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Abstract
This essay performs a rhetorical criticism of neo-classical economics, with particular attention to its methodological influence on a number of faulty mathematical models that lay at the epicenter of the 2008 financial crisis. Going beyond Goodnight and Green's mimetic conception of economic rhetoric, which positions rhetoric as a site of mediation between symbolic and material spirals, we argue that the rhetoric of neo-classicism is best understood as an “apparatus” that attempts to suture two ontologically incommensurable conceptions of time that we term intensive and extensive. We further argue that the hinge of this rhetorical apparatus centers on a kairotic tactic of arbitrage, which theoretically posits, at the same time that it negates, ontological market failure. We end by exploring rhetorical alternatives to neo-classical economics that take the internally contradictory structure of arbitrage to its emergent conclusions.
The authors would like to thank Barbara Biesecker, Jeremy Grossman, and Atilla Hallsby, for their very thorough and thoughtful editorial suggestions, as well as Chris Gamble, Raymie McKerrow, Sine Nørholm Just, and David Anderson, for their contributions to current and previous drafts of this project.
The authors would like to thank Barbara Biesecker, Jeremy Grossman, and Atilla Hallsby, for their very thorough and thoughtful editorial suggestions, as well as Chris Gamble, Raymie McKerrow, Sine Nørholm Just, and David Anderson, for their contributions to current and previous drafts of this project.
Notes
[1] The Great Recession has become a popular synonym for the financial crisis of 2008. Economists point to December 2007 as the start of the “Great Recession.” See Chris Isadore, “It's Official: Recession since Dec '07,” CNNMoney.com, December 1, 2008, http://money.cnn.com/2008/12/01/news/economy/recession/index.htm.
[2] Evelyn Rusli, “Bernanke Believes Housing Mess Contained,” Forbes.com, May 2, 2007, http://www.forbes.com/2007/05/17/bernanke-subprime-speech-markets-equity-cx_er_0516markets02.html; “Trouble at HSBC Stemmed from Household Purchase,” The New York Times Dealbook, February 23, 2007, http://dealbook.nytimes.com/2007/02/23/trouble-at-hsbc-stemmed-from-household-purchase/?scp=2&sq=hsbc&st=nyt; Rhys Blakely and Tom Bawden, “Bernanke says sub-prime crisis cost could be $100bn,” The Sunday Times, July 19, 2007, http://business.timesonline.co.uk/tol/business/economics/article2105558.ece.
[3] “Dissecting The Bear Stearns Hedge Fund Collapse,” Investopedia.com, last modified 2009, accessed December 18, 2013, http://www.investopedia.com/articles/07/bear-stearns-collapse.asp.
[4] Adam Shell, “JPMorgan increases Bear Stearns bid to $10 a share,” USA Today, March 29, 2008, http://abcnews.go.com/Business/story?id=4516500.
[5] “Lehman Brothers Files For Bankruptcy, Scrambles to Sell Key Business,” CNBC.com, September 15, 2008, Bankruptcy_Scrambles_to_Sell_Key_Business; Ronald Orol, “Geithner, Paulson defend $182 billion AIG bailout” Marketwatch.com, January 27, 2010, geithner-paulson-defend-182-bln-aig-bailout-2010-01-27
[6] Megan Barnett, “Start Bailing,” Upstart Business Journal, October 3, 2008, http://upstart.bizjournals.com/news-markets/top-5/2008/10/03/House-Passes-Bailout-Bill.html.
[7] Edmund Andrews, “Fed Loosens Standards on Emergency Loans,” The New York Times, September 15, 2008, http://www.nytimes.com/2008/09/15/business/15fed.html?ref=business.
[8] “Obama Signs Bill Overhauling Financial Rules.” The New York Times Dealbook, July 21, 2010, 202010&st=cse
[9] See Nouriel Roubini and Stephen Mihml, Crisis Economics: A Crash Course in the Future of Finance (New York, NY: Penguin, 2010).
[10] For an excellent review of this literature see Philip Mirowski, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown (New York, NY: Verso, 2013).
