> At 21/08/01 21:41 -0700, Ian wrote:
>
> > He does go into how one
> >material medium's relation to time--paper--affected the bundling of
> >asset streams and how computer programs for bundling, unbundling
and
> >rebundling in the quest for the dream of liquidity and market
clearing
> >is effecting a shift in the meaning of property rights that we've
> >gotten from the legal realists through Berle and Means.
>
>
> That was broadly how I read the article. More sophisticated
electronic ways
> of doing financial business highlight the fact that paper contracts
are
> symbols too. This leads to greater complexity about what can
actually be
> done in the transfer of assets, and what an asset, or a bit of
property, is.
>
> I see this article as evidence of developing knowledge by the
> intelligenstia who manage and administer finance capital, while the
units
> of finance capital become ever larger, and ultimately more abstract
in
> representing vast masses of dead labour.
>
> It is a symptom of how the capitalist system is teetering on the
edge of
> its breakdown when its servants no longer find it rational, and yet
it is
> dependent on them.
==========
Well it seems to be a very real issue of how to manage the
computational complexities enabled by mathematics, the fact that math
can model and prescribe all kinds of economic time and whether they
are a harbinger of an improvement in forcasting robust asset streams
or are creating problems of information overload for the received view
of property rights. The essay goes into a paper by law professor
Charles Mooney published in the Cardozo Law Review in 1990 [I perused
the Cardozo website and noticed a Steve Diamond had written a piece on
Autopoiesis in America, that you Steve, 'fess up?] Paper created legal
problems and efficiency problems in back in the late 60's and early
'70's and the then head of the SEC came right out and said electronics
was going to augur a big change in the meaning of property akin to
what happened late in the 19th century under people like Justice
Holmes and others.As Maurer states "the chains of fiduciary
obligations have the potential to come undone and cause, what the
literature terms 'systemic risk'; the possibility that the whole
system, based on future obligations to settle trades promised during
the course of the trading day, will collapse."
Granted, this has always been a possibility under capitalism, but
perhaps what we're seeing is the need to insure the potentially
disastrous consequences of the computability of an enormous spectrum
of risks and volatility in asset trading taking precedence over
property rights. Mooney puts it thus: "Modern securities markets have
moved so far beyond the movement of pieces of negotiable paper that
the property law construct is inadequate and unworkable. Whatever
rules might emerge, there is a need to push the legal regime 'beyond
negotiability' and, perhaps, 'beyond property.'
> Everyone in a market place bears risk, and any attempt to redefine
the
> right to make profits from others labour on the grounds that
entrepreneurs
> have a monopoly of risk, should be firmly resisted. Workers take
> considerable risk, with much less certainty, in living in a certain
> location and acquiring certain skills with the risk of prolonged
> unemployment always over their heads.
=======
Well risk is like the game of musical chairs rather than a casino; you
want the other guy to have a monopoly on it. Capital mobility is the
opposite of capital commitment. Finance capital has attention deficit
disorder. It doesn't want to commit to anything but the next sure
thing which, of course, there is none. So it bundles and rebundles
asset/risk porfolios in some abstract space-time of algorithms,
leveraging [credit inflation] as fast as their software allows them
to. LTCM showed what happens at the limits of current computational
competence.
>
> However I do sense that risk management is the Achilles heel of
capitalism.
> The more they try and manage risk (for example in the important and
growing
> area of health management) the more they have to explore socially
stable
> ways of organising the economic activity, including the risks, which
can
> now be very expensive.
>
============
Time to watch the health of insurance firms, reinsurance firms and
securities regulators....
"With leveraging there will always exist a remote possibility of a
chain reaction, a cascading sequence of defaults that will culminate
in financial implosion if it proceeds unchecked. Only a modern central
bank, with its unlimited power to create money, can with a high
probability thwart such a process before it becomes destructive.
Hence, central banks will of necessity be drawn into becoming lenders
of last resort. But implicit in the existence of such a role is that
there will be some allocation between the public and private sectors
of the burden of risk of extreme outcomes." [Alan Greenspan]
Spinoza and Marx would love the above; if the CB can create $ ex
nihilo and risk is ultimately going to be socialized then what is the
justification for the allocation of the rewards to those who don't
bear the risks because they can displace them onto everyone and thus
no one...What is financial risk if you can create $ out of nothing and
wipe the computers clean of fiduciary duties so as to "jump start the
patient." Is monetary risk an illusion and a foil for good old
indeterminacy? I'm having a Terry Southern moment....Who decided that
the opposite of credit is debt? Or is "forgive us our debts" a code
for "eliminate a current accounting pathology; the buildings and crops
and tools and people are still here, what's the problem?"
Ian
