When I suggested a couple of weeks ago that the intellectual hegemony of free market capitalism was under threat, Dan Drezner expressed “polite skepticism”:http://danieldrezner.com/blog/?p=3943.

Is this the beginning of a norm shift in the global economy? It’s tempting to say yes, but I have my doubts. The last time the United States intervened on this scale in its own financial sector was the S&L bailout — and despite that intervention, financial globalization took off. The last time we’ve seen coordinated global interventions like this was the Asian financial crisis of a decade ago — and that intervention reinforced rather than retarded the privilege of private actors in the marketplace. In other words, massive interventions can take place without undercutting the ideological consensus that private actors should control the commanding heights of the economy.

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I’m sure there’s nothing to this so-called ‘financial crisis’ that wasn’t explained adequately in that classic Sutherland instructional video, “The Wise Use Of Credit”. If not, then in that companion volume, “What Makes Us Tick”.

We have a friend who travels on business to India a lot. He was discussing how maybe next week isn’t the best week to be away from home because if the whole system melts down he’ll get stuck in Bangladesh, with the airlines unable to buy gas for the planes because money has seized up globally. Getting back to Singapore would be like a cross between Burmese Days and Planes, Trains and Automobiles. Not that he really thinks that. It’s just that everyone is thinking that. I mean: it almost definitely won’t happen.

I’ll just talk nonsense for a while. Because: what do I know? I praised Scott Morse’s art a couple weeks ago. Since then I bought a new collection of his stuff, Scrap Mettle [amazon]. You can check out this preview from his upcoming Tiger! Tiger! Tiger! . (If you missed my first post and don’t know who Scott Morse is, you can read his wikipedia entry, or check out this site. I linked to his blog above. He’s done animation stuff and other stuff.) [click to continue…]

We’ve all been strictly enjoined to avoid schadenfreude in the current crisis, and indeed few are likely to escape unscathed. Still I’m struck by a couple of examples of historical irony

* Ten years ago, I was debating representatives of the Dutch bank ABN-AMRO, who were pushing for the privatisation of Australian Capital Territory Electricity and Water (ACTEW). A couple of days ago, the Dutch operations of ABN-AMRO were nationalised

* British Bank Northern Rock was nationalised following a run by customers seeking to withdraw their money. Now, seen as safer than its competitors, it is being forced to limit deposits.

Although I am not commenting on the current crisis, I think it would be irresponsible of me not to point out that I not only saw it coming five years ago, I even suggested a number of potential solutions which were similar in shape to the one actually chosen, but decidedly more innovative. If any readers are emailing their congressmen etc, you can quote me if you like. I promise that I am not trying to talk up a massive speculative book of Beanie Babies.

Though it may have seemed impossibly far off in our hazy youth, these days we fondly look back at the turn of the 21st century and think that was when the world was new and fresh and everything seemed possible. Or searchable, anyway. For one month only, here is Google’s index, c. 2001. It shows that we were present individually though not collectively. Besides nostalgia for this distant past, consider the results of searches such as “housing bubble” or “subprime mortgage lending” or “counterparty risk.”

The Spencer Foundation has just announced the second of its major strategic initiatives: on civic learning and civic action. Here’s the announcement, and here are the application guidelines. Please direct queries to the program administrator (whose contact details are at the bottom of the guidelines page).

And, if you missed it, the first strategic initiative is on Philosophy in Educational Policy and Practice; I am happy to entertain queries on that one.

While you are at their fantastic new website, check out the page devoted to papers resulting from Foundation grants: two interesting papers, one by Eric Hanushek on policy analysis, the other by Helen Ladd on accountability.

Ingrid’s post below (plus a couple of other events) prompted me to look for G.A. Cohen’s new book: Rescuing Justice and Equality (UK) is apparently already out in the US despite being published on November 1st. I bought several copies (so my students can read it with me), and hereby promise that I’ll have some sort of review here in January (January, because, unlike Richard Arneson, I need time to review books that haven’t officially been published yet).

