The following is an excerpt from Crackernomics 2: The Structure Of Money
‘Nowadays people know the price of everything and the value of nothing’.
Modern money operates as a universal Lingua Franca – a common language. It has gained this pre-eminence by promising ordinary people a way of understanding an otherwise incomprehensible world
But the understanding of reality that modern money offers is warped and mutilated. Modern money actually offers a facsimile of knowledge – an hallucination of the way the world is.
The ideology and rhetoric of modern money was created to seal this hallucination off from physical reality. This ideology permanently and irrevocably FRAGMENTS reality so that the cult of modern money cannot be challenged by human experience.
The ideology of modern money exists to mutilate your mind by partitioning it.
Priests of modern money claim that anything outside of their money model world is irrational and essentially meaningless. They insist that everything experienced outside their framework must be disregarded.
The priests of modern money claim that their parody of reason is the end point of the search for universal truth. They say that all other conceptions of value, truth and meaning are primitive, parochial and limited and in the end they will be swallowed up by the cult of modern money. They seek to persuade that the rise of this cult is irresistible because it is Progress.
A Kind Of Magic
The modern money knowledge hallucination is predicated on creating a description of the world that does not require any actual understanding of the physical characteristics of this world.
This claim to produce knowledge without understanding is a magical claim. To produce knowledge from nothing is alchemy- as preposterous as the claims of a fairground clairvoyant.
Take a moment to think about this. Across the globe there are vast markets which comprise of commodities being traded by people who in reality know literally nothing about these commodities. The system works because these traders are not required to know anything.
The speculative method of extracting wealth is predicated not upon understanding any particular commodity but upon predicting the prices that markets will create for commodities and reacting to them.
In other words market speculators are not trading on the knowledge they have but rather trading on the knowledge that others do not have!
For instance, a commodity trader is not required to know anything about an actual steak and its physical value to know what it will be ‘valued’ at. If he knows that any particular group of customers only has £5 to spend on steak, then he knows that the price these customers will pay for steak will not and cannot be more than £5. The steak will be ‘valued’ at worth £5 or less, irrespective of any actual physical value and worth.
This is an insight into ‘price discovery’. Prices are created not discovered. Contemporary prices are a consequence of previous prices. Monetarism is predicated on this observation. As such it is a repudiation of classic capitalist ideology.
Price ‘discovery’ is an illusion in the same way a student takes LSD and ‘discovers’ a whole new world previously unseen. But the truth is that he has not discovered anything. He has created this world by means of introducing a chemical into his brain.
Well you might say, how come descriptions of this LSD world seem to be so similar when people recount them? I am afraid the answer is that most people lack the imagination to create anything novel, either under the influence of drugs or not..
The money/price hallucination is another created virtual hallucination. It allows the raw resources of the world to be leveraged to extract value by people who will never actually see anything of these resources and who never have to directly face the consequences of their market manipulation.
This process reaches a new high (or low), point in HFT-high frequency trading. Modern networking computer technology allows analysis and manipulation of the market to be carried out in amounts of a nanosecond. Now no longer even knowledge of the other market participants required, only knowledge of the technical structure of the system expressed through computer code.
Is HFT the end game in the cult of modern money? Or is it possible that money can become even more sealed off from physical reality even as its dictatorship over lives becomes ever more tyrannical? How has money become transported over time from the population to a hermetically sealed dictatorship isolated in an intellectual palace?
The claim is made that the modern money hallucination is based on reason and reality. This is the historical link between the modern world of the money hallucination and the ‘Enlightenment’ which was supposed to be founded on reason.
The religion of Economics preaches the story of progress from the concrete world of the senses to the transcendent heaven of modern money. How is a system that was supposedly based on reason transformed into one openly based on ‘animal spirits’, fear and greed?
Understanding the relationship between the two rests on the difference between a proper description of reality and a money description of reality.
Here ‘proper’ is not intended as some kind of value judgement. It means to describe real artefacts in the real world using real descriptors- a physical description. A proper description of any particular object has two elements.
