Finance Is A Cult

[ska_mna]

You'll love this one...

Umair Haque puts up the Wikipedia definition of a Cult alongside his analysis of the Finance Industry and asks "Is Finance A Cult?"

I have to resist reposting every blog post this guy writes as I could flood this forum with them - every one is a gem in my opinion!

Full article here >

In the last post, I suggested that modern-day "finance" as we know it has little to nothing to do with (real) economics. Where economics is about creating authentic value, igniting positive sum games, discovering pathways to prosperity, finance is (or has become) about reshuffling yesterday's value, extracting the lion's share in zero sum games.

Yet, the self-appointed sheriff of the global economy--the master "trader"; in reality, a mere jumpsuited technician of a lethally dysfunctional machine--is viewed as the modern-day equivalent of a mystical seer, a Delphic oracle, whose visions earn the indisputable right to luxuries and riches beyond the most avaricious dreams of the kings of yore.

All of which raises the question: if modern-day finance isn't (about) economics, then what is it? I'd like to suggest it's nothing more than--and nothing less than--a cult.

Consider, for a second, a quick listof characteristics of mind control techniques that cults use:

Studies performed by those who believe that some religious groups do practice mind control have identified a number of key steps in coercive persuasion:

• People are put in physical or emotionally distressing situations;
  
• Their problems are reduced to one simple explanation, which is repeatedly emphasized;
  
• They receive unconditional love, acceptance, and attention from a charismatic leader or group;
  
• They get a new identity based on the group;
  
• They are subject to entrapment (isolation from friends, relatives and the mainstream culture) and their access to information is severely controlled.
  

Let's go through each one by one.

People are put in physically or emotionally distressing situations.

Does the edifice of modern-day finance put people in emotionally and physically distressing situations--moreso than they have to be, to amplify the stakes? In fact, it puts entire nations and regions in them--just ask Europe, America, or China. The cries of "Panic!! Armageddon!!" that every minor question or challenge to the cult of finance are met with are a form of inflicting distress--as are the constant looming threats that "the markets" will eternally, hellishly punish those who fail the test of virtue.

Problems are reduced to one simple explanation, repeatedly emphasized.

Does the monolith of modern-day finance reduce problems to one simple explanation, repeatedly emphasized? Sure: it's the idea that I've called financial determinism--that through unfettered financialization (read: bigger banks, funds, faster trades, more intense buying and selling of paper) the world's challenges can be surmounted, and humanity's biggest problems solved--and that conversely, without hyperfinancialization, humanity has little chance at prosperity. Simply put: more finance, good. Less finance, bad. Would that the world were so naively simplistic.

They receive unconditional love from a charismatic leader.

One word: Geithner. Kidding aside, the point is: the cult of finance has a set of leaders--leaders who show cult members a level of unconditional love that's truly breathtaking, that makes religious cult leaders look like misers. Bailout after bailout after bailout for blowing up entire economies? Now that's unconditional love.

They get a new identity based on the group.

Does modern-day finance create "a new identity based on the group"? I think so. Once you're a member of the cult of finance, the kid gloves come on. You're essentially above the law, beyond the state, and through the looking glass. And I'd guess that might be behind the curiously overweening sense of power most of the members of this cult display: the off-the-cuff remarks that bank chiefs make, for example, that are farcically absurd (when they're not savagely dehumanizing)--like Lloyd Blankfein's famous claim that Goldman Sachs is just "doing God's work".

They are subject to entrapment, and their access to information is severely controlled.

Does modern-day finance create situations of entrapment, and control access to information? Of course--it's entire "business model", as anyone who's spent more than a day or two inside an "investment bank" is premised on hoarding, restricting, limiting, and squeezing information--and so literally keeping nations and corporations, CEOs and prime ministers in the dark. This point is indisputable, given the steep rise over the last few decades in revenues from trading--and the not-so-secret secret that much of that trading revenue is based upon a whisper circuit of quasi-insider info. The cult of finance is premised fundamentally on sophisticated tools to erect barriers to information at every pass--that's exactly what shadow banking is.

I could go on, but perhaps my point is clear. "Finance" as we know it serves little social purpose; instead of a socially useful activity, it's a self-destructive one for nations to encourage and subsidize.

