Wednesday, October 15, 2008

The Flight to Abstraction

My decision some two and a half years ago to launch a weekly blog on the future of industrial society has had its share, or more than its share, of unexpected results. The original plan was to start a conversation about the future within the contemporary Druid community, which is not precisely one of the largest religious movements in America these days, and I would have considered the project a success if the blog’s total readership topped fifty. That The Archdruid Report somehow failed to stop there still astonishes me.

Just as unexpected has been the impact on my own writing process. Some writers, like the hero of Edward Gorey’s wry tale The Unstrung Harp, have orderly habits: on November 18th of alternate years, with the creaking predictability of an old orrery, you can be sure that Gorey’s protagonist Mr. Earbrass will start a new novel. By inclination, at least, I fall on the other end of the spectrum, and it happens as often as not that I sit down at the keyboard Tuesday evening with no notion what my next post ought to be about. What astonishes me is that the muse has always come through, though there are times I can almost see her distractedly pulling down random volumes from the bookshelves of Parnassus, looking for scraps to toss me.

Very often, though, it’s her more improbable tidbits that bring the most unexpected insights. I can think of no other excuse for this week’s post, for the idea at its core came out of a moment of mental collision hard to describe in any other way. That moment arrived on the weekend just past, when I looked up from a paperback copy of Giambattista Vico’s New Science to the surreal skyline of Las Vegas at night.

Now it’s probably worth saying up front that of all the cities I’ve ever visited, Las Vegas is my least favorite: a garish urban cancer that apparently exists for the sole purpose of proving that it’s possible to take a barren, scorpion-infested wasteland and make something even worse out of it. I was there for a conference that took advantage of the cheap rates offered by a third-rate casino hotel, and would not have gone there otherwise. What made Vegas an unlikely source of inspiration that evening, I think, is that it takes modern industrial society’s least laudable features to their furthest extreme; its utter disconnection from nature, its insatiable appetite for resources, and its promotion of distraction and greed as the highest goals of human life mirror the worst features of the world three centuries of industrialism have built.

That made Vico a particularly apposite commentator. Giambattista Vico lived from 1668 to 1744; he spent his career as a teacher of rhetoric at the University of Naples, and devoted his off hours to one of the great intellectual projects of his time. His masterpiece, Principles of a New Science Concerning the Common Nature of Nations, appeared in three editions of increasing complexity, the last one after his death, and was almost completely ignored for most of a century thereafter. When it finally found its audience in the mid-19th century, its influence was profound, and continues to this day.

The New Science, as the work is generally known, was nothing less than the first modern attempt to make sense of the laws governing history. Vico was perhaps the first modern Western thinker to recognize the parallel historical trajectories of his own society and that of classical Greece and Rome; using those as his two test cases, he attempted to sketch out “the course the nations run,” the process by which a society rises from barbarism to civilization and falls back to barbarism again. With only two examples to work from, Vico inevitably jumped to many conclusions that don’t always hold up well in the light of a broader view of world history, but some of his ideas are astonishingly prescient, and his basic intuition – that societies go through broadly similar stages on the way from their initial rise to their final collapse – remains central to any attempt to make sense of history on the grand scale.

Vico’s argument is complex and difficult to summarize, but one of its core themes – the one whose relevance to the present struck me most forcefully that night in Las Vegas – is the role of abstraction. A wide range of social phenomena, Vico pointed out, focus entirely on specific concrete realities in the early days of a culture, and evolve toward abstraction over the lifespan of the culture. Law codes start out as lists of rules for specific cases, and broaden into statements of principles covering infinite variation in practice; words leave behind concrete meanings – how many people nowadays recall that the verb “understand” once meant literally “to stand under,” in the sense of upholding or supporting something? – and take on ever more nuanced meanings; religion begins in the shattering impact of the numinous on individual lives, and diffuses into elegant theological notions disconnected from the realities of human experience.

So, too, economics. Vico barely mentions the economic sphere – as a scholar of rhetoric and law, his interests lay elsewhere – but the economic history of the Western world fits his scheme precisely. The cultures that clawed their way back up from the bitter dark ages that followed the fall of Rome knew only one form of real wealth, agricultural land – a habit of thought that still survives in the phrasing that calls land, and only land, “real property.” The warrior aristocracies that threw back the last barbarian invasions from Europe and imposed a tenuous peace on their battered societies defined themselves by their landholdings; possession of a “knight’s fee” – enough land to support a single armored horseman – was the one requirement of noble status in those days. Money existed in the form of coinage, but most people went from one year to the next without ever seeing any; nearly all goods and services moved through customary patterns of exchange in which market forces had no place.

The waning of the Middle Ages saw the gradual replacement of these customary economies with a new economics of precious-metal currency. Feudal tenure, by which farmers held the right to their land in exchange for specific duties defined by tradition, gave way to cash rents, and a significant part of the population moved away from the land to proto-industrial wage labor in the newly expanding cities. This was a step toward abstraction; gold and silver coins replaced fields of grain as the basic definition of wealth, and made way for concentrations of economic power far more extreme than anything the Middle Ages had seen.

Further abstractions followed. By the 17th century, banks began to issue paper receipts for gold and silver in their vaults, and these receipts could be exchanged like the coinage that backed them. The invention of the banknote was followed promptly by the practice of printing more banknotes than a bank’s gold and silver reserves would cover, on the assumption that most of the notes would never be cashed in for metal; when word of this practice spread, the first bank runs followed. In the same way, companies found they could bring in capital by selling shares of their future earnings; the purchasers of these shares then found that their prices could be bid up or down, and stock speculation was born.

Fast forward a few more centuries, and we arrive at today’s global economy, which consists primarily of the buying and selling of abstractions. The concept of wealth, which was once limited to the immediate means of production, and then shifted to mean the precious metal markers used to denominate the value of production, has now mutated into arbitrary numbers that can be wished into existence by a few keystrokes. When the US government announced a few days ago that it was investing $250 billion in the nation’s banks, for example, that money did not have to be pulled out of some imaginary bank account in the national treasury, much less extracted from the dwindling productive capacities of America’s remaining factories and farms; it was conjured into being by government fiat, in order to replace some even vaster sum of abstract wealth that more or less dissolved into twinkle dust over the preceding weeks.

