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Posts Tagged ‘markets

“You are a citizen, and citizenship carries responsibilities”*…

Back in the mid-90s, your correspondent was interviewed for an article in Wired in which I was asked for an opinion on the future of nationalism. My answer (TLDR: “citizens” were becoming “consumers”) was rooted in observations of a dynamic afoot across several domains– that as the logic of the market colonized more and more civic and social spaces, more relationships were becoming “consumer-vendor”- like: students becoming consumers of (especially higher) education, patients becoming consumers of healthcare, even “worshippers” becoming consumers (of some) religions… but especially citizens becoming consumers of their governments.

Though I was only pointing out what I saw (and certainly not suggesting nor endorsing the shifts), I got a deluge of responses, pretty evenly divided between assertions that I couldn’t be more wrong and accusations that I was preaching dangerous, even seditious, change.

Fast forward a couple of decades, and here we are. As Kai Brach reports in his wonderful newsletter, Dense Discovery

We are living deep inside the ‘Consumer Story’, a foundational story of humans as inherently self-interested and competitive. It’s a story that has shaped not just individual behaviour but organisational design, economic theory, the role of government, morality – all of culture and society.

This is according to author and citizen advocate Jon Alexander. As he outlines in his book Citizens and his talks, he believes it’s time to change the Consumer Story into a ‘Citizen Story’ to take control of our collective agency and transform our communities, our institutions and our politics.

In two articles for the BBC and Psyche, Alexander and co-author Ariane Conrad argue that in today’s prevalent Consumer Story, self-reliance has become an extreme sport, leading us to pursue only our own self-interest.

We define ourselves through competition. Along the way, our choices represent our power, our creativity, our identity – they make us who we are. Every organisation and institution, from businesses to charities to government, exists to offer these choices. All are reduced to providers of products and services…

We have such pervasive inequality that it threatens the safety of everyone (even the wealthiest), while the story says that our primary responsibility is to compete to hoard more. We have ecological breakdown, while the story insists that our identity and status rely upon ever-increasing consumption. We have an epidemic of loneliness and mental health challenges, yet the story tells us we stand alone.

Every single day, we’re bombarded with messages that condition us to think of ourselves as consumers: independent and self-contained individuals rather than interdependent social beings. … When a local council has a ‘customer service hotline’, or a political campaign is interested only in harvesting clicks, it’s pushing us deeper into the Consumer Story.

The BBC article lists a range of examples of communities and organisations that move the Citizen Story forward, while the Psyche piece offers a list of practical steps/considerations that help us “step up and step in.”…

Are you a “subject,” a “consumer”… or a “citizen”? Becoming the citizens we need to be, from @kaib@mastodin.au.

Paul Collier


As we rethink our relationships, we might note that it was on this date in 1955 that a leading advocate for policies that greased the shift from citizen to consumer, The National Review, published its first issue. Founded by William F. Buckley Jr., the magazine has played a significant role in the development of conservatism in the United States, helping to define its boundaries and promoting fusionism; it remains a leading voice on (and of) the American right. 


Written by (Roughly) Daily

November 19, 2023 at 1:00 am

“The functionalist organization, by privileging progress (i.e. time), causes the condition of its own possibility”*…

Meet the new boss, painfully similar to the old boss…

While people in and around the tech industry debate whether algorithms are political at all, social scientists take the politics as a given, asking instead how this politics unfolds: how algorithms concretely govern. What we call “high-tech modernism”—the application of machine learning algorithms to organize our social, economic, and political life—has a dual logic. On the one hand, like traditional bureaucracy, it is an engine of classification, even if it categorizes people and things very differently. On the other, like the market, it provides a means of self-adjusting allocation, though its feedback loops work differently from the price system. Perhaps the most important consequence of high-tech modernism for the contemporary moral political economy is how it weaves hierarchy and data-gathering into the warp and woof of everyday life, replacing visible feedback loops with invisible ones, and suggesting that highly mediated outcomes are in fact the unmediated expression of people’s own true wishes…

From Henry Farrell and Marion Fourcade, a reminder that’s what’s old is new again: “The Moral Economy of High-Tech Modernism,” in an issue of Daedalus, edited by Farrell and Margaret Levi (@margaretlevi).

