Wednesday, October 7, 2009

The spirit of postmodernity and the new financial order. By Alexander Dugin.

Canis Ferreus' Note: The original article by Alexander Dugin was published in a Russian conservative newspaper in September 2000. I still find the context in which this piece puts any financial forecasting research quite stimulating. Being no professional translator, I've taken time to translate this piece from the Russian in hope that English-reading public worldwide will find it interesting as well. My opinions may differ from the author's.

1. The paradoxes of postmodernity

Despite the fact that the postmodernist approach has established itself as something irreversible and total in the modern culture, the content of the term "post-modernity" is still subject to lively arguments. Post-modernity as a move, as a pose, as a style, as a method, as the specifics of our attitude towards the objects of art and technological strategies has gradually entered the very flesh of our society to such a degree that it's hardly possible now to discuss what is and what isn't post-modernistic. The permeation of postmodernity into the elements of our being is so deep that it's no longer possible to disentangle it as something independent. Therefore all interpretational and gnoseological models, built on the principles and presumptions different from the vague and evasive maxims of post-modernity, have to be addressed not to the general public but to a very narrow community of experts.

Post-modernity differs from modernity just like modernity itself differs from pre-modernity. On a number of counts, post-modernity managed to establish itself in all seriousness and for a long time, having seduced and hypnotized with its extravagant elements all those who are able to catch the universal aggressiveness of its methodology.

Modernity, having come to replace pre-modernity, in its turn, pushed to the periphery, if not into non-existence, everything linked to the traditional paradigms. Pre-modernity retired into the sphere of disjoint fragments that saturate the periphery of consciousness and the broad fields of the unconscious. Research and de-mythologization of the traces of pre-modernity would constitute the most entertaining pass-time of the twentieth century modernists. The interest in the "irrational" was in reality an aspiration of the victorious "modernistic rationality", which became a universal language, to explore those gnoseological layers whose overcoming was the basis for the spirit of modernity.

From the very beginning modernity dealt with pre-modernity very harshly. The Enlightenment rationalism simply ridiculed the traditional society and its structures, discredited them, brutally drove them into the underground, got them decapitated like the last French king. To non-modernity, the very right to existence was denied. It was demonized as "reaction", labeled "backwardness", "lack of civility", "primitivness", "archaism", "obscurantism" etc. In fact, pre-modernity was tabooed. Not until the XXth century has an interest toward this "exceeded level" re-emerged, and it turned out that modernity rushed things a bit proclaiming pre-modernity to be defeated, non-existent, eliminated. The modern man turned out to be a lot less rationalistic and a lot more archaic than positivists triumphantly stated. The more brutally did modernity treat pre-modernity, the more aggressively did the rudiments of the latter behaved later on. The European fascism was a bright flash of such a reaction. Bolshevism, ostensibly operating with rational models, was recognized to be an archaic reaction somewhat later. Tragically and gradually, in the XXth century the spirit of modernity was discovering the limits of its victory and realizing all its shakiness. The factual man turned out to be too much booby-trapped with the archetypes of the past ages...

Post-modernity replaced modernity as a sum total of pessimistic reflexions, as a result of the exhaustedness of modernity's triumphant aspect, as a result of a crisis in the aggressive aspect of positivist critique and belligerent rationalism. Post-modernity explicitly incorporated the failure of the strategy of modernity. But does it signify a new, alternative direction? To what extent is the analogy between pre-modernity and modernity, on the one hand, and modernity and post-modernity, on the other, justified?

That's not an easy question. Habermas holds an extreme stance on the issue. Some "new right" thinkers (in particular, German philosopher Armin Mohler) who welcomed in postmodernity the crash of rationalism and positivism, hold the same view -- but with the opposite sign, re-interpreting in their own favour the newly found unlimited plurality of interpretations that came to replace the one-dimensional modernistic totalitarianism.

As an alternative, there is an opinion that postmodernity is not an antithesis of modernity, that their apparent paradigmatic difference hides the deeper unity of their vectors. Such (or similar) is the view of Jean Baudrillard, the post-history theorist. In such vision, postmodernity is disclosed as a new move in the strategy of modernity, who realized the ineffectiveness of fighting the pre-modernity via direct negation. In that case a subtler position -- readiness to reveal the archetypes, already gone into the unconscious -- is occupied by modernity, but only in order to "cure" these archetypes, rather than to release them.

