There are a number of different cults in the financial world where I earn my bread and butter. One is the school of technical analysis, whose sectarians are called “Chartists” on the Street. The Chartists try to discern patterns in the curves of recent market indices that resemble other such patterns evident in economic history, and then predict what will happen next on the basis of what followed a previous instance of the recent shape. This is exquisitely bass-ackward, because the recent shape of the curve of a broad market index like the S&P 500 is a derivate of the recent changes in investor expectations about the future course of corporate profits, which are a proxy for changes in overall economic wealth, which are derivates of changes in general economic activity, which are in turn derivates of trillions of discrete economic decisions by actual human agents, that result in physical work. What moves the economy is the work triggered by those decisions; like your decision about whether to enjoy the marginal beer as you read this fascinating blog, or not. For everyone but the Chartists themselves, the patterns in the recent shape of the curve of an index don’t factor into their quotidian decisions. What do thus factor, for most people, are quite concrete moral and aesthetic considerations – like, “Boy, I sure could use a beer; but, these pants are too tight, lately, so …” The Goodness and Beauty, the Economic Value, of society, are produced by the moral and aesthetic decisions of human agents.
Technical analysis, then, is not only risibly reductionist, but it reduces economic activity, not in the wrong way, but in a wrongheaded way, a way that can’t even be wrong; as if physicists were to attribute the behavior of the physical systems under their study to their tables of measurements of such systems.
So, anyway, I’m not a Chartist. Charting is interesting, in rather the way that finding shapes in clouds is interesting. But I myself am of the High Church of Efficient Markets; my cult’s regard for the Chartists in rather like that of Episcopalians for Pentecostal snake-handlers. As an investment technique, I think technical analysis is bogus. Understand, this is a terribly courageous thing for me to say, because Chartists are rather like Randians: you do NOT want to be heard questioning their creed, or they will be all over you. Such at least is their rep on the Street. I don’t believe I’ve ever actually meet a Chartist in real life, or a snake-handler either, for that matter.
Do I sound like I’m sneering? I don’t mean to; for there is more to the story. Consider that, just because a man is handling snakes in church, and so putting God to the test, that does not mean the Holy Spirit is not at work in him, or in the snakes. Likewise, just because the curves on charts don’t move the markets of which they are mere artifacts, that doesn’t mean that the curves contain no information at all. Indeed, if the world is intelligible, as indeed we find that it is, then charts of any aspect of its behavior must be informative, if we but look at them rightly. Put another way: waves simply could not appear in honest, accurate charts of the behavior of physical systems, such as human society, unless they were veridical representations of actual waves in the behavior of actual entities. The waves on the charts don’t produce the waves in the actual world, but the actual waves are indeed really there to be charted. If we had a way to understand all the waves of activity in the world that are factors of market indices – which is just to say, if we had a way to understand all the waves of activity in the world – then, in principle, we really could predict the future of the world, and therefore of markets, on the basis of those curves. But we have no such way, and Gödel has shown that we can’t have such a way. There is no such thing as a complete description or measurement of the world, no Theory of Everything, that can be expressed within the logical system of the world. This, in the final analysis, is why there will always be impenetrable theological mysteries.
So: there really are these waves in the activity of the actual world, and we have no reason not to think there are not a very great number of them, all superposed, operating in human societies. We are nowhere near understanding them, yet; we are, rather, at the very beginnings of assembling our natural history of these waves. And the project is an intellectual backwater, perhaps because there is so much lower-hanging fruit available – like, climatology, right?
Do you detect a snicker? Well, perhaps this time you do …
Backwater it may be, but it is busy with all manner of amateur scholars. I am not such a one. I know about S curves and Kondratieff cycles, but … well, the doctrine of the Trinity is hanging there, right in front of me, so …
Nevertheless – sorry about all this preamble – I have begun to wonder recently whether we might not have arrived at one of those points in history when lots of different social waves (which I myself have no hope of understanding, or even specifying) are constructively superposed in such a way as to provide an opportunity for a phase change, in which great stress on social systems catalyzes social liquefaction. At such points in history, everything seems suddenly up for grabs, susceptible of reinvention. All that is solid melts into air, the world is turned upside down. The societies that emerge from such periods are often quite different than their predecessors. The last time we went through such a change was in the decade or so beginning in about 1968; before that, it was the decade or so beginning in about 1918.
Such phase changes needn’t be all that violent, as human violence goes. They are convulsions more of weltanschauung than of physical bodies. In such periods, people simply begin to look at things in a novel way. Under these new perspectives, people evaluate their experiences differently; and these evaluations are then realized in their moral decisions, in the works they then perform, and so in the concrete economy. Over the subsequent years, the new perspectives – and their logical implications – slowly permeate the fabric of society, affecting customs, laws, language, liturgy, institutional arrangements, economic valuations, and the built environment.
I’m not so much interested in all the curves as in the possibility that we are involved in a phase change. Consider all the huge convulsions – mostly non-violent, or violent on a relatively trivial scale by recent historical comparison – that have been underway over the last four years:
- Financial Panic.
