Showing posts with label garden of beasts. Show all posts
Showing posts with label garden of beasts. Show all posts

30 January 2023

Stocks and Precious Metals Charts - Empires of Lawlessness: Fear, Uncertainty, and Doubt - The FUD Factor

 

"Franz Neumann’s book Behemoth, details how the Nazi regime came about, how you could have this really advanced, highly educated, industrial society suddenly be ruled by this imperialist, vicious regime – how is this possible?  And when looking at the ways that the economic elites collaborated, the end result is you have the German establishment supporting Nazism basically as a way to crush any leftists that might want a social revolution or serious reforms to German capitalism."

 Aaron Good, author of American Exception

"Day by day the money-masters of America become more aware of their danger, they draw together, they grow more class-conscious, more aggressive. The [first world] war has taught them the possibilities of propaganda; it has accustomed them to the idea of enormous campaigns which sway the minds of millions and make them pliable to any purpose.

American political corruption was the buying up of legislatures and assemblies to keep them from doing the people's will and protecting the people's interests; it was the exploiter entrenching himself in power, it was financial autocracy undermining and destroying political democracy. By the blindness and greed of ruling classes the people have been plunged into infinite misery."

Upton Sinclair, The Brass Check

“A fascist is one whose lust for money or power is combined with such an intensity of intolerance toward those of other races, parties, classes, religions, cultures, regions or nations as to make him ruthless in his use of deceit or violence to attain his ends. They claim to be super-patriots, but they would destroy every liberty guaranteed by the Constitution.”

Henry Wallace

"The totalitarian doctrine of the state thus satisfied the various traditional partisans of German reaction: university professors, bureaucrats, army officers, and big industrialists.  It was also acceptable to the western world in general.

Totalitarianism also served the practical needs of the moment.   The situation was difficult and Hitler was prompt to use the weapon of the totalitarian doctrine.  The revolution was to proceed in an orderly fashion—in so far as property, the civil service, and the army were concerned." 

Franz Neumann, Behemoth: The Structure And Practice Of National Socialism 1933-1944


"When humanity, subjugated by the terror of crime, has been driven mad by fear and horror, and when chaos has become the supreme law, then the time for the empire of lawlessness will have come."

Friedrich Rudolf Klein-Rogge, Das Testament des Dr. Mabuse

Stocks were sluggish and weak today, going out near the lows.

We are facing a big week of central Bank interest rate decisions, notably the Fed and ECB, and also the important Non-Farm Payrolls report on Friday.

Gold and silver traded weakly, with silver showing a little bit of upside.

The VIX ticked higher.

The Dollar edged up a bit.

The same jokers who for years have been chanting 'blockchain, blockchain' and '5G,5G' are now intoning 'AI, AI' and 'reverse aging, reverse aging.'

Bread and circuses.

Old as Babylon, and as evil a Faustian bargain as sin.

Have a pleasant evening.


22 August 2019

Stocks and Precious Metals Charts - Waiting for Godot In Jackson Hole


“There’s man all over for you, blaming on his boots the faults of his feet.”

Samuel Beckett, Waiting for Godot


"The beast was allowed to speak great blasphemies against God.   He was given the authority to do what he willed, but only for forty-two months."

Revelation 13:5


“Each day we are becoming a creature of splendid glory, or one of unthinkable horror.”

C. S. Lewis

The markets are waiting to see what Jay Powell is going to be saying at Jackson Hole.

And of course they are holding their collective breath, waiting for the latest tweets and policy stunners from The Chosen One, and self-proclaimed Second Coming of God.

From now on you cannot say that you did not know. 

We're taking a drive this evening to Cliff's Homemade Ice Cream.

So many flavors, so little time.

The markets will always be there.  Our friends and family may not.

Have a pleasant evening.





19 February 2019

Stocks and Precious Metals Charts - In the Garden of Beasts - Developing Gold Chart Formation Targets 1550


"Again the memory of those days swept over him like a nightmare— the people they had met travelling; then people who couldn't add a row of figures or speak a coherent sentence.  The little man Helen had consented to dance with at the ship's party, who had insulted her ten feet from the table; the women and girls carried screaming with drink or drugs out of public places—

—The men who locked their wives out in the snow, because the snow of twenty-nine wasn't real snow.   If you didn't want it to be snow, you just paid some money."

F. Scott Fitzgerald, Babylon Revisited, February 1931


"To the politician and administrator laissez-faire was simply a principle of the insurance of law and order, with the minimum cost and effort. Let the market be given charge of the poor, and things will look after themselves...

Hobbes had argued the need for a despot because men were like beasts; [Joseph] Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required.

The acceptance of near-indigency of the mass of the citizens as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism [Dissertation on the Poor Laws].  The improvidence (lacking personal responsibility) of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. (born to be vile?)  Also what would become of the fatherland unless we could rely on the poor? "For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?"

Karl Polanyi, The Great Transformation, 1944


"Thus the elements are in place: a weak legislative body, a legal system that is both compliant and repressive, a party system in which one (I would in 2019 now say either) party, whether in opposition or in the majority, is bent upon reconstituting the existing system so as to permanently favor a ruling class of the wealthy, the well-connected and the corporate, while leaving the poorer citizens with a sense of helplessness and political despair, and, at the same time, keeping the middle classes dangling between fear of unemployment and expectations of fantastic rewards once the new economy recovers.

That scheme is abetted by a sycophantic and increasingly concentrated media; by the integration of universities with their corporate benefactors; by a propaganda machine institutionalized in well-funded think tanks and conservative foundations; by the increasingly closer cooperation between local police and national law enforcement agencies aimed at identifying terrorists, suspicious aliens and domestic dissidents."

Sheldon Wolin, Inverted Totalitarianism, 2003


“Each day we are becoming a creature of splendid glory, or one of unthinkable horror.”

C. S. Lewis

The financial spokesmodels were unnerved with the rally in gold today, which was in no doubt due in some part to the weakness of the Dollar, and the stress on the physical supply with the return of China to business from their long holiday week.