In the course of its totalitarian and unshared dominance, modernity went down into the depths of the unconscious assumptions, became a "natural" language, shaped the unconscious.

Meanwhile, the pre-modernity, having stayed in a "cultural ghetto", lost vitality, got weak, isolated itself. Pre-modernity rose from the human underground -- blind, worn down, tired and inviable, vampire-like, phantom-like (hence, the incredible popularity of the vampires and "revenants" in the modern mass-culture). Moreover, pre-modernity turned out to be considerably contaminated with the elements of modernity -- at least, those of them, that managed to get assimilated by the depths of the unconscious.

Thus, postmodernity emerges not as an overcoming of modernity, but as a continuation of the latter, its final stage, called up to crown its original strategy. Hence the notion of the "end of history" (Francis Fukuyama) and similar concepts of the optimistic liberals who have identified post-modernity with the ultimate victory of their ideals.

Beyond doubts, both views on the essence of postmodernity are grounded. But it's hard to prefer either of them. The content and the meaning of postmodernity can not be grasped in their final volume, since we are talking about an unfinished process, in which we all participate and whose outcome will be largely determined by its future trajectory. If Habermas and Mohler are right, the elements of pre-modernity, disperse as of now, will be able to self-organize into a conservative-revolutionary pole, to form a historical subject, which will chart a new, alternative course of civilization, where the traditional will be rehabilitated, modernity will be recognized as a subversive perversion, and a new paradigm will be formed. If those who consider postmodernity a new tactics of the modernity are right, then today's chaos will lead to the final de-ontologization of the archetypes, who will lose their viability. The man will be able to subject himself to cloning peacefully, as a purified bio-mechanism, eventually liberated from the "ontological fog". And the history will indeed end, since its subject -- the human being -- will disappear.

2. Market, the only legitimate heir of modernity

Many economists speak today of serious transformations in the market system, which mean a change of paradigm in this sphere, too. In a sense, the financial sphere is subject to post-modernization, just like the spheres of culture, of social institutions, and of the politics. And naturally, the content of such a post-modernization is just as questionable as the general definition of postmodernity in all other fields. Let's consider this problem in some detail.

Modernity projected itself onto two basic economic models, equally aspiring to succeed to the spirit of Enlightenment, to rationalism, to the orthodox compliance to the basic contemporary norms: liberal-capitalism and socialism. Economic history of the XXth century was a dramatic confrontation of the two systems -- the capitalist one and the socialist one -- for the right of becoming the main heir of the Enlightenment. Both camps contested in the orthodoxy of their views regarding the modernity, rivaled each others loyalty to the trajectory of civilization set at the origin of the New Time. Marxists considered their theory to be more "modern", and therefore, were convinced that the future would belong to socialism, which was destined to overcome the "archaic capitalism", the latter being an economic model contaminated with the rudiments of the past. Liberal economists saw socialism as an economic heterodoxy, the round-about path of the modernity, leading one away from the clear and simple principles of the free market, economic egotism and the social equality of opportunities, which are the basis of the modernist outlook.

It is in this contesting of the legacy of Enlightenment, by the way, that the philosophical basis of the "anti-fascist convergence" lay -- the basis of the Allies' relationship during the WWII. The two camps of the modernity stepped out together against the reborn "pre-modernity".

After 1945, the rivalry of the two economic systems intensified. Development of the techno-sphere, social problems, ecology, geopolitical tensions -- all that required determinateness from the two rival economic systems, each one aspiring to universality. Three different scenarios were possible:

  1. Convergence of the two systems on the basis of the common ancestry, the loyalty to the modernist paradigm

  2. The global victory of socialism (which would mean that the liberal model is less adequate to the spirit of modernity)

  3. The victory of liberalism (which would mean, on the contrary, that socialism is the more archaic and, correspondingly, less modernistic phenomenon).

Up until recently, this was an open question, and only in the 90s, the third scenario became a fact. This practical turn of events -- victory of the liberal, market paradigm over the socialist model -- carries a huge conceptual meaning for the assessment of the actual content of the models of social and economic development of the modern civilization.

The fact of the victory of the liberal West over the socialist East is the signature of the greater modernist orthodoxy of the capitalist model. The Soviet socialism combined the progressist discourse (a modernist component) with the archaic underpinning of the social organization (a pre-modernistic component). Likewise, in the liberalism, modernism was combined with certain social institutions of fairly conservative flavor (monarchy, the inheritance of fortunes and the like).

