Animal Crackers In My Soup

 

tomato soup

Andy Warhol is famous for predicting that in the future everyone will be well….famous for 15 minutes. This should rightly be considered as the pre-eminent definition of the Democratisation Of Celebrity.

Even more perceptive, (although lesser-known), is another Warhol dictum: ‘Art is what you can get away with’.

In the United States of Everywhere money, like art, is also what you can get away with. So in a sense, art is money. That is to say, there is a clear parallel between the way that both art and money are produced, and a correspondence between what art and money can do- their functionality.

This brings us to Andy Warhols famous Campbells soup tin paintings.

On the surface, it appears that Warhols soup tins are something of a satirical comment on mid 20th century capitalism and consumerism. But if we look deeper and within the context of Warhols background in media, design and advertising we see that these images are something much more profound than mere satire;   an exploration and meditation on the production of authority and persuasion.

Authority is a fundamental component of persuasion. This seems to be counter intuitive. Authority is associated with force. Persuasion is generally regarded as the counterpoint to force; force is resorted to when persuasion fails. But persuasion and force are two points on the same spectrum.

Persuasion rests upon the authority of the persuader. Authority is the expression of the validity of power. In effect, you are persuaded by the force of an argument, or you are compelled by the force of an individual or organisation if the argument fails.

The nexus between Authority and Persuasion is the form of a proclamation. The proclaimer makes a statement which is then tested by subsequent events. In this sense we can think of a proclamation as a kind of contract between the proclaimed and the future, or the proclaimed and reality.

A proclamation is a statement to the effect that: ‘Things should be this way’.

Should the proclamation turn out to be in accordance with the future or with reality, the authority of the proclaimed is enhanced. Should the proclamation turn out to be at variance with the future or with reality then the authority of the proclaimed is diminished.

This all might seem a little abstract, so let’s return to the practical example of the soup tin paintings

The Naked Lunch

naked soup

Warhols soup tin paintings begin with an actual tin of Campbells soup. No soup-no paintings. More specifically, no Campbells soup, no paintings.

A tin of Campbells soup is made up of two separate components: the tin of soup itself and the label on the tin which describes what it is. After differentiating between can and label we can understand that Warhol was primarily interested in soup tin labels as opposed to tins of soup. If Warhol was actually interested in tins of soup as opposed to labels, he would probably have embarked upon a career as a chef as opposed to that of an artist….

Having isolated the Campbells soup tin label as the point of interest we can examine it in more detail. It is composed of a number of graphic elements. It is important to understand that each of these elements fulfils a specific purpose.

The first of these elements is the Campbells logo. This logo is exactly the same on every tin of soup. There is a reason for this. Consistency of this element represents consistency of intention, or more precisely consistency of contract. The meaning conveyed by a brand is: You know what you are getting; this is your guarantee.

The second of these elements is the name of the specific soup- the contents. This tells you what is actually inside the tin and varies from can to can of soup. This is also a form of contract. The fact that you can rely on Campbells soup company to produce consistently the same quality of soup that differs only in type is the substance of the contract that you have with the Campbells company.

Imagine that you purchased a tin of ‘chicken noodle’ soup only to find inside the actual tin was ‘black bean’ soup. In other words, imagine what the effect would be if the contractual elements on the outside of the tin can differed from the contents on the inside of the tin.

It Does Exactly What It Says On The Tin

In the event the soup you thought you were getting did not live up to either the quality or the description on the label then the Campbells brand would be diminished. In other words it’s value would fall.

Both the Campbells brand name and the soup type description are in fact proclamations. They are contractual proclamations made on the basis of the brand authority that Campbell soup company has. They are proclamations tested at the point of future consumption.

If you doubt this argument is correct, imagine buying unlabelled tins of ..whatever from a discount store. Could you sue the manufacturer for breach of contract if it was the ‘wrong’ flavour? Could you sue manufacturer for breach of contract if it were below desired levels of quality?

No, you couldn’t- no contract exists to be breached because the manufacturer has not specified the terms of any contract in the form of a label. Effectively the contents of the tin would have no value.

The Proof Of The Pudding

The test of the Campbell soup company proclamation comes in the opening of the tin and the eating of the contents. Either the contents live up to the label or they do not.

A money currency note fulfils essentially the same function as a Campbells soup tin label. In the same way that a soup tin label has a brand name so currency note has a brand-name; that of the issuing central bank.

And in the same way that a soup tin label has a specific flavour, so currency notes have a corresponding specific interest rate.

The brand is what all Campbells tins of soup have in common; the flavour is what they have in difference. The central bank is what all currency notes have in common, the interest rate is what they have in difference.

A bank note issued at 25 basis points is a different flavour from one issued at 50 basis points! They have the same brand label, but they are NOT the same soup !!

You test the soup proclamation by opening the tin and eating the soup. You test the central bank proclamation by bearing the money and using it to turn a profit.

If the soup tin company product turns out to be rubbish you look for an alternative, which forces the company to change its recipe. If the currency notes issued in any particular quarter at any particular interest rate prove incapable of producing a profit you also look for an alternative forcing the central bank to vary the interest rate.

The Plot Thickens….

So far so good.

Then along comes Andy Warhol who leveraged the meaning of the Campbell soup tin label and the authority of Campbells. (Remember here that the meaning of the Campbell soup tin label is a contract). By means of his soup tin paintings Andy Warhol produced what was effectively a derivative of the Campbell soup tin label.

This is one of the hardest things to understand about derivatives: the relationship between a derivative and the nominal subject of the derivative:

There is no direct relationship between a derivative and the subject of activity of that derivative. The derivative, as its name makes clear is one step removedderived from its subject.

For instance, there is no direct link between the infamous Mortgage Backed Securities and the housing which they purport to represent (as everyone found out to their cost in the Credit Crunch).

This lack of a direct link is precisely the basis on which derivatives can be said to be money and money can be said to be equivalent to derivatives.

WHEN YOU CAN’T SPECIFY (LEGALLY RESOLVE), WHAT THE RELATIONSHIP BETWEEN A CONTRACT AND THE SUBJECT OF THAT CONTRACT IS, THAT CONTRACT IS A FORM OF MONEY.

THIS MEANS MONEY IS INTRACTABLE.

Everyone is aware that there is no longer a link between silver and gold and the five pound note in your pocket. But most people still fail to understand that there is no direct link between the 5 pound note in your pocket and the wealth of the British economy. You cannot take a 5 pound note into the bank of England and claim a portion of ‘Britain’ on the basis of the contractual ‘promise’ made on a 5 pound note.

This absence of direct relationship is the basis for a currency notes which are a generalised contract being money.

Does this mean then that there is no relationship at all between activity based on a derivative and the subject of that derivative? In fact, the subject of a derivative is used as a trigger to activate a particular clause in a derivative contract in the same way that a horse race is used to trigger a particular clause in the betting contract between a punter and a bookie.

The bookie leverages the authority/power of the winning horse to run a book on the race. This is the essence of a proclamation.

The race itself can be regarded as a commons. A horse race is an open, common event. Everyone has equal access to it.   Bets are money/derivatives based on that event.

The economy/society is an open series of events. Money/Derivatives are generalised contracts like betting slips, based on this series of events.

Andy Warhol leverages the power of the Campbells brand which can also be regarded as a commons. The Campbells brand necessarily works on the basis that a large number of people recognise it and its significance, whether they actually buy Campbells soup or not.

They recognise the significance of the label and the contract that the label represents. This is related to, though separate from the soup itself. The Campbells commons is separate from the soup- nothing to do with the physical soup. It is to do with the label, the contract and the meaning. The brand value; paid for by advertising and found on supermarket shelves.

The soup is private, the label is a commons.

The Campbells label contract is ubiquitous. Ubiquity is always a characteristic of a commons. As I explain on previous occasions the appropriation of all or part of a commons is the fundamental process of democratisation. Democratisation- the process of creating a Democracy, works by stealing a commons from the people. That is what democratisation is and always has been.

The reason that the soup paintings have ‘cultural power’ is the ubiquity of the Campbells brand. Andy Warhols soup tin can paintings based on the soup tin originals are a private appropriation of cultural commons.

Who is appropriating this commons?

Andy Warhol and the wealthy patrons of Andy Warhols art. Andy Warhol is issuing a proclamation based on the Campbells Soup Tin Contract (the ‘Andy Warhol proclamation’), and his art dealers and patrons are trading on that proclamation. Andy Warhols reputation and value as an artist (like an issuing bank) is derived from the reputation and value of the Campbells Soup Co.

The use that this derivative will be put to is considerably different from the use that the original label contract was put to And the effect of this is that an Andy Warhol painting of a tin of soup it’s worth a hell of a lot more than the tin of soup that it derives its value from.

Still, there is nothing here that is fundamentally unstable. The problem arises when the paintings of the soup cans no longer actively correspond with the with the reality of the soup cans they are based on. So for instance, if Andy Warhol produces a painting of ‘mosquito wing and belly button lint’ flavoured soup, this clearly does not correspond to any soup that exists in the real world.

