Aleksandr Dugin

THE EVAPORATION OF FUNDAMENTALS IN THE “NEW ECONOMY”

The problematic ontology of turbo-capitalism

Some theorists of the “technical analysis” say that the modern stock exchanges, and especially the securities and derivatives markets, operate in a separate condition from the normal fundamentals of the capitalist economy, becoming independent from the sphere of real production. The financial volumes involved in the real sector’s credit and investment mechanisms appear to be many times less than the volume of virtual capital circulating in the field of the stock-exchange game. At some stages of this process there is an extremely interesting phenomenon: at some definite gaps of stock market time, the dynamics of price evolution becomes completely independent from the economic component of the shares, as the velocity of rational calculation of fundamentals appears to be considerably slower than the time needed by the stock-exchange players for taking a decision. And consequently, some definite moments of the stock-exchange game escape from the logic of the price formation dynamics typical of classic capitalism. Similar phenomena were detected even earlier, and some followers of the classical system were inclined to reduce this phenomenon to random fluctuations (random walk theory), which looked as anomalies only at a very great approximation, being inscribed in medium- and long-term models within the normative logic of market evolution. 

A distinctive feature of turbo-capitalism is that as a matter of fact it insists on the constitutive normal status of these anomalies, giving them an autonomous theoretical value. Short-term fluctuations of price trends and high-risk operations in financial credit instruments and derivatives turn out to be the priority criterion for evaluating the pace of economic growth; and the growing volume of the capital involved in this sector, in comparison to the traditional sectors, is the evidence of this growth. The accounts of the virtual sector of capital circulation generate the impressive picture of prosperity of the "new economy", and the frenzy-like involvement of simple citizens in the stock-exchange game (in these days an unprecedented quantity of US middle-class individuals are shareholders – that is 50% of all Americans!) supports this illusion. 

Such drive to virtualisation in the conditions of turbo-capitalism is accompanied by the increase of the services sector of the economy, as the main monetary mass circulates not in the field of production, as in second-line sectors. The old economy, bound to the real sector, depreciates and starts to be considered as a minor, subsidiary area. Managers, specialists in the field of PR-technologies, designers, stylists etc. are incomparably better paid than the workers in the manufacturing sphere or even in the trade sphere.

The process of virtualisation is mirrored also in the kind of companies which become central in the stock-exchange game. It is the companies linked the "high technologies", to informatisation and the logistics of informatisation. The main expectations of the shareholders point to this direction, which is as much as possible advertised on a global scale as the "economic destiny of mankind". Curiously, these hi-tech companies are valued according to their share price, essentially differing from their real profitability. And the gap between stock capitalisation and real efficiency (profitability) sometimes reaches hundreds percents. For example, in the case of the Internet company Yahoo this gap reaches the unprecedented figure of 1000 %! In other words, people pouring money into the shares of the flagships of the "new economy" (Microsoft, AOL etc.) are guided by two different motivations. In a long-term perspective they buy future efficiency, i.e. the pay for their conviction that these today not so efficient companies sometimes later will realise a qualitative leap. By sticking to such conviction, by causing expectations, the shareholders get the lion's share of the profits received by the "new economy". Apparently, the categories of "expectation" and even "conviction" are but virtual. Expectations may come true, but may also not. The efficiency of these companies is also virtual. The only non-virtual, real thing in this situation is the rise of the share price – and all the participants to the process can be quite convinced of this, having changed them on cash money. As the whole machine of the "new economy" is directed on supporting these expectations, such controls do not reach a critical mass, remaining but particular cases: having bought and having sold back the shares with profit, without having any trouble, the holder will necessarily be exposed to the temptation of repeating the deal. 

Thus in turbo-capitalism an evaporation of fundamentals takes place. What does the term "evaporation" (in latin "evaporatio") stress? Not that capital vanishes in the circulation process of the "new economy", but that it considerably changes its quality. In the classical model money is the blood of the economy. Credit, investment, financial instruments, shares, loans etc., in the end only serve the real sector, creating an operating environment for the rise, metamorphosis and disappearance of goods. The most abstract economic models with reference to industrial capitalism do not attribute any autonomous ontological value to the financial sphere. So capital remains bound to the material (or semi-material) reality of economic life, being nevertheless a derivative element, though with a huge degree of independence. However complex it maybe, it is nevertheless only a function of the real sector, its logistic, ingenious projection. 

In the classical liberal theory the basic ontological reality of the market nevertheless remain the so-called "fundamentals", i.e. the quite concrete and verifiable balance between supply and demand, linked to concrete goods (or services). These fundamentals are the objects of the most complicated, head-breaking manipulations, which also form the living tissue of economic history. The exposure of some of these manipulations is the essence of Marxism. But in any case the fundamentals are saved, whatever the position held by the main actors of economic process in relation to them. 

