Monday, July 13, 2020

Could America Have a French-Style Revolution?

As with the French Revolution, that will be the trigger for a wholesale replacement of our failed institutions.
Since it's Bastille Day, a national holiday in France celebrating the French Revolution, let's ask a question few even think (or dare) to ask: could America have a French-style Revolution? Not in some distant era, but within the next five years?
By French-style Revolution I don't mean the extravagant use of the guillotine, I mean the complete political overthrow of the ruling elites. This overthrow need not be violent; it could be an entirely peaceful electoral rejection of the two-party political elites and the Federal Reserve / banking / financialization elites which together form the neoliberal-neofeudal ruling elites.
The BAU Crowd (business as usual) considers the possibility of such an overthrow of parasitic, predatory elites as remote as a landing by Martians. I suspect they're purposefully blind to the reality that America's elites and institutions are structurally incapable of accepting meaningful reforms that would address the extremes of dysfunction, exploitation, predation and wealth / power / income inequality that characterize America today.
America's elites and institutions have only one systemic response to crisis: do more of what's failed spectacularly.
This inability to acknowledge the reality of their own self-serving incompetence and the deeply dysfunctional nature of virtually every level of America's economic, social and political orders leaves an overthrow of the entire ruling elite as the only option left other than resignation to Bread and Circuses funded by the Fed, a policy of desperation that will inevitably debauch the U.S. dollar and impoverish everyone who counted on Bread and Circuses to fix what's broken.
Counting on Fed-funded Bread and Circuses to fix what's broken is the perfection of magical thinking, a state of denial expressed by the phrase routinely (but apparently falsely) attributed to Marie Antoinette, when she learned that the peasants had no bread: Then let them eat brioche (roughly translated into "cake" in English).
Ignoring the horror of the delusional BAU Crowd, let's explore the set-up for a French-style Revolution in America.
Setting aside the horrors of the guillotine, the French Revolution was many things unfolding at once:
-- The failure of the Monarchy's money system, as inflation soared to the point commoners could no longer afford bread. (The price of bread peaked the week that the Bastille was stormed by mobs.)
-- The overthrow of the state-religion nexus in favor of Enlightenment rationalism.
-- The romantic ascent of liberty as the rallying cry against an oppressive feudal hierarchy.
-- The fragmentation of the social and political orders into warring factions.
-- The failure of the Monarchy's institutions to recognize and understand the potentially fatal challenges and institute reforms that addressed the problems.
-- The failure of the French economy, which was plagued by poor roads and communication lines, limited trade due to regional fragmentation and low levels of productive investment.
-- Geopolitical rivalries with Great Britain, the rising power of the Germanic states and other continental European powers (Russia, Austria, Sweden).
In sum, institutions that had failed collapsed and were replaced, first by Napoleon's centralized bureaucracies and later by political reforms, a process that took much of the 19th century to play out.
I think the parallels to America in 2020 are obvious, if inexact.
Most importantly, America's core institutions have failed: the financial system, healthcare, higher education, the political process and the national defense/intelligence complex.
