Sunday, November 20, 2011

Institutional analysis and #OWS

I have long believed that there is no intellectual invention more interesting than Institutional Analysis (IA).  The second I saw how it worked, I was just stunned by its potential.  But while it is easy to describe IA, it is pretty hard to actually do it.  But we have a moment in history that calls out for forecasting methods that have proven effective and IA is one of the few intellectual exercises with a track record of actually predicting things.

#OWS—an IA case study

Rule #1 of IA  Set some boundaries for inquiry.

With #OWS, the cause for unrest (based on both the literature and signage) is overwhelmingly economic.  People are seeing such precipitous drops in their living standards they fear for their survival.  Many of these problems are rooted in the real economy—over-population, peak oil, climate change, the overfished oceans, etc.  But these problems are made infinitely worse because our governments are corrupt, our schools of economics are populated by religious nuts, are banks are run by sociopaths, and our understanding of money is beneath primitive.

#OWS protests are mostly aimed at how the economic pie is being divided.  This is certainly a worthy target (but unless the problems of the real economy are addressed, there won't be much of a pie to divide.)

The Guardian did a short animation on the numbers behind this protest motivation. Sums it up rather nicely.

To summarize: #OWS has identified a problem and the problem is real.

Rule #2 of IA  Define the institutional problem areas.

#OWS wants to affect change but is up against two MAJOR obstacles.  1) The banksters may be the most powerful, most entrenched, most violent, richest, and best organized social grouping in human history.  2) Because #OWS is essentially powerless and has no institutional memory, whatever it attempts must be made up as they go.

Here we see a gently humorous look at one of the problems a movement that is making it up on the fly must deal with.  In this case, the emergence of new class distinctions based on the old problems caused by the division of labor.

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Occupy Wall Street Divided
Daily Show Full EpisodesPolitical Humor & Satire BlogThe Daily Show on Facebook

Rule #3 of IA  Evaluate the Institutional strengths.

Even though #OWS may claim to represent the 99% and they are overwhelmingly on the side of virtue as classically defined, the odds are massively against them.  Hippies vs. folks who have been running the world for at least 300 years hardly seems a fair fight.  However it is not as one-sided as might appear at first glance.
  • The moneychangers are beginning to lose the narrative and this is the one battle they cannot lose.  A good deal of the power the moneychangers have always held has been their ability to control the magic rituals around money.  If they ever lose that, they are two-bit charlatans walking the streets.
  • They are BROKE.  They may look rich in their skyscrapers but their house of cards is ready to collapse and any of dozens of triggers could blow it over.
  • They have dozens of cultural traps waiting to bring them down.  The Fed is probably unconstitutional, the ancient world including the Old Testament has dozens of admonitions against debt and usury, the moneychangers are the only folks so evil, the Christ of the new Testament resorted to violence, and countless other examples.
The only thing that makes this even close to a fair fight is that the banksters are not nearly as powerful as they look.  Besides being overwhelmed by sheer numbers, the 99% are WAY more desperate in a physical sense.  A lot of them literally have run out of room to back down—even born cowards can become brave and creative when there is no other alternative.

On the other hand, banksters do not rise to the top of the greedpile lacking motivation.  More horrifying, they can look out the window and see what will become of them if they ever have to resort to honest work.  In addition, the banksters have one huge advantage—they have demonstrated over the years that they will stop at NOTHING.  There is no atrocity they will not commit (and have not committed) to keep their perch at the top of the something-for-nothing professions.  These are some scary mothers.  They may not be able to create much of anything, but they can do unimaginable damage.  Not surprisingly, the rest of us have have good reason to fear them.

Rule #4 of IA  Look for historical precedents.

cover of Hudson's essay
It’s a drawing of the cuneiform 
transcription of a debt cancellation 
(amargi law) by Enmetena, 
ruler of the Sumerian 
city-state of Lagash, c. 2400 BC, 
the first known legal proclamation. 
The original is in the Louvre.
Click on image to enlarge
If anyone cares to poke into the conflict between the moneychangers and the folks they exploit will discover ALL cultures that have created money have dealt with these problems.  Back in 1992, Michael Hudson wrote a clever piece called the The Lost Tradition of Biblical Debt Cancellations which demonstrates how fundamental this concept is to both the Jewish and Christian traditions.  Since some form of debt cancellation is the only way there will be any meaningful progress in the bankster-#OWS conflict, it is a good thing to understand that we are descended from people who thought long and hard about these issues.

And if the conflict is cannot be resolved out of good will, there are always revolutions.  The French Revolution of 1789 not only resulted in a large drop in their Predator classes, it also laid the groundwork for Napoleon's monetary reforms.  (Of course, Napoleon would piss away his amazing prosperity on pointless military ventures—proving the Revolution did not get rid of ALL the useless Predators.)

Anyway...this is how Institutional Analysis is done.  You stick to observable phenomena and historical analysis that is beyond rational debate, and you don't get too far lost.  Of course it is one thing to say that bankers tend to act like bankers because there are thousands of years of recorded history to back up your point.  It is quite another to know with some degree of certainty what that means—at the very least, you must know some of that history.  Like Edison once said about invention, IA is 2% inspiration and 98% perspiration.

According to my own IA, #OWS has a pretty good chance of eventually triggering some basic economic reforms.  This NOT because I believe in leaderless drum circles but because the banksters have run out victims in the Producer Classes and have begun to turn on their own.  Banksters will agree to minor regulatory reform because they need protection from even more ruthless and cunning banksters.  Major reforms are another matter.  By utterly corrupting the economics profession, the banksters destroyed most of the intellectual firepower necessary to do something meaningful about the problems facing the real economy.

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