What makes this pursuit of the abstract so dangerous, of course, is that abstract value is not the same thing as the concrete realities it once represented: green fields and grain in storehouses; strong muscles and the work they accomplish; or for that matter, factories, the resources that keep them running, and the products that come from them. These are real wealth; the layers of economic abstraction piled atop them are simply complex social games that determine who gets access to how much of this real wealth – and those games can become so complex., and so dysfunctional, that they get in the way of the production of real wealth. The flight into abstraction can proceed so far, in other words, that the abstractions interfere with the concrete realities underlying them.

This possibility became appallingly real in the week or so immediately preceding my trip to Las Vegas. The overnight interbank loan market – an economic abstraction so arcane that not even economists seem to be able to explain its function in ordinary English – froze up, and as a result stock markets worldwide panicked and crashed, erasing trillions of dollars in paper wealth in a single week. Desperation moves by the world’s central banks bought a few days of respite, but today’s trading brought another disastrous slump. (Connoiseurs of irony may find it worth noting that today was the birthday of economist John Kenneth Galbraith, whose The Great Crash 1929 anatomized exactly those speculative delusions that were rehashed in the last two decades and caused the current debacle.)

A stock market crash, it bears remembering, does not cause crop failures, labor shortages, or the destruction of industrial machinery. Its impact is purely on the fabric of economic abstractions built atop the real wealth of land, labor, and industrial plant. Yet that impact can be devastating; in the depths of the last Great Depression, the production of goods shrank to a small fraction of what it had been before the 1929 crash. There was still plenty of land, plenty of laborers, and plenty of machines, not to mention millions of families whose breadwinners would have liked nothing so much as a chance to earn money and buy products; the only thing that could not be made to work was the market where abstractions were bought and sold, and without its help, the real economy ground to a halt.

We are facing the same situation now, and official attempts to stabilize the economy are failing because they focus on the abstractions rather than the realities underlying them. The $250 billion just poured down a Wall Street rathole, for example, could have been used instead to pay for the rebuilding of America’s rail network, with dramatic positive effects that would have resonated throughout the economy. Any such project would hire hundreds of thousands of workers across the spectrum of skilled and unskilled trades; locomotives and rolling stock would have had to be built, countless miles of track laid and upgraded, stations repaired or built from scratch, and every dollar spent on all these things would ripple outward through the economy, supporting businesses of every kind and refinancing local banks with deposits rather than loans. Projects of the same kind played a large role in helping many countries in the 1930s begin to pull themselves out of the morass of the last Great Depression.

Instead, the $250 billion has been assigned the task of making up for a portion of the largely imaginary wealth that has already evaporated from the balance sheets of banks. Abstraction has triumphed over economic realities, and the multiple impacts of that failure of imagination will be with us for a long time to come.

36 comments:

Frank said...

Thanks for your insights, Archdruid. For me, the financial crisis has crystalized the process whereby we all become poorer over the next few years. It is also noteworthy, I think, that the current financial and coming economic crisis dovetails nicely with the theory of Peak Oil. That leads me to prognosticate a short recovery three to five years out, followed by another hard contraction as we bump up against Peak Oil again. Unfortunately, the next contraction will include shortages of exportable oil and will probably lead to gasoline shortages like those experienced in Atlanta and the Southeast US after Ike, but this time more or less permanent. We think voluntary simplicity can go a long way towards mitigating personal discomfort with the upcoming changes in lifestyle we are all about to face. Thanks from Frank at EntropyPawsed

robertmp said...

Dear JMG, Thank you again for your weekly discipline. The world economy produces a lot more than abstractions. The production is facilitated by credit. Credit expanded heroically, and is now contracting (heroically). And in a model of permanent industrial contraction, why would an owner of capital lend (extend credit)? Stay tuned.
Yours truly,
Robert

Mark said...

Not to mention that the fiat we use as currency, now has an intrinsic value to most people. Isn't that the major issue? We now see paper slips as wealth - a majority of consumers doesn't understand that our economy is built upon abstractions. I guess that explains the reasons why we're in so deep... Just curious, would you ever see a revolution, an uprising against government (armed or otherwise), as a solution? Many speak and think of it, but do you feel it would ever solve any thing? Or is it more logical and effective to solve the issue from within the household outwards?

John Michael Greer said...

Frank, my take on the likely shape of the near future is pretty close to yours, though it's possible the next period of stabilization and partial recovery could be anything up to a decade out; there's been a lot of Monday morning quarterbacking about how the last Great Depression could have been circumvented, but the omniscience of current economic theory is at least open to question just now!

Robert, er, if you'll read my post again you'll find that I'm quite aware that the economy produces more than abstractions; it's precisely because the abstractions are getting in the way of the real economy that we're in the fix we're in. Credit is merely one of the abstractions.

bryant said...

An interesting post JMG.

Since I work in an extractive industry when I am not doing permaculture, I have had occasion to consider the degree of abstraction in the economy. The notion that this abstraction extends throughout the culture and could be a manifestation of the aging of the civilization took me by surprise. I expect to be ruminating on that for a while.

One possible quibble though; promissory notes functioned as an exchangeable currency between the mercantile class even in the middle middle ages. Here is a link to a promissory note issued in 1199.

http://www.fordham.edu/halsall/source/1200manduel.html

Granted, the use of promissory notes was fairly limited and it's main raison d'ĂȘtre was to avoid having to travel with large sums of coinage. Still, the issuance of paper currency is probably derived from the practice of exchanging promissory notes to parties outside the original contract.

robertmp said...

