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The challenge in creating a true general view of September 11th isn’t simply gathering the information. It is simply figuring out where to go with the many different leads, riddles and paradoxes that hang in the air. Ossama Bin Laden is known to have had strong ties with the US CIA for many years before the events. The events were certainly the greatest “intelligence failure” in US history yet no official has received a punishment or rebuke for them. How can President Bush call for greater spending, allow more layoffs and expect patriotism. And so-on. Press reports claimed total CIA ignorance of Afghanistan one day and deep involvement the next. And so-on (link to list).
And a further paradox is that the many media reports showing these other anomalies seem to have had little impact on the average person. This is partly because few have any coherent framework to consider this in. Another factor is that there is no conceptual bridge connecting these riddles and the conditions of people’s daily existence. We aim to present such a bridge.
Now for us, the more we see of the September 11th events, the more we see a crisis of the entire society unfolding. The trick is to show this crisis as a result of certain processes which form a “system” organizing the present-day world. These operations include deception, money, credit, work, and secrecy.
It isn’t a matter of some single “conspiracy theory” though it clearly involves a number of conspiracies, starting with the destruction of the WTC itself. [Link to “Further Thoughts On How To Begin”]
The story shows that there were connections between the dynamic of Enron and the dynamic of the Taliban/Al-Qaida. Yet at the same time, what it reveals is not enough to generate the whole events.
Indeed, it’s worth noting that none of the events described even seem that logical in themselves.
We should begin realizing that Enron wasn’t very concerned with making money so much as looking like it could make a whole lot of money. This dynamic had been driving it for quite a few years.
It seems like Enron shouldn’t have been that concerned with building a pipeline since could be buy natural gas on the open market. But, by saying they needed a pipeline, they could barrow the money for the pipeline and use that barrowed money to begin manufacturing fake profits on the power plant. If the pipeline bogged-down, they possibly could follow that up with another super-project.
And this is actually good. I mean we do have to admit that the World Trade Center attack was a conspiracy on one level or another – the planes didn’t fly themselves into the building. Thus we know there’s a conspiracy who’s exact details we aren’t going to learn for a while, even if they conform the mainstream version.
But what’s more useful is to see an entire process, an atmosphere that has created some horrific and unexpected events.
So with the Enron Al-Qaida article, we should extrapolate an entire capitalism of fictions. If you have the right players, for a while you can go without pipelines and gas to coming together, fiber optic being connected to anything or internet companies selling anything.
So, in this sense, power, control, and the appearance of control are traded indefinitely in hidden chambers. And in this atmosphere, any influence is important to hold onto.
The Author of Dollars For Terror, in 2000, wrote an interesting title for one of his chapters. In English it translates to “Is there a pilot in the American Airliner?” This metaphor became extremely literal in a few months.
But the point is that in the information trading economy, directing secret operatives becomes everything. And play of information trade makes principles, even the principles of defending capitalism, nothing.
We can trace a cycle of development in terms of cycles of chaos and order.
- We begin with a system, society or situation where resources cycle through a traditional order.
- Now, entrepreneurs disrupt this system and people must begin to rely in the market to satisfy needs that previously were satisfied traditionally. This generates development as slowing this needs-satisfaction brings
- Even more, the market operates by an “information order”. This order dictates those who own the critical information will profit from the entire operations of the system.
* A corollary of this schema is the state with the hollow center. The US with its domestic and foreign policy details apparently up for grabs would qualify as would the third world states controlled by ideological clique.
The framework of marketable information in our sense encompasses both the dot-com boom and global Neoliberal investment. The importance of this framework isn’t how much it works but how much it is able to give confidence to would-be investors throughout the world. By this measure, it has been a success and has been the model of the new world order.
- To maximize the value of marketable information, an entrepreneur must actually conceal his information from others. This allows the many failures of the information model to be concealed as well as inviting every sort of fraud for those investing in the unknown information.
Security and control ironically are part of the selling of secret information. Several arguments can be made that openness actually creates better safety than secrecy. But naturally the tail of commerce will wag the dog of safety here.
- Information develops as much as possible in terms of being generic so as to allow a schema for investment. Enron’s fiction of the market for futures in data bandwidth – sense on the practical level yet critical on the level of allowing outside investors to believe they could profit from the coming “information age”.
- The secrecy and genericness of new, developing info-products means that this development will “corrode” the boundaries which normally keep capitalism as a safe, sustainable activity. Derivatives are an ideal way to conceal a Ponzi scheme. The secret motion of operatives has drug dealing as a natural extension and so-forth (this isn’t to say that simple legality is what’s necessary or what is being corroded).
- The dynamic of the market does not actually produce efficiency and progress. The movement of outside investment is determined by the dynamics of the unfolding crisis – essentially they need to make quick cash. And the operations of secret motion can conceal this.
- The world market at best can provide a market for a single commodity per country.
- The infoscheme allows problems to be postponed into indefinite and definite futures. This process can happen on many more levels than simply the economic. Lies and manipulations on many levels can be carried out by all manner of managers to prevent postpone their own personal fall.
All of these expansions compete with the growth of the economy itself. Put as exponential growth, we can see the scheme as unsustainable. But we can see the production system’s success in growing exponentially – if economic relations can cull only a certain amount of bubbles, the rest can be escaped through growth. This is the closest thing to “sustainability” which the system has to offer.
- The development of stripped down ideologies serving only immediate interests is a natural corollary of expanding promises into the future. Ideologies in general justify to the mass the way capital operates as well as organizing what the capitalist themselves do.
James Watt’s statement “when we cut down all the trees, Jesus will come” shows guiding principles in harmony with the economic dynamics of the new order. And it note
Now, the aspects and the problems of the infoscheme have arisen gradually and at different times. Secret agencies became truly large after WWII, drug dealing has been appearing for a hundred years, speculation became a key dynamic in the late sixties, etc..
The most important aspect of it was the end of the Keynesian order. Neoliberalism and other schemes were necessary to order the investment world - to give the capitalist class a definite idea of how further expansion would proceed.
The publicity for a new order can wind-up having more importance than such cynical blather would seem to merit. The world of today calls itself “the post cold-war era”, “the end of history”, “The age of information” or Neoliberalism.
We use the term “information monopolism” as a rough thread that ties these different visions together. This phenomenon is what we see as giving ideological coherence to this present order. And it also shows the many ways that the system is coming closer to incoherence.
Information capitalism is an interesting thing. “Information” can be measured but it is weightless, colorless and volume-less. With modern technology, a nearly infinite amount of information can be placed in the smallest imaginable area.
When the capitalist class imagines a world in which the economy rests on the production and consumption of information, it imagines a world in which its profits flow in a guaranteed fashion.
While “cyberspace” seems have many hard to manage problems, the information monopolists are seen as those who prosper here.
In a society where information is
There are several important variations here. Will information be a final consumption good or will it be a means of production? The failed Internet economy showed the variation where information would become the good for consumption.
Enron Corporation shows all of these tendencies most concretely. This organization put out the image of having a cybernetic mastery of markets, data, resources and politics throughout the world. The collapse of this organization shows some of this to simply be a lie but it shows the failure of these models.
Enron was heavily involved in the Neoliberal project of spreading privatization and investment throughout the world.