See also: “The Algorithm Society and Its Discontents” (or here) by Brad DeLong (@delong).

Apposite: “What Greek myths can teach us about the dangers of AI.”

(Image above: source)

* “The functionalist organization, by privileging progress (i.e. time), causes the condition of its own possibility–space itself–to be forgotten: space thus becomes the blind spot in a scientific and political technology. This is the way in which the Concept-city functions: a place of transformations and appropriations, the object of various kinds of interference but also a subject that is constantly enriched by new attributes, it is simultaneously the machinery and the hero of modernity.” – Michel de Certeau


As we ponder platforms, we might recall that it was on this date in 1955 that the first computer operating system was demonstrated…

Computer pioneer Doug Ross demonstrates the Director tape for MIT’s Whirlwind machine. It’s a new idea: a permanent set of instructions on how the computer should operate.

Six years in the making, MIT’s Whirlwind computer was the first digital computer that could display real-time text and graphics on a video terminal, which was then just a large oscilloscope screen. Whirlwind used 4,500 vacuum tubes to process data…

Another one of its contributions was Director, a set of programming instructions…

March 8, 1955: The Mother of All Operating Systems

The first permanent set of instructions for a computer, it was in essence the first operating system. Loaded by paper tape, Director allowed operators to load multiple problems in Whirlwind by taking advantage of newer, faster photoelectric tape reader technology, eliminating the need for manual human intervention in changing tapes on older mechanical tape readers.

Ross explaining the system (source)

“I think inequality is fine, as long as it is in the common interest. The problem is when it gets so extreme, when it becomes excessive.”*…

Alvin Chang, with a beautifully-told (and beautifully-illustrated) primer on a startling unpacking of the fundamental logic of our market economy…

Why do super rich people exist in a society?

Many of us assume it’s because some people make better financial decisions. But what if this isn’t true? What if the economy – our economy – is designed to create a few super rich people?

That’s what mathematicians argue in something called the Yard-sale model

Read it and reap: “Why the super rich are inevitable,” by @alv9n in @puddingviz.

* Thomas Piketty, A Brief History of Equality


As we ponder propriety, we might recall that it was on this date that Jane Austen‘s [and here] Pride and Prejudice was published. A novel of manners– much concerned with the dictates of wealth (and the lack thereof), it was credited to an anonymous authors “the author of Sense and Sensibility,” as all of her novels were.

Title page of the first edition (source)

Written by (Roughly) Daily

January 28, 2023 at 1:00 am

“Location, location, location”*…

Adam Tooze on the biggest vulnerability in the global economy…

In this precarious moment – in the fourth quarter of 2022, two years into the recovery from COVID – of all the forces driving towards an abrupt and disruptive global slowdown, by far the largest is the threat of a global housing shock…

In the global economy there are three really large asset classes: the equities issued by corporations ($109 trillion); the debt securities issued by corporations and governments ($123 trillion); and real estate, which is dominated by residential real estate, valued worldwide at $258 trillion. Commercial real estate ($32.6 trillion) and agricultural land add another $68 trillion. If economic news were reported more sensibly, indices of global real estate would figure every day alongside the S&P500 and the Nasdaq. The surge in global house prices in 2019-2021 added tens of trillions to measured global wealth. If that unwinds it will deliver a huge recessionary shock.

In regional terms, as a first approximation, think of global real estate assets as split four ways, with the US, China and the EU each accounting for c. 20-22 percent and 35 percent or so belonging to the rest of the world.

The housing complex is at the heart of the capitalist economy. Construction is a major industry worldwide. It is one of the classic drivers of the business-cycle. But beyond the constructive industry itself, the influence of housing as an asset class is pervasive. Compared to equities or debt securities, residential real estate is owned in a relatively decentralized way. Homeownership defines the middle class. And for the majority of households in that class, those with any measurable net worth, the home is the main marketable asset.