Dear JGM,
I believed I was quoting you; "Fast forward a few more centuries, and we arrive at today’s global economy, which consists primarily of the buying and selling of abstractions."
Yours truly,
Robert

John Michael Greer said...

Mark, armed revolution is almost always a disastrous mistake -- the vast majority of the time, it fails, and when it succeeds the new government generally ends up more oppressive and dysfunctional than the old one.

Bryant, of course promissory notes go way back -- just as precious metal coinage existed during the dark ages. None of the stages I've outlined are absolute; it's a question of the predominant form of wealth in a society.

Robert, please reread the passage you just quoted: "primarily" does not mean "exclusively." Given that the total value of the paper wealth bought and sold in any recent year vastly exceeds the value of tangible goods bought and sold in that same year, I don't think that "primarily" is any sort of exaggeration.

tristan said...

As an arch-druid, and a practitioner of the esoteric arts, do you see money as a manipulatable illusion? If so then it makes sense that if one can see the true root story that is propelling the illusion would could stay ahead of the story and thus profit.

Does that make sense? I just finished "Long Descent" and I have read some of your other books so I am putting together different concepts from different books.

T

Jason Camp said...

Hi JMG,

I think an interesting fact is how most people have no concept of number value - especially when it concerns money. For example, let us look at what the $700 billion dollar bailout looks like if we were to take loonies (Canadian Currency) and stack them flat against each other. That is to say, make the loon on one face touch the queen on the other face (like a roll of pennies).

If we allow that a loonie is 1mm thick (it isn't, it is actually 1.75mm thick but 1mm works better to keep our numbers simple)

1 loonie = 1mm = $1
10 loonies = 10mm (1cm) = $10
1000 loonies = 100cm (1m) = $1000
1 000 000 loonies = 1000m (1km) = $1 000 000 ($1 million dollars)
1 000 000 000 loonies = 1000km = $1 000 000 000 ($1 billion dollars)

Circumference of the earth = 40 000km

Therefore, if we wanted to wrap the earth in one BIG roll of loonies we would need 40 billion of them.

$700 billion dollars would wrap the earth 17.5 times in loonies rolled face-to-face!! (keep in mind that since a loonie is actually 1.75mm thick the true number would be 30.65 times!)

If you really want to cook your noodle - the US debt as passed the $10 trillion dollar mark (September 2008). That would mean we would wrap the earth 250 times in loonies!!! (again, since the loonie is actually 1.75mm the true number is 437.5)

Yet, governments around the world have a way of tossing out HUGE monetary numbers that are very hard to conceptualize.

I hope this might help people, like myself, who have had trouble visualizing such numbers.

Cheers,
BB

mxyzptlk said...

JMG,

I've been thinking about leaky abstractions lately, as well. "Leaky" is an adjective that gets applied in user interface design, where details from lower layers "poke through," like when a website displays ASP error messages instead of the website you were expecting, or when you have to reach into the tank and jiggle the valve by hand to make the toilet flush.

Dmitri Orlov makes the point, in different words, that the USSR was better prepared for its collapse in part because of its considerably leakier abstractions. The average person knew the detailed insides of the technologies and processes that made their daily lives run, because they had to.

This leads me to a personal quandry that I think many share: how much abstraction do I try to eliminate? In my own field, network security, I'm quite familiar with each of the seven abstraction layers of the OSI model, but even I couldn't solder together a network interface card from commodity components, or compute and respond to TCP sequence numbers by hand. How much abstraction should we prepare to lose?

The traditional survivalists have a simple answer: "All of it." Obviously, we're expecting a more complicated answer. How do we prepare, though?

Guessing wrong has serious consequences: I don't have the financial resources to quit my job, leave the city, and buy a house on 10 arable acres in the country. I don't have the mental resources to stay competitive in the network security game, learn to fix slightly obsolete electronics with scavenged supplies, learn to grow enough food to supplement my diet in an urban setting, and learn to create a 1900s, 1800s, 1600s, 1200s, and 800BC-style homestead from scratch.

Each of these different descents down the abstraction stack we live atop today require a skillset that's almost completely different, and none of them will be entirely like what the future requires. How can we optimize our individual responses to a crapshoot like that?

Joel said...

Excellent, as always. And as usual, I have one tiny nitpick:

"Real property" is "real" not as in reality, but as in royalty: it is ultimately controlled by higher authorities, and any individual claim to it is subsidiary. If languages didn't drift so, we might pronounce "real estate" similarly to "el camino real."

With that out of the way: I love how so many internet types are looking for ways to "monetize" their products. It might make a lot more sense to de-monetize.

FARfetched said...

When you get right down to it, money is whatever enough people say it is. Through history, enough people have called cattle, pretty pieces of paper, shiny objects, and big stone disks money.

One could say that money itself is an abstraction. For example, the gold bugs' favorite example is how a gold coin would purchase a new suit 100 years ago, and the same gold coin would still purchase a new suit today — so you could say that either a gold coin, or a like amount of paper money, is an abstract representation for "things of value."

Some amount of abstraction is necessary to facilitate commerce; paying the electric bill with cattle or buying groceries with lumber is simply too cumbersome. Better to exchange the cow or lumber for some agreed-upon abstraction, then use that to settle the accounts for utilities or groceries. But I agree that the abstraction has grown far beyond the means of production.

You don't even have to print money anymore — you could (given access) make yourself a millionaire with a few keystrokes (and a convict afterwards). Legally, you can create money by going into debt — and that's exactly the problem. The total debt has overwhelmed the real wealth created by producing things of value. Canceling all debts would quickly right the ship, but would put nearly all the burden on the privileged classes… which is why that won't happen.

Michael said...

JMG - glad you take the time to share your ideas with us, always enjoy reading them.

I share your views on Vegas - on a stop in LV a few years ago during a mountain bike trip I remember being at the center of the Circle Bar in the Hard Rock and looking around - there wasn't a SINGLE person who looked like they were enjoying themselves (it contrasted nicely with the genuine enjoyment we had all had moving by our own power through nature) - so not only does LV reflect some of the worst qualities of our modern culture, at heart I think it isn't even really enjoyable for those involved in it's "entertainment". Watching people chase an abstraction of wealth, most of whom have to know at some level that the odds are against them - was saddening.