Events of the early 90s proved, that the socialist model is more archaic and pre-modernistic, whereas the liberalism has confirmed its historic right to the unshared possession of the modernist fortune.

Curiously, the Hegelianist Kozhin, liberals Popper and Hayek, Raymond Aron, the French "new philosophers" Bernard-Anri Levi and Andre Glucksmann have foreseen such a development. The crash of the Soviet camp has ultimately proved this hypothesis.

The market and the modernity coincided. The plan lost, having revealed its pre-modernistic underpinning. The victory took place not just on the level of the economical and technological effectiveness. History herself pronounced her judgment, at least the line of history that identified itself with the New Time.

Therefore the modern economic history is the history of capitalism, and in it, the socialist experiment is a temporary deviation, an aberrational loop. Such an understanding of socialism is taken for granted by the most consistent of the liberal economists, and it explains, by the way, what's behind the media-cratic cliche of identifying the "red" with the "brown".

Socialism, having not proved its right of succession with respect to modernity, can not aspire to the leading role in determining the paradigm of postmodernity. That new which corresponds in the economics to the stage of transition from the modernity to the post-modernity must be found exclusively in the framework of the capitalist model, in the space of market. Therefore for the future, we drop the appeals to socialism, Marxism and so on.

The newest transformations in the market system must be studied, based on the market itself, and its immanent laws.

3. The magic world of finance

In the modern financial system of the capitalism there is a sector, which corresponds the best to the post-modernistic spirit, incorporates the economic equivalent of the basic post-modernistic strategy. We are talking about "technical analysis".

That's the customary name for the theory and practice of playing the market, based exclusively on operating with trends. George Soros, the prodigious figure of this field, who has accomplished in it the most brilliant result, calls this the "alchemy of finance". Indeed, technical analysis, completely isolated from the very basis of capitalism -- from figuring out the balance of supply and demand -- resembles a mystic discipline.

John Murphy, the greatest theorist of this field, distinguishes three basic principles of technical analysis, which he confronts with the traditional market analysis -- the "fundamentalism":

  1. Market discounts everything

  2. Prices move in trends

  3. History repeats itself

The first point means that the emergence of some unit on the stock or commodity market already includes in its price all aspects of reality, related to this thing: not only the pricing mechanism, but also the social context, political mutations and even the possibility of natural disasters. From now on their reality is lifted.

The "fundamentalist" approach, proper to the classical liberalism, would refrain from such an absolutization. It never stated the complete separation of a thing from its environment. The most consistent fundamentalist trader, such as Buffet, would emphasize not what is happening in the market, but the business cycle which precedes this happening.

Even though the principle "market discounts everything" looks like the familiar classic of the liberal theory, it looks as though some typical post-modernistic ironic hint glances through it. The complete absolutization of the market and the market price of goods in separation of the business cycle in reality mystifies the very reality of the market, turns it into a separate instance, which controls existence, based on its own virtual laws. The market is stated to be not the conclusion of the business cycle, but its reason, and therefore, a serious shift happens in the implicit ontology of capitalism.

Classic capitalism defined the being of a thing through a balance of supply and demand in it. That was, of course, an ontological relativisation compared to the pre-capitalist models of ontology, where things were assumed to have more independent basis, related either to the degree of its hierarchy in the Divine scheme of creation (creationism), or in its immediate link with the Deity (manifestationism).

Technical analysis is an even more radical step away from the traditional models of ontology. With the formula "market discounts everything", a separation from even extremely relativistic model of supply and demand occurs, and the being of a thing is placed into the elements of permanent trading in the virtual spaces of the exchange. In this situations, forms such as "portfolio investments", "circulation of hot money", currency operations and especially debt servicing, assume the central significance. A transition from the market of real goods and stocks to purely financial schemes, to the virtual economy, in which the pure movement of capital is the most important thing.

When we state that "the market discounts everything", we assume the factual autonomy of the financial system with respect to all the other aspects of reality. But since this reality is assumed to be capitalist reality, the new financial order reveals itself as postcapitalism or virtual capitalism. In this postcapitalist model the emphasis falls not on the dynamics of supply and demand, but on the organisation and control of the fund exchange and futures flows, which assume an autonomous meaning, become self-important and central, marginalising the "real economy" sector and the traditional trade. The movement of capital in the market cycles becomes so important and significant, operates with such numbers (often of ephemeral meaning), that traditional sectors of the economy become insignificant in comparison...

