A Genealogy of Greed

8/3/2019 A Genealogy of Greed

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A genealogy of greed

The financial system has gone berserk,but themeans and staff to control and monitor financialacts and facts are more sophisticated than ever. Howdid we come this far and what can we do? An

historical analysis.

Since the outbreak of the financial crisismany analysis have been made trying toexplain how this all has happened and whatfactors have led to the present situation. Mostof them have pointed to some flaws in thepresent capitalistic system or to someunfortunate events that have caused theproblems. If we could only adjust these the

dream of unlimited free enterprise and wealthfor all good men would finally become real.Criticism of the structure of capitalism hassince long not been taken seriously, like in thedays when books of the Frankfurther Schule or Jean Baudrillard were widely read on thecampuses and in the public libraries.

Lately all over the world the man in thestreet has become ever more convinced thatthere is something utterly wrong with thecurrent financial system, without however

being able to pinpoint precisely what really iscausing all the problems. Especially the Occupymovements are opposing the financial systembecause they see it as the main cause of inequality and injustice. The slogan is 'we arethe 99%', meaning only one percent of thepopulation profits from the system. Howeverthere is no clear cut alternative, the Occupymovement is pure resistance against theexistent.

Being far from the well known Marxist

criticism of bourgeois or classical capitalism,Occupiers refrain from taking political sides.This not without good reason. Marx hasundoubtedly quite accurately predicted thepresent problems. He could not foresee thedevelopment if the IT industry, which plays adominant part in all present financial traffic,but he knew that globalization was imminentand he could foresee most of the problems thatit would bring about. The Occupy movement ishowever not just another communist group, asthe bankers would like to have it. Firstlybecause Marx did not invent communism. Thiswas done by Wladimir Iljitsch, better known as

Lenin, who turned the economy of Marx into apolitical system. Secondly the Occupymovement does not agree with mostcommunist and Marxist ideas. Nobody needsanother resuscitation of historical materialism,even more so because it has been rejected by

recent social critique. The Occupy movement isa rebellion against establishment. Occupiers donot accept the status quo, they do not take itanymore and they have a deep but wordlessfeeling that something is terribly wrong withthe political economy.

Banks and brokers do not bother. They dobusiness as usual and hope that the freezingnights of the winter season will push theOccupiers back to the central heating. But thegeneral public takes the side of the Occupiers.

Apparently there is a wide gap between thegenerally shared public feelings of right andwrong and the modus operandi in the financialfield. How did this happen? What caused it?How do we explain that the broker who investswithout blinking in weapon industries,environmental hostile technologies andcompanies who take most of their profit fromchild labor, is at home a decent guy whowashes the dishes and has serious talks with hisson because the latter failed to keep his roomtidy?

The virtues of viceIn order to find the root cause of this gap we

have to go a long time back in history. In the year 1714 a booklet appeared in London writtenby a Dutch physician: Bernard Mandeville(1670, Rotterdam – 1733, Hackney). It wascalled 'The Fable of the Bees, Private Vice,Public Benefits'. The fable tells the story of a

beehive, where the bees complain time andagain to their god Zeus about the high rate of criminality and the low standards of publicmorals. Zeus gets annoyed by all thiscomplaints and changes the hive overnightinto a model society. Everybody suddenly ishonest and of good will. There is no theft, nocheating, no burglary and people only dienatural deaths. The consequences aredisastrous. There is a massive unemploymentand everybody is bored to death. There are no

police anymore, no locksmiths, no insurances,no lawyers or judges. Life has lost all meaning.Nobody gets really rich, because people do not



want to make big profits. So there is no wealth,no jewelry and no big art. The bees becomedesperate and eventually beg Zeus to restorethe original situation.

The message of this pastiche of ThomasMore's Utopia is clear: vices are good for the

economy. You cannot make money in heavenand all those moralists are unworldly idealists.So it is wrong to try to improve one's low andmean character and become a better person.Man is a mean bastard this is God's will. If Godhad willed us to be saints He had created adifferent society. It is God's will that only asociety of mean skunks is prosperous. This is avery Calvinist message that Mandeville wouldalso send to the present Occupy Movement hadhe known about them.

The fable arouse quite some turmoil and hasbeen even banned for some time. Mandevillemust however been very proud of his idea,because he wrote several versions. In 1755 ithad it's ninth print and even in the twentiethcentury the economist Frierich Hayek admiredthe book. Some elements were used by AdamSmith in his book 'The wealth of the Nations'(which appeared in 1776) and have become astandard assumption in the science of economy.

