What Will Be Tomorrow?

Our confidence in the world is shattered. How could what is happening be allowed to happen?

Who will we have become once this is over? Why do societies and institutions -- to pose the question once raised by Leopold von Ranke -- have ruin right before their eyes and yet march straight into it? This is the question that the American House of Representatives considered at the start of this past week in its hearing on the Lehman Brothers bankruptcy. How could the managers of the bank still carry on as though nothing had happened although they had known for months that their business model would go bust? The answer is: Lehman believed that a breakdown would also hit the others and affect so many people that the government would have to intervene.

We are just being taught to call this conduct "greed." But "greed" is the most innocuous explanation of all for this acute threat to our social order. That is perhaps why people like to use it so much. During the past two weeks the old mortal sin was invoked in more than three thousand press articles; in the meantime, judging by the headline of a a leading german business paper, we have now reached the point of discussing the "greed of ordinary folk." So everybody is guilty? Greed may be bad, but it is human. From that point of view, the present crisis would be nothing more than a routine appointment in God's standing tribunal on man.

Societies were civilized to prevent precisely what now seems possible: that they are destroyed by the reckless action of individuals. If this safeguard is no longer guaranteed, profound distrust in society and in the dependability of social reason begins. That is the situation politics now finds itself in. But because millions of Germans were urged over the past decade to convert to neoliberalism, trust the financial markets and distrust government that is now everybody's situation. Everyone now has to face up to the fact that the reasoning behind their most important life decisions was based on a purely speculative system.

Why do we live in a society that, having ruined its natural environment, is now about to knowingly ruin its social environment and the lives of an entire generation? In his book Collapse: How Societies Choose to Fail or Succeed, Jared Diamond specified the causes that encourage elites to destroy their societies. "They feel safe because the perpetrators are typically concentrated (few in number) and highly motivated by the prospect of reaping big, certain, and immediate profits, while the losses are spread over large numbers of individuals." This precisely is the wager that Congress identified at Lehman Brothers. In the mid-sized loss zone, writes Diamond, individuals waive legal recourse because they see not the slightest chance of receiving compensation, given the large numbers affected. In the big loss zone everybody is affected, and now the already damaged state is practically compelled to take action to stabilize the system, even if that leads it to the brink of disaster.

According to Diamond, the inclination of elites to ruin a society grows in proportion to their ability to insulate themselves economically from society as a whole. The better they manage to do so, the less will they be affected by the consequences borne by everyone else.

Those who believe that the current destruction of fundamental trust in the rationality of economic action will remain without consequence will know better at the latest after the next election. The world of money has been fictionalized over night. The escape into nationalization, initiated by the banks themselves, is the liquidation of market metaphysics. Now that we live in utter uncertainty about what is and what is not, only the state remains to pronounce that something does indeed exist, and not just nothing. If Friedrich Engels' observation: "The essence of the state is humanity's fear of itself", ever applied, it does so today.

The chancellor was right when she spoke of a threat to our social order in her policy statement. The bank failures on Wall Street have unleashed a chain reaction comparable to the impact the 18th century Lisbon Earthquake had on the thinkers of the enlightenment. Then, the question was how a benevolent God could permit such a catastrophe. The consequences were: doubt in the viability of his world and a process of self-enlightenment that left virtually no stone unturned in the European system of thought.

How could what has just happened be permitted to happen? If answering that question is not to be left to left-wing demagogy, it will be necessary to talk about the division of our society into those who bear the consequences and those who do not or even benefit from them. Civic society has proven repeatedly that it can learn from paradigmatic disasters. Now, in the latest situation akin to global civil war, it must enter into a most vigorous argument with itself. The crisis not only changes the world. It changes the way we think.

Comments

[Erdgeist]

Greed or exploitation, the American worker has been gamed if not robbed who is the real engine of the world economy. In The Forum (February, 1931), Foster & Catchings rightly observe:

"For capital, as well as labor, can continue to prosper only if real wages -- that is to say, standards of living -- increase at the same rate as the productivity of labor. In other words, employers of labor can prosper only if they can find a market for the products of labor; but for a market, employers must look chiefly to the laborers themselves."

77 years later we have lost sight of this. While the productivity of American labor has greatly increased**, the ordinary wage earner has not seen a subsequent rise in their income. What has happened is they have been robbed by those who employ them. Further adding insult to injury, the American worker's jobs have been shipped to China and other countries which only profits American corporations -- but not the nation as a whole.

Now it appears that the recession will go quite deep because the America worker, who is also the engine of consumption, is underpaid and out of credit.

There will be no bright tomorrow so long as the American worker is not adequately paid for their productivity -- and continues to be robbed by greedy corporations who are engaged in labor arbitraging; who could not care less about the United States of America.

