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Economics, Energy and the French

posted by Rick Webb
Rick Webb
Rick Webb

Co-founder, COO : New York

topics: Measurement and Analytics, Search, Process, Installations, and Internet Culture

on October 08, 2008 at 05:03 PM
filed under: Entrepreneurship
http://tbg.cm/gwbvJo
Noah wrote a really awesome post about economics, perception, philosophy and whatnot, and it was awesome, and got me writing a way too long comment, so I thought I’d re-post the comment here, as it deviates a bit from his core focus…
Oh man now you are totally speaking my language. I have been very, very fascinated with this topic for a long time.
First let me start with the foundation of my perspective into this aspect of economics. When I was in school I had to write my thesis on an economist. I was an existential, horny little twerp, and up for a good academic exercise, so I chose to write about George Bataille, the noted friend of the existentialists, head of the Bibliotheque Francaise in the 1920’s and famous pornographer. His most famous book was a novella called “The Story of the Eye,” which is a great little dirty romp through adolescence, bulls, defiled catholic priests and urination.
In his day job, though, he plowed the same fields as Sartre, Camus, etc., delving into the true nature of the world around us from a philosophical bent. He would write treatises on anthropology, architecture, religion, sexuality and… wait for it… Economics.
So, I had been plowing through these various gloriously nihilistic treatises when my Economics degree track required a thesis on an economist, so I chose Bataille. At the time, it proved to be a hellacious mistake – he was way beyond my pay grade – but in the long run, it has proven to be an invaluable means of looking at economics, especially when it comes to two very important touch points: the conversion of labor into currency and trade, as happened in the 16th-19th centuries, and the period we are going through now, the transition away from rooting securities to actual labor and goods.
I’m radically simplifying, but Bataille basically posited thus:
1) Economics is best defined as the study of energy on the planet, it’s harnessing, and its conversion into a usable and tradable commodity.
2) Humans are innately endowed with a desire to collect this energy.
3) As society progresses, humans collect more energy than they need for survival
4) Upon reaching excess, they are driven toward ostentatious displays and dispersing of the energy to show others that they are “secure” (he uses the term “potlatch” for this habit, drawing from 1700’s pacific northwest indians but referencing the trend throughout humanity from the pyramids to elizabeth bathory to cathedrals to the great wall).
5) Humans then fetishize the potlatch as, essentially, a PR move, and then spend beyond the safe level in trying to show others that they are secure.
6) The excess, then, actually becomes a curse. He calls this “the accursed share.”
OKAY, so the parts that I think are interesting and relevant is that he starts way back at energy. Literally energy and manna circling the globe. That is, he starts WAY back before labor, goods, production and currency. It’s al just energy.
When viewed through this, the conversion off of the gold standard, and things like CDOs right now make sense. As long as the paper is tied to actual energy, it’s fine. The specific nature connection and the conversion (trade, barter, gold standard, dollar bills, diamonds, futures, stocks), while not moot, are not vitally important either. This nicely explains why, despite all practical common concerns, it wasn’t such a big deal when we moved off of the gold standard.
it also, philosophically at least, indicates that we don’t need to freak out, necessarily, as economics moves into a weird world of paper and obligations that are difficult to trace back to the real world. If anything, something like right now actually validates that the paper is relevant and real, otherwise the real world would feel no impact as the paper market implodes.
I think, now, we’re in the beginning of a convulsive realignment as the markets advance a bit more and re-negotiate their links with this “energy,” perhaps bypassing some previously-used energy manifestations (such as homes, or goods, or even currency) that were, really, only different stepping stones.
And, finally, tying it to Baudrillard, the perceptions and panic of the people are, it would seem, according to Bataille, just as valid as a manifestation of the capture of energy swirling across the globe as gold, oil or currency. The ties are, in fact, still there. They are just not the ties that our capitalist system watches.
Economics is starting to grasp this, of course. You’re seeing Bataille’s theories now manifest themselves in behavior economics, neuroeconomics and econometrics and game theory. It’s been interesting watching economics over the last 20 years and seeing how relevant Bataille’s theories are to these new burgeoning fields.
I think, ultimately, we’re witnessing a re-thinking of what capitalism is. I still think the core philosophy of capitalism aligns with Bataille and is a useful guide for us still – that people operate out of self interest, and if you set the rules up right around that, everyone can benefit. But I think most of the windowdressing around that – how we regulate, why, and whether wealth can really be defined only in terms of currency – are going out the window. Our very notion of Currency is insufficient as the measure of wealth, as it fails to capture so much, most notably happiness. We’ll need a new benchmark that can handle it. That, I think, will take another 100 years but is ultimately where it’s all heading.
Oh man, I should stop. Sorry. Nice to hear someone else thinking about economics as more than money, though.
(as a side note, I find it interesting that neuroeconomics is not in my spellchecker and econometrics is. I wonder if you could do a study of a discipline’s cultural relevancy as based in its presence in spellchekers)