As a successor to Keynesianism, Neoliberalism was projected as a schema which would solve the declining profits and investment deviling the late Keynesian era of the 1970s. World privatization would bring all the economic activity of the world to the Western Market, guaranteeing an infinite source of economic expansion. Just as important, the model of information mastery would guarantee Western Transnational Corporations would control the bulk of ever-growing markets and be able to profit from them. This is where the slogan, “the age of information” is critical. Roughly defined, information mastery through computers, through being at the center of governments and exchanges and through having the greatest skills. Thus both Microsoft and Micheal Milken projected information mastery, though Microsoft’s luster has lasted longer.
Enron of course, combined the approaches of Milken and Gates when it ended-up turning a public utility into a derivatives trading website allegedly worth $60 billion dollars.
The control of information is huge part of this information order. Marketization must promise imperialism without the corruption and limits to growth. It thus must promise that clear leaders will continue control things s that outside investors can steer their resources in the leader’s direction. And information advantage is the tool which these would-be leaders can show as giving them the ability to exert this control.
Secrecy is the oldest trick in the charlatan’s book. Yet unlimited secrecy also can now be justified as a critical part of maintaining these new information monopolists. Ultimately the secrecy of Enron’s investments, of Microsoft’s source code, and of the CIA’s dealings can be placed in the bucket of critical approaches.
The Enron debacle shows what happens when information is sold as a means of production. And indeed, the nature of Enron was that it followed the logic of pure information flow itself by not distinguishing between trading, producing and consuming information.
But the end of the company brought home the point that however indirect the process of speculation might be, companies cannot spend “fictitious cash” indefinitely.
So here we have a complex relationship between the promises, the lies and the images which modern corporations present to their wealthy investors. And these all happen in the context of the spectrum of classes, from poor to wealthy, being exposes the same general story.
Just as much, this system cannot simply fool people at one time but must continue it’s operations over an definite period.
We can begin by saying “when the present world has escaped our control as totally as it has today, it is not surprising that we experience utter disaster.”
Expanding our view slightly, the connections between the Enron collapse, the Argentine collapse and September 11th can be seen on the immediate level that Washington has become an essentially mindless hive motivating by multiple, surging flows of money. Al-Qaida was essentially just one corrupt product of the vast surge of criminal activity swirling around the CIA, offshore banking, transnational corporations, international drug dealing and covert capitalism in general. Enron was even more clearly a product of this. The crisis of Argentina showed an IMF which barely noticed the falsity of its rhetoric of “global investment creating efficiency” as a corrupt cloud of transnational capital, including Enron Corporation, merely looted the Argentine economy. Enron had the best blind-eyes money could buy while Al-Qaida had the CIA veil and the Argentine looting was under the wing of the IMF.
Neither Enron nor Al-Qaida were ultimately enemies of the present system either. Rather, speculative, covert and criminal capital tends to organize its own demise. Enron saw its demise coming pitifully late. Ossama Bin Laden’s belief that he could challenge the American gang was exactly the megalomania that gang enterprises tend to nourish – Bin Laden and Kenneth Lay are a fine match for each other. But the end of these two hardly gives capital reason to sleep easy.
Hyman Minsky divided investment into three department, hedge, speculation and Ponzi. As the market expands, the Speculative and Ponzi sectors expand further and eventually bring down the market.
How can we politicize this functionalist schema. We can describe this as the coherence of the capitalist system. A Ponzi scheme is a system working against over-all investment system, it is essentially a break-down of the solidarity between capitalists.
The point is that capital faces labor and also faces capital. While capital may claim to love the “animal spirits” of the competition but it ultimately admits that it requires a code of conduct, a “morality” from it’s participants.
But this combination of agreement and competition is a “world order”. We can take the Keynesian world order after WWII as our archetype for this.
The Keynesian and the Neoliberal located the source of profits in a slightly different place.
Looking to the crisis of capital, for us as for Marx, we can see the fundamental crisis as the contradiction between the increasingly social character of production and the continuing individual control of the means of production (Capital III). In the case of capitalism, the declining rate of profit and the need to conceal the conditions of businesses whose profits have vanished generates a crisis on many levels at once. [Off to arithmetic]
In maintaining it’s condition of equating labor with survival and commodities with usefulness, capital has two dilemmas. How to sell the things it produces and how improve the efficiency of it's operations - how to maintain circulation and how to organize reproduction/accumulation. Problems with accumulation manifest in problems of circulation so these problems are strongly linked. And each form of capital has only part of a solution to these problems. Covert capital does not have any solution to the question of improving the efficiency of an operation, while overt uses open accounting standards to tell investors about the companies which need more money and thus ideally overt capital produces a system of continually increasing efficiency. Still, when overt capital sells uses advertising to tell consumers that they need the products it wishes to sell, it does not a guaranteed a sale. Covert capital forces the consumer to buy - buy guns or be conquered, buy drugs because you are addicted, buy oil because everything needs it, etc.
In thinking about this, remember this society is produced, reworked and recreated by the complex inter-related labor of everyone. At the same, a small, blind bureaucracy of the rich and the technocrats decides the direction in which this complex reproduction process will be directed.
We can list vast range of symptoms; Currency and other speculation and fluid foreign investment capital, Ponzi schemes, and fraud, illegal commodities, secret commodities, offshore banking and fictitious corporations, illegal money, illegal activities, secret money, secret activities, cell organizations, mind-control and the generation of fanatics and assassins, the rigid character armor of everyday conformity, the ideologies of panic and the acceleration of panic, a system which cannot maintain coherence, a system whose rulers no longer have enough incentive or resources to support the totality of conditions. The properties of finance tie these symptoms together. [Multiple links]
Any sort of finance operation works by promising someone a future payoff for a present value. Cash, stocks, bonds, 401(k) accounts, and more obscure items all operate this way. Since the wide future seems to offer unlimited possibilities, it can easily seem that finance offer’s it’s users unlimited power. Yet, as managers of Enron Corporation discovered, you can wind-up with a situation where past promises come due more quickly than you can make believable future promises. Just as much, as Enron’s investors found, those who count expanding promises the first to be burned (with the creators of the financial instrument only be punished later, if ever).
Now when this period reduces all human labor to value and money, it offers all of the objective and subjective satisfactions of life at best only in terms that are financial. Satisfaction becomes potential. Labor is compensated with money – potential goods. And the goods themselves change. A shirt has an immediate use – a television merely offers the possibility of some satisfaction at a later point. And jobs today offer survival and at best the potential of a comfortable retirement (avoiding Enron and dot-com stock).
Barrowing and deceiving each essentially involve postponing a reckoning into the future. Lies about the conditions of life tend to be revealed as time goes on while debts come due. Those with tremendous power have many times imagined they could escape a future reckoning by lying and barrowing faster than people could keep-up. The CIA has cast a widening fog over US foreign policy while the advertising industry offers a new piece of junk as quickly as we get bored with the old piece of junk.
Of course, it is more accurate to speak of the ruling ideologies of capital than simple lies. An ideology implicitly creates the effect that a conscious lie must actively aim for. The security ideology demands more and more security without offering serious protection – since real life is always insecure, the solution of security ideology is to constantly escalate. Continuing this, the entire reign of ideology thus uniformly falsifies the conditions of life today. This falsification does not solve the various problems but merely once again postpones the reckoning into the wide future – taking postponement to a second or nth degree. And this second degree is the obscure beauty and danger that Wall Street calls the derivative (the name derivative is appropriately taken from the math term for the instantaneous rate of change of a curve or function). [Link to realm of ideology]
Seeing things this way, we can cast the entire history of our period as the history of the financial derivative in a larger sense. We hear that capitalism has experienced many crises over its history but that the wizards of Wall Street seemed to have solved those till recently. Yet we would offer that all these solutions involved postponing the crisis itself into the future as well.
