George Soros on Financial Crisis (Beaucoup de Links)

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Click the link above for the audio of George Soros describing the current financial meltdown.

The full transcript of the interview with Bill Moyers and George Soros here.  The wiki on Soros’ theory of financial markets is here.  I’m reading Soros’ new book on the subject (as well as a few of his previous ones) for a paper for class.  This guy is brilliant on this stuff.  One of the few minds that really gets it (Nouriel Roubini, Peter Schiff, Michael Lewis & Crew, among others).

The key part is here:

GEORGE SOROS:Which they didn’t properly understand. And there was always a separation between the people who generated the mortgages and packaged them and sold them to you and the people who owned them. So nobody was paying attention to the quality of the mortgages because they didn’t have an interest. They — all day collecting fees. And then there were other people holding the mortgages.

I’m working on the issue of credit as growing from the notion of “belief” or “trust” (in Latin credere).  Credere is the same root as Creeds.  There was no ability to trust in this system because no one knew anyone else.  Speculators, brokers, and the such are not the ones to be have been making these loans–from subprime on up, nor then those even further removed from the reality of relationship–e.g. those who did the securitization and SIVs and then later the CDOs on the SIVs.

That and the notion that human actions affect the market (what Soros calls ‘reflexitivity’) lie at the heart of the necessary re-think….Soros’ new paradigm.  It follows in his decades long critique of economics as mimicking physics (via math).  In other words, to make economics into a natural science–to describe economic behavior as conforming to natural laws.  Even the more recent attempts to re-read economics along evolutionary, biological or chaotic theories has some benefit but is still trapped in what Ken Wilber calls “subtle reductionism” (as opposed to the earlier gross reductionism).  For more on that distinction, this mind-blowingly brilliant manifesto by Christian Arnsperger.

So the economic theory (according to Soros) is based on the wrong psychology, the wrong anthropology really–that is the wrong view of the human being.  Natural science-based economics thinking is suffering from what Whitehead termed “misplaced concreteness”.  That means to confuse what is originally an insight or explanatory framework predicated on a certain context (usually a fairly easy to understand rather basic one) and universalizing that insight/frame to all contexts as if there were the “natural” state of affairs.

It is built on C.S. Peirce’s notion that what we call natural laws are actually habits in the universe.  Everything starts as a moment of novelty or choice.  But over time repeated actions habitutate and instantiate themselves into the woop and warp of the universe.  What humans term natural laws are usually just the most basic, earliest, ways of being in the universe.  They are so ground in through habitual patterning that they are essentially almost 100% determined.

In market terms, following Soros, the idea of homo economicus, the rational all-knowing actor in the market that guides so much thinking in these realms is a misplaced concreteness drawn originally from the realm of markets in durable goods, where the basic law of supply and demand and the equilibrium that grows out of those interactions basically holds.  [They are in this analogy like the movements of gas molecules in a container–you can’t predict how any one molecule will go but basically you can more or less predict how the entire set of molecules over time will interact].

But credit markets are not goods markets.  And here we are back to choice and trust and the unknowability of the future and that the real and our actions interact and are responsive to one another.  That the future is free and open.  (Soros’ political vision is built out of this philosophical point).  Hence the modernist worldview and formal operational cognition upon which it rides, assumes everything heads to equilibrium (in economics this is called Walrasian thought).  Hence no regulation is necessary as everything left in its natural state will work out to the equilibrium–since all actors in the system are rational.  Sound familiar?

Ultimately by disentangling economics from relationships (and hence from consciousness/feeling) we move into an etherealized reality, where economic value can be inflated to the point where value is accruing without any actual work/product being done.  And then eventually that self-reinforcing (self-reflexive) mania will be exposed and then the house of cards comes falling down.

Religiously to have the wrong notion of the human being is to have the wrong notion of God–in other words to committ idolatry.  Because humans are made in the image of God (so claims theology).  To consider the market as a god (“the all-knowing” market).  Idolatry socially comes out in the form of wrongly structured relationships.  In the globalized frame, we exist to serve the markets, not they us.  The fruit of that fundamental misinterpretation and mistaken practice is now coming to harvest.

