Mutual Risk and Occupation of the Policy Space

Ensuring that consumers have integral value (like a free market provides), rather than derivative value, is what capitalism will not do by technical design.

Our being plagued with a "jobless recovery" is no accident. Nor is it the product of a cyclical ontology derived from a natural, stochastic tendency to extract value (capital) for reinvestment.

(Remember that even though capital accumulates with each boom and bust, the cycle is the result of deliberate economic action. Capitalists want us all to believe it is derived from nature--a natural law--but it is really intended to derive detriment by technical design.

The risk of default is more by human, intelligent design than a crap shoot, delimiting the concept of "risk" to "being stuck with the detriment."

The successful capitalist innovates techniques for avoiding "the risk," which means it is left for others to consume by "default"--it's survival of the fittest. The crude, selfish exploits of Homo habilis may be derived from intelligence, but it is not to be confused with the self-interest of the wise man who realizes sticking others with the detriment is but to hoist the "self" on one's own petard.)

While the detriment exacted--the austerity--is supposed to provide a benefit, according to neo-classical economics the benefit is derivative. (In other words, the benefit--the reward--is fully assumed with the risk of loss. Hence the risk and reward are integral components of the derivative process but are considered neo-classically to be the natural, and thus legitimate, outcome that derives over time which, as we know, occupies space. While we typically consider space to be an empty nothingness, this space, understand, is the "quantum" that the quants on Wall Street work with to calculate the risk of loss fully assumed and, remember, occupying this space directs the detriment, positioning "the risk" for consumption. In a free market, the risk is consumed in the alpha dimension--it is calculated by the consumer with the quantity "income," which is value accumulated over time. In the world of Wall Street quants, risk is consumed in the beta dimension. Volatility--cyclical frequency--creates the opportunity to apply the risk, or detriment, which reduces the income, or the quantity, needed to apply risk in the alpha dimension which prudently regulates, or legitimately derives, the outcome. Without fully occupying this space, the consumer--the prudent regulator--is at a loss, and this loss is the quantity of government needed to control the proportion of risk accumulated that I call, "the gamma-risk proportion"). The benefit (which fully assumes the detriment), neo-classically derives from the accumulated capital and the demand for its consumption, not the value of labor input. So, for example, when we hear analysts describe and explain the Euro crisis, it's all about consumers (the populus) needing to undergo austerity. If capital is stuck with the risk, which according to popular analysis reduces its demand for consumption (investment), then we all suffer. Hmmm...doesn't that mean only the popolaccio (the little people) should suffer detriment?

The benefit, you see, is supposed to be mutual (integral). It is supposed to benefit both labor (the physical energy needed to create value, including the intellectual energy and labor-saving property put into it) and capital (the symbolic, highly portable value that seeks the lowest risk at the highest possible return to support its integral value--the labor that adds supply and reduces risk with adequate income, and savings, to demand its consumption). Neoterically, however, risk, rather than being integral to its value, is derived from the reward.

(Keep in mind that philosophers conservatives typically refer to--Hume, Burke, Locke, Adam Smith--classically regard labor as integral value from which capital investment--adding supply, or productivity--is derived. Smith, for example, regarded consolidation of savings derived from the value of labor into the hands of a few people--which became known as "the capital"--to be a moral hazard. In other words, he regarded consolidation of value, like we have now, to not be normal, and Marx certainly did agree with that. Except for Marx, who is credited with giving capitalism a bad name and whose philosophy is identified with the tyranny and oppression he so avidly argued against, these classical philosophers are neoterically cited without regard to the integral value of labor.)

Capitalism is expected to charge the highest possible price at the lowest possible cost, which means there will always be demand insufficient to pay the price. Consequently, we should always expect there will be crises that measure overextension of that marginal product--the inability to demand the supply--as a natural condition for expanding the pie (which in a post-industrial, neo-classical environment is largely a function of labor-saving productivity gains).

