Cologne 26-Sep-2008

Plenty are presently exulting gleefully in the 'collapse of capitalism'
and expressing their moral vitriol at money, the medium that enables and
lubricates the gainful interplay. What do they want? Well, money, honest
money, and not the money of greed. Only the others are greedy. Or they
want control and calculable security. They put their trust in the State.

Credit works on the players placing credibility, i.e. trust, in each
other. The creditor trusts the debtor to repay, but is paid for the risk
of the debtor perhaps being unable to do so. Interest rates are higher,
the higher the estimated risk. Wall St. banks invented packages of debt
bundling debtors with good credit-worthiness together with those of poor
credit-worthiness. How to estimate the risk of default on these bundled
loans? Simple, said the Wall St. banks and the world's three leading
credit-rating agencies: go on the 'history' of debt default.

Flanked by this fatal dose of empiricism: 'it's gone well so far, so
will continue to go well' (the methodology of S&P's, Moodys' and Fitch's
'sophisticated' computer models fed with countless empirical data), the
alchemy with probabilities to transmute low grade into AAA ended up
poisoning the entire waterhole. The debt packages were sold globally, so
the risk of debtor default was not borne by the lending banks themselves
but disseminated throughout the global financial system. This seemed
like a great way to play the gainful game.

Empiricist methodology is Aristotle's _epi to poly_ ("for the most
part") class of knowledge based on observing (or extracting)
regularities, which he distinguishes from genuine knowledge of the
principles (or first grounds) governing movements. Going back to first
principles and calculating the probabilities of debtor default in
complicated debt-bundles when interest rates rise seemed too
'theoretical', i.e. removed from the 'real world'. But when debtors
started to default on their mortgages, suddenly AAA 'really'
metamorphosed back into low grade, and nobody wanted the tainted
packages of debt, especially since it was hard, if not impossible, to
see what was in them. Nobody believed anyone else, especially the banks,
so the markets trading in these supposedly sophisticated debt packages
evaporated into nothing. Which exemplifies that markets are nothing
other than places where players (have to) trust each other in playing
the mutually gainful game, i.e. they are an ongoing interplay of
estimating and trusting each other. Markets have no substance, no
standing presence, but are a nothing of mutual reflection. Trust is a
mutual mirroring of each player's estimated stand in the interplay. If a
player turns out to be untrustworthy, e.g. uncreditworthy, then his or
her estimated stand, i.e. reputation, suffers, and s/he becomes a nobody
with whom the others do not want to play. Bye-bye to the Wall St.
investment banks.

If there are many groundless principles (free starting-points) at play
with one another in the interplay, then, to play well, it is best to be
prudent and watch out for what simply comes along groundlessly,
unexpectedly, outside any regularity -- Aristotle's _symbebaekos_ (also
known as 'contingency', from the verb _symbainein_, lit. 'to go along
with'). _To symbebaekos_ is a groundless principle/starting-point that
cannot be brought under the control, the dominion of knowledge.
Knowledge has to fore-see the end-result, i.e. the _idea_ of the
_telos_, that is to be brought about, or to come about, through the
appropriate (pre-calculable or pre-dictable) movement. What simply comes
along or pops up cannot be foreseen. What comes about in the interplay
of many groundless starting-points cannot be foreseen; there is no
'sight' (_idea_) to be fore-seen on the horizon, but only a mood (of
confidence, of nervousness...).

The gainful interplay is only 'stochastic' in the original Greek sense
of the word: each player only aims at a target (_stochos_) that can
easily be missed. The target is the final evaluation of one's gainful
striving in the interplay as actually successful, thus having the
end-target in one's hand (Aristotle's _entelecheia_ or lit.
'in-end-having-ness'). The target in interplay is far more evasive than
any simply moving target because the manifold movements of the ongoing
interplay are intricate, interwoven, surprising, unforeseeable,
incalculable. They just come along in ever new variants, depending on
the everchanging constellations and unexpected configurations of
interplay resulting from the movements of the many players.

_To symbebaekos_ is above all the locus of the other's freedom, from
which 'anarchy' very many are inclined to flee to safety -- through
trusting submission to a superior political power promising security:
the State. Otherwise the players trust each other in an agreement that
enables them to move toward mutually beneficial ends. Trust is the
elemental lifeblood of civil society that 'is' only as a moodful
resonance among the players enabling the interplay.

The international credit crisis is a breakdown of trust. Those who
played a high-risk game were caught out when the music stopped, that is,
when interest rates started rising again from abnormally low levels.
Trust can only be re-engendered when transparent rules of play promote
more prudent playing. This depends on the insight of prudence that
allows for risk and what might happen rather than casting caution to the
wind, as many players have been and are wont to do in succumbing to the
temptations of the Siren enticements of easy gain.

The calls for more regulation, more state control of the financial
institutions are to be expected from those political forces and ways of
thinking for which groundless interplay among free starting-points is
anathema. The other is to be mistrusted. Civil society itself is said to
be asocial. The State is called upon to assert its power over the
interplay through more laws, more regulation of what the players may and
may not do, as if the State (i.e. the politicians in their superior
wisdom) could foresee all possible outcomes of the interplay and all
possible techniques of playing, including the tricky ones.

But if the State (i.e. that never-ceasing political power play of many
political players) has any prudence, it must restrict itself to laying
down prudent rules of play without stifling the interplay itself through
the delusion that it could control it. More State control (the principle
of the heavy-handed political prince) would not improve the players'
play through better rules of play that demystify financial alchemy and
the sham sophistication of empiricist modelling; it would stifle the
freedom of interplay (the sometimes fair, sometimes ugly 'anarchy' of
the markets), purportedly for the people's own good.

***

We know very well (from ontic life experience), and yet we do not know
(ontologically), that we are all caught up in the power play of the
interplay, that we are who we are only by virtue of being evaluated,
estimated in the ongoing power play, whatever historical-epochal guise
this may take. Insofar as we do not know, we look for solutions to the
problems of interplay that are not adequate to who we are (whether we
want to be or not) as players and free starting-points. We pretend we
don't know that each of us is a power-centre at play; we pretend that
only the others (the powerful) have power (and abuse it) and that we are
the innocent, powerless losers who need protection.

Instead of relying on our deep-seated prejudices pro or con market
interplay, perhaps we could start think what it is.

_-_-_-_-_-_-_- artefact text and translation _-_-_-_-_-_-_-_-_-_
_-_-_-_-_-_-_-_-_-_-_-_- made by art _-_-_-_-_-_-_-_-_-_-_-_-_-_
http://www.arte-fact.org _-_-_-_-_-_-_ artefact@... _-_-_-
_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_ Dr Michael Eldred (c)_-_-
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