All this support does not mean that weshould accept Mandeville's conclusions at facevalue. Let us look at the facts. Societies withhigh moral standards are in general veryprosperous. It are the poor societies that havehigh rates of criminality and low moralstandards. A high public moral does not lead togeneral ennui and depression. It generallymeans more celebrations, sports and art. Inregions with severe winters farmers do not

steel or slide each others throats because of boredom. They make handicrafts like woodenstatuettes and cuckoo clocks. This enhancestourism and prosperity. These are facts weknow from the real world and they cannot beproven wrong by Mandeville's phantasiesbased on his very limited view on a humansociety. His objection that an extravagantbillionaire provides many jobs, is contradictedby the fact that the amount of money thebillionaire spends can also come from a large

group of people with an average income. Apublic pool generates more jobs (and fun) thana private one.

God in businessA milestone in the history of economics is

the already mentioned work of Adam Smith,where he shows among others that freecompetition in certain circumstances leads to a

more or less stable balance between demand,price and supply. Smith thought that he haddiscovered the laws God had installed in humaneconomy. Only if the administration does notinterfere, entrepreneurs will automaticallyproduce the very products consumers want andsell them for the price that is best for all. Theentrepreneur who sells the wrong products at awrong price will be pushed aside by thecompetition. It seems like the economy isconducted by 'an invisible hand'.

Smith does not agree with Mandeville'sthesis that vices are in general the driving forceof the economy. He wants citizens and inparticular entrepreneurs to behave decently,but he does not deny that the economy runs onself-interest. We do not expect to get our foodbecause of the goodness of the butcher, thebrewer or the baker, but because of their well-understood self-interest. The optimal balance isonly possible if everyone just has his or herown profit in mind. The administration is notto interfere, but has the task to see everyonebehaves according to the rules of thecompetition game. This means no monopolyand no common interest, as is the case withcartels and similar deals. Smith's so callednatural laws are a significant step towards theformation of the modern commercial field,where no human factors are involved andbusiness is business. The events within thisfield are determined by a calculus, a

mathematical model.The Italian philosopher Macchiavelli (1469-1527) advised kings to leave their conscience intheir bedrooms, because it impedes efficientgovernment. Mandeville repeated this adviceto the economists. Smith introduced thestructure of the economical calculus of desire.He considered himself to be the Newton of theeconomy. He thought that he had discoveredthe laws with which God has set-up theeconomy like Newton had discovered the

gravitational structure with which God hascreated the universe. It did not occur to himthat competition is something man has



invented and that a lot has to be organized inorder to make the supply regulate the price. Hedid not realize that prevention of monopolyand vertical or horizontal deals and theorganization of a field with equal players wherethe price is determined by competition is a

highly artificial situation. Smith was convincedhe had found a kind of natural law that hasbeen intended by God. That is why interferenceis wrong. It is against God's will. Thecommercial field where doing business takesplace is an autonomous area where only theeconomic calculus rules. This always has beenthe basic dogma of all conservative politicians.Economists like Hayek, Friedman and Stiglitzhave an almost religious belief in the beneficialinfluence of the free market in any

circumstance. Human interference comes closeto sacrilege.

The consumer as a prisonerThe ideology of desire was confirmed by the

mathematician John Nash, winner of the NoblePrice and main character in the film 'Abeautiful Mind'. He invented the prisonersdilemma. This is a situation where twoindividuals or groups depend on each other inorder to find the best solution. The classicalexample is the situation where a bank robberand his mate are caught by the police. There isnot enough evidence. Each has the option tocut a deal or to deny any involvement. Thisgives four possibilities:

1. both deny2. both confess3. the mate cuts a deal4. the robber cuts a deal.

Let's assume that cutting a deal means one

year in prison for the robber and four for hisaccomplice. Confession means two years. If therobber cuts a deal, outcome 2. and 4. arepossible. This makes a total of one plus two isthree years. If the robber denies then 1. and 3.are possible outcomes, which is a total of zeroplus four is four years. What should the robberdo? Well, Nash's mathematical game theoryshows that cutting a deal and betrayal of hismate is the most advantageous strategy,because that amounts to three years, while

being loyal to his mate amounts to four years.Nash concluded that betrayal is almost alwaysthe most advantageous strategy and this means

again that this world is made for unscrupulousegoists. Compassion and solidarity are forutopists and intellectuals.