Normatively, we should always expect for "the capital" to foreclose on the marginal product. It is normal for the rich to buy it up, providing the liquidity necessary to pay for it, recycling the marginal risk (the unproductive waste--the productivity gained or, that is, derived) into future, accumulated value (the expected value of productive, economic expansion being held in reserve and normatively described as "the paradox of thrift"). Naturally recurrent crises (or the risk of loss fully assumed) always makes us stronger. Without it, capitalists say, paradoxically, we cannot all have the opportunity to share in the prosperity.

The virtue (the normative, moral strength) of recycled marginal risk, understand, is an accumulation marginally excised from labor but neoterically valued as consumer demand. Depriving consumers of the value needed to avoid foreclosure (the risk of default) is the moral hazard to be avoided, not the normative value to be expected.

Instead of providing strength, the cyclical value (the beta) of the marginal risk is really the source of systemic weakness. It is used to command the marketplace enough to determine its direction while, at the same time, claiming it is free and open as long as government does not intervene.

When labor suffers the detriment of capital formation ("the risk" fully assumed), the loss, you see, paradoxically, is not really a loss. It is not necessary for government to intervene and spoil the benefit. When the Great Recession deflated the housing market, for example, and forced millions out of their homes, which hedge funds subsequently bought cheap and are now renting dear to the foreclosed until eventually their homes are sold back to them for a capital gain, there is a net benefit that accrues to consumers as long as government does not try to modify it. Measuring the detriment, you see, according to capitalists, has a late-order benefit that is described as "paradoxical" because it is really a net loss in zero-sum to the vast majority of consumers.

Since, capitalists claim, labor does not have the capacity to understand this paradox, labor erroneously tries to retribute the loss (a liability that is really an asset) by unionizing and engaging in other means of collective action. According to reactionaries, demanding government intervention is the problem and not the solution in a marketplace that is fully assumed to be free and open to anyone willing to take the risk (or as it consolidates more and more with each business cycle, to freely avoid it). The really big error here, however, is that reactionaries claim big government adds risk. No, it adds regulation missing from organizing to avoid the risk; and instead of resisting consolidation of the risk, government regulation tends to support it. Dodd-Frank, for example, is now forcing small banks to merge in order to absorb big, too-big-to-fail compliance costs, which forces them to be "too big to fail." So, here we are, accumulating risk by erroneously trying to avoid it being added. This is not paradoxical, it is, rather, a cognitive deficiency that results from an affective disorder--a full-blown ideological psychosis that fully assumes selfishness is the wisdom that prudently regulates the risk, and then when it doesn't, but goes hog-wild crazy...well, isn't that paradoxical?

(Remember, the "fully assumed risk" is a pre-ordained ontology--it is the gamma risk that catastrophically presents when it is always being avoided. For capital, it is a function of resisting consolidation of labor; for labor, resisting the consolidation of capital. The risk factor is mutual. In both cases, the natural "objective" is to resist the consolidation of power, but in both cases, paradoxically, resisted by its consolidation.)

The measurable error, according to capitalists (which includes consolidated labor that organizes to equally share in the profit margin), is inflation and unemployment, like we have now. "Surplus value" (accumulating risk of a declining rate of profit derived from a rising marginal rate) as classically described is characterized, neo-classically, as a fundamental misattribution, which is a symptom of psychosis--specifically, according to reactionaries, the psychosis of giving up the "self" (selfishness) to the tragedy of the commons.

Acting in self-interest, labor organizes to share in the profits. Since the marginal profit is demanded by earned income (labor value from which the marginal value fundamentally derives), labor does not try to derive value, but to retribute, or reintegrate, the value held in reserve. Bear in mind, the more labor shares in the profit, the more the rate of profit, paradoxically, declines; and remember, a declining rate of profit is what deflation is.

Deflation, remember, is to be resisted at all cost by keeping value held in reserve at the expense of labor (which, as is plain to see, supports the risk by trying to resist it). This is what capitalism is and does--it relies on crises to increase the economic rent. As the cost of labor falls, the cost of living increases, and if we do not bail it out with the value in reserve (the risk to be consumed), we experience general economic crises.