In the "new economy" these fundamentals undergo a qualitative transformation. The sphere of virtual finance and financial credit instruments starts step-by-step to affirm its rights to erase the reality of market fundamentals, as the bases of the operating management system. And as a consequence of this, it appropriates to itself the status of ultimate reality, postulating market fundamentals according to its own inhering regularities, whenever and wherever necessary. In turbo-capitalism the primary and the secondary, the base and the superstructure change their places – in this the essence itself of its virtuality is shown. Virtuality is a possibility, market fundamentals are the element of reality. The “new economy” postulates that the processes in the sphere of possible are autonomous in relation to reality. From now on, supply and demand and also the concrete correlation between them are no more the “atomic facts” of management. On the contrary, they are conceived as collateral consequences of the oscillating trends in the stock market games. Supply and demand can be fully provoked or artificially visualised depending on autonomous stock exchange processes. 

Through evaporation, fundamentals are transferred to a special level of existence – they are no more subjects and relations built with reference to subjects, but signs and relations that rise with reference to signs (see G.Debord, J.Baudrillard etc.). 

The sign becomes the basic equivalent of virtuality. Thus the sign, initially called to only temporarily replace the thing, to serve as its relative and conventional substitute, acquires an autonomous ontology, being released from the association to the signified thing, showing - since some moment - only itself. And the more so, the sign can be interpreted through different things, not having a precise equivalent, hypnotising the consciousness by fact itself of its presence, its inmost value. The contemplation itself of the sign acquires a value, the confidence that it exists, that it is somewhere near. The sign can thus prove its reversibility into fundamentals to those who are too mistrustful or backward; but the sense of turbo-capitalism is that this reversibility is so “obvious” that any attempts to check with reality are conceived as something annoying and inappropriate, “not civilised”. “Conventional wisdom trusts the sign” – such is the imperative of the “new economy”. Doubting it means showing absolute unseemliness, “sailing against the current”. 

Here can be an objection: the described model represents but a thick illusion. The “old economy”, you see, does not disappear anywhere, its laws have not been abrogated by anyone. And if the real sector will not develop or generally operate, the phosphorescent system of virtual pyramids and overheated markets, despite of all hypnotic cogency, will fall in any time… When the gap between the evaporated fundamentals (founded on the ontology of the sign) and the real, classic fundamentals will reach a critical size there will be collapse, recession, stock-market crack, and everything will return again to the inescapable classic pattern, to the real sector etc. Actually, everything is more complex than this. 

But let's see, what is the source of such point of view of the manifest or implicit actors of the “old economy”, criticising turbo-capitalism and forecasting its inevitable demise? In order to conveniently understand the ontology of the “new economy” it is necessary to go back to the past. True, today the reality of the “evaporation of fundamentals” of the economy is looming closer. But those same fundamentals – when and how did they acquired the quality of basic reference of ontological reality? The supporters of the “old economy” generally overlook such problem. For them the ontological content of the economic understanding of reality belongs to the category of postulates: the economy and its laws of development are the fundamentals, since they are connected with the basic, primary, fundamental aspects of human life - with the satisfaction of primary material needs and with the complex social-psychological and political-economic superstructure surging on their base. Classic economics – both liberal and Marxist (as its heterodox derivation) – started (silently, but also explicitly) from the acknowledgement of the deep ontological nature of the economic development. The economy, the economic pole were seen as the deepest foundations of human life, as a feature of “reality”, in its etymological sense - “thingness” [veschnost’]. 

Economocentrism is the general denominator of the majority of the social and political views of modernity. The economy is seen as the original reality of social development and at the same time as a destiny. The debate with those who defended different ontological equations was won a long time ago. For this reason the philosophical context in which are found today the subject of the “new economy”, the revealing of the “ontology of turbo-capitalism”, and in particular, the alarmist signals about the catastrophic “evaporation of fundamentals”, is strictly limited by paradigmatic presuppositions – the ontology of the classic market and the alarming perspective of its loss (transmutation) in the new trends of transition to virtuality. Thus the growth of virtualisation is acknowledged by the supporters of the “old economy” as a disastrous aberration, as some historical case of “blind alley evolution”. In the longer term their prognosis is either the great collapse of turbo-capitalism and the return to the classic standards of the economy, or the total catastrophe. Interestingly, the apologists of the “new economy” (whose philosophical conclusions, however, must be listened to with great caution, since the tactically motivated (and solidly paid) nature of their conclusions is obvious) solve this problem in a wittier and (in our view) more consequent way: they affirm that the virtualisation of the economy and the autonomisation of signs do not bear in itself any special drama, and that mankind (maybe not all mankind) will find a good place in the self-generated show, as it earlier assimilated the challenge of the Modern Ages and further deepened its economocentrism. This position – taken with some corrections – is more interesting than the "warning of the classics" (not to mention the rear-guard volleys of some kind of Marxists, stuck into post-industrialism). There, where the apologists of the “old economy” identify an unprecedented break, the supporters of turbo-capitalism see a continuum; what the “classicists” consider as a random deviation, the “virtualists” identify with a uniquely logical stage, differing from all the previous ones. 

