a communist regime I had learned, very quickly, to keep my mouth shut.

Like all authoritarian regimes, communism eventually crumbled.
Mostly under the pressure that had been built from within and which could not be accurately measured, simply because people were conditioned to keep their mouths shut.

Nowadays technology makes it possible for some of us to ‘look’ ‘beyond’ what most understand by ‘freedom of expression’.

… anxiety and action shouldn’t be based only on what could happen in theory as much as what’s likely to happen in practice — and how much it will affect you.

Some people are afraid of sharks. While the prospect of being eaten by a giant fish is vivid and terrifying, it’s also unlikely, old chum. In fact, the drive to the beach is far more dangerous than the swim once you get there.

Likewise, avoid getting hacked. But more important, start taking action on the bigger risk: The stuff publicly posted on social sites.

Alternate meaning of ‘freedom of expression’?

‘You are free to express yourself and I am free to use whatever information you have chosen to share’!

Actually it makes a lot of sense.

Let’s imagine, for instance, that my son comes home and tells us he is going to marry someone.
Twenty short years ago my wife would have phoned her best friend and told her about it. In two days the news would had traveled around and feed back would had poured in, specially if we were living in a small community. We would had been informed about all past indiscretions attributed to our son’s intended spouse, as long as any had ever surfaced.
Nowadays, being technological savvy, my wife would google the name first, even before phoning her best friend – if she wasn’t already privy of ‘enough’ indiscretions, of course.

Would it make any sense to blame the public authorities who do the same thing? Or the private agents who, in their attempt to fulfill their jobs, use whatever information is publicly available about each of us?
My question should have a special meaning for those of you who live in democratic countries – where the public authorities execute whatever mandate you have entrusted them with, and under an economic regime governed by the (more or less) free market – meaning that all ‘private’ agents need at least some support from their stakeholders (yes, that’s you!) in order to remain economically viable.

I’ll come back to this subject.

Meanwhile you can learn more about it by reading the article that spurred my rantings:

“Anything you post can and will be used against you”

Just click on the title.

Tallow = “the white nearly tasteless solid rendered fat of cattle and sheep used chiefly in soap, candles, and lubricants“.

bite-the-bullet

The mutiny (India, 1857) broke out in the Bengal army because it was only in the military sphere that Indians were organized. The pretext for revolt was the introduction of the new Enfield rifle. To load it, the sepoys had to bite off the ends of lubricated cartridges. A rumour spread among the sepoys that the grease used to lubricate the cartridges was a mixture of pigs’ and cows’ lard; thus, to have oral contact with it was an insult to both Muslims and Hindus. There is no conclusive evidence that either of these materials was actually used on any of the cartridges in question. However, the perception that the cartridges were tainted added to the larger suspicion that the British were trying to undermine Indian traditional society. For their part, the British did not pay enough attention to the growing level of sepoy discontent.

tallowed-five-pounder

The new £5 notes contain tallow, a substance made from animal fat Credit: AP

“…a trace of tallow in the polymer pellets used in the base substrate of the polymer…”
“As the tweet was shared, social media users expressed their disgust at the news.
“New £5 note isn’t vegan. Was everyone’s 2016 New Year’s resolution to do ridiculously insane stuff like adding meat to money?” “

What are we to learn from these two (separate ?!?) incidents?

That we have not yet learned how, or when, to use tallow?

Or that we have reached, again, such a level of generalized discontent that people might use whatever plausible pretext in order to vent their accumulated grievances?

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