Without the bailout that follows every crisis (in which economic leverage--the rent--exceeds the quantity of currency in circulation, like the trillions of dollars currently occupying dark markets), the full quantity of risk assumed in priority (the gamma risk) will be measurably consumed. Consumption of the overextended value (payment of the extended rent in late order, which capitalism refers to as "needed austerity") reintegrates the derivative value in a crisis (gamma-risk) proportion. This full reintegration of value (in which labor value fully converges with consumer value) is what capitalism must prevent at all cost.

If capitalism does not prevent full consumption of the risk (typically with war and welfare in various proportions, which essentially fits, or measures, the risk proportion), capitalism meets its demise (the convergence occurs). However, full consumption of the gamma risk (by resisting it with austerity measures that serve only to support it) does not necessarily have to take the highly consensual mechanics of a peaceful and prosperous pluralism (a free market) with it.

Supporting the risk by trying to resist it is the "gamma-risk proportion." It is the risk ontology fully assumed in priority. Declaring, for example, "We hold these truths to be self evident..." is to declare, in priority, empirical occupation of the policy space that determines the self; that is, government, in priority, is what allows us to freely choose our objectives, which means "We the People" divisibly define our objective reality based on self-interest.

Our founders made it clear that government, in priority, occupies the space of risk that is fully assumed. This prior assumption of risk was, and still is, based on experience. It was clear then, as it is now, that the sovereign has the power to independently define the objective (and, keep in mind, pursuing an objective gives existential identity, both divisibly and indivisibly, to our "objective" reality). Where there is an objective there is purpose.

Objectively, however, the risk ontology does not care what our ideology is. It assumes nothing--it just "is" (as Ayn Rand described it, for example, "A is A"), which is what it means for it to be a fully assumed quantum (the value to be retributed) that will fully consume us (or reintegrate) if we do not heed the indicators of impending crises.

Understand that our founders intended to empower government with all "the risk" in priority. This "risk," you see, is the fully assumed gamma risk--the angst the kings experience by always having to shift all the detriment to their subjects in order to maintain their status, empowered with self-determination. Today, want-to-be kings operationalize this working, revolutionary hypothesis with conserving consolidation of wealth and power--the essential attributes of self-determination.

Today's power elite consider themselves the keepers of the Revolution and are entrusted with keeping its morals (essentially avoiding "moral hazards," like the power to self-determine from the bottom up) by essentially ensuring a reactionary, binomial, republican form of government ("A" is always A by ensuring that the process is "A" therefore B therefore "A" therefore B...). They must always react ("A" therefore B therefore always objectively "A") to what they consider counter-revolutionary objectives, which are typically characterized as "socialist or communist" tendencies that threaten the natural, Constitutional right of self-determination.

Toggling between "A" and "B" always centers on the size of government, which essentially operates to control the risk proportion, as we previously discussed, in priority. When the risk is off (identifiably "B"), conservatives consider the risk to be "on" (too big) and liberals consider the risk to be in abatement or "off." Being always either on or off, you see, conserves the risk in a crisis proportion--it is risk prone by being operationally risk averse, which is just nuts! It is completely psychotic, but then we have people like Ayn Rand to let us know that being selfishly psycho is not at all abnormal. It is a normative identity in which our concept of good and evil is pathologically delusional.

The only objective, verifiable morality, according to conservatives (which, by process, we have to include the "B" side) is the moral hazard of government being so big that it occupies the power of self-determination--the power of the prudent regulator to occupy his or her own space. Government does not allow, but disallows, ownership of the "self" by occupying its space.

While the occupation is supposed to be mutual, Constitutionally endowed with the consent of the governed, reactionaries are always limiting ownership of the policy space in the representative form. So, you see, while businesses that are too big to fail (which occupies the space of the prudent regulator) are the model of efficiency (capable of demutualizing the risk so that only the non-elite occupy that space), government that is too big in reaction spoils the efficiency.

