Financial markets do not exist
Posted on Sunday 30 October, 2011
Filed Under Economics
ONE of the most striking aspects of the blanket media coverage of the eurozone crisis is the way in which financial markets are routinely spoken of as entities with a life of their own.
They are conceived of as capable of adhering to ethical codes, from which they have of late drifted away. Ostensibly they can experience such human emotions as tension, and even desperation, fear, panic and the jitters.
In addition, they can demand obedience, on pain of the exaction of serious consequences. George Soros tells us that financial markets are driving the world towards another Great Depression. No wonder that governments have little choice but to do their bidding.
So it is a worthwhile corrective to point out that, in the ordinary sense of the word, financial markets do not exist. No one has ever seen one, or taken a photograph of one, for instance.
They are not an expression of the laws of physics, or of some divine will. They are simply a conceptualisation of the social relationship that exists between the people that make them up, and the rest of the population.
Somehow a set of human properties is depicted as having broken free of its basis in the real world of men and women, and is projected instead as an independent power over them, capable of issuing diktats that impinge on just about everybody on the planet.
I’m not an unqualified admirer of the late György Lukács, but anyone looking for an instantiation of the great Hegelian Marxist thinker’s notion of reification could hardly come up with a more clear-cut example.
Next time you hear that ‘the markets’ are pushing for this, that or the other, substitute the words ‘the bankers’ into the sentence. It will take you rather closer to the reality of the situation.
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15 Responses to “Financial markets do not exist”
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Good stuff. The markets do exist however because the ruling elites decree it so not in the way weather or the moon exists. In fact most of the time nobody hates a market more than the capitalist. If he is at a competitive disadvantage he invariably seeks protection. It is only where he already has a massive advantage that he demands his government prise open the markets such as when European agri giants smash their way into Africa creating a clearance process that dwarves the old Highland version.
It is a political economy so workers of course are always trying to undermine the market in labour, the damaging competition between themselves, by combining but the capitalist is constantly re-asserting it and destroying her efforts. It becomes cheaper to close down a unionised factory and set up a new one and most of the time it is the same capitalist doing the closing and opening and `competing’ with himself which is why China is dominated by relocated Western-owned businesses. Nevertheless we have reached the point where markets are globalised, saturated and dominated by monopolies. Their brutal stupidity cannot take us a single step further forward. There is nowhere else for them to go.
It should be said however that without understanding that financial markets just as they are consciously constituted must be consciously abolished or we will be reduced to some crazy reformist Keynesian delusion that pretends that not only do markets not exist when they do but the neither does the ruling class who impose them which will resulting in hyper-inflation as the value of money plummets and the working people suffering not just the consequences but also taking the blame.
The “market” is a convenient shorthand for all its players – bankers, governments, corporations and even small individual investors (not forgetting oil sheiks and Russian oligarchs, of course!).
A more serious problem is the fact that not only did socialism, whether of the Leninist or Fabian variety, fail, but we have no coherent explanation for its failure.
We could make a start on this perhaps by noting that socialism claimed to be able to achieve economic growth whilst rigidly upholding a moral code based more or less on the ethics of the French revolution.
In fact there is plenty of evidence that the opposite is necessarily true. The Industrial Revolution was funded on wealth plundered from India and from slave labour – slaves do produce wealth wherever labour input is confined to more or less unskilled work as it was in the colonial world and may be again soon with computerised mechanisation.
It is also the case that a realistic attitude towards the world – which socialism fetishizes – is self-defeating. There is an interesting piece on Bill Mitchell’s blog in which he looks at, among other things, the expectations of the unemployed (in the US) regarding their chances of re-entering the labour market (within a given timeframe). A realistic assessment would be “not particularly good” or thereabouts – yet I would bet that it is mainly those who take an unreasonably optimistic view of their chances who do in fact get hired. Self-belief is a precondition of success, and whilst realistic self-belief is the best kind, it’s probably true that delusional self-belief leads to more success than a realistic assessment that you haven’t got a particularly strong offer.
And I suspect that this was so long before anyone had heard of markets, whether capitalistic or mercantilist.
“ONE of the most striking aspects of the blanket media coverage of the eurozone crisis is the way in which financial markets are routinely spoken of as entities with a life of their own.”
Isn’t that the crux of the problem, though? The financial markets have become so abstracted from base economic activity that they do have a life of their own. (That this is not sustainable is of no interest to the spivs who want a quick return.)
Will the Labour Party address this issue? Of course they wont, it’s too difficult. The Tories tell us that the poor and the not yet poor must pay. The Labour Party wants to reduce the cost to the poor, as an aspiration, but perhaps just not yet.
It must be a real fucking pleasure to be an active member of the Labour Party.
Lobby. Hardly matters how active you are if you lose the election. The winners legislate.
In Marxist terms all the institutions of capitalist society can be theorised as ‘forms of the social relations of capitalist production’ – and so located as alien forms of relations between people.
However, in a context where the ‘separation’ (as Guy Debord puts it) between people and the results of their activity has intensified to an historically unprecedented degree, I’m not sure it helps the formulation of practical political strategy and tactics to assert the non-existence of financial markets. Consciousness is (not yet) at a level where that will resonate beyond a thin layer of Marxist theorists.
If we assert the non-existence of powers that are alien to our human sociability then I suppose we could argue that the Labour Party does not exist…
Next Left. Have you tried plain speech. That is what the working class understand. The middle class anti capitalists occupying the ground outside St Paul’s are arguing with clergy and talking about Jesus. Lost in Space they are. The capitalist are laughing.
“Hegelian Marxist thinker”
Another prize specimen for my collection of oxymorons!
Duff – Probably 2 of the greatest minds to ever walk the planet, you must be a god or an idiot to feel confident enough to declare them morons. I know where my money is heading.
I really don’t see how finance can be divorced from the so called real economy anymore than the making of plastic ducks in factories.
The ultimate cut to the chase question is this: Does humanity need a wealthy powerful elite to make decisions on where production is invested or would we be better off if that decision was made collectively. Or to put it another way, do humans flourish more in dictatorship or democracy?
Isn’t that a bit too close to the idea that society does not exist?
I didn’t know that Hegel and Marx were Islamic thinkers. Fancy that!
Great comment thread OstlEr.
That wibbertarian policy has werked wonders.
PS. not that i care. blergghs shud all be killed along with their thick malevolent owners. Not you like – just the malevolent ones.
Al Qaeda Operative. The slight advantage of a democracy is you can leave. A dictatorship, well take East Germany you would get shot for attempting to go over the wall. The advantage of a dictatorship is you can be a spectator at the glorious military parades and wave flags at the great leaders. More fun I say and who really wants to vote when you had! the likes of Gadaffi looking after your interest.
Jimmy you seem to have missed the point but then this is no surprise. Western education leaves a lot to be desired.
Death to the West!
AQO. What do you mean I seem to have missed the point. Either I have or have not.
ALQ: Surely you have answered your own question. Humans (in your analysis) function best in dictatorship, a particular type known as a theocracy. QED.