Economics in Spirit and Truth

A Moral Philosophy of Finance

N. Wariboko

• Publisher: Palgrave Macmillan
• Year: 2014
• ISBN:
  9781137475503
• Topic: Philosophy
• Subtopic: Ethics & Moral Philosophy

Wariboko offers a critical-philosophical perspective on the logics and dynamics of finance capital in the twenty-first century in order to craft a model of the care of the soul that will enable citizens to not only better negotiate their economic existences and moral evaluations within it, but also resist its negative impact on social life.

Chapter 1

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The Idea of Finance

Introduction

The idea of finance points us to two related but distinguishable profound perspectives for understanding and interrogating finance capital and its place in any modern economy. First, the idea of finance relates to the internal split of the modern economy. It refers to the primordial crack or lack at the birth of the modern economy that both causes and traces an inherent imbalance at the core of any economy. This split is constitutive of the modern economy. There is always an internal gap within the economy, and finance capital is the form of appearance of both the economy and its inherent gap. Contrary to popular opinion, finance or finance capital has no separate existence of its own; it is part of the spatial-temporal processes of the economy. The idea of finance captures the thinking that for an economy to exist as a monetary economy it must be divided against itself. The basic insight here is that the “external” opposition between Main Street (real production) and Wall Street (mere financial activities, so-called casino capitalism) is grounded in the modern economy’s immanent self-opposition.

Second, the idea of finance stands for the project of reshaping economic exchanges in the light of deterritorializing world economy, network of transactions, that is much more than elements in a particular economy. The idea of finance is the idea of transacting in the marketplace in view of what is universal and new. What transformative activities of the self and social existence, that is, care of the soul, might constitute an appropriate response to the idea of finance? “When our material social reality is not only dominated by the spectral or speculative movement of Capital but is itself progressively ‘spectralized,’” how should Christianity care for the soul?¹

This chapter examines the “economics and politics” that shed light on the appropriate response to these questions through the investigation of their modes of quest for truth. In the practices of both disciplines the care of the soul is thematized (or implicit) on the basis of the idea of the care of truth, a sudden emergence of the new from a structure’s “own inherent (point of) impossibility.”² In the circulation of spectrality, materiality, or spectrality as reality, both finance capital and emancipatory politics represent only different modes of truth itself. In this environ care of the soul is ultimately the concern for initiating something new amid ongoing reality. And its most appropriate form is a critical response to finance capital in spirit and truth.

The Fundamentals of the Idea of Finance

Economics is regarded as the science of economy, an effort to describe the universal structure of economic life of humankind. In recent times, starting with Gary Becker of the University of Chicago, it has become an endeavor to describe the whole of human life. This effort to describe the whole of reality or life was marked by several attempts to reach beyond the false appearances of human behavior to their underlying core. This core has been identified as the rationalizing principle, the homo-economicus “real” of existence and sociality.

What the critics of this model of economic explanation—what we can call the “hard model of economic behavior”—have done is to say that the obvious behavior or the ordinarily observable actions are not illusory or unreal but the conditions of possibility of the appearing of the homo-economicus real itself. For instance, economists like Amartya Sen and economic sociologist Mark Granovetter argue that the embeddedness of economic behavior in social networks is the “transcendental genesis” of homo economicus.³ So the question, they posit, economists must ask is this: What does the appearing of homo-economicus real presuppose? What must always already have taken place in the society for economic behavior to appear to us the way they do?

The answer preferred by the “soft-model” economists is social relations, the irreducible, nondeconstructible horizon of economic actions. Armed with this answer, they explain the failure of hard economists to fully understand the truth of finance as the limitation of reason. But I argue that the economy is cracked and antinomic. It is never a harmonious global whole. Reasoning about the economy has been dominated by efforts to harmonize all its elements or parts into a consistent narrative. Consequent to this, the crack and antimonies we see in the economy when we conceive it as All we attribute to the limitation of our reasoning and techniques. We do not or have failed to locate them in the economy itself; that is, failing to conceive economic reality itself as cracked and antinomic. Every economy, every sector of it, has an imbalance, a crack in its very core. When we properly look at the economy with the necessary Roentgen apparatus we will see its own crack, antinomy, and antagonism, “the traces of its future death,” that will make it to fail on its own.