In other words if the Andy Warhol painting is judged to be inauthentic then its value or the value of the proclamation it makes will be reduced, possibly to nothing.

And this, believe it or not, was the basis for the credit crunch that destroyed so much of the western economies since 2008.

Before financialisation managed to establish a death-grip on the worlds developed economies, the production of currency proceeded more or less more or less along the lines that the Campbell soup can company produces soup.

Every three months or so central banks produced soup at a proclaimed interest rate, (equivalent to a flavour), and people decided whether to buy that soup or not.

Then along came Andy Warhol (derivatives creators and traders) and Andy Warhol chose Campbells soup to be the subject of his painting practice. Note that there is no direct relationship between soup production and painting production, there is only an indirect derived relationship.

Financial institutions decided that housing would be a good area to base their derivative production on. Just like Andy Warhol, it was simply a matter of choice..

After a while, as they became more confident, financial institutions began to imagine all kinds of strange flavours of soup in the images they produced. They could do this because no one dealing in these images was actually going to eat any soup or have to taste it. Unlike the Campbells soup company there no   constraint on the about what flavour of soup got the financial institutions could produce.

And this went on until 2008 when those who dealt with and owned this new form of art became increasingly worried about the validity of their purchases. This can and does regularly happen in the art world of course. Some art appreciates in value and some doesn’t.

Now imagine that Andy Warhol found that his ‘mosquito wing’ flavour soup tin paintings weren’t being well received by the critics or selling so well. So he contacts the Campells soup company and tells them that they need to actually start producing mosquito wing soup so that he can point to the real tins on a supermarket shelf and prove that his vision is valid.

‘Why In Gods Name would we want to do that?’ asks the soup company

‘Because I am a very famous artist’ says Andy Warhol

‘The people who buy and trade my art are very rich and very important. If they lose money on my paintings and go bankrupt this will bring the entire economy down. In other words, I am Too Big to Fail’

And that is more or less what actually happened in Quantitive Easing!

For the past seven years, like Oliver Twist and the foundlings in the workhouse, savers have been put on an enforced diet of Campbells Very Thin Gruel. Meanwhile, the sick and the old have been treated to Campbells Good Old Fashioned Poverty Broth.

Developing economies have enjoyed Campbells Hyper Liquidity Hot Money (a spicy concoction that burns going in and burns even more at the other end)… And for the upper echelons of the market it is Campbells Extra Thick Full Fat Cream Flavour.

And the reason that the shelves are full of this stuff and are going to remain so for the foreseeable future, is so that the derivative soup tin paintings look authentic and the proclamations they made are valid…

Bon appetite.

 

 

2016: The Great Unraveling

 

 

 

Had a coat of fine leather and snakeskin boots
But that coat always had a thread hangin’ loose
Well I pulled it one night and to my surprise
It led me right past your house and on over the rise’

 

‘Lucky Town’- Bruce Springsteen

 

The World’s Political And Economic Order Is Stronger Than It Looks

8:39PM GMT 30 Dec 2015

 Telegraph.co.uk/finance/economics/12074226/The-worlds-political-and-economic-order-is-stronger-than-it-looks.html

In the last days of 2014 I identified 2015 as the first Year Of Culture. I described the rise of the cultural constituency – a new kind of sub national grouping transforming the nature of politics internationally and domestically.

The dramatic rise of SYRIZA in Greece, PODEMOS in Spain, Trump in America, and even the division of Scotland and England between SNP and the Conservative party proved my observation to be accurate. No one else came close to predicting the rapid and transformative rise of the cultural constituency .

My analysis comes from the perspective that fundamental and far-reaching change is taking place. This affects not only the way that politics and economics is practised but the core ideological principles that underpin these disciplines in the ‘western’ world.

Economics as we have understood it has fallen apart – there is no longer an economic rationale -a unifiying ideology that underpins the debate between opposing factions. Instead, it has been substituted for by a cocktail of emotion and morality that is the precursor to fully fledged sub-national identities.

Until the end of the Cold War questions of group identity and conflict appeared to be successfully subsumed within the modern nation state. It was argued by our liberal elite that this process of sublimation to liberal democracy would continue throughout the world. Loyalty based on district or ethnicity or religion would gradually wither away and be replaced by loyalty based on ‘class’ and comparative economic advantage economic rationale.

 

This transformation was the essence of progress and modernity and was supposed to be unstoppable. But by now it is now becoming increasingly obvious that not only has the global process of liberal expansion stalled, it is now being reversed– even within the core nations of Western Europe where it began 450 years ago.

The bigger picture has been revealed over the past year. If 2015 was the first Year of Culture then 2016 is the first year of The Great Unravelling.

In a recent piece in the Telegraph, ‘The World’s Political And Economic Order Is Stronger Than It Looks’ Ambrose Evans Pritchard (AEP) compares the world as it is now and as it was in two other periods of great upheaval; the interwar decades between 1918 and ‘39 and the time of The Thirty Years War that divided Europe into Protestant and Catholic states.

In AEP’s brief description what is immediately striking is the central significance of Germanic thought in these crises; its liberal wing personified by Erasmus and Stefan Schweig, its prescriptive wing by Martin Luther and Adolf Hitler.

 

It is also striking to note that despite recognising the centrality of German politics and culture in the rise of Protestantism and the World Wars, AEP somehow fails to recognise the possibility that German culture and politics is again at the centre of a global crisis we now find ourselves in.

 

Indeed, it is not even clear that AEP is sure that there IS a specific crisis.

 

‘Readers have scolded me gently for too much optimism over the past year, wondering why I refuse to see that the world economy is in dire trouble and that the international order is coming apart at the seams’.

 

His central prognosis is that things could be a lot worse; is this justified optimism or blindness?

 

AEP is unable to see both the ‘Germaness’ or the danger in the present crisis because contemporary events frame the end of Empire, something which is likely to be beyond the ability of the adherents of that empire to discuss rationally.

 

Protestantism and the Enlightenment were markers for the beginning of the age of the modern Germanic nation state which displaces ethnic and cultural regional identity. Luther and Protestantism represent the birth and growing pains of an Empire Of Thought co-existing with the physical Germanic empire. The split between Protestant and Catholic thought in Germany was characterised by German philosophy as the failure of Catholic thought.

 

The World wars that began almost exactly three hundred years after the Thirty Years War represented another intellectual milestone -an irretrievable split between Continental German and Anglo Saxon thought. This split centered on the failure of the liberal continental German tradition of Goethe and Schiller (and even Marx) to resist the rise of barbarism. This was in turn characterised by Saxons as the failure of continental German thought.

 

There is a pattern here: The prevalent form of thought is said to have failed as a competing form of thought emerges, then there is an unraveling that spirals into conflict.

 

The Technical Basis For Civilisation

 

A global unified Germanic philosophy emerged from Protestantism, based on the idea that there was a technical basis for ‘civilisation’ that dominated more or less the entire world:

 

‘Zweig’s description of Europe in the years leading up to 1914 is intoxicating. Everything seemed to be getting better: wealth was spreading, people were healthier, women were breaking free’….He could travel anywhere without a passport, received with open arms in Paris, Milan or Stockholm by a fraternity of writers and artists. It was a cheerful, peaceful world that seemed almost untainted by tribal animosities’ (!-AP)..

 

It was believed that the more technologically advanced a society was, the more civilized it was. The more civilised it was, the more morally developed it was. The impulse and capability leading someone to develop a combustion engine is the same impulse leading someone to create a sewer system, universal education etc. It is a process of improving the lot of mankind through individual effort.

 

Ironically perhaps, this argument reaches its apotheosis in Karl Marx (a Protestant family converted from Judaism, missing out Catholicism on the way!), who claimed that a physically materially advanced society is better in every way than a non developed society more intelligent and more moral. Crudely put, it is further along the road to ‘inevitable’ revolution and socialism.

 

But the fetishisation of technological development ended in Auschwitz and Hiroshima, after which it was undeniable that technology was also an enabler for what can only be called bestiality. WWII showed the world that you could be a savage with a V2 rocket and a computer just as easily as you could be a savage with a hatchet and a headress. The chimera of technology and civilisation was dead.

 

After the worldwide discrediting of German philosophy a section of the elite sought to preserve what they could of German intellectual heritage and corresponding cultural and political power. Welfare and Multiculturalism are what they took from the burning ruins of Germanic philosophy. These were the post WWII liberals that created the Germanic welfare societies and the European Union.

So what does it mean to say that the German elite wanted to save global Germanic philosophy? They wanted to save it from being lost within the world. The C20th saw German philosophy transformed in a few decades from a global transformative force to one in danger of being completely despised and ignored. Post war Germanic politics, both ‘left’ and ‘right’, is the process of rehabilitating German philosophy and society in the eyes of the world

 

This collapse of German philosophy was exactly the inevitable consequence of a fratricidal inter-Germanic war. After all, how can German philosophy claim to be the all inclusive end point of human civilisation when both types of Germans are trying to destroy each other?

‘even during the slaughter of the First World War, Europe still had a moral conscience. All sides still bridled at any accusation that they were violating humanitarian principles.