Less a legitimate collective interest in the pursuit of prosperity, "finance" bears all the hallmarks of a quasi-religious cult--a "hypermachine" whose goal is to, at all costs, enforce loyalty to a fantasy of divine salvation (with lurid threats of eternal punishment and foregone salvation), dictated from on high by charismatic leaders, on whose tablets are inscribed a set of commandments that are nothing but a tightly controlled system of organization that uses simplistic, lowest-common-denominator techniques of social domination and psychological subjugation to sharply circumscribe the boundaries of human freedom, responsibility, and growth.

It's got little to do with economics, prosperity, and humanity--and a whole lot to do with big, fat, dirty money.

Oh, hi--welcome to the Great Stagnation. Want fries with that cult membership?

Brilliant!

[wonderpup]

This is the truth of it I think.

It also explains Economist's. I've long wondered why this essentially useless and non functional role persists, more so given their collective failure to detect the single largest financial disaster in human history.

Their value lies not in the practical but in the ritual- their role is not to critically analyse the doings of their masters but to sanctify those doings- in the manner of a witch doctor's ceremonial blessing of the tribe before a battle.

This also explains why the core members of the financial sector seem impervious to the utter failure of their own model of trickledown economics, which they continue to propagate to this day. The point being that neo liberal economics-being a religion-does not require the validation of empirical reality- it- like God- just is.

America is a country of religions and cults- so it's not that surprising that Wall street- the inner sanctum of money here on earth-should become a 'holy' place- and that those who utter criticisms are in their turn branded as 'unamerican' - they are, after all, infidels and unbelievers.

The real charge against Occupy Wall Street is not it's objectives- no one seems to know what they are- the real crime of the protesters is their willingness to spit in the face of God. They dare- horror of horrors- to utter criticisms against capitalism itself.

[(Blizzard)]

This is the truth of it I think.

It also explains Economist's. I've long wondered why this essentially useless and non functional role persists, more so given their collective failure to detect the single largest financial disaster in human history.

Their value lies not in the practical but in the ritual- their role is not to critically analyse the doings of their masters but to sanctify those doings- in the manner of a witch doctor's ceremonial blessing of the tribe before a battle.

This also explains why the core members of the financial sector seem impervious to the utter failure of their own model of trickledown economics, which they continue to propagate to this day. The point being that neo liberal economics-being a religion-does not require the validation of empirical reality- it- like God- just is.

America is a country of religions and cults- so it's not that surprising that Wall street- the inner sanctum of money here on earth-should become a 'holy' place- and that those who utter criticisms are in their turn branded as 'unamerican' - they are, after all, infidels and unbelievers.

The real charge against Occupy Wall Street is not it's objectives- no one seems to know what they are- the real crime of the protesters is their willingness to spit in the face of God. They dare- horror of horrors- to utter criticisms against capitalism itself.

The word you are looking for is 'hegemony'. Modern finance is a key part of the dominant hegemony.

Economics is really just a branch of sociology, and is an interesting and valuable thing for humans to study. The interesting question is, why are influential economists so bad, to the point that they often don't even understand their own theories?

Why, for example, do they never distinguish rent-seeking from productive business? Why do they believe useless statistics such as GDP?

For example, consider the definition of a recession. In recession, out of recession, it makes no difference because it has an arbitrary definition (one that can be manipulated by government spending).

And yet economists don't seem to get this. Are they really that shallow?

I suspect that economists are important to the ruling belief system, since it justifies itself using the language of business and trade, and so economists have to be co-opted. Those economists that support the ruling class (because they aren't really very good) rise to the top of banks and governments. Economists that question these ideas just get ignored.

[nmarks]

The perception of finance as a cult stems from the smug self-satisfied camaraderie that has always controlled it, in the modern era starting with the bribing of the King and the formation of the then privately owned privately controlled Bank of England in 1694.

Edited October 12, 2011 by nmarks

[Setantii]

This is the truth of it I think.

It also explains Economist's. I've long wondered why this essentially useless and non functional role persists, more so given their collective failure to detect the single largest financial disaster in human history.

Their value lies not in the practical but in the ritual- their role is not to critically analyse the doings of their masters but to sanctify those doings- in the manner of a witch doctor's ceremonial blessing of the tribe before a battle.

This also explains why the core members of the financial sector seem impervious to the utter failure of their own model of trickledown economics, which they continue to propagate to this day. The point being that neo liberal economics-being a religion-does not require the validation of empirical reality- it- like God- just is.

America is a country of religions and cults- so it's not that surprising that Wall street- the inner sanctum of money here on earth-should become a 'holy' place- and that those who utter criticisms are in their turn branded as 'unamerican' - they are, after all, infidels and unbelievers.