- The first black President.
- The first avowedly Radical and anti-American President.
- Apogee of Social Democratic policy in the US (with Obamacare, etc. ad nauseam)(feeds back into #1).
- Collapse of Social Democratic policy in Europe (feeds back into #1).
- Debt crises – EU debt, US federal and municipal debt, unfunded pension liabilities as far as the eye can see, etc. – leading to hyperinflation (now in the works)(feeds back into #1).
- Accelerating collapse of marriage, sex roles, the family, sexual morality, religious faith and practice; leading more and more obviously to social breakdown, disease, chaos, personal failure and misery, violence, anomie.
- The renascence of aggressive Islam.
- Collapse of the Main Stream Media and their control over Western discourse.
- First stirrings of Radical popular resistance to the Liberal Establishment’s relentless promotion of immorality and ugliness.
I could go on. Any of us could. The net effect of all of this is that the Established system of liberalism now institutionalized throughout the civilized world is strained everywhere to the breaking point, and beyond. The financial crisis is an artifact of this crisis in our concrete social arrangements. And as more and more people are beginning to see, there just isn’t enough money in the world to keep things going as they have been. There will be no more real bailouts. Such bailouts as may be concocted henceforth will be merely notional. There will be – no, there is already underway – a terrible, terrible marking to market. Many, many institutions will likely fail.
This doesn’t necessarily mean there will be a huge long depression, or riots, or a total breakdown of social order. These things could happen, of course. But in the Panic of 1819, unemployment in Philadelphia was at 75%; three years later, everyone was back at work again. If the marking to market is allowed to run its course, quickly, the period of suffering – i.e., of reforming our lives so that they agree with reality – can be relatively short.
If the marking to market is frustrated and delayed, as in the EU right now, it will take much longer and will be far more destructive to basic social order, which – like markets – is a derivate of personal morality. A sustained period of economic insanity, such as the Russians endured, can demolish personal morality. This happens because in an insane system it is not possible, in the final analysis, to behave in a way that makes real sense. Morality, being the proper adjustment of behavior to reality, is simply and only the sensible, intelligent, rational way to behave. The Natural moral Law makes itself felt first in common sense. Survival in an insane system depends on violating common sense, on behaving insanely. It depends on enacting a concrete repudiation of common sense, again and again, as a condition of merely getting along from one day to the next. When a whole people has been trained away from common sense by consistent practice of moral insanity, and is no longer very capable of teaching practical wisdom to their children, it can take many generations to recover it, and then to learn the habits of virtue.
Such a perdurant moral desert need not happen in the West. A time of economic crisis is ipso facto a time of moral crisis; and a moral crisis is at root an intellectual crisis. When in our course through life we stumble at a comeuppance of some sort, we naturally begin to wonder what we have misunderstood, and how we ought to change our policies. Discomfort attracts attention, triggers deliberation, learning, neural reorganization. And people can adapt their behavior to a new situation very quickly, once they apprehend it. I rather think that, once Westerners see the handwriting on the wall, as increasingly they do, they will be ready to turn on a dime. The whole ridiculous edifice of liberalism could then disappear almost overnight. We’ve seen it happen before, to peoples far more oppressed by it than we have ever been.
A wicked, insane system can vanish in a week; can become suddenly so totally irrelevant that everyone just drops it. We must remember that liberalism, being a tissue of falsehoods, is terribly weak, and vulnerable to the merest breeze of contradiction, whether it issues from cogent argumentation or the accidents of history. This is why liberals instantly revert to enraged ad hominem spluttering when they encounter difficulties, and begin to look about for a sacrificial victim, even if only among their own. The Revolution always devours its young; Obama may be about to find himself on Moloch’s menu, the latest scapegoat for the slow-motion liberal train wreck.
More than anything else, what has made me wonder whether Something might be Happening (we don’t know what it is; we *can’t* know what it is, until it has happened) is that the children have begun to insist that the Emperor is Naked. Once the children begin to insist such things, the scales soon fall from the eyes of their seniors. And when that happens, it can be like waking from a bad dream to bright solid day, with the cheerful smell of strong coffee wafting up the stairs. Anything can then happen. On such a morning, humble folks can find themselves setting forth on a Quest.
 Viz., the generalization of the civil rights movement of the sixties from blacks all the way to sexual perverts.
 Interestingly, it is in changes to the built environment that such changes of perspective are often first evident. A case could be made that the Restoration movement that began in the 70’s – a phenomenon of folk architecture, driven by homeowners, developers and town fathers rather than by the nihilist architectural academy – was the first hint of a cultural turn to the traditional and humane, and away from the brutality and nihilism so apparent in Modern and Post-Modern architecture. A similar wave of Restoration swept England at the time of the Oxford Movement.
 The apprehension is key; it is generated by discomforts generated by intellectual errors, which can be masked for a long time by great prosperity.