In every case, a class of insiders has come to dominate each centralized hierarchy for its own benefit. Blinded by their greed and hubris, they cannot recognize or understand the systemic failure they inhabit because their attachment to their position, privilege and power is blindingly strong.
Reform is impossible, for as with the French Monarchy, the existing system is the wrong structure and unit size, to borrow a phrase from Peter Drucker. Reforms profound enough to actually repair what's broken would require the insiders surrender much of their position, privilege and power, which they will never do.
As I have taken pains to explain, finance capitalism has fatally distorted the American economy in ways that few understand (or want to understand, since it's so disturbing).
The resulting concentration of wealth and power has also fatally distorted the political process of governance.
As I explained in my books Resistance, Revolution, Liberation and Inequality and the Collapse of PrivilegeAmerica's systems only function when there is more of everything to distribute, i.e. "growth": more money, more goods and services, more political power.
When there is less of everything, America's institutions fail because they have no mechanisms for DeGrowth / contraction.
This is the result of their systemic structure as centralized hierarchies. Expansion is effortless, contraction breaks the system. (See the chart of the rising wedge model of breakdown below.)
Much is being made of the fragmentation of American society into so-called progressive-conservative camps, and perhaps the best way to understand this fragmentation is that both camps recognize the failure of American institutions but differ on how to reform them.
Given that America's institutions only function with "more of everything," a reality that aligns with America's zeitgeist of "there's always more of everything," I consider it inevitable that whomever is in power will enthusiastically embrace the illusory "solution" of printing trillions of dollars out of thin air, in the delusional confidence that the world's appetite for dollars is essentially infinite.
Put another way: America finds it comforting to assume that it will always be able to digitally create "money" out of thin air and trade this "nothing" for real goods, i.e. "something."
That America has gotten away with this magic for decades only fuels the confidence of those who reckon the way to "get more of everything" is so easy and simple: just create another few trillion dollars out of thin air and buy the world's resources with this "free money."
Eventually the rest of the world will tire of this fraud, and America will face the loss of its magic printing press.
At that point, inflation will destroy the purchasing power of the US dollar and commoners will be unable to afford the cost of living.
As with the French Revolution, that will be the trigger for a wholesale replacement of our failed institutions. Whether that replacement can be accomplished within the existing political system will depend on a great many factors that will be unfolding simultaneously and interacting with each other in unpredictable, nonlinear ways.
My work is all about sketching out alternative systems that are non-hierarchical, opt-in, decentralized, adaptive, self-organizing and anti-fragile--everything that our current systems are not.
How do we get from "there"--failed, centralized hierarchies dominated by self-serving insiders-- to "here"--opt-in, decentralized, adaptive, self-organizing and anti-fragile institutions?
Nobody knows, but I suspect the decay of our failed institutions will accelerate rapidly, and we won't have to wait very long to witness the messy transition to new decentralized, localized, flexible non-elite-ruled institutional models.
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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Sunday, July 12, 2020