The events of the last weeks have made me wonder about the agenda of contemporary analytical political philosophy. There are many ways to describe the current financial crisis, but it’s not implausible to say that the foundations of capitalism are shaking. Yet I find little help in contemporary analytical political philosophy to help me understand what’s going on. Perhaps I’m looking in the wrong place. Perhaps I am ignorant. Perhaps I’m not trying hard enough (probably true given that there are so many other things that need to be done). Yet another explanation may be that in the last decades analytical political philosophers have focussed increasingly on issues to do with non-economic topics, or, as far as economic topics are concerned, on micro-economic topics and/or on issues of (re-)distribution or economic policies at the national/state level. Of course, there is quite a bit of related stuff – on the moral limits of the markets or on global justice for example. But are these literatures in themselves sufficient, or sufficiently integrated, to help us analyse capitalism? I doubt so.

I have friends and colleagues who work outside analytical political philosophy, have no background in economics at all, who are convinced they understand capitalism or neoliberalism and have strong normative views about these issues. So a possible thing for me to do would be to join them. Yet I have never found the ‘critical’ literatures they read very helpful – too rhetorical, too sweeping, insufficient analytical for my taste. Too much at the level of critique and deconstruction and too little at the level of helping us sort out the problems and propose constructive solutions. But at least the authors working in those literatures should be credited for having addressed crucial topics, which are, in my opinion, insufficiently addressed in the analytical tradition.

From informal talks over the last week I know I am not the only one with these doubts. Isn’t it time for a macro-economic turn in analytical political philosophy, that is, shouldn’t more of us put our efforts in analysing capitalism and alternative economic (global) systems, rather than focussing on micro-economic issues or non-economic issues? I suspect there is quite some (older?) literature out there, but that it just hasn’t been very fashionable in recent years. So what if we would start by collectively constructing a reading list on these issues for those who prefer to reason within the analytical tradition?

Via “David Levine”:http://www.againstmonopoly.org/index.php?perm=1253, it appears that George Mason University is “being sued”:http://www.courthousenews.com/2008/09/17/Reuters_Says_George_Mason_University_Is_Handing_Out_Its_Proprietary_Software.htm for over 10 million dollars by the owner of EndNote (which happens to be Thomson-Reuters).

The complaint states, “Dr. Daniel J. Cohen, Associate Professor, Department of History and Art History, and the director of GMU’s Center for History and New Media, developed Zotero, which is a freely distributable, open-source software based research tool that allows users to gather, organize and analyze sources, including citations, and freely share the results with others.” The Center for History and New Media release “a new beta version of Zotero to the general public” on July 8. Reuters adds, “A significant and highly touted feature of the new beta version of Zotero, however, is its ability to convert – in direct violation of the License Agreement – Thomson’s 3,500 plus proprietary .ens style files within the EndNote Software into free, open source, easily distributable Zotero .csl files.”

Now, I’m obviously not an intellectual property lawyer (fwiw the “Wikipedia article”:http://en.wikipedia.org/wiki/Reverse_engineering on reverse engineering, which may or may not be reliable but is certainly more reliable than me, suggests that suits over interoperability are of dubious legal merit). But I am an academic, and thus part of EndNote’s core end-user market. And I say that, regardless or not of whether it’s legal, this is a bullshit move on Thomson-Reuters’ part. There are a lot of academics out there who have used EndNote in the past and created styles for the journals that they submit to etc. EndNote’s owners are clearly worried that these academics will be tempted to move their styles from EndNote to a software package which in my view (and I’ve used both) is clearly superior. This is a no-brainer. There is _no significant innovation or value-added_ to EndNote’s specific file format. Nor is there reason to believe (given the existence of Zotero) that protecting this file format and EndNote’s purported intellectual property rights over it will encourage innovation in this particular marketplace. On the broad social merits, Reuters’ attempted shakedown is indefensible.

Nor is this as trivial an issue for academics as it might seem. As Scott has “suggested”:http://insidehighered.com/views/2007/09/26/mclemee “in the”:https://crookedtimber.org/2007/09/26/zoteromania/ “past”:https://crookedtimber.org/2007/12/12/archival-zotero-fication-or-possibly-vice-versa/#more-6498 Zotero and projects like it are at the heart of an effort to bring something like the semantic web to academia. Zotero combines bibliographical database management with social tagging and other fun stuff – it is gradually becoming a platform through which academics can share metadata and other interesting things with each other. Which means that this battle is likely to have long term consequences in determining whether or not new forms of academic collaboration are likely to be controlled by academics themselves, or take place through some kind of commercially controlled intermediation, with all the forms of stupidity that are likely to go along with that.

