Wednesday, July 15, 2020

How Beliefs Kill

Markets can be mesmerizing and seemingly magical things. By making purchases according to their values and needs, individuals cause reality to be reconfigured, out of site, invisibly and often at a great distance, satisfying those desires and needs. The intricate tapestry of markets with which we now live, having stitched the world together, is a marvel to behold. But the minute rhythm of its weave can all to easily hypnotize us into misunderstanding what's really happening. Markets exist, like money, only in our minds, their warp is our belief and their weft our action on those beliefs. There are people and things that markets organize, but themselves, they are just ideas: agreements between people that function as institutions in the same way as all our social institutions, by shared consent, as ideological representations of how people and things can be arranged. For better or worse, real resources are configured by these belief and agreements.

Demand, supply and money interact in logical relationships of ever expanding complexity through markets. For instance it can be shown mathematically that "profit" across an economic system is equal to successful "investment" where investment is defined as money spent to reconfigure capital goods and/or re-organize labor into more efficient processes to exploit the reconfigured or existing capital goods. The resulting profit across the system equals the combined input of successful investments. Function by function, the subsystems that make up modern markets are conceived symbolically to allow their situation within the larger system to be understood in order to identify those points where real resources can be reconfigured or new processes introduced to create more profit. And the further one is from actual production, the more symbolically loaded the math becomes, it is in these abstractions, and mostly in their manipulations, that finance finds it's millions.

This symbolic aspect of markets, for the elite, is their most enchanting characteristic: that all the complexity of reality need not clutter the stimulus and response of "price setting", the essential symbolic function of the market equation around which all other terms are organized to distribute resources efficiently. But for markets to deliver on that potential, every symbol in the construct which contains assumptions about some real thing must have these assumptions continuously tweeked. To track reality they must constantly be tuned, modified or abandoned as the feedback of reality dictates. "By making purchases according to their values and needs," for instance, assumes people with money to spend, an inherently political question where policy, not the market, determines reality. The most important assumptions are all political in this way. As what we think of as capitalism was taking its shape, an important vein of its development opted to deliberately exclude essential  populations from participating in markets, chose to prevent them from having money to spend to impact price signals, keeping them as slaves for the sake of money profits in markets elsewhere. This political decision made business very profitable.

By the time of the American Civil War, slaves constituted almost 40% of the population of the American South and were a key traded asset on the London Stock Exchange and the key to profitability in the plantation economy. For profit in markets, "people cause reality to be reconfigured, out of site, invisibly and often at a great distance, to satisfy those desires and necessities." For the end buyer of cotton, or the traders of slave mortgages in London, the mass early deaths and appalling treatment of American blacks was an invisible externality. Or for those who knew, which those profiting most certainly did, they were an acceptable cost of doing business. This is the essential problem of markets: every symbolic construct of the system has real referents that however distant or obscure can take on staggering moral weight. The Corona Virus is underlining and highlighting for all the world the moral failures of America's markets now which are currently destroying, by conflating, both our politics and economics. 

Remember way back in early March when the combined Democratic field was dogpiling on the Sanders campaign for its "irresponsible" Medicare For All proposal? At the cost of (bites pinkie) ONE TRILLION DOLLARS (over ten years)! Then, ...remember a few weeks later in late March, when Congress handed $1.6T to the Fed? Who within that same week gave ALL OF IT to Wall Street. From the same Congressional Act there is another $4.6T similarly pre-authorized for the Fed to play with but no one can tell what's going on with it because Congress provided meaningless oversight provisions. Only licensed financial institutions have accounts with the Fed, so there is that inherent limit on where it can spend. The Fed is doing as it pleases within that limit. Mysteriously the financial markets are near an all-time high. So is the US Covid infection rate with the US already the world leader in Covid deaths. The United States of America, I submit to you, can pay for whatever it CHOOSES and these are the choices our elected representatives have made.

In a previous post, I made the claim that in the political market US policy making has become, with policy for sale to the highest bidder, policy cannot be coordinated towards any public aim, public health for instance, that conflicts with some private profit flow: profit comes first, that's what the buyer paid for. This is what I'm talking about when I say that markets and money are nothing but social agreements and that our beliefs about them reconfigure real resources: one day the money isn't there, the next it is, some people get rich, some people die. Because of these beliefs. Where did that money come from? Why can't the US contain the virus? The nations around the world with socialized medicine have, the US and other nations that don't, haven't. We can insure the profits of corporations but not ensure the health of citizens because of what we choose to believe.

No taxes were raised, no extended debate determined who would get rich, nor who would die. This is what was legislated with the Orwellian named "Cares Act" and passed by voice vote. On what grounds can anyone claim that our elected representatives care about their voters? Donors got rich, voters died. Winners and losers had long since been selected by four decades of legislation that made it very difficult to help voters at all while astonishingly easy to help corporations, particularly financial ones. Corporations, operating within their new Citizens United rights as persons, had lobbyists available and prepared for a crisis with comprehensive wish lists to shield corporate leadership from consequences of mismanagement under the banner of Covid relief, and had pre-bribed Congress adequately through "campaign finance" to ensure results. Voters only had their votes which don't register in the market for policy where only money has purchase.

Like the nineteenth century London traders in slave backed mortgages, our legislators have shown that their first priority is preservation of capital, followed by ROI. They have arranged the apparatus of governance to dependably produce on these priorities. In addition, to inforce this they're generous in funding the coercive power of the state, from a vast overseas military empire to increasingly militarized domestic police forces. They have arranged the apparatus of governance to ensure fossil fuels continue to make profits even as they destroy the ecology required for human existence: the particular humans benefiting, small in number as they are, are remote from the dry and carcinogenic environments their profits require elsewhere. Death and ultimate extinction will be far from them or after they're gone, what do they care? A politics cannot get more bankrupt than this.