Capital Distribution

Accumulated capital is expected to distribute. That failed expectation accumulates a diplomatic risk that, if allowed to persist, will require the legitimate force of public authority (it could be an FBI raid on hedge funds, or the invasion of Normandy). For the people who demonstrate that capital only distributes at the liberty of its holders, hording capital to the point of failed expectation presents the testable limitation of the risk.

A sovereign debt crisis does not present the same level of risk it did in the first half of the 20th Century because of monetary and fiscal tools designed to diffuse the risk in posteriori. The limit has been tested to yield a result that is not expected to be a popular consent for fascism or containment of a global communist threat.

The technology for managing risk in the gamma proportion is sophisticated enough to prevent falling into extreme elitist models that promise The People stability at the expense of freedom and prosperity. However, because the tools are intended to operate in posteriori, after the general detriment has been applied (distributing the risk, not the capital, as a public good), the general benefit is limited to stabilizing the means of deriving the accumulated value of the detriment (application of the risk value) in the future (its present value).

The effect is clearly dialectical: we went from general economic crises (classic liquidity crisis like we have now) resulting in general war, to classic crises resulting in post-hoc stability of the accumulated value and the risk it presents monetized into recessionary, rather than depressionary, trends. The proportion of risk value is synthetically conserved, but not without the thesis of diplomatic force and the failure of legitimate expectation having been technically transformed into a new means of evaluating the risk.

By careful and visible examination of what is a legitimate financial risk (antithetically limiting the liberty of the bourgeois elite since the American Revolution), we are now more concerned with detecting signals that indicate the extent of the risk. Where the crown would just send in the royal troops to contain the risk out of proportion (to protect and conserve the property of the crown in extension), we now discover and prosecute "channel" and "network" risks, for example, that intend to use the signals needed to assess and apply the risk as a function of private property (the extended value the crown lost to the revolutionaries).

The military, for example, wants to know what the risk, hidden in the proprietary black boxes of hedge funds, for example, really is. They want to know what kind of tools hedgers have hidden in their boxes and how they work, and since these tools are intended to craft the element of surprise to arbitrage the value of the risk, it is job one of military analysts to not be surprised. If there is one thing intelligence officers know very well is that the technicals are easily manipulated so that it is virtually impossible to detect what is a true or false signal. It is absolutely essential to detect any and all means of manipulation to manage the extent of diplomatic risk (to either prevent or prosecute warfare) with any predictive utility.

The means of diplomatic force are much more sophisticated now than general or even limited warfare. Fighting limited wars to prevent the threat of communism, for example, is a hard demonstration of power abandoned for softer diplomacy backed by assets prepared for the worst-case scenario. It is critical, then, for the players to have an accurate assessment of the risk.

Warfare distributes capital, it is no secret, and can be operationalized with domestic policy agendas. The war on terror, for example, operationalizes with global economic growth to increase the supply of labor available to the capital. This increases the level of risk on two fronts, both foreign and domestic which is, as federalists describe it, the exclusive, diplomatic domain of elite control. Any tendency to pluralism is countered by the need for authoritative control of potential conflict, keeping a practical and analytical elitist model in both a familiar and apparent (but devised) necessary condition.

An elite model is necessary to maintain civil order (and so doing causes incentive for civil disorder). It is an organizational tautology of conflict--a feedback loop that algorithmically predicts the stimulus and the frequency of the response. The feedback achieves a stable (predictable) instability that tests the extent of the risk by demonstration of power (like the crown did, which is why Jefferson called the Federalists "monocrats").

We see, then, how the elitist model utilizes both validation and verification for the application of power. The need for elite control is built into the model and the extent of the risk is verified by its demonstration.

The elite have learned not to allow the demonstration (the accumulation of capital) to occur (distribute) with world-wide conflict because the risk becomes extensively out of control and ontological; and the more ontological, the more likely risk will pluralize from consolidation into a more verifiably legitimate state.