A businessman has to deal with the realworld. Nash's mathematical formulas provedthat the profit seeking competitive

businessman acted like was meant by God. Themore because Nash could prove that a worldwith competitive egoists would ultimatelycome to an optimal equilibrium. Hobbes'soriginal state, where a man is a wolf to man, isthe best possible situation. Of courseexperiments showed that most human beingswhere not aware of this and opted forcooperation instead of betrayal. This provedagain that economists and politicians neededscience to do their jobs well and that Andy Cap

is ignorant and sentimental.Again 'universal laws' have come out of the

magic hat that are in favor of a free marketeconomy, and again it is easy to see the flawsand unnaturalness of these so called laws. Thebest strategy in the prisoners dilemma dependson the numbers which are stipulated. It is quiteeasy to change the numbers of prison sentenceso that cooperation gives the best outcome.Besides in the real world a lot of other factorsare involved. Your mate is not a completeunpredictable variable. Perhaps you know henever talks or perhaps you both have alreadyagreed not to talk in case of an arrest, orperhaps he knows that he will be despised byfriends and family if it comes out that he hascut a deal. More important even is the outcomeof a series of prisoners dilemmas. When youplay this against a computer a hundred timesor more, it appears that another strategy called'tit for tat' is the best. This means that you

cooperate at first and subsequently mirror themoves of the opponent. If he betrays, youbetray and if he chooses to cooperate you dolikewise.

Nash's false analysis caused a lot of mischief.It lead among others to an insane nuclear armsrace, because the cold war had the structure of a prisoners dilemma and so the best strategyfor both the U.S.A. and the Soviet Union was tostrike first. To neutralize the threat it wasnecessary to keep enough counter force ready

to make a massive retaliation possible in orderto scare off the adversary. There wereconstantly nuclear bombers and submarines on



patrol and the reserve of nuclear weapons wasenough to make the whole earth many timesinhabitable.

In economics it caused companies to adoptan aggressive marketing strategy with a deadlycompetition. Every businessman was roaming

the earth for profit and exploitation, no matterthe consequences. Even when signs of globalwarming appeared and it had become clearthat the supply of raw material is limited,multinationals knowingly ignored this, only tocontinue the race. Profit before people.

From cathedral to shopping mallSo prosperity is founded on desire and

success is rooted in egoism. The icing on thecake came when many psychologists (among

who anti-psychiatrist Robert D. Laing) came tothe conclusion that man is by nature a hardboiled egoist who is in continuous pursuit of power over his fellow beings. If anyone thinksdifferently he or she is a hypocrite or justfooling himself or herself. That is why officialsnever work. They have nothing to gain forthemselves by working. If they work hard allbenefits go to the boss. All they have to do is just keep their noses clean, this and only this isin their best interest. The only way to motivatea person is by reward and punishment. This iswhy trade unions do not fit in the picture, theymake punishment, read sacking lazyemployees, almost impossible. The moreimportant a job is the more crucial it is that theworker is well motivated. The best way toachieve this is to reward the worker.

In the beginning managers rewardedthemselves and their coworkers with shares,but it did not last long before huge bonuses

went each year each year into the already wellfilled pockets of top managers and CEO’s. Evenwhen business did not go well, there wasreason enough for a substantial bonus.

Doing business was making money andmaking money was useful. So working for thegovernment was not useful. This was an extrareason to minimize all tasks for thegovernment and privatize as much as possible.The administration had to been lean and meanand above all cheap. And if you happened to

work for the government you had to follow asmuch as possible the business model. Officialsclaimed that also they had a right on bonuses.

Another reason was that since WW IIpoliticians had seen the dangers of hugecrowds. It had become clear that democracy isnot fully immune for dictators. Hitler forinstance had been elected and Mao had thesupport of the majority. The crowd is an

uncertain factor, it had to be controlled.Elections are time consuming and the outcomeis uncertain. Many (among who Sigmund Freudwho wrote the book 'Civilization and it'sdiscontents') feared the bestial drives of largecrowds run amok. In order to safeguard acountry against this it was necessary to find outwhat was going on in the streets and to controlit. A good method was the polling of opinionsof the man in the street. This had already beendeveloped by companies to find out whether

their products were appreciated and they couldget more people to buy them. So it would be farmore easy to replace elections by polls. Theoutcome of the polls could show how to keepthe crowds content and this would preventriots and political turmoil. The official name forthis was crowd control. A happy consumer isno troublemaker.

Part of crowd control was what EdwardBernays called 'public relations'. Heimplemented the theory of his uncle SigmundFreud of the unconscious drives for commercialends. In 1929 he staged a happening where young American women lit up cigarettes inpublic during a parade. He called the cigarettes'torches of liberty', making them a symbol forwomen independence. It was a huge successand from then on every brand needed anadvertisement campaign. Bernays even got apresident reelected by organizing partieswhere popular movie stars were photographed

together with the president by journalists of allimportant newspapers. So the myth wascreated that with the right tricks one couldchange the public discourse and with thisdecide upon the value of things. With enoughmoney and the right public relations magician you could become God. This was an importantcontribution to the professional attitudeproblem of most capitalists. They were themanipulators, the men and women in thestreets were merely their objects.

