Graeber's rhythmanalysis of the first 5,000 years of debt

Excerpt from an essay version of David Graeber's timely Debt: The first Five Thousand Years. Graeber here argues for an historical analysis of the present that works through a rhythmanalysis: attempting to layer the multiple rhythms of the present together (long durations, the medium and the micro rhythms as a contemporaneity) and feel them. "How do all these rhythms weave in and out of each other? Is there one core rhythm pushing the others along? How do they sit inside one another, syncopate, concatenate, harmonise, clash?"

Historical action tends to be narrative in form. In order to be able to make an intervention in history (arguably, in order to act decisively in any circumstances), one has to be able to cast oneself in some sort of story — though, speaking as someone who has actually had the opportunity to be in the middle of one or two world historical events, I can also attest that one in that situation is almost never quite certain what sort of drama it really is, since there are usually several alternatives battling it out, and that the question is not entirely resolved until everything is over (and never completely resolved even then). But I think there’s something that comes before even that. When one is first trying to assess a historical situation, having no real idea where one stands, trying to place oneself in a much larger stream of history so as to be able to start to think about what the problem even is, then usually it’s less a matter of placing oneself in a story than of figuring out the larger rhythmic structure, the ebb and flow of historical movements. Is what is happening around me the result of a generational political realignment, a movement of capitalism’s boom or bust cycle, the beginning or result of a new wave of struggles, the inevitable unfolding of a Kondratieff B curve? Or is it all these things? How do all these rhythms weave in and out of each other? Is there one core rhythm pushing the others along? How do they sit inside one another, syncopate, concatenate, harmonise, clash?

Let me briefly lay out what might be at stake here. I’ll focus here on cycles of capitalism, secondarily on war. This is because I don’t like capitalism and think that it’s rapidly destroying the planet, and that if we are going to survive as a species, we’re really going to have to come up with something else. I also don’t like war, both for all the obvious reasons, but also, because it strikes me as one of the main ways capitalism has managed to perpetuate itself. So in picking through possible theories of historical cycles, this is what I have had primarily in mind. Even here there are any number of possibilities. Here are a few:

Are we seeing an alternation between periods of peace and massive global warfare? In the late 19th century, for example, war between major industrial powers seemed to be a thing of the past, and this was accompanied by vast growth of both trade, and revolutionary internationalism (of broadly anarchist inspiration). 1914 marked a kind of reaction, a shift to 70 years mainly concerned with fighting, or planning for, world wars. The moment the Cold War ended, the pattern of the 1890s seemed to be repeating itself, and the reaction was predictable.

Or could one look at brief cycles — sub-cycles perhaps? This is particularly clear in the US, where one can see a continual alternation, since WWII, between periods of relative peace and democratic mobilisation immediately followed by a ratcheting up of international conflict: the civil rights movement followed by Vietnam, for example; the anti-nuclear movement of the ’70s followed by Reagan’s proxy wars and abandonment of détente; the global justice movement followed by the War on Terror.

Or should we be looking at financialisation? Are we dealing with Fernand Braudel or Giovanni Arrighi’s alternation between hegemonic powers (Genoa/ Venice, Holland, England, USA), which start as centers for commercial and industrial capital, later turn into centers of finance capital, and then collapse?

If so, then the question is of shifting hegemonies to East Asia, and whether (as Wallerstein for instance has recently been predicting) the US will gradually shift into the role of military enforcer for East Asian capital, provoking a realignment between Russia and the EU. Or, in fact, if all bets are off because the whole system is about to shift since, as Wallerstein also suggests, we are entering into an even more profound, 500-year cycle shift in the nature of the world-system itself?

Are we dealing with a global movement, as some autonomists (for example, the Midnight Notes collective) propose, of waves of popular struggle, as capitalism reaches a point of saturation and collapse — a crisis of inclusion as it were?

According to this version, the period from 1945 to perhaps 1975 was marked by a tacit deal with elements of the North Atlantic male working class, who were offered guaranteed good jobs and social security in exchange for political loyalty. The problem for capital was that more and more people demanded in on the deal: people in the Third World, excluded minorities in the North, and, finally, women. At this point the system broke, the oil shock and recession of the ’70s became a way of declaring that all deals were off: such groups could have political rights but these would no longer have any economic consequences.

Then, the argument goes, a new cycle began in which workers tried — or were encouraged — to buy into capitalism itself, whether in the form of micro-credit, stock options, mortgage refinancing, or 401ks. It’s this movement that seems to have hit its limit now, since, contrary to much heady rhetoric, capitalism is not and can never be a democratic system that provides equal opportunities to everyone, and the moment there’s a serious attempt to include the bulk of the population even in one country (the US) into the deal, the whole thing collapses into energy crisis and global recession all over again.