The power elite of consolidated capital know very well that the cheap labor sustaining the current accumulative trend into the top 2 percent of incomes has bourgeois aspirations. Until those green-shoots mature, the risk accumulating in more mature labor markets is a threat to that accumulation of wealth. The threat accounts for the urgency to fix social security rather than distribute the accumulation to reverse demand deflation. This is a very significant miscalculation of the risk. The jobless, for example, are being told that they will have to work longer to retire, provided you have a job, which requires you work longer if you get one that does not competitively export to a cheaper labor market that consolidates the capital in the form of undistributed wealth.

Without the expected distribution of the capital, The People (the sovereign) are faced with a no-win scenario, and telling them that they will need to pay a consumption tax with the longer working time is an overextension of the risk that has very questionable intellectual value. Thus the need for the force and legitimacy of public authority fully prepared for the worst-case scenario.

The reason Wal-Mart is not allowed in New York City is because it is a threat to civil order. The risk is too high. With that high risk would be a high reward for Wal-Mart, but that reward would not sufficiently distribute to support the rents. Sure, there would be plenty of inexpensive, cheap-labor goods, but massive unemployment and deflation. The risk to the community is calculated to exceed the reward, averting the accumulation of risk (the consolidation of value) into a crisis proportion.

The risk is subordinate to the general welfare.

In either case, whether order or disorder in priority, whether pluralism or consolidation, the constant value is the general welfare. Hamiltonians argue, for example, that equitable distribution of wealth is a risk to the general welfare because we then lose the capacity for identifying those who are most capable of managing the risk. Consolidation of industry and markets (reducing the free market to an economy-of-scale efficiency), then, indicates the proper and efficient management of the risk by those who are most capable of reducing, or leveraging it, to their advantage.

Pluralists, on the other hand, argue that elites are the risk to be managed. Whether it is fascism, socialism, communism or whatever "ism," it is the power elite that presents the risk to be managed.

Without elite management of the risk, it is otherwise managed by The People toward a peaceful and prosperous end (the empirical, popular legitimacy of a free-market ontology, continuously tested and re-tested so that trust is a function of verification). Rather than The People being subordinated to the elite, the elite are subordinate to The People...to the Sovereign (the risk that the elite consider counter-revolutionary).

Natural subordination of the risk to the general welfare is subjected to all manner of philosophical interpretation, but they are all objectively concerned with its accumulation and distribution toward an expected, measurable value (or the possibility of its modification). Failure of that expectation, whether dominant or subordinate, requires the force and legitimacy of public authority to manage the risk the failure represents.

Accumulated capital is expected to distribute, and if it does not, the legitimate force of public authority is a fully expected value of the risk assumed. For a power elite, the assumption of loss is modeled into systemic risk, like the systemic risk that has recently led to bailing out entities deliberately designed to be too big to fail. Deconsolidation--distribution--of the value will successfully manage this risk to the fullest satisfaction of the Sovereign...The People.

With the risk of failed expectation fully discounted in priority, we can be well on our way to the peaceful and prosperous pluralism we all know we should have but are denied with the overvalued expectation of elite authority.

That failed expectation accumulates a diplomatic risk. The force of public authority gains expected value against that risk, and since the risk supports the expected value, the elite naturally conserve the value without fail. The practical, organizational model of "too big to fail," for example, that technically supports consolidated capitalism causes crises that demands elite command and control. Thus, it is an expectation that is assured not to fail, giving it the appearance of repeatedly demonstrating a confirmable success when it is really a systematic means of ensuring failure and the cyclical, zero-sum value of the risk.

The assumption of risk is modeled to value at 100 percent of probable loss. Risk is then expected to be managed, discounted, to the fullest extent of that value--the risk of loss, that is, is fully assumed with the force and legitimacy of public authority. The effect is a practical demonstration of power that recursively confirms (conserves) the value of the risk without failure of expectation, which systematically limits the accumulation of diplomatic risk by popular demand.

Capital that only distributes at the liberty of its holders as a demonstration of power (only after having gained favorable tax policy along with spending cuts that do detriment to the lower classes, for example), presents a reoccurring detriment (an accumulative risk) that falsely confirms the need for elite authority. Hording capital to the point of failed expectation presents the testable limitation of the risk that indeed, by its expected reoccurrence, gains the presence of probable loss.