I think a monetary system based on energy units seems the most practical for the future - but I doubt it will happen.

Stephen Heyer said...

Excellent post!

This is why I keep reading John Greer!

Economics being something of a hobby of mine (yes, some people are that weird) I was already sort of aware of the increasing levels of abstractions in the financial sphere. However, going back to the Giambattista Vico’s “Principles of a New Science Concerning the Common Nature of Nations”, at least as related and interpreted by John, moved it out of my subconscious and illuminated its importance as a general principle or civilization.

Keep up the good work John.

Bootstrapper said...

Hi John,

Another thought-provoking post, thank you.

Of course, the real reason why the government has chosen to pour $250BN into the financial black hole instead if investing it in infrastructure, is because big business and big finance is its natural constituiency.

Big business, big government and big finance exist in a symbiotic relationship. I call it 'Govcorp'. This symbiote however, appears to have a parasitic relationship with the rest of society. The ( debt-based ) money system must be supported because it's the principal mechanism Govcorp uses, to extract wealth from society. To a parasite, the host is just a rescource; there to be exploited . . . to extinction.

Internalise this, and all their actions become understandable, even logical. Catherine Austin Fitts calls this "Tapeworm Economics". An apt metaphor, I think.

National currency is now revealing it's true nature,as a concentrator of wealth. 'Money' is both 'real' in the sense that it has existence as physical notes, coins and entries in ledgers, but it's also a concept, in the sense that it emerged out of a need to facilitate exchange in economies that evolved permanent division of labour.

As such, the concept of money properly belongs to the Commons. The problems being experienced today can be traced to the fact that the money systems of the industrialised world have been privatised.

It's correct that pouring billions of imaginary Dollars down the black hole created by the Large Wall Street Moron Collider has generated, is just piling fantasies on top of one another. But the link to ( and effect on ) the real economy is real, in that people must have something to use as a medium of exchange and a ( comparitive ) measure of value and as the supply of money depends on banks creating it out of thin air by making loans. Without these loans, the money supply dries up and commerce siezes.

The solution has been around for a long time:

//peakenergy.blogspot.com/2008/10/locabucks-are-local-currencies-way-to.html

http://alt-money.tribe.net/thread/70e5eb29-853d-44ca-9faa-b789d1757037

Regards, Paul.

Siobhan Blundell said...

Dear JMG, thanks for another great post. I think the world of modern art mirrors the role of abstraction in society now, just as you have discussed, in that one of the world's wealthiest contemporary artists, Damien Hirst, (of the 12 million dollar stuffed shark) declares himself that he cannot draw or paint. Art imitates life, as they say.

Bill Pulliam said...

"a barren, scorpion-infested wasteland"

Really, John Michael, is that any way to refer to any natural ecosystem? Even as a rhetorical flourish?

Scorpions do not infest the desert, they inhabit it. Casinos infest it.

A desert is not a wasteland. It has not been laid waste; it is a magical and fully-functioning masterpiece of evolution and adaptation.

Sorry, but you really couldn't have expected me to let that one slide...

Personally, I find Las Vegas fascinating. One will never understand the American psyche without first coming to understand Las Vegas. It is who we really are as a society in our deepest collective dreams and desires. It is the ultimate temple of materialism, the true religion followed with fanatical devotion by the overwhelming majority of our population. Nothing about our beliefs, choices, values, priorities, and actions makes any sense without this key to it all.

Ryan D. Hottle said...

Your insights are truly profound...I wish I had your eloquence with words! Just finished your book too: Most excellent piece of work. In this blog you mention rebuilding railroads as non-abstract project that would help the U.S. in more ways than one. May I point you to my blog, www.GlobalClimateSolutions.org where I wrote (a somewhat crude) outline of how the U.S. might deal with the global economic crisis including rebuilding rail, investing in decentralized carbon-negative energy, and undertaking a significant home and small business weatherization program. Keep up the good work.

Yours truly,
Ryan D. Hottle

Conchscooter said...

The problem is that these abstractions came into being not only because some people profited directly by them, but alos because it was a great deal more convenient and safe for everyone if they had access to letters of credit instead of bags of gold, or coins instead of bartering animals and vegetables directly.
So now we've taken it too far in the direction of the abstract. I guess the only sensible way to find our way back to the middle ground is to sit on the sidelines and let the chips (chips-Las Vegas eh?) fall where they may. Instead our fearless leaders promise to throw more abstractions at the problems and the merry-go-round won't stop.

Jacques de Beaufort said...

Brilliant insights as usual.

Is it not strange that public intellectuals essentially offer their wares for free these days ? I encourage people to buy the book if they like the sampler treats.

Frank-
I think your completely right about the timing with Peak Oil. I only wonder when people will actually realize this is the root cause and of entropy within the system. With gas prices now down again, the MSM has pretty much forgotten the phenom and I'm not seeing Simmons and Co. on the news lately. Mostly it's Peter Schiff and Robert Hirsch who get to represent the Doomers these days. Peter Schiff thinks little about limits to growth, and is essentially a free-market purist. The "market" is largely a political construct, which is why the energy problem is described in the language of nationalism. "Dependence on Foreign Oil".

Even if the Politicians know the reality, it's nothing they can shill. Who want's to buy the self-limiting prospects of a post-hydrocarbon world ? People buy fantasies, reality comes for free. And a sucker's born every minute.

I only wonder how this will play out culturally, within the space of the Arts and Media ?