The development of the process of the derivative trading involves the perspective of “profiting through superior information”. This is the approach of the large investment house with banks and corporations ultimately working about the same.
And this “superior information” is only that if it is hidden from the eyes of the general public – i.e. the process implies a covert tendency within capitalism.
Moreover, the vast field of derivative trading can overwhelm any boundaries to these covert operations.
This private control of covert information can be cast in many lights.
The distortions of derivative trading are fairly simple. More investors can be drawn whenever there is something to trade and some expectation there’s money to be made – whether a long term profit exists is much less important.
This speculation is nothing new in the shady investment world. What’s new is how well the process muddies the waters around what is or isn’t a sound as opposed to a speculative investment.
Investments in oil pipelines and in fiber optic capacity are two very useful activities. Outside investors can quickly measure the capacity that is being created. So it was very logical for Enron to invest heavily in physical and informational pipelines to nowhere.
[Insert however detailed a timeline you wish here]
The commodification of information could be considered the key factor within the Neoliberal agenda. The outline of power and assembly line production has been established; the “Fordist” model hit its limits in the sixties.
The Fordist model would be: Fixed Infrastructure + Mass Production. The Neoliberal model involved removing the fixed infrastructure to extract surplus value and imagining a class of information monopolists who would have the expertise to take advantage of this process (Litton Industries is a key example of this). This second aspect is key since created enough investor confidence that these information monopolists could effectively gain the investment for a continuing expansion of their operations. This confidence wasn’t required only for new investment but to keep the generated profits from flying to competing ventures.
Commodified information has several forms. Essentially, it can be either an ultimate consumption commodity or it can be part of a means of production. We consider here the means of production. Because information can be infinitely reproduced, information must automatically have a multiplicative effect on a production process. This seems to contradict the usual addictive effect on value which an ordinary capital good has. But ultimately this means that the addictive and multiplicative aspects must become equal. This equalization can happen through the information becoming universal – either free or sold by a single monopolist to everyone. This is essentially modifying the standard of production for a given industry. Even here, there is a limit to the total amount of profits extractable in this software model.
This can happen through information being specifically limited to a single possessor modifying a single production process. The particular piece of information might not modify the process but the situation of information appearing does modify the socially necessary aspects of the process.
The ideology of a company like Litton or Enron is that they have unique skills, experience and information to organize various processes efficiently. Long Term Capital Management operated programmed trading which attempted to use computers to avoid the risk of the market. Litton specifically broke unions and otherwise extracted immediate increases in surplus value. Enron attempted to negotiate contracts with third world nations which involved a guarantee of profits to Enron while not necessarily being able to find authentically profitable projects (this didn’t work that well over time).
Enron’s derivative operations were extremely useful since a derivative trade makes it very murky whether a company is making money through it’s knowledge or whether the company is simply postponing problems into the future.
You have a consumer aspect where it will be sold to everyone but with particular controls that prevent it from being re-reproduced.
Those who interpret Marx as putting forward a generic labor theory of value are dead wrong. Marx did not put forward a generic labor theory of value – rather he noted that dynamics inherent and specific to capitalism are what make labor power a unique commodity in the production relations. (Critique of the Gotha Program Quote – “Nature is the mother and man is the father”)
Actual production can be analyzed using a number of necessary quantitatively measurable element aside from labor power. Energy, space, nature, information, oxygen and more are limited quantities which could be factored as having a limiting and determining effect on production. The trick is that these elements themselves reduce to commodities with labor-value. Thus an analysis of production adding these quantities is certainly not
The “Age of Discovery” involved highly uncertain actions which had to spread across many investors. Insurance, stock markets and other institutions were created to reduce risk and thus free-up enough willing capital for investment.
Suppose that we create a quantity called market-valued information – MI. In this process, every M-C and C-M involves a quantity of MI as well. MI essentially gives a “bonus” of the percentage of a transaction. In our na´ve model, MI cannot shared between individuals.
MI is our answer as to the difference between interest income and the total average profits of all enterprises (which must automatically be higher since otherwise, half of enterprises would be failing).
There is a distribution of MI, a very uneven distribution. We must assume then that this uneven distribution of information is also an information bleed-off or information trickle-down through the tree of the capitalist class. The stock market is a key example since it is constructed by the expert trades of those knowledgeable yet it is assumed that this information is will be usable by the average trader – those wholly ignorant of the details of a stock can still invest in it with a bit of confidence.
And here our supposed MI is a kind of opposite magical ingredient to labor power. And MI is something is certainly also supposed by capital itself in many forms, especially around the inevitable ideology that “capital is a return for risk-taking”. Now, when capital makes MI a universal category, it immediately runs into problems since MI is a key aspect of illegality. Those who know the location of holes in fences, which guards are crocked and so-forth are quite capable of using this also as MI. But the accommodation of MI implies a huge array of enterprises capable of keeping secrets for their return on information. We might imagine that an organization like the CIA would be intended to “keep the others honest” but really it functions as the opposite, the largest dishonest force around.
Now, the integration of capital itself works against the creation of walls between honest and dishonest activity. In a company which deals primarily in terms of derivatives, distinguishing between a loan and a profit is extremely difficult – if you sell an option for money now, telling whether said option will likely have to be repaid later requires MI and thus cannot be told by an outsider. If a company produces and market commodities in several different markets, then it has a legitimate need to “hedge” itself against fluctuations in currency and raw materials prices. A simple increase in inputs and outputs to our model ultimately produces opportunities for a multitude of “investment vehicles” as well as methods of faking profits or losses. But the key aspect is that this allows an impersonation of vast MI.
We can look at the modern corporation with it’s “total quality management” and see an organization dedicated to production on the scale of greater MI proportion.
Certainly, the way that people thought Enron made money is important here. People thought that Enron had more information and a greater “global reach” than other energy players and thus that it could extract more money from global energy flows. This idea was certainly hazy yet it was key part of the scam.
Now, the information schema of Neoliberal profitability is amazingly contradictory. The high investors extract profits by using superior information to invest in companies with superior information. The honesty of accountants is the force to prevent these companies from being Ponzi schemes.
The information candle is burned at both ends by the desire for “transparency” on one hand and the desire of companies with marketable information on the otherhand.
Now when we look at the crisis of capital, we can see many situations where interest rates are reduced to nearly nothing through the speculative expansion of the money supply. And by this token, one effect of the crisis of capital is to increase the relative value of MI. This happens on many different levels.
With an uncertain medium of exchange, both the capitalist and workers’ cycle could be considered a matter of entrepreneurialism. Yet the capitalistic cycle is ultimately more so than the workers.
The worker has ultimately a continual, renewable supply of labor power and must sell to gain his survival. Wage labor cannot be accumulated in raw form but must be sold gain the worker money. The mechanisms of the market only reduce the choices of how the worker can sell his product.
If the value of exchange mediums is uncertain, he will obtain a maximum of survival goods whenever he can – inflationary behavior. If the value of wage labor itself is uncertain, he will save as much retirement and rainy day money as possible.
Now, a capitalist could be said to have a supply of information which he uses to make his investment decisions. This information includes tangibles and intangibles within our model. We could suppose that different ventures have different outputs and thus make the simplistic assumption that a capitalist knowing which of these is good would profit and a capitalist not knowing would loose.
The simplistic assumption in a signal economy is that money flows from those with bad information to those with good information.