How Do We Change the Leadership of our Quasi-Sovereign Big Tech Neofeudal Nobility?

You better bow low and pay up, peasant, or your voice in the digital world will disappear just as quickly as your democracy's control over Big Tech.
Who's the junior partner in global hegemony, Big Tech or the U.S. government? The question would have been laughable just a few years ago, but now it's a viable debate when we ask questions like: which one plays a larger role in your daily life, Big Tech platforms or the government? If controlling the flow of data is now the primary means of production, then who owns control of data flows? As we all know, the answer is Big Tech platforms: Google, Facebook, Apple, Microsoft, Amazon, Twitter, Netflix et al.
As Mark, Jesse and I discuss in our latest salon, The Rise and Fall of the Neo-Feudal Network State, these platforms have become defacto sovereign states with global hegemony over surveillance, censorship, data collection and behavioral influence--what Jesse calls network states.
Since the leadership of these private-sector sovereign entities is effectively monarchical, it is also effectively neofeudal: these platforms are private, closed source systems, managed by black-box algorithms hidden from users and regulators. This is the acme of neofeudalism: there is no democratic control at all by users or citizens.
Whether Facebook will ever hit upon a more coherent approach to protecting the free expression of the powerless as well as the powerful depends on whether it ever comes to grip with its own role as the largest censor in the history of the world. (emphasis added by CHS)
"Facebook is governing human expression more than any government does or ever has," said Susan Benesch, a faculty associate at Harvard University's Berkman Klein Center for Internet & Society. "They have taken on the task of defining hate speech and other unacceptable speech, which is a quasi-sovereign power... and we the public have no opportunity to contribute to the decision-making, as would be the case if the decisions were being made by a government."
Indeed, despite company executives' paying lip service to the concept of democracy from time to time, Facebook is structurally monarchical.
To the University of Virginia media studies professor Siva Vaidhyanathan, campaigners against Facebook need to come to grips with the global nature of its threat.
"The US got off easy in 2016-- the same year that Rodrigo Duterte took over the Philippines by riding Facebook to victory, and two years after Narendra Modi took over India by riding Facebook to victory. Much of the world suffers from all of the Facebook maladies much worse than the US."
Vaidhyanathan argued that solutions to Facebook's ills cannot be achieved with oversight from above but will require a more fundamental shift from below. "The root of Facebook is the fact that it is a global intrusive surveillance system that leverages all that behavioral data to target both ads and non-ad content at us."
In other words, the lords of Big Tech control the digital means of production, and the peasants and serfs are powerless. That is the perfection of neofeudalism. As Mark and Jesse posit, this has effectively flipped the central states (governments) into the junior partners of the privately owned network state/central state global hegemony.
In response, governments now view the quasi-sovereign Big Tech platforms domiciled in their borders as key allies in the struggle for global hegemony. Hence we are witnessing pushback against Chinese social-media giant TikTok, which as Jesse points out, is indeed a global platform for propaganda just like Facebook, Google, et al.
Recall that propaganda isn't just what you're allowed to see, it's also what you're not allowed to see and also what's being promoted on Page One in your feed and what's been buried on Page 23 (to use an old-media analogy).
Meanwhile, these privately owned quasi-sovereign networks are immensely profitable, as they sell the data they collect to advertisers and marketers, including political campaigns. Apple, Google, Amazon, Facebook etc. wield more political power and influence than traditional political advocacy groups because their cash hoards are so stupendous.
The feedback loop is ominous: as government regulators are throttled or marginalized by political pressure bought by privately owned quasi-sovereign Big Tech platforms, the platforms are in effect protected from any democratic control exerted by the citizenry in their nominal "home nation," not to mention the citizenry they influence in other nations.
Unlike the old monopolies like Standard Oil, the quasi-sovereign Big Tech platforms are the media, so there's nothing left to balance their skyrocketing power. As we discuss in the podcast, their control is (in Jesse's term) molecular, so they've effectively dismantled the legacy social-political structures such as working class, middle class, etc.
With mass media replaced by Big Tech's data-flow / behavioral-control molecular media, political coherence has been lost, and so divide-and conquer control mechanisms are now essentially infinite: any group, no matter how coherent, can be splintered into warring fragments by the Big Tech Neofeudal Nobility.
After all, they have the data and they can use it however they want, with no limits or controls by users, citizens or nominally democratic governments.
How do we change the leadership of our Neofeudal Nobility, the privately owned, quasi-sovereign Big Tech platforms? The short answer is: we don't. There is no mechanism left for influencing anything in the monarchies of Facebook, Google, Apple, Amazon, etc al.
Meet the new boss, worse than the old boss. You better bow low and pay up, peasant, or your voice in the digital world will disappear just as quickly as your democracy's control over Big Tech.
Recent Podcasts:
My COVID-19 Pandemic Posts


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
Thank you, Lawrence M. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.
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Saturday, July 11, 2020