Consumption, crowd control and publicrelations, this was the American model of thebrave new world and some writers like Francis



Fukuyama even thought this was the end of political history. Nothing would ever change,utopia had been realized.

Critical philosophy, also called theFrankfurter Schule is since long outdated.Baudrillard and Foucault are hard to find

within the campus. Morals and values are notshared anymore. The only value that isgenerally recognized is market value and thatchanges by the day. Most of the time the mediapreach the gospel of consumerism. Success isachieved by advertisement and media trainingwhich can be bought. There are trainers andcoaches everywhere.

The truth is that it is all about money, butmoney is not worth anything anymore. This ishidden behind the facade of expensive suits

and fancy cars. It is a separate artificial world,very remote from real values in the lives of people, that are about sickness and health,birth and death, love and friendship. Eventhese have been commercialized in soap series,but they always escape the market values whenthey really happen. They are shared in pubsand cathedrals, mosques, tea houses andtemples. People read books about them and tryto learn how to cultivate them. Philosopherseven wrote that the art of being human is theart of being a true friend. But according to themanagers this is all child play for the ignorant.Now we are modern and civilized and we liveour lives between the shopping mall and thegarbage can. Prosperity is consumerism andlive in debt. This is the kind of poverty that iscalled wealth, at last if poverty is understood asthe constant need for things. The man in thestreet goes along, what else can he do? He ishowever not convinced and cannot explain the

grudge that is eating him. The advertisementsmake him think about the newest tabletcomputer rather than about the way he leadshis life.

Loyal to the earthSo how is it possible that the manager who is

making this world inhabitable and poisonssociety with indifference and greed, is such anice and decent guy? What makes him speakwith a split tongue? Where do these Jekyll and

Hides come from? The whole financial field isgrounded on the belief in the intrinsic absolutevalue of money. This is pure metaphysics. We

saw how this metaphysics was constructed. Bymeans of Mandeville's fable, Smith's invisiblehand, Nash's prisoners dilemma and Bernays'spublic relations a game was created thatisolated itself from the lives of people and atthe same time was considered to be something

of a higher order. The Christian rituals werereplaced by the rituals of the financial marketand the shopping malls. It is not more credibleor logical to suppose that money makes aperson happy than to believe that one's soul issaved because roughly 2000 years ago a son of acarpenter died on a Roman torture instrument.Both are equally absurd. Both myths are keptalive by time consuming rituals and both haveestranged themselves from daily life.

Banks turned the stock exchange into a

casino by the production of derivatives.Computer programs exchange valuesautomatically, faster than any human being canimagine. The financial system is close tomathematical chaos, which means that verysmall changes can cause massive unpredictableconsequences. (The internet is also heading inthis direction.) And finally this monster takesso much energy and is creating so muchinequality that a possible environmentalbreakdown and a global 'Verelendung' appearsat the horizon.

The Chinese utopist Kang You Wei (康有为)predicted a world government, perhaps this is abit farfetched and it is not likely to happen inthe near future. We cannot fall back into anisolationist nationalism either. So we have torevert to peace meal engineering and learn aswe are proceeding. Many people are in favor of more regulation, which is a curse in the eyes of the financial high priests and a sacrilege of

their 'metaphynances', but it seems an obviousthing to do. Games need to be corrected, likethe soccer game that became more interestingbecause of the introduction of the offside rule.Money is a useful tool to make life moreconvenient, it should not be the oppositemeaning that life makes money exchange moreconvenient. We should wake up from thedream that is called capitalism. We honorscientists and artists who offer their bestefforts to the human race, why should wehonor those who just make human lifemiserable through their exchange game? Forthis we do not need a new spiritual leader or a



new religion, we need to become morepractical. The philosopher Friedrich Nietzschecalled this being loyal to the earth. The earth iswhat feeds us and what supports our being.Plato focused on the sun as the symbol of theuniversal absolute good, beautiful and true.

Many humans however have drowned at sea orin the moor while the sun was brightly shining.The sun is useless when the earth does notsupport you anymore. And what is a bettersymbol of resistance and hope to sit and liedown on the earth in front of the buildingswhere metaphynancial rituals take place? TheOccupy Movement is making an excellentpoint!

Erik Hoogcarspel

Rotterdam november 2011

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A Genealogy of Greed