2416 – Financial Empire w/ Daniela Gabor and Ndongo Samba Sylla (Jacobin Radio 2023)

“Olúfẹmi Táíwò guest hosts an interview with Daniela Gabor and Ndongo Samba Sylla on how financial power has shaped the global economic order under capitalism from colonialism through Bretton Woods, the Washington Consensus, and today’s Wall Street Consensus. 

Read Daniela’s work: people.uwe.ac.uk/Person/DanielaGabor

Read Ndongo’s work: rosalux.de/en/profile/es_detail/N8SVHTS8SA/ndongo-samba-sylla?cHash=ccf0c8d371bde0fecbac8337bbc6f832

Support The Dig at Patreon.com/TheDig“

Here is 2h of the most intense and informative talk I got to listen to recently. I totally recommend both of them to follow in TW/X – if you are still on that platform. We had some previous posts on economy and political economy and inflation, but this one is truly essential for everyone interested in how global financial institutions came to exist and how the dollarisation of the world after WWII came to dominate our lives. It is also a very good introduction into two important theories that have lost the battle in the market of ideas – but are increasingly resuscitated in order to make sense of the rising unequal exchanges, dependencies, and monetary imperialisms that structure the Global North/Global South axis in capitalism: Dependency theory and World-systems theory. What is important is that both of them (one from Eastern Europe and the other from Equatorial Africa) advocate for a new global economic system where the Global South is at its center (the so-called “Bandung Woods” named after the Afro-Asian or Asian-African Bandung Conference in 1955 Bandung, Indonesia) to replace the Washington (or now Wall Street) Consensus.

Most of what I am saying here tries to approximate what the two eminent (imho opinion) macroeconomists and monetary sovereignty experts spell out. I am going to quote in full Gabriela Gabor (who happens to be a Romanian born) from the written version of the interview (available here).

DANIELA GABOR:

The Washington Consensus is in a sense a marker of who makes the rules in the global economic system, and that was Washington. Its intellectual father was John Williamson. He was quite reluctant to recognize himself as an intellectual father, because very quickly, the Washington Consensus was dubbed as a neoliberal consensus. I think it’s best described as a holy trinity of economic policies that were prescribed to countries, particularly in Latin America. This was a “what’s-happening-in-our-backyard” type of arrangement for the United States.

The three pillars of the Washington Consensus were economic stabilization, privatization, and liberalization [my emphasis). Economic stabilization basically meant the central banks have to target inflation and to keep prices stable; privatization meant trying to reduce the footprint of the developmental state in the economy by preventing the state from allocating capital or getting involved in production through state-owned companies or enterprises; and liberalization of international trade meant removing trade barriers, but also liberalization of prices domestically by not using price controls and removing subsidies as much as possible.

This is interpreted as an attempt to change the balance between the state and the market. Of course the states vs. markets framework is a crude description because the state had to construct certain markets. But it is true that the Washington Consensus was a policy paradigm and a political project to kill off the developmental state. In the 1950s and ’60s, the developmental state, under what we describe now as heterodox economic ideas, attempted to design a national development strategy in a context of  deteriorating terms of trade.

For developing nations, the question was, how do we make sure that we will get paid better for our exports than what we have to pay for our inputs? That typically meant industrial upgrading. That typically meant having a good industrial policy. It typically meant having some form of financial repression, which subordinated the domestic banking system to the needs of the industrial policy. It meant some form of a social contract with domestic capital and also with foreign capital, but mostly domestic capital, to make sure that domestic capital worked together with the state for industrial policy purposes.

The Washington Consensus is basically a political project to dismantle this developmental state and instead to bring in the market as the mechanism to allocate resources. The state doesn’t disappear of course. But what we know is that the state that is useful for citizens in a sense disappears because you have an increasing removal of the state from the provision of public goods, one way or another, under the idea that the market can do things better than the state.

In the postwar era, you have the Bretton Woods institutions that are pushing this Washington Consensus all over the world. Wherever the IMF or the World Bank go, they leave a trail of structural adjustment programs. You have the IMF pushing for stability and particular forms of monetary and fiscal austerity under the Washington Consensus. There is an increasing recognition toward the end of the 1990s that this has meant a lost decade for Latin American countries, that it produced a lot of poverty across African countries that were forced to adopt them. Of course there are certain domestic political constituencies that preferred the Washington Consensus rules simply because they align well with the aims of right-wing politics.