None of these are necessarily mutually exclusive but they have very different strategic implications. Much rests on which factor one happens to decide is the driving force: the internal dynamics of capitalism, the rise and fall of empires, the challenge of popular resistance? But when it comes to reading the rhythms in this way, the current moment still throws up unusual difficulties. There is a widespread sense that we are heading towards some kind of fundamental rupture, that old rhythms can no longer be counted on to repeat themselves, that we might be entering a new sort of time. Wallerstein says so much explicitly: if everything were going the way it generally has tended to go, for the last 500 years, East Asia would emerge as the new center of capitalist dominance. Problem is we may be coming to the end of a 500 year cycle and moving into a world that works on entirely different principles (subtext: capitalism itself may be coming to an end). In which case, who knows? Similarly, cycles of militarism cannot continue in the same form in a world where major military powers are capable of extinguishing all life on earth, with all-out war between them therefore impossible. Then there’s the factor of imminent ecological catastrophe.

the end(s) of certainty

[An older post kept in storage but may as well let it out of the deep freeze].
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I'm publishing a few posts from the last few years here which focus on the central place of Paul Kelly's 1992 The End of Certainty in any understanding of the long Labor Decade. Kelly's 'story of the 1980s', as his book was subtitled, acts as both the hegemonic means into thinking about this period (one of almost national-epic governmental change) and as itself a text of a considerable force through which the long decade becomes narrativised and thereby available for making meaning and legitimating political projects. In other words, my interest in this 'history' is dual: as a text through which to periodise; and as a text which performs a particular type of periodisation.

The post immediately below is a relatively short one, and attempts to analyse the narrating position Kelly adopts at certain points in the narrative. From where and when can Kelly as narrator know, with an Olympian and magisterial certainty, that a critical political decision was pragmatic and yet inadequate to what the times demanded? The tentative answere here is that if we consider that Kelly is employing conventions from the Bildungsroman, we can use the extensive critical apparatus that has formed around discussion of this form to unpack how, and perhaps why, this narrating position is adopted. Indeed, Joseph Slaughter's notion of the Bildungsroman narrator employing a future-anterior form, or a tautological teleology, is very helpful in explaining how The end of certainty makes this key move. But why? Some answers proferred here.

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The ‘banana republic’ was a dose of shock therapy for the nation which for a while left a legacy of crisis which Labor could have utilised to impose far tougher policies on the nation. The opposition gave labor plenty of room. Howard called for a freeze of wages and public spending; the New Right was mugging unions from Robe River to Mudginberri. Keating’s authority was as potent as Hawke’s popularity. The prime minister declared the crisis the equivalent of war. The historical judgement in terms of the public mood and the depth of the problem is that the Hawke-Keating team failed to seize the full magnitude of the moment. Labor could have gone further but lacked the courage and imagination.

Labor felt it was heroic enough – its decisions were draconian by orthodox standards and its advisers were pleased. Labor was also frightened by the demons of revolt from its base and a community backlash. Hawke and Keating depicted themselves as bold warriors. But history will record that the times demanded more and would have given more.

Paul Kelly, The End of Certainty, 1992, p227.

To many Australian of my age (born in the 1960s), who were forming into adults in the 1980s, this quote from the end of a critical chapter in journalist Paul Kelly’s epic bildungsroman of the Australian Labor Party’s modernisation of the Australian economy, will trigger memories of a set of key events, narrative sequences and political dramatis personae. The ‘banana republic’ referred to here is a dystopian warning that treasurer Paul Keating dispatched, speaking on the phone to the king of talk-back radio in Australia at the time, John Laws, in 1986. Having instituted a ‘clean float’ of the Australian currency on the international exchange markets in late 1983, Australia’s integration into global finance markets now provided a moment by moment measurement of the nation’s economic performance and worth: the price of the $A. Combined with those stubbornly residual national accounts measures, which the Keynesian era had provided, such as the balance of trade, the current and capital accounts, foreign debt, Keating in 1986 judged the signs of national economic prospects to be quickly darkening. The storm warning transmitted on a nationally syndicated morning radio show in 1986, predicted landfall at Argentina if the ship of state wasn’t decisively and quickly steered away from that regressive land.

The notion of a banana republic, a nation-state prone to military dictatorships and juntas, surviving, for the few, on precarious agricultural production, forever in debt to the developed world, was the dystopian destination coiled in the storm warning Keating employed to legitimate how and where the ship of state must now be steered: into rougher, but ultimately more prosperous, international waters. If Australia, and we are talking about Australia, was not to be a banana republic, what then was it to be?

Kelly makes it clear that history itself found that the efforts made to steer away from this dystopia didn’t meet its demands. That, instead of ultimately averting the banana republic the possibility, unfortunately, lingers (in 1992).