The Sinking Titanic's Great Pumps Finally Fail

The greater fools still partying in the first-class lounge are in denial that even the greatest, most technologically advanced ship can sink.
On April 14, 1912, the liner Titanic, considered unsinkable due to its watertight compartments and other features, struck a glancing blow against a massive iceberg on that moonless, weirdly calm night. In the early hours of April 15, the great ship broke in half and sank, ending the lives of the majority of its passengers and crew.
The usual analogy drawn between the Titanic and our financial meltdown stems from the initial complacency of the passengers after the collision. Some passengers went on deck to play with the ice scraped off the berg, while most returned to the festivities still working their magic as midnight approached.
The class structure of Edwardian Britain soon came into play, however; as the situation grew visibly threatening, the First Class passengers were herded into the few lifeboats while the steerage/Third Class passengers--many of them immigrants--were mostly kept below decks, sealing their doom.
But there are even more compelling analogies than initial complacency turning to panic. Consider this diagram of the great ship:
The large black rectangles on the lower deck represent the coal bunkers; they were located adjacent to the boilers which powered the engines. Though the ship only scraped against the iceberg, as Titanic explorer Robert Ballard explains, that was enough to pop rivets and open hull plates:
The glancing blow that ruptured the Titanic's hull over a distance of roughly 250 feet (out of a full length of 882 feet) and admitted water into six of her compartments sealed her fate.
Considerable hullabaloo attended the attempt in the summer of 1996 to raise a piece of the hull from the debris field, but far more interesting was the ultrasound investigation of the area of the bow damaged by the iceberg. These images revealed six small tears or openings affecting the first six compartments. Just as we had surmised in 1986, the great gash was a myth and the actual openings into the ship seem to have been the result of rivets popping and hull plates separating.
This offers a very powerful analogy to the fatal damage inflicted on our financial system by an apparently "glancing blow" with the pandemic shutdown. Just as the Titanic was mortally wounded not by great tears in its hull but by the buckling of steel hull plates, so the U.S. (and thus global) financial system is sinking from similarly "glancing" blows.
The actual damage could have been contained--do you sense another analogy about to surface?-- had the fifth watertight bulwark--shall we call it "the bulwark against systemic failure"?-- extended a few decks higher. But inexplicably, this watertight barrier did not extend as high as the other watertight bulkheads.
Though the water gushing through a three-foot gash in the forward engine room was held back by the ship's great pumps, as the bow sank lower then water seeped over the fifth watertight bulkhead and gushed into the boiler room, extinguishing the fires that powered the pumps.
This generated a feedback loop: the higher the water rose, the more boilers were extinguished and the less power was available to the pumps.
And so against all "rational odds," the ship's apparently minor structural design flaw led to its inevitable loss as the mighty pumps lost their battle against the rising water.
To all the "experts," the risk of collision with an iceberg were considered low, while the risk of catastrophic damage were considered essentially zero. Hmm, does that remind you of our financial system circa September 2019, just as the great U.S. economy's hull was buckling?
Now we have the Great Pumps of Federal Reserve money-printing and Stimulus, which in a close analogy are pumping trillions of dollars into the sinking U.S. economy. But just as the engines of the Titanic lost power as the water extinguished the boilers supplying steam to the engines, so the stimulus is only keeping the rising water temporarily at bay-- it is not actually saving the "engines" of the economy from sputtering.
And what are those engines?
1. Debt, which must increase to fuel spending, income and thus taxes
2. Rising assets, which provide the basis for ever-more borrowing
3. Government borrowing, which enables government spending to keep rising without regard to actual tax revenues or the health of those being taxed
4. Rising employment as vast borrowing and spending creates new jobs
The ice-cold water is splashing into each of these engines. As assets fall then there is simply no foundation (collateral) to support more borrowing. As debt is paid down rather than expanded, then spending falls. As spending falls, so do revenues, profits and employment, all of which crimp tax revenues.
The last engine is government borrowing. To those still standing on the sloping deck, cheering the "good news" of Big Tech's meteoric ascent to the heavens of bubble overvaluation, this seems like the engine which can never be extinguished. Through thick and thin the Federal government and the state and local governments (via muni bonds) have been able to borrow and spend stupendous sums seemingly without consequence.
The demise of this last great engine will surprise as many as the sinking of the Titanic did, but it is as inevitable as the sinking of the great ship. The pumps can only hold the water back for a while, but the Stimulus magic will expire sooner than anyone imagines.
As the government scrambles to find buyers for endless trillions in new U.S. bonds (and trillions more in new corporate debt, new mortgages, new consumer debt, student loans, new muni debt, etc.) then interest rates will rise and the great engine of ever-greater debt will hiss and sigh as the water rises and then go silent and cold.
The first-class passengers have already been ushered to their lifeboats. They've sold to the euphoric passengers buying Big Tech's parabolic ascent and the greater fools still partying in the first-class lounge who are in denial that even the greatest, most technologically advanced ship can sink, taking everyone in denial down with it.
The sinking is not a possibility, it is an inevitability.
Recent Podcasts:
My COVID-19 Pandemic Posts


My recent books:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

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