As noted previously there is a relative scarcity in the 'free float' of physical gold, and the tricks and forced exchanges, and soft confiscations from other countries can only go so far in the face of a steady, almost unrelenting, demand for the real thing.  With leverage of paper to bullion in the gaming markets estimated at 100 to 1, a disruption in the flow of physical supply could be rather impressive.

The concern of the financial commentators was that it is unusual for gold to rally in what appears to be a safe haven move, but with stocks also rising. Always the stock market, for this crowd.  That is their major concern, their first priority. The system is God, and damn the people whom it was designed to serve and support.

Stocks did back off markedly into the close after a rather robust showing during the day. We must put our best foot forward for the rest of the world after all.  And at the end of the day, we can relax the charade a bit, and pocket the grift.

Chart-wise, gold has begun to flesh out a new cup,  which if it succeeds in cmpleting the formation, and if it manages subsequentlyt to break out, will target $1550 at a minimum measuring objective on the chart.

As I noted in some posts over the holiday weekend, the long bear market in gold, which was sustained by managed selling of physical gold by central banks in order to manage the market has clearly ended around 2007.   The price of gold began to rally a few years earlier in anticipation of this sea change in selling and accumulation by the major players.

And so now, after a long consolidation which has followed the first leg of the new bull market, the price of gold appears to be attempting to begin its second leg, and move to take out the prior highs.  Let's see if it can maintain its momentem to the rim of the cup, so to speak.  At that point a retracement is often customary.  Perhaps a retracement now would not be unusual after a long quick run.

Longer term a higher price in gold is likely to be accompanied by social disruption and political uncertainty as one might expect on an examination of history.  Gold provides a safe harbor in troubled times.  And we do seem to be lurching towards some perversely desired rendezvous with destiny, taking it to the limit, so to speak.

If by some miracle of providence we could have what a good person might wish for, rather than what they might see coming despite all their efforts, our grandchildren might not be tempted to damn us for our willful foolishness and careless pride. 

We can take comfort in the undeniable fact that the future is an elusive mix of possibilities and probabilities, and that the eventual outcome is, in the final analysis, largely unknown but in the hands of Providence, as well as our own.

But beware the leaven of the Pharisees and of Herod.

Have a pleasant evening.






26 January 2018

In the Garden of Beasts: First the Unholy Slaughter of the Innocents


"The perpetrators were scholars, doctors, nurses, justice officials, the police and the health and workers’ administration.   The victims were poor, desperate, rebellious or in need of help. They came from psychiatric clinics and childrens' hospitals, from old age homes and welfare institutions, from military hospitals and internment camps. The number of victims is huge, the number of offenders who were sentenced, small."

Commemorative Tablet at Tiergartenstraße 4, Berlin


"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people. What is called 'fellow traveling' (collaboration) was primarily business interest: one pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much. That is a general law of the status quo."

Theodor Adorno


“Each day we are becoming a creature of splendid glory or one of unthinkable horror.”

C. S. Lewis

The efficiencies of the death camps evolved from the initial experiments in killing the disabled, the mentally ill, the anti-social, and the poor.

One does not wake up one morning, and decide to become a monster.  No, men become beasts,  but one rationalization, one marginalization and objectification of the other,  one small step and excuse  towards the horror at a time.

Do you think that we are so good as to be exempt from this?  That we are incapable of such wanton blindness towards sin?

The model for the identification, sterilization, and finally the slaughter of the weak and the vulnerable in Germany was found in the United States, an ugly chapter in American history that is rarely mentioned.

And what then, is the difference between gassing and burning those who you consider to be life unworthy of life, or exposing them to predators, denying them a fair chance or the assistance for the basics of a decent life such as a living wage, health care, warm clothing, and basic human dignity, slowly working them to an early death while defaming them as deserving of it, because you think that they are inferior, and not as human as the such as you.

Oh no, no one ever helped me.  I did it all on my own.  And so can they. 

And so you deny God Himself, and how He has saved you from misfortune, He has helped you in your failings, and He has given you the gifts that you possess, in your pride.

“It is worth remembering one of the important lessons of the Carrie Buck story [from Charlottesville, Va]:  a small number of zealous advocates can have an impact on the law that defies both science and conventional wisdom.”

Paul A. Lombardo, Three Generations, No Imbeciles: Eugenics, the Supreme Court, and Buck v. Bell






"There is not a more perilous or immoral habit of mind than the sanctifying of success.”

Lord Acton


The fact that the foolish person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with him as a person, but with slogans, catchwords, and the like that have taken possession of him.

He is under a spell, blinded, misused, and abused in his very being. Having thus become a mindless tool, the foolish person will also be capable of any evil and at the same time incapable of seeing that it is evil. This is where the danger of diabolical misuse lurks, for it is this that can once and for all destroy human beings.”

Dietrich Bonhoeffer, Letters and Papers From Prison


"Many commentators automatically assume that low intergenerational mobility rates represent a social tragedy. I do not understand this reflexive wailing and beating of breasts in response to the finding of slow mobility rates. The fact that the social competence of children is highly predictable once we know the status of their parents, grandparents and great-grandparents is not a threat to the American Way of Life and the ideals of the open society.

The children of earlier elites will not succeed because they are born with a silver spoon in their mouth, and an automatic ticket to the Ivy League. They will succeed because they have inherited the talent, energy, drive, and resilience to overcome the many obstacles they will face in life."

Greg Clark, The Economist, 13 Feb. 2013


"You have not strengthened the weak or healed the sick or bandaged the injured or brought back the strays or looked for the lost; rather, you have ruled them with harshness and tyranny. So they were scattered because there was no shepherd; they were scattered and became prey for every wild beast of the field."

Ezekiel 34:2-5


“You may choose to look the other way, but you can never say again that you did not know.”

William Wilberforce


08 April 2015

Gold Daily and Silver Weekly Charts - Profiles In Hypocrisy, In the Garden of Beasts


"The only vice that cannot be forgiven is hypocrisy. The repentance of a hypocrite is itself hypocrisy."