…Two decades later, even that had disappeared. Zweig lived to see his country amputated, cut off from its economic lifelines, and reduced to a half-starved rump.’.

German philosophy is at its root a philosophy of total world domination – its proponents on ‘left’ and ‘right’ only differ in that they advocate the use of force or industry or intellect to achieve this end.

 

From its inception German philosophy understood itself to be the future the product of progress and development. All nations HAVE to become nation state democracies because this is the consequence of ‘inevitable’ development- It claims that everybody in the world ‘yearns’ to be ‘free’ etc. German philosophy is based on Universalism therefore it has to be all subsuming. It cannot be just one of many philosophies. In a grand irony, the philosophy of competition cannot ever accept the validity of any competition with itself!

This is the kernel inside the United States of Everywhere: ‘Do you accept the pre-eminence of German philosophy?’ Seen through a contemporary prism this question presents as: Does the developing world rise because it has adopted Germanic liberal capitalist thought or because it has resisted it?

 

This question was certainly open in the initial period of globalisation when it seemed that the ‘West’ was instigating a free and comprehensive exchange of ideas and material with the rest of the world.

 

However, since the debacle of the ongoing Mid Eurasian wars and the chaos they have brought, it is becoming increasingly harder to deny that it is only through resistance to Germanic thought that progress is achieved or even basic human civilisation maintained. Developing nations are increasingly forced to turn their back to the ‘West’ in order to survive.

 

Even Saudi Arabia-a direct creation of Anglo Saxon foreign policy now finds itself driven into conflict with the nation that sponsors it as a consequence of the chaos that is engulfing the entire Middle East.

 

This brings us to what really appears to be bothering AEP. What he describes as the “managed “rise of China as competitor to the USA. AEP chooses to see this as a matter of political and economic transition rather than a cultural one.

..The fateful rupture between the US and China that many feared has not in fact happened. Washington has so far managed the rise of a rival superpower more or less benignly.

China has just been admitted into the governing elite of the Bretton Woods financial system with the backing of the US Treasury. …Barack Obama and Xi Jinping steered through a sweeping climate change accord in Paris, the template for a new G2 condominium.

In case this all seems a little implausible:

‘This is not to deny that the Pacific Rim remains the world’s most dangerous fault-line. The South China Sea is on a hair trigger. The US Navy faces the unenviable task of defending the global commons of open shipping lanes without crossing an invisible strategic line.

But not to worry:

.. the Chinese hubris that seemed so alarming four years ago has faded with the dawning realisation that they are not magicians after all – and America is not in decline after all’

What an image- the USA as defender of a ‘global commons!’ At this point I can’t help wondering if AEP is entirely serious about all this. Still…

 

Underneath the rhetoric, AEP implies that China is so thoroughly westernised that there would be no significant difference in the way global politics and economics operates were China to become the single most powerful economic and political power in the globe.

 

In contrast, I would argue that what we have already seen of China’s limited rise to power is undermining not only the economic ideology of capitalism, but even more importantly, the cultural identity that underpins it.

The German nations of NW Europe have sought ‘moral’ leadership through their loudly proclaimed willingness to accept middle eastern refugees. However, it has become increasingly apparent that no group of nations, no matter how willing they are to adopt multiculturalism, are able to physically cope with the effects of millions of foreigners who are motivated by and adapted to, what is fundamentally an alien understanding of life, culture and morality.

 

But this is not simply about Islam. A Eurasian Identity is rapidly challenging and threatening to overwhelm European identity as we have understood it for the past 400 years. The fall of Europe and the rise of Eurasia are increasingly obviously coterminous- graphically illustrated by the wave of mass immigration that has transformed the political and cultural landscape of western Europe in the past year.

 

The stark choice is that you can have a modern open welfare system of the type that has characterised post-World War II Germanic societies, or you can have mass immigration but you cannot have both.

 

So this is where the nations of western Europe find themselves. They can continue to adhere to post WWII principles in the form of welfarism or they can continue to adhere to post WWII principles in the form of mass immigration but they cannot do both.

 

The similarity between this period of crisis and the preceding crises becomes clear. In the time of Erasmus and Luther, German societies could no longer reconcile their fundamental beliefs with those of the Catholic church. The Holy Roman Empire was split and the German empire was born.

 

At the beginning of the C20th the global Germanic empire could no longer reconcile its internal differences and split. The Anglo Saxon empire separated and the Germans tried to create the European Union as a response.

 

And now at the beginning of the C21st the German nations are beginning to split within themselves because of the tension between multiculturalism and welfarism. And this is the Great Unraveling because once these nation states go, German philosophy goes finally and completely with them.

I pointed this out in a piece I wrote about Anders Brevik and the mass killing of Norwegian Social Democrats a couple of years ago. I argued then that the killing was the symptom of precisely this impending collision between the two remaining strands of postwar thought; Multiculturalism and Welfare. Since that time this contradiction has only become sharper.

 

in writing about Vector History I have observed that the intellectual framework behind welfarism is a feudal/integrating one whereas that behind mass immigration is a capitalistic/disintegrating one. Inevitably, these two impulses will come into conflict. Both are German ideas but only one can survive.

Elementary My Dear Watson Or Or It’s Your Private Life, Come On Baby Leave Me Out Or The Economic Dark Ages Or Not With A Bang But A Whimper

sherlock

‘Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth’.

Arthur Conan Doyle

 

As you know, on December 16th 2015 the American Federal Reserve Committee finally produced a 25 point increase in its short term lending rate indicating that the most recent phase of QE is over. This is what Churchill might have referred to as the ‘end of the beginning’ in the ongoing Quantitative Easing saga that has been unfolding in the seven years since the Credit Crunch…

 

There are pundits and bystanders who said this day could never come- lots of them. The idea that central banks would forever be unable to taper QE became accepted wisdom in a whole host of chat forums, blogs and media outlets.

 

But the Feds clear determination to go ahead with rate increases has recently resulted in much rhetorical trimming. Just as the smart money started to get out of junk bonds so smart mouths began to get out of ‘no taper’ talk.

 

As is always the case with these things, over the coming months it will get increasingly harder to find anyone who will be prepared to admit to having ever argued that the Fed could not taper. By next summer all that will remain of the ‘libertarian’ insurgent critique of Fed policy will be a hard core rump that doggedly maintains:

 

  1. Rate increases don’t mean anything because they are part of some kind of elaborate international financial scam.

 

  1. Rate increases are the cause of imminent fiscal Armageddon; first for the American economy and then for the world.

 

For years Crackernomics has consistently predicted and anticipated increases in interest rates as part of the ongoing democratisation of money. Not only did I argue that interest rates must happen, but I even went so far as to specify what the final general rate of interest would be.

 

I argued that the Federal Reserve, together with the Bank of England will lead a global move to implement gradual interest rate increases until they reach a level of around 3%.

 

There is a solid logical reason why interest rate increases are happening and why they are happening now. This decision is not arbitrary or meaningless. There is also a solid logical reason why central bank interest rates will finally be pegged at around 3%. This is not arbitrary either. But the reasons that interest rates are being modeled this way have nothing to do with the ragbag of guesses and speculations commonly cited in both mainstream and alternative media.

 

We can apply Conan Doyle’s famous dictum: ‘Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.’ to the various explanations and excuses usually given for tightening. Once we have finally cleared out of the way what can’t be, we can close in on what the only logical reason for rate raising can be – implementing the democratisation of money.

 

 

Inflation

 

Since the mid 1970’s inflation has been the granddaddy of all excuses for Monetarist central-bank intervention in the setting of bank interest rates. In Monetarist lore inflation is the ISIS of economics necessitating distasteful but necessary waterboarding of the traditional ‘free market’ economy in the interests of defending the status quo. So could inflation (or deflation), be the reason that the Federal reserve has decided to trigger an interest rate rise now?

 

Such an idea will stand up for about thirty seconds. It has become entirely clear that central banks are unwilling or unable to systematically affect the inflation rate in the USA, England or anywhere else –most famously in Japan, (the home of ‘QE’), where the economy is into the second decade of missed inflation targets.

 

It is important to remember that in the initial period of the post Credit Crunch crisis Britain regularly recorded inflation much higher than the target 2% rate. But since the essence of QE was to lower interest rates to the zero bound, after QE started there was no available means of affecting inflation by QE monetary policy.

 

Fair enough, this much was understandable, even predictable given the restraints that QE places on monetary policy. However, when it became apparent that inflation was going to fall a long way below the 2% target mark, you might reasonably ask: Why did the B of E take no effective action and raise rates then ?

 

When inflation started to fall Monetarist central bankers didn’t propose any serious action to prevent it. Instead they immediately cited other factors in support of what was the obviously already made decision to maintain low interest rates.

 

Throughout the entirety of the credit crunch and the ensuing crisis Monetarist central bank targets for inflation have consistently either been over or undershot, and by a significant margin. The failure to achieve two percent inflation is simply avoided or effectively dismissed by the vast majority or economists and media whenever questions are raised about it. For whatever reason it is absolutely clear that the Fed and B of E are unwilling to directly and systematically produce a 2% inflation rate.