By the early 2000s, Bretton Woods institutions become a bit more unwilling to promote the more radical elements of the Washington Consensus. This leads to what is called now the Post–Washington Consensus, which is a recognition that there are market failures. The idea is that if there are market failures, then of course the state is necessary. So you don’t have the resurrection of the developmental state, but you have the resurrection of the state as a regulator that tries to correct market failures but doesn’t allocate capital or doesn’t interfere with market signals. It corrects the signals if those have gone wrong one way or another.

In some ways we still have that now, because all discussions about carbon prices, for example, have to do with how to achieve the low-carbon transition; they rest on the idea that the state doesn’t need to do a lot more than just correct the failure of the market to price the climate crisis.

NDONGO SAMBA SYLLA (who has written a book on the history of CFA – Africa’s last colonial currency):

I am from the generation whose parents suffered the consequences of the IMF and World Bank austerity policies. You could see concrete impacts because many people were fired from their jobs, for example, because one of the ways to implement these structural adjustment policies was for the state to clean up its own budget. That means limiting its spending, and one way to limit the spending is to cut health expenditures and education expenditures and also to get rid of some civil servants.

Reduced state budgets also meant less investment and less open-door immigration policies. That has been the impact. That’s why if you look at the development trajectory of Africa and compare that to Asia, you would see that the most significant difference came after the 1980s. This is because Asian countries were not subject to IMF and World Bank policies in the 1980s and 2000s.

Some countries, for example, Cote d’Ivoire, Senegal, and Niger — their real GDP per capita in, say, 2015 was lower than their best level of real GDP per capita before implementing the IMF and World Bank’s policies.

That’s a clear indicator of the failure of these kinds of policies. But their primary aim was to prevent the emergence of the developmental state. There are many things people say about Africa, but the first two decades were developmental decades, despite all the shortcomings and despite the many proxy wars. But the leaders were really committed to creating some development, and you can see that in the work by the African economist Thandika Mkandawire.

On that final note, what is the Wall Street Consensus? (paper by Gabriela Gabor here)

he Wall Street Consensus (WSC) is an elaborate effort to reorganize development interventions around selling development finance to the market. The Billions to Trillions agenda, the World Bank ‘Maximizing Finance for Development’ or the G20 ‘Infrastructure as an Asset Class’ all call on international development institutions and governments of poor countries to ‘escort capital’ – the trillions of institutional investors – into ‘investable development bonds’, preferably in local currency. For this, the 10 WSC commandments aim to simultaneously reorganize local financial systems around bond market-based finance and forge the de-risking state. The state derisks bond finance for institutional investors by extending guarantees and subsidies to cover (i) demand risks attached to user-fees for (PPP) infrastructure, (ii) political risk attached to policies such as nationalization, higher minimum wages and climate regulation, (iii) climate risks that may become part of regulatory frameworks as material credit risks and (iv) bond market (liquidity) risks that complicate foreign investors’ exit from development assets. The WSC narrows the scope for a green developmental state that could design a just transition to low- carbon economies.

2129 – Speculative Communities: Living with Uncertainty in a Financialized World (book by Aris Komporozos-Athanasiou 2022)

check book here

check an interview with the author here

Largely I would say Aris K. A. takes a wide look at how the speculative – as a vacuous category mostly understood as and defined by today’s encroaching financial markets. Here’s my first point of contention – why ignore or abandon definitions of how ‘the speculative’ has been reinstated or applied inside philosophical traditions. Before the high abstractions of abstruse financial instruments and even before let’s say the ‘speculative turn’ in recent philosophy, we’ve seen at the start of the 20th c philosophers such AN Whitehead understanding of speculative thinking as playing a vital role in the history and evolution of philosophical trends (see for this Whitehead and Bradley a comparative analysis by Leemon B McHenry 1992). Speculative constructions are what philosophical movements do. During historical periods entire domains of human knowledge get preoccupied & immersed in a feverish activity that results in these expansive theoretical constructions that are being pruned back by analytical rigor & methodological fasting. But then such a strict adherence to methodologies starts being stifling and exhausting and the central issues feel stale and burdensome, so speculation is needed to embolden and rejuvenate this thirst for understanding. At the time, from a minority position of sorts within the philosophical mainstream, Whitehead enlivened this productive relation by building his own metaphysical scheme, in a period when metaphysics fell out of favor with philosophers and was still railing after what some have called the ‘Kantian catastrophe‘. His fresh exercise in speculative thinking acknowledged that philosophical trends came to be dominanted by logical positivism or linguistic analysis: the new orthodoxies of the 20th century. At a time when the speculative in its philosophical sense was lagging behind, speculation was in fact flowering elsewhere, with physics and cosmology picking up on this relay – emboldened by new advances in experimental science, relativity theory, quantum mechanics, as well as evolutionary & organicist thinking in biology, areas that kept revolutionizing our understanding of the universe and surrounding reality.

