Saturday, December 25, 2010

A Spectre is Still Haunting Europe...

But this time it's not necessarily Communism, or any other label used by humans to conveniently understand their complex forms of socioeconomic organization. It's the spectre of an unrelenting reality, emerging from the depths of history, with no plans to follow but its own. What exactly, then, is reality and why does it have its own plans? These are not easy questions to answer, but many brilliant minds have had much to write and say on the topic. It may be safe to say with near certainty that, if nothing else, reality is constantly evolving and always lingering in the furthest boundaries of our comprehension.

The famous German philosopher, Georg Wilhelm Friedrich Hegel, is most readily identified with using the dialectic process to describe reality. It is the process in which opposing forces of nature push and pull with each other in a very non-linear fashion, until one rapidly gives way to the other or there is a synthesis of both. This framework, of course, is itself a simplifying abstraction used to understand the complex evolution of historical processes, but it also reflects a deep truth that many people fail to recognize throughout their lives.

Although Hegel rediscovered and thoroughly popularized the dialectic method within the social sciences, he somewhat naively believed that human ideas, as a reflection of God's thoughts, were the driving force of reality's evolution. Karl Marx and Friedrich Engels adopted Hegel's method in their socioeconomic analysis, but they completely "turned it on its head". As Marx explained:

My dialectic method is not only different from the Hegelian, but is its direct opposite. To Hegel, the life-process of the human brain, i.e. the process of thinking, which, under the name of 'the Idea,' he even transforms into an independent subject, is the demiurgos of the real world, and the real world is only the external, phenomenal form of 'the Idea.' With me, on the contrary, the ideal is nothing else than the material world reflected by the human mind, and translated into forms of thought." (Capital, Volume 1, Moscow, 1970, p. 29).
One of the the hot topics in the "material world" right now is the European Union and its increasingly imminent disintegration. Toxic debts from sovereign nations across this region can no longer be serviced at their true cost, so everyone is clamoring to find the "best" way to subsidize such debt and avoid a wholesale restructuring, in which all the imaginary wealth on the balance sheets of major banks would simply evaporate. Many commentators are enraged at the idea that U.S., French or German taxpayers would have to subsidize the profligate ways of Greece, Ireland and those soon to follow in their footsteps. At the very least, these bailouts should be preceded by or conditioned with strict austerity measures designed to bring an end to the failed welfare/entitlement state and re-establish values of "personal responsibility".

Some of the more astute commentators are enraged at the idea that Greek, Irish and other EU citizens will soon be forced to live with much fewer public benefits and much higher taxes to keep malicious banks and their crony governments in power. They correctly point out that such a path of austerity is "economic suicide" and will only lead to more suffering in the long-run. Instead, they advocate that these countries should refuse to honor their unproductive debts to banks, break away from the monetary union and reissue their own national currency. While this "option" will certainly lead to uncertainty, disorder and a significant destruction of both real and imaginary wealth in the short-term, it represents the only true path to a just and sustainable future.

However misguided the bailout/austerity advocates may be, or correct the "sovereign defaulters" may be, they both seem to place themselves outside of a larger dialectic process. For the latter especially, it is absurd that anyone could possibly think bailouts conditioned on harsh austerity measures could be a good path forward for the countries involved. Why can't these people see that too much debt is the problem, and subsidizing existing debt or adding more debt will not solve it? Isn't it clear by now that TBTF banks are parasites, constantly sucking productive capital out of the global economy, and no amount of austerity will positively impact sovereign debt problems as long as they remain in operation? Perhaps the answers to those questions lie outside the realm of conscious human decision, and in the realm of complex historical evolution.

There is an ever-present debate which occurs over big government vs. small government , public entitlements vs. privatized markets, public spending vs. austerity, etc. These concepts are typically perceived as independent ideas that exist so humans can choose one over the other, but they are actually two sides of the same coin, one side being necessary for the other side to exist. Looking at only the most recent period of history, it was the credit bubble and subsequent housing crash which created the "need" for European states to respond forcefully with deficit spending.