These are understandable yet odd claims made by Paul Kelly, who has become highly influential as a political commentator, working both in the production of extended historical narratives like The end of certainty, and more tightly as editor-at-large for Rupert Murdoch’s national broadsheet The Australian. It is understandable that Kelly would make such grand claims about a history which he knows in so much as his historiography is political in very specific ways. Kelly, in the passage cited above, is actually asserting that it is the times, anthropomorphised here as that ‘subject’ (collective or singular, we aren’t told) which made a demand which wasn’t fully supplied, or complied with.

How can Kelly claim to know not only what History will record but what the times demanded? It’s instructive to turn back a few pages in this chapter to find the figure of this position from which such a judgement is made: it is the jury of the international markets – an anthropomorphised collective subjectivity that makes judgements like a judicial operative. That the markets are to be figured as subjective is one astonishing trope, but that a market (which is itself a moment in which the commodity form exists – that moment at which demand and supply come to terms and perform an exchange) is not an army, a general giving orders, a bureaucrat administering statutory regulations, but a jury is a key trope in what Kelly is performing in his political narrative (political both in subject and purpose). For to ascribe the clear, eye and ear of a jury to what the times demanded, and further, to what the times demanded as being that which history will record, is to suggest that the markets are a jury: comprised of regular, ordinary citizens, who will adjudge the evidence, and hear testimony and argument, who will be directed by judges, and who will reach either a majority or unanimous verdict. When Kelly writes that the times demanded more, he infers that the markets demanded more . . . that, indeed, what the ‘markets’ demanded was more deregulation (particularly of the labour market), less public spending. What was demanded was undersupplied – that is why History is able to record a deficit in political will and action; a surplus of Labourism’s sentimental traditionalism.

Kelly’s narrative may seem reasonable from out perspective, after 10 years of neo-conservative governance: a neo-conservatism that has its own Australian aspects. But it might be useful to ask not only from where Kelly’s narrative/ historical writing voices its certainty (one of the unintentional ironies, surely, here is the paradox of an age of uncertainty, so certainly described and above all judged by history’s magisterial, almost moral, eyes and ears) but more importantly from when (in other words is there a type of temporal structure – a chronotope?). And here’s the clue: Kelly writes that ‘the times demanded more’. This is an odd anthropomorphism when analysed as a clause. However, the concept that distinct times make distinct demands, even at a national, or even international, level is a commonplace notion: it is a notion that forms a fundamental operation in political rhetoric, and it is also an emblem of a narrative genre: the coming of age genre – the Bildungsroman. For to meet the demands of the times, or of an age, is effectively to come of age – to become integrated into the age, and in so making this accommodation, to accept ‘reality’, or to develop realism.

Kelly’s bildungsroman (of course, The end of certainty, is more than this) is classical in the two ways of the progenitor of the genre (Goethe’s Wilhelm Meister’s apprenticeship): the self forms a mature identity both through self integration and through integration with the world. In Kelly’s Bildungsroman Keating plays out the role of Wilhelm, but we are stuck in the transition phase, and Keating’s time at the helm is not yet secured. Kelly, perhaps, is speaking from the Tower Society, The end of certainty the book of Keating’s life – the instruction manual necessary to complete the formation. But alongside Keating is the nation itself – the body politic – which is to be reformed, modernised, to grow out of both its previous generation (the Menzies generation which is like the ancien regime: lethargic, rigidified, sclerotic, closed, old, no longer flexible and efficient, protean and creative, confident and outward looking), and also its youthful, adolescent phase (the Whitlam era: crazy mad, rushing, self-indulgent, experimental, idealist).

As mentioned above Kelly can’t write a classical(and thereby closed) Bildungsroman as his central subjects – Keating & Australia – are still being re-formed/ developed, modernised. The economic realism, which Kelly has made his peace with, has formed him as an individual. His writing, his textuality, his rhetoric is a performance of his maturity – he has integrated politics with economics and found a realism from which to articulate the zeitgeist (the times) as that which the jury of the international markets had judged Australia’s political elite and found that its demands were not fully met! Writing in 1992 the nationl re-formation (the necessary breaking of the Australian settlement) is a becoming that has a telos, a set of destinations. These end points, as Meaghan Morris following Annie Cot argues, are utopian – endless economic growth, that doesn’t so much move towards filling, or closing, a lack, but rather creates and exacerbates the lack in the performance of a neo-conservative discourse. It is Grunge literature that captures some of this movement: rather than a dystopia, it is an atopia that emerges in the thematics of Australian grunge literature as that lack which neo-conservative discourse fuels. In grunge lit, rather than coming-of-age as individual subjects the transition from youth/ adolescence/ teenage to adulthood/ maturity is not only thwarted, it is instead refused, negated, caught in a feedback loop, stuck – the metamorphosis (itself a trope of re-generation) fails, becomes diseased and dies.