JMG I think I recall a passage in "Descent" in which you mention the orgiastic and masochistic tendencies of cultures in decline. Hieronymous Bosch and Breughel provide good windows into a Post-Plague Europe, and both artists seem to be stern moralists, while at the same time delighting in (esp. Bosch) the forbidden pleasures of the flesh. In these moments Eros is consumed by Thanatos, but in such a relationship, both are finally defined. Pre-Industrial art, especially the Catholic variety is spilling over with Paraphilic fantasy and grim tableau full of submission, domination, and martyrdom. I suspect that the hipster nihilism of Post-Modern bricolage will give way to a much more auratic and immediate theatre of narrative.

This is where I'm supposed to say "If there's even anyone around to paint in 10 years." But I think we underestimate the resilience of the creative urge. Epic and profound artistic masterpieces have been produced throughout all of human history, oil or not. With an abundance of time, and very little materials, a skilled artisan can produce a cultural artifact with very real value. We make our abstractions real with images. If we did not we would live in the "blooming buzz" of William James and be like infants or psychotics.

The human spirit will endure. It knows how to do nothing else.

Matt Cardin said...

Thank you, John, for the insight into your creative process -- which, incidentally, mirrors my own. Who knows what surprises the muse has in store on any given day? My own hides her face if I try to impose anything resembling a regular schedule or discipline upon her.

And thank you, too, for the oh-so-necessary fundamental insight you have presented in this post, in your ever-eloquent manner. I'm reminded of the similar eloquence of Alan Watts -- one of my favorite writers and thinkers -- whose early-1970s essay "Does It Matter?" dovetails and plays tag at many points with your post here. One of his essay's most effective moments comes when he illustrates the absurdity of abstract monetary values coming to overshadow concrete material wealth and resources by imagining a carpenter who arrives at work one day to be told by his supervisor, "Sorry, no work today. We're out of inches." The surprised worker points out that inches are just a measurement of really existing materials, and that it's fully possible to do work that day since there's still lot of lumber, nails, etc. But the supervisor tells him, "Sorry, you obviously don't understand the economics of carpentry. We've been using too many inches lately and now they're all used up. So, no work today."

Watts goes on to point out the obvious parallel of this absurd scenario with such situations as an economic depression, where, as he and you so ably state, only the monetary medium of exchange has experienced a disruption, and yet people have become so hypnotized into believing that real wealth consists in the money itself that they allow the monetary disruptions to affect and disrupt their real relationship [with real, material wealth.

I know I'm just summarizing what you said, so I'll stop here. I just find this insight fascinating and, like you, absolutely necessary amid present circumstances. How very interesting that it was Vegas that inspired your muse to deliver the material of inspiration which you shaped into this excellent post.

JimK said...

Abstractions do not just float above real objects, but also coordinate their interactions. I suspect that is a bit part of how civilizations age: the quest for efficiency leads to more intricate coordination of tools, materials, and processes. Increasing intricacy implies less robustness. Eventually some environmentsl shift brings the house of cards down.

Any society needs to optimize its use of resources. This can be done by some central authority, or in a more distributed fashion. Free market capitalism is a type of distributed optimization algorithm. Of course our clever fananciers are always added extra bells and whistles to squeeze a little more slack out of the system.

It's not just the fananciers, though! Engineers are constantly doing more with less. But these highly efficient systems depend on finely tuned interactions between more and more components. For example, look at modern automobiles - if you dare! My Toyota Corolla is a miracle of reliability and efficiency - but I have never looked under the hood, and I doubt there would be much use in doing so. My first car was a 1967 Mustang with a 289 cu. inch V-8. That Mustang was really easy to work on, to set the points, time the ignition, etc. The Toyota uses electronic ignition and fuel injection. The electronics can use sophisticated software constantly to adjust engine parameters to changing conditions. But it takes a complex computer system at the shop to be able to diagnose and repair the car!

The value of tools and materials is a function of the technical environment. Tools and materials function in systems. A simpler example would be nuts and wrenches. A wrench might be very well made, but if it is some odd size that doesn't match any nuts around, then it's not worth much!

The values of things depend ever more strongly on fine details of the ways we do things, both in the present and in the medium term future - through the duration of the thing. Uncertainty about how we will likely be doing things in the medium term future translates into uncertainty about the value of this or that thing.

galacticsurfer said...

I came to this general idea of civilization growing from concrete to abstract from the astrological side first so therefore following analysis.

Jupiter and Saturn have a 20 year cycle of conjunction to opposition. For 200 years they meet each 20 years in air signs then switch to water signs for 200 years and then to fire signs for 200 years and then to earth signs for 200 years. This cycle then repeats. It is an 800 year cycle.

Saturn and Jupiter are political/social planets(unlike Mars or Venus, Mercury or moon which move quickly and are interpreted as having influence on individual personalities). Their movements determine great political and historical changes.

The air signs are Aquarius, Gemini, Libra

Water signs are Pisces, Scorpio, Cancer

Fire signs are Sagittarius, Leo, Aries

Earth signs are Taurus, Virgo, Capricorn

The conjunctions in Air signs begin in 2020 (first in 1980 but then went back to earth sign in 2000 once) for 200 years. Essentially we are in for a dissolution of our culture under air signs. As I interpret astrology water feeds a new culture so the beginnings of a new civilization in year 1400-1600 or year 2200-2400 under control of water signs a "renaissance" of a high culture would occur. (springtime)

In years 1600-1800 and 2400-2600 we could expect under fire signs the full flowering of the new culture as in summer time.

Autumn would take place under earth signs. Materialism here takes over completely so that the ideals developed in the last dark ages or winter controlled by air signs would be contorted and misunderstood to be purely materialistic values. What started in somebody's head became only purely material.

This interpretation seems to be just opposite of the one given in the piece going from concrete to abstract. Perhaps two things are working here. A movement from the soul/mind outwards into the material world which corresponds to the astrological interpretation and a movement from outer world of material things to the mind/soul in the historical interpretation.

So when the physical and spiritual have switched places we are back at the end of the cycle and must start again. We are at the point in the Ying/Yang symbol where one black or white point exists in the middle of a different coloured field as in Korean flag. Therefore the sudden crisis in all areas of scociety. Collapse and black swan behaviour occurs everywhere to rebalance reality.