At rhe same time one needs to somehow give due recognition to how communities and writers of speculative fiction have been using that term to specifically explore the variations and possibilities of an unknown and unpredictable future through their work. Here I am following closely a key text by Steven Shaviro that attempts to trace how speculative fiction and financial speculation interlace yet part ways when it’s about nurturing and multiplying possibilities (in the case of SF) versus just making them operational in the present or trying to actualize them and exhaust every potential (in the case of financial markets). Yes, one can subsequently attribute this current opening towards the speculative – as signaling a growing disposition towards and awareness of the ‘great outdoors’, of the ‘- exo’ everything or even growing larger participation than ever in fictioning as part of the growth of a vibrant SF global community and multiple translations. So it’s good to keep all this on my mind when Aris is talking about the (as yet incomplete) transition from the rational subject implied by most classical bourgeois economics of the so-called Homo economicus that was supposedly all about individual decisions, equilibrium, optimization and maximizing profits towards what he calls the Homo speculans of today characterized not just by risk-taking or betting on known probabilities (here he makes a distinction between betting and speculation) but somehow on increasing uncertainty, creating havoc while staying afloat when everything that previously seemed imposibile or improbable seems to happen. He is the newly evolved species that even social theory at this moment has not reckoned with. In the face of all the rising algorithmic injustice, in the face of inequality and the inherent insecurities of a financialized world there’s new communities coalescing that he calls speculative communities. And he adopts this in order to stay clear of how ‘mass delusions’ have been been described since the 19th c. Imagination used as a generative – productive capacity is not new its as old at least as the Industrial Revolution or International Labour’s Movement. Aris picks up on Benedict Anderson notion of imaginary communities – the development of ‘nation states’ and nations as invented, co-imagined communities birthed out of the volatility of industrial revolution and the breakdown of old worldview and formation of new ones. I’m also thinking a bit ahead – about working class organizations and even syndicates – that also form in the face of class conflicts and struggles that offered more than wage slavery and uncertain livelihoods. So one should not stop at brokers when thinking about imaginary or speculative communities. On one side this helps perceiving these old/new speculative or imaginary communities aggregating not as irrational mindless crowds but as mutating communities faced with more and more insecurity and uncertainty trying théorie best not to reap luxury benefits but to try and stay afloat among speculative bubbles that they don’t really control. This new Homo speculans is gregarious, swarming and animated by ‘animal spirits’ (in the words of Keynes) and hearsay because it knows how important it is to be more opened (than before) towards the possibility of radical contingency and oriented towards the absolute and completly unpredictable unknown (not just the calculated unknown of probabilities and risk management but one that is completely impossible to anticipate!). In a sense as financial markets kept making our way world more disastrous and prone to unusual outcomes, people have managed navigate dangerous waters, admitting unrecognizable configurations or vernacular practices tonemerge often as forms of counter-speculation. Yet sadly in the Anglo US world its not the Indian farmer revolts but the Anarcapulco crowd who strike one as a thoroughly speculative speculator community.

I at this moment have my own doubts about how much Homo speculans is as open as pretend open or indeed as adaptive if left to live (unaided) amongst the ruins of crumbling infrastructure and disappearing old certainities (and new very clear certainities such as climate change challenges). One big absence from this account is the existence of actual institutions or dirigiste hybrids that are both harnessing these speculative cyclical bubbles and that try to operate at a structural level instituting pockets of certainty, leveraging, changing probabilies and actualizing futures in a more planned and directed way. Here I am thinking about the real semiconductor Asian miracle and leveraging of highly skilled and complex tasks in the chip industry – essential and important to both to current algorithmic capitalism and also a (safe) way to surf the regular tsunamis of this Schumpeterian capitalism. Subsidies are the key here and this is not such a wild bet at all but a careful grooming. I am wondering about spontaneous groups & communities and how this spontaneity is only partial and inversely how the statal buffering against such rampant speculation keeps intervening to save those selfsame markets.

