Thursday, 09 April 2009

• Endogeneity/Reflexivity/Circularity/Self-prophesising

  We affect our circumstances more than we appreciate. Women do it in their affection for men, speculators affect market fundamentals (no shit!) and name callers affect those who they call names, as well as themselves, activists, prophets and poets lead people into believing change is possible and affect that change.
  

  
  

  John Updike: "Resistability is a direct function of the female decision to resist or not to."

  - Freddy Thorne to Janet, Couples (1968)

   

  Lee Baker: "[According to "narrative self" theorists,] we fashion ourselves in the process of creating our self-representations, stories woven out of the fabric of our experiences." (2009)

   

  George Soros: "The prevailing interpretation of financial markets - the Efficient Market Hypothesis (EMH) [that financial markets tend towards equilibrium] - has been well and truly discredited by the Crash of 2008. The current financial crisis was not caused by some exogenous factor - like the formation or dissolution of an oil cartel - but by the financial system itself.

  [ . . . T]he alternative theory of how markets work - the theory of reflexivity - [ . . . ] holds that mispricing in financial markets can [ . . . ] affect the fundamentals that markets are supposed to reflect. [ . . . ]

  [ . . . ] Reflexivity can be interpreted as a circularity, or two-way feedback loop, between the participants' views and the actual state of affairs. People base their decisions not on the actual situation that confronts them but on their perception or inpterpretation of that situation. Their decisions make an impact on the situation. The two functions operate concurrently, not sequentially. If the feedback were sequential, it would produce a uniquely determined sequence leading from facts to perceptions to new facts and then new perceptions, and so on. It is the fact that the two processes occur simultaneously that creates an indeterminancy in both the participants' perceptions and the actual course of events.'"

  - The Crash of 2008 and What it Means - The New Paradigm for Financial Markets (2009)

   

  Amartya Sen/Arthur Cecil Pigou: "One economist whose current relevance has been far less recognized is Keynes's rival Arthur Cecil Pigou [ . . . ] Pigou was much more concerned than Keynes with economic psychology and the ways it could influence business cycles and sharpen and harden an economic recession that could take us toward a depression (as indeed we are seeing now). Pigou attributed economic fluctuations partly to "psychological causes" consisting of

  variations in the tone of mind of persons whose action controls industry, emerging in errors of undue optimism or undue pessimism in their business forecasts.^[5]

  It is hard to ignore the fact that today, in addition to the Keynesian effects of mutually reinforced decline, we are strongly in the presence of "errors of...undue pessimism." Pigou focused particularly on the need to unfreeze the credit market when the economy is in the grip of excessive pessimism:

  Hence, other things being equal, the actual occurrence of business failures will be more or less widespread, according [to whether] bankers' loans, in the face of crisis of demands, are less or more readily obtainable.^[6]

  Despite huge injections of fresh liquidity into the American and European economies, largely from the government, the banks and financial institutions have until now remained unwilling to unfreeze the credit market. Other businesses also continue to fail, partly in response to already diminished demand (the Keynesian "multiplier" process), but also in response to fear of even less demand in the future, in a climate of general gloom (the Pigovian process of infectious pessimism)."

  - Capitalism Beyond the Crisis, New York Review of Books (2009)

  
  

  Ron Suskind/Karl Rove: "In the summer of 2002 . . . I had a meeting with a senior adviser to Bush . . . The aide  (presumably Karl Rove) said that guys like me were 'in what we call the reality-based community,' which he defined as people who 'believe that solutions emerge from your judicious study of discernible reality.' I nodded and murmured something about enligthenment principles and empiricism. He cut me off. 'That's not the way the world really works anymore,' he continued. 'We're an empire now, and when we act, we create our own reality. And while you're studying that reality - judiciously, as you will - we'll act again, creating other new realities, which you can study too, and that's how things will sort out. We're history's actors . . . and you, all of you, will be left to just study what we do.'"

  - Without a Doubt, New York Times Magazine (2004)

  
  

  Noam Chomsky: "The propaganda campaign about "Islamic fundamentalism" has its farcical elements - even putting aside that US culture compares with Iran in its religious fundamentalism. The most extreme Islamic fundamentalist state in the world is the loyal US ally Saudi Arabi [ . . . ] The West has no problem with Islamic fundamentalism there. Probably one of the most fanatic Islamic fundamentalist groups in the world in recent years was led by Gulbuddin Hekmatyar, the terrorist extremist who had been a CIA favorite and prime recipient of the $3.3 billion in (official) US aid give to the Afghan rebels (with roughly the same amount reported from Saudi Arabia), the man who shelled Kabul with thousands killed, driving hundreds of thousands of people out of the city [ . . . ]

  "Similarly, it is not at all concealed in Israel that its invasion of Lebanon in 1982 was undertaken in part to destroy the secular nationalism of the PLO, becoming a real nuisance with its persistent call for a peaceful diplomatic settlement, which was undermining the US-Israeli strategy of gradual integration of the occupied territories within Israel. One result was the creation of Hizbollah, an Iranian-backed fundamentalist group that drove Israel out of most of Lebanon. For similar reasons, Israel supported fundamentalist elements as a rival to the accomodationist PLO [ . . . ]

  "In brief, Islamic fundamentalism is an enemy only when it is "out of control"." [And it has also gotten out of control in places like post-9/11 Britain precisely because of the media's fascination with "Islamic fundamentalism".]

  - Fateful Triangle: The United States, Israel & The Palestinians (1999)

  
  

  Franklin Delano Roosevelt: "The only thing we have to to fear is fear itself - nameless, unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance."

  - Inaugural address (1933)

   

  Bob Marley: "Emancipate yourselves from mental slavery
  None but ourselves can free our minds"

  - Redemption Song (1979)
  

  
  

  Mohandas Gandhi: "You must be the change you want to see in the world"

  
  

  Cesar Chavez: "Si se peude!" (1972)
  

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