Re: [xmca] Re: déjatel¹ nost¹

From: Andy Blunden <ablunden who-is-at>
Date: Wed Oct 01 2008 - 16:46:32 PDT

That's right Martin. In Capital, Marx did not write a theory
of everything, just an immanent critique of capital; one
specific, very well-defined type of activity. Real human
life, even in a capitalist world, presupposes a multiplicity
of types of activities. Capital subsumes more and more of
human life every year, and with that threatens to extinguish
life altogether.


Martin Packer wrote:
> Andy Blunden wrote:
> But yes, Marx unfolded it all out of the commodity relation.
> I suppose so, in a manner of speaking. Certainly Marx's analysis of the
> commodity tells us something key about the capitalist kind of economy. It
> tells us about a central way for entities to be; it tells us about the
> ontology of capitalism. Marx tells us not just that commodities exist in
> this kind of social reality, he tells us about the processes in which they
> are created and destroyed. His is a "critical" analysis that explores the
> conditions for the possibility of commodities (and of capitalism as a
> whole). (It's also critical in the sense of exposing the inherent injustice
> of buying people's labor and paying them less than the value of the goods
> they produce. The relations among people, and people's productive work,
> exist as commodities too.)
> But I think Marx never forgot the people whose conduct is mediated by
> commodities. The fact that we need to eat and sleep if we are to do a
> productive day's work. That we die and can't take our accumulated capital
> with us. That it takes two parents to produce a new worker. Can one say that
> these facts are built into the form of the commodity? I think so.
> Regulations about ownership and inheritance reflect some of these facts.
> Hourly wage rules reflect others. Commodities are tailored to the (so-far)
> unavoidable realities of human existence. Commodities have affordances -
> there are some practices we can perform with them, others we can't. But
> people have affordances too, despite our plasticity - there are some things
> you can do with a worker, others you can't. Figuring out which is which is
> one of the key struggles in this form of life, as you know well.
> So commodity (understood as a form, as a relation) is the unit of analysis.
> But it was the whole system, in its complexity, dynamism, inequity and
> contradictions, that Marx was trying to understand. One thing I find
> fascinating about the NY Times Op Ed piece this morning (I've copied the
> text below) is the suggestion that this system is in fact an emergent order,
> 'merely' the product of the acts of multiple agents. There is no such
> 'thing' to the system separate from what humans do. If we all stayed in bed
> one morning and refused to work, the system would vanish. The
> interobjectivity of buildings and equipment would remain, but unanimated,
> nothing would get done. I don't know what capacities were built into the
> agents in the simulation that is reported in this article - not
> rational-choice individualism, I assume - but this is where having a
> Vygotskian around would be very useful!
> Martin
> TimesPeople
> [image: The New York Times] <> [image: Printer
> Friendly Format Sponsored
> By]<>
> ------------------------------
> October 1, 2008
> Op-Ed Contributor
> This Economy Does Not Compute By MARK BUCHANAN
> Notre-Dame-de-Courson, France
> A FEW weeks ago, it seemed the financial crisis wouldn't spin completely out
> of control. The government knew what it was doing — at least the economic
> experts were saying so — and the Treasury had taken a stand against saving
> failing firms, letting Lehman Brothers file for bankruptcy. But since then
> we've had the rescue of the insurance giant A.I.G., the arranged sale of
> failing banks and we'll soon see, in one form or another, the biggest
> taxpayer bailout of Wall Street in history. It seems clear that no one
> really knows what is coming next. Why?
> Well, part of the reason is that economists still try to understand markets
> by using ideas from traditional economics, especially so-called equilibrium
> theory. This theory views markets as reflecting a balance of forces, and
> says that market values change only in response to new information — the
> sudden revelation of problems about a company, for example, or a real change
> in the housing supply. Markets are otherwise supposed to have no real
> internal dynamics of their own. Too bad for the theory, things don't seem to
> work that way.
> Nearly two decades ago, a classic economic study found that of the 50
> largest single-day price movements since World War II, most happened on days
> when there was no significant news, and that news in general seemed to
> account for only about a third of the overall variance in stock returns. A
> recent study by some physicists found much the same thing — financial news
> lacked any clear link with the larger movements of stock values.
> Certainly, markets have internal dynamics. They're self-propelling systems
> driven in large part by what investors believe other investors believe;
> participants trade on rumors and gossip, on fears and expectations, and
> traders speak for good reason of the market's optimism or pessimism. It's
> these internal dynamics that make it possible for billions to evaporate from
> portfolios in a few short months just because people suddenly begin
> remembering that housing values do not always go up.
> Really understanding what's going on means going beyond equilibrium thinking
> and getting some insight into the underlying ecology of beliefs and
> expectations, perceptions and misperceptions, that drive market swings.
> Surprisingly, very few economists have actually tried to do this, although
> that's now changing — if slowly — through the efforts of pioneers who are
> building computer models able to mimic market dynamics by simulating their
> workings from the bottom up.
> The idea is to populate virtual markets with artificially intelligent agents
> who trade and interact and compete with one another much like real people.
> These "agent based" models do not simply proclaim the truth of market
> equilibrium, as the standard theory complacently does, but let market
> behavior emerge naturally from the actions of the interacting participants,
> which may include individuals, banks, hedge funds and other players, even
> regulators. What comes out may be a quiet equilibrium, or it may be
> something else.
> For example, an agent model being developed by the Yale economist John
> Geanakoplos, along with two physicists, Doyne Farmer and Stephan Thurner,
