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Steven Shaviro argues that part of our difficulty in making coherent sense of the crisis, reflects the way we experience as individuals, the market economy as something alien to us, over which we have no power. The boom and bust cycles that are intrinsic to capitalism are instrumental in instilling this sense of fatalism in people. One possible challenge to this fatalism is repoliticising one of the most ubiquitous aspects of the economy: money. Nearly all capitalist theory assumes ‘the neutrality of money’, yet rather see it as a vanishing mediator we need to understand, as this credit crisis has shown, that money isn’t a faithful ‘representation’ of wealth that exists, rather it is something that has it own intrinsic density and weight.


The crisis was unpredictable, but also unsurprising. It came upon us suddenly, without warning. Nobody knew about it ahead of time — and nobody could have known. There was no way to plan for it; no way to forecast it; no way to take it into account, financially or otherwise. It is only in retrospect that we can trace the incipient signs of the crisis, follow the slow progression of its advent. For the crisis marks a rupture with everything that came before. It dislodges all our certainties. Everything has been changed irrevocably. Conservatives can no longer pretend that “the market” takes care of everything. And progressives can no longer shunt aside questions of political economy, as if questions of domination and hierarchy, of biopolitics, of race and gender and even class, were somehow independent of the processes of capital accumulation.


And yet, at the same time, the crisis was something to be expected. It is only through willful blindness that anyone could have been surprised that the whole house of cards would collapse at some point. Of course, the bankers, the businessmen, and the economists were indeed taken by surprise. But they shouldn’t have been. If the world financial system hadn’t teetered on the edge of the abyss in September 2008, it would have done so at some other time. There is no way it could have avoided falling apart eventually.


For the boom that preceded, and led to, the recent bust was, of course, structurally untenable. So much debt was accumulated, that it could never possibly have been repaid. Financial institutions were earning huge premiums as supposed compensation for the risks that they were taking on. But their calculations assumed, at the very same time, that their actual, effective risk was close to zero, that their continued premiums and profits were a sure thing. They took it for granted that those subprime mortgages would never default in great numbers, all at once. They took it for granted that the insurance guaranteeing them would never have to be paid. So it all went on, in a continually self-reinforcing positive feedback loop.The vastly leveraged speculations of the financial institutions found their counterpart in the massive accumulations of unsecured debt by homeowners and other consumers.


Even now, when the crisis is fully upon us, it’s impossible to understand it, or to make coherent sense of it. For the collapse takes place invisibly, and in slow motion. You can’t really see it as it happens. The day after all the credit dried up, the world looked the same as it had the day before. Eventually, you notice that there have been small, incremental changes. Some businesses have closed; there are less cars out on the street; there have been a few more break-ins in my neighborhood. But the “trickle-down” nature of these disruptions is such that you cannot ever view the changes directly.


The crisis is a disaster, in the sense described by Maurice Blanchot: “the disaster ruins everything, all the while leaving everything intact.” My house has not been changed in the time since the crisis hit. It is physically exactly the same as it was, and it is just as comfortable to live in. But it has nonetheless been impalpably transformed. It has gone from being a source of notional wealth to being a burdensome debt. Just a few years ago, the equity I held in it was greater than my yearly salary. But now, its market value is considerably less than the principal that I still owe the bank, according to the terms of my mortgage.


Of course, I am one of the lucky ones. I still have a well-paying job; and one that, as a tenured academic, I am unlikely to lose. I should be able to keep on paying my mortgage without defaulting — even though, strictly speaking, I am paying a considerable sum each month in return for a property value that no longer exists.The bank will continue to earn a profit from me — even as my own savings are negative, and still going down. Because of my employment situation, I won’t face the consequences of this deficit until I am forced to retire — something I hope I can hold off doing as long as possible.


Not everyone has such good fortune as I do. Many people are in trouble right now — and not just in some unspecified future. I live in Detroit, where the overall unemployment rate, as I write this, is something like 23%. I have a friend who works (as so many people here do, or used to do) for General Motors. He hasn’t been laid off yet; but it could happen at any time. He has no idea what will happen to General Motors in the months ahead, as the company reorganizes after its likely bankruptcy. At GM, you never know in advance whether, or when, you will lose your job. You don’t know about other people being laid off, either. These things are never announced. You realize you haven’t seen somebody around for a while; you go down the hallway to their office, and find out that it has been empty for weeks.


The real question here is the one of our relation, as individuals, to the economy as a whole — or to the so-called “free market.” We are told that the market is made of individuals just like us. We are told that it consists in nothing more, and nothing less, than the summation of billions of decisions made by billions of autonomous individuals, each of us making choices for ourselves. And yet, we actually experience the market as a vast, ineluctable force. It feels like something entirely alien to us, over which we have no power, and from which there can be no appeal. This is why economic catastrophe is something invisible, impalpable: it affects every aspect of our lives, yet we are unable to “see” it in itself, to discern it as an actual force, behind its all-too-evident effects.


We bitch at the government all the time, because we can more or less see how it works, and because it gives us specific people to blame when something goes wrong. That is why so many Americans agreed with Ronald Reagan when he said that government was the problem — despite the fact that Reagan himself was the government. The market, in contrast, seems to be something that’s just there — like the weather, perhaps, or like an earthquake. We complain about the economy all the time, of course — but only in the way that we complain about a rainy day. Anything further would be a waste of breath — since we know that we cannot do anything about it. Americans get mad about having to pay taxes; but, even if they grumble, they basically accept the fatality of outrageously high interest rates on their credit cards. This is why there are no riots, and no street protests, in the United States today.


