Adam Curtis

It is astonishing that everything about the credit crisis is still discussed in the technical terms of economics. Although, as most commentators agree, almost all economists failed to predict the financial crisis that swept through the western economies in 2008 - we still slavishly discuss and analyse it in their technical terms.

Whether it is straight journalism, or columnists' rants, or even imaginative responses like the play Enron, the problem is described either as a technical system that went wrong or as a set of strange inventions that were then corruptly used by bad and greedy people. And in doing this all the journalists, and the critics, and the playwrights earnestly try and explain to us the system in the terms, and the framework of "market-speak" created by the economists and the financiers.

The high point of this came last week when lead items on TV news were devoted to the letters written by two opposing groups of economists. It was the height of absurdity as economists from the opposing camps came on News-24 to announce pompously that "this is far more important than politics". As David Blanchflower (ex-member of the Monetary Policy Committee) pointed out in a really good piece in the New Statesman - HERE - they have absolutely no basis for any of their claims. The reason is that they have no idea what is going to happen to the economy in the next 12 months.

But more than that - perhaps the economists are the problem? That they themselves cannot see the full dimensions of the project of which they have been a part.

But still we listen to them, and still our journalists use their language and assumptions.

Which means that despite the disasters we are still trapped in the economists' world.

But the moment you pull back and look at that world from a wider perspective strange things start to emerge.

When the neoliberal project first began in 1979 with Mrs Thatcher the idea was that politicians would give away power to the markets and the state would shrink. Over the past 15 years the idea of the "market" has been extended to practically every area of society - education, health, even the arts. But to make this happen those running the neoliberal project had to enforce it by creating vast and intricate performance indicators and feedback systems (which in many cases led to wide scale absurdities). And to do this they used the mighty power of the state.

The crucial thing is that these systems had practically nothing to do with the original idea of the "market". They are actually a strange pseudo-scientific piece of planning engineered by politicians and groups of technocrats that borrowed far more from cold-war ideas of feedback engineering and cybernetics than from the risky roller coaster of the market. And to create the systems they had to greatly enlarge the state and the extent of its power, which is the very opposite of the vision of a free-market utopia.

And when you examine the roots of the neoliberal idea of the market it gets odder still. The ideas that rose up in the post-war years that captured the imagination of people like Mrs Thatcher are actually a very strange mutation of capitalism. If you listen to interviews with Friedrich Hayek he talks far more like a cold war systems engineer discussing information signals and feedback than Adam Smith with his theories of Moral Sentiment.

While the roots of the technical systems that the banks created to manage risk also lie back in the cybernetic dreams of the 1950s and 60s. Dreams not of progress through the dynamism of markets - but of using computers to create a balanced, almost frozen world. - just like in the Cold War.

Which raises the question - have we misunderstood what we have lived through since 1979?

We think it was the resurgence of capitalism. But maybe it was something very different? Something that we can't see properly because we are still trapped in the economists' world and their mindset.

I am putting up a film I made as part of the Pandora's Box series - because I think it is relevant. The Pandora's Box series looked at how scientific ideas were taken up and used by politicians and other powerful groups to justify what were essentially political attempts to change and re-engineer the world.

In this episode I argue that Mrs Thatcher's monetarist experiment of the 1980s was not just giving power away to the markets. In reality it was a pseudo-scientific attempt to re-engineer Britain that had far more in common with the preceding Old Labour attempts at "scientific" economic planning that it did with any free market theory.

And I think it would be good to pull back and look at the recent crisis in the same terms.

The film also includes the most fabulous machine I have ever seen. A giant interconnected system driven by water to model the whole British economy.

Comments

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  • Comment number 45. Posted by johngerard

    on 3 Oct 2010 12:41

    economics should be taught with the other humanities. it's about interpretation. being a trader by profession, i learned immeasureably more about 'the markets' and their behaviour, and improved my work far more by reading a few books on psychology than the few dozen books i've read on the technical aspects of financial trading and economics. maths and economics are simply window dressing for market moves. something for people to talk about on Bloomberg TV.
    the markets are a psychological, not a technical construct.
    i read a quote once that said "people bring more than money and information to the markets - they bring themselves..."
    no trader is concerned with what THEY think the implication of X central bank doing Y is - they are concerned with what the average opinion of average opinion of the market particpants is a result of that action - it's removed from the economic fundamentals.
    the bottom line is that market moves are all about probably the most basic human emotion of all - fear. the fear of not making money, but especially the fear of losing it...

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  • Comment number 44. Posted by Phiiip Pilkington

    on 20 Sept 2010 11:20

    "We think it was the resurgence of capitalism. But maybe it was something very different? Something that we can't see properly because we are still trapped in the economists' world and their mindset."