At this more lower spontaneous level, H speculans has also learned something dangerous under dangerous highly volatile times, that he can, under conditions of growing disempowerment & instability still change the odds or try to stay abreast by somehow and more controversially increasing unpredictability. This is how Aris reads these quite worrying & catastrophal political trends of ethno politics & populism in general because he somehow refuses to judge these newly formed conspiracy- swimming communities as purely irrational or just misinformed and lunatic fringe. Aris is a former economist turned sociologist and this already tells us something. Have not read the book – but his argument is surely more complex and I urge you to read the interview. His recourse to the mythical I find a quite problematic but i find his openness to subcultures and conspirative thinking amenable to high weirdness (as defined by Erik Davis). One last thing – I posted this after the podcast on Elon Musk because Aris AK also pics on Musk as an example of typical speculator (Trump and other recent demagogue aren’t also there) – pulling stunts, using memes, switching from one day to the next and fooling around with his own ability to spin tall tales, combine science fact with science fiction, inflame the imagination of his fans and plunge or push up stocks by tw most inconsequential affirmations on his twitter feed. To his credit Aris also recuperate the true origins of speculative financial markets in the 1900 Chicago, the first derivative market of abstract financial instruments in the world, developed initially (if i understood well) as means to hedge farmers against such risks as a bad harvest that they couldn’t control or risks of food products going rotten and nobody wanting to buy them. This is a story worth reading in itself but he goes further than economics or financialization into our daily app practices & tech addictions, our increasingly fluid and volatile love-lives as they grow or result from our increasing usage of dating apps and constant swiping. He considers imagination a guiding faculty to help us wade through the murky waters of speculation (here i have some trouble – stemming from Guy Lardreau’s critique of imagination that lags behind and how fiction jumps ahead of this poverty of imagination).

“Speculative Communities investigates the financial world’s influence on the social imagination, unraveling its radical effects on our personal and political lives.

In Speculative Communities, Aris Komporozos-Athanasiou examines the ways that speculation has moved beyond financial markets to shape fundamental aspects of our social and political lives. As ordinary people make exceptional decisions, such as the American election of a populist demagogue or the British vote to leave the European Union, they are moving from time-honored and -tested practices of governance, toward the speculative promise of a new, more uncertain future. This book shows how even our methods of building community have shifted to the speculative realm as social media platforms enable and amplify our volatile wagers.

For Komporozos-Athanasiou, “to speculate” means increasingly “to connect,” to endorse the unknown pre-emptively, and often daringly, as a means of social survival. Grappling with the question of how more uncertainty can lead to its full-throated embrace rather than dissent, Speculative Communities shows how finance has become the model for society writ large. As Komporozos-Athanasiou argues, virtual marketplaces, new social media, and dating apps bring finance’s opaque infrastructures into the most intimate realms of our lives, leading to a new type of speculative imagination across economy, culture, and society.”

1977 – bilingual EN/RO extraterrestrial publication of the New TEMPOrealities show (2021)

Here is the publication of the show with various critical, speculative, and theoretical texts related to the show.

This publication contains:

Stefan Tiron: Portals to New Temporealities: The Xenogeneses of SF

Ion Dumitrescu: No God in Cosmos

Steven Shaviro: Defining Speculation: speculative fiction, speculative philosophy and speculative finance

Mihaela Drăgan: Roma Futurism Manifesto Techno-witchcraft is the Future

Ralitsa Gerasimova: Galaxy Library: The Sci Fi Gem of the Socialist Bulgaria

Alin Răuţoiu: Invasion X

Irina Gheorghe: Foreign Language for Beginners

Centrul Dialectic/Mihai Lukacs + Bogdan Popa: Ice Money

Vilmos Koter: Help Message to the Universe

1675 – The Time of Money by Lisa Adkins (2018 book)

Speculation is often associated with financial practices, but The Time of Money makes the case that it not be restricted to the financial sphere. It argues that the expansion of finance has created a distinctive social world, one that demands a speculative stance toward life in general.

Replacing a logic of extraction, speculation changes our relationship to time and organizes our social worlds to maximize the productive capacities of populations around flows of money for finance capital.

Speculative practices have become a matter of survival, and defining features of our age are hardwired to their operations—stagnant wages, indebtedness, the centrality of women’s earnings to the household, workfarism, and more. Examining five features of our contemporary economy, Lisa Adkins reveals the operations of this speculative rationality. Moving beyond claims that indebtedness is intrinsic to contemporary life and vague declarations that the social world has become financialized, Adkins delivers a precise examination of the relation between finance and society, one that is rich in empirical and analytical detail.

Read Excerpt: Money on the move (Chapter 1)