The recent series of 'austerity revolts' in Europe suggests that those entreaties are falling on increasingly deaf ears. It is difficult to imagine a weakened banking sector making matters that much worse than they are at present for the mass of those not otherwise engaged in high finance.
Failure of imagination fueled by an unhealthy dependence on this one sector may be at the root of the problem. The US economy, in particular, became increasingly addicted to finance as its post WWII dominance began to wither in the face of growing competition from those whose military destruction - both allies and opponents - was finally overcome, 30 years on. While markets and margins shrank - helped along by a suddenly emboldened Arab oil economy - business leaders cast about for a means of prolonging their hegemony. Finance, headquartered in New York, London, Frankfurt and Zurich, proved the obvious candidate. Complicated, networked and clubby, it provided an easily defended refuge from the tumult of change. Even, or perhaps especially, industrial companies could wrap their tangible products around intangible services like financing and leasing.
The downside of course, is that like all addictions, this one felt good because it made success seem deceivingly easy and did not require the hard work of retooling for an uncertain future. Finance also fueled and benefitted from the allied tech bubble. The problem now is that the ravages of the 30 year dependence are becoming apparent. Enablers, like US Treasury Secretary Geithner and his European help-mates have persisted in defending the ancien regime and denying that an alternative is even imaginable. Those who doth protest too much are increasingly ignored. There will be a revival based on firmer bases, though perhaps not soon enough for all who have suffered in the interim. JL
Morgan Sandquist comments in Naked Capitalism:
Is it fair to say that because the quality of the denial surrounding the banking industry’s problems is so similar to that of the denial surrounding addiction, that addiction is therefore the root of those problems and our ongoing failure to adequately address them? Perhaps not, but others have come to describe money, debt, and banking as something very much like addiction for entirely different, and far better argued, reasons.
In Debt: The First Five Thousand Years, David Graeber looks deeply into the anthropological record and finds that money and debt, and, by extension, banking, are all essentially the same thing, and they’re not what most of us understand them to be.
Money is certainly not simply the objective store of value and medium of exchange that economists would have us believe it is. Because money is created as debt, its use to finance productive activity means that that activity, whatever it is, must then generate interest to be returned to money’s creators in addition to the money lent.
This has given rise to an industry, even a class of people, that derives its livelihood not from any productive activity of its own, but merely from having money. In Sacred Economics, Charles Eisenstein takes this a step further to show that this overhead cost inherent in all monetarily denominated activities means that the value represented by money must always grow. There is no logical end to what must be monetized–natural resources, ideas, time. Nothing can remain unowned and clear of liens, and that will eventually consume any finite realm:
The dynamics of usury-money are addiction dynamics, requiring an ever-greater dose (of the commons) to maintain normality, converting more and more of the basis of well-being into money for a fix. If you have an addict friend, it won’t do any good to give her “help” of the usual kind, such as money, a car to replace the one she crashed, or a job to replace the one she lost. All of those resources will just go down the black hole of addiction. So too it is with our politicians’ efforts to prolong the age of growth.
I don’t hope to make in a couple of paragraphs the full case that those two authors have made over hundreds of pages, so I’ll just assert it to have been compellingly made: namely, that money, debt, and banking have gone from being a tool that we might use to ease social activities to being the purpose of those activities. They have become an addiction, and because they’re an addiction, all of us who are touched by them have developed a rich and pervasive denial of this fact, its history, and its consequences.
In practical terms, what do we gain by perceiving money, debt, and banking as an addiction and the discourse around them as denial? Speaking for myself, it helps me understand the otherwise inexplicable irrationality behind our ongoing financial decline. I can imagine no other explanation for so much of what we’ve seen in the last few years: the failures to properly address the mortgage and subsequent foreclosure crises; the criminal activities of banks, hedge funds, and ratings agencies, and the spiral of consumer indebtedness; the deeply emotional and often militarized response to people sleeping in an otherwise unused square of concrete in a nocturnally unpopulated commercial district; and, most of all, the general populace’s willing acquiescence to all of this.
It appears only that banking must continue as it is, undisturbed, and nothing must disrupt the use and abuse of debt and money. Though an explanation for the full range of symptoms of the banking crisis, or for the full range of symptoms of any addiction, risks being reductive, without some causal dynamic behind these symptoms, there can be no effective response to them. To prevent something from happening, a cause must be identified and addressed.
Understanding money, debt, and banking as addiction also helps me trust myself and seek a constructive approach to the daunting task of resolving this crisis. As anyone who has ever had to face the full force of shared social and familial evasion can attest, the temptation to surrender to that alternate reality despite his or her better judgment, if only for the sake of civil relations, can be overwhelming.
In the case of the banking industry, that evasion often comes in the form of expert opinion that seeks to persuade not through the substance of the discussion, but through a dependence on credentials and ad hominem dismissal. It’s invaluable to be reminded that such a surrender, regardless of expert arguments, will at best only defer the consequences that we fear. Asking ourselves if, at the addict’s eventual funeral, we’ll be comfortable that we did everything we could is a remarkable inducement to focus. It can also be a powerful inducement to anger, so the understanding that it’s really addiction and denial, not friends and family, that we’re fighting can provide a basis for the compassion we would need to constructively approach such an emotionally volatile undertaking.
Finally, this understanding helps me focus on the ultimate goal of any such effort, rather than becoming sidetracked by pointless diversions.
As I mentioned above, one strategy of denial is to hide the connection between the symptoms of addiction and their real cause. It allows the alcoholic to believe that his or her diabetes and other health issues are the result of poor diet and that his or her depression is genetic or the result of poor parenting. It’s not that an alcoholic necessarily consumes a model diet or was well reared, but addressing just those symptoms allows the alcoholic to keep drinking, and other symptoms will follow from that drinking.
Similarly, it’s not that banks don’t need to be better capitalized, but providing them with capital and liquidity alone allows banks to continue pursuing courses of action that are neither financially nor economically viable.
To effectively address addiction is to prevent further addictive use of the substance. Any effort directed at symptoms will, to the extent they’re effective, simply enable continued substance abuse. It’s only by understanding the nature and extent of denial, navigating its maze, and intervening directly in the use of the substance that one can hope to effectively address addiction, and even then, the odds aren’t in the addict’s favor. And only with a thorough understanding of this dynamic and all of its implications can we hope to intervene effectively in the banking crisis that as of now continues unabated.
0 comments:
Post a Comment