 

It is clear that controlling inflation/deflation cannot be the reason why the Fed has decided to raise interest rates now.

 

Employment

 

The rate of employment is often cited as the most important secondary factor in the decision to raise interest rates. The rate of employment is often given as a rough and ready measure of the health of the economy.

 

In the USA the official estimate of employment at this time stands at around 5% but credible unofficial estimates of unemployment can be as high as 10-15%. This is a massive discrepancy and not one that is easily explained. No problem though; just like the unachieved inflation target, mainstream economics simply does not bother trying to explain it.

 

Whether or not the actual unemployment figures stack up, we should ask the question: Does tightening monetary policy help create sustainable employment?

 

The answer must certainly be no. Restricting the money supply by increasing interest rates always has an adverse effect on employment rates. The actual argument employed by rate hawks is that the economy can stand increased interest rates despite the adverse effect this will have on employment.

 

So promoting increased employment (whatever the actual rate of employment is), cannot be the reason for tightening interest rates.

 

Credit bonds and markets

 

Bond and equity markets have increasingly become skewed towards riskier activity as a result of QE. The energy sector, in particular bonds issued by fracking companies, are often cited as a particularly egregious example of this ‘misallocation’ of capital.

 

It is generally agreed across the board that increasing interest rates means that a disordered exit from bonds and equities is made more likely. It follows from this that companies with dodgy credit will not able to fund further development and expansion. It is only a matter of time before this inability to raise capital and service debt will have serious, and probably fatal, consequences for a whole range of business concerns. Systematic financial breakdown is baked into this interest rate rise cake.

 

The trend for stock buy backs and other forms of equity manipulation will also begin to shut down under the effect of incrementally increased interest rates. We can expect a whole raft of stock market activity to cease and indexes to shift permanently significantly lower. Again, like employment this is a negative factor, but the argument from hawks is that rates should be raised despite these effects.

 

So protecting and improving the prospects for bond and equity markets cannot be the reason for increasing interest rates

 

International Movement Of Capital

 

Closely related to the effect on domestic bonds and equities is the effect on international capital markets of an increase in American interest rates. This will result in a rise in the exchange rate of the dollar, making access to dollar capital more difficult for developing economies and existing dollar denominated debt much more difficult to pay back. As a result developing nations will inevitably be forced to move further away from the dollar denominated sphere of influence.

None of this is positive for dollar trade with the world. Rebalancing the international credit and debt markets in favour of dollar trade cannot be the reason for increasing interest rates.

Personal debt

 

Personal debt is always threatening to get out of hand in both America and Britain. This new credit reality is closely related to semi permanent bubbles in both the housing sector and long term educational expenses which continue to expand relentlessly in the Anglo Saxon world. Any interest rate rise can only have one effect on personal debt- and it is not a good one.

 

So preventing widespread personal debt meltdown cannot be the reason for raising interest rates.

There you have it. I have briefly reviewed the main factors that are supposed to have been taken into consideration in the feds deliberations and shown how in each case they argue against a rate raise, if they affect the outcome at all.

 

Central bank rates:

 

  • Have had no direct calculable effect on inflation or deflation so far
  • If increased, raise unemployment
  • If increased, cause dislocation in capital equity and bond markets
  • And cause dislocation in developing economies
  • If increased, exacerbate personal debt problems

 

Does this mean that interest rate manipulation has no relationship to the real economy? Not at all, but it is not the relationship we are encouraged to discuss.

 

The Real Relationship Between ZIRP, QE And The Economy

 

Things have changed over the past seven years and QE has worked- in some territories more comprehensively than others. It has provided the time and space for a systematic restructuring of both consumer and labour markets.

 

We can easily observe that what has changed dramatically over the past seven years is the definition of employment (and therefore unemployment). It would not be an exaggeration to say that this change in the definition of what employment is has become the defining factor in describing the modified post credit crunch economy.

Changes in the form and content of labour are portrayed as technical innovations but in fact they can more accurately be described as the effects of the democratisation of money. The ‘sharing’ or ‘gig’ economy created by ‘Uber’ etc. is not an expression of supposed advances in mobile technology anymore than Bitcoin is the result of a few lines of code; it is an expression of a comprehensive breakdown of the post WWII social order.

 

Work is increasingly becoming casualised; the traditional protections and benefits that have been associated with full-time working in the developed world have been eroded to the extent that they are now only really applicable to a small and ever decreasing minority of workers in the public service sector and government.

 

The proliferation of zero hour contracts are a striking example of this casualisation of labour, and for a very specific reason. It is not simply a matter of worse terms and conditions or the failure of wages to keep up with prices.

 

Innovations such as zero hour contracts make it virtually impossible even to be able to understand who is actually employed and who is not employed. Employment and unemployment as we previously understood them have been defined out of existence. Is someone on a zero hours contract employed or unemployed? There is no way of telling until you go and take a look- just like Schrodinger’s  Cat…this is quantum employment.

 

A massive leap in the number of people who are effectively self employed has produced a corresponding leap in the numbers who are effectively self unemployed.

 

One of the major victories of Monetarism in the Anglo Saxon world has been to redefine unemployment as a private, not a public matter. Just like Grace Jones’ sociopathic 80’s anthem has it: ‘It’s your private life.. leave me out..’

 

Changes in the definition of employment feed directly into changes in the way that inflation is calculated and understood. The main justification of monetarist central-bank interventionists has always been the danger of a wage inflation spiral. In other words, it is primarily regulating and disciplining wage settlements that make the decisive difference in the battle against inflation.

 

Without an integrated social labour market mechanism supported by trades union and collective bargaining there is simply no means to systematically produce wage inflation.

 

This is reflected in the continued failure of wage growth over the past seven years. In response to this developing problem even a nominally right wing government in Britain adopts a long term ‘socialist’ strategy of increasing minimum wage levels to create wage ‘growth’. And across Europe we see the emergence of various guaranteed income proposals and ‘peoples QE’.

 

Everywhere the state is being forced to consider stepping in to create wage/income ‘growth’ because the complex social structures that supported collective wage bargaining have been deliberately collapsed.

 

Without systematic wage growth there can be no systemic inflation. This was always the dream of Monetarists; to make inflation episodic and isolated, breaking what they called the ‘wage inflation spiral’. In Monetaristland where inflation broke out it would be suffered in isolation by small groups who would be unable to pass it on to the economy as a whole through wage increases or price rises.

 

As a consequence, we experience high rates of inflation in some specific areas and deflation in others. Since these isolated and specific patches of embedded long term inflation are becoming the norm, it is becoming untenable to claim that a generalised inflation rate as it is calculated is an adequate reflection of the reality of the economy. Monetarists are entirely aware of this and are making their plans accordingly…

 

A pattern is beginning to emerge here.

 

Economic Dark Age

 

As expressed through employment and inflation democratised money is being used to restructure, redefine, and reinterpret the labour market and the relationship between consumers and workers and the economy as a whole.

 

The nature of this restructuring is to create a situation where it is harder and harder to see the overall picture- understanding is deliberately being fragmented. I have referred to this on previous occasions as the creation of The Secret Economy. How much employment there is like how much inflation, is becoming unknowable. The economy and the information it represents is becoming balkanised.

 

This Economic Dark Age is entirely intended. Politics in the last century was about justifying the discrepancy between the wealth that accrues to capital and the wealth that accrues to labour. And elites comprehensively lost that argument. This century is going to be all about obscuring the discrepancy between the wealth that accrues to capital and the wealth that accrues to labour. Elites are moving the fight onto ground that suits them better…

 

What has been particularly striking about the past year has been the way in which even well established economic perspectives have begun to break down and become episodic and increasingly incoherent.

 

The entire ‘will she, won’t she?’ rate raising game itself is part of reducing any comprehensive view of the economy to a meaningless tussle over week to week tactics with no consideration of what these changes will mean in the long run. To be perfectly frank, I believe this is entirely intentional.

 

Intellectual and political elites in developed economies have no interest in contributing to a comprehensive narrative now. In the same way that a declining American empire prefers confusion and chaos to international law and order, the intellectual elites of late term capitalism prefer intellectual chaos to trying and failing to dominate a global argument about economics. The elite is preparing to effectively abandon ordered thought itself, and it was always entirely and inevitably the case that this would be done in silence..

‘This is the way the world ends

This is the way the world ends

This is the way the world ends

Not with a bang but a whimper..’

 

 

But Crackernomics is here to prove it is entirely possible to build a comprehensive picture of the world as it is developing in the 21st C. But that uphilll struggle is going to be harder than even I thought. The very idea that a coherent world view is even possible has become part of the battle.

 

Since it is easy to show that none of the professed excuses stand up as a reason for increasing interest rates now, if you are at all interested in maintaining some semblance of logical thought, it is clearly time to explore the one reason that has been avoided by mainstream economists.

 

Despite the wholesale destruction and chaos they have caused, derivatives have been successfully protected from any serious attempt to control and restrict their ever expanding use over the past seven years.