There is no such thing as a perfectly safe medium. Any exchange of commodity and medium is based on an expectation that the risk of the medium is out-weighed by the greater likelihood of future gain or future survival.
The modern derivative system came most directly into view at the point where reports surfaced that unknown speculators appeared to have used derivative trading to profit from for-knowledge of the September 11th attacks.
These reports are as unverifiable as many of the particulars of the attack. But this presents us with two elements which we can see a different way. We have a sea of uncertain information and system which is essentially oriented around profiting from the uncertainty of information.
A model of ideal speculation implies that money will naturally go from those least informed to those most informed. And the trading of derivatives implies such an ideally speculative system.
The fiction of the modern mathematical finance is that of the perfectly efficient market. This fiction is needed for the process of “portfolio insurance” which justifies an unlimited increase in said portfolios.
This portfolio analysis is essentially parasitic on the most immediate “good information” which generates the reasonable estimates for a particular stock’s value. Generally, the more that stock prices are mostly based on very simplistic aspects, the most that frauds such as Enron are a risk.
The basis of investment capitalism is creating an “atmosphere” where those with little investment acumen can still feel comfortable investing the market. This is combination of thinking that those at the very top are willing to share some wealth fairly and the expectation that the wheels of capital will actually generate this wealth.
Such an order requires markets open to further exploitation and a ruling class where an order of market makers prevent destructive competition.
Now, the ideology of the efficient market is a particular unifying factor of Neoliberalism. As ideology, it does give a unified basis for action. Making privatization a “sure thing” is the “new order”.
Keynesianism projected a progressive rationality which would tame the irrationally of markets. Neoliberalism imagined unleashing the animal spirits of the market in contrast to “stifling spirit” of the government.
In reality, Neoliberalism was a project of holding together Keynesianism’s logic while the coherence of the state investment leader could no longer hold together. The pump of demand was still primed, primed even more really, but primed by private money creation and deregulation/privatization.
The massive expansion of free-floating capital did mitigate the decline in profits for a while.
A massive increase in
[We’ll be sort-of reworking “The Key To Financial Collapse” as are organization of EVERYTHING]
* Lead-in and motivator for our very general approach, THEN
* We begin in the wide social stage in which wage-labor is possible. Maintaining the relations wage labor means keeping a world of normalcy. This normalcy can also be framed as circulation, as a managed world, as overt capitalism.
* But within this normalcy, there is also the crisis. This crisis involves a continual reorganization. Crisis appears as a sudden destruction, as gradual decay, as secret activity, etc.
* Wage labor implies finance – the pushing of things into the future. And we can see a world where more and more is being pushed into the future on every level.
* Our crisis appears when more comes due than can be paid for. And crisis is worked into the operations of the system itself.
* Now, over history capital has had many models to balance the ratio of crisis and normalcy [link to list]. These are controls over and agreements between classes. And naturally, these models have had an overt face and covert addendums.
* These model range from the low level of financial controls to the high level of ideological coherence.
* Political-economic class dynamics have determined the growth-process of every model of model of expansion. Link to ways that modernization has been determined through the class-based reinvestment system. Link to the Soviet Union and flexibility of reinvestment, normal US and flexibility and drug-capital and flexibility of capital use.
- End Summary now jump to present system
The present Neoliberal model overtly implies an increase in profits based on the “rationality” of world markets. Covertly it gives a free-hand to multi-national capital to guarantee their profits.
- World out of control leads to disaster
- How does that connect with the mass of covert money circulating around Al-Qaida?
- The expansion of wage labor as the expansion of finance. Link to overt and covert as models of the accumulation of capital.
- [The rest of the finance chapter, introduce normalcy and crisis]
- Ways of framing the crisis [circulation vs. accumulation]. Expandable link to arithmetic of the crisis
- Expandable link to history of crises and solutions
- Covert and Overt as the model present solution
We can begin with the symptoms,
We can begin with the conditions of our daily life
We can begin with riddles
We can begin with various self-reinforcing dynamics
We can begin with broad summaries
Our condition living under capitalism involves being reduced to abstractions in various ways.
On many levels, we can see a unity of current social processes coming ultimately out of this movement into abstraction.
The Covert/Over capital dynamic. The duality of normalcy/crises. Crises as the political/economic-struggle of different classes reaching loggerheads. The decay of logic. Disaster as self-reproducing system in capital and the question of whether it can become unmanageable. Contenting solutions to capital’s crises. The expansion of Ponzi schemes as a product of crisis capital. The wider dynamic of finance as a massive postponing of everything into the future. The loss of coherence of capitalist society.
The simplest way we have to consider this is how the product of our social labor goes out of our control. And this out of control reappears as both a world of secrecy and a world which is an alien machine.
This alienation, “out-of-control-ness”, appears as a division of the labor process using various rules. And also as the breakdown of this division.
The history of the last hundreds years involve various divisions of this alienation, which have essentially broken-down and formed the basis of new divisions.
In the middle of this century, we had solutions which aim to create an overt rationality to the workings of the system – communism and American each claimed to work by the highest standards of modern experts. Currently, we see the rise of solutions which call on people to accept the workings of an unknowable, secret process – The CIA, the world currency market and Allah all work in ways we are not meant to understand.
And we can see the rise of these mystery solutions as the unraveling of the coherence of the system which exploits us since means the system can no longer find coherence in the process of exploitation.
The tendency for unexpected collapse can be seen if we conceptually divide current methods of capitalist expansion. Today, overt and covert enterprise work side-by-side in advanced capitalist production yet the financial system dictates that they follow different rules and often-opposite rules.
And the results may only appear in time. It only became obvious at the end that Enron’s overt activities had no rational hand behind them.
We can see overt and covert capitals as the two poles of a strange magnet.
A simplification is to look at capitalism as having two “departments”, the overt and the covert.
[Stuff from overt and covert capital]
In reality, these departments intersect. The overt sector is that sector which can and does get investment from the outside. While overtness is one way to create confidence, having the appearance of being trustworthy is equally important, having the appearance of being within a class of people who can trusted can be enough. And this varies considerably depending on how much confidence there is in the market as a whole.
Looking further, we can frame this crisis as involving two basic tendencies within the development of our modern capitalist society. On the one hand, we can see the explicit tendency of capitalism - the visible movement of capitalism over time has been to change from intensive exploitation to extensive exploitation. In this tendency, we can see this the mechanisms of responsible financial capital, of modernization and of rationalization. In this corner, democracy and freedom of speech are critical factors since free expression allows investors to know which companies are good investments.
One the other hand, on the edge of this visible growth has been the growth of the thief, covert capital, the spy, the fraud, dictatorship and the racket. More exactly, we are viewing this section as all enterprises that require secrecy for their operations. Contrary to the broad ground of overt capital, covert capital seems obscure, backward and arbitrary. This obscure second area has always existed, yet has always depended on the growth of rational commerce for its growth: The mafia cannot shake down merchants for more than what the merchants produce. Unknown factors only matter as much as there also known things that matter- the covert capitalist depends on the overt capitalist's sense of cohesion since the covert capitalist has loyalty to neither the system or even his fellow gang- and so-forth. The point ultimately isn’t really whether you break the law but whether you are on the edge of visibility and control. In terms of their operations, cops and robbers here are part of the same systemeIH. The system of security needs criminals to get funding and the criminal enterprise needs cops to create scarcity and drive-up prices.
Thus covert enterprises have been concentrated at the center of power and at the very edges of power. This edge and center can be geographical or social. The very rich and the very poor each have an incentive to break the law, one because they are above the law and other because they are too miserable to worry about the law. In Afghanistan, there are few police to enforce any laws. In CIA Headquarters, few have to worry about the law.