Air Signs- collapse of old civilization
Water signs – start of new civilization
Fire signs- more complicated
Earth signs- concrete form taken on


To put it simply, in 1400 a man was empty of physical/material possessions, being poor and destitute in society after 200 years of poverty, starvation, plague but full of spiritual values. He was able now to put all his renewed spiritual energy into something new in the external world. After 600 years the ideals of the rennaisance to transform the physical world have been burnt out. All deeper purpose has been lost. The spiritual abstract energy has been lost /dispersed /expended/ wasted upon the outer world/ hobbies instead of preserved for the enlightenment of the soul.

Meanwhile by application of the mind to the physical world in ever greater amounts this world has attained a certain degree of abstraction as in money and derivatives, nuclear power, etc.

Starting now we can expect the people to go back inside themselves in the spiritual quiet and do simple physical activities like monks. After 200 years a new high culture willhave its chance to be born but slowly over time.

This correponds certainly to Archdruid's ideas of gradual change although I think history can be quite staccato at turning points due to planetary conjunctions or opposition such as happen on election day in USA and for next couple of years with repeated Uranus/Saturn opposition (conservative and radical forces in opposition) same constellation as in 1965-1966 era.

Lynnet said...

Good post; thinking about that, really my IRA and its losses in the last month was just an abstraction anyway; it's not "real" until it is in my hands. I agree with you on Las Vegas too.

I thought it might be useful to distribute that $250 billion in abstractions to local credit unions and small local banks for the purpose of making local loans. The worst thing to do with it is what they are doing: forced nationalization of the stronger banks, by replacing some of the vapormoney with more of it.

I like the more concrete idea of rebuilding the railroads; roads and bridges are another opportunity, and utility grids and distribution networks. Things that are real and will benefit us in the long run, undertaken now while we still can do it.

sv koho said...

JM Greer has such a knack for focusing on aspects of a problem ignored by mainstream thinkers, that is those thinkers who live within the envelope. This idea of modern wealth as an abstraction occurred to me some weeks ago when my son asked me what had happened to all this lost wealth. Where had it gone? Zurich? NY? London? Ouangadougou? No son, it's nowhere. It's everywhere. It was just paper. No worse than that, it was a digital abstraction, a vaporization of globalized digital bits. My son is very concrete and works for Dell Computer and when I put in those terms, he started to get it.Do Icelanders get it?Now that they have gone from one of the wealthiest countries per capita to owing $200,000 per capita. We need Bob Dylan or Tom Lehrer to write a song explaining this for us. This subject is very important and I hope you stay on this thread JMG.

John Michael Greer said...

Tristan, it does make sense. I don't see money as an illusion, though -- it's a real phenomenon, as real as any other abstract system -- and the story that defines it has its own momentum and implicit values which cannot necessarily be manipulated at will, and which also impose changes of their own. It's impossible to enter into a system without becoming to some extent bound by the system -- believing otherwise was Faust's great error.

Jason, that's an excellent bit of imagery! Many thanks.

Mxyz, the whole point of the Long Descent is that we don't have to worry about suddenly being pitchforked into another time; historical change happens slowly, from the perspective of an individual life, and that gives us the flexibility to adapt as we go, and to affect the process itself.

Joel, that's a common misconception -- the word "real" as in "real estate" actually comes from Latin res, "thing," rather than rex, "king." That's the testimony of my Webster's Ninth Collegiate, at least.

Farfetched, money is indeed an abstraction, and that doesn't condemn it -- abstractions are useful when they don't drift too far from the underlying phenomena. It's just that we've piled abstraction atop abstraction until the resulting heap is breaking down of its own weight.

Michael, my guess is that by the time the descent finishes, we'll be back to customary exchanges, with barter and small amounts of coinage as backup -- but we'll see.

Stephen, thank you!

Paul, parasites rarely kill their hosts -- it's not a good survival tactic, especially if there are no other hosts close to hand. Nor, to be frank, do I find your solution very plausible.

Siobhan, well put. Too much of today's art is the manufacture and marketing of expensive collectibles for the rich.

Bill, I should have expected that! Still, you must admit that as rhetorical flourishes go, that one was pretty good.

Ryan, thanks for the link.

Conch, exactly.

Jacques, of course there will be people painting in 10 years, and in 100, and in 1000. They've been at it since Lascaux, and I for one hope they don't stop any time soon. I'll have some comments on the survival of culture in a future post.

Matt, it's been a very long time since I read Watts -- too long, clearly. I'll have to remedy that.

Jim, good. If I had more time on my hands, it might be interesting to explore the difference between the different layers of abstractions, from the ones that directly coordinate tangible things to the ones that hover like wraiths in the empty air.

Surfer, this is reminiscent of the Jupiter-Saturn conjunctions in Arabic astrology -- Abu Masha'ar, iirc, mostly claimed that each such conjunction marked the beginning of a religious movement.

Lynnet, local credit unions and consumer banks would be a lot better than the current rathole, but the problem with placing deposits to encourage loans is that no loan officer in his or her right mind would make lots of loans in the current economy -- most of what's loaned out won't be paid back. That's why payrolls are the place to start; once people have more money, the local banks will get their share and things can begin to improve.

Koho, I'd love to hear a Tom Lehrer song about the current situation!

The North Coast said...

Appearances saved, realities sacrificed- thus spake Lord Chesterfield 250 years ago, but he couldn't possibly have imagined the pyramid of magical thinking that constitutes today's financial arrangements.

The total tote for all the interventions promulgated in the past year, to shore up the abstract at the expense of the real, now stands at $3 Trillion, and counting.

As a man who wrote to Kunstler observed, with $750 Billion we could totally rebuild our freight and passenger rail, completely electrify it, and provide service to every settlement of more that 5,000 people in the lower 48.