**http://www.nytimes.com/2006/08/28/business/28wages.html

[aresoma]

Danke,

I agree with your notion about the stupidity of the analysis centering around greed. The recent Spiegel is probably one of the weakest ever because it put so much emphasis on this human condition.

You use a very important phrase that is very German and very topical: "order". The failure of the markets is the lack of order policy in the United States. In other words we need to spread ordoliberalism as a cure.

Everybody knew that it was about to happen ten years ago but the surprise was that it did not happen so far. Risks need to be managed. Markets need order and buffer mechanisms. As European we have the tools ready, time to export them.

[sposton]

There is no question that our elites have brought this disaster upon us all. While we intuitively understand the concept of tragedy of commons on a micro level, we have hard time understanding it when this pattern plays out on the macro level. Yes, if IBM's, GE's, Citigroup's of this world act in their own self interest they can and do often deliver damage to the common-wealth. We ought not forget that we license greed to deliver public good. That requires a vigilant eye and not the "free market knows best" attitude. After all, we are talking about greed! When licensed greed fails to deliver public good it is not the time to just bailout the greed but to re-evaluate the underlying premise. The only way to make greed deliver value to us is to threaten it with an alternative - socialism. Otherwise the greed will continue robbing and use your money to lobby your government to screw you. In order for them to change there has to be a sword above their heads.

[DuganS1]

In the vast majority of the time, when these corporations (IBM, GE, Citi) act in their own self-interest it delivers large benefits to the common good.

[sposton]

And that is the reason to keep them. But they ought to know that they exist for us and not the other way around.

[TorpedoTommy]

"But because millions of Germans were urged over the past decade to convert to neoliberalism, trust the financial markets and distrust government that is now everybody's situation."

And by who were they urged if not by bourgeois papers like the 'Frankfurter Allgemeine', whose co-publisher just so wisely spoke to us.

[WgS]

Let's put it this way, if the past 8 years for sure (and one could well argue longer) has not been part of a conscious conspiracy, then I am even more afraid for humanity. If this is what w

[CharlieMarlowe]

The Historian Barbara Tuchman calls it "folly". Folly occurs when everyone involved in making decisions or effecting outcomes knows they are heading for disaster but are unable to change the course of history.

[RoloTomassi]

"How could what has just happened be permitted to happen?"

Simple; the Chicago School of Economics financial policies were adopted as a RELIGION by the financial sector and the government alike--given that fact, no other outcome was possible, as CSE policies have failed in every application.

Faux outrage that attempts to direct us towards introspecdtion of self or government is pointless; the cause is known, and all that is lacking from a program of future prevention is the political will to face reality and begin the arduous task of weeding out CSE policies from the financial sector and the government.

[DuganS1]

Where do you get the idea that the policies of the CSE "have failed in every application"? That idea holds little merit.

[RoloTomassi]

That idea hold quite a bit of merit; read a book once in a while and tune out the BS.

[Stephen308]

It's worse than you think.

We live in a society where community organizers help to sue banks to force them to make bad sub prime loans so said community organizers can work on building their political base as the man who helped bring easy money to the "deserving poor" and build their left wing credentials. Then, when the bad loans they created spiral out of control being abused by others as well along the way, when the primary lending organizations that paid said former organizer big campaign dollars and fail the public having done what said organizers wanted them to do in buying junk loans, same said organizer can run for president as "the answer to the crises" and blame "others" for causing it.

It's worse than you know.....or did you know that? It's not so much a failure of capitalism but a failure on the first order of corrupt self seeking individuals who used abused our nations banking system and their political influence to pass out easy money and get votes. Then the greed of others entered in and made matters worse. And by the time you are done you have a global disaster....with those who helped cause it, like Obama, claiming they didn't help cause it that they are "the answer".

Are we going to spend the next 8 years covering up Obama's mistakes? Is that what makes one "progressive"?

[RoloTomassi]

Thought and action to the Left of your political comfort zone is surging in this nation and I suspect you had better brace yourself, as none of your GOP-driven attempts at obfuscation will stop it.

Your party's approach failed miserably, and now you will be forced out of power.

[RedneckDem]

It'll be hard to cover up any of Obama's mistakes (i.e. he wont have time for mistakes) as he'll be busy covering up for Bush's.

[Bucwhet]

I guess I will go get the book now

[QuietLightTraveler]

Our form of capitalism, as we knew it, is now gone. Communism failed and now our form of capitalism has failed. Our system failed because our Government failed us. It failed us by not putting into place the necessary controls on the private sector. Anyone who has ever studied human nature must know that human beings are greedy and will look out for number one. The problem with corporations in the private sector is that they are inherently unethical whenever they can get away with it. Why? Because they are b ased solely on profit. On the other hand, the problem with Government is that it is frequently incompetent, just as ours has been in this current financial crisis. Why is Government incompetent ? Because politicians who run government are not subject to the usual day to day scrutiny of their performance as you and I are on our jobs. It's as simple as that. Noow, of course we will need to have a more intrusive government in order to protect people and to survive. Thus the further erosion of some of the independence and freedoms we previously enjoyed.