> looks at how the level of credit in a market can influence its overall
> stability.
> Obviously, credit can be a good thing as it aids all kinds of creative
> economic activity, from building houses to starting businesses. But too much
> easy credit can be dangerous.
> In the model, market participants, especially hedge funds, do what they do
> in real life — seeking profits by aiming for ever higher leverage, borrowing
> money to amplify the potential gains from their investments. More leverage
> tends to tie market actors into tight chains of financial interdependence,
> and the simulations show how this effect can push the market toward
> instability by making it more likely that trouble in one place — the failure
> of one investor to cover a position — will spread more easily elsewhere.
> That's not really surprising, of course. But the model also shows something
> that is not at all obvious. The instability doesn't grow in the market
> gradually, but arrives suddenly. Beyond a certain threshold the virtual
> market abruptly loses its stability in a "phase transition" akin to the way
> ice abruptly melts into liquid water. Beyond this point, collective
> financial meltdown becomes effectively certain. This is the kind of
> possibility that equilibrium thinking cannot even entertain.
> It's important to stress that this work remains speculative. Yet it is not
> meant to be realistic in full detail, only to illustrate in a simple setting
> the kinds of things that may indeed affect real markets. It suggests that
> the narrative stories we tell in the aftermath of every crisis, about how it
> started and spread, and about who's to blame, may lead us to miss the deeper
> cause entirely.
> Financial crises may emerge naturally from the very makeup of markets, as
> competition between investment enterprises sets up a race for higher
> leverage, driving markets toward a precipice that we cannot recognize even
> as we approach it. The model offers a potential explanation of why we have
> another crisis narrative every few years, with only the names and details
> changed. And why we're not likely to avoid future crises with a little
> fiddling of the regulations, but only by exerting broader control over the
> leverage that we allow to develop.
> Another example is a model explored by the German economist Frank
> Westerhoff. A contentious idea in economics is that levying very small taxes
> on transactions in foreign exchange markets, might help to reduce market
> volatility. (Such volatility has proved disastrous to countries dependent on
> foreign investment, as huge volumes of outside investment can flow out
> almost overnight.) A tax of 0.1 percent of the transaction volume, for
> example, would deter rapid-fire speculation, while preserving currency
> exchange linked more directly to productive economic purposes.
> Economists have argued over this idea for decades, the debate usually driven
> by ideology. In contrast, Professor Westerhoff and colleagues have used
> agent models to build realistic markets on which they impose taxes of
> various kinds to see what happens.
> So far they've found tentative evidence that a transaction tax may stabilize
> currency markets, but also that the outcome has a surprising sensitivity to
> seemingly small details of market mechanics — on precisely how, for example,
> the market matches buyers and sellers. The model is helping to bring some
> solid evidence to a debate of extreme importance.
> A third example is a model developed by Charles Macal and colleagues at
> Argonne National Laboratory in Illinois and aimed at providing a realistic
> simulation of the interacting entities in that state's electricity market,
> as well as the electrical power grid. They were hired by Illinois several
> years ago to use the model in helping the state plan electricity
> deregulation, and the model simulations were instrumental in exposing
> several loopholes in early market designs that companies could have
> exploited to manipulate prices.
> Similar models of deregulated electricity markets are being developed by a
> handful of researchers around the world, who see them as the only way of
> reckoning intelligently with the design of extremely complex deregulated
> electricity markets, where faith in the reliability of equilibrium reasoning
> has already led to several disasters, in California, notoriously, and more
> recently in Texas.
> Sadly, the academic economics profession remains reluctant to embrace this
> new computational approach (and stubbornly wedded to the traditional
> equilibrium picture). This seems decidedly peculiar given that every other
> branch of science from physics to molecular biology has embraced
> computational modeling as an invaluable tool for gaining insight into
> complex systems of many interacting parts, where the links between causes
> and effect can be tortuously convoluted.
> Something of the attitude of economic traditionalists spilled out a number
> of years ago at a conference where economists and physicists met to discuss
> new approaches to economics. As one physicist who was there tells me, a
> prominent economist objected that the use of computational models amounted
> to "cheating" or "peeping behind the curtain," and that respectable
> economics, by contrast, had to be pursued through the proof of infallible
> mathematical theorems.
> If we're really going to avoid crises, we're going to need something more
> imaginative, starting with a more open-minded attitude to how science can
> help us understand how markets really work. Done properly, computer
> simulation represents a kind of "telescope for the mind," multiplying human
> powers of analysis and insight just as a telescope does our powers of
> vision. With simulations, we can discover relationships that the unaided
> human mind, or even the human mind aided with the best mathematical
> analysis, would never grasp.
> Better market models alone will not prevent crises, but they may give
> regulators better ways for assessing market dynamics, and more important,
> techniques for detecting early signs of trouble. Economic tradition, of all
> things, shouldn't be allowed to inhibit economic progress.
> Mark Buchanan, a theoretical physicist, is the author, most recently, of
> "The Social Atom: Why the Rich Get Richer, Cheaters Get Caught and Your
> Neighbor Usually Looks Like You."
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Andy Blunden +61 3 9380 9435 
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Received on Wed Oct 1 16:47 PDT 2008

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