With the $2.3 Trillion remaining, we could invest in the types of industries that will be relevant, not to say critical, for the next 30 years- things like electrical power generation (solar, Hyperion reactor, windpower, small dams), and in restoring our city and town centers and densifying housing and commercial around them, and, most critically, turning all those abandoned subdivisions full of 4,000 sq ft crapboxes back into farmland- a pretty challenging job.

But we will do none of these things, because we are so invested in the world as we envisioned it circa 1965 that we just have to keep on throwing the good money after the bad. We will try to "put a floor" under housing prices while even cheap rentals become more unaffordable to more people. We will make sure that the bonuses and fees keep flowing in the financial industry while more job niches disappear and more people out here become unemployed- and homeless.

I have never been so depressed and without hope as I've been while watching our economy be completely socialized over the past three weeks, for I know that none of the benefits thereof will accrue to me or mine, and we will become impoverished to pay for this, while the road to stability in our own lives is blocked forever, and our resources dwindle.

I am literally physically ill over this, sick with worry for my own future and shaky present, and for the well-being of those who I love.

Tony said...

To paraphrase a well-known historical figure, the capitalists borrowed the money to buy the rope with which they hanged themselves. As a result, huge amounts of bail-out money are being spent in an attempt at financial resuscitation. I agree completely that we should devote our energies (human and otherwise) on real and beneficial things, such as railways and renewable energy. However, by suggesting that it is a case of either/or, I think that you have fallen into an abstraction trap. The money conjured into existence for the Wall St. bail-outs can just as easily be conjured out. This disappearing trick is simple to perform, easier than pulling rabbits from a hat, but do those in government realise that and will they do it?

All over the world, ordinary people, businesses and entire countries are up to their eyeballs in debt to private banks and other money-lenders. How can this be? We have more energy available to us now then ever before (and probably ever after). It is impossible to understand the root cause of so many of our problems without knowing how money is created. I confess I did not until a few days ago and now that I do I am appalled and angry. Most of the money in existence is actually debt, created out of thin air by private banks who then demand that interest be paid to them on this debt-money, which they had no right to create in the first place. Coins and notes minted and printed by governments are the only debt-free money, but this cash now forms only a tiny proportion of the total amount of money in circulation.

The number one priority today is money reform. We need to nationalize money, not banks. Only governments on behalf of their peoples should be allowed to create money and it should be debt-free. We have no hope of dealing with emergencies such as climate change and peak oil as long as we have a debt-based money system. The private bankocracy that controls our lives has grown like a cancer since 1694 when the Bank of England was established. It is profoundly unjust, undemocratic and hugely damaging to our planet. Now, while the banks are weak, is the ideal time to reform the money system. For more details, please see

http://tinyurl.com/5ay8gd

Robert M said...

This is the best explanation to the current financial crisis I've seen to date(try big picture or calcualted risk). As you have pointed out the money could be spent better elsewhere but in order to get to the point you make we have to have leadership to respond properly. Neither Paulson or Pelosi have had anything positive to say to date.

Danby said...

Excellent post, John Michael. I'm (almost) sorry was on vacation and missed most of the discussion.

mxyzptlk,
Yes it's possible. I work as a system, network and storage administrator, one of the last blue collar jobs in the computer business. As JMG could tell you, I've been convinced since High School that our culture as it is constituted could not survive. I moved out to the country where we lease 10 acres and a shack for a shockingly low rent. We produce a fair amount of our own food, and I have taught myself and my kids everything I took an interest in, from blacksmithing and organic gardening through training driving horses to haberdashery. We've been out here for almost 20 years now, and it's not so bad. I fact it's quite a bit better than the life I had in town.

Granted there have been tough times, including unemployment, but I know few in my business that haven't had to experience that over the same time frame. And poverty on acreage in a rural place is a very different thing than poverty in the city or in suburbia. I just bought 4 piglets in anticipation of getting laid off next spring. If I do, well, we have meat next winter. If not, then we have cheap meat next winter. Especially home made sausage, ham and bacon.

You do have to take a different attitude to work if you take the long commute option, but it's a healthier attitude anyway. Work is for making money. It's not where your friends are, it's not your social life, and most of all, it's definitely not who you are. It's just a means to make money. When (not if) you lose it, you lose one way of making money.

And money is just a means to get those things you can't get some other way; trading, bartering, working, growing or making. Money has no value in itself. A job has no value in itself. If it did, you'd work for free. It's just like a computer system or a network has no value in itself, except as a means to facilitate productive work and human communication.

I guess I've been de-abstracting my life for a long time now. Which is ironic, since I am primarily an abstract thinker.

hardhead said...

With this post, John, you have come to the root, not only of the "economic crisis," but of a great many other problems we're having and predicaments we're in. I only wish your voice was heard - and heeded - more widely.

We (Homo sapiens) are uniquely the symbol-using animal, manifested most openly by our use of language. It's very hard for us to think usefully about language, though, because it is so fundamental to who and what we are and do - like fish in water, language is our element, and we take it for granted. It's a great tool, but we find it hard to grasp that it's only a tool. Used appropriately, it's beneficial; used exclusively, it's toxic.

Appropriate use means unremittingly referring our abstractions back to primary, preconceptual, preverbal experience, and judging how well the abstractions fit that experience. This is even more crucial when level after level of abstraction has been built on lower-level abstractions, as is the case in our "advanced civilization." When we make even one slightly erroneous or unfounded abstraction, as it ramifies throughout our world-view, we are by that much out of touch with reality; mix in a few more mistaken notions at any level, and it's very easy to become full-blown psychotics. Which is a fair description of where we are now.

If H. sapiens is to survive over the long term, I believe it's imperative for us to learn how to stop talking, at intervals, even to ourselves, and to reconnect with our primary, preverbal experience. It's a long, hard project to reach a point where we can do that effectively, but I see no other way. Language, symbolism, and abstraction are good tools - when applied judiciously and with restraint. But we've long since overdosed. Evolution has gone up billions of blind alleys, and it looks very much like we're at the end of another one.