[DuganS1]

Our system has not failed, far from. Once the bad paper is purged from the system, things will go back to business as usual. The private sectors is not "inherently unethical", but very ethical for 99% of folks. We just need to find the bad apples and remove them from the system.

[RoloTomassi]

More GOP nonsense, and guess what, we're not buying it....

[DarthVector]

So we have problems grounding currency?

Then bring on a solar energy monetary standard. Peg everything to the supply of solar and tidal energy. Ground our currencies in this, as we would have with gold previously. But this requires an economics that considers economies as grounded in natural systems.

Fundamentally, solar and tidal ARE wealth, as they are energy entering the earth's closed ecosystem, unlike some other forms (such as geothermal) which are limited (albeit not very much from our current perspective). Wind is partially solar (thus fits in). We can work this out.

Doing this, we can especially encourage the "mining" of that fantastically underused solar and tidal resources which we float around and float around us - a form of mining and wealth creation that will simultaneously ground our efforts at financial and climate stability.

After all, the sun radiates a set amount of energy a day, outside our control. The moon continually exerts a force on the waves. You simply can't corner that. And the way you increase wealth is that you improve the means by which you capture and use solar and tidal power (and their downstream variants such as wind).

[January]

Maybe, as fresh water shortages increase, we can do some political reorganization around water basins? I live in a coastal city in California. Back in the days when progressives saw the need for distinct coastal management, we got a couple new government units involved. Local governments (like mine in Long Beach) have already ignored them when development interests dominate. But sooner or later some good citizens go to court and we get some remediation. I have a nearby area that is partial wetlands that have been neglected. No, we won't get the original natural beauty, but we will get something in addition to commercial, condos, and a dump.

[DarthVector]

Yes, but I would argue water resources need management under some kind of public-commons principle. I don't think water serves as currency well - it's too necessary.

After all, I can live without electrical power, although not in a modern fashion - but I can't LIVE without water.

Indeed, the thrust of my whole point is that we reorganize economic conceptual models in line with their empirically observed embedding in ecologies. Economy, the wholly owned subsidiary of ecology. Not treehugging, just empirical facts. It's not anti-technology, or anti-human, it's truly pro-life in a way that christianist (so-called) pro-lifers cannot recognize.

And deeper to that economic shift must be a respect for the natural world as embodying G-D - as Deleuze said, the universe as "remainder to God's eternal calculation", and G-D as not human but universal. I loved your quote response to another post of mine btw - I thirst for justice for all, not just justice for all humans.

[jsarets]

I hope this crisis enlightens the populace to the unsustainable lie that is money.

Money is debt. We can only have as much money as we have debt. If we had no debt, we'd have no money. But we'll never have no debt, because the money we need to pay interest is also created from debt. Unless we keep borrowing and consuming at an exponential rate, the entire banking system defaults on its debt to the Fed.

But eventually, people are going to ask why the Fed isn't foreclosing on insolvent banks. They are going to find out that, unlike any real bank, the Fed doesn't have any debt obligations of their own. They can and will lend unlimited money into existence with no risk besides their fraudulent scam being exposed.

Money is a lie because as time proceeds, its supply must approach infinity. Any commodity whose supply is infinite has a market value of zero. Money, it turns out, is destined for worthlessness, and our only hope is to eliminate it before it enslaves us all.

We need to get out of debt and, by doing so, get out of money. We must flood the economy with enough interest-free Treasury bills to eliminate all debts and then regulate their supply proportionally with population.

We must NOT adopt a gold standard, because it is too easily cornered, and indeed already cornered, by the same interests that perpetrate the money lie.

[ICUP]

Do you really believe that this is possible? If so, please explain your plan.

[jsarets]

It's simpler than it seems.

President Obama calls on Congress to exercise its power to coin and regulate money as granted by Article I Section 8 of the Constitution to authorize the Treasury to pay down all dollar-denominated debts, public and private, within 8 years by issuing interest-free Treasury bills that can only be loaned out at full reserve.

For every new Treasury dollar deposited in debt-owning banks, one dollar of new loans is made available, one dollar of existing debt is retired, and one Federal Reserve dollar is removed from circulation.

When the process is complete, the entire supply of Federal Reserve dollars would be replaced by Treasury notes with zero inflation, all existing debts would be retired along with their unpaid interest, we would have the option of a slow- or no-growth economy, and we would have confidence in a banking system that only loans out what it has on deposit.