For my part, I’m going to refuse to use Reuters’ software in future, strongly discourage graduate students from buying EndNote, and try to get this message out to my colleagues too (at least those of them who aren’t using Zotero or some BibTex client already). If I taught any classes where Thomson printed relevant textbooks, I would be strongly inclined not to use these texts either. I encourage you to do the same (and, if you’re so minded, to suggest other possible ways of making it clear to Reuters that this kind of behaviour is intolerable in the comments). People have argued that the music industry has screwed up badly by suing its customers – whether that’s true or not, makers of academic bibliography software should be told that suing universities for what appear to be entirely legitimate actions is not likely to do their reputations any good.

NB- post corrected shortly after publication for bone-headed error.

<i>Cross-posted at <a href=”http://www.michaelberube.com/index.php/weblog/wandering_back_in/”>some obscure blog</a>.</i>

I recently spoke at <a href=”http://www.stonybrook.edu/sb/cdconference/”>this conference</a>, which was (a) historic and très cool and (b) something I’d been fretting over for months.  (Janet and Jamie came with me, and Nick and his girlfriend Rachel joined us on Saturday.  Fun for the whole family!)  I had a fairly easy assignment: a twenty-minute response to Martha Nussbaum on the opening night.  I’m familiar with some aspects of her work, and I assigned a good chunk of <a href=”http://www.amazon.com/Frontiers-Justice-Disability-Nationality-Membership/dp/0674019172″><i>Frontiers of Justice</i></a> to my disability studies seminar last spring, so the opening few paragraphs of my response simply pointed out that few philosophers have taken up the challenge of cognitive disability so thoroughly and satisfactorily as she.  I briefly summarized Nussbaum’s critique of John Rawls and the social contract tradition; here’s a snippet from that critique.

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Happy New Year! And now back to our regularly scheduled political programming (NSFWish):

The argument by talking point style that characterizes all sections of the political right in the US has been evident as usual in relation to the financial crisis, so I guess it’s time to play whack-a-mole yet again. The most prominent points I’ve seen are

* It’s all the fault of the Community Reinvestment Act, which forced banks to lend to low-income borrowers. Quite a few people have pointed out that many of the subprime loans weren’t required under CRA. More to the point, given that the market structures in the bubble made mortgages a fungible asset, the CRA was a nonbinding constraint. It’s clear that many more subprime loans were given out in the bubble years than were required under the Act and that the excess was greatest in the areas where the bubble was worst. The CRA had no effect at all under these conditions.

* If regulation were the problem, how come the hedge funds haven’t been affected? In fact, it was the failure of Bear Stearns hedge funds that signalled the spread of the crisis beyond the subprime mortgage market. And the main reason hedge funds haven’t yet been hit by the crisis of the past few weeks is that they don’t allow redemptions except at stated dates (for most of them it will be next Tuesday. Perhaps there won’t be a problem, but that’s not what the markets think. In any case, those making the claim seem to be unaware of the redemption restrictions.

Robert Waldmann of Angry Bear has a fascinating post exploring the possibility that sharp movements in the value of Lehman senior debt could be explained by the possibility that Lehman had sold Credit Default Swaps on itself. Since a CDS is insurance against the possibility of default on debt, this is a no-lose bet for Lehman. If the firm survives, they collect the premiums and pay nothing and, if it doesn’t the losses are borne by the creditors. And, as Waldmann points out, it’s not crazy to buy such a CDS, since it will retain some value in bankruptcy. If you’ve already sold a lot of Lehman CDS yourself, there’s a significant hedging benefit. So both parties benefit, and the losers are the existing bondholders. Waldmann has an interesting optimization exercise to show that optimal (for Lehman) use of the CDS option could explain the collapse in the value of Lehman bonds.

Thinking about this, I’m more and more convinced that Warren Buffett’s description of derivatives as financial weapons of mass destruction applies in spades to CDSs.

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Pancho: So what does political philosophy have to say about the banking crisis?

Lefty: Excuse me?

Pancho: Well, millions ruined, pensions and savings binned, an appeal to taxpayers to save the banks? It all seems rather, um, well _distributive_… I’d have thought you could give us some policy advice?

Lefty: Well I don’t really do that kind of thing, I do ideal theory.

Pancho: What’s that when it’s at home?

Lefty: I’m mainly concerned with devising optimal principles of social regulation under conditions of strict compliance, this is far too messy for me …

Pancho: Go on, have a go!

Lefty: OK well, since you insist …. Luck egalitarianism might be a good starting point.

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