The first dynamic of proper description defines the commonality of objects. In the case of an apple we can describe an apple as ‘plant’ and then as ‘fruit’. Using the plant…fruit descriptor we associate the apple within an ontology, a systematic description of plants.
The second dynamic of description differentiates an object as different from other objects within a class. e.g. Fruits are consistently different enough from all other plants to be defined in their own right. ‘Apples’ are consistently different enough from all other ‘fruits’ to be seen as something definable in their own right. We can further subdivide ‘apples’ into different varieties and then further refine the subdivision process.
In theory it should be possible to create a description for each individual apple that locates it within the entirety of nature- by which I mean not just an abstract description of type, but to locate a particular apple within time and space.
We start from broad categories:
Plants- subdivided to Fruit – subdivided to Apple- subdivided to Variety- subdivided to Location- subdivided to Farm – subdivided to Tree – subdivided to Time of harvest.
When we carry out this process something peculiar happens along the way. Numbers begin to substitute for names. There are no longer absolute descriptors (names), such as ‘Apple’ only relative ones; weight, colour, sweetness etc. These require relative numeric values.
As we move towards capturing a specific instance the uniqueness we seek becomes lost in relativity. The harder we seek ‘uniqueness’ the more it is revealed to be a chimera. Names are subdivided into numbers. But then numbers are subdivided into codes.
A code is in fact a name constructed from numbers. But where numbers are real e.g. they are descriptors, codes are not real (they are names), and require descriptors!
If I describe an apple as the fifth apple picked from a tree, I am not describing something uniquely real about that apple. I am describing something relative- something that only has meaning in relation to all the other apples on that tree. ‘Five’ is a number and it is real; ‘Fifth’ is a code and it is not.
And once we have allowed the creation of number/code/names all Hell breaks lose shortly after.
The number 400 is divisible by the number two to create the number 200. But the code/name/descriptor 400 is also divisible by the number 2 to create the code/name/descriptor 200. The meaning of this observation is that codes can be made to parallel the logic of mathematics.
In other words CODES can relate to each other numerically and consistently the same way that NUMBERS can. But they are NOT required to be defined and relate to each other LOGICALLY the way that NAMES are. This means that results can be produced from manipulating codes that are consistent but not logical or real.
Codes operate in the gap between names and numbers. This is where the hallucination is situated.
You can numerically binary encode an image (description) of Superman in a Computer Generated Imagery program. And then you can numerically manipulate that code to make him ‘fly’ in encoded space. The description of his flight will be entirely consistent within the encoded universe. But it won’t be real. It will be a model.
When that model is intercut with ‘real’ live action you have real problems telling what is real and what is not. This is how CGI/Live action movies work.
At the moment we are not required to act as though a Superman film is a real documentary. (Well, for now anyway). But we are required to act as though climate change models are real. And climate change models are essentially the same thing as a Superman film, real footage intercut with numerically manipulated code descriptors.
Climate change models take real stuff and code it. Then they produce a film, (a model), based on that manipulation. The film IS consistent. It DOES make numerical sense. But that does not mean it is logical or real.
In order for the climate change ‘model’ to be plausible it has to be cut off from the real physical world so it cannot be challenged by experience. And so it is. It is placed in the future where our real physical world experience cannot go.
Superman lives in Metropolis. Batman lives in Gotham City. Climate change lives in the future.
The same applies to price. Price is code masquerading as number. As a consequence modern money ‘value’ is also code masquerading as number.
Most of the people reading this will be well informed enough to know and understand that the ‘Federal Reserve’ is nothing to do with the Federal Government of America. It is just a name.
But do you also understand that the ‘10’ printed in the corner of a dollar note is not actually a number but also just a code/name? And the ‘$1’ price tag printed on a stick of celery at your local market is also actually a code and not a number?
The implications of this are massive and staggering.