The best part is that, as the money supply is replaced gradually over Obama's presidency, new loans would be made to the tune of $40-60 trillion, ushering in an unprecedented era of global prosperity as other nations follow suit. By unlocking the power of public money, civilization can unleash its greatest potential.

[Kassandra]

Society's fundamentals will have to shift. I will probably not live to see it, but I hope that, somehow I have helped.

I think the basic shift will have to be away from a monolithic "GOD" figure which has dominated civilization for the last 6000 years at least. If we are too survive and actually have a planet which works the way it should and was meant to: fostering life in all forms possible, we must recognize that we,as a species can no longer pass judgment on the appropriateness of the way life expresses itself. We can no longer pass judgment on what has a "soul" or doesn't.

We have lived in a "holier than thou" way for thousands of years now. We have allowed the most violent gender to rule. And we have lived in constant warfare and glorification of that warfare all this time.

Whether with weapons or thoughts, we have separated ourselves from life itself. Is it any wonder it is so easy to sway us with fear of all kinds?

If we can ever humble ourselves before the incredible fact that we live on a planet which most certainly is one of the few in the entire Universe which can sustain life and if we can begin to treat this planet and everything on it with respect and wonder, we will have passed the old paradigm and will actually mature into a species worth being.

[SonofLiberty1]

A shift AWAY FROM GOD?

Wake up and smell the coffee Kassandra, we've been there and done that and it'doesn't work!

What we need to do is to shift back TOWARDS GOD, and ask for HIS DIVINE MERCY and then we shall truly be free and life will get better.

[DarthVector]

Sorry, SonofLiberty1, but the shift away from "God" is not only successful but inevitable.

We have got to abandon the miraculous thinking of "God" who has divine mercy.

Let me ask you this; are you suggesting that "God", the all-Perfect, answers prayers?

If so, does this not mean that, in answering and altering the world in your favor, "God" has changed His mind?

Does this not mean "God" is changeable and thus not Perfect?

The trouble is that thinking about "God" as some kind of super-Father is a diminuation of G-D. It is IDOL WORSHIP. And thou shalt not worship the graven idol.

G-D is far more mysterious and deep than a bearded dude on a chair, dispensing justice at Armageddon. Those are human myths of revenge and redemption. G-D is beyond that.

We would do well to recognize G-D as being beyond the human, as it would open us to the immanent spiritual all around us, of which we are one aspect.

Peace.

[RoloTomassi]

No we have not done that in this country, and the need for it is greater than ever. Religious dogma is part of the problem, and has NOTHING to do with the solution.

It is YOU, SonofLiberty1, who needs to wake up.

[Kassandra]

I do believe I said "monolithic God". Your conception of god is, apparently different from mine. When we finally recognize the "divine" in all things, we may stand a chance as a species.

Christianity and the other andro-centric religions have done much harm to this earth and it's people's.we've even called the people's who lived in accordance with other than Christianity "savages". But it was they who were right, not the Christains. The endless wars and devastation of the planet in the name of a monolithic GOD have proven that amply.

Try to educate yourself on what religion has done as opposed to what real spirituality is. Religion is a tool for social and political control. And I seldom see "righteousness" except for "self-righteousness".

Stop leading unexamined lives. You'd be closer to Jesus if you got a little humility

[HallStyle]

Yeah the mortgage industry is a mess. But, it is a mess because people can't pay their mortgage. If it weren't for the Mortgage collapse many of us would still be in the dark about how these banks and insurance companies have been PLAYING all of us for years. We would have never been able to stop deregulation, now we can put a stop to deregulation. THE PROBLEM IS JOBS! If I were to get laid off today, I would have a hard time paying the bills. I would probably get behind on a few bills. I would probably have to get a loan, if I QUALIFY for the loans. If I don't qualifiy then I just want be able to pay a few of these bills and I will default. For years companies have been betting on mortgages. Some betting that they want default, and some betting that I will default. I don't even know how this is legal but they do this it is call Credit Default Swaps! When more and more people default the holder of the policy gets paid. The bank gets there property back and the defaulter gets nothing. Now that the value of homes have dropped the banks are getting homes back that aren't worth what the original note. The Insurance companies are getting brook paying the default swappers. This is how big companies like AIG began to collapse. Billionaire Jeff Greene pretty much got most of his wealth from this CORRUPT system.

[lcats]

Many people saw this coming, the only question was "when?" My mother took all of her money out of the stock market more than 10 years ago, for example. In the face of the Bush years and going as far back a Reagan, there was little one could do -- protest, become more cynical, perhaps move to another country. Timing is everything. Perhaps now we can start setting things right, at least if Obama is elected.