William Hazlitt


"The U.S. went off the gold standard in August 1971. With no benchmark, central banks could print money and debase currencies. That opened the door for huge bailouts after big banks screwed up in a big way. Taxpayers—not incompetent bankers—paid the price.

By [the late 1980’s], the Federal Reserve Bank and large U.S. banks had established a pattern to control the public relations damage each time banks had a major screw-up: accountants and regulators let banks lie about the size of the problem to stall for time; the Federal Reserve blew smoke at the media; finally, the Fed would bail out the banks in a way that most taxpayers would not understand.

Banks didn’t have to get smarter or more competent. The Fed trained the banks that uninformed taxpayers would eat the losses, and fake accounting would let bank officers keep their positions and their money."

Janet Tavakoli, Decisions: Life and Death on Wall Street

Gold and silver were pushed back to their assigned round numbers, with gold barely holding above 1200 and silver pushed well below the 17 handle.

Ted Butler has a rather striking piece about the rigging in the silver market which you can read here.

Speaking of silver it appears that Turkey had record imports of silver bullion in March. You can read about that here. I am not sure how significant that is. We can certainly keep an eye on it to see if this is a one time thing or a trend.

 Thoughts of silver drachmas and dirhams come to mind, but it is most likely improbably premature. Still, this is a currency war and things seem to be building to a reckoning of sorts.  Who can say what desperate people might do to end repression?

Nothing really happened at the Bucket Shop on the Hudson.  A few contracts of silver were claimed, and inventory was shoved around the plate in the warehouses.  The real action is taking place in the Mideast and Asia.

We have become a coarse and careless people, smugly confident in our 'Exceptionalism.'   We are no longer shocked about lies, but instead critique the style and performance of the liars, and try to emulate them in our own professions.  
How can we not cringe at some of the more shocking abuses that pass for generally acceptable behavior in public figures these days?  And we encourage it, by both our silence and our acceptance.
Oh yes, we recoil in horror at any kind of sex, at the human form, with great puritanical umbrage, but stealing and cheating, and abusing the poor and the defenseless in even the most petty and vicious ways is looked upon with admiration, because we are in love with power. 
Power is our new golden calf.   Even some so-called 'reformers' are falling all over themselves at a chance to move near the circles of power, to have influence, to be seen as connected.   All we seem to want is to get paid, to get ahead, to 'win.'
Hypocrites!

And the example of our cultural and societal icons are certainly leading to a general corrosion of all morals and civilities.  And that is a shame, which eventually will have significant repercussions and consequences for us as a people and a society. 
Where will we finally draw the line and come to our senses?  How far are we willing to go?  How many crimes and abuses, how much theft and torture are we willing to overlook?   Why do we allow our society to be defined by sociopaths?  
When will we finally look about, and see that we too, despite all our smug superiority, have created our own garden of beasts?

Have a pleasant evening.




"Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they (people) were actually beasts and that, precisely for that reason, only a minimum of government was required. From this novel point of view, a free society could be regarded as consisting of two races: property owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrates were necessary, for hunger was a better disciplinarian than the magistrate...

The paradigm of the goats and the dogs seemed to offer an answer. The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith's humanistic foundations, and incorporated those of Townsend...Economic society had emerged as distinct from the political state...

To the politician and administrator laissez-faire was simply a principle of the insurance of law and order, with the minimum cost and effort. Let the market be given charge of the poor, and things will look after themselves...

What induced orthodox economics to seek its foundations in naturalism was the otherwise inexplicable misery of the great mass of the producers which, as we know today, could never have been deduced from the laws of the old market. But the facts as they appeared to contemporaries were roughly these: in times past the laboring people had habitually lived on the brink of indigence (at least, if one accounted for changing levels of customary standards); since the coming of the machine they had certainly never risen above subsistence level; and now that the economic society was finally taking shape, it was an indubitable fact that decade after decade the material level of existence of the laboring poor was not improving a jot, if, indeed, it was not becoming worse...

The acceptance of near-indigency of the mass of the citizens as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism. The improvidence (lacking personal responsibility) of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. (born to be vile?) Also what would become of the fatherland unless we could rely on the poor? "For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?"...

Robert Owen, in 1817, described the course on which Western man had entered and his words summed up the problem of the coming century...The organization of the whole of society on the principle of gain and profit must have far-reaching results. He formulated these results in terms of human character. For the most obvious effect of the new institutional system was the destruction of the traditional character of settled populations and their transmutation into a new type of people, migratory, nomadic, lacking in self-respect and discipline—crude, callous beings...  

Karl Polanyi, The Great Transformation

02 October 2012

Aktion T4 - In the Garden of Beasts


"The perpetrators were scholars, doctors, nurses, justice officials, the police and the health and workers’ administration.

The victims were poor, desperate, rebellious or in need of help. They came from psychiatric clinics and childrens hospitals, from old age homes and welfare institutions, from military hospitals and internment camps.

The number of victims is huge, the number of offenders who were sentenced, small."

Commemorative Tablet at Tiergartenstraße 4, Berlin

Most people are unaware or simply overlook the actions of the German government that began in 1939, in which the State, with the active cooperation of the medical and legal professions, began the systematic murder of people who were physically and mentally inferior, at least according to the judgement of the State.

It was this decision, and its willing acceptance by the thought leaders and intellectuals of the day, in defining who had the right to live based on their ability to serve the State according to its own needs, that laid the groundwork for the death of compassion, and the murder of over ten million people in the name of unnatural selection.

Once the State has the power to say who is a worthwhile human being and who is not, no one is safe.

We do not often hear about Aktion T4, the euthanasia program, because the weakest have little or no constituency, and are sometimes overlooked because others think that their own causes, or their own pain, is more significant.

This is not about abortion, which is the preoccupation of many sincere people today. This is a question that is inescapable, unequivocal, to those who say that they value life.