If the area of the hidden is the very center and the very edges, then the area of the known is the broad middle. In our modern capitalism, drab, day-to-day businesses and commerce form a well-oiled machine. The normal, honest capitalist may wish to keep his bank account secret but he would prefer the operations of his firm be open and verifiable to his outside investors, his insurance company, he banks and the multiple agencies of democratic capitalism. And this openness results in resources that are used a fairly efficient manner, an outside investor would demand that unused office space be rented out, unused factories be close and so-forth. And with this demand for efficiency, the apparently normal operations of the market have expanded to more and more aspects of life, producing democracy, a market place of ideas and a bio-technological marketplace for life. We should notice that this tremendous demand for efficiency produces a relatively low but predictable rate of profit for its investors (something that can be seen indirectly in the low interest rates which banks will offer to all comers).
Certainly, overt capital seems to render its workers merely cogs in its massive wheels – yet for all this it must offer logic to drive its executors. However implicitly, rational capitalism at least must appear to provide the average worker with a social contract, a logic which offers some reasonable chance of survival.
Now oppositely overt capital, covert capitalism tends towards tremendous inefficiency. The Mafia Don or the CIA agent cannot rent-out any of his resources since that might give his enemy some clue about his operations - moreover, the money he makes from rackets or drug dealing seem far more profitable than what could be gotten from more efficiently using the space. Compensating for the inefficiency of the illegal enterprise is extremely high money rate of profit that a successful illegal enterprise has.
A key part of our consideration is that the covert section is just that. Not only do most illegal enterprises conceal their activities, the CIA actively falsifies its situation for a variety of purposes. Thus considering the entire political economy of the covert sector is more productive than figuring how much of a hand Bush had with Enron, who knew what about September 11th and so other questions.
Just as much, we are not assuming any wall separates the legal and illegal sectors. Just the opposite, the operations of the market and power dynamics changed Bin Laden from construction magnet to
One of the Russian Mafia's specialties today is the stock fraud. This involves creating a company by selling shares, falsifying the amount of money that company makes to increase the value of the stock, and ultimately escaping with the money hapless investors shell-out. This scheme is no different than the Enron scheme.
Today we can look at those commodities that are naturally world commodities. These are drugs, gold, guns, oil and miscellaneous raw materials. Many commodities circulate today with these "world commodities" having only a percentage of the trade. But the world commodities are the ones that circulate primarily on the world level. Automobiles or steel may indeed play a powerful role in world commerce. Yet there is nothing that prevents a region such as Europe, East Asia or North America from being essentially self-sufficient in these industrial goods. The situations where Japan sell automobiles to the US comes in terms of the natural imbalance of capital flows rather than inherently within the automobile market -later Japan switched its production to the US. Thus geopolitics and the management of the world as a whole has been something of a province of the covert capitalists.
Capital is essentially a lump of dead labor whose possessor expects to see grow all by itself. Thus a capitalist expects a rate of profit. This is both a ridiculous possibility and the fiction that all energy of the system works to make close to a reality.
Marx began with the analytic tools of “classical political economy”. Ricardo operated assuming that the value of a commodity was based the amount of labor within the good. Marx took labor value as a useful quantity for analyzing the entire capitalist system. For Marx, labor value is the key attribute that unifies the condition of all commodities. Still, Marx discovered that the labor value of a commodity was not generally proportional to the money price of the commodity.
The equation of volume III of capital was rate of profit = V/(C+V). Here, rate of profit is expressed in terms of labor value, V is “variable capital” – the labor part of capital, And C is “constant capital” – the material part of capital. Since the total amount of labor used by a society grows rather slowly and amount of materials, equipment and so-forth used by capital grows very quickly, we can see that rate of profit will decline in labor value terms over time (glossing over a large part of Capital I-III).
The next question is whether this decline in the “value rate of profit” affects the money rate of profit. We say it does and for we discuss the relation between money price of and the labor value of any commodity. The long-term money price of a commodity isn’t identical to the labor value – they are related by a complex, determinant formula worked out by a Russian economist. However, there are a wide variety of “real world” assumptions which allow us to deduce that the money price is approximately proportionate to labor value. We get this assumption by noting that technology has grown in a heterogeneous fashion. While some industries, such as computer chips, have experienced massive automation, other industries, such as housing construction, work on direct labor. Thus the reproduction cost of labor sinks towards a ratio of “diminishing returns” – say D. Thus our money price of item have a fixed labor value L is going to sink to L*D asymptotically. And by this token, our money profit rate will move towards our asymptotic value. We can see that this also seems to be the approximate ratio that the various quantities move towards currently – workers can buy back the objects they produce at some ratio to the labor which they put into them.
Now, we’ve discussed the decline in the long-term money profit, what does that say about the immediate money profit and the crisis of capital. Movement to a stable money profit requires the equalization both of prices and of profits. Price equalization require open markets and profit equalization require that capital be able to flow freely from industry with entrepreneurs having the ability to create competition for any industry which generates unusually high profits. This equalization is thus not instant but happens over a long process inter-industrial flow. And by that token such flows are often not the main concern of the captain of industry fighting for his immediate mass of profits (Marx lists numerous factors which can temporally relieve the decline in the rate of profits and our comments here are mostly rewriting and enlarging these).
Seeing how the decline in the rate of money profits happens, we can see at its effect on particular individually controlled pieces of capital. As noted elsewhere, as production becomes more interdependent, modern capitalist enterprises rely increasingly on loans for the bulks of their activity. Now we assume the greater part of the value is of a corporation is contained in fixed-interest (I) loans on the corporation - debt. The minority part of the value of the corporation is represented by the stock held by the corporation’s owns - equity. Now the rate of profit (R) is rate relative to the total capital of the corporation, debt and equity together (D + E). The stockowners thus get R*(D+E) – I*(D) as their expected long-term return. Remembering E is generally larger than D, we can imagine that if R declines to below, then expected stockholder return becomes negative. This means that the company is worthless and thus bankrupt. Remembering that this is value of a typical company, we can then see the circumstances which could result in a total devastation capitalist corporations.
We’ve seen it could happen. But does it “have to happen”? Why is this a general tendency of capital? Why couldn’t small, incremental decreases in rate of profit happen, the stockholder value be reduced and capital go on with its game? This is because of capital’s tendency to resist the decline. Rather than allowing small declines, the tendency of management is to resist any decline in value until they are absolutely forced to accept it, at which point the entire basis of enterprise has been wiped-out.
We note that since the equalization process is long and obscure, modern managers have generally done many things to postpone it (seizing monopoly control of markets, manipulating supply and demand and so-forth). Just as much, at the point that shareholder value becomes negative, company managers have strong incentive to try to keep the company going nonetheless. And here we can see the Dot-com boom, Enron and further disasters waiting quietly in the wings.
If the present crisis is the flower of all previous crises, the history of crises is the history of divisions of capital.
We would say that the apparent unity of capitalist society implies a profound and justified pessimism in capitalist society’s own thinking.
We could argue that what we are calling covert and overt tendencies of capitalism have been with us for as long as capitalism has infested the planet. But these divisions today more express the conditions of this crisis. The changing distributions of this pie of world power are symptoms of the ultimate crisis of capitalism.
Even before the development of the Soviet Union, state capitalism and private capitalism openly pushed forward their respective agendas for the positive development of capitalist society.