"Prices change in trends" -- this can be regarded as the second signature of postcapitalism. The concept of trend (the basic notion of technical analysis) first appears in the theory of Charles Dow. Watching dynamics of market prices, he suggested to consider the stock price movements not as a chaotic process, but as a trajectory with implicit logic of its own. The market fundamentalists tried to discredit the very notion of a trend in the popular Random Walk Theory, stating stochastic nature of the exchange price movements, which are completely determined by the balance of supply and demand. The technical analysis campers, on the contrary, absolutize the concept of a trend, believing that the very presence of a price trend after passing a certain stage is practically unrelated to the processes outside the stock exchange, and the market price is composed by the immanent laws of virtual trading. An important philosophical consequence follows: market price dynamics within the system of trends becomes a process, independent of the actual reality of the commodity or stock. This is an expression of the same process of de-materialisation and transition to manipulations with signs, detached from reality, which Baudrillard considers the characteristic signature of postmodernity. The autonomy of a trend is nothing other than the market expression of the autonomy of a sign. Besides everything else, such an approach can result in price trends existing in reality even when the underlying market object is purely nominal, fictitious. By the way, in the case of portfolio investments, servicing and restructurization of global debts and other similar financial processes we are talking about real operations with fictitious objects...

Finally, the third thesis "history repeats itself" resembles directly the picture of the world which existed in the pre-modern conditions. The irreversibility and single-directedness of history is the basic element of the New Time (modernity). The progress, the translational, one-way development are the inalienable vectors of the modern rational thinking, predetermining all that corresponds to the "conventional wisdom" after Enlightenment. The perception of time as a cycle is, on the contrary, the brightest signature of the traditional society. Applied to the analysis of the stock exchange cycles, the technical analysis states what is clearly a non-modernistic truth. And since it is the market that constitutes today the ontological sum total, the statement of its cyclic nature de facto applies to all other aspects of reality -- for "the market discounts everything"...

The new financial system, charted most clearly in the concepts of technical analysis, is described in terms of pre-modernistic disciplines: the "alchemy of finance", "self-fulfilled prophecy" (a term analysed by Murphy which resembles theurgy of the ancients), "market wizards" (the title of a best-seller by Jack D. Schwager). Here we deal with an embrio of new reality, with postcapitalism, a bright manifestation of post-modernistic spirit in the sphere of economics. If one can dismiss the postmodernist themes in the sphere of culture (as do those who do not realize the seriousness and depth of the fundamental civilisational mutation, denoted by the term "postmodernity"), in the sphere of finances and the economy it is not so easy to dismiss.

4. To read the chart of the future correctly

The magic mazes of the new economics, neo-auguric art of "chart reading", financial hermeticism pose in front of us the same problems as do philosophical manifestations of postmodernity in other areas. Just like we leave the question of the ultimate meaning of postmodernity open, one can not sentence the maturing mutation of the economic model, the transition from capitalism to postcapitalism. Postmodernity does not simply reject modernity, it ironically equates modernity with pre-modernity, but with the pre-modernity taken as a fragment and a void sign. The new financial system in which technical analysis and magic speculations of the traders of the Soros' type will take more and more central positions, does not eliminate the mechanisms of classic capitalism, it assimilates them in a lifted form, equating them with the fragments of extravagant priniciples, borrowed from completely different historico-cultural and economic contexts. And it's very likely that, having overcome socialism and other, even more archaic forms of economy, the new financial order in the future will absorb selected exotic elements borrowed from alternative economic models. One can not exclude a priori, that post-capitalist reality will at one point put Marxism in vogue again, just like clothes of the 50s, 60s and 70s become fashionable in the New Wave teenage stylistics.

We are on the threshold of the brave new world, the world of exchange magic, hermetic spells of the brokers, electronic movement of the autonomous capital. This world has many various features -- grotesque, ironic, extravagant, exotic and sinister.

Postmodernity is the change of the basic paradigms. We ought to try to realize their essence, to decode the content of this most complex loop of the human history. And the key to such realizing -- one of the keys, at least -- is the close analysis of the newest economic trends.

Postcapitalism is irreversible and unavoidable. But who can tell what it is?

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