A significant strand in Kelly’s historical narrative is the notion, itself a key convention of the Bildungsroman, that political leaders rise into executive power due to the mis/fit between some innate personality trait and the character of the times: that the mixture of contingent circumstances combined with the ‘philosophies’ of the party leaders and challengers, must also align with a personality that fits the times, the party, the mood, the necessities and the constituencies (including business, international forces etc). Another way to put this is to say that a successful stateswoman or statesman will have a biography that maps not only the personal traits 'called-out' by the times, but that they will be able to persuade a majority to alter with the times. It’s no surprise then that Meaghan Morris, in her essay 'Ecstasy and economics', considers theories of immantentism and the aestheticisation of politics, largely through reference to Kelly’s previous portraits of Keating in The Hawke Ascendancy.

For what is subtextual in The end of certainty is the call of the times for a charismatic leader: a leader whose personality enables them to successfully lead (essentially to orchestrate a viable hegeharmonics, themselves), and whose individual formation has been tempered by a productive accommodation with global, post-Keynesian economic realism. Morris rejects Kelly's demand for a leader to suit the times, but not without first praising Kelly's skill in mise en scene, in religious allusion, and in portraiture. I add a skill in employing conventions in the Bildungsroman.

Carbon Trading: the 2015 crisis in sub-prime carboffsets

Hopefully, I'm not alone in being fundamentally confused and a little ignorant about what the Emissions Trading Scheme legislation rejected by the Australian Senate this week would've brought about. Putting a cap on the amount of carbon pollution and letting the market price this carbon, seem to be the basics of the scheme.

Markets and prices, huh? The ABC's radio and sometimes TV economics correspondent Stephen Long was last night discussing some of the dangers of such a scheme on Lateline. Long observes that there are already derivatives in the carbon trading markets, as investors seek to "manage risk" by hedging, securitizing, selling short, and so on, products based in these markets. He worries that the practice of investing in carbon offsets--carbon sinks or tree plantations that putatively function to balance pollution elsewhere--needs the sorts of governmental compliance, accreditation and oversight regimes that were globally absent in the lead-up to the 2007 GFC, to ensure that such carbon-offsetting actually achieves its aim of capturing carbon. Without such oversight there is the distinct danger that markets in offsetting will develop their own version of sub-prime mortgages: unsustainable carbon sinks, plantation forests that are fronts for pulp materials, land-clearing to make way for such offset plantations which are stages in plans for other forms of development, or simply forests that exist only on paper.

It makes sense then, that Murdoch's Neoliberal economist--Michael Stutchbury--supports the pricing of carbon, even though he is a trenchant critic of the Neoliberal-post Social Democracy Rudd Government which failed to get the upper house numbers to push through their Emissions Trading Scheme earlier this week; a scheme with carbon pricing at its centre.

Long argues that there are either going to be huge compliance costs if carbon trading is to be comprehensively regulated, or we could well see a crash triggered by the collapse in the sub-prime carboffset market.

Neoliberalism: ideology & practice

From the first paragraphs of Leo Panitch and Martin Konings in the latest New Left Reviw (57). "Myths of Neoliberal Deregulation" (Subscriber access)


If a single root cause has predominated in explanations of the current global financial crisis, it is ‘deregulation’. Lack of state oversight of financial markets is widely cited—not only in the opinion columns of the financial press, but by left-wing commentators, too—as having permitted the perilous over-leveraging of financial institutions, based on weakly securitized debt, that has brought about the present debacle. This diagnosis of the cause of the crisis also steers towards a particular solution: if deregulation allowed markets to get out of control, then we must look to re-regulation as the way out. Thus Will Hutton sees the subprime crisis as the result of decades of laissez-faire policies, resulting in excessive financial growth and instability; now that ‘Anglo-Saxon financial capitalism has suffered a fundamental reverse’, he looks forward to the return of Keynesian regulatory policies. Eric Helleiner also hopes that ‘the crisis may be pushing us toward a more decentralized and re-regulated global financial order . . . more compatible with diverse forms of capitalism’ that would ‘sit less comfortably with an entirely liberal set of rules for the movement of capital and financial services’. By contrast, Robin Blackburn’s analysis of the crisis makes the point that ‘financialization was born in a quite heavily regulated world’, and he questions whether ‘more and better regulation’, even while needed, will ‘be enough’. But his account of the crisis mainly emphasizes rampant financial innovation in an unregulated shadow banking system.

For many authors, this focus on ‘deregulation’ in explaining the current crisis is closely associated with a Polanyian understanding of the shifting boundaries between state and market, which would see markets as having become 'disembedded’ from the state. From this perspective, we may now be witnessing the start of a movement whereby the market will be re-embedded in public norms and regulatory institutions. As Robert Wade recently wrote in these pages:

Governmental responses to the crisis suggest that we have entered the second leg of Polanyi’s ‘double movement’, the recurrent pattern in capitalism whereby (to oversimplify) a regime of free markets and increasing commodification generates such suffering and displacement as to prompt attempts to impose closer regulation of markets and de-commodification.

