The Utopia of Rules

I once attended a conference on the crises in the banking system where I was able to have a brief, informal chat with an economist for one of the Bretton Woods institutions (probably best I not say which). I asked him why everyone was still waiting for even one bank official to be brought to trial for any act of fraud leading up to the crash of 2008.

OFFICIAL: Well, you have to understand the approach taken by U.S. prosecutors to financial fraud is always to negotiate a settlement. They don't want to have to go to trial. The upshot is always that the financial institution has to pay a fine, sometimes in the hundreds of millions, but they don't actually admit to any criminal liability. Their lawyers simply say they are not going to contest the charge, but if they pay, they havent't technically been found guilty of anything.

ME: So you're saying if the government discovers that Goldman Sachs, for instance, or Bank of America, has committed fraud, they effectively just charge them a penalty fee.

OFFICIAL: That's right.

ME: So in that case… okay, I guess the real question is this: has there ever been a case where the amount the firm had to pay was more than the amount of money they made from the fraud itself?

OFFICIAL: Oh no, not to my knowledge. Usually it's substantially less.

ME: So what are we talking here, 50 percent?

OFFICIAL: I'd say more like 20 to 30 percent on average. But it varies considerably case by case.

ME: Which means… correct me if I'm wrong, but doesn't that effectively mean the government is saying, "you can commit all the fraud you like, but if we catch you, you're going to have to give us our cut"?

OFFICIAL: Well, obviously I can't put it that way myself as long as I have this job… (p. 25-26)

First of all, historically, markets simply did not emerge as some autonomous domain of freedom independent of, and opposed to, state authorities. Exactly the opposite is the case. Historically, markets are generally either a side effects of government operations, especially military operations, or were directly created by government policy. This has been true at least since the invention of coinage, which was first created and promulgated as a means of provisioning soldiers; for most of Eurasian history, ordinary people used informal credit arrangements and physical money, gold, silver, bronze, and the kind of impersonal markets they made possible remained mainly an adjunct to the mobilization of legions, sacking of cities, extraction of tribute, and disposing of loot. Modern central banking systems were likewise first created to finance wars. So there's one initial problem with the conventional history. There's another even more dramatic one. While the idea that the market is somehow opposed to and independent of government has been used at least since the nineteenth century to justify laissez faire economic policies designed to lessen the role of government, they never actually have that effect. English liberalism, for instance, did not lead to a reduction of state bureaucracy, but the exact opposite: an endlessly ballooning array of legal clerks, registrars, inspectors, notaries, and police officials who made the liberal dream of a world of free contract between autonomous individuals possible. It turned out that maintaining a free market economy required a thousand times more paperwork than a Louis XIV-style absolutist monarchy. (p. 8-9)

When historians write the epitaph for neoliberalism, they will have to conclude that it was the form of capitalism that systematically prioritized political imperatives over economic ones. That is: given a choice between a course of action that will make capitalism *seem* like the only possible economic system, and one that will make capitalism actually *be* a more viable long-term economic system, neoliberalism has meant always choosing the former. Does destroying job security while increasing working hours really create a more productive (let alone innovative, loyal) workforce? There is every reason to believe that exactly the opposite is the case. In purely economic terms the result of neoliberal reform of labor markets is almost certainly negative--an impression that overall lower economic growth rates in just about all parts of the world in the eighties and nineties would tend to reinforce. However it has been spectacularly effective in depoliticizing labor. The same could be said of the burgeoning growth in armies, police, and private security services. They're utterly unproductive--nothing but a resource sink. It's quite possible, in fact, that the very weight of the apparatus created to ensure the ideological victory of capitalism will itself ultimately sink it. But it's also easy to see how, if the ultimate imperative of those running the world is chocking off the possibility of any sense of an inevitable, redemptive future that will be fundamentally different than the world today must be a crucial part of the neoliberal project. (p. 129-130)

Why is it that languages always change? It's easy enough to see why we need to have common agreements on grammar and vocabulary in order to be able to talk to one other. But if that's all that we need language for, one would think that, once a given set of speakers found a grammar and vocabulary that suited their purposes, they'd simply stick with it, perhaps changing the vocabulary around if there was some new thing to talk about--a new trend or invention, an imported vegetable--but otherwise, leaving well enough alone. In fact, this never happens. We don't know of a single recorded example of a language that, over the course of, say, a century, did not change both in sound and structure. This is true even of the languages of the most "traditional" societies; it happens even where elaborate institutional structures have been created--like grammar schools, or the Académie Française--to ensure that it does not. No doubt some of this is the result of sheer rebelliousness (young people trying to set themselves off from elders, for example) but it's hard to escape the conclusion that ultimately, what we are really confronting here is the play principle in its purest form. Human beings, whether they speak Arapesh, Hopi, or Norwegian, just find it boring to say things the same way all the time. They're always going to play around at least a little. And this playing around will always have cumulative effects. (p. 200)

It's worth thinking about language for a moment, because one thing it reveals, probably better than any other example, is that there is a basic paradox in our very idea of freedom. On the one hand, rules are by their nature constraining. Speech codes, rules of etiquette, and grammatical rules, all have the effect of limiting what we can and cannot say. It is not for nothing that we all have the pictures of the schoolmarm rapping a child across the knuckles for some grammatical error as one of our primordial images of oppression. But at the same time, if there were no shared conventions of any kind--no semantics, syntax, phonemics--we'd all just be babbling incoherently and wouldn't be able to communicate with each other at all. Obviously in such circumstances none of us would be free to do much of anything. So at some point along the way, rules-as-constraining pass over into rules-as-enabling, even if it's impossible to say exactly where. Freedom, then, really is the tension of the free play of human creativity against the rules it is constantly generating. And this is what linguists always observe. There is no language without grammar. But there is also no language in which everything, including grammar, is not constantly changing all the time. (p. 200)