    This was actually built into the theories themselves - although I have a sneaking suspicion that many of the theorists didn't realise this.

    The best source for this line of thought is a recently translated lecture series by the eminent French philosopher Michel Foucault. The series is available in lovely binding on Amazon - it's around 15 quid; its called 'The Birth of Biopolitics'.

    Foucault starts off trying to trace the roots of what he calls 'biopower' but ends up doing a full exposition of how neo-liberalism is in fact an attempt to subordinate the state to rationalised economic calculation. He concludes that what the neo-liberals are really trying to do - whether they like it or not - is to avoid a totalitarian state (most of their theories are based on those of Austrian emigres with major cases of 'state-phobia' due to their experience of Nazism) by constructing a technocratic state in which basic freedoms are partially realised.

    Another line of approach to this is through another historian of thought: Philip Mirowski (who Curtis interviewed for The Trap). Mirowski argues that the project to 'economise' social relations took a new turn when it began to appropriate computer metaphors in the 1950s. This led to a view of humans as, not homo economus, but as quasi-cybord creatures, completely subjectable to rational calculation (essentially the view of man put forward by Nash, but on a far more sophisticated level).

    Anyway, I think Curtis should make a documentary incorporating these ideas - especially those turned up in Foucault's lecture series. They just aren't getting the coverage they deserved. I remember a while ago being in a politics class. The lecturer was trying to explain the difference between liberalism and neo-liberalism and why the two diverged from the same ideology. He was falling over himself trying to do this. I offered the suggestion that neo-liberalism is in fact an attempt to rationalise state institutions in terms of market logic - a similar, but slightly different process, I said, to what happened in the Soviet Union under the technocrats. The man looked at me as if I had four heads... he simply couldn't understand what I was talking about.

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  • Comment number 43. Posted by Valentinus

    on 21 Jun 2010 12:34

    Dear Adam

    It might interest you to know, if you did not see it already, that a letter appeared in The Guardian Letters page on Wed 16 June, referencing The League of Gentlemen, in relation to the Office for Budget Responsibility.

    You can read it at

    http://www.guardian.co.uk/politics/2010/jun/16/budget-realities-public-sector-distortions

    I wrote the letter and am a great admirer of your work.

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  • Comment number 42. Posted by G

    on 21 May 2010 00:17

    I feel that politics is profoundly crippled because we have lost sight of the simple fact that economics is a man-made phenomenon and not a physical ecosystem like nature. We have mistaken analogy for reality. We do not yet have the power to completely reshape nature, but we do have the power to radically rethink things like banking, money, and this perceived need for continual economic growth, which may well turn out to be ecologically unsustainable. We could do whatever the hell we want instead of waiting for the market's permission!

    Because earthy, more spiritual notions like love, charity, community, honest dealing and goodwill - self-transcendence in general - are now seen as being at best a limited, fugitive aspect of a human nature that is predominantly and probably eternally dark and carnivorous, and at worst a kind of sentimental delusion, our only recourse is to govern like manipulative animal-trainers. This amounts to an admission of defeat: we might as well all die, because humans absolutely cannot consistently live such a life, try as they might.

    'Wisdom' is now a word consigned to New Age bookshelves, along with a lot of other good words - words you could productively ponder the meanings of all day.

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  • Comment number 41. Posted by Valentinus

    on 12 Mar 2010 23:43

    All I want to say as an admirer of everything Adam Curtis has done–-and as an academic working on, among other things, futures––is how grateful I am to have this episode of PB back on the site. We should have the whole series, which shares this episode's astonishing prescience. Every time I hear that final admission from Alan Budd, I am amazed.....I have an old VHF of the series. Remarkable to note how it has grown rather than diminished in relevance.

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  • Comment number 40. Posted by plamski

    on 8 Mar 2010 15:52

    36. At 00:30am on 05 Mar 2010, Evgueni in Horley wrote:
    So true to type AC never poses the fundamental questions in his film - what is money supply? How is money created, and by whom? Who is really in control of it?
    ------------------------------------

    I absolutely agree with Evgueni. The question that no journalist dare even ponder upon is the system of Central Banks. But we have to be fair to Adam Curtis - it is dangerous asking this question. Journalists that have made attempts to uncover the truth have been mysteriously disappearing.

    All will be revealed in 2012, though. The wait is nearly over.

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  • Comment number 39. Posted by the art teacher

    on 7 Mar 2010 19:16

    Thought I would share this link with everyone; I think it's a brilliant piece. I read it and thought there was some major crossover with the topics raised on here, especially the talk about 'narrow technocratic' ideas.

    http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=8&_r=1

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  • Comment number 38. Posted by victorkiriakus

    on 7 Mar 2010 17:24

    Paper currency when backed by gold or silver has actual value. Today's fiat currencies represent not intrinsic value, but DEBT. Dollars for example come into existence when bank make loans. Since there is interest owed at each dollar's inception, that means there is always more debt owed to BANKS than there are dollars that exist to pay it off. That means governments and the taxpayers will be in ever greater indebtedness to banks.