The central problem with this perspective is the tendency to analyse the financial dynamics of the past decades within the terms of that era’s hegemonic self-representation—that is, through the key tenets of neoliberal ideology: the retreat of public institutions from social and economic life, and the return to a pre-Keynesian era of non-intervention. But it was only on the most stylized and superficial reading that the state could be seen to have withdrawn. Neoliberal practices did not entail institutional retreat so much as the expansion and consolidation of the networks of institutional linkages that sustained the imperial power of American finance. Of course it has become commonplace to assert that states and markets should not be seen as really counter-posed; but such claims have tended to remain rather perfunctory, and most research has remained guided by the notion that financial expansion has been accompanied by the attenuation of the state. A concrete account of the many ways in which the us state and financial markets are mutually constituted must necessarily involve an awareness that the practical effects of neoliberal ideologies are not well represented in those discourses themselves. Neoliberalism and financial expansion did not lift the market out of its social context; rather, they embedded financial forms and principles more deeply in the fabric of American society.

This is not to deny that changes in the mode of regulation played an important role in the developments that led to the crisis, but rather to argue that these should be situated within a wider context of financialized class relations. [pages 67-8]

Fraser on the GFC

Just a placeholder to come back to.
Former Governor of the Australian Reserve Bank - Bernie Fraser - on the GFC.

Unbecoming of age: Australia's financial deregulation

After Kevin Rudd's post-Neoliberalism manifesto it was only a matter of time before his predecessor -- John Howard -- would appear to both set Rudd straight and to provide a set of scissor-ready quotes that can be cut'n'pasted into further Labor rhetoric about the defence and affirmation of neoliberalism residing in the Liberal party.

Howard, in his inaugural speech last night at the Menzies Research Centre, did voice the common-sense argument that the Hawke-Keating governments must be included in the list of those who Neoliberalised Australia. This is the central political flaw in Rudd's polemic: that any repudiation of Australian neoliberalism can't reasonably ignore the great neoliberalisers who floated the exchange rate, relaxed banking restrictions -- including permitting the entry of foreign banks --, oversaw the shift of the Reserve Bank's primary goal from unemployment, to the current account deficit, to the focus on inflation --effectively from protecting jobs to protecting finance capital --, privatised former government enterprises, reduced tariff protection, and used the increasingly hollowed out Accords to both dismantle the Arbitration system and de-unionise labour.

Yet Ruud's essay signals that there has been a change in rhetoric, or at least ideology, as David McKnight argues, which constitutes an opening for much needed government intervention in the face of the climate and financial crises. Let's hold Rudd to his anti-free market ideology, is McKnight's preferred response to this shift in political language. This is a useful goal, but there are lessons here from the long Labor decade that might be worth revisiting as a warning to such pragmatic support for what might merely be a change in ideology, rather than in governing practices.

Firstly, we need to admit that the ALP neoliberalised Australian society. Not just the economy. Neoliberalism is a political, social and cultural project, and not just a doctrine about free markets and minimal government. Neoliberalism is a political project equally at home in the Labor and Liberal parties.

Secondly, there might be elements (practices) of neoliberalism that are worthwhile, that promote equality and justice. Just as the New Liberalism of the late 19th and early 20th century did much to establish the social and economic protections that stabilised many sections of Australian society during the twentieth century, there are also techniques and rationalities of neoliberal forms of governing that promote social justice and democratic participation better than so-called social democratic techniques. The desire to wholely repudiate neoliberalism from the Left is an understandable yet dangerous one. For example, flexible work practices are odious when they are used to casualise and make precarious the lives of manual labourers, so that employers can minimise costs and committments to employees. On the other hand, flexibility in working hours for parents or carers is to be encouraged. The sorts of practices of flexibility that result in job-sharing could do much to reduce job-losses as employers increasingly look to cut labour costs as turnover suffers. James Ferguson has developed this line of thinking based on his anthropological work in Africa.

Thirdly, the Hawke-Keating government modernised aspects of white, male, heterosexual Labourism that needed changing. This modernisation, however, was caught up and entwined in the national coming-of-age narrative that had financial 'deregulation' as its central event . Those worthwhile elements of Australian Labourism -- elements which articulated to those social democratic practices that Whitlam sought to implement -- need not be cast off as part of the adolescence of Australian political culture: as the eczema of Australian modernity which was cured by the mature openness and independence that opening the financial arteries of the Australian economy achieved. Neoliberal globalization is essentially a project aimed at installing a political culture which serves the movement of finance capital to all reaches of the globe. Neoliberalism is the (political-)culture of finance capital, and it's that nexus that needs to be broken and rearticulated to other political-cultural forms.