While the private capitalist West certainly absorbed the Soviet Union, private capitalism isn't presenting any hope for world improvement any longer. This is the situation that Guy Debord dubbed “the integrated spectacle”. But ultimately, we can see that the present world is not absolutely integrated. All the contradictions of previous times exist and are asserting themselves in newer ways. The system may trumpeted its position after the end of the cold war as "the end of history", as a unified, unchallenged democratic bloc. But now, one can more clearly suspect that capital’s contraction to single bloc actually signals weakness.
The solution for each crisis postponed a reckoning for certain key values. These values were artificially maintained by the general action and agreement of the mass of capitalists as well as by enough of the working class. And thus each of these solutions and their artificial maintenance has directly set the stage for the next form of the crisis.
The ideal solution for a crisis is a situation where the powers-that-be sweep the deck and create a whole new playing field. This is a playing field for companies between each other and for workers and companies. World War II was closed thing we’ve seen to such a “clean-sweep”. Today’s rhetoric of “this changes everything” certainly aims to create a similar clean sweep. Yet, a glance at our present world indicates a “playfield” still quite similar to before.
Despite it’s ideology of competition, capitalism requires cooperation, both between capitalists and between workers and capitalists (even more, it cannot survive too much cooperation between workers).
This cooperation occurs on many levels, especially the ideological, the legal and the financial levels.
The dry accumulation of accounting, banking, insurance, safety, zoning and other standards express a range of behaviors and attitudes which capital must require for the competitive behavior of one enterprise not to directly destroy other competitive enterprises. These range from the simple expedient of not letting someone build a warehouse that burns down his neighbor’s warehouse to the complex regulations preventing stock fraud and manipulation.
And some of these expedients are attitudes. Instilling an attitude of wanting slow, careful returns is a key aspect of making
Now, each phase of capitalist development has been kindled by a paradigm of development. Understanding that capitalism requires a foundation, a series of common agreements, we can imagine how various periods have sacrifice aspects of that foundation. This undermining can come back in many forms.
The history of the capital’s cyclic crises fades all the way back to nineteenth century. We can say that the great depression of the 1930’s was last of these huge cyclic crises.
Keynesianism: money supply.
Neoliberalism: Rate Of Profit.
(Lots can be taken from elsewhere)
The entire world has seen the hollowing out of viable local economies in the name of transnational development. And much of this development has proven to be an illusion, a mirage which the transnational corporations quickly terminate once they have destroyed local enterprises, ecology, and culture.
Still, we cannot see this process as having simple heroes and villains. The rise of any kind of modern development produces a similar kind of imbalance. The former Soviet Union was vilified for “looting” the economies of Eastern Europe by removing whole factories and making each nation’s economy into a feeder for the whole Soviet economy. Yet the creation of a geographic division is the most logical possible outcome for any developing capitalist economy – one massive factory will replace many small, otherwise viable ones.
When capital reaches its crisis, the crisis is the result of the balance of all factors of the economy. It is an inter-dependent imbalance of market structures, the working class’ refusal of exploitation, the development of the means of production and the coherence of the capitalist class. These imbalances are what ultimately produce a world where “normal” production becomes unviable. The rise of speculative, unsustainable, and illegal capital is part of the unviability of normal development.
The neo-liberal and transnational model itself has been an effort to escape the profit crisis which the developed world’s capitalist nations faced beginning in the later 1960’s.
The Nikki bubble and the Asian Crisis have hobbled the development of the huge Asian section of World Capital. Yet there are also major Asian transnationals which play an important part in the transnational development circus.
Ultimately, the still-advancing crisis of capital is what renders the entire edifice of capitalist activity unviable – the crisis would have been spread about the local level instead of occurring with catastrophic speed around the world. And thus we can see classically “Marxian” behavior – to escape its crisis capital has globalized and thus made itself more vulnerable to total global crisis. Twenty or fifty years ago, workers in Argentina and America would not have immediately common interests. Today they do. Twenty or fifty years ago, workers in Argentina wouldn’t have had some of the means to directly communicate their views to American workers. Today they have the Internet.
We can see capitalism using both overt and covert solutions to its problems in the last twenty years. In many nations, Argentina being noteworthy, dictatorship has replaced democracy and then been replaced again by democracy. From one perspective, the world is being divided between spooky, mafia and legitimate businessman. This isn't raw power but a matter of each aspect being used for the purposes of over-all capital.
Thus we can say that covert capital fundamentally lacks the powers of financial capital. Covert capitalists at least begin placing their winnings under a rock. Thus covert capital is sink of capital: The rise of covert capital results in a problem of the circulation - buying coke doesn't create jobs the way that buying a car creates jobs etc. Just as much, covert capitalists lack cohesion with the world capitalist class. The mafia is equally willing to engage in stock fraud as drug dealing and so forth.
The CIA is invariably a drug
dealer in all places in which it operates. And drugs thus are one of the ideal
intensive exploitation products. Drugs multiply tremendously the overt budget
of the intelligence agencies.
So we can ask, "is this a drug-cartel with intelligence connections or an intelligence organization with drug-connections". To answer this, we look at the structure of covert capital. While money laundering is one of the world's largest businesses, it still presents serious logical problems. The flow from covert to overt sources is not a one-time but a continuous problem. Thus, the drug dealing which CIA activity cannot generate self-reproducing classes of covert capitalists. The drug-dealers that come out of “company” activity still fight each other, fight other global capitalists and hide their money in offshore banking.
Individual capitalists have always liked to partially cloak their actual wealth - those who are rich enough will generally succeed. Today, the international capital markets float in the same sea of unknown as the money of Ossama Bin Laden. The secrecy of this cloud of unknown money is far more important than a hypothetical "victory in the war on terrorism". And the decisions going into the secrecy of this cloud express well the current balance of overt and covert capitalist power.
Since each capitalist is something
of his own gang, ultimately covert capital is what buys overt capital. Both
banks and individual investors will be in on a particular venture. But if we
trace such an investment back, we will naturally find one or more distinct
Thus, according to the particular context, we speak of "poles" of capital. These poles are groups of capitalists united enough by a common ideology to be able to act together. The vast pool of currency speculation flitting from nation is ultimately a single empty center for capital.
On this level of operation, the crisis of capital is expressed by the reduction of the number of poles.
On the level of the individual firm, the situation seems relatively clear. The management of Enron extracted “only” a few billion from the company before the financial house of cards collapsed. The inability for Enron as originally constituted to make the money which Wall Street expected certainly gave its management incentive to begin a sucking the company. Moreover, the need to pump-up the entire stock market gave considerable incentive for the creation of such boondoggles.
The critical dynamic now seems to be that the operations of the crisis push more and more money into the covert sector. Those companies that cease having ordinary profits begin pumping out profits by more shadowy means. This conversion allowed the American economy to claim to have "escaped the business cycle" during the 1990's. Yet the crisis then appears suddenly, as a bolt from the blue, as a stock market collapse, as a nation who’s topsoil is washed away, as suicide pilot's destroying the world’s largest office building or as the world's 7th largest company suddenly going broke - and so-forth.
An important principle of markets
is that bad money chases out good. The capitalist can't make normal profits in
a system filled with crooks. The internet bubble in many ways prevented the
internet from being anything more than a boondoggle, with only one-person firms
and the largest firms capable of making real money. In Argentina today, capital
has reached utter loggerheads. Argentina has largest external debt in the
world, $140+ billion dollars, twice the original value of Enron Corporation.
