2012/06/05

The Current is Your Currency

There is no random coincidence in the fact that the magnitude of our present economic crisis matches and co-occurs with the growing scale of environmental catastrophes and industrial accidents. The disciplines of economics and ecology share common origins in the Greek root oikos (home), as they are both concerned with how humans interact with and exploit their environment. It is only in modern times that the economy has come to be seen as a separate system from the natural world. Yet there is no escaping the fact that the economy is just an abstraction of the way people organize themselves to use their environment. 
This is made clear the numerous ways in which the economy can only be explained with metaphors derived from real world phenomena. Just consider all the terms that have been used in the mass media to report on the economy. The "bailout" is of course the most obvious metaphor, but there are so many more. The number of bad loans reached a "critical mass" and the real estate market had a "meltdown" that arose from the "perfect storm," and of course there was "fallout" for investors. Mortgage securities are now considered "toxic" or "radioactive." "Liquidity" "vaporized," stocks "cratered," the economy "fell off a cliff," the president thinks he can "ride the tiger in order to tame it." A senator warns of "economic Pearl Harbor." Credit default swaps are "weapons of mass destruction," but who cares about any of this if he doesn't have "skin in the game." In 2007 a credit "tsunami" was heading our way, but we just stood on the shore watching it roll in. The "bubble" burst. Prices "nosedived" (why not "nosedove"?). Government props up the financial system like a "dam," refusing to open the "floodgates" that would let some problems drain away on their own. The credit system must be revived by opening up the "spigot" and sending in a "troop surge" to do battle, but not before the "sclerotic arteries" of the system are fixed. It needs more "oxygen," as long as that doesn’t "feed the flames," but should we bother trying to save a "burning house"?
Ronal Bailey, writing in Reason, noted that the financial industry's reliance on metaphor to explain itself has become so problematic that the American Securities and Exchange Commission has declared that financial professionals would be "… barred from using metaphors when speaking about the markets and investments." He quoted one commentator who added, "It’s clear from the research that any discussion of the market and its direction is totally metaphorical. The market is not a thing. We've got to stop talking about it vaulting, slipping, inching, bouncing, pushing, resisting, rebounding, rallying, and clawing. This is a sober business, not a Las Vegas cage fight… markets cannot 'flirt' with anything."
John D. Casnig, founder of the Metaphor Observatory, asked in an article in the Wall Street Journal, “Why the rush to deploy metaphor to describe the Wall Street crisis? Because nobody can understand it. Metaphor is used when we can't understand something in its own context.”
And this is the point of this blog post. The financial system is a complete figment, at best a symbolic representation of the material wealth made possible by technology and of the way we think this wealth should be shared. The film Margin Call, set in a fictional investment bank in 2008, put in the mouths of its characters some of the best commentary on the nature of the beast. On the eve of destruction, one banker says to another:

“If people wanna live like this in their cars and big fuckin' houses they can't even pay for, then you're necessary. The only reason that they all get to continue living like kings is cause we got our fingers on the scales in their favor. I take my hand off and then the whole world gets really… fair really… quickly and nobody actually wants that. They say they do, but they don't. They want what we have to give them but they also wanna, you know, play innocent and pretend they have no idea where it came from… You know, the funny thing is, tomorrow if all of this goes tits up they're gonna crucify us for being too reckless but if we're wrong, and everything gets back on track?”

In denouement, the CEO played by Jeremy Irons comments dryly to his colleague:

“So you think we might have put a few people out of business today. That it’s all for naught. You've been doing that every day for almost forty years, Sam. And if this is all for naught then so is everything out there. It’s just money; it’s made up. Pieces of paper with pictures on it so we don't have to kill each other just to get something to eat. It's not wrong. And it's certainly no different today than it’s ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987… It's all just the same thing over and over; we can't help ourselves. And you and I can't control it, or stop it, or even slow it. Or even ever-so-slightly alter it. We just react. And we make a lot money if we get it right. And we get left by the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers. Happy foxes and sad sacks. Fat cats and starving dogs in this world. Yeah, there may be more of us today than there's ever been. But the percentages-they stay exactly the same.”

Unfortunately, the evil CEO of the big investment bank may be right. Everyone wants to hang the bankers now, but there were no complaints from the little people who were making easy money flipping property, taking out reverse mortgages for honeymoon trips and refurbished kitchens. No one has yet found a better way for us to play with the excess wealth generated by our technological mastery of the planet’s resources.
So if money is just “made up,” what is the real measure of our standard of living? I can find no simpler explanation than that offered by Michael Madsen in his film Into Eternity, (15:00~) which he narrates as a letter to people of the future who might find the nuclear waste deposit at Onkalo, Finland. He asks,

“My civilization depends on energy as no civilization before us. Energy is the main currency for us. Is it the same for you? Does your way of life also depend on unlimited energy?”

In order to really understand the meaning of “toxic assets” and “financial meltdown,” we’ll have to really take a hard look at the wreckage of the Alberta Oil Sands, the Gulf of Mexico, Chernobyl and Fukushima, and remember where the metaphors come from. We’ll need to worry less about how to “fix the economy.” That problem could be repaired by a (warning: metaphor) giant global reset button, an end to this (d'oh! metaphor!) monopoly game, and the declaration of a worldwide debt default. There could be the issuing of new currency, and the end of the federal reserve and other national banks printing money, lending it to banks, then having governments borrow their own money back from banks at a higher rate. This is a relatively simple problem, but the ecological crisis is a problem that doesn’t need to be expressed in metaphors. It’s real and much more difficult to resolve. 

Footnote:
If you think an English teacher in Japan may not be qualified to spout on these issues, then don't take it from me. Listen to economist Steve Keen (author of Debunking Economics), whose starting point is to "...write off the private debts, nationalize the banking system, and start all over again.” 

Further reading:
Beaton, R., Maser, C. Economics and Ecology: United for a Sustainable World. (2011).

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