To that end, Steve Keen has a useful breakdown of the emergence of Neoliberalised finance capitalism, Australian-style, here. Keen, in response to John Howard's specch last night, writes:

how anyone could champion the first reform–the deregulation of the financial system–as a “great” reform in today’s climate beggars belief.

As I argued in the Roving Cavaliers of Credit, financial deregulation was based on a misguided belief that the financial system operated like an ordinary market for goods, where the market itself would work out a sensible volume of and price for credit. A proper analysis of how money is created shows instead that a deregulated financial system will pump out as much credit as borrowers can be enticed to take on. In a world in which leveraged speculation on asset prices is possible, that will lead to the economy taking on so much debt that it will ultimately fall into a debt-induced crisis–which is where we are now.

Once in this situation, deregulated finance then amplifies the problem by going from supplying too much credit to cutting off the credit tap in a manner that reduces overall economic activity.

So the financial deregulation that Howard championed last night, and that successive Labor and Liberal governments introduced, led not to a better functioning economic system, but to a financial catastrophe that is still in its infancy.

To argue that the entire crisis was due just to the subprime scam, and lax financial regulation, is to ignore the obvious signs in the data that too much credit was being generated relative to income. These signs go back to mid-1964 in Australia, and to Armistice Day in the USA.

I expect that the belief that the Australian banking system is immune from the problems that have beset the rest of the world will be sorely tested in the next year or two, as the macroeconomic crisis caused by financial deregulation strikes at the heart of Australian homeownership. The level of household debt in Australia is as high as in America (when measured in terms of each country’s GDP), and though all the focus has been on the USA’s irresponsible lending to the Subprimes, in fact household debt in Australia grew three times as fast as it did in America in the last twenty years.

The Australian financial system is thus dependent on all Australian mortgage holders being able to service their debts, when the only source most of them now have to do that is their jobs. As jobs go as the crisis deepens, the solvency of the Australian financial system will be sorely tested.

No-one will then claim that financial deregulation was a “great reform”.

Neoliberalism as the cultural logic of finance capitalism: a reading of Anthony Macris's Capital Volume One

Another PhD excerpt from the penultimate section of the third and final chapter. The key sentence in this section is

This play of the embedding and dis-embedding of the symbols and models in a novel, which is often analogized as the play of reflections in a series of mirrors, is again a cultural form for derivatives, the avant-garde of finance capitalism, which take a 'grounded' asset and turns it through a complex set of risk-calculating mirrors, embedding and dis-embedding the financial 'instrument' as its ownership changes hands and its integrity is disaggregated, or fragmented as the "underlying asset can now itself become an abstract relation" (Lee and LiPuma, 2005: 412).

The aim of the 'reading' here is to homologize a literary technique -- the Generative mise en abyme -- with a set of finance capital techniques -- financial derivatives.*

Paul Kelly, as we saw, narrativised finance capital in the form of the evaluative historical future which narrates Australian, and indeed, global modernity in his The End of Certainty. This is a cultural logic of finance capitalism: the finance markets will decide the fate, indeed they are the times, of national bodies like the Australian one. In Elliot Perlman's novel, Three Dollars, the cultural logic of finance capital is repressed, emerging as the ideologeme of epilepsy: the body convulsive and unconscious, its electrical rhythms in a state of arrhythmia. For Fredric Jameson finance capitalism has its own cultural logics which are based on the abstraction of money that neither produces nor consumes but rather circulates in money markets (1997: 265). Published in the same year as Macris's book Jameson's "Culture and Finance Capital" is a suggestive essay using Giovanni Arrighi's spiral, rather than a progressive, model to explain the three stages of capitalism: the implantation, or embedding stage; the productive development stage; and finally the financial speculation stage (248, 251). Jameson seeks to locate homologous cultural forms which match the psychic dimensions required to live in, with, and critique these stages (260-65). Using Simmel's theories on the link between the money form and forms of abstract consciousness in the modernist period, Jameson extrapolates on the notion of capitalism as increasing mental abstraction in the modernist phase by suggesting that in the third stage of financial capitalism money takes flight from the ground on which it is generated, not to be re-invested into machinery or land, but rather to be invested in the deterritorialized cyberspace of financial markets (259-60). Rather than being linked to substances and objects, in finance capitalism money relates abstractly to other monies, producing new forms of abstraction especially those derived from speculation on the volatility of inflation and deflation of money (261). Jameson looks at and historicizes the career of the form of the "image fragment'" including the ways that it has been presented and conceived between the modernist period and our own 'post'-modernist one. The dominant form in this 'period' is the film preview: an advertisement for a future product sufficient in itself (261-62). There are image fragments opaque to analysis and those, like the ones Roland Barthes analysed in Mythologies, that are over-signifying. They use stereotypes, where an excess of meaning serves the connotating second order meanings (264). Jameson writes: "I think we need a concept of renarrativization of these fragments to complement Barthes's diagnosis of connotation at an earlier stage of mass culture" (264). While "in the modern moment the play [of image fragments] remains meaningless" postmodern representations of "total flow" art attempts to renarrativise those cultural fragments, that assert their independent stereotypical significance, into a continuum:

[w]hat happens here is that each former fragment of a narrative, which was once incomprehensible without the narrative context as a whole, has now become capable of emitting a complete narrative message in its own right. It has become autonomous, not in the formal sense I attributed to modernist processes, but rather in its newly acquired capacity to soak up content and to project it in a kind of instant reflex - whence the vanishing away of affect in the postmodern. The situation of contingency or meaninglessness, of alienation, has been superseded by this cultural renarrativization of the broken prices of the image world. (264)

Modernist abstraction is money itself in a situation of capital accumulation. Money abstract and empty - looking sideways toward what it can hitch a ride to: "it is thus incomplete like the modernist images I have been evoking; it directs attention elsewhere, beyond itself, towards what is supposed to complete (and also abolish) it [ - ] it knows a semiautonomy" (264). Macris's innovation is to have found a way to renarrativise, or to make continuous up to a point, image-fragments without merely presenting a string of over-signifying stereotypes. Instead, in Capital, volume one's London Underground track we read not of Grunge bodies but of something like a Grunge cavern within which used commodities, other life-forms and organic matter too small and fast to qualify for mercenary attention are narrativised into a slow motion singular camera-tracking mimesis. These London Underground subjects and objects, a pregnant mouse, a Lucozade bottle, the Australian tourist, are also temporalities thus making a continuity out of different times.

Yet Macris is not content to leave his depiction of the increasing penetration of market forces at renarrativizing fragments back into their material situations. He also introduces a literary 'machine' into his novel in the form of Generative mises en abyme. In its more basic forms the mise en abyme can be defined as employing

relatively simple, near-mechanical procedures of miniaturisation, embedding, and mirroring, later progressing to more complex modes of reflection across multiple narrative levels, and only reaching the truly generative stage once the mirrors proliferate and distort, converting the text into a field of reflections governed by modalities that go beyond referential and mimetic functions. (Macris, 2003: 51-2)

This play of the embedding and dis-embedding of the symbols and models in a novel, which is often analogized as the play of reflections in a series of mirrors, is again a cultural form for derivatives, the avant-garde of finance capitalism, which take a 'grounded' asset and turn it through a complex set of risk-calculating mirrors, embedding and dis-embedding the financial 'instrument' as its ownership changes hands and its integrity is disaggregated, or fragmented as the "underlying asset can now itself become an abstract relation" (Lee and LiPuma, 2005: 412). Indeed, the homologous descriptions below of the culture of financial derivative circulation and that of Macris's Generative mise en abyme are worth noting: "[o]nce speculative capital devoted to financial derivatives becomes self-reflexive and begins to feed on itself, it develops a direction dynamic towards an autonomous and self-expanding form" (412). While Macris writes in similar terms:

By multiplying the actual number of mises en abyme, and making each of them of the same importance, Simon has begun to solve the problem of having an originary text that is mirrored at all: the first term has been abolished, and there is now only an infinite series of reflections amongst multiple mirrors, all of which 'produce' one another. (2003: 53)

My argument here is that the ensemble of literary forms Macris produces with his novel Capital, volume one is on the one hand aimed at undoing a naturalisation of Neoliberal Bildung, in the novel's thread of biographical episodes, and on the other a homology of the operations of the leading instrument of finance capitalism in the form of the Generative mise en abyme. These two threads, or tracks, in being presented alternately ask to be read into and against each other. Thus the episodes of failed Neoliberal Bildung are traversed by image-fragments from the other thread, such as the accordion that appears on page 180as the young boy travels toward Brisbane, while another accordion appears in the London Underground thread (199-201). In the young boy's eyes the accordion is a folk instrument, while in the tunnel it becomes apparent that the accordion is being used to attract the attention of the Underground commuters to a mini-market where an old David Bowie cassette is for sale. The novel appears to ask: what is the meaning and value of an accordion, and is it even possible to fix a stable meaning and value onto such an instrument?

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Jameson, Fredric. “Culture and Finance Capital.” Critical Inquiry 24.1 (Autumn, 1997): 246-65.

Kelly, Paul.The End of Certainty: Power, Politics and Business in Australia. Rev. ed. St Leonards: Allen and Unwin, 1994.

Lee, Benjamin and Edward LiPuma. “Financial Derivatives and the Rise of Circulation.” Economy and Society 34.3 (August 2005): 404-27.