The situation shows an economy that one manifestly cannot extract this amount
of money from. Yet any effort to reduce or extend the debt payments risks
reducing the discipline of the world debt market. Other nations may then
imagine taking a similar road to Argentina. The conditions of Argentine
non-accumulation cannot be solved solely in terms of concessions from the
Argentine working class. Only a slow realization and write-off by world capital
could gain enough capital to allow a further cycle of accumulation.
This situation comes tremendously close to the classical collapse of capitalism predicted by Marx and Engels. And just as much, things most go from a unsustainable situation to a situation where the proletariat seizes power for itself, and they have a long way to go to achieve that situation.
In many ways, the world hasn't recovered from the crisis of 1998. The Dot-com bubble partially spent the world's economies out of this problem but the problem of capital's unwillingness to invest in development remained. Economic expansion continued throughout the world yet from Korea to Argentina, capitalists were unwilling to re-invest and machinery suffered decay.
Drug capitalism is the largest sector of covert capital. Drug serve as both a tax on the poor and a reflection of a condition of total desperation within the population as a whole. The personal economy of the junky (the heroin user) is identical to the political economy of the Ponzi scheme. He robs the future for an instant, artificially induced euphoria. The Junky and the Ponzi scheme have existed for a long time now, of course. The question is simply the balance of their existence.
In the last few years, the America Democratic and Republican parties currently have had the smallest differences in ideology of any time in their histories yet they simultaneously have fought some of mostly divisive battles in their history. In a larger scale, the crisis characterized by the contradictions of factions which are tremendously close yet seem to lack loyalty to each other.
When George Bush and Al Gore exactly bisected the US electorate, they perhaps should have realized that democracy had reached a serious crisis. This isn’t because the exercise in computerized prediction discredited democracy in the eyes of the ruled but because this predictability had ended elections’ ability to act as a damper to market forces as a whole.
We can see a futile call for electoral reform today from an American business class which is suffering under vast weight of contributions extracted for the democratic auctioning-off of American political power. But realistically, American political power will certainly continue to extract vast sums for epic battles between two political cliques having vanishingly little political differences.
This pure manipulation is also an expression of our general crisis of capital. On one level, the use of cynical propaganda and electioneering expresses a progress of the means of falsification; mostly in terms of a society that has lost it's moorings visa-vis spectacular manipulation. Simultaneously it expresses the need to unify with the state, the need for a single pole of capital to predominate.
One key unifier of September 11th with the more immediately obvious crises of the economy is the way that ideology has become more and more a means of production, how ideology has become more and more purely instrumentalist.
When Enron fleeces its employees with false stock, it also steals from its wealthy investors.
And this is not to say that ideology is not a means of deception. Indeed it is but this means of deception and manipulation is inextricably woven into the production process. Ideology and propaganda sell a tremendous number of goods as well as increasing a less than rational loyalty of workers to bosses. But there is a key balance in the way this means is applied. The lie must be both used and believed at a very fine balance. Ideology is more than propaganda. Ideology simultaneously unifies capitalists themselves and sells the system to the masses.
When ideological control serves only as a manipulation towards the masses, it expresses a lack of ideology’s ability to control the rulers themselves. And this lack of control is a lack of coherence within the whole system. A universally believed ideology is what keeps an individual entrepreneur from hiring thugs to assassinate his rivals. The destruction of the WTC tower is strong evidence that ideological unity is faltering – Saudi and American capitalist poles are loggerhead. With both CIA agents and Enron management, the methods of capitalism became only schemes which would be used not only against the peons but also against capitalists “outside the loop”. The problem isn’t that these folks failed personally as members of the ruling class but that they did things that ultimately put the entire system in danger.
In our department model, those acting without an ideological commitment to capital as a whole have passed into “covert capitalism”. The Ponzi scheme is the most obvious way in which a capitalist well wind-up treating the “fellow” capitalists in a purely instrumentalist fashion. But naturally the schemes of the CIA, which involve “doing anything to protect national security”, are also in this general realm.
Now, our “departments” are a relatively rough shorthand for a complex process. The point is exactly what forms the covert or nihilistic enterprises take. The CIA was cynical and self-serving fifty years ago. But the exact form of its cynicism where the entire question turns.
So here we can say that there is an ideological economy with runs in parallel to the more usual qualities of the economy. And our conclusion is that this ideological economy shares the crisis of the mundane economy. In moments of this crisis, the guiding ideology of world capital becomes less and less oriented towards maintaining capitalism in anything longer than the very immediate term. The CIA's willingness to deal with Al-Qaida up to September 11th shows this as much as the IMF's nihilistic policy towards Argentina. This incoherence is part and parcel of the entire crisis.
The rise of covert capital appears also as capital running out of ideologies.
Anthrax experts certainly understand that the more interviews they give, the more devastating both the hoaxes become and the more likely real attacks become. This lack of concern with actual security isn't ultimately surprising.
The ideology of security
ultimately become is the ideology of the covert capital itself. The claim that
more secrecy equals more security is an intellectual Ponzi scheme. For example,
the "security" provided by concealing the movement of nuclear
material through populated areas means that few voices get to contest such
ridiculous actions and this ultimately means that very insecure situations
result. But such further disasters are likely to be answered with a call to
Like the high-tech ponzi ideology, the security ponzi ideology has already had many ups and downs, yet unlike the dot-coms, not enough sections of capital have suffered enough to bring the sellers of security under any scrutiny. And the security sector has the option to ultimately arrest those who doubt it.
Following this pattern, the FBI man who failed to find the real Lockerbie bombers naturally was promoted to head of FBI anti-terror operations against Al-Qaida. The unity of Al-Qaida and CIA methods is just as telling as the reputed Bin Laden-CIA contacts month before September 11th. Islamic Fundamentalism has followed the CIA in the same way as drug dealing has followed company activity. This is entirely natural given the characteristics of this ideology (link). Some might be surprised how easily this apparent antagonist collapsed in the Afghan conflict but it follows a natural system. The structure of gang capitalism makes the destruction of the lesser racket inevitable at any one point (we were in fact among those surprised at an earlier point).
“Islamic Fundamentalism” or Islamicism could be seen as a purely a tool by the CIA operatives taking an instrumentalist approach to their intervention in third-world nations. Simultaneously, CIA activity has no trouble allowing a flow of Islamicist terrorist entrepreneurialism along with their own flow of illegal activity.
A Vietnamese-American worker compared the Enron's demise to the fall of Saigon in 1975. "I watched the fear in the eyes of the South Vietnamese soldiers as they retreated and disposed of their weapons. I watched families and friends hugging each other for comfort as they waited in fear for the uncertainties that were about to fall on them. Last Monday those memories came flooding back. I saw chaos and confusion. I saw co-workers and friends hugging one another for comfort."(corp-watch article on Enron).
Today, West media has made no serious secret that Ossama Bin Laden was trained, armed and directed by the CIA and Western interests. If no one has reacted to this, it because no can imagine an alternative to the idiotic narrative of events put forward by this same media. Just as much, we can see
The events we have seen are more like holes in the fabric of reality than any immediately understandable collapse. But when we understand these events as whole flocks of chickens coming home to roost, things make more sense.
The crisis appears both as a continual misery and as a series of collapses. In some periods, the working class goes ahead to first refuse the conditions of labor and thereby throws capital into crisis. In the present period, capital is finding its crisis so quickly that the working class will likely be left searching for the solution.
The struggle of the Palestinians today is perhaps most immediate among those struggles which generate a crisis for capital. The willingness to fight at those points where things seem utterly hopeless places one at the vanguard of class struggle.