Middle-class households are for the most part undiversified and unhedged speculators in one asset, their home. Furthermore, since homes are the only asset that most households can use as collateral, they pile on leverage. For households, as for firms, leverage promises outsized gains, but also brings with it serious risks in the event of a downturn. Mortgage and rental payments are generally the largest single item in household budgets. And household spending, which accounts for 60 percent of GDP in a typical OECD member, is also responsive to perceived household wealth and thus to home equity – the balance between home prices and the mortgages secured on it. For all of these reasons, a surge in mortgage rates and/or a slump in house prices is a very big deal for the world economy and for society more generally…

More background and an assessment of the outlook: “The global housing downturn,” from @adam_tooze.

For Tooze’s follow-up piece on the risk inherent in the $23 trillion US Treasury market, see here.

Harold Samuel


As we mortgage our futures, we might recall that it was on this date in 1914 that the Federal Reserve Bank of the U.S. was opened. In actuality a network of 12 regional banks, joined in the Federal Reserve System, they oversee federally-chartered banks in their regions and are jointly responsible for implementing the monetary policy set forth by the Federal Open Market Committee.

In that latter role, they are central to the housing market in that they set interest rates and purchase mortgage securities from Fannie Mae and Freddie Mac (Government-Sponsored Enterprises in the mortgage market). At this point the Fed owns about a quarter of the mortgage-backed securities issued by Fannie Mae and Freddie Mac.

The Federal Reserve Banks in 1936 (source)

Written by (Roughly) Daily

November 16, 2022 at 1:00 am

“Wall Street people learn nothing and forget everything”*…




Perhaps, perhaps, this crisis marks an end of the “neoliberal era”.

The word “neoliberal” immediately provokes contention, but let’s not get fancy or upset here. For our purposes, neoliberalism is just a set of social heuristics: 1) that markets are in general the most capable institution for organizing human affairs; 2) that therefore, absent strong reasons to the contrary, use of market or market-like institutions should be maximized, “completed”, expanded even into domains heretofore intentionally insulated from them; and 3) that other institutions, including the state, should take a supportive, even subservient role: filling in gaps (“safety net”), addressing “market failures” that are presumed to be rare rather than pervasive, and only when a high burden of proof has been met. Any other intervention is a “distortion” to be avoided at all costs.

I think it fair to describe the period from about 1980 until the 2008 financial crisis as a neoliberal era, a period of time during which these social heuristics were widely accepted by governing elites and policy, in the United States and the broad West, was informed and shaped by them. The period from 2008 until now has been a kind of undead neoliberal era. Post Great Financial Crisis, neoliberal ideas have been discredited among much of the public and are actively contested even within governing elites. But, absent consensus on some new set of social heuristics, not much has actually changed. Material interests in the continuity of institutions shaped by neoliberalism remain strong.

Continuity now is broken. When this pandemic is “over” (whatever that means), the undead bones of neoliberal governance may well yet again gather themselves from the chaos and reconstitute the suave, smooth-talking vampire to whose predations we have grown unhappily accustomed. But they may not. We may find ourselves in a period of social experimentation and change. If so, as we diminish (not eliminate!) the role of markets, it is useful I think to understand the variety of functions that markets serve, so that framers of new institutions understand what will be excised, what may sometimes need to be replaced…

The always-provocative Steve Randy Waldman goes on to enumerate and explain four key functions that markets have, for better and/or worse, played.  The entire essay is eminently worthy of a read; but for your correspondent’s money, his unpacking of the fourth role– “Markets launder history”– is the most striking:

A crucial function of status quo market institutions is to hide details surrounding the provenance of commodities, which contributes to the interchangeability or fungibility of commodities. Apple can shift the location of its production across the globe, but from a customer perspective, the only input to the process is their money which is transformed, as if by magic, into an iPhone. Outside of market processes, nothing is like this. When we produce goods for ourselves — “cottage production” as the economists call it — every item has a history. The coffee table Dad built is not the same as any other coffee table, even if it is physically not so different from some other table. As markets develop, firms try to reconstitute this kind of nostalgic, positive history, using labels like “hand-made” or “artisanal”. These attempts not very persuasive.

However, the history of commodities is not always positive. When our credit card dip magically transforms into an iPhone, it is the same iPhone whether the cobalt inside it was mined by well-treated workers or child slaves. Like Vietnam vs China vs the US, these “back ends” are interchangeable, except to the degree that one makes the product cheaper, which we prefer. But human beings are moral animals. No aspect of our experience is naturally immune from our judgments, individually and communally, and judgments have huge effects on our behavior and experience. We might not enjoy our shrimp dinner, if rather than pulling the shrimp from plastic in the freezer, it was delivered to us directly by the trafficked crewman who may have harvested it. We might feel bad, and that might impair preference satisfaction.