In 2008 the financial markets collapsed and the disruption was attributed to the failure of finance to be concretely connected with so-called real productive activity. To use the language of John Maynard Keynes, it was argued that the financial circulation of money was delinked from the industrial circulation to a dangerous, speculative level. This disconnect was attributed to greed or profit-drive run amok on Wall Street. But there is a different way to interpret what happened. What appears as the inability of finance to fund and correlate with real production indicates a crack in the economy itself, so that the very failure to engage with real production is the indicator of the truth of nature of the modern economy. The problem (inability) is here part of the solution. The very inconsistencies, antagonism (if you like), and anticorrelation between finance capital and industrial (real) capital bear witness to the truthfulness of the working of the modern economy.

In order to constitute itself as monetary economy the economy seems to have separated itself from finance or from itself. Finance is the symbol of that separation, the crack, the lack of the economy. Finance thus becomes the desire to gain entry into a world of surplus enjoyment promised by the economy. More importantly, it is the separation of finance from the whole economy that unites finance with it, since this division or separateness is immanent to the economy. Finance or indeed the economy emerges when the economy divides itself from itself. The division, the gap between economy and finance, is there even when (if there was ever such a time) finance relates to the real productive economy in a self-identical manner. The so-called 100 percent correlation of finance and economy is possible because the economy opposes itself to finance, sunders itself from itself. But in spite of sundering and opposition it relates to finance as the same in the opposite. We must ask how the same or self-identical is a perfect (appropriate) correlation? The economy is opposed to itself, so identity is not a uniting of real economy and finance that takes place perfectly or absolutely. Thus, identity or absolute relation is not that of a functioning economy.

א The Idea of Finance: From Limit and Limitlessness to Kinship and Self-Generation

The separation of finance from the economy is the first division between limit and limitlessness, excess in material production.⁴ An economy able to divide against itself on the production of goods and services and stored value, which can finance them, represents a certain intensity of vitality. Once this excess has appeared, what will the economy do with it? It has to be sent in search of material prosperity.

Society is immediately put in a double bind: either this excess is directed to the extant, limited production that will result in feverish inflation of asset value, which is a bad thing; or it has to go searching for “economies” that make it insouciant to the good of the extant economy, given the ability to undermine any authority to control it. This is also a movement away from collective activity to support happiness. No wonder from its beginning (or close to it) finance has turned energies toward private satisfaction, individual withdrawal to zones of private leisure, and escalating demands of private happiness on society by those who have harnessed finance’s accumulated vitality.

This is the paradox of finance as a reign of economic excess. The excess signifies the development and transformation of an economy and also its potential ruin. (Modern public, state economic management has largely been about how to square this circle.) We need to quickly add that this excess or the reign of excess is not foreign to the economy. Finance bears the desire of the originating (primitive) economy to be limitless, beyond the limits of immediate satisfaction. Today technology as limitlessness proper of human existence has made common cause with finance to further this tendency.

In addition to the appearance of the division between limit and limitlessness, the birth of finance signifies the emergence of two principles in the economy: kinship and self-generation. This is the basic division of the economy into parts that are faithful to the whole (a son’s bond to his mother) or parts that are not. Organization of productive and reproductive activities of wealth can no longer proceed on a massive scale without “insemination” by finance capital, but finance can grow by self-engendering. An economy is a regime of exchange that is not one. Finance is its founding power of heterotopy for a monetary economy. This effectively happens when the monetary economy commences: when the principle of economic reproduction is separated from the law of kinship, nearness, or naturalness. This is precisely what irks Aristotle and the scholastic theologians: that money (metal), which they regard to be barren, can reproduce. Once finance has been birthed economic relations cannot be confounded with relation to blood, soil, or religion. And within this, the excellence specific to it emerges: limitlessness concern to gain, which is actually the absence of concern. This is what it means to be ruled by chance. Finance is all about risk-taking, calculation of risks, the “favor of heaven and fortune,” which has no foundation. The excesses of finance capital do not have anything to do with supposed madness for profit. “It is simply the dissolving of any standard [of concern by which nature or human convention] could give its law to communitarian artifice via the relations of authority [and harmony] that structure the social body.”⁵