John Michael Greer said...

North Coast, pour yourself a drink; despair isn't necessary, or for that matter helpful. What we are seeing is the beginning of the end of money as we've known it. The huge sums flung about so wildly and so uselessly by governments around the world are little more than collective hallucinations at this point; I think most people must know by now that the US will never have the ability to pay back more than a small fraction of the vast sums it's borrowed, and so all those trillions being poured into banks have nothing backing them but the fiscal equivalent of twinkle dust. Over the years to come, other ways of exchanging goods and services will evolve, and I suspect most of us will find those rather more useful than the dysfunctional mess the money economy has become in the last few decades. More on this soon.

Tony, if you've only just figured out that all our money nowadays is nothing more than debt, you're a bit behind the curve -- that's been discussed in alternative circles for a very long time now. I'm far from ready to commit to any of the various theories about what ought to replace debt-based currency; my guess is that what works will become plain enough in the next few decades.

Robert, you're not going to see any semblance of leadership in the US so long as most Americans want what Kunstler calls "the paradise of happy motoring" to continue one way or another, and won't willingly accept anything else. No one wants to risk Jimmy Carter's fate, even though putting on a cardigan instead of turning up the heat has become a necessary choice again.

Dan, I've noticed that those who can think in abstract terms often have an easier time making sense of the current mess than those whose thought is bound to concrete phenomena. Abstraction makes it easier to step back and notice the absurdity of the spectacle.

Hardhead, most cultures include at least one set of disciplines that focus on teaching individuals to disentangle themselves from the verbal web of collective social consciousness. The much-abused term "meditation" covers some of these, though not all, and when a culture allows them to do their job, they do it very well. Thus I don't think that we're seeing any sort of dead end for H. sapiens -- it's purely today's industrial societies and the worldview they embody that have reached the end of the road. More on this later on.

Consumer said...

I hope I can follow all of those rules above.

First of all, I just finished the book and loved it, and look forward to the blog every week. You are one of the keenest and most eloquent observers of the situation out there.

This post contains some very good insights, and I think the role of abstraction is very real.

That said, I think you have overstated the degree to which Economics is an abstraction. Economics is a way of organizing and dividing the "real" work that takes place in society, and Finance is how this happens. The need to pool capital cannot be overstated, without it, no project larger than 10 workers worth would get done. Finance has two main roles: pooling capital and dispersing risk, and these are necessary to getting "real" work done.

You are probably right though, that many of the people in Finance have forgotten what it was supposed to be about, but a lot still do get it. Agreed that the bailout money should have gone into the "real" economy.

Denis said...

Good article.

In the 1930s the abstractions became disconnected from the underlying realities they represented.
The abstractions were meant to act as a metric. They further became the channeling network through which the commerce flowed.
Thus a breakdown or a major distortion in the abstractions caused a constipation to occur.
This explains why production dropped to a small fraction of its pre 1929 value.
Other means of trade such as bartering had been abondoned and long forgotten.

In order to remove the distortion a depression was necessary. The depression realigned the abstraction back to a closer approximation of the reality it was meant to represent. It was painful but it was necessary.

The problem with Paulson and Bernanke is that they are only experts in the abstraction and they are uncomfortable in dealing with the reality side.
Congress is using them as if they have the only story.

This is why we are printing money to "fix" the abstraction in the hope that it will be a laxative to fix the constipation.

The real problem is that the underlying reality has shrunk (e.g. loss of manufacturing to outsourcing etc.) whilst the abstraction describing it has been expanding.

This is why I vehemently opposed the 700 billion bailout.

The reason why the banks do not want to lend out money is that they see this fact for themselves. They will lose the money they lend out.
Paulson and Bernanke.........please listen and take note.

The trillion plus fiat should have been used to fix the reality while the abstraction was allowed to contract until both reached parity once again.

To do this you spend the fiat "money" on:

a. Build 400 secure design nuclear power plants coast to coast and hook up to and expand the national grid

b. Address the decaying infrastructure (roads, bridges, railroads, airports, seaports) by creating jobs that use home produced materials and machines

c. Develop and deploy clean coal processing technology all over the mid-west

d. Drill, drill, drill........did I mention offshore and on land also

e. Use (a) and (c) and (d) to establish permanent energy independence plus become an exporter of energy within 10 years

f. Get serious about fusion research........100,000 engineers and scientists with a cold (yes, I did say cold) fusion target under a consolidated gov, university, industrial initiative.

By using the fiat money to produce real jobs, goods, and services the realignment between the abstraction and the real will be made more certain.
Mathematicians would call this convergence.
It will be visible and measurable.

The current approach will unfortunately cause divergence. It will be less visible and not measurable. Very prone to fraud and white collar gouging. Did I mention Wall Street??

The other issue is the law of unintended consequences.

As every "fix" is applied to the abstraction there will be many unintended consequences.

There is an army of exploiters out there ready to take advantage of the loopholes created.

This will assure us that the next bubble will come.

How many bubbles do these guys have to experience before they realize that all we have is a flawed "bubble to bubble" pantechnicon of an economy.

Just a few ideas I am currently working with.

Zach said...

Danby,

I'm glad to see your response -- I've had very nearly the same question (from very nearly the same circumstances).

Contemplating what needs to be done, in terms of keeping the current career useful as a means of obtaining money, plus the skills needed for the Long Descent, leaves me alternately feeling like Alice in front of the Red Queen, and Bilbo complaining about feeling like too little butter spread thin.

I'd appreciate some wisdom and practical advice here (from JMG and anyone else, also). I suspect the 'answer' is simply to take one day at a time, do what is possible for one to do, and put one foot in front of the other. Repeat as necessary. :) Is that about right?


peace,
Zach

Danby said...

zach,
I just ran across this essay written by Reginald Jebb in the 1930's:
http://distributism.blogspot.com/2008/10/crying-need.html

It's pretty cogent to the question.