This function of markets is obviously essential to our neoliberal status quo… We all understand what a sausage factory is, and have some idea of why we famously might prefer not to observe one. But we all know, even if we don’t live like we know, that in fact there’s a lot of history in the goods and services we consume we’d at least be ethically squeamish about. As I write, the Federal government has just effectively coerced meatpacking workers to labor in manifestly unsafe workplaces, in the name of preserving our food supply. How should that affect our relationship to bacon? How does it, when our experience of the packaged, refrigerated product is mostly unaltered? In ordinary times, lots of us are fond of animals but do not become vegetarians. If we were required to personally kill the animals we eat, many of us would enjoy our carnivore lifestyle quite a bit less. Again, the abstraction markets offer make us richer, in the sense that we enjoy what we otherwise would not. Okay, maybe that’s gross, and we should all be vegetarians. But then what do you think about the conditions under which migrant workers harvest our garlic?

There is a case for this laundering of history. Modern production processes are complicated, involving a many stages and circumstances, each of which involves tradeoffs, conflicts, and shades of gray. If we tried as individuals to police all that, we’d do a poor job in an ethical sense and make ourselves poor in a practical sense. Instead we outsource the ethical choices to state regulation of production and trade. Then so long as commodities are produced and sold in legal markets, every purchase comes with a dollop of absolution. Individually, we might not all agree on the choices the state makes, but hey, this is a democracy right? On the whole, the theory goes, our choices will be more effective when they are collective and enforced, rather than if we tried to rely on more perfectly individualized consumer judgments, boycotts or such. So ethics as well as expedience are on the side of this arrangement.

Of course if neoliberalism is defined in part by an attitude of state subservience towards markets, perhaps, in a neoliberal era, it should not surprise us if expedience came to eclipse ethics. Many of us now think that modern supply chains are sexy Apple packaging wrapped around horrifically ugly production arrangements, and that legal and financial markets often serve to wrap theft and extraction in pretty paper bow ties. This “function” of markets is part of what motivates us to challenge them. But it remains to be answered how much and just how we might want to retain the blissful ignorance delivered by virgin commodities. Inscribing all the history markets erase on a blockchain or whatever, and then relying on individuals to evaluate the ethics of every stage of production of every good and service they consume, does not seem workable or effective. On the other hand, if markets launder history too effectively, that short-circuits the capacity of democratic politics to insist upon ethical production, as voters are shielded from the harms of cruel supply chains but enjoy the benefits of lower prices. Some variant of the status quo, where ethical choices are collectively made and enforced by states, seems like the only way forward. (Perhaps I am too uncreative?) It’s one thing to speak abstractly about retrenching from neoliberalism, with its corrosive effect on collective action in pursuit of moral ends. But what, concretely, do the political institutions and processes look like that would render it ethical for us to enjoy the goods and services available for purchase as though they had no history? What would be the trade-offs in what we perceive as prosperity if we instated those institutions?

Do read the full piece on his blog, Interfluidity: “Four functions of markets.”

See also “Neoliberalism: the idea that swallowed the world” and “Neoliberalism” [from whence, the image above]

* Benjamin Graham (legendary “value investor,” mentor of Warren Buffett)


As we bid and ask, we might recall that it was on this date in 1626 that Peter Minuit, the new director of “New Netherland” for the Dutch West India Company, landed there– that’s to say, on what we now know as Manhattan Island.  Later that year, he “purchased” the island from the the Canarsee tribe of Native Americans for a parcel of goods worth 60 guilders: roughly $24 dollars at the time, now roughly $1,000.  In the event, the Carnarsees were happy to take payment in any meaningful amount for land that was mostly controlled by their rivals, the Weckquaesgeeks.


1626 letter from Pieter Schaghen (a colleague of Minuit) reporting the purchase of Manhattan for 60 guilders



Written by (Roughly) Daily

May 4, 2020 at 1:01 am

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