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[...] How money came to be what it is today, in capitalist modernity, may perhaps with the benefit of hindsight be reconstructed as a process of progressive dematerialization and abstraction, accompanied by growing commodification and state sponsorship. But how money functions in its present historical form is more difficult to say; where it is going from here, harder still. This social construction has always been beset with, and driven by, unanticipated consequences—caused by human action, but not controlled by it.
[...] State power and finance are, in fact, Siamese twins, sometimes at odds with one another but always interdependent. Money is, as it were, the oldest public–private partnership: at one and the same time private property and public good; tradeable commodity and central-bank monopoly; credit and debt; a creature of the market and of the ‘grey area’ between market and state. The relationship undergoes continuous permutation. Yet despite its ever-changing and often downright bizarre forms, money can be traced to just two sources, both located in the force-field between states and markets. One is the creativity of all sorts of traders seeking new devices—in the modern jargon—to cut transaction costs, from promissory notes to bitcoin, assisted and exploited in equal measure by a growing financial sector which buys and sells, for profit, the commercial paper used by traders to extend credit to one another. The second is the need of states to finance their activities through debt or taxes—usually both—and to keep their economies in good health by providing businesses with safe means of exchange and abundant opportunities for ‘plus-making’. [...]
Money speaks, it is said, and its first words are always: trust me. Given the obscure circumstances of its production, this seems to be asking a lot. As economic exchange became more extended and opportunities for confidence tricks—from John Law to Standard and Poor’s—proliferated, so trust in money, essential for the capitalist economy, had to be safeguarded by state authority. States, or their rulers, have since time immemorial made money trustworthy by certifying it with their stamp of approval. This afforded them an opening to appropriate a fraction of its value in the form of what is called seigniorage, as well as providing manifold occasions for abuse, such as debasing the currency. An important contribution to the credibility of states as stewards of money was the seventeenth-century invention of permanent public debt, in parallel with the transition from personal to parliamentary rule and the introduction of regular taxation. These developments guaranteed the state’s creditors the reliable servicing of outstanding balances. Public debt could now be subdivided into low-denomination debt certificates, and these could circulate as means of payment, because the state could be trusted to accept them in payment of taxes, or in exchange for whatever it had promised to deliver when issuing its debt as currency. Moreover, private credit as extended by banks to trustworthy debtors could be denominated in public debt, making the sovereign state the economy’s debtor of last resort.
[...] Finance can only be what it is if it partakes in the state, and the state develops into a value-creating economic agent as it extracts seigniorage from its money production and invites the financial industry to cash in. In fact, according to Vogl, states became sovereign by co-opting finance into their emerging sovereignty and parcelling out part of that sovereignty to the markets, thereby creating a private enclave within public authority endowed with a sovereignty of its own. Just as modern society could not have been monetized without state authority, so the state could only become society’s executive committee by making finance the executive committee of the state.
Money, then, emerges in what Vogl calls ‘zones of indeterminacy’, where private and public interests are reconciled by assigning public status to the former and privatizing the latter. The result is a complex interlocking of conflict and cooperation generative of, and benefiting from, what Vogl calls ‘seigniorial power’—a relationship in which the state and finance undertake to govern one another and, together, society at large. Zones of indeterminacy, Vogl writes, ‘have an ambiguous relation to both sides, they are encouraged and restricted by state authority, they can either boost or inhibit the exercise of political power, and they can stimulate or obstruct (for example through monopolization) market mechanisms’. Financial systems need state regulation to remain responsible and trustworthy, but too much regulation drives money away and thereby undermines the viability of the state. States, in turn, don’t just need robust banking systems for the economy but also credit for themselves, for which they must be in a credible position to promise conscientious repayment, with interest. If they default, they may lose access to financial markets, and their financial industry—and perhaps that of allied countries too—may have to default as well.
It is in crisis situations, when banks are about to collapse or states teeter on the edge of insolvency, that the liberal notion of a clear distinction between markets and the state is exposed as a myth. On such occasions, as financial and political elites join forces in a virtual boardroom, functional differentiation—the pet category of functionalist sociology—loses its meaning and sovereignty reveals a Schmittian face [...]
[...] central banks have historically moved back and forth between very different institutional forms: private, public and various combinations of the two. Far from constituting a rational-functionalist formation, they have performed widely diverse and often barely related functions—from the administration of state debt to the issuing of currency and the supervision of private banks—cobbled together more or less ad hoc according to political expediency, just as one would expect in a world of ‘indeterminacy’. What distinguishes them as a type is that they exist to protect finance from the fickleness of political rulers—absolutist or democratic—while providing the latter with at least the illusion of control over the fickleness of financial markets. Institutional independence is crucial, nowadays meaning above all insulation from electoral politics. Monetary questions must be de-politicized—which is to say, de-democratized. Central banks, Vogl argues, constitute a fourth power, overshadowing legislature, executive and judiciary, and integrating financial-market mechanisms into the practice of government.