This is about respect for a human life after it is born, and comes into the world, which so many people willfully overlook and forget.

What good is it to fight for the right of a child to be born, and then to promote a policy of social Darwinism, a survival of the fittest as if people were animals, forcing them to compete with slave labor in foreign lands in the name of The Market?   Or to embrace a healthcare system that holds parents hostage, as they bankrupt themselves while frantically trying to care for their sick child or their loved one, in the name of The Market?

Despite a lucky few who manage to emerge triumphant from The Hunger Game, inhuman policies and a system of privilege virtually condemn the unfortunate child to a lifetime of desperation and poverty, to be caught in the infamous 47% of the country that struggles to live and to merely survive, and to raise their children, often from hand to mouth. 

These are the working poor, students, the elderly, the disabled, who are sanctimoniously condemned and caricatured for not being able to outwit the abuses of the law and resist the perversions of the powerful that allow the select few to cheat and rob them at every step of the way. This is no deep economic mystery; it is a crime.

It was the professional class, the doctors and the lawyers, who willingly sanctioned the murder of the innocents in Germany. And for that great crime against God and Man, which almost no one protested against, the country was brought low and laid to ruin.  

And it is a terrible trap to think that we today are so different, so exceptional, that we are not capable of permitting the same thing to happen all over again.  After all, we are only doing what is necessary, what is required, because The Market says.

In their desire to escape the pain and complexity of being human, men can make themselves into beasts, one step at a time. And then there is hell on earth.

"Aktion T4 was the name used after World War II for Germany's "Euthanasia programme" during which physicians killed thousands of people who were "judged incurably sick, by critical medical examination".

The programme officially ran from September 1939 until August 1941, but continued unofficially until the end of the Nazi regime in 1945.

During the official stage of Action T4, 70,273 people were killed, but the Nuremberg Trials found evidence that German and Austrian physicians continued the murder of patients after October 1941 and that about 275,000 people were killed under T4.

More recent research based on files recovered after 1990 gives a figure of at least 200,000 physically or mentally handicapped people killed by medication, starvation, or in the gas chambers between 1939 and 1945.

The name T4 was an abbreviation of "Tiergartenstraße 4", the address of a villa in the Berlin borough of Tiergarten which was the headquarters of the Gemeinnützige Stiftung für Heil- und Anstaltspflege, bearing the euphemistic name literally translating into English as Charitable Foundation for Curative and Institutional Care.

This body operated under the direction of Reichsleiter Philipp Bouhler, the head of Hitler's private chancellery, and Dr. Karl Brandt, Hitler's personal physician. This villa no longer exists, but a plaque set in the pavement on Tiergartenstraße marks its location."





"The inability to identify with others was unquestionably the most important psychological condition for the fact that something like Auschwitz could have occurred in the midst of more or less civilized and innocent people.

What is called 'fellow traveling' (collaboration) was primarily business interest: one pursues one’s own advantage before all else and, simply not to endanger oneself, does not talk too much. That is a general law of the status quo."

Theodor Adorno


“Then shall He say also unto them on the left hand, ‘Depart from Me, ye cursed, into the eternal desolation prepared for Satan and his angels. For I hungered, and ye gave Me no meat; I was thirsty, and ye gave Me no drink; I was a stranger, and ye took Me not in; naked, and ye clothed Me not; sick and in prison, and ye visited Me not.’

Then shall they also answer Him, saying, ‘Lord, when did we see Thee hungering or thirsting or a stranger, or naked or sick or in prison, and did not minister unto Thee?’ Then shall He answer them, saying, ‘Verily I say unto you, inasmuch as you did it not to one of the least of these, ye did it not to Me.’

Look in the mirror, Narcissus, and see what you are becoming.


20 September 2012

Karl Polanyi On Liberal Economics and the Rise of Fascism


"Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they were actually beasts and that, precisely for that reason, only a minimum of government was required.

From this novel point of view, a free society could be regarded as consisting of two races: property owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrates were necessary as hunger was a better disciplinarian than the magistrate...

The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith's humanistic foundations, and incorporated those of Townsend...Economic society had emerged as distinct from the political state."

Karl Polanyi, The Great Transformation, 1944

Plus ça change, plus c'est la même chose. Only the percentages and the methods of sorting seem to matter to a certain type of ubermensch mentality. And of course force and fraud are indispensable to the accumulation and protection of their wealth.

I have spent the last day or two reading Karl Polanyi's landmark work of economic history, The Great Transformation: The Political and Economic Origins of Our Time.

Polanyi's history is particularly good because he describes in some detail how the predominant economic thought changes and adapts itself to its cultural context, the changing attitudes and philosophies of people and particular historical developments. And how it even begins to shape history as a branch of political philosophy. What are people, and what is their relationship to society as a whole? What is power? What is moral?

It is a grave mistake to treat economics as a physical science like chemistry. Chemistry seeks to quantify and explain an essentially unchanging physical world in substance if not in incidentals.  There are real laws. Theory becomes verifiable fact, and new facts build to new theories. Chemistry evolves, in that it changes with a remarkably evident progression of one thing on another which can be seen against some objective standard.

Economics reflects the changing attitudes of politics and the other social sciences to the relationship among the individual, society, and nature.  That is not to say that there is no learning in a social science. There is plenty of learning, but also a strong tendency to have to re-learn the same hard lessons over and over again. 

If someone in astrophysics were to say that the sun revolves around the earth they would be laughed off the podium and booted out of their positions. But if an economist says even now that markets are naturally self-regulating and efficient if left alone, they might be given a large grant and the chairmanship of an economics department, even though this theory has been found wanting, or as some might phrase it, a howler

There is a remarkably poignant paragraph in Polanyi where he says that since self-regulating markets have been proven to be nonsense "we are witnessing a development under which the economic system ceases to lay down the law to society and the primacy of society over that system is secured." As John Kenneth Galbraith put it, there are no new financial frauds, just variations on the old familiar themes.