 

Derivatives (privately issued money), are once again barely discussed in the media. This is a measure of the Monetarist central banks success. And now that derivatives are once again safe and sound and secret, the Monetarist Federal reserve feels free to move on to the next stage of its programme..the division of the world economy into roughly 50-60% government issued currency and 40-50% privately issued currency (derivatives).

 

That is why interest rates have been raised at this time.

 

NB: My very best wishes to those who have read and followed the United States of Everywhere through 2015.

 

Particular thanks to Dave Harrison for his very helpful ‘nudges’ in the right direction..

 

 

 

 

Meet The ‘New Deal’, Same As The…. Or She Is Mocking Us,, Not Samson Or Smile Caroline, There’s Justice In The World…Or Crazy Like A Fox

rare25

 One King for Another……

 

 

In the first two parts of this series I argued that the pyramid model which lies at the heart of ‘left’ and ‘right’ conceptions of society is limited and ultimately a barrier to understanding what happened in the lead up to the credit crunch and its aftermath.

 

I argued that a dynamic vector model of society is a better reflection of reality because it captures fluidity or movement within the economic system. The original dynamic vector model I suggested was made up of a ‘Feudal’ or integrating vector and later an added ‘Capitalist’ or disintegrating vector.

 

An economic vector is precisely a means of concentrating or distributing wealth and power. All societies are concerned fundamentally with this; collecting and concentrating social power and wealth and then re-distributing it to those who are ‘worthy’. All politics and economics are derived from this central process.

 

A dynamic vector model offers insight into specific episodes in history, (the American Continental War was one such example I used), and into the very idea of history and progress as we receive it from established sources. More fundamentally, dynamic vector history offers the observation that establishment history can no longer claim some supposed essential difference between feudal and capitalist elite often characterised as the ‘Enlightenment’.

 

On the contrary, the vector model shows that it was entirely possible for the feudal and emerging capitalist systems to exist side by side at the ‘top’ of society. Rather than capitalism being a supposedly unstoppable revolutionary force, it was feudalists recognising continuing inexorable disempowerment at the hands of the capitalist vector that brought about ‘revolutionary’ civil conflicts. This is nowhere truer than in the case of King Charles and the Puritans in England.

 

In fact, rather than capitalism (as the Anglo Saxon Establishment would have you believe), being implacably opposed to feudalism, throughout its development the capitalist vector has systematically relied on a feudalist vector for its protection and survival. The rhetoric is of undying hostility (in the Protestant world at least), but the reality is one of pragmatic accommodation.

 

To understand the relationship between feudalism and capitalism, the capitalist recognition of the necessity of feudalism, is to begin to perceive a key difference between Germanic and Anglo Saxon (Protestant) ideology and continental (Catholic), ideology in Western Europe.

 

The creation of a capitalist vector allows a section of society to potentially permanently dis-integrate itself from society as a whole. But the capitalist vector needs to re-create a version of the feudal vector if it is to disengage from actively managing society and concentrate on making itself as separately wealthy and powerful as possible.

 

The more advanced and sophisticated a capitalist elite, the more it relies upon a ‘socialist’ feudalist vector to manage and integrate the remainder of society. The ability to manage feudalistic redistribution of wealth is usually taken as the key determinant of capitalist development; the successful (or unsuccessful), evolution of every advanced capitalist nation can be described in terms of a relationship with feudalism.

 

The secret is to tame the’ excesses’ of feudalism. This is the historical necessity of Protestantism in North Western Europe; to reform/undermine the feudal integrated society so that it can become a useful servant to the capitalist vector. Or think of it as a Catholic/Samson and a Protestant/Delilah who cut his hair while he slept and delivered him into the hands of the Philistines.

‘She is mocking us…not Samson’

This leads to the observation that the ‘socialist’ left is in reality the justification for a feudal vector. This is the service that the ‘left’ performs for capitalism. This is why establishment left parties exist; if they did not perform a useful service they would certainly not be there. If you doubt this observation, consider the history of left parties in Latin America in this context.

 

The welfare, integrating, feudal left is useful not because it offers the promise of benefits of the future, but because it offers the hope of preserving some of the protections and freedoms from the past!

 

The idea that people could have been in some ways freer in the past than they are now will be met with horror and even outrage by proponents of Germanic Capitalism and Socialism alike for this is blasphemy against the Germanic religion of Progress ( as in; ‘when we took over, that was progress’…)

 

Implacable opposition to anything that challenges the idea of a ‘Dark Ages’ is one of many similarities that Socialist Cane and Capitalist Abel (or is it the other way?), have in common but neither wishes to acknowledge.

 

This way of understanding the relationship between left and right, feudal and capitalist, is more than an intellectual curiosity. It leads us directly to a deeper understanding of the post credit crunch world.

 

One of the main reasons I began the United States of Everywhere blog was to try to understand the comprehensive and systematic failure of the left in the aftermath of the credit crunch. It doesn’t matter whether you accept or support any of the ideas, preconceptions or prejudices of the left; understanding its effective collapse over the past couple of decades is vital to building up a useful picture of why we are where we are.

 

In theory it was all over after the financial mega collapse- all the ‘left’ had to do was to pick up the marbles and declare the game won. Capitalism was now totally dependent upon the mercy of the state; ‘free market capitalism’ if it had ever really existed was completely discredited now. But that was very certainly not what happened.

 

In fact the Neo Conservative right has been consistently strengthened over the subsequent years and even more startling, the libertarian right has emerged as the only social force with anything substantially critical to say about the systematic nature of the changes we have seen.

 

In attempting to understand the failure of the left I realised that I would have to go outside the bounds of traditional economic argument. I began to describe Whiteism which links Germanic culture, history and identity to contemporary questions of economics.

 

Financialisation is intimately linked to questions of the development of the left and its relationship to feudalism and especially the development of Neo Conservatism. And this in turn leads to the relationship between Trotskyism and Neo Conservatism in the context of American history.

 

Capitalists successfully disengaged by means of creating the modern welfare state (feudal vector) in Europe beginning in the late 1940’s but it took another two decades until this process was played out in 1960’s America.

 

America’s capitalist vector had priorities that were substantially historically different to those of Western Europe but as I noted America was always willing to pragmatically embrace feudal practice if it thought it necessary (as in Washington) .

 

This brings us to the rather ironically named ‘New Deal’, (since it should be more accurately described as the ‘Old Deal’), programme instituted by Franklin Roosevelt in the 1930’s. Although it later came to be regarded with widespread acceptance, (rhetorically at least), at the time the New Deal was seen by many as a fundamental betrayal of a central tenet of American ideology; that a society could survive and thrive with only a capitalist vector. Venomous hatred of the New Deal betrayal of this ideal is a fault-line that runs right down to the bedrock of America.

 

Despite this fundamental opposition, practical necessity meant that the provisions of the New Deal survived more or less intact right up to the inauguration of the Great Society. But the New Deal was always fundamentally an ad hoc programme. Somewhere lurked the hope/belief that once America got back on the right track again it could go back to the Good Old Days of pure capitalism.

 

By the time of LBJ’s ‘Great Society’ and the Vietnam War, the American elite had little appetite for a return to the past, ( well, the old past anyway..). It became clear to the 60’s American elite that to get in line with modern western thinking it was going to be necessary to institute a version of feudal history to make up for the one that America didn’t have.

 

In fact, the Great Society was the formal acceptance that there was no longer the hope of a temporary feudal fix in the form of a New Deal. Like everywhere else in the developed world the American elite would have to come to some kind of permanent accommodation with feudalism. This would make them in a sense irrevocably ‘liberal’. This in turn directly led to the birth of Neo Conservatism and the emergence of Nixon’s Moral (Silent) Majority. If there had to be a feudal vector then henceforth Neo Conservatives would battle to cast it in the Anglo Saxon image.

 

It is no co-incidence that within a decade or so of the Great Society Monetarist Milton Friedman had effectively conceded that there would have to be permanent state management of capitalism under the justification of controlling inflation.

 

Since the market would now be permanently under the constant control of the state through the central bank, Monetarists simply could not allow any left wing alternative to exist. If a comprehensive state programme to protect the market was justified, then in theory a comprehensive state programme instead of the market could be justified. (The tattered remnants of this argument are still around the political fringe today in the form of ‘peoples QE’)

 

This meant that there could not be an American left of any kind since it was possible in theory that they could be elected, and if elected they could control the central bank and if they could control the central bank they could control the economy, and that would be game over.

 

And so just at the moment that total state control of the economy became reality- the left dream for eight decades- the political services of the left were to be dispensed with. Neo Con Monetarists would displace the left and act as the new feudal bureaucracy.

 

Let us be absolutely clear what this means: That the Germanic nation state ‘left’ project has turned out to be the biggest game of bait and switch in the history of human society!

 

The call for a state run society was made in western Europe for nearly a century only for it to be exclusively turned over to extreme right wing ideology the moment it was actually achieved!

 

Since the arrival of Monetarism we have been watching the left clearing its desk, gathering its political belongings together in a cardboard box and being escorted from the building….

The left finally gets it….