Government, conservatives argue, referring to Rand's Objectivism, for example, is actually the reactionary element--it wants to go back to when the king (the sovereign power) feudally occupied the space of prudent regulator with the power of self-determination. Government, they argue, reacts to diminish the austerity (the ownership) required to occupy the space of elite status, which according to capitalists is the objective (the productive incentive) that causes economic growth and expands the opportunity to earn wealth and gain power. Government, not big business, then, presents the risk to be consumed.

Even though big business axiomatically operates to increase sales with as few employees as possible (which is a contradiction, not a paradox, because increasing sales requires employment--a distribution, or more ownership of income, not less), the reaction is to always blame the size of government for the fully assumed crisis proportion. "The risk" fully occupies the space of the prudent regulator in the form of austerity in the gamma dimension rather than the income required to consent in the alpha dimension. This is big business occupying the space of the prudent regulator, not government, and keep in mind, this occupation does not "add" risk.

(Keep in mind that a paradox, by nature, resolves. A contradiction, however, derives by objective. A contradiction will not resolve without throwing it out by objective.)

In a consolidated, corporate environment, with a massive government authority to control its extent, risk is being constantly misattributed ("A" therefore "B" therefore "A"...). Constant fundamental attribution error indicates a persistent, organizational pathology, and rather than being addressed as an accumulation of errors, it is deliberately described and explained by the high priests of consolidated capitalism, and routinely believed by the laity, to be added risk.

What is added by corporate consolidation is not risk, but government authority (bureaucratic power) to mange its accumulatively derived (gamma-risk) proportion (a' posteriori). "Government is," then, fallaciously considered, "the problem and not the solution" (post hoc). If we want to create jobs, you see, all we have to do is get government out of the way.

In a neo-classical, high-efficiency, economy-of-scale corporate environment, proponents of consolidation maintain that government does not add integral value. Instead, government adds risk from which derives a failure of expectations and civil unrest.

Occupy Wall Street, for example, conservatives contend, is not a function of economic failure because, remember, systemically influential industries and markets are neo-classically designed so that they are "too big" to fail. (Being "too big" to fail means, unparadoxically, operating with pricing power that subjects the consumer--the prudent regulator--to the producer, unlike a free market, which is why, for example, we need a Consumer Finance Protection Bureau that the corporate says is antithetical to free-market mechanics.)

The economy is deliberately organized (with subjugating pricing power) so that "the best and the brightest money can buy" controls our destiny from the top down (as Alexander Hamilton envisioned it). It is when government (consent of the sovereign) occupies economic space (like the king did) that we can expect failure. So, you see, it stands to reason, conservatives contend, the problem isn't "big business," it's "big government."

(Remember that while Hamiltonians react to consent of the governed as the tyranny--the risk--to be avoided in the interest of the general welfare, the argument relies on there being a free market. There is supposed to be a clearly defined, economic space in which consent--a pure, democratic form of governance by objective that is highly divisible and thus easily measured right down to each and every individual--operates without encumbrance. It is a space fully assumed by the prudent regulator with the full faith and credit of the Federal Government. Thus, for example, we have the Federal Open Market Committee, and thus we must have a free market--the democratic form--because we have it efficiently consolidated and operating by organized committee.)

Reactionaries argue that government gets so big it occupies the space needed to grow the economy (and, as Rand argues, because it tries to operate contrary to our highly divisible, objective, self-interested nature, government naturally limits our liberty, and thus our productivity, which leads to crises). Quite the contrary, however. By consolidating, business gets so big that it occupies the space that we call government, and then government is co-opted, promulgating regulations that support rather than resist the demand for big government--consolidation.

By allowing the consumer to fully occupy the policy space in priority, the objective (our objective reality, as Rand describes it) is redefined in a highly divisible, pluralistic manner that allows for a government that governs least.

As long as the prudent regulator is subjected to the objectives of consolidation, the consumer always occupies the toxic space where risk is dumped (de-mutualized) to presumably protect us from its aversion.