The very finance-induced distortions, deficiencies of the modern economy, that we do observe report the very working or nature of the modern economy. The form of the economy has been contaminated by its very finance-content. Finance is inscribed into the economy as its uncanny distortion; so economy and finance share the same logical form.

Financial excesses are in the distortions of the economy. The distortions of the economy are directly rendered to observation by the form of finance. They express themselves in finance. Finance also displays the logical form of an economy. What appears as the financial form, no matter how fragile and ephemeral it may seem to us, is the form of the economy. There is more truth in the appearances of finance form than what may be hidden in the real economy or what may be hidden beneath them, if there is such a thing. The real economy or real production is not the hidden reality beneath financial appearances. Economic (productive) structures are nothing but the very form of financial structures, the very form of appearance of money (monetary system). So concern about the unstable and deceptive nature of finance capital misses the point, which is that finance is the appearance of the whole economy, no matter how unstable and “unproductive” it may be.

For Peter Alexander Egom, a Nigerian economist, the real, productive, and financial structures express or reflect the index-number structure of the monetary linchpin of the economy.⁶ So to correct or speak about distortions and instability in the economy caused by financial operations is to correct or talk about the underlying monetary system, whether it is private-sector-commodity-interest-free or public-sector-interest-based money.⁷ Egom is making a profound philosophic point without being explicitly conscious of it because he thinks he is strictly making an argument about index number and money. Put differently, he misunderstands or misinterprets the radical, revolutionary dimension of this thought. He starts from the dualism of productive structures (substantial, material part of collective economic life) and the active forces of money, the power of becoming in the economic life. He then asserts a gap between the productive structure (“reality”) and the determining order of money: the notion that productive structure can “participate” in the monetary order or that the determining monetary order can shine through the productive economy, appear in it. This appearance captured as index-numbers, he argues, is the truth of any monetary economy.

What Egom gets wrong is his meta-physicalization, ontologization of the determining monetary order, as if money or index number forms a more substantial “true” order of reality. What he is not ready to accept is that finance has no separate existence of its own; it is part of the spatial-temporal material processes of the economy. It may (indeed) assume a virtual nature, locating itself between hard-thatness of real production and nonexisting entity, merely subsisting, but it is never in a realm apart from the economy. There is no more true reality of economy life or monetary index numbers than the spatial-temporal reality of the whole economy as one body. The ontological status of money (finance, index numbers) is that of pure appearing. Our problem is not how we can understand the true picture of an economy through monetary index numbers, which are beyond the appearance of the whole economy, but how appearance of money can emerge.⁸

The conclusion Egom avoids or fails to see is that money does not dwell beyond the economy, not in a separate ontological sphere of collective life; it is “appearance as appearance.”⁹ Finance is to economy what senses are to the body.¹⁰ It is the Event; the incorporeal effects of “corporeals.” It is the “surface of an Eve...

Table of contents

• Cover
• Title
• Introduction: Economics Is Not an Alien Monster
• 1   The Idea of Finance
• 2   Theological-Ethical Critique of Accounting
• 3   The Ontology of Moral Hazard in Finance
• 4   Faith Has a Rate of Return
• 5   The Knot of Finance
• 6   A Political Theology of Market Miracles
• 7   Care of the Soul: Resistance to Finance Capital as Virtue
• Conclusion: Rethinking Economic Ethics
• Notes
• Bibliography
• Index