Primer: American Debt and Global Capitalism

"The operation of markets is now the instrument of social control and forms the impudent breed of our masters. Control is short-term and of rapid rates of turnover, but also continuous and without limit.... Man is no longer man enclosed, but man in debt."

(Gilles Deleuze, Postscript on the Societies of Control)

"the self-movement of Capital is far from the circular self-movement of the Hegelian Notion: the point of Marx is that this movement never catches up with itself, that it never recovers its credit, that its resolution is postponed forever, that the crisis is its inner most constituent, which is why the movement is one of the 'spurious infinity,' forever reproducing itself."

(Slavoj Žižek, The Parallax View)

'Das Kapital reveals the fact that capital, though organizing the world can never go beyond its own limit. It is a Kantian critique of the ill contained drive of capital/reason to self-realize beyond its limit."

(Kojin Karatani, Transcritique)

"What all this means is that the urgent task of the economic analysis today is, again, to repeat Marx's critique of political economy, without succeeding on to the temptation of the ideologies of 'postindustrial' societies... the key change concerns the status of private property: the ultimate element of power and control is no longer the last link in the chain of investments, the firm or individual who 'really owns' the means of production. The ideal capitalist today functions in a in a wholly different way: investing borrowed money, 'really owning' nothing--even indebted, but nonetheless controlling things. A corporation is owned by another corporation, who is again borrowing money from banks, who ultimately manipulates money owned by ordinary people like ourselves."

(Slavoj Žižek, Have Michael Hardt and Antonio Negri Rewritten the Communist Manifesto For the Twenty-First Century?)

"To be sure, the increased availability of credit has contributed mightily to the American economy and has allowed consumers to make big-ticket purchases like homes, cars and college educations.

"But behind the big increase in consumer debt is a major shift in the way lenders approach their business. In earlier years, actually being repaid by borrowers was crucial to lenders. Now, because so much consumer debt is packaged into securities and sold to investors, repayment of the loans takes on less importance to those lenders than the fees and charges generated when loans are made."

(Gretchen Morgenson, "Given a Shovel, Americans Dig Deeper Into Debt", NY Times 07/20/2008)

"The American consumer has for decades served as the engine of world commerce, using borrowed cash to snap up the accoutrements of modern living — clothes and computers and cars now manufactured, in whole or in part, in factories from Asia to Latin America. Eliminate the American wherewithal to shop, and the pain would ripple out to multiple shores."

"Globalization, in other words, allowed China and Japan to amass the fortunes they have been lending to the United States."
"But globalization also emboldened American capitalists to take huge risks they might have otherwise avoided — like borrowing to erect forests of unsold homes from California to Florida, delivering the speculative disaster of the day. They were operating with bedrock confidence that money would never run out. Someone would always buy American debt, delivering more cash for the next go."
"And this same interconnectedness appears to have reassured regulators in Washington about the health of the American financial system, as they declined to intervene against highly speculative lending during the real estate boom. Mortgages were being distributed to investors around the globe, and so were the risks, the regulators reasoned. Anyone who bought into that risk would have a strong interest in seeing that the American financial system stayed upright."
"In other words, in the estimation of people in control of money, the United States cannot be allowed to collapse, just as Fannie and Freddie cannot be allowed to fail. Too much is riding on their survival."
"The central truth of that logic still seems to be apparent as the Treasury keeps finding takers for American debt."

(Peter S. Goodman, "Too Big to Fail?", NY Times 07/20/2008)

"A financial bubble is a market aberration manufactured by government, finance, and industry, a shared speculative hallucination and then a crash, followed by depression. Bubbles were once very rare..."

"Nowadays we barely pause between such bouts of insanity. The dot-com crash of the early 2000s should have been followed by decades of soul-searching; instead, even before the old bubble had fully deflated, a new mania began to take hold on the foundation of our long-standing American faith that the wide expansion of home ownership can produce social harmony and national economic well-being. Spurred by the actions of the Federal Reserve, financed by exotic credit derivatives and debt securitiztion, an already massive real estate sales-and-marketing program expanded to include the desperate issuance of mortgages to the poor and feckless, compounding their troubles and ours."

"That the Internet and housing hyperinflations transpired within a period of ten years, each creating trillions of dollars in fake wealth, is, I believe, only the beginning. There will and must be many more such booms, for without them the economy of the United States can no longer function. The bubble cycle has replaced the business cycle."