The real charge against Occupy Wall Street is not it's objectives- no one seems to know what they are- the real crime of the protesters is their willingness to spit in the face of God. They dare- horror of horrors- to utter criticisms against capitalism itself.

Agree with everything you said. Good post.

[wonderpup]

Why, for example, do they never distinguish rent-seeking from productive business?

Yes you would think this would be an important line to draw. But as you point out many economists are employed by the rent seekers, so their best interest lies in not making the distinction.

What's pernicious about economists is their implied claim to scientific objectivity- they lend a spurious intellectual cover to ideas that are laughably shallow and have proven totally false in practice.

They are not scientists, they are paid spokesmen for the institutions that employ them or who fund their employers.

[Executive Sadman]

Whose the cults leader then?

Bring down a cult leader, you bring down the cult.

Rothschild? Soros?

Krugman?

[Executive Sadman]

NM, seems to say geitner.

Though most seem a lot more suspicious of Soros IMO.

[billybong]

Likely it is indeed a "cult".

These days simply a cult of fraud, deception, greed, looting, thievery, corruption.................................................

Blimey, the topic link might even deserve to occupy part of a "corner" of the Private Eye magazine

Edited October 12, 2011 by billybong

[ska_mna]

This is the truth of it I think.

It also explains Economist's. I've long wondered why this essentially useless and non functional role persists, more so given their collective failure to detect the single largest financial disaster in human history.

Their value lies not in the practical but in the ritual- their role is not to critically analyse the doings of their masters but to sanctify those doings- in the manner of a witch doctor's ceremonial blessing of the tribe before a battle.

This also explains why the core members of the financial sector seem impervious to the utter failure of their own model of trickledown economics, which they continue to propagate to this day. The point being that neo liberal economics-being a religion-does not require the validation of empirical reality- it- like God- just is.

America is a country of religions and cults- so it's not that surprising that Wall street- the inner sanctum of money here on earth-should become a 'holy' place- and that those who utter criticisms are in their turn branded as 'unamerican' - they are, after all, infidels and unbelievers.

The real charge against Occupy Wall Street is not it's objectives- no one seems to know what they are- the real crime of the protesters is their willingness to spit in the face of God. They dare- horror of horrors- to utter criticisms against capitalism itself.

Wonderpup is one of my favourite posters on this forum at the moment, always seems to put my thoughts into a concise paragraph or two.

On the subject of breaking the cult - how is this going to happen? Like wonderpup says, OccupyWallStreet (OWS) is coming under all sorts of flak for daring to challenge a religion. I think the side who wins this war of economic principals in the US will be the one that manages to get the argument of patriotism on their side. So for example, I think OccupyWallStreet needs to start pointing out that the crisis America is facing is so great that it is going to destroy the country on the World's economic stage (if the middle class goes, so does the country). Therefore is it not more patriotic to oppose the hegemony and reinvent the economy on real wealth creating industries? Surely anything other than that would be unpatriotic. If they get patriotism on their side, then they'll get most of the red states on their side too.

It's also why I think, if the OWS brigade can get the aforementioned patriotism on their side, America could undergo the economic revolution needed before we do. We don't do patriotism in this country and just expect the state to sort everything out for us.

That said, this is encouraging this morning:

http://www.bbc.co.uk/news/business-15286447

European banks may need to raise 200bn euros

The EBA wants banks to have capital reserves of between 9% and 10% of their overall assets. European banks may have to raise a collective 200bn euros ($276bn; £175bn) to boost their capital reserves.

The proposal is being made by the European Banking Authority (EBA), which wants the banks to have more funds in reserve to help protect them from any future shocks in the financial markets.

Could this help break the cult?

The irony in all this is that this massive experiment in deregulated free market finance is going to result in more state control. As pointed out by some in the "How did we get here" thread on HPC, I think all this is going to result in more state control and more socialism. It will be this direction in which the populace demands to go in, not the other way. That's not entirely a good thing, as I'd rather have a free market to allow new industries to emerge. Unfortunately the bankers demonstrated that they have all the self-control of a fat kid in a sweet shop and have therefore massively tainted capitalism with their brand of it.

[nmarks]

If freedom is power and power comes with responsibility then freedom comes with responsibility.

Responsibility is something you will never get from sociopaths and psychopaths allowed to act without restraint.

Sociopaths and psychopaths cannot be trusted to act responsibly when given freedom.

Remove them and free markets might function correctly without supervision.

Edited October 13, 2011 by nmarks