5 comments

On October 09, 2008 at 12:23 AM, aimee wrote:
Dude. We need to get some EXISTENTIALIST t-shirts made. They can say "THE ACCURSED SHARE" on the back overlaying a big, grimy explosion. Man. I want to start a noise band by that name.

The thing about the paper market imploding... trade becomes about reputation. Noah made a good post about this very thing recently, and Bruce Sterling wrote a book about it (Distraction). William Gibson probably did too, but I haven't heard about it yet.

Back to t-shirts. I betcha we could sell some existentialist tees. Nihilist, even.

Yes, I am smiling.
The notion of currency as energy is fascinating. And we are definitely in a phase of energy transition as in making itself relevant again but I feel like energy is only valuable when it's manifested into a tangible asset not just that it exists. ie gold backing, conceptually speaking, will always need to be.
On October 10, 2008 at 09:24 AM, Matt Blake wrote:
I think this is a very fundamental observation that needs to take place in order for us to gain perspective on this current economic crisis. If energy is at the root of all action, then it must be the underlying factor driving our monetary system? If this is the case, the further you remove yourself from the original source of energy, the more potential for collapse you have created. This is the case where people in their sophisticated derivative trading have essentially been trading a farcical source of energy and passing it off as being legitimately backed. The only problem was it diluted of the original energy and actually a chemical concoction...So with that being said, maybe leveraging 40 to 1 odds that someone who has defaulted on their credit/debt might pay and in turn creating economic growth with this number probably wasn't a good/sustainable idea now was it? Very good post Rick, much enjoyed
@Matt Blake - I don't think, actually, that the markets are getting more detached from the underlying economy. I think the markets have ALWAYS reflected more than the paper and currency that we measure them in. Even when we were kids, we knew, innately, that they went up and down based on non-monetary events. I think we're witnessing a decoupling of the markets from the currencies they are measured in, as they slowly become more reflective of the actual energy of the planet. I don't think this will work any time soon, of course, and we'll keep modifying the whole system in times like these to make them more rooted, again, in currency and goods, but, ultimately, in some childhoods-end-style climax, a hundred years from now or so, we'll accept that the intermediate steps of currency and commodities are irrelevant. Maybe. Someday. This is, of course, theoretical and not particularly useful right now, but I do think it goes a way to explain why the markets still reflect reality even as they are removed from currency.
On October 11, 2008 at 03:17 PM, Matt B. wrote:
Haha, I'm sorry Rick, I did distort your post...Upon a second read, and more notably the second half of your post, I do see the the relationship between energy and economics you are referring to as being the relevant piece of the argument. I must have injected the worries of the day into my perception the first time around. This is a very forward thinking idea, as you have stated its purely theoretical at this point, but I believe there is a genuine awareness building around this style of thought. Thank you for the correction by the way, and not just leaving the misdirected thought out there.