"The next bubble must be large enough to recover the losses from the housing bubble collapse... we can expect to see the creation of another $8 trillion in fictitious value, which gives us an estimate of $20 trillion in speculative wealth, money that inevitably will be employed to increase share prices rather than to deliver 'energy security.' When the bubble finally bursts, we will be left to mop up after yet another devastated industry. FIRE (finance, insurance, and real estate), meanwhile, will already be engineering its next opportunity. Given the current state of our economy, the only thing worse than a new bubble would be its absence."

(Eric Janzen, "The Next Bubble: Priming the Markets for tomorrow's big crash", Harper's Magazine, February 2008)

"In the 1990s, the incomes of the richest 1% of taxpayers went up 10% a year in real terms (see chart), while those of the other 99% grew at an average annual rate of 2.4%. Between 2002 and 2006 the richest 1% saw 11% annual real income growth: everyone else got less than 1%. Three-quarters of the gains from the Bush expansion went to 1% of taxpayers, who now receive a larger share of overall income than at any time since the 1920s."

(The Economist, "Workingman's Blues", 7/24/08)

"Borrowers who are in trouble on their mortgages have seen their government move slowly — or not all — to help them. But banks and the executives who ran them are quickly deemed worthy of taxpayer bailouts."

"On the ground, this translates into millions of troubled borrowers, left to work through their problems with understaffed, sometimes adversarial loan servicing companies. If they get nowhere, they lose their homes."

"Once again, this emergency action smacks of the regulatory responses of recent years: do nothing to curb the deal-making mania while it is occurring, but when the rout comes along, hurry up and rein it in."

(Gretchen Morgenson, "Borrowers and Bakers: A Great Divide", NY Times 07/20/2008)

"Almost four decades have passed since the United States scrapped its last currency ties to precious metals. Our copper and nickel coinage still retains some metallic value, but not nearly enough for the purpose of currency tampering—the historic temptation of inflation-plagued or otherwise wayward governments, including, at times, our own. Instead, since the 1960s, Washington has been forced to gull its citizens and creditors by debasing official statistics: the vital instruments with which the vigor and muscle of the American economy are measured. The effect, over the past twenty-five years, has been to create a false sense of economic achievement and rectitude, allowing us to maintain artificially low interest rates, massive government borrowing, and a dangerous reliance on mortgage and financial debt even as real economic growth has been slower than claimed.If Washington’s harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it actually is."

"As inflation and interest rates have been kept artificially suppressed, the United States has been indentured to its volatile financial sector, with its predilection for leverage and risky buccaneering."

"Let me stipulate: the deception arose gradually, at no stage stemming from any concerted or cynical scheme. There was no grand conspiracy, just accumulating opportunisms."

"Transparency is the hallmark of democracy, but we now find ourselves with economic statistics every bit as opaque—and as vulnerable to double- dealing—as a subprime CDO."

"The credit markets are fearful, and the financial markets are nervous. If gloom continues, our humbugged nation may truly regret losing sight of history, risk, and common sense."

(Kevin P. Phillips, "Numbers Racket: Why the economy is worse than we know", Harper's Magazine May 2008)

"Recall the difference between the standard capitalist and the Marxist notion of economic crisis: for the standard capitalist view, crises are 'temporary, correctable glitches' in the functioning of the system, while from the Marxist point, they are its moment of truth, the 'exception' which only allows us to grasp the functioning of the system (in the same way that, for Freud, dreams and symptoms are not secondary malfunctionings of our psychic apparatus, but moments through while one can discern the repressed basic functioning of the psychic apparatus)."

(Slavoj Žižek, "On Alain Badiou and Logiques des mondes")

...and the professional ideologists (priests of all sorts, most of whom are convinced ‘laymen’)

"What is really disturbing about The Name of the Rose, however, is the underlying belief in the liberating anti-totalitarian force of laughter, or ironic distance. Our thesis here is almost the exact opposite of this underlying premise of Eco's novel: in contemporary societies, democratic or totalitarian, that cynical distance, laughter, irony, are, so to speak, part of the game. The ruling ideology is not meant to be taken seriously or literally."

"...the real aim of ideology is the attitude demanded by it, the consistency of the ideological form, the fact that we 'continue to walk as straight as we can in one direction'; the positive reasons given by ideology to justify this request -- to make us obey ideological form -- are only there to conceal this fact: in other words, to conceal the surplus enjoyment proper to the ideological form as such."

(Slavoj Žižek, The Sublime Object of Ideology)

Reading the Suprime Crisis

'This, then, is where we stand today: the antagonism imposed on us by the space of dominant ideology is the secondary antagonism between (what Badiou calls) "reactive" and "obscure" subjects, leading their struggle against the background of the obliterated Event.