Macris, Anthony. “Claude Simon and the Emergence of the Generative mise en abyme.” AULMA 99 (2003): 50-66.

___, Capital, Volume One. St Leonards: Allen and Unwin, 1997.

Perlman, Elliot. Three Dollars. Sydney: Picador, 1998.

Dregulation

Peter Gowan's essay in the latest New Left Review -- Crisis in the Heartland: consequences of the New Wall Street System -- is an interesting read not least for the clear way in which he lays out some of the more complex elements in those credit market operations that have been at the heart of the GFC (Global Financial Crisis).
I found the following passage (below), especially the argument proferred in the second paragraph, nailed the false binary opposition between regulation and deregulation. Neo-liberalism, however, is not just an ideology --here used in the sense of an imaginary or false set of ideas that mystify and cause people to act against our own better interests -- but can also be seen as rationalities and techniques for conducting conduct: governmentality. Where Gowan writes:

The problem with this explanation is that, while the New Wall Street System was legitimated by free-market, laissez-faire or neo-liberal outlooks, these do not seem to have been operative ideologies for its practitioners, whether in Wall
Street or in Washington.

Wendy Brown argues, instead, that this contradiction between practice and belief/ rhetoric is consistent with Neoliberalism as governmentality:

Neoliberalism can become the dominant governmentality without being dominant as ideology -- the former refers to governing practices and the latter to a popular order of belief that may or may not be fully in line with the former, and that may even be a site of resistance to it. ("Neoliberalism and the End of Liberal
Democracy" Edgework: 49)

*

Prevailing theories

Much of the mainstream debate on the causes of the crisis takes the form of an ‘accidents’ theory, explaining the debâcle as the result of contingent actions by, say, Greenspan’s Federal Reserve, the banks, the regulators or the rating agencies. We have argued against this, proposing rather that a relatively coherent structure which we have called the New Wall Street System should be understood as having generated the crisis. But in addition to the argument above, we should note another striking feature of the last twenty years: the extraordinary harmony between Wall Street operators and Washington regulators. Typically in American history there have been phases of great tension, not only between Wall Street and Congress but also between Wall Street and the executive branch. This was true, for example, in much of the 1970s and early 1980s. Yet there has been a clear convergence over the last quarter of a century, the sign of a rather well-integrated project. [30]

An alternative explanation, much favoured in social-democratic circles, argues that both Wall Street and Washington were gripped by a false ‘neo-liberal’ or ‘free-market’ ideology, which led them astray. An ingenious right-wing twist on this suggests that the problematic ideology was ‘laissez-faire’—that is, no regulation—while what is needed is ‘free-market thinking’, which implies some regulation. The consequence of either version is usually a rather rudderless discussion of ‘how much’ and ‘what kind’ of regulation would set matters straight. [31] The problem with this explanation is that, while the New Wall Street System was legitimated by free-market, laissez-faire or neo-liberal outlooks, these do not seem to have been operative ideologies for its practitioners, whether in Wall Street or in Washington. Philip Augar’s detailed study of the Wall Street investment banks, The Greed Merchants, cited above, argues that they have actually operated in large part as a conscious cartel—the opposite of a free market. It is evident that neither Greenspan nor the bank chiefs believed in the serious version of this creed: neo-classical financial economics. Greenspan has not argued that financial markets are efficient or transparent; he has fully accepted that they can tend towards bubbles and blow-outs. He and his colleagues have been well aware of the risk of serious financial crisis, in which the American state would have to throw huge amounts of tax-payers’ money into saving the system. They also grasped that all the various risk models used by the Wall Street banks were flawed, and were bound to be, since they presupposed a general context of financial market stability, within which one bank, in one market sector, might face a sudden threat; their solutions were in essence about diversification of risk across markets. The models therefore assumed away the systemic threat that Greenspan and others were well aware of: namely, a sudden negative turn across all markets. [32]

Greenspan’s two main claims were rather different. The first was that, between blow-outs, the best way for the financial sector to make large amounts of money is to sweep away restrictions on what private actors get up to; a heavily regulated sector will make far less. This claim is surely true. His second claim has been that, when bubbles burst and blow-outs occur, the banks, strongly aided by the actions of the state authorities, can cope with the consequences. As William White of the bis has pointed out, this was also an article of faith for Bernanke. [33]

iii. systemic options
The real debate over the organization of financial systems in capitalist economies is not about methods and modes of regulation. It is a debate between systemic options, at two levels.

A public-utility credit and banking system, geared to capital accumulation in the productive sector versus a capitalist credit and banking system, subordinating all other economic activities to its own profit drives.
An international financial and monetary system under national-multilateral co-operative control versus a system of imperial character, dominated by the Atlantic banks and states working in tandem.