 

It was a sure thing that the Monetarists on ascending to power, would seek to shrink the state and to shrink it in a  specific way. Under Reagan talk swiftly turned to ‘welfare queens’ and so on. This was unsurprising.

 

But more interestingly that visceral hatred of the New Deal I referred to earlier made itself felt in the ongoing repeal of post Wall Street Crash banking regulation implemented by Roosevelt. And it was this legal reform that formally opened the door to financialisation.

 

And now we can close in on three central questions that have been there since the Credit Crunch but never satisfactorily answered:

 

What exactly is financialisation?

How exactly does it work?

Why did it appear exactly when it did?

 

So what exactly is financialisation?

 

It is a new vector, a new conduit for concentrating wealth and power. It operates alongside the capitalist vector and the feudal vector. This vector is actually physically constructed from the Democratisation of Money.

DMVM

Just like the capitalist vector it originally acted as a conduit for concentration and redistribution- remember the ‘Big Bang’?, Remember the ‘share owning democracy’? Remember how the sons and daughters of Ordinary Joes could get a pair of red braces and make Big Bucks down on the trading floor?

Seems a long time ago now doesn’t it? But for a while at least the financial vector really did redistribution…

 

How does it work?

 

Capitalism turns power and wealth into money. Capital is exactly power and wealth expressed as money. You do stuff to get money.

 

But Financialisation does the exact opposite of Capitalism. Financialisation turns money into power and wealth. You do money ( literally make it), to get stuff

 

In other words it is the exact antithesis of the capitalist process or vector. In other words, Financialisation is Anti capitalism!

This is the real basis for the crude ( but to some degree perceptive), slogan that Financialisation is ‘socialism for the rich’.

 

Socialism was never the opposition to capitalism. In fact there never really was an opposition to capitalism until about twenty years ago. This is what makes the present period unprecedented. But the oppostion to capitalism is not very nice is it? No, but it is proving to be effective.

 

Why did Financialisation appear when it did?

 

The Monetarist attack on New Deal bank regulation set the stage for financialisation. But the real impetus for financialisation to grow came from shrinking the size of the state. The Democratised Money shadow economy is growing into the exact size and shape of space where western post war states used to be. The consequence of yet again failing to utilise feudalism effectively. I will explain why this is in the final part… (In the meantime you could think about Japanese feudalism and if that has anything to do with why QE started there..)

 

 

 

 

 

 

 

 

PART 2 Back To The Future Or Actually The Future Is Exactly What It Used To Be Or Neo Feudalism Or Now Listen You Queer, Stop Calling Me A Crypto Nazi Or I’ll Sock You In The Goddamn Face!

 

The general political and economic history we are taught focuses on forms of society over the functions that form represents. It teaches economic and political structures are primary and the forces they actually represent are secondary at best.

 

This creates a history and a politics that are at best really only a series of snapshots strung together in the semblance of a storyboard, or at worse a single blurred image, the import of which we endlessly haggle over with no hope of ever coming to a clear resolution.

 

If we accept this fragmentation of history and politics the best insight we can hope for is the pyramidal model of society that the ‘left’ and ‘right’ use.

 

The understanding we have of history and politics is not the result of unknowable abstractions, it is the concrete result of the most powerful forces in the society we live in. A fragmented and disintegrated political/ economic system inevitably produces a fragmented and disintegrated understanding of history and politics.

 

The disintegration of capitalist society we experience can be sourced to an elite – traditionally seen as the ‘top of the pyramid’, effectively drawing off a vector of wealth and power from society but not redistributing any of that wealth and power back.

 

Capitalism did not always do this, nor is it necessarily forced to this, but it has the tendency to do this. The potential to systematically and permanently vector wealth away from society to a specific elite differentiates Capitalism from all the other forms of society, contemporary and historical. It is what makes capitalism special.

 

Capitalism is a form of society where economics really can be separate from politics -an observation the left vehemently denies and the right celebrates but refuses to acknowledge the consequences of. But why does the ‘left’ deny this simple observation? Understand this and you understand the relationship between War, Welfare and Whiteism.

 

In the Divergent Split Stream Model the capitalist elite draws off wealth and power through the capitalist vector . (shown here). This wealth and power becomes increasingly INVISIBLE and UNKNOWABLE to the remaindered feudal integrated vector. For mainstream economics and politics (which are the province of feudalism), more or less the whole purpose of existence has become to try to understand what your elite is doing at any given time and hopefully to influence it.

ssm

Understanding the process of disintegration can give us historical insights into the motivations of the elite and their consequences for society as a whole.

 

At a crucial stage in its development, a capitalist elite is no longer automatically obliged to organise or defend the society they benefit from, symbolised by the moving out of military uniform that all capitalist elites eagerly undertake when they are able. I pointed out that kings and barons rise and fall with the redistribution systems they service. This is as true for contemporary feudal/integrated societies as for those that existed 500 years ago.

 

Capitalists are consciously ‘Independent’ when they no longer go to war to defend the society that protects and benefits them. Think about George Washington and the American War of Independence in this context. Think also about Adolf Hitler and the Nazis.

 

At the time of George Washington, nascent Anglo Saxon capitalists in America were in the process of creating a new separate system of wealth accumulation and redistribution based on the wholesale theft of that continent.

 

If anything distinguished the emerging Saxon American system from its European counterparts it was the fact that it sought to be pure and whole. The Anglo Saxon American process was entirely one of transferring a territory and its wealth from one racial cultural group to another; there was literally nothing else happening in America at that time. Proto America understood itself to be entirely a redistribution system.

americanmodel

And everyone who benefitted agreed that the process had great potential. It became the American Anglo Saxon evangelical project to demonstrate to the world that such a thing as a society running with only a capitalist vector was actually possible!

 

Here is America’s specific claim to moral, political, and historical uniqueness in the world; Germanic Land Democracy that you can successfully run a society without a feudal/integrated vector. Damn the Pope! Damn the European hierarchy of Church, Nobility and Society! And Double Damn Noblesse Oblige!

 

Just as ‘The King’ is the personification of the feudal/integrated system so ‘The Individual’ is the personification of this Capitalist vector. Summed up in the truly bizarre Saxon cri de coueur : ‘The Englishman’s Home Is His Castle’. Feudalism and Capitalism fused together; Germanic land Democracy.

 

At the precise historical moment of Americas birth, two imperatives clashed in the person of George Washington. One moment he was required to act as feudal king fighting a war as guarantor and defender of a uniquely American redistribution system. The next moment he was President; a mere elected functionary.

 

Washington hovered between these two states of public (and internal!), being. As feudal king his purpose was to integrate American society, as President he was representing the interests of forces that were striving to create the first permanently disintegrated society.

 

If you doubt the feudal personification of Washington and the American elite, remember that they named America’s capital city after this single man. And they did it with straight faces and no hint of irony. Isn’t this the very essence of ‘primitive’ feudalism?

 

Now compare the American Continental War with the First World War which was the last time a significant section of European, (in particular continental German), capitalists were willing to actually fight and die for the society they were beneficiaries of. After the Somme there were to be no more trenches for the young men of these elites. It was this change in society more than any other that gave the Second World War its own character twenty years later.

 

In a bizarre mix of comedy and tragedy, German corporate bosses decided to hire a replacement mock-feudal military caste to stand in for them in the form of the Nazis, led by the corporal Hitler! Has there ever been such a catastrophic bungle by any social group in history?

 

The burgher market trader instincts of German capitalists gave birth to the most deadly set of consequences imaginable. Most horribly ironic of all, Germans clearly recognise their propensity for this kind of stupidity in the classic tale of the ‘Pied Piper of Hamlyn’. But they are doomed to go ahead and relive it anyway…over and over again.

 

So here are two Germanic elites and two very different stories. American Anglo Saxon and Continental German had to adapt to and adopt the necessities of feudal integration and both did so in very different ways. These were two nations at different times under existential threat from outside. The Anglo Saxon American revolutionaries took feudalism on wholesale, the Continental Germans tried to buy a ready made version of it off the shelf. The Anglo Saxons in America succeeded wildly and the Germans failed catastrophically. Neither outcome was happenstance.

 

The historical lesson here is that CAPITALISM ALWAYS NEEDS FEUDALISM to survive and develop. If Capitalism fails to harness the power of feudalism, it risks its own existence. You can‘t fake it as the German bourgeoisie found out to its cost…

 

Most exactly of all, Capitalism needs to construct a feudalist distribution sub system if the capitalist elite is to successfully disintegrate itself from society.

 

Who will administer society if the capitalist elite is off pursuing its own interests? On what basis, with what justification, will this administering body operate? Its only viable justification is the integration of society; the essence of feudalism

 

A bureaucracy must be formed representing a new relationship between oppressed and oppressor. Instead of paying money to the King who distributes it to his enforcers, you must pay the enforcers directly!

 

But this capitalist/feudal bureaucracy is different because of a third consequence of disintegration; the emergence of ‘social science’.

 

Social science is only possible and necessary when you want exact scientific knowledge of the ‘mass’ of people as a separate grouping. Enter the new capitalist disciplines of Sociology, Anthropology etc. In the universities and the colleges of the 18th and C19th the foundations of a new priesthood is being created.