In his reading of Badiou, Adrian Johnston discerned the ideologico-critical potential of the Badiouian topic of evental breaks: when the balance of an ideological situation is disturbed by arising "symptomal knots," elements which, while formally part of the situation, do not fit into it, the ideological defense can adopt two main strategies, the false "eventalization" of the dynamics which is thoroughly part of the existing situation, and the disavowal of the signs which delineate true evental possibilities, their reading as minor accidents or external disturbances:

one, making mere modifications appear to promise evental newness (a tactic that comes to the fore in the ideology of late-capitalism, whose noisily marketed "perpetual revolution" is really just an instance of the cliché "the more things change, the more they stay the same"-or, as Badiou puts it, "capitalism itself is the obsession of novelty and the perpetual renovation of forms"); two, making the sites sheltering potentially explosive evental upheavals appear to be, at a minimum, unremarkable features of the banal, everyday landscape, and, at most, nothing more than temporary, correctable glitches in the functioning of the established system.

Perhaps, this line of thought needs just one qualification: Johnston writes that "the ideology of the worldly state, through a sort of bluff or masquerade, disguises its non-integrated weakest points, its Achilles' heels, as fully integrated cogs and components of its allegedly harmonious functioning-rather than as loci containing the potential to throw monkey wrenches in its gears and thereby generate evental dysfunctions of this regime, a regime that is never so deeply entrenched as it would like to appear to be in the eyes of its subjects." Would it not rather be that one of the ideological strategies is to fully admit the threatening character of a disfunction, and to treat it as an external intrusion, not as the necessary result of the system's inner dynamics? The model is here, of course, the Fascist notion of social antagonisms as the result of a foreign intruder - Jews - disturbing the organic totality of the social edifice.

Recall the difference between the standard capitalist and the Marxist notion of economic crisis: for the standard capitalist view, crises are "temporary, correctable glitches" in the functioning of the system, while from the Marxist point, they are its moment of truth, the "exception" which only allows us to grasp the functioning of the system (in the same way that, for Freud, dreams and symptoms are not secondary malfunctionings of our psychic apparatus, but moments through while one can discern the repressed basic functioning of the psychic apparatus).'

(Slavoj Žižek, "On Alain Badiou and Logiques des mondes")

Slavoj Žižek - The Reality of the Virtual

Slavoj Žižek: Materialism and Theology

'It is well-known that an automaton once existed, which was so constructed that it could counter any move of a chess-player with a counter-move, and thereby assure itself of victory in the match. A puppet in Turkish attire, water-pipe in mouth, sat before the chessboard, which rested on a broad table. Through a system of mirrors, the illusion was created that this table was transparent from all sides. In truth, a hunchbacked dwarf who was a master chess-player sat inside, controlling the hands of the puppet with strings. One can envision a corresponding object to this apparatus in philosophy. The puppet called “historical materialism” is always supposed to win. It can do this with no further ado against any opponent, so long as it employs the services of theology, which as everyone knows is small and ugly and must be kept out of sight.'

(Walter Benjamin, On the Concept of History)

"...the relationship between historical and dialectical materialism is that of parallax; they are substantially the same, the shift from one to the other is purely a shift of perspective."

(Slavoj Žižek, The Parallax View)

Indeed, is not dialectical materialism essentially materialist theology, that aspect of Marx that, despite its necessity, is "small and ugly and which must be kept out of sight."

The communist hypothesis remains the good one

From "Censorship Today: Violence, or Ecology, a New Opium for the Masses"

by Slavoj Žižek

So what is the problem here? It is easy to make fun of Fukuyama's notion of the End of History, but the majority today is "Fukuyamaian": liberal-democratic capitalism is accepted as the finally-found formula of the best possible society, all one can do is to render it more just, tolerant, etc. The only true question today is: do we endorse this "naturalization" of capitalism, or does today's global capitalism contain strong enough antagonisms which will prevent its indefinite reproduction? There are three (or, rather, four) such antagonisms:

1. Ecology:
In spite of the infinite adaptability of capitalism which, in the case of an acute ecological catastrophe or crisis, can easily turn ecology into a new field of capitalist investment and competition, the very nature of the risk involved fundamentally precludes a market solution - why? Capitalism only works in precise social conditions: it implies the trust into the objectivized/"reified" mechanism of the market's "invisible hand" which, as a kind of Cunning of Reason, guarantees that the competition of individual egotisms works for the common good. However, we are in the midst of a radical change. Till now, historical Substance played its role as the medium and foundation of all subjective interventions: whatever social and political subjects did, it was mediated and ultimately dominated, overdetermined, by the historical Substance. What looms on the horizon today is the unheard-of possibility that a subjective intervention will intervene directly into the historical Substance, catastrophically disturbing its run by way of triggering an ecological catastrophe, a fateful biogenetic mutation, a nuclear or similar military-social catastrophe, etc. No longer can we rely on the safeguarding role of the limited scope of our acts: it no longer holds that, whatever we do, history will go on. For the first time in human history, the act of a single socio-political agent effectively can alter and even interrupt the global historical process, so that, ironically, it is only today that we can say that the historical process should effectively be conceived "not only as Substance, but also as Subject." This is why, when confronted with singular catastrophic prospects (say, a political group which intends to attack its enemy with nuclear or biological weapons), we no longer can rely on the standard logic of the "Cunning of Reason" which, precisely, presupposes the primacy of the historical Substance over acting subjects: we no longer can adopt the stance of "let the enemy who threatens us deploy its potentials and thereby self-destruct himself" - the price for letting the historical Reason do its work is too high since, in the meantime, we may all perish together with the enemy. Recall a frightening detail from the Cuban missile crisis: only later did we learn how close to nuclear war we were during a naval skirmish between an American destroyer and a Soviet B-59 submarine off Cuba on October 27 1962. The destroyer dropped depth charges near the submarine to try to force it to surface, not knowing it had a nuclear-tipped torpedo. Vadim Orlov, a member of the submarine crew, told the conference in Havana that the submarine was authorized to fire it if three officers agreed. The officers began a fierce, shouting debate over whether to sink the ship. Two of them said yes and the other said no. "A guy named Arkhipov saved the world," was a bitter comment of a historian on this accident.

2. Private Property:
The inappropriateness of private property for the so-called "intellectual property." The key antagonism of the so-called new (digital) industries is thus: how to maintain the form of (private) property, within which only the logic of profit can be maintained (see also the Napster problem, the free circulation of music)? And do the legal complications in biogenetics not point in the same direction? Phenomena are emerging here which bring the notion of property to weird paradoxes: in India, local communities can suddenly discover that medical practices and materials they are using for centuries are now owned by American companies, so they should be bought from them; with the biogenetic companies patentizing genes, we are all discovering that parts of ourselves, our genetic components, are already copyrighted, owned by others...

The crucial date in the history of cyberspace is February 3 1976, the day when Bill Gates published his (in)famous "Open Letter to Hobbysts," the assertion of private property in the software domain: "As the majority of hobbysts must be aware, most of you steal your software. /.../ Most directly, the thing you do is theft." Bill Gates has built his entire empire and reputation on his extreme views about knowledge being treated as if it were tangible property. This was a decisive signal which triggered the battle for the "enclosure" of the common domain of software.

3. New Techno-Scientific Developments:
The socio-ethical implications of new techno-scientific developments (especially in bio-genetics) - Fukuyama himself was compelled to admit that the biogenetic interventions into human nature are the most serious threat to his vision of the End of History.

With the latest biogenetic developments, we are entering a new phase in which it is simply nature itself which melts into air: the main consequence of the scientific breakthroughs in biogenetics is the end of nature. Once we know the rules of its construction, natural organisms are transformed into objects amenable to manipulation. Nature, human and inhuman, is thus "desubstantialized," deprived of its impenetrable density, of what Heidegger called "earth." This compels us to give a new twist to Freud's title Unbehagen in der Kultur - discontent, uneasiness, in culture. With the latest developments, the discontent shifts from culture to nature itself: nature is no longer "natural," the reliable "dense" background of our lives; it now appears as a fragile mechanism which, at any point, can explode in a catastrophic direction.

4. New Forms of Apartheid:
Last but not least, new forms of apartheid, new Walls and slums. On September 11th, 2001, the Twin Towers were hit; twelve years earlier, on November 9th, 1989, the Berlin Wall fell. November 9th announced the "happy '90s," the Francis Fukuyama dream of the "end of history," the belief that liberal democracy had, in principle, won, that the search is over, that the advent of a global, liberal world community lurks just around the corner, that the obstacles to this ultra-Hollywood happy ending are merely empirical and contingent (local pockets of resistance where the leaders did not yet grasp that their time is over). In contrast to it, 9/11 is the main symbol of the forthcoming era in which new walls are emerging everywhere, between Israel and the West Bank, around the European Union, on the U.S.-Mexico border.