Keep in mind that there is a difference between monetary theory, which is more akin to finance, and macroeconomics, which operates more generally in the realm of broad relationships and what is essentially morals or public policy. It is well said that a little learning is a dangerous thing, because one does not understand the scope of the field and their own limitations.

A certain school of economics can, and often did as shown in this history, coolly observe that profits will be maximized if a large percentage of the workers are maintained on the verge of starvation and insecurity without any support or interference from society, in the service of a superior few. We can clearly see the descendants of that particular moral philosophy in the world today.

It should be understood that by 'liberal economics' is meant 'self-regulating,' or essentially unregulated markets, and not progressivism as we might think of it today.  Polanyi goes to some lengths to show that there are no self-regulated markets that are fair and efficient.  Mostly those markets that are called self-regulated are set up with a bias that favors the insiders that control them.  Or as I said the other day, naturally occurring self-regulated markets are as common as seals reciting Shakespeare.

It is a long book. I will almost certainly read it again in more leisure. I tend to read quickly online, and more carefully when holding an actual book. But it was enjoyable and those inclined might read it with some benefit.   It gave me a framework on which to hang quite of bit of independent thought and learning, providing some additional coherence.  I think I understand why certain things have happened in the way that they have.

Bear in mind that Polanyi is a man of his time. I disagreed with many of his thoughts on the gold standard for example, even though I am not even in favor of it today as I have said, for some of the same reasons he cites. I have seen another 60 or more years of history without a gold standard, and know that what he saw was not so much attributable to the gold standard but the inflexibility of a single currency system, much as we are seeing with a euro currency and a multiplicity of fiscal regimes in the euro zone today.   And for the dollar reserve currency in the world which is in a similar process of failing for similar reasons.  I still wonder at who conceived these monstrosities and what they were really thinking, except for an expedient solution that became institutionalized with a powerful set of adherents and beneficiaries, and so long outlived its usefulness.

I include here only key passages, by no means exhaustive or complete. I have left out whole sections of his thought on land for example. But the major progression of his thought is here.

A Utopian system leads to an impasse between the adherents attempting to sustain the unsustainable and those who are obliged to endure its conflicts with reality. Much in the manner of the Wall Street financialisation cartel and the real productive economy today. The system might function well during a spectacular growth period, but when some return to normal growth occurs the system fails and a standoff occurs.

Unless resolved by organic reform that impasse can lead to 'reform by other means,' or an extreme solution and with it a general unhappiness. This is in fact his thesis, that the failure of neoliberal economics and its unwillingness to relieve the deadlock in which it held the real world economy led to the rise of the extreme solutions of fascism, communism, and the second great war. He makes an interesting case.

Enjoy.
"A market economy is an economic system controlled, regulated, and directed by markets alone; order in the production and distribution of goods is entrusted to this self-regulating mechanism. An economy of this kind derives from the expectation that human beings behave in such a way as to achieve maximum money gains. It assumes markets in which the supply of goods (including services) available at a definite price will equal the demand at that price. It assumes the presence of money, which functions as purchasing power in the hands of its owners.

Production will then be controlled by prices, for the profits of those who direct production will depend upon them; the distribution of the goods also will depend upon prices, for prices form incomes, and it is with the help of these incomes that the goods produced are distributed amongst the members of society. Under these assumptions order in the production and distribution of goods is ensured by prices alone...

Nothing must be allowed to inhibit the formation of markets, nor must incomes be permitted to be formed otherwise than through sales. Neither must there be any interference with the adjustment of prices to changed market conditions—whether the prices are those of goods, labor, land, or money. Hence there must not only be markets for all elements of industry, but no measure or policy must be countenanced that would influence the action of these markets. Neither price, nor supply, nor demand must be fixed or regulated; only such policies and measures are in order which help to ensure the self-regulation of the market by creating conditions which make the market the only organizing power in the economic sphere...

A self-regulating market demands nothing less than the institutional separation of society into an economic and political sphere. Such a dichotomy is, in effect, merely the restatement, from the point of view of society as a whole, of the existence of a self-regulating market...

A market economy must comprise all elements of industry, including labor, land, and money. (In a market economy the last also is an essential element of industrial life and its inclusion in the market mechanism has, as we will see, far-reaching institutional consequences.) But labor and land are no other than the human beings themselves of which every society consists and the natural surroundings in which it exists. To include them (people) in the market mechanism means to subordinate the substance of society itself to the laws of the market...

To allow the market mechanism to be sole director of the fate of human beings and their natural environment, indeed, even of the amount and use of purchasing power, would result in the demolition of society. For the alleged commodity "labor power" cannot be shoved about, used indiscriminately, or even left unused, without affecting also the human individual who happens to be the bearer of this peculiar commodity. In disposing of a man's labor power the system would, incidentally, dispose of the physical, psychological, and moral entity "man" attached to that tag. Robbed of the protective covering of cultural institutions, human beings would perish from the effects of social exposure; they would die as the victims of acute social dislocation through vice, perversion, crime, and starvation.

Nature would be reduced to its elements, neighborhoods and landscapes defiled, rivers polluted, military safety jeopardized, the power to produce food and raw materials destroyed. Finally, the market administration of purchasing power would periodically liquidate business enterprise, for shortages and surfeits of money would prove as disastrous to business as floods and droughts in primitive society...But no society could stand the effects of such a system of crude fictions even for the shortest stretch of time unless its human and natural substance as well as its business organization was protected against the ravages of this satanic mill...

But on the island of Juan Fernandez (an economic analogy described earlier) there was neither government nor law; and yet there was balance between goats and dogs. That balance was maintained by the difficulty the dogs found in devouring the goats which fled into the rocky part of the island, and the inconveniences the goats had to face when moving to safety from the dogs. No government was needed to maintain this balance; it was restored by the pangs of hunger on the one hand, the scarcity of food on the other. (This is the law of predator and prey).