For a more adequately overview of the essence of the problem, it is necessary to turn to the historical and paradigmatic context in which the first economic theories appeared. Certainly, some definite aspects of the understanding of the economy were always common to all societies. But up to a definite, strictly fixed historical moment they did not claim (and for a set of causes could not claim) to the status of independent discipline, and furthermore to a function of priority philosophical interpretation. This became possible only then, when the general attention of mankind was absorbed by the unchained search for unexpected interpretation systems - in the field of ontology, epistemology, methodology etc. - where success was sometimes defined by an extravagant nihilistic (concerning the conventionally settled standards - liable discrediting estimated cumulatively as "relics" and "prejudices") approach. Certainly, we are talking about the Modern Age, about the Age of Enlightenment etc. Let us remark that in the beginning the theoretical constructions of Adam Smith and other founders of political economy did not claim to ontological generalisation, as they were considered as an instrumental and applicative development of the general liberal-mechanicist approach, applying the social-philosophical settings of Francis Bacon, John Locke and Thomas Hobbes and the physical and mathematical method of applications of Galileo Galilei and Isaac Newton to the area of the economy. But in this initially applicative field of political economy were centred the main motives of the Modern Age, expressed into simplistic physical and mathematical formula. The derivation of man and human experience, and consequently of human life, from some lowest, material-ontical, primary realities – from the pattern of things and its inhering regularities, and also system of exchanges and lusts with them bound – became a remarkable and bold conclusion from the fundamental intellectual drive of the Modern Age, easily embodied in the rational enumerative structure, visual and finely applicable in practice. As it often happens, a whole set of ontological implications from such turn was also carried over to the classics of political economy; yet their most serious and true opponent, Karl Marx, ingeniously recognised in the economic field a pole of the eschatological struggle of mankind for the meaning and destiny of reality. 

Anyway, just then – at the historical turning point of the incoming Modern Age, and in the context of a general epistemological revolution, rejecting the traditional society’s normative feature of confidence, and actively seeking for the roots of ontology in the systems of material objects and in their representation – were engendered the first seeds of the ontology of the market, i.e. those same fundamentals whose evaporation inspires today such severe fears in so many people. Thus the deontologisation of the economy is not an exclusive property the “new economy”. Turbo-capitalism, the domination of virtual sector only extends and develops an impulse already present in the source itself of the modern economy. 

In the system of values of the traditional society, which was acknowledged and successively overthrown by the Modern Age, the economy had a secondary quality: it was the field of consequences, the sphere of coagulation of more subtle and tenuous relations. The ontology of the economy was a particular case of the ontology of the society (politics), and this in turn a particular case of the ontology of the Church. Life was concentrated in the thin worlds of the spirit, in theological dogmas, in cults, in the sacred bases of social institutions. The world of things and their circular motion, the cycles of primary needs and elementary reactions, were considered as the periphery of ontology, as the area of the most arbitrary and random phenomena. The economy as a whole could not be fundamental, and autonomous logic of the market was permanently prevented by higher instances obeying to a plan of different priorities, connected with a system of ideas rigidly dominant above the system of things. Man and his economy were instruments of the ontology, and not its constituting poles. 

The Modern Age in itself was the unique period of evaporation of different fundamentals – the fundamentals of the traditional society. This fundamentals did not vanish forever (therefore we speak about “evaporation”, instead of about deletion), but interchanged their nature, being embodied into something different. Shaky and bodily depending from the will of the noblemen, the autonomous bourgeois logic, up to that time as light as the swell of waves swinging the merchant's ships, began to turn into the firm basement of the new society. The values of the aristocracy began to have a new equivalent, valour and honour received a new meaning. Each issue began to be measured by its price. Economic cycles and monetary instruments became the common measure, replacing spirit, knowledge, will, force. The ontology of the traditional society was dissolved. It seemed then that this phase of nihilism meant the “end of the world”. Inflexible conservatives prophesised that a world without fundamentals would not last long … 

History has shown, however, that new systems of values are quite capable to condense into something relatively steady; and the epoch of the coming of capitalism, its expansion, its materialisation, its penetration into all the pores of human life and social institutions have generated a large scale picture of its dynamic stability. The fundamentals of market equilibrium coped with many challenges. Marxism, whose signs were placed on an ethical evaluation of the coming socio-political change –  going the opposite way than those who, without any special reflection, went along the main road of capitalism – was defeated with great difficulties and at incredible costs. And just in that moment, when the victory above Marxism looked like final, and the heritage of the Modern Age without alternatives had gone to the liberal-capitalist system, again on the agenda there was the issue of the severe qualitative mutation of the ontology of capitalism – on the side of the virtual logic of turbo-capitalism, of the paradoxical labyrinths of the “new economy”. 