This universal spending across the developed world, in turn, contributed to the runs on sovereign bond markets in the Eurozone, creating the "need" for regional/global institutions to respond forcefully with plans of bailouts and/or austerity. Despite these measures, the housing markets across these countries remain extremely fragile and bond markets across Europe continue to show symptoms of an incurable disease. The dialectic evidence is right in front of our eyes, where it will remain, as one force rapidly gives way to another.

The opposing forces of modern times are different from those of Marx and Engels only in form, but never in function. It is the ongoing clash between the increasingly rich and increasingly poor, the extractors of  economic rents and the sellers of debt, the oppressors and the oppressed. Whatever the specific characterization of the simple dialectic involved, it must be viewed as a direct product of historical processes that have evolved over time. There should be absolutely no surprise at the fact that people hold diametrically opposed ideas on how nations around the world should proceed to deal with their debt issues. They are just ideas, after all, and they reflect an underlying tension in the material relations of human existence.

The general outcome of our current dialectic struggle will not be governed by these ambitious ideas, but by the natural forces of antagonistic evolution. Large swaths of unproductive private and public debt will not be repaid, and sovereign countries will default on their obligations. International monetary, political or strategic unions that rely on economic stability, mutual trust and confidence will not be preserved in any meaningful form. Citizens of the developed world will not stand in a single-file line and receive their bitter dose of austerity in an orderly fashion. These things are almost 100% certain, and no amount of conscious planning or top-down decision-making will make them less likely to occur.

I realize that the points made above, taken to their logical extreme, could imply that human beings have no "control" over their collective future, and therefore effectively no "free will". This implication, among many other things, could render the relentless criticisms of commentators around the world, including me, acts of zero importance or influence. If the future is set to evolve from complex, oppositional forces of nature, then there is nothing left to do but wait and watch it all unfold. Indeed, the enigma of free will, and the nature of reality itself, have been painstakingly analyzed by both scientists and philosophers alike, with no firm conclusions ever reached.

Personally, I find it at least worth noting that people are always obsessing about the differences between what is and what could have been. Despite the fact that history continues to repeat itself at the most fundamental levels, humans never seem to learn from the past, change their collective behaviors and break the "vicious" cycle. It seems we always address our systemic problems with too little, too late, and are then left with intractable predicaments to face. European politicians and financial analysts may yap all day about what should be done to solve their sovereign debt problems, or what they plan to do, but I am only interested in what will happen, and that seems to be a process increasingly disconnected from even the most clever ideas or plans of human beings.

Our individual actions, however, are not unimportant or meaningless. Regardless of whether they result from freely-constructed decisions or a complex deterministic process, they are the constituents of our future. The theoretical underpinnings of reality may become largely irrelevant in terms of our practical ability to remain secure and healthy in the upcoming years. Furthermore, there are certainly many people out there with extremely flawed and/or dangerous ideas. On the off chance that our freely-chosen words and actions  actually do have influence, it would be unwise not to speak out against such ideas. So I remain critical of misguided policies and opinions and do not hesitate to express such views, but I will always try to temper my personal judgments with a broader understanding of historical evolution. For that process is truly a spectre that no person can tame.


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  2. The process of history and human social evolution follows a cyclical path but still cannot be predicted because many small outside variables tend to create big differences in the cycles. Even though many of us acknowledge that civilizations tend to make the same mistakes as past civilizations, the process and variables are always different and changing in real-time.
    There is always a variable which present civilizations consider to change the nature of the cycle. In this age, we consider the emergence and parabolic growth of technological advances to offset any disaster circumstances that seem to always be in the back of our minds (ie. solving the energy crisis by technology or the fiscal crisis by credit/derivative creation). There is individual free will we are all connected as a species. As a species, we understand that certain needs must be met to survive and this survival instinct creates the need to follow a certain path, which is inevitably cyclical.

  3. If humans inherently follow a "survival instinct" that leads us to very similar paths of social evolution repeatedly, then what free will do we actually have?

    I think this is a question that should always be in our minds when discussing the state of our society and the policy choices we could or could not make.