a blog by Elisabeth Young-Bruehl

On May 7, 2009, nine months into the Great Recession, the fiftieth birthday of C.P. Snow’s famous Two Cultures essay was celebrated . The celebration came at a time  in our country’s intellectual life when a third culture had fully developed and was looking down upon the other two.  The Humanities and the Natural Sciences still looked at each other across a deep ravine,  although for a decade or more  scientists had been featured in excellent wide-audience books and films about their subjects.  But neither camp could  decipher the third culture  developing up in the castle  that looks down on us all. There,  “the masters of the universe” speak Marketspeak and have a way of life called Risk Assessment.

American Marketspeak had its origins in university departments of economics,  particularly at the University of Chicago, where a professorial clique known as neo-conservatives  or free marketers created it in the decades just after the Second World War. The many European émigrés among that crowd hoped that “free market capitalism” would save the world from future Depressions and thus from what had happened to Europe in the wake of the Depression, particularly in Germany. Free market capitalism was meant to be a therapy for the old industrial capitalism’s destructive  dynamics (which were not, it turned out, what Marx said they would be, but were, nonetheless, very destructive). Not much thought was given to free market capitalism’s own dark side.

Once Marketspeak was learned and spoken fluently in financial centers, like Wall Street or The City in London,  it became something quite different. Not the language of a theory in a discipline, but the language of traders and bankers and of big business as well.  Ask any member of that club to explain “synthetic collateral  derivative  swaps” and “securitization” to you, and your head will buzz immediately.  Business page journalists responsible for translating Marketspeak into plain English make it clear, without intending to, how detached from reality Marketspeak is and how barren of common sense. It is the bureaucratic  power-language  of our day, which in Kafka’s novels, like The Castle,  and in my profession have been studied and interpreted as, respectively,  psychosis-inducing and psychotic.

So now we have this situation:  Wall Streeters  being called before Congress to explain what happened in the Fall of 2008 are able to say whatever  they want  with perfect confidence that no one will understand them except  a few economists and the Wall Streeters who now work for the Obama Administration, which saved most of them from oblivion last year with the largest bailout package in the history of the capitalist world.  Almost every politician will  pretend that he or she understands, however,  and will,  more importantly, let  Marketspeak be the language of the hearings, even while moralistic admonishments are delivered in public relations English for the press to convey to the people.

Meanwhile,  among the people and among academics in all disciplines other than Economics there is Kafkaesque bafflement and rage at the near-collapse of not just our economy but the world economy,  the interlinkage of national economies. Although individual nations within that interlinkage were  affected differently, according to whether they did or did not have any protection in place, that is, whether  their own banking systems were or were not sensibly regulated and uncorrupt.  Here in Canada,  the banking sector, which is a service sector, not a castle, was carefully reregulated  in the 1990s after an alarm bell went off over bank liquidity. A reality check worked; there was a harkening to a danger signal, psychosis receded.

In their bafflement and rage,  many Americans share one explanation for what  happened in the Fall of 2008: they say the collapse was produced by Greed.  Greed is the one of the seven deadly sins that has come up the culprit.  Wall Streeters were greedy.

The diagnosis has a lot of weighty precedent behind it—and not just in the pre-capitalist period of Chaucer’s Pardoner’s Tale.  Radix malorum est cupiditas (“the root of evil is greed”) is how St. Jerome’s Vulgate  had rendered 1st Timothy: 6:10 into Latin. The translation is a bit ambiguous because  cupiditas stretches over two meanings: cupidity or greed, and intense desire. But the original Greek New Testament was quite clear: the root of all evil is philarguria (love of money, and specifically of the silver-money used in trade).  Jerome probably chose cupiditas because in the early Christian tradition –most obviously in St. Augustine—cupiditas is the general term for desiring things of this world,  including money, while its opposite, caritas, is love as love should be, directed away from this world and right toward  God.

So the sin of these Wall Streeters  is avaritia, avariciousness. Outraged citizens stand outside the Washington hearing rooms bearing placards to tell the sinful: “Shame on you!” Perhaps the “wages of sin” for the whole lot of them will be death!  The more forgiving protesters may be wishing the Wall Streeters  a mere dark night of the soul after which they will be redeemed: “Through the dark night pride becomes humility, greed becomes simplicity, wrath becomes contentment, luxury becomes peace, gluttony becomes moderation, envy becomes joy, and sloth becomes strength” (so St. John of the Cross described the full-throttle Christian journey into virtue).

Despite the present American penchant for Christian admonitions, finger-pointing is not very analytical  or psychoanalytical.  We need to understand this culture of the castle where  Marketspeak is the language.  To a clinician, the castlemen are easily recognizable by their most salient characteristic:   they are supersmart about silver-money’s present paper forms but dull, really obtuse, about people  and about anything that might happen in the future to people. They illustrate the rule of thumb (well known to the Roman rhetoricians like Cicero) that avaritia  facit bardus, avariciousness makes one stupid, rather like acute anxiety.  So, love of money is a symptom, not the disease. The disease is a social diseasse, I think, and should be called anxiety over rulership, over who is and is not going to have control.  The diseased are what our kids call “controlfreaks,” and money is their chief weapon –that is why they love it.

In America presently this anxiety over rulership is acute as a result of the great abandonment  of what I called in my last post “the priority of the political,” the priority of a realm where we are all equals and no one rules over another.  If an American citizen who prioritized the political were called upon to answer the question “who should control the nation’s economic policy?” that person would certainly answer  that the elected representatives of the people should regulate the economy so that it serves all the people,  harming as few as possible, and protecting the next generation’s inheritance of the nation’s resources.  That person would not answer: “the bankers should control economic policy.”

