An Organizational Problem

Our continuing financial crisis is the latest example of ignoring what is technically an organizational problem being philosophically maintained.

Consolidation of the governing, policy space, both politically and economically, is technically risk-prone, not risk-averse; and philosophically, organizing to avoid the assumption of risk (or to empirically determine a probable outcome) is what the American Revolution (the age of Enlightenment) was all about.

When empiricism--a philosophy of thinking--emerged not as magic tricks, but a verifiable (risk-averse) means of acquiring knowledge, a revolution occured. This Enlightenment led us into an industrial revolution (the technical application of empirical philosophy), and that revolution continues to converge technical and philosophical aspects of sovereign power (organizing for self-governance, or self-determination) to occupy a singular space.

Philosophically, the political-economic interests that supported the American Revolution were technically interested in creating wealth and keeping it from being confiscated by the sovereign. Technically, they organized to protect their interests with a philosophical foundation that is empirically derived--they declared themselves ("We the People") sovereign. This "Declaration" (this thesis of independence that is the working hypothesis of science) essentially converges the "self" and "governance" into a singular space so that our objectives are easily measured and verifiably attainable, or "self evident."

(Occupy Wall Street protesters don't see a verifiable attainment, for example, and so they intend to occupy the policy space that governs the evidence--the profit and loss--of that attainment.

The protest is both prescriptively and descriptively in the spirit of the American Revolution, and the right-wing reaction is how kings reacted to the Declaration of Independence...with indifference at first, until it became self-evident that sovereignty empirically resides, both technically and philosophically, with "We the People." This, you see, is the gamma-risk dimension where the risk ontology obtains as a quantum singularity but paradoxically attains a pluralistic, teleological expression. The expression is a creative process, intelligently designed, much as our founders originally viewed the empirical value, the ontology, of a government designed by consent, or by "objective" of the governed.)

According to original, American Revolutionary thought, consolidation of power is risk prone. When sovereign power is consolidated into the hands of kings the state naturally operates contrary to our objectives--the risk of loss is fully assumed in priority. (The risk of loss is gamma, but when intelligently organized, or pluralized, in the alpha dimension, the reward fully converges with the risk so that power is both normatively legitimate and technically verifiable).

At the time of the American Revolution the debate naturally centered around the role of government authority. The Revolution revolved around determining who is legally sovereign, or self-determined, which is essentially a question of organizational technique that is philosophically derived.

While dialectical determinists argue that the philosophy of risk is technologically "pulled," consider that at the time of the American Revolution philosophy was more concerned with the risk of losing economic value to the sovereign, value that was essentially derived (organized) from the labor of the bourgeoisie (to fulfill the king's objective reality). This is what Adam Smith was referring to when he declared it is the natural right of the business class to make as much profit as it can, and keep all that it makes, because it labored over it. It was a calculus of profit and loss with the sovereign taking more value than risk assumed because the king was, by his divine, insurmountable, singular nature, too big to fail. He could cover his losses, or cause loss and determine his competition, by merely raising the rent; and if his subjects didn't like it, well, they're just "envious"...sound familiar?

Empirically, however, the (envious) bourgeois class, being Enlightened (and prone to revolution), knew that the king's "nature" (his objective reality) was not verifiably singular, but relied on the wealth that its class created to demonstrate power and maintain status (the status quo). It reasoned then that the wealth created is not the wealth and power of kings alone, but "The Wealth of Nations," which is organized by an entrepreneurial class willing to take risk as long as government does not interfere or try to take its wealth. The objective, then, is to devise a mode of sovereignty that is "hands off," and the best way to do that is "hands on"--by declaring your "self" the sovereign.

Hence, government had to be organized to ensure the right to self-determination, which essentially requires a philosophy of risk that ensures the reward is legitimately derived, and thus legitimately kept and used as the private property of the sovereign. There needs to be a philosophy to support the new, organizational technology from which the value of self-determinism derives--the job of managing risk so that the risk-taker can keep, as Smith said, everything the risk-taker labored to earn, but as Smith said, as well, the risk-taker, like the king, is not a quantum singularity.

The right to private property (the right to sovereign power) is organized today to deprive it of others, which demonstrates power. When private equity firms, like Bain Capital, buy up foreclosed homes, it is called "free enterprise." In other words, the corporate body (the collective person, Bain Capital, for example) is legally sovereign and has the power to determine the self, including the "self" of others like the crown did by extension of the rent.

Extension of the rent (the economic risk that inevitably transforms into political risk) is accomplished by organized consolidation of the capital, which is called free enterprise. So, when private-equity firms, like Bain, buy up distressed assets, they are consolidating industry and markets (the quantum) toward a singularity (political risk they react to as "communist" or "socialist") that overextends the rent and forces assets into distress. While it freely demonstrates (enterprises) the power of the sovereign, it arrogantly forgets what objective reality really looks like and diminishes, like the king, that on which it naturally depends.

The risk-taker is dependent on conserving the natural right of others to self-determine, and as soon as that right (his sovereignty) is not conserved, he no longer, by nature, fully assumes the right in the future, but fully consumes that right by his own self-determination. Not only is it foolishly self-destructive (greedy) to consolidate industry and markets, Smith contends, for example, it is a moral hazard (which the greedy psychopathically describe as "class envy" and "class warfare").

If the objective is to avoid the moral hazard--the fully assumed risk--by ensuring free markets, it is necessary to avoid the problem of a declining rate of profit that classical economists referred to. Remember, "the declining rate of profit" is a demand deficiency due to liquidity crises, like we have now, which results from insufficient income to demand the value of labor put into expanding the pie. This pathology of insufficient income (our recurrent risk of default), as Smith said, is an organizational problem, and while today we support the margin (the risk) by monetizing the debt, the problem, and the solution, remains the same.