Hegel on Wall Street - NYTimes.com - 0 views
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hegel self-interest practices meaning capital virtue Wall Street
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That we all agreed about the moral ugliness of the bailouts should have led us to implementing new and powerful regulatory mechanisms. The financial overhaul bill that passed congress in July certainly fell well short of what would be necessary to head-off the next crisis. Clearly, political deal-making and the influence of Wall Street over our politicians is part of the explanation for this failure; but the failure also expressed continuing disagreement about the nature of the free market. In pondering this issue I want to, again, draw on the resources of Georg W.F. Hegel
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the primary topic of his practical philosophy was analyzing the exact point where modern individualism and the essential institutions of modern life meet.
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The “Phenomenology” is a philosophical portrait gallery that presents depictions, one after another, of different, fundamental ways in which individuals and societies have understood themselves. Each self-understanding has two parts: an account of how a particular kind of self understands itself and, then, an account of the world that the self considers its natural counterpart. Hegel narrates how each formation of self and world collapses because of a mismatch between self-conception and how that self conceives of the larger world. Hegel thinks we can see how history has been driven by misshapen forms of life in which the self-understanding of agents and the worldly practices they participate in fail to correspond.
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Hegel’s probing account means to show is that the defender of holier-than-thou virtue and the self-interested Wall Street banker are making the same error from opposing points of view. Each supposes he has a true understanding of what naturally moves individuals to action. The knight of virtue thinks we are intrinsically good and that acting in the nasty, individualist, market world requires the sacrifice of natural goodness; the banker believes that only raw self-interest, the profit motive, ever leads to successful actions.
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Both are wrong because, finally, it is not motives but actions that matter, and how those actions hang together to make a practical world. What makes the propounding of virtue illusory — just so much rhetoric — is that there is no world, no interlocking set of practices into which its actions could fit and have traction: propounding peace and love without practical or institutional engagement is delusion, not virtue.
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Conversely, what makes self-interested individuality effective is not its self-interested motives, but that there is an elaborate system of practices that supports, empowers, and gives enduring significance to the banker’s actions. Actions only succeed as parts of practices that can reproduce themselves over time. To will an action is to will a practical world in which actions of that kind can be satisfied — no corresponding world, no satisfaction. Hence the banker must have a world-interest as the counterpart to his self-interest or his actions would become as illusory as those of the knight of virtue.
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Actions are elements of practices, and practices give individual actions their meaning. Without the game of basketball, there are just balls flying around with no purpose. The rules of the game give the action of putting the ball through the net the meaning of scoring, where scoring is something one does for the sake of the team. A star player can forget all this and pursue personal glory, his private self-interest. But if that star — say, Kobe Bryant — forgets his team in the process, he may, in the short term, get rich, but the team will lose. Only by playing his role on the team, by having an L.A. Laker interest as well as a Kobe Bryant interest, can he succeed.
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Every account of the financial crisis points to a terrifying series of structures that all have the same character: the profit-driven actions of the financial sector became increasingly detached from their function of supporting and advancing the growth of capital. What thus emerged were patterns of action which, may have seemed to reflect the “ways of the world” but in financial terms, were as empty as those of a knight of virtue, leading to the near collapse of the system as a whole. A system of compensation that provides huge bonuses based on short-term profits necessarily ignores the long-term interests of investors. As does a system that ignores the creditworthiness of borrowers; allows credit rating agencies to be paid by those they rate and encourages the creation of highly complex and deceptive financial instruments. In each case, the actions — and profits — of the financial agents became insulated from both the interests of investors and the wealth-creating needs of industry.
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Nothing but fierce and smart government regulation can head off another American economic crisis in the future. This is not a matter of “balancing” the interests of free-market inventiveness against the need for stability; nor is it a matter of a clash between the ideology of the free-market versus the ideology of government control. Nor is it, even, a matter of a choice between neo-liberal economic theory and neo-Keynesian theory. Rather, as Hegel would have insisted, regulation is the force of reason needed to undo the concoctions of fantasy.