Hobbes had argued the need for a despot because men were like beasts; Townsend insisted that they (people) were actually beasts and that, precisely for that reason, only a minimum of government was required. From this novel point of view, a free society could be regarded as consisting of two races: property owners and laborers. The number of the latter was limited by the amount of food; and as long as property was safe, hunger would drive them to work. No magistrates were necessary, for hunger was a better disciplinarian than the magistrate...

The paradigm of the goats and the dogs seemed to offer an answer. The biological nature of man appeared as the given foundation of a society that was not of a political order. Thus it came to pass that economists presently relinquished Adam Smith's humanistic foundations, and incorporated those of Townsend...Economic society had emerged as distinct from the political state...

To the politician and administrator laissez-faire was simply a principle of the insurance of law and order, with the minimum cost and effort. Let the market be given charge of the poor, and things will look after themselves...

What induced orthodox economics to seek its foundations in naturalism was the otherwise inexplicable misery of the great mass of the producers which, as we know today, could never have been deduced from the laws of the old market. But the facts as they appeared to contemporaries were roughly these: in times past the laboring people had habitually lived on the brink of indigence (at least, if one accounted for changing levels of customary standards); since the coming of the machine they had certainly never risen above subsistence level; and now that the economic society was finally taking shape, it was an indubitable fact that decade after decade the material level of existence of the laboring poor was not improving a jot, if, indeed, it was not becoming worse... (trickle down theory had not worked, mystifying economists.  The old canards are the best).

The acceptance of near-indigency of the mass of the citizens (roughly 47 to 99 percent apparently) as the price to be paid for the highest stage of prosperity was accompanied by very different human attitudes. Townsend righted his emotional balance by indulging in prejudice and sentimentalism. The improvidence (lacking personal responsibility) of the poor was a law of nature, for servile, sordid, and ignoble work would otherwise not be done. (born to be vile?) Also what would become of the fatherland unless we could rely on the poor? "For what is it but distress and poverty which can prevail upon the lower classes of the people to encounter all the horrors which await them on the tempestuous ocean or on the field of battle?"...

Robert Owen, in 1817, described the course on which Western man had entered and his words summed up the problem of the coming century...The organization of the whole of society on the principle of gain and profit must have far-reaching results. He formulated these results in terms of human character. For the most obvious effect of the new institutional system was the destruction of the traditional character of settled populations and their transmutation into a new type of people, migratory, nomadic, lacking in self-respect and discipline—crude, callous beings...

He proceeded to the generalization that the principle involved was unfavorable to individual and social happiness. Grave evils would be produced in this fashion unless the tendencies inherent in market institutions were checked by conscious social direction made effective through legislation...The Industrial Revolution was causing a social dislocation of stupendous proportions, and the problem of poverty was merely the economic aspect of this event. Owen justly pronounced that unless legislative interference and direction counteracted these devastating forces, great and permanent evils would follow...

The trading classes had no organ to sense the dangers involved in the exploitation of the physical strength of the worker, the destruction of family life, the devastation of neighborhoods, the denudation of forests, the pollution of rivers, the deterioration of craft standards, the disruption of folkways, and the general degradation of existence including housing and arts, as well as the innumerable forms of private and public life that do not affect profits...

Two vital functions of society, the political and the economic, were being used and abused as weapons in a struggle for sectional interests. It was out of such a perilous deadlock that in the twentieth century the fascist crisis sprang...

Economic liberalism (liberal in the sense of laissez-faire) was the organizing principle of a society engaged in creating a market system. Born as a mere penchant for non-bureaucratic methods, it evolved into a veritable faith in man's secular salvation through a self-regulating market. Such fanaticism was the result of the sudden aggravation of the task it found itself committed to: the magnitude of the sufferings that were to be inflicted on innocent persons as well as the vast scope of the interlocking changes involved in the establishment of the new order...

The global sweep of economic liberalism can now be taken in at a glance. Nothing less than a self-regulating market on a world scale could ensure the functioning of this stupendous mechanism. (one world government) ...No wonder that economic liberalism turned into a secular religion once the great perils of this venture were evident. There was nothing natural about laissez-faire; free markets could never have come into being merely by allowing things to take their course...The road to the free market was opened and kept open by an enormous increase in continuous, centrally organized and controlled interventionism...  (At the end of the economic continuum, both extreme laissez-faire and communism meet, becoming almost indistinguishable in their destruction of the individual and their particular social institutions which inhibit centralized control).

Stabilization of currencies became the focal point in the political thought of peoples and governments; the restoration of the gold standard became the supreme aim of all organized effort in the economic field. The repayment of foreign loans and the return to stable currencies were recognized as the touchstones of rationality in politics; and no private suffering, no infringement of sovereignty, was deemed too great a sacrifice for the recovery of monetary integrity (austerity anyone?)

The privations of the unemployed made jobless by deflation; the destitution of public servants dismissed without a pittance; even the relinquishment of national rights and the loss of constitutional liberties were judged a fair price to pay for the fulfillment of the requirement of sound budgets and sound currencies, these a priori of economic liberalism...

The root of all evil, the liberal insists, was precisely this interference with the freedom of employment, trade and currencies practiced by the various schools of social, national, and monopolistic protectionism since the third quarter of the nineteenth century; but for the unholy alliance of trade unions and labor parties with monopolistic manufacturers and agrarian interests, which in their shortsighted greed joined forces to frustrate economic liberty, the world would be enjoying today the fruits of an almost automatic system of creating material welfare.  

Liberal leaders never weary of repeating that the tragedy of the nineteenth century sprang from the incapacity of man to remain faithful to the inspiration of the early liberals; that the generous initiative of our ancestors was frustrated by the passions of nationalism and class war, vested interests, and monopolists, and above all, by the blindness of the working people to the ultimate beneficence of unrestricted economic freedom to all human interests, including their own.

A great intellectual and moral advance was thus, it is claimed, frustrated by the intellectual and moral weaknesses of the mass of the people; what the spirit of Enlightenment had achieved was put to nought by the forces of selfishness In a nutshell, this is the economic liberal's defense. Unless it is refuted, he will continue to hold the floor in the contest of arguments...