Indeed, the very purpose of the “free market” is to instill this kind of fatalism in people. The market is largely an instrument of discipline and control. Friedrich Hayek, the godfather of twentieth-century neoliberalism, praises the “free market” precisely because it subjects “man” [sic] to “the bitter necessity of submitting himself to rules he does not like in order to maintain himself against competing groups.” The objective value of the market is that it “forces us to be free,” forces us to behave “rationally” and “efficiently,” forces us to act concertedly in our own individual interests — any broader considerations be damned. Ethics, aesthetics, sympathy, solidarity, and care for others are all simply excluded, except to the extent that they can be packaged as commodities and put up for sale. The “price system” confines, restricts, and channels our behavior far more rigidly, and effectively, than any compulsion based upon mere brute force would be able to do. No State apparatus, no “governmentality,” no measure of surveillance, and no form of education or propaganda has been able to constrain human freedom as comprehensively — or as invisibly — as the “discipline of the market” has done.


To see the market in this way is to understand that boom and bust cycles are intrinsic to its proper functioning. Capitalist economies are inherently bulemic, operating according to a binge-and-purge logic. In other words, the crisis is not a bug, but a feature. The real estate boom of the earlier part of this decade served the purpose of massive capital accumulation, and the transfer of wealth from middle- and lower-class households to the financial sector. But the current orgy of capital destruction also serves to consolidate this accumulation, by relieving the pressures of overaccumulation and overproduction without reversing inequities in the distribution of wealth. Boom and bust alike are”objective” conditions that override any appeal to ethical concerns, and any exertion of political will. We can argue about how to deal with these conditions, but we cannot challenge the “givenness” of the conditions themselves. This is why the “answer” to our political disputes always turns out to be the same. The only thing that matters is to serve the interests of the financial sector: in boom times, by encouraging its “innovations”, and in bust times by bailing it out.


It was always only a mystification to say (as orthodox neoclassical economists are wont to do) that the market economy basically works towards equilibrium, matching demand and supply, and allocating resources in accordance with people’s desires. The best capitalist economists themselves know better. Joseph Schumpeter, for instance, is openly scornful of equilibrium theory. He sees the essence of capitalism as a continual process of “creative destruction”: massively disruptive, continually in turmoil, and energized by despotic monopolization rather than by “perfect competition” (which doesn’t really exist). Hayek, for his part, bases his argument in favor of the market precisely on the fact that the “perfect knowledge” that neoclassical theoriy attributes to economic agents is in fact unattainable. Hayek is also blithely unconcerned that, as he freely admits, “the impersonal decisions of the market” are absolutely “incompatible with a full satisfaction of our views of distributive justice.”


Schumpeter and Hayek at least show some awareness of the human costs of the market mechanisms that they endorse so fervently. The same cannot be said of their neoliberal disciples and successors of the last thirty years. Schumpeter’s vision of dynamic, entrepreneurial innovation, and Hayek’s sense of the economy as an emergent, self-organizing system (which thrives precisely in far-from-equilibrium conditions) have become axiomatic at this point — on the Left as well as on the Right. Almost nobody is willing to challenge Schumpeter’s or Hayek’s presuppositions, despite the fact that these assumptions bear a good deal of responsibility for leading us into — or, at the very least, for legitimating — the catastrophic situation that we find ourselves in today.


I’m inclined to say that the problem really boils down to money. Nearly all capitalist economic theory — aside from that of Keynes — assumes what Hayek calls “the neutrality of money.” That is to say, money is considered to be an entirely transparent medium, “a neutral link between transactions in real things and real assets” (Doug Henwood, quoting Keynes) having no intrinsic effects of its own. The “monetarism” of Milton Friedman and his followers asserts that “distortions” of an otherwise innately perfect market system come about only when the government interferes with the “natural” level of the money supply.


But we ought to know — after McLuhan as well as after Marx — that a “medium” is never neutral. It only seems “transparent” to us because it is so ubiquitous; we take it so much for granted that we fail to notice its workings. We are unaware of the effects of money for the same reason that (as McLuhan put it) fish are unaware of water. The one thing that economics never takes into account is the materiality, and medium-specificity, of money itself. Media theorists ought to study money as a medium, in the same way that they study television, video, and Web 2.0 as media — but unfortunately, for the most part they don’t. And political economists ought to pay attention to the materiality of money, instead of regarding it just as a “vanishing mediator.” 


By “the materiality of money,” I don’t just mean the physicality of gold, or of metal coins and dollar bills and paper scrip. Above all we need to consider the materiality, and medium-specificity, of money at its most virtual and evanescent: the money that’s made of 1s and 0s zipping across the network, and that takes the form of derivatives and arcane financial instruments. In none of these forms is money simply neutral and transparent. The delirium of financial speculation that led us to the current debacle is precisely due to the fact that money isn’t just a faithful “representation” of wealth that exists, concretely and tangibly, in other forms; rather, it is something that has its own intrinsic density and weight.


Lots of people, both on the Left and the Right, blame the crisis upon the proliferation of “fictitious capital”: of money that was not grounded in concrete, physical wealth. We should reject this way of thinking, and say, instead, that things like credit default swaps are, in themselves, every bit as “real” and “material” as the houses whose subprime mortgages they are supposedly, at many removes, based upon. After all, these houses would never have been constructed in the first place, were it not for the financial instruments in which their deferred debts could be embodied. The non-neutrality of money, its bias and partiality, must be the starting point for any consideration of transnational capital, and of what we have to do in order to get ourselves out from under its baleful sway.

Special issue: read also, representing the crisis
Tags: capitalism, debt, economic crisis, neoliberalism, Steven Shaviro

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