Just as the name ‘apple’ is used in England and ‘pomme’ is used in France and ‘manzana’ is used in Spain, so this artefact is given a different price in all these different territories.
What is the relationship between the different names used in the different territories? Is it logical? It is the same relationship as that between the different ‘prices’ for this artefact. There is no real, logical relationship.
Outrageous nonsense! I hear you cry. There is a real consistent relationship between prices and the value of money notes. They vary but they make sense in national and international markets.
No. There is a consistent real relationship between NUMBERS and codes steal this relationship and use it to masquerade as logical, rational and reasonable under cover of it. It is a parody of reason.
Money value is something that various disparate artefacts are held to have in common. As Oscar Wilde famously said :
‘Nowadays people know the price of everything and the value of nothing’.
It is hard to over emphasise the profound intelligence of this remark.
The deeper truth is that we know the price of everything precisely because we don’t know its value. Price is the only way that the Germanic cult of Capitalism can make practical, intellectual and even moral sense of the world.
We don’t know the actual value relationship between a red pepper and a box of matches. But if the pepper is priced at 50p and the box of matches at £1 we say that the matches are twice as valuable as the pepper. Of course this is absolute gibberish, but the world is made to conform to this madness…
In another example, two things that cost the same are said to be the same. This gives rise to the outrageous example of the inflation substitution calculation in America.
When any particular item in the basket of goods used to calculate the rate of inflation actually inflates in price, it is simply substituted for an alternative at the old price! When steak becomes too expensive to fit the ‘inflation rate’ it is removed as an embarrassment and hamburger is substituted. Quality is not a concern when inflation substitution is made.
This outrageous abuse of reason works on the basis that anything at a given price is the equivalent of anything else at that same price. Reason, life and the world are mutilated so they fit the price hallucination.
I will finish with a broad description of price rhetoric.
Say you wish to buy a vacuum cleaner. You are presented with a list of three possible vacuum cleaners priced at M50, M80 and M600. (M is any standard unit of currency)
The prices given generate two categories of apparent ‘information’:
1.’Information’ about each particular vacuum cleaner in relation to the others and also
2.’Information’ about vacuum cleaners in general as a group of products.
Information about each particular vacuum cleaner in relation to the others
That M50 and M80 are similar but that M600 is considerably superior in some way; as expressed in price. You can understand this as the quantified (of course no actual ‘quantity is identified, just a code name), difference between a standard saloon and luxury sports car.
’Information’ about vacuum cleaners in general.
The value of vacuum cleaners in relationship to boxes of matches or whatever. e.g. all vacuum cleaners as a class of product are more expensive and thus more valuable than all boxes of matches as a class of product.
It follows from this that if we alter the price list relationship between the three vacuum cleaners we say something different about these relationships and generalities. The price mechanism generates a grammar and a logic upon which the rhetoric of marketing is based.
However, the problem is that this information is based upon assumptions about price that are not necessarily true. In order to create a semblance of general logic they assume:
The seller wants to sell at any particular price.
The seller wants to sell as many elements as possible at any particular price
Each price describes an independent entrant into the market
There is a relationship between price and intention
But it is often the case that:
The seller does not want to sell at any particular price.
The seller does not want to sell as many elements as possible at any particular price
Each price does not describe an independent entrant into the market
There is no relationship between price and intention
In other words the market cannot really capture the reality of intentions: Sometimes the market is ‘rigged’, which really means sometimes market participants do not act in the way that the priests of the ‘free’ market claim they should act.
And so the free marketers relaxed laissez faire attitude is transformed into rage and they rush to pass laws to protect free markets from… freedom. The free market always becomes a dictatorship of rules to make sure it remains free.
At the conclusion of the Matrix the ‘Neo’ Man discovers that the whole universe he has been living in is the expression of code. It has consistency but it is not real. Once he sees the world as merely code he can manipulate it in any way he wishes.
The Matrix was all about financialisation.
It was made in 1999, just when financialisation was really getting going.
What else would it be about?