Who's To Blame?

Given the circumstances that presented themselves to me today, this is an apt post. I feel particularly vindicated that I originally wrote this on the 18th of September while The Economist just published this.

As the financial world has toiled, troubled, and bubbled, an angry mob is beginning to coalesce and they are begging for blood. 'Down with Wall Street!' 'Greed is Evil!' 'What havoc doth these bankers wrought!?' And so goes the chorus. It is interesting how little was written about the titans of finance during the good times while pundits are now pouncing merrily on the world's financiers. What stirred this irascibility? No doubt it is understandable that people are frustrated when their wealth begins to decline and no doubt were investment bankers and their cohort quite careless. Fundamentally, however, we are looking to assign blame. Blame begets anger and a feedback loop ensues. Various commentators, economists, and journalists have placed blame with myriad entities, corporate and corporeal. The sensible among them have distributed blame amongst the flock, but I think this warrants further examination. Who then is to blame?

'Wall Street' and 'The Square Mile' are always an easy target. Those mysterious investment bankers, traders, and hedge fund managers - we know they make a lot of money, but unlike lawyers, we are unsure as to what they really do. It all seems so surreal, so complicated, so shrouded in mystery. No doubt the financial services industry is at the centre of the crisis and well deserving of blame, but I think society has jumped the gun out of misunderstanding. After all, like a hurricane, conditions must be favourable to let the financial system get to such a state. What then were these conditions?

Greed - it's a popular word again, and not in the Ayn Rand sense. Greed caused this, particularly the greed of the bankers. Fair enough, but it would be spurious to deny we are all greedy and that greed has been lurking about for eons. It hasn't been stuck in the closet for x number of years. Greed drives us, motivates us, keeps us moving. Kept in check by sensible institutions (the family, government, civil society, occasionally religion) its externalities are tempered. Who were the greedy ones here? Many say the bankers, some say the CEOs, others the foolish people who bought houses they couldn't afford. We could stretch this to those who bought that Mercedes on Mazda salary or anyone is credit card debit for that matter. Much of the Anglo-Saxon world was living beyond its means -we were all greedy. How then was this greed unleashed with such a force?

As I previously said, greed is always present, but some conditions bring out its monstrous qualities more effectively than others. At its root is a culture of consumption that has increasingly driven identity and meaning. With the fall of feudal structures and a formal aristocracy, capitalism was bound to discover another means of representing power and position. The signs and signifiers circulated slowly at first, but the quest to uncover profits at a greater rate demanded marketing begin to drive a culture of consumption. And so it has been for some time now. Western countries became rabid consumers and it required a massively cheap manufacturing complex to satiate out desires.

The East Asian tigers began to fulfill this role in the 80s and soon enough its remit was taken over by China. Who wouldn't accept this position with gratitude at the rate Westerners began to consume? Technology was the twin partner in this scheme. It allowed for productivity to increase quite handsomely - for a while. With technology driving down costs in tandem with East Asia, there appeared to a condition that was strangely benign. Policy makers were lulled into thinking this confluence of technology and cheap labour could keep interest rates low while inflation remained low. For a while, this worked beautifully. The 'new economy' was flourishing and money was cheap. People reacted on their natural instincts and took advantage of the bargain. But alas it couldn't be sustained forever. Someone had to call the bluff and so the unwinding began. The rest can be found in the newspapers.

Is there a common theme here? There are multiple narratives at work, some in parallel, others seemingly at odds. While I vociferously try to avoid grand narratives, I find one suitably descriptive of our (post)modern predicament - complexity. How it oozes and undulates with human 'progress'. Much like the game of Jenga, as the system grows more complex (i.e. taller), one missing 'brick' and much of the structure comes tumbling down. In this case, the financial system has been wrecked. But could there be further feedback loops? Climate change policy is likely to be on the back burner, resources are likely to be diverted, and political discourses will be rerouted in who knows what direction. There is a lot at stake. How do we manage? Our Modernist impulses will be of little use, we cannot analyse our way out of this. It is far too complex and our empirical capabilities are not advanced enough to cope. Once again I re-iterate that a post-modern approach is needed in a post-modern world. An appreciation of subtleties, the absence of absolutes, and foolish assumptions is warranted. We should try to anticipate events, but bear in mind that meaning is evaporated in the vortex of media. Ultimately we should anticipate that which we cannot fathom. This is not re-assuring and certainly not a guarantee of 'progress' as such, but if a teleology does exist then complexity is a condition we must accept as an inevitable challenge we have little control over. I realise I offer few, if any, solutions, but what solutions can be presented with such enormous networks of uncertainty? Volunteers stand up.