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Against Natural Theology

These are some scattered thoughts arising in relation to a paper I’m working on for a class in Process Theology.

Alfred North Whitehead godfather of Process Thought argued for a God within his overall cosmological system.  Fairly unique contribution relative to modern era philosophers in that regard. So Process Thought is deeply imbued with a Natural Theological strain.  David Ray Griffin one of the godsons (I suppose) of Process Theology wrote a classic text arguing for a new Christian natural theology.

Natural Theology is the belief that arguments at the level of reason alone can be proferred to prove the existence of God.  Usually these arguments grow from a study/interpretation of the natural world.

One of the classic arguments in this regard is Thomas Aquinas’ Argument from Necessity.

Observing that every being in nature requires another being for its existence (i.e. everybody has ‘rent[s] in the universe) Aquinas argued that therefore the entire universe was (in the parlance) contingent.  And therefore the universe itself required a being to bring about its existence. Namely God.

The problem with this theory is the extrapolation from individual cases to the universal.  Just because all beings in the universe require a cause does not mean the universe is the same as individual beings.  Aquinas to his credit did leave open the possibility that the Universe was eternal (though intriguingly for the purposes of my argument he believed the universe had a beginning in time because the Church said so–i.e. it was an article of faith).

He argued that the Universe could not have existed (true) and therefore there must have been a Necessary Being to get the universe going (wrong). Or rather why would that being be Necessary and not simply another in a causal chain?  [Aquinas has to assert without evidence that an infinite causal chain can not be–but why is that automatically the case?].  The argument only functions if you can prove that there is no infinite causal chain.  But you can’t prove there is no infinite causal chain without proving a Necessary Being (i.e. the difference between causing to be and causing to exist I would argue is already a theological distinction which assumes that which it is supposed to prove) but you can’t prove the Necessary Being without proving there is no infinite causal chain which in turn you can’t prove without proving a Necessary Being which you can’t prove without proving no infinite causal chain, which you can’t…..and you see the circularity.

Later came the classic argument from design–that the Universe was like a watch and therefore just as a watch required a watchmaker so the Universe requires a designer.  Of course the idea that the universe is like a watch is a human construct and metaphor.  It’s a human interpretation.  It’s an interpretation btw of a well educated, Western European in the modern period (like William Paley who wrote this in the 19th century) because watch making was considered a high art and technology in his day.

What both of these arguments are getting at and what I think can be established through science and philosophy is that there is Eros or a potential for Emergence in the Universe (see footnote26).  But that is nowhere near the same as proving the existence of a God.

The question of a god/God is always part of a religious tradition.  It is always part and parcel of the intersubjective, linguistic reality in which we are formed.  Natural theology being a 3rd person “ITS” view of things, forgets the inter-subjective construction of reality and believes there is a way to get to The Objective Truth once and for all.  [Classic modernist fallacy].

How that this shakes out in practice is something along what the lines of Derrida describes as the absent shaping the present.  In Process Thought, Whitehead describes God as All-Compassion (Love).  But why would be the case?  In a certain strand of Buddhism, for example, there is the concept of the alaya vijnana (the so-called Store House Consciousness).  Which is also elsewhere called the Causal Consciousness.  The store house ‘stores’ all the memories of the Kosmos in a way very similar to how Whitehead’s Process God is the one who integrates all reality into itself and re-members it.  (Everything is redeemed through the Divine’s Memory).

Now of course the Process view has an evolutionary twist that the store house lacks–since evolution was not understood in the intersubjective when the notion arose in Buddhism.  But notice in the Store House concept is no necessary description of Love per se.  Because that is a construct built out of the Biblical heritage.

Which is exactly my point–back to Derrida for a second.  The absent is theology and the intersubjective.  [Whitehead’s philosophy is only partially intersubjective not fully so].  Because Whitehead, as the son of an Anglican clergyman, grew up in the Anglican tradition of Holiness/Beauty of God, this has to be background for his philosophy.  Doesn’t mean it’s wrong, it just means the idea that this provable from the exterior world or from interior (individual-subjective only) reflection is way off base.