But the Wall Streeters being asked what happened in the Fall of 2008 are facing legislators who  did answer  just that.  The older among them began a trend by agreeing to a series of unilateral decisions made by Richard Nixon’s Administration and repeated  ever since in variations.  Legislative  majorities  then and since (overriding some great and courageous dissenters) have,  I think, shared Richard Nixon’s motivation.  It’s as though they channeled   him mumbling to himself:  “This Vietnam War has been a disaster; we must reassert American  might and rulership. We have enemies everywhere,  and we must make it clear that we are the superpower,  at no risk of losing our Number One position.” Two ways to go forward opened before his imagination.  The first was to revamp militarily and reweaponize  to be sure we would  never lose another war . More power to the Pentagon! (More power to the defense contractors as well; forget the warnings about “the military-industrial complex” from Nixon’s boss Eisenhower). The second was to declare world-wide  economic war, WWIII,  and be sure that capitalism triumphed over socialism definitively.  Globalize!  Free the markets! Follow the money!  It was as though Washington said to Wall Street ‘You guys are the nation’s other army, the New Economic Army—go forth and win us the world!’

Free market capitalism  became  America’s economic war strategy.  But to let the New Economic Army out the barn door, the barn door had to be opened. That process was called deregulation. What it meant, in effect, was prioritization of the economical . The people’s elected  representatives  signed over to business leaders and especially bankers,  as the generals of the New Economic Army,  the nation’s fate, directing them only with the caution “minimize risk.” Thus was the “science” of financial risk management endorsed in the early 1970s, and it became a key ingredient of the third culture (more on this in a future post).  But, unfortunately,  the risk managers suggested all kinds of new highly mathematical  economic weapons (derivatives of  derivatives) which simply spread the risk into every nook and cranny of the economies of the entire world.  Only risk to the bankers themselves was minimized —temporarily.

Richard Nixon was the perfect person to envision and engineer this shift toward creating a New Economic Army to make us  “the richest and most powerful nation on earth.” Ever the paranoid,  carrying a great brick of old personal political humiliations on his head, Nixon stressed in his unilateral decisions that he was protecting  the country against risks and sudden shocks. There will be no more recessions and recoveries such as are typical of countries tied to the gold standard!  So Nixon jettisoned the gold standard in 1971 and, at the same time, the Bretton Woods currency system. Then he set the Federal Reserve  up for more control over interest rates, and thus inflation, to minimize the inflation risk that might follow from the float of currencies.  Basically,  the whole cascade of  decisions was a gift to Wall Street,  including the endless access to very cheap  credit from the Fed with which the bankers could speculate to their heart’s content. Our journey as a nation into praiseworthy,  patriotic  debt began.  This debt had nothing in common with the debt Keynes had suggested could be used to reconstruct  equitable political institutions and infrastructures needed and used by all citizens. Rather, the relationship of government and corporate America fundamentally reconfigured. As pushers and peddlers and croupiers enable addicts, it is that new state-and-capitalism   intimacy that enabled  “love of money” among the masters of the universe.

Wall Street then set out to conscript into its Army as cannon fodder every citizen  who wanted  to own  expensive  electronic equipment,  two cars,  or –especially,  poignantly–a house, a safe haven.  By the 1990s, mortgages and then sub-prime mortgages grew like mushrooms across the land,  little repositories of Marketspeak in very fine print. The uncreditworthy  poor and the middle class, particularly the “Main Street” small business people, were set-up to help out the banking industry! The banking industry that was fast becoming a casino.

When the bankers or the government itself needed bankers, they could turn to other countries,  who helped their economies  grow with ours. China was among them from the start, for letting the New Economic Army out the door also involved  showing an “Open Door” (in 1971) to China, our former Communist enemy,  and now our chief  Communist-Capitalist creditor. Since Nixon, economic policy has consistently trumped foreign policy. Washington stopped saying that the Chinese Communists had been poised to take over Vietnam and that was why we had had no choice but to go to war there. The “Domino Theory” evaporated into thin air.
The globalizing growth of capitalist states since the Nixon years,  especially during the Reagan years –the Thatcher years in the U.K.—has been phenomenal.  So has the increase in private-sector   debt, especially in the US and the UK.  So has sovereign debt everywhere.  And to those who benefited from it, this kind of debt-based, banker-managed capitalism  did seem to be working brilliantly. The American shareholder class was pleased, as CEOs of all kinds of companies, not just financial institutions, began to reward shareholders by prioritizing short-term profits; and the CEOs themselves were rewarded  accordingly with fantastical salaries and bonuses. When the unexpected Fall of the Berlin Wall and the dissolution of the Soviet Union came about, President Reagan could even claim that the “free market” had been the terrible swift sword of socialism’s demise. Nixon’s dream come true. A victorious ending for the Cold War.  Many intellectuals  of all three cultures chimed in to celebrate “the end of history” in triumphalist prose.

The abdication of political life that began in the early 1970s produced the conditions for a social disease, anxiety over rulership, which can reinforce a character  trait called grandiose narcissism.  As in individuals, so in societies, grandiose narcissism always grows up on top of a deep wound, a trauma to which the original response has been hysteria.  The wounded society hysterically finds another group to blame—“the Evil Empire,” “the Axis of Evil”(after the trauma of 9/11)– and then narcissistically gears up to behave as though the wound had never happened and complete mastery or rulership had never been threatened.   New defenses and much bald-faced lying are set on top of old hysterical defenses: a new army is organized  to go out and prove that everything is going to be what it was –we are going to be The Greatest,  as we were.  Even many Baby Boomers who had been opponents of the Vietnam War got swept up in the national project of overcoming its humiliations and being like The Greatest Generation of its fathers.  Politically, the radix malorum is to act out of shame, defensive nostalgia, and envy of others’ good fortune; to act for conquest and for rulership.  The political evil is the opposite of acting in and for freedom among equals.

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