Central banks’ claim to autonomous authority is based on their assumed, and asserted, technical competence. [...] Central bankers themselves have always been aware, although they hide it as best they can from the unwashed, that central banking is ‘not a science but an art’. This means that what they sell to the public as a quasi-natural science is in fact nothing more than intuitive empathy, an ability acquired by long having moved in the right circles to sense how capital will feel, good or bad, about what a government is planning to do in relation to financial markets. [...]
[...] Financialization for Vogl essentially involves the transfer of financial oversight to the financial markets themselves, ultimately establishing oversight of states by markets. Subjected to the dictates of capital accumulation, the relations that make up the infrastructure of social life are financialized, depoliticized and indeed de-socialized. Responsibility for economic order shifts from constitutional, potentially democratic, governments to ‘a patchwork of public entities, international organizations, treaties and private actors which superintends the privatization of regulation and, as a consequence, the marketization and informalization of law and legal institutions’. As governance is privatized, finance becomes the sole remaining sovereign. [...]
[...] As union jobs have disappeared, participation in the labor force, the political system, and cultural affairs is increasingly regulated by professional guilds that require their members to spend the best years of life paying exorbitant tolls and kissing patrician rings. Whatever modest benefits accreditation offers in signaling attainment of skills, as a ranking mechanism it’s zero-sum: the result is to enrich the accreditors and to discredit those who lack equivalent credentials.
Jean Baudrillard once suggested an important correction to classical Marxism: exchange value is not, as Marx had it, a distortion of a commodity’s underlying use value; use value, instead, is a fiction created by exchange value. In the same way, systems of accreditation do not assess merit; merit is a fiction created by systems of accreditation. Like the market for skin care products, the market for credentials is inexhaustible: as the bachelor’s degree becomes democratized, the master’s degree becomes mandatory for advancement. Our elaborate, expensive system of higher education is first and foremost a system of stratification, and only secondly —and very dimly —a system for imparting knowledge.
hell yeah
As the credentialism compulsion seeps down the socioeconomic ladder, universities jack up fees and taxi drivers hire $200-an-hour SAT tutors for their children. The collective impact may be ruinous, but for individuals the outlays seem justified. As a consequence, college tuitions are nowhere near their limit; as long as access to the workforce is controlled by the bachelor’s degree, students will pay more and more.
locally optimal, but globally absurd
[...] major political questions are rarely complex in that sense. They are much more likely to be complicated, in the Avril Lavigne sense, meaning that they involve reconciling disagreements among competing stakeholders —or, as the situation may demand, ratcheting them up.
Quadrupling the supply of gold stickers is one way to devalue the credential; getting rid of the sticker system altogether is another. In our pay-to-play society, many of those toward the bottom of the educational pyramid are getting fleeced; others, though, are getting a leg up. Because it’s callous and unreasonable to ask the disadvantaged to decline opportunities to advance, subverting credentialism must start at the top. What would happen to the price of a bachelor’s degree if the 42,000 high school valedictorians graduating this spring banded together and refused to go to college? And is it too much to ask the Democratic Party to refrain from running any candidate for national office who holds a degree from an Ivy League school?
Then there are our own credentials. Che Guevara once declared that the duty of intellectuals was to commit suicide as a class; a more modest suggestion along the same lines is for the credentialed to join the uncredentialed in shredding the diplomas that paper over the undemocratic infrastructure of American life. A master’s degree, we might find, burns brighter than a draft card.
maybe the thiel fellowship is praxis
The accidental progenitor of the blogorrheic style is David Foster Wallace. What distinguishes Wallace’s writing from the prose it begot is a fusion of the scrupulous and the garrulous; all of our colloquialisms, typically diffusing a mist of vagueness over the world, are pressed into the service of exactness. To a generation of writers, the DFW style was the sound of telling the truth, as—in an opposite way—the flat declaratives and simplified vocabulary of Hemingway were for a different generation. But an individual style, terse or wordy, can breed a generalized mannerism, and the path once cleared to saying things truly and well is now an obstacle course. In the case of the blogorrheic style, institutional and technological pressures coincided with Wallace’s example. Bloggers (which more and more is just to say writers) had little or no editing to deal with, and if they blogged for money they needed to produce, produce. The combination discouraged the stylistic virtues of concision, selectivity, and impersonality.