 

By the time that the Split Stream Welfare Model is implemented the capitalist elite has effectively reproduced the pre-capitalist system but excluded the itself from it. In other words the elite has become truly ‘modern’ and ‘scientific’ by means of ensuring that the remainder of society is ‘primitive’. And every capitalist society since then is objectively judged to be successful to the extent that it manages to recreate a feudal system and visibly exclude itself from it.

sswm

Of course, we need a name for this new relationship between bureaucracy and society. We can hardly directly admit it is feudalism- that the brave new future we are building is fundamentally dependent on the past. So we give this state of affairs a new name to reflect its ‘social’ nature ; we will call it ‘Socialism’.

 

Now we can see where Germanic ‘class’ politics springs from- a concoction of feudalism, welfare and socialism (or War, Welfare and Whiteism if you prefer). This is the political structure that will support and illuminate the new redistribution system.

 

And so along with Washington and Hitler, vector history brings Karl Marx into focus.

 

Somewhat vain and self important but also brilliant, Marx was a rogue operator in the new emerging social sciences. Like an insufferably precocious pupil Marx constantly disrupts and irritates the lecturer with startling insights, speculations and guesses called out from the back of the class. Some of these catcalls were pinpoint accurate and some were horribly wrong.

 

But by effectively second guessing a whole raft of developments in the emergence of social science, rogue student Marx managed to disrupt the entire inaugural lecture. The carefully planned unveiling of ‘Social Science’ collapsed into chaos!

 

And it has never recovered..Is it any wonder the establishment regards him as they do?

 

It’s hard not to see young Marx as something of a Victor Frankenstein character (as in Prometheus), seeking forbidden knowledge, failing to heed the warnings of his teachers and ultimately heading for disaster.

 

And while we are about it; seeking to raise what was dead through the newly acquired power of science… Given what we know about young Mary Wollstonecraft and her antecedents, I think I can make an argument that the Frankenstein story itself is a metaphor precisely for the emergent scientific capitalist class bringing feudalism back from the dead.

 

This is Not America…

 

By the time America invaded Vietnam in the 1960’s none of its national elite or their children went to die in wars. And nobody seriously expected them to. This certainly gave the Vietnam war its very own peculiar nature. American society at large was well aware of the extent this change even if it did not understand the full significance of it. What this meant was that America and its elite, despite its peculiar development path was becoming more like the European states.

 

The documentary film ‘Best of Enemies’ records the televised debates in 1968 between liberal Gore Vidal and conservative William F. Buckley Jr. and it happens to capture perfectly this moment of America’s final transition from ‘capitalist+’ to ‘capitalist-‘ society. As the publicity blurb for the documentary has it:

 

‘ Intended as commentary on the issues of their day, these vitriolic and explosive encounters came to define the modern era of public discourse in the media, marking the big bang moment of our contemporary media landscape when spectacle trumped content and argument replaced substance’

 

To make it absolutely clear: The Nixonian/ Neo Con movement as espoused by William F Buckley jr that emerged in the late 1960’s is a welfare system just as its liberal counterpart espoused by Gore Vidal was. It’s specific argument is that welfare should be constructed in such a way as to benefit white Anglo Saxon society and particularly white working class Anglo Saxons at the expense of other sections of American society. In other words it seeks to exclude some sections of society to more clearly cohere the remainder around a specific identity.

 

It is no coincidence that Nixonian welfare centered on the Moral Majority emerges precisely when the elite begins to very consciously disengage (as in the Vietnam war) from American society. The project is to then put in place a comprehensive new welfare system that society will rely on to maintain cohesion. Buckley and Vidal are arguing over what the nature of the new sub system feudal welfare system, (LBJ’s The Great Society), will be.

 

It is every bit as consciously redistributive as so called liberal or socialist opponents. Its difference centres on who qualifies. And who qualifies will be decided by which version of the history of America becomes the dominant narrative.

 

From this perspective the animus between the two antagonists comes into clear focus. It is no accident that both are populist disseminators of American history. It is no accident that their central argument revolves around what the content and meaning of American history is.

 

If Thine Eye Offend Thee..

 

And now we can finally move towards a rational explanation for what seems totally irrational oxymoronic Neo Conservatism: It is America’s admission that it needs feudalism in some form if the elite is to successfully disengage. But in this admission America’s previous strength is revealed as a weakness because it has no feudal backstory to hang its welfare state on. It is going to have to invent one.

 

This is the opportunity for ‘right wing’ public intellectuals like Buckley and Irving Kristol to prove their worth. We can explain how Neo Conservatism can draw together an establishment WASP like Buckley and an ex ‘Trotskyist’ like Kristol within the context of American politics. On the surface their political trajectories would appear to be irreconcilable. But if we understand that their shared struggle is not to re-formulate the future but the past, many of the apparent contradictions evaporate.

 

Both Kristol and Buckley realised that in the creation of Neo Conservatism, their shared purpose was to try to find a way to create a vision of the past and to present it as the future; feudalism as welfare. The inspiration of Neo Conservatism is to accept the practical reality of the need for feudalism, while publically denying it with all your might. In a moment of clarity Kristol realised that feudalism/integration was essentially what his Trotskyist Socialism had been about all along.

 

From this perspective we can see that the Cold War arguments over whether communist Russia was more advanced than USA is really an internal argument about the future of America. America is projecting its hopes and anxieties onto Russia and later Japan and China. Because now the American elite continually gazes upon feudalism with fear and a kind of sick desire. They are painted into a corner. They are all turned around.

 

This has reached some kind of crisis point with Islamism. The modern Protestant welfare society finds itself powerless to launch an all out attack on feudalism. How can it? It will be cutting its own throat. No matter how much it is offended it cannot put its own eye out or cut off its own hand.

 

Disintegrated history and politics experiences its dislocation and confusion through the medium of past, present and future. Whenever the West tries to describe an alien society it does so in terms of primitive or advanced etc. The West is permanently confused as to whether China is modern or backwards. Or modern and backwards. Or whether it is going forwards or forwards and backwards at the same time.

 

The West looks for markers of ‘modernity’ like mobile phones or gay marriage. If you have a modern mobile phone network but not gay marriage is your society modern or backwards? Was Iran becoming more modern or less modern when it overthrew the Shah of Iran? Is the Arab Spring a leap forward or backward? Was Morsi and the Muslim Brotherhood progressive or regressive? Confusion multiplies and reigns.

 

Something like this happened with astronomy. Retrograde motion is an observed phenomenon in astronomy in which planets appear to move ‘backward’ across the night sky. Of course, this is impossible, planets can no more move backward in space than societies can move backwards in time. Retrograde movement is the consequence of planets with relative trajectories seeming to accelerate at different speeds. They are all going forward in perfect order, it is just that from one point of view it can seem as though they are not.

 

When a model of the solar system was put forward that more accurately mirrored reality, all the confusion disappeared. Soon astronomers were able to predict the whereabouts of any given planet at any given time. It happened when they realised they could not calculate correctly with the earth as the centre of the system. The same thing must happen now with Anglo Saxon societies. The world does not revolve around them. History does not revolve around them.

 

Societies can appear to move backwards but of course they don’t really. They are all progressing forwards we just have to find a model to explain how. Vector history can do that. The key is to identify or restate a problem in a way no one has before and offer a solution. That is what I have done here.

 

 

 

Pyramid Schemes Or Vector History Or I’m Ready for My Close Up Or There is no such thing as a Disintegrated Society Or Is There?

The structure of pre-capitalist societies is often depicted as a Hierarchical pyramidal structure with the mass of people forming the widest part of the pyramid at the bottom and then progressively smaller echelons forming each tier as it moves towards the top. We can call this a Standard Hierarchy Model and make a simple diagram of it something like this:

shm

 

In this model wealth and power moves upwards from the bottom of the pyramid to the top and wealth and power in the form of patronage is redistributed down from the top to the bottom. In establishment rhetoric this is portrayed as the ‘classic’ ‘oppressive’ state structure.

 

Establishment history argues that this oppressive state structure belongs both to our pre-capitalist past and contemporary non capitalist societies such as North Korea, (which in Establishment ideology are essentially the same thing). But Establishment history argues that in contrast to all other types of societies, present and past, the pyramid structure is modified within capitalist societies.

 

The crudest Establishment description of hierarchy modification is in the Inverted Hierarchy Model. This model shows the mass of people benefiting from capitalism relatively and absolutely more than any other echelon in the pyramid. The argument is that the lower down you are in the oppressive pyramid model the more you benefit from the Inverted Hierarchy Model. We can show it like this:

ihm

In this model it is argued that power ‘democratically’ flows away from elites, up to the mass of people. Then patronage is redistributed down from the mass of people to the elite through the democratic process. As proof of this redistribute process the Inverted Hierarchy Model argues that the mass of people receive invisible, intangible social goods. These include the right to be an individual, the right to express opinions in free speech, sexual freedom etc, As an added bonus these riches get progressively larger and more encompassing with every passing year!