    While this system is obviously advantageous to banks, it is inherently unstable and leads to everyone else becoming an indentured servant to the banksters. This concept is not understood by the vast majority of people, including economics majors who are usually not exposed very much, if at all, to Austrian Economics. It has been known, however, for centuries.


    Part 2 (for those blessed with a longer than American attention span)

    Read this quote from our third President Thomas Jefferson:

    "The [privately-owned] Central Bank is an institution of the most deadly
    hostility existing against the principles and form of our Constitution...
    if the American people allow private banks to control the issuance of their
    currency, first by inflation and then by deflation, the banks and corporations
    that will grow up around them will deprive the people of all their property
    until their children will wake up homeless on the continent their fathers
    conquered."

    The Bank of the United States (1816-36), an early attempt at an American central bank,
    was abolished by President Andrew Jackson, who believed that it threatened the nation.

    He wrote:

    "The bold effort the present bank had made to control the government, the distress it
    had wantonly produced...are but premonitions of the fate that awaits the American people
    should they be deluded into a perpetuation of this institution or the establishment of
    another like it."

    Andrew Jackson had at least two attempts made on his life. So proud and intent on
    warning the future generations was he that his tombstone is inscribed with the phrase
    "I killed the bank!"

    I can't recommend enough reading books by Ludwig von Mises, Murray Rothbard or Ron Paul. Many of their works can be read for free online at the Ludwig von Mises Institute. If enough readers of this blog call attention to the role of central banking in this fraudulent "world debt crisis", then perhaps Adam Curtis will consider doing a documentary about it.

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  • Comment number 37. Posted by John

    on 7 Mar 2010 03:50

    Does anybody know what the music is at the start of the programme?

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  • Comment number 36. Posted by Evgueni in Horley

    on 5 Mar 2010 00:30

    Gentlemen, this sure looks like a red herring. Just what you might expect from an established voice from within the media mainstream (detailed explications of such a thesis can be found in Herman/Chomsky's Manufacturing Consent, Mark Curtis's Web of Deceit etc).
    So the economists are to blame, 'coz they haven't been able to come up with any half decent theories! As our starting point we are to take for granted the benign intentions of our "representative" governments and that their control of the money supply is exclusive. Thus the discussion that follows is framed. Still Tony Benn partly has it: "if a scientist helps you with your ideology you use him, if he doesn't you disregard him". When politics is the end game, all kinds of pseudo-science is often shielded from the rigours of the scientific method. One day we'll look back in wonderment on 20th century embarrassments like "climate science", speed cameras as an effective road safety tool, numerous virtual death tolls due to passive smoking, salt, cholesterol etc ad nauseum. Keynes's and Friedman's contributions will be amongst this lot, examples of useful distractions permitted to float to the top of the pile by elite interests because they helpfully limit themselves in scope and thus avoid the forbidden questions.
    A similar process goes on in the media, it is the 'sound chap' journos that get the promotions and not the ones that are unafraid to ask the really awkward questions. So true to type AC never poses the fundamental questions in his film - what is money supply? How is money created, and by whom? Who is really in control of it? If he did, he would quickly discover the mathematical impossibility of interest-bearing debt-money and where such a money-creation process logically leads (clue: boom & bust).
    We must not be too harsh on AC. Sometimes you have to watch what you say if you wish to keep your career on track.
    But in case AC does decide to test for himself where the invisible boundaries lie of what can be expressed in the mainstream, here's an idea for a documentary: exploring the effect on society of strong feedback in the form of institutions of direct democracy. It has a proven track record of sefeguarding stability and growth for the last 150 years in Switzerland. There is plenty of literature on this though you won't see it mentioned in the mainstream (see for e.g. Gregory Fossedal's Direct Democracy in Switzerland). Switzerland is far from perfect, but it sure has a head start on the rest of the 'free world'. Here are some unmentionable (in the mainstream media that is) facts about Switzerland. Its highest unemployment ever recorded was ~5% during 30s depression. For comparison, ~5% happens to be UK's lowest unemployment ever recorded. Swiss GDP per capita is one of the highest in the world. The Swiss franc has consistently been one of the world's most stable currencies. The Swiss central bank is bound by the Swiss Constitution to pay 2/3 of its profits to the federal government. Swiss newspapers and TV are obliged by law to give equal access to proponents and protagonists of popular ballots. The list goes on. To obtain such concessions from the ruling elites here is unthinkable. Care to explore why, Mr AC?

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