On the one hand, the deontologisation of capital it is represented as a disastrous phenomenon. On the other hand, it is an objective process: the autonomous ontologisation of the economy, implicitly present already in the classics and up to the end acknowledged by Marx (in an alternative ethical system of coordinates), meant the deontologisation of the more massive system of values of the traditional society, where the worlds of the material objects were but the extreme periphery. These objects and their cycles (“shenanigans of the commodity” – Hakim Bay) look like a rather small reality in comparison to the massively spiritual and after political-feudal ontology of the traditional societies. Then the sphere of metaphysical principles was considered to be unconditionally real and even actual, while the economic field was a secondary and random sphere. This meant that the economic model could be varied depending on deeper social (and sacred or forced) trends. 

The transition to the bourgeois system separated the economy from those fundamentals, to the participation to which it was assigned before. Something interesting occurred in the world of the subject we are investigating: in the traditional society reality was a sign (even in a Catholicism tomist-aristotelic realism prevailed, instead of the pre-bourgeois nominalism of Roscellier-Ockam). This sign also yielded the ontology of the thing, as its soul. Echoes of the ontology of the sign can be met even in Paracelsus and Jakob Boehme - signatura rerum. This “signature” was the quintessence of an ontology producing the reality of "rerum" (things) strictly speaking. Translating with Latin derivatives: the “thingness” of things was non-real (=sign-like). The transition from live signs and their systems (embodied in priests theology and soldiers heraldry) to the systems of things was the precise expression of the “third state” – the one which generated the modern political economy and an ontology applicable to it. Fundamentals became the fundamentals of the merchants. In its time it was not less advanced and bold than the theories of the modern apologists of the stock market “technical analysis”. 

It follows from all these considerations that the “new economy”, by corroding those fundamentals that have been familiar to us in the last centuries, is doing something similar to what occurred when those fundamentals affirmed themselves for the first time. In turbo-capitalism we reach not simply the borders of ontology, as the borders of the ontology of the third state, the limits of the bourgeois system of measures. And the “new economy” itself is not yet a new era – it is an ambiguous and pluri-significant challenge to say goodbye to the old, but not offering at the same time anything new. Already on the horizon of the “new economy” confusedly appear absolutely unfamiliar and unusual virtual figures - "Lawnowerman", living into digital computers, or human clone-mutants. At the same time, there are some curious semi-restoration moments of the “new economy” – eroding the system of things and invoking a system of signs, in which the essential element is not so much possession, as contemplation and sensorial simulation (from here the proliferation of narcotics, television networks and computer games), turbo-capitalism makes reality moving and bodily, borne out of tight frameworks of material and rational chains, of mechanical alternation of demand-offer. True, the extreme conservatives (R.Guénon) say that the present phase of post-materialism corresponds to the “opening of the cosmic egg from below”, while in the epoch of the traditional societies it was opened from above, and later (during classic capitalism) it was closed from all sides. And, true, signs in the traditional society played an essentially different role, than in modern advertising and trademarks. However these differences are relative: in the societies of the East, where traditional motives have never been completely deleted, post-modern elements quite easily combine with pre-modern relics. Very significant in this sense is Japan, where the most recent technologies are elegantly inscribed in shintoist polytheism, and stock exchange gambling is interlaced with zen-buddhist meditation – the theory about “reading stock market graphs” through visual associations – the "candles", “five-pointed buddhi" of the Tokyo brokers etc. 

The process of the evaporation of fundamentals in the “new economy” easily enough yields to fixation. Much more complex is to define in what he will be poured out. 
Will it generate something new? Or will it fall, being unable to stand border tension – as the human view proliferation of new technologies, automatic machines, virtualisation and genetic engineering is put into question? Will mankind turn back to what was thoughtlessly abandoned by it on the threshold of the Modern Age, terrorised by where its logic of desacralisation is leading to? Will the sphere of the “new economy” become a fighting ground among different geopolitical, cultural and civilisational trends? 

We said above that we stand before the "transition from a system of things to a system of signs". There is one weak point in this expression: will this new “system of signs” be a true system, i.e. a hierarchically ordered set? And if so, according to what criteria? 

This is an open problem, to the solution of which we all should contribute.
 
 

November 2001