So what if the new proletarian position is that of the inhabitants of slums in the new megalopolises? The explosive growth of slums in the last decades, especially in the Third World megalopolises from Mexico City and other Latin American capitals through Africa (Lagos, Chad) to India, China, Philippines and Indonesia, is perhaps the crucial geopolitical event of our times. It is effectively surprising how many features of slum dwellers fit the good old Marxist determination of the proletarian revolutionary subject: they are "free" in the double meaning of the word even more than the classic proletariat ("freed" from all substantial ties; dwelling in a free space, outside the police regulations of the state); they are a large collective, forcibly thrown together, "thrown" into a situation where they have to invent some mode of being-together, and simultaneously deprived of any support in traditional ways of life, in inherited religious or ethnic life-forms.

While today's society is often characterized as the society of total control, slums are the territories within a state boundaries from which the state (partially, at least) withdrew its control, territories which function as white spots, blanks, in the official map of a state territory. Although they are de facto included into a state by the links of black economy, organized crime, religious groups, etc., the state control is nonetheless suspended there, they are domains outside the rule of law. In the map of Berlin from the times of the now defunct GDR, the are of West Berlin was left blank, a weird hole in the detailed structure of the big city; when Christa Wolf, the well-known East German half-dissident writer, took her small daughter to the East Berlin's high TV tower, from which one had a nice view over the prohibited West Berlin, the small girl shouted gladly: "Look, mother, it is not white over there, there are houses with people like here!" - as if discovering a prohibited slum Zone...

This is why the "de-structured" masses, poor and deprived of everything, situated in a non-proletarized urban environment, constitute one of the principal horizons of the politics to come. If the principal task of the emancipatory politics of the XIXth century was to break the monopoly of the bourgeois liberals by way of politicizing the working class, and if the task of the XXth century was to politically awaken the immense rural population of Asia and Africa, the principal task of the XXIth century is to politicize - organize and discipline - the "de-structured masses" of slum-dwellers. Hugo Chavez's biggest achievement is the politicization (inclusion into the political life, social mobilization) of slum dwellers; in other countries, they mostly persist in apolitical inertia. It was this political mobilization of the slum dwellers which saved him against the US-sponsored coup: to the surprise of everyone, Chavez included, slum dwellers massively descended to the affluent city center, tipping the balance of power to his advantage.

How do these four antagonisms relate to each other? There is a qualitative difference between the gap that separates the Excluded from the Included and the other three antagonisms, which designate three domains of what Hardt and Negri call "commons," the shared substance of our social being whose privatization is a violent act which should also be resisted with violent means, if necessary: the commons of culture, the immediately socialized forms of "cognitive" capital, primarily language, our means of communication and education (if Bill Gates were to be allowed monopoly, we would have reached the absurd situation in which a private individual would have literally owned the software texture our basic network of communication), but also the shared infrastructure of public transport, electricity, post, etc.; the commons of external nature threatened by pollution and exploitation (from oil to forests and natural habitat itself); the commons of internal nature (the biogenetic inheritance of humanity). What all these struggles share is the awareness of the destructive potentials, up to the self-annihilation of humanity itself, if the capitalist logic of enclosing these commons is allowed a free run. It is this reference to "commons" which justifies the resuscitation of the notion of Communism - or, to quote Alain Badiou:

The communist hypothesis remains the good one, I do not see any other. If we have to abandon this hypothesis, then it is no longer worth doing anything at all in the field of collective action. Without the horizon of communism, without this Idea, there is nothing in the historical and political becoming of any interest to a philosopher. Let everyone bother about his own affairs, and let us stop talking about it. In this case, the rat-man is right, as is, by the way, the case with some ex-communists who are either avid of their rents or who lost courage. However, to hold on to the Idea, to the existence of this hypothesis, does not mean that we should retain its first form of presentation which was centered on property and State. In fact, what is imposed on us as a task, even as a philosophical obligation, is to help a new mode of existence of the hypothesis to deploy itself.

Žižek on Children of Men

Fetishist Disavowal

'Niels Bohr, who gave the right answer to Einstein's "God doesn't play dice" ("Don't tell God what to do!"), also provided the perfect example of how fetishist disavowal of belief works in ideology: at seeing a horse-shoe on his door, a surprised visitor told the physicist that he didn't believe in the superstition that it brought luck, to which Bohr snapped back: "I also do not believe in it; I have it there because I was told that it still works if one does not believe in it!" What this paradox renders clear is the way a belief is a reflexive attitude: it is never a case of simply believing - one has to believe in belief itself. Which is why Kierkegaard was right to claim that we do not really believe (in Christ), we just believe in our belief - and Bohr just confronts us with the logical negative of this reflexivity (one can also NOT believe one's beliefs...)'

(Slavoj Žižek, The Parallax View)

The Pervert's Guide to Cinema (2006)