 

This Inverted Hierarchy Model is obviously overtly ideological and tends to be used mostly in Anglo Saxon societies and in particular the USA. But that doesn’t mean that is has no basis in history and culture. The objective is to try to understand what basis it actually has..

 

A more subtle Establishment argument is to agree that we live in a base heavy pyramidal structured society but to argue that who is at the top of the pyramid and who is at the bottom regularly changes over time. In other words the structure remains constant but the composition of the pyramid is open to change. This model accepts the implied need for the state to guarantee some kind of equality to mitigate the nature of the pyramid but characterises this as the need for equality of opportunity.

 

In contrast, anti Establishment arguments emphasise the fact that the structure of the pyramid remains constant irrespective of the composition of any particular echelon. Any movement of elements within the pyramid is limited and inconsequential. It follows that if the pyramid is incapable of internal change, change must come from outside.

So the basic mainstream Establishment position is:

The Capitalist form of society is a pyramid but it differs from previous social pyramids in that its composition changes and will continue to change over time.

The anti Establishment position is:

The pyramid is essentially the same as previous pyramids, has not changed and will not change until political force (usually from below), makes it change.

 

On these two essential positions the matter rests and has rested for some time. But it is possible to conceive of social structure in a different, dynamic way. This dynamic understanding can illuminate the observation people understand the pyramid structure not in abstract or random ways, but in ways that are exactly the inevitable outcome of the relationship between elite and the rest of society and the way this relationship has developed and been subjectively experienced.

 

Instead of the Establishment series of ongoing pyramid ‘snapshots’ or the opposition ‘oil painting’ of a single static pyramid, we can imagine the pyramid form instead as a dynamic vector on a graph representing a flow of wealth and power from the base of the hierarchy to the top and then back down again. This model integrates movement into the basic model itself. It is the difference between the dissection of a cadaver and studying the flow of blood through a living body.

 

Lets go back and look at the classic ‘oppressive’ pyramid structure from the perspective of this Hierarchical flow model. It looks like this:

hsm

Wealth and power moves upwards from the ‘peasants’ at the bottom to the ‘King’ at the top and is then redistributed by the King back down through the lords and barons and so on until a residue of wealth reaches the bottom again. In this model the elite is the mechanism of redistribution and the ‘King’ is the personification of the elite. We are taught that this is how medieval European society or contemporary non capitalist society such as North Korea is structured.

 

The fundamental Capitalist critique of an oppressive state structure like this is that the ‘King’ collects wealth and power from the people and then redistributes it to the power structure that protects him and the echelons below him from the people he collects wealth from in the first place. In other words the process of redistribution reinforces the redistributive structure in place and makes it impervious to change. This can be called a Force System.

 

The people pay to the King and the King pays the bodyguards and so on downwards thought society. Redistribution and force are intertwined. Wealth is redistributed throughout society through the Force System.

 

This process is characterised as a ‘crony system’ by Capitalists. It is also often misrepresented as a Forced System as opposed to a Force System. Capitalists argue that because redistribution is done through the force system it is ‘forced’ – it cannot be to any extent voluntary. They argue that this is morally unfair and/or economically and politically inefficient. They argue that it must inevitably collapse, and if it doesn’t decent people should work to bring about that collapse anyway and by any means necessary.

 

You should note that Germanic capitalist ideology viscerally detests Force System   because it does not reward the personal character traits that German culture and personality  admires and promotes.

 

The Fate of Kings

 

In a fully ‘feudal’ society everybody is effectively employed by government. Your economic boss is very often literally the general who leads you to war. And this political/economic model is reproduced right up to the very top. The commercial and the political is entirely integrated and entirely consistent , (which is to say that the logic of society is reproduced throughout society to the same extent). All of society is integrated and consistent.

 

The king is the guarantor of the system and the network. Consider the fate of Gaddafi in Libya and Ceausescu in Romania. Consider also what is in store for al Assad if his enemies get their way. This fate of kings is not random or happenstance. The fate of the King is absolutely entwined with the fate of the redistributive system.

 

Rather than a feudal society It would be more accurate to call this an integrated society because economics and politics are fused and every echelon is fused to the one above and below it by means of the redistributive system.

 

The popular capitalist ideological critique is that systems like this are static. Everybody is in a place within the system. Nobody can be outside the system and nobody can move within the system. Of course if they see any evidence to the contrary of their assertions they simply ignore it.

 

This criticism fits within the capitalist list of accusations which run from popular to true in descending order:
It is static

It rewards ‘bad character’

It is dangerous for ‘the people’ (which really means it is dangerous for people like us!)

 

If the capitalist system was the opposite of an integrated society it would be a disintegrated society wouldn’t it ? Could there be such a thing as a disintegrated society? A society like this would be a society that is defined by the belief that: ‘There is no such thing as society’. Could such a society exist? If so how could it exist?

 

With the advent of Capitalism instead of one income and dispersal system there are now two systems within society. Where there was only the integrated feudal political system there is now also a separate capitalist ‘economic’ system that mirrors the feudal political system. This can be called a Split Stream Model because there are two separate streams of income and redistribution. It can be shown like this.

ssm

Wealth and power rises and falls on a ‘commercial’ stream (blue) and a parallel political stream (red). Both streams are integrationist which is to say they concentrate wealth upwards towards the elite and then redistribute it.

 

Notice that this model does not differentiate between a ‘feudal’ and ‘capitalist’ elite. There is no need to try to manufacture a fundamental political or cultural conflict between the feudal and the capitalist elite in this model. They have separate income streams and dispersal networks but they are not fundamentally different.

 

This is in stark contrast to capitalist establishment history, (and Establishment anti-Capitalist theory!), for which it is very important to claim that capitalist elite are different from the feudal elite, because they have been transformed by an intangible, magical process called ‘Enlightenment’

 

I’m Ready For My Close Up

 

This Split Stream Model can be regarded as the basis for the idea of a ‘Golden Age of Capitalism’. In as far as Capitalism can be said to be progressive, the justification for it lies in this model.

 

The capitalist commercial blue vector shows Capitalism concentrating power upwards through the capitalist production process and then redistributing wealth and power back down through the very same capitalist production process. It should be very clear that unlike a feudal system wealth and power are NOT redistributed back to the people they had been extracted from. And wealth and power are NOT redistributed to everyone throughout society. But they are redistributed comprehensively nevertheless.

 

Imagine yourself standing on any point on the blue vector in other words, imagine yourself as part of the commercial vector. As part of the process, from your point of view Capitalism really does redistribute wealth and power; you can see it happening, it is happening to you. You are part of an alternative to the feudal redistribution system.

 

This is the form of society that traditional (sometimes ‘libertarian’ and even Neo Conservative) Anglo Saxon history focuses on. This is the basis and justification for Neo Conservative ‘trickle down’ rhetoric and at the same time the reason for its ‘Libertarian’ opposition returning again and again to the period of the American Constitution, and even sometimes the French Revolution.

 

We can look again at the Inverted Pyramid Model from this perspective. For someone at the apex of the blue vector the pyramid is indeed inverted.. power and wealth comes to you and you redistribute it. And that is why this model forms the basis for all pro-market, particularly Saxon rhetoric. Think of it as a snapshot of Germanic capitalism in early adulthood; fresh-faced and looking at her very best. It’s the same snapshot that Capitalism still uses on her Facebook page, although it’s a long time since she looked anything like that….

 

There are two systems co existing, but one of them has a clear future where the other does not. A new Divergent Split Stream Model begins to assert itself where economic wealth and power is no longer distributed back down through the lower echelons. The feudal vector system comprehensively redistributes wealth. The capitalist vector no longer does.

What this means is that in effect the capitalist vector is getting its government for free….It can abandon its obligations outside of the state. That model looks like this:

dssm

As a consequence of capitalists abandoning any social obligations they may have felt they had, the feudal system progressively impoverishes itself in comparison with the capitalists. This is effectively the moment of overt capitalist revolutions, the moment when ‘feudalists’ and ‘capitalists’ understand the true meaning of what is happening and what its inevitable consequences will be. Then comes a decisive political battle. Ironically it is when capitalism stops actually being progressive and revolutionary that an actual capitalist revolution becomes necessary!

 

And now things get really interesting.

The post revolutionary redistribution system bypasses the elite entirely. This is the Split Stream Welfare Model and it looks like this:

sswm

The top echelon elite have taken themselves out of the redistribution process altogether but they are still protected by it. The elite are effectively disintegrated from the system. The difference between an old fashioned ‘oppressive’ pyramid and a modern system is that the people used to pay wealth and power to the King to distribute to his bodyguards. Now they pay to the bodyguards directly. This is called democracy. The system is streamlined.

 

And if the red vector looks familiar from the models above. It should because it is the same one.

Now the Split Stream Welfare Model reproduces the feudal distribution system, but outside of the elite. That is what ‘welfare’ redistribution actually is; a reproduction of the classic feudal non capitalist redistribution system but at a lower level of society. If redistribution is really feudalism, is the left really ‘feudal’?

You betcha!

So what is a ‘progressive’ then?

‘Back To The Future’ Next time….