Beyond this, the contrast of the
events in Argentina and those in Afghanistan show the absolute contrast between
class struggle and bourgeois war. The September 11th events and the Afghan war
followed the pattern of bourgeois war, a struggle that can be fought once the
consciousness of the proletariat has been destroyed, once solidarity has been
We have full solidarity with those Afghans who rebelled against the Taliban during the "War Against Terrorism" - remember that in many cities the Taliban had been expelled by uprising and demoralization before mercenary Northern Alliance arrived to occupy the area.
In Argentina, an uprising of the vast majority prevented the "state of siege" declared for the enforcement of austerity.
Revolutionaries can hardly confront a wounded person with the suffering of others. We do not need an appeal to moralism throughout the world; the proletariat has an objective common interest. We can trace a line of causation between the death of the office-dwellers of the WTC and the actions of the American CIA. This is just an instance of a general principle that the enemy lies within. The brutality of the Taliban is more obvious to the average Afghan than the schemes of the CIA are obvious to the average American.
Beneath the surface of the various “financial bubbles” which we see today are Keynesian economic strategies. And beneath these are strategies for adjusting the political-economic relations between capitalist and between workers and capital. Among other things, this process aims for new models of production and consumption. The dot-com boom involved workers’ willingness to accept worthless stock as a high portion of their salaries. We can see a gather retail housing boom which, if it gets off the ground, will involve a system of once again unsustainable exploitation patterns involving the average person making their lost wages through housing speculation – and naturally winding up homeless, jobless and penniless. But, as mentioned, it’s uncertain whether such a scam could move beyond the first step in the face of growing awareness of the world economic farce. If capital can continue to create these new models, it does not have to do much else. Of course the new models won’t last but there is always another lie behind the first.
We believe that a division of world capitalist enterprises into overt and covert departments is very useful for understanding the evolution of crisis capital. Minsky divided arbitrage into sound, speculative and Ponzi. Our division is similar but it depends on what ideological forces shape
We are dividing our consideration between a covert and an overt sector. This division may seem rather arbitrary but it is extremely useful for dealing with the common situation of speculation versus productive activity.
We have an investor who gives his money to a manager who supervises the production of various goods as well as speculating on various markets. The manager knows that if he begins to lose money, he will be fired. So, if a situation is reached where money will be lost, he instead begins a series of schemes designed to conceal this fact. The manager controls the entire factory so coming up with some money each month for a while is fairly simple. It is only after a period of time that things can get ugly.
We should not that as long as things are going fine, our manager may be a pillar of society. It is possible that circumstances would allow our manager to be rehabilitated by an economic upturn if he hasn’t sunk too far into secret debt. But the sinking into secret debt doesn’t take too long.
One important aspect is that today 100-200 transnational corporations control more than a third of document world-trade, and the most important third. These companies often have nested boards of directors and nested ownership, making the highest level of world capital extremely powerful and extremely concentrated. This system is still extremely complex, with the levels of ownership, directorship and management inter-locked but not identical – looking at the Enron collapse, we expect that Enron stockowners as a whole were burned even if Enron management escaped with sizeable chunks of this stock-bubble company’s carcass. Altogether, this shouldn’t cause to view these entities as “immune to the market”. Rather, we should realize that the effect of market forces can be delayed and spread according various political agendas. Just as much, some market effects appear as one of these titans collapsing suddenly rather than as visible economic decline.
Now, these vast entities have a powerful ability to engage in “intra-company trading”. This economic activity is very much analogous to the activity of the Soviet Union in that they balance their economic activity without the usual need for profits on each transaction. And in this process, they have wide latitude to produce entirely fraudulent effects. Enron corporation had extremely strong “intra-company trade” as well as the ability to manufacture the appearance of profits through this trade. Thus some portion of these intra-company trades can lumped with our covert capital department.
These vast entities are not identical with the state and have distinctly different operations. At the same time, they segue into the state.
We can imagine the bursting of
various financial bubbles. We can also imagine a financial system that is
propped up with various devices similar to Japan’s system, with a similar
The expansion of GSEs certainly qualifies as another bubble akin to the dot-com bubble. But we should remember that each of these bubbles is also a cycle of Keynesian finance. GSEs are government-guaranteed debt financing mainly mortgages. These have expanded exponentially in the last ten years yet the situation is “only” equivalent to the Reagan-era debt boom, though it is certainly hidden.
This has been so widely discussed that one would think there would be nothing more to say. This isn’t true though.
In anycase, today there is no more explicit opposition but rather opposing tendencies within the same bloc. The "covert" and "overt” sections of capital account for those tendencies that earlier lead to the division of the world into intensive state capitalism and extensive private capitalism. This division seems to be specific to the present period where capitalists universally repudiate state capitalist ideology yet the tendency to state capitalism remains quite strong.
One section is the highly inter-dependent. Overt capitalist enterprises are tied together with banks, insurance, stockholders and democratic institutions. The other section of capitalist activity stands on it's own, whether as a military machine or stacks of dollars in a mattress and favors intensive exploitation and covert operation.
Those who claim that September 11th "changed everything" generally have shown almost no change in their own fundamental approach. Those who claim that September11th was "saddly predictable" paint with an equally idiotic broad brush. Certainly, we who trace the directions of the
Certainly, these categories are an effort to puzzle-out the many riddles that September 11th created. And on that, it's important for us to say that we were surprised by the exact events of September 11th. While we have certainly aimed for an understanding of the over-all system which gave birth to the events of September 11th and it's aftermath, there is no doubt that recent events have revealed many previously hidden manifestationsof the systems dry-rot. We aren't afraid to say that it's been challengegiving a new formulation to these events. This text is not a bolt fromthe blue but umteenth itteration of an effort to understand the event -we're changing our approach and we might change it again.
Which of these aspects of capitalism has dominated history really depends on how you frame and divide these tendencies (admittedly we are talking about the tendencies, the tendency to control, the tendency to multiply money, the tendency hide to money, and so-forth). Neither tendency could exist without the other. Commerce has expanded through both a state that sends adventurers around the world and from the build-up of normal, regular stock companies whose operations can be inspected by outside businessmen.
Still, each has its unique aspects. We should notice that a gang has always been needed to prepare the way for ordinary commerce to occupy more terrain (and naturally this gang never leaves either). Columbus began the scheme extracting gold from the new world and certainly used the least cost-efficient methods, since it was the Indians who pay this bloody cost.
The productivity of overt capital
and the scams of covert can both be understood within the mechanisms of the
"money multiplier". This multiplier operates through a cycle of a
capitalisting deposit money and banks lending out that same money in turn. The
bank is expect to verrify that those they loan the money to either buy
"collateral", items of verified value or simplydeposit the money in
turn. But with the bought collateral or the deposits, the loaned money tends to
find it's way back to the bank and thus the banks are able to loan it again,
starting the cycle over again. Based on theamount of capital which banks or
individual capitalist hold, this resultsin a geometric series expanding the
size of total desposits by some ratio(in modern America the percentage
expansion about 10). Thus there can beten times as much "financial
capital" as there is total "real money".
The money multiplier means that items which qualify as collateral for banks loans now have N times as much money chasing them as they would have previously and thus their value can expand by that ratio of N. The question certainly becomes whether this increase in value is ultimately justified.
Such a cycle results in an
expansion of the value of items bought by anyone barrowing money. For example,
houses are now chased by ten times as much money as before (which means that
without banks, the price of a house would about the price of what is presently