To separate labor from other activities of life and to subject it to the laws of the market was to annihilate all organic forms of existence and to replace them by a different type of organization, an atomistic and individualistic one(a vision of Orwell's 1984).

This effect of the establishment of a labor market is conspicuously apparent in colonial regions today. The natives are to be forced to make a living by selling their labor. To this end their traditional institutions must be destroyed, and prevented from re-forming, since, as a rule, the individual in primitive society is not threatened by starvation unless the community as a whole is in a like predicament...

Now, what the white man may still occasionally practice in remote regions today, namely, the smashing up of social structures in order to extract the element of labor from them, was done in the eighteenth century to white populations by white men for similar purposes... (the economic hitmen come home again).

Mankind was in the grip, not of new motives, but of new mechanisms., Briefly, the strain sprang from the zone of the market; from there it spread to the political sphere, thus comprising the whole of society. But within the single nations the tension remained latent as long as world economy continued to function...

Eventually, the moment would come when both the economic and the political systems were threatened by complete paralysis. Fear would grip the people, and leadership would be thrust upon those who offered an easy way out at whatever ultimate price. The time was ripe for the fascist solution.

The fascist solution of the impasse reached by liberal capitalism can be described as a reform of market economy achieved at the price of the extirpation of all democratic institutions, both in the industrial and in the political realm. The economic system which was in peril of disruption would thus be revitalized, while the people themselves were subjected to a re-education designed to denaturalize the individual and make him unable to function as the responsible unit of the body politic.

This re-education, comprising the tenets of a: political religion that denied the idea of the brotherhood of man in all its forms, was achieved through an act of mass conversion enforced against recalcitrants by scientific methods of torture.

The appearance of such a movement in the industrial countries of the globe, and even in a number of only slightly industrialized ones, should never have been ascribed to local causes, national mentalities, or historical backgrounds as was so consistently done by contemporaries...

In fact, there was no type of background— of religious, cultural, or national tradition—that made a country immune to fascism, once the conditions for its emergence were given. Moreover, there was a striking lack of relationship between its material and numerical strength and its political effectiveness. The very term "movement" was misleading since it implied some kind of enrollment or personal participation of large numbers. If anything was characteristic of fascism it was its independence of such popular manifestations. Though usually aiming at a mass following, its potential strength was reckoned not by the numbers of its adherents but by the influence of the persons in high position whose good will the fascist leaders possessed, and whose influence in the community could be counted upon to shelter them from the consequences of an abortive revolt, thus taking the risks out of revolution.

A country approaching the fascist phase showed symptoms among which the existence of a fascist movement proper was not necessarily one. At least as important signs were the spread of irrationalistic philosophies, racialist aesthetics, anticapitalistic demagogy, (and procapitalist demagogy for that matter) heterodox currency views, criticism of the party system, widespread disparagement of the "regime," or whatever was the name given to the existing democratic set-up...

What we termed, for short, "fascist situation" was no other than the typical occasion of easy and complete fascist victories. All at once, the tremendous industrial and political organizations of labor and of other devoted upholders of constitutional freedom would melt away, and minute fascist forces would brush aside what seemed until then the overwhelming strength of democratic governments, parties, trade unions.

If a "revolutionary situation" is characterized by the psychological and moral disintegration of all forces of resistance to the point where a handful of scantily armed rebels were enabled to storm the supposedly impregnable strongholds of reaction, then the "fascist situation" was its complete parallel except for the fact that here the bulwarks of democracy and constitutional liberties were stormed and their defenses found wanting in the same spectacular fashion...  (or as Orwell put it, a revolution is the kicking in of a rotten door - Jesse)

Fascism, like socialism, was rooted in a market society that refused to function. Hence, it was world-wide, catholic in scope, universal in application; the issues transcended the economic sphere and begot a general transformation of a distinctively social kind. It radiated into almost every field of human activity whether political or economic, cultural, philosophic, artistic, or religious. And up to a point it coalesced with local and topical tendencies. No understanding of the history of the period is possible unless we distinguish between the underlying fascist move and the ephemeral tendencies with which that move fused in different countries."

Karl Polanyi, The Great Transformation, 1944

26 September 2011

The Garden of Beasts: Die Nacht der Langen Messer - The Night of the Long Knives




I have finished reading The Garden of Beasts by Erik Larson, and I now understand why it is such a popular book of non-fiction.

It is remarkably well-researched, with an impressive set of footnotes based on original sources from diverse places. They are worth reading in themselves as they contain little delights and vignettes. The book provides deep insight into some of the minds of eyewitnesses grappling with the events of the day.

In part because of the source materials, the book spends what one might feel is an inordinate amount of time showing things from the perspective of Ambassador Dodd's daughter, the femme fatale Martha, and her many flirtations and affairs with the prominent of that city, including the head of the Gestapo and an NKVD agent from the Soviet embassy. She is not a particularly sympathetic character, being such an obviously shallow, albeit well-connected, narcissist.   Even these episodes are well written enough to be interesting if one enjoys that sort of background perspective and romantic intrigue.  And it is entertaining to read about the involvement of great literary names like Carl Sandburg and Thorton Wilder,  amongst others.  There is nothing in fame and recognition that deters personal folly.

Ambassador William E. Dodd himself is a frustrating figure, the southern born history professor from the University of Chicago who stumbles into the hornet's nest while looking for a sinecure. He comes across as petty and ineffective, carelessly anti-semitic in the manner of those times, and certainly no hero. And yet in the end he 'does the right thing' and looks good, and quite prescient, in comparison with his fellows. We might make some allowances to the need for a diplomat to be discreet while in office, and to manage perception for the support of official policy.

But it does bring home that point so many miss, that even while great events grind slowly along, ordinary and even extraordinary lives with all their petty preoccupations and diversions go on, the sun still shines, and people marry and are given in marriage, until the moment that, however slowly and in stages it may happen, the door finally closes.   .

I gained a new understanding of how some of the earlier events in the post-Weimar government progressed, and how the rise of the Nazi party unfolded, slowly, with more, but unfortunately ineffective, opposition than we might have believed, at least from 1932 to 1935. And so it was very worthwhile. No one should have been caught by surprise if they had their eyes open.

In particular I finally understand the 'Night of the Long Knives' as more than a passing intramural event as it is depicted so often in documentaries which compress the great sweep of history into an hour or two, and too often crush out the real significance, the many human undercurrents amidst ordinary preoccupations and foibles that comprise great events.

The 'Night of the Long Knives' was the first overtly extra-legal action in the Nazi rise to power. And this might be a lesson for us today as we interpret contemporary events and the perversion of mere legality without regard to morality, tradition, or honor. It was a clear sign of things to come, for those who had a mind to see it.

The book ends with the recall of Ambassador Dodd to Washington, replaced with one of the crony members of 'The Pretty Good Club.' Dachau is full of political prisoners, Jews are being individually terrorized and denied basic human rights, the infirm and defective are being sterilized and murdered, and all political and public information has been brought into conformity with the Nazis through their program of Gleischaltung

The real dark night of the soul and Kristallnacht lay in the future, having been born and emboldened by the continuing appeasement in the face of each worsening outrage against all convention and social norms. The Americans could overlook the progression of abuses against others as long as the Hitler regime 'would do business with them.'  It is the fatal weakness of realpolitik, its cumulative moral hazards, writ large. 

It is interesting to contrast the complacency of the career diplomats,  at that time most often Americans of privilege, and their preoccupation with obtaining full payment of the German bonds for their wealthy domestic constituents and the banks, with the agony of the German people as they slowly sunk into the abyss.  The lone voices that were raised in protest were suppressed, ridiculed, marginalized, and ignored even in America.  

This is a fine example of serial policy error in the service of privilege and the status quo. To many amoral minds, including especially the capitalists of the free world, Hitler's rise to power was just another business opportunity, and the plight of his victims a crisis not to be wasted, a source of great profit. And not all those who benefited were censured and punished. Some families rose to greater prominence and power, even in America, on a pile of European corpses.

In Germany the hopes of liberals and moderate conservatives alike fell before the uncompromising obsession for power and unrelenting fanaticism of a minority of some of the most banal and oddest people ever to take power in a major developed nation.   Not one of them could have risen by individual merit, but they did have a talent in exploiting other people's fears and weaknesses, and the sharp and unwavering focus of the sociopaths and psychopaths, that seems to bewilder and beguile the more diffused nature of the average person.

I was struck in fact that the great failure that was made by so many was the assumption that as the leader of a great and educated nation, Hitler was rational, and would eventually make the most rational decisions. So they believed his many assertions of his peaceful intents, and good wishes, even as he turned Europe into an abattoir. Like the efficient market hypothesis, people were blinded to reality by a theory about the natural goodness and rationality of politicians.

The dichotomy is never so apparent as in contrasting the leaders of the movement with their own Aryan ideals: the club footed Goebbels, Himmler the chicken farmer, the sybaritic Göring, the weak minded and superstitious Hess, and the boorish fanatic Hitler.  And the ordinary people made jokes about it, until even humour was crushed under the jackboot, choked out as fear and greed became pervasive.  Through an astute combination of terror, propaganda, and the perversion of the law, an entire people were persuaded to sleepwalk into the abyss.

The author includes, almost as throwaways, some interesting insights into the German character and its mutation under the Nazis.  In particular I was struck by his description of them doting on their dogs and their horses, and the national laws forbidding cruelty to animals, so that the horses, as Dodd the Virginia gentleman farmer observed, were among the fattest and best kept he had ever seen.  And in the end of it all, during the Russian assault that leveled the area around the Tiergarten and the Reichstag, a stray shell struck the stables, and the horses stampeded down the ruined avenues, in flames.

As long as the personal interests of the status quo of the wealthy and powerful were served, those in positions of responsibility said and did nothing, until it was too late even for them.

"What most occupied the attention of the State Department [in 1934] was the outstanding German debt to American creditors. It was a strange juxtaposition. In Germany there was blood, viscera, and gunfire; at the State Department in Washington, there were white shirts [of the wealthy career diplomats and career politicians], Hull's red pencils, and mounting frustration with [Ambassador] Dodd to press America's case [for full payment of the sovereign German debt]...

In Berlin, Dodd was unmoved. He thought it pointless to pursue full payment, because Germany simply did not have the money, and there were far more important issues at stake...

Through his first year in Germany [1933], Dodd had been struck again and again by the strange indifference to atrocity that had settled over the nation, the willingness of the populace and the moderate elements in the government to accept each new oppressive decree, each new act of violence, without protest...

Dodd continued to hope that the murders would so outrage the German public that the [Hitler] regime would fall, but as the days passed he saw no evidence of any such outpouring of anger...

For Dodd, a diplomat by accident, not demeanor, the whole thing was appalling. He was a scholar and a Jeffersonian democrat, a farmer who loved history and the old Germany in which he had studied as a young man. Now there was official murder on a terrifying scale. Dodd's friends and acquaintances, people who had been to his house for dinner or tea, had been shot dead.

Hitler's purge [June 30, 1934] would become known as 'The Night of the Long Knives,' and in time would be considered one of the most important episodes in his ascent, the first act in the great tragedy of appeasement...

This lack of reaction arose partly because many in Germany and elsewhere chose to believe Hitler's claim that he had suppressed an imminent rebellion that would have caused far more bloodshed. Evidence soon emerged, however, that showed that in fact Hitler's account was false...

The controlled press, not surprisingly, praised Hitler for his decisive behaviour...In a letter to Hull, Dodd forecast an even more terroristic regime... 'The people hardly notice this complete coup d'etat. It takes place in silence...I would swear that millions upon millions have no idea what a monstrous thing has occurred.'"

Erik Larson, The Garden of Beasts