[11] John Bentley, “McCain: ‘Greed of Wall Street’ To Blame for Economic Meltdown,” CBSNews.com, September 16, 2008, http://www.cbsnews.com/news/mccain-greed-of-wall-street-to-blame-for-economic-meltdown/.
[12] David Jackson, “Obama: ‘Fat-cat’ Bankers Owe Help to US Taxpayers,” USA Today, December 18, 2009, industries/banking/2009-12-13-obama-bankers-small-business_N.htm.
[13] Sarah van Gelder, ed., This Changes Everything: Occupy Wall Street and the 99% Movement (San Francisco, CA: Berrett-Koehler, 2011).
[14] Our understanding of economic performativity is not novel and is a relatively established orthodoxy in the fields of anthropology and sociology. Our aim is to specify the rhetorical dimensions of economic performativity, which, in this essay, we locate primarily at the theoretical and methodological levels of neo-classical discourse. For an outstanding overview of economic performativity see Donald A. MacKenzie, Fabian Muniesa, and Lucia Siu, eds., Do Economists Make Markets?: On the Performativity of Economics (Princeton, NJ: Princeton University Press, 2007).
[15] Deirdre N. McCloskey, The Rhetoric of Economics (Madison, WI: University of Wisconsin Press, 1998). It is worth noting that McCloskey's project is situated in a larger movement within rhetoric known as the Project on the Rhetoric of Inquiry (POROI). For a definitive essay on POROI, see John Lyne, “The Rhetoric of Inquiry,” Quarterly Journal of Speech 71, no. 1 (1985): 65–73.
[16] G. Thomas Goodnight and Sandy Green, “Rhetoric, Risk and Markets: The Dot-Com Bubble,” Quarterly Journal of Speech 96, no. 1 (2010): 115–40.
[17] In this respect, our project is consistent with the thesis put forward by John Bender and David E. Wellbery, who argue for an ontological conception of rhetoric, or “generalized rhetoric that penetrates to the deepest levels of human experience.” Our aim is to situate this generalized rhetoric, or what they call “rhetoricality,” in the material conditions of economic theory and practice. See John Bender and David E. Wellbery, “Rhetoricality: On the Modernist Return of Rhetoric,” in The Ends of Rhetoric: History, Theory, Practice, eds. John Bender and David E. Wellberry (Stanford, CA: Stanford University Press, 1990), 25. Our premise regarding the ontological rhetoricity of economic marketplaces in also touched on briefly in Christian Lundberg's discussion of Milton Friedman. See Christian Lundberg, Lacan in Public: Psychoanalysis and the Science of Rhetoric (Tuscaloosa, AL: University of Alabama Press, 2012), 91–93.
[18] The distinction between extensive and intensive time is introduced in Indradeep Ghosh, “The Form of Time, the Logic of Affect, and a Frame of Subjectivity,” Journal of Contemporary Thought 37 (Summer 2013): 35–50.
[19] We understand rhetorical surplus as an affective remainder, or irreducible excess, that goes beyond any system of representation, or totality, that would desire to contain and capture its meaning. For a detailed exposition of this conception of surplus see Kiarina A. Kordela, Surplus: Spinoza, Lacan (New York, NY: SUNY Press, 2008).
[20] Goodnight and Green, “Rhetoric, Risk and Markets,” 117.
[21] Goodnight and Green, “Rhetoric, Risk and Markets,” 117.
[22] Goodnight and Green, “Rhetoric, Risk and Markets,” 118.
[23] Goodnight and Green, “Rhetoric, Risk and Markets,” 118.
[24] Goodnight and Green, “Rhetoric, Risk and Markets,” 119.
[25] Goodnight and Green, “Rhetoric, Risk and Markets,” 119.
[26] Goodnight and Green, “Rhetoric, Risk and Markets,” 119, italics in original.
[27] Goodnight and Green, “Rhetoric, Risk and Markets,” 119.
[28] Goodnight and Green, “Rhetoric, Risk and Markets,” 122.
[29] Goodnight and Green, “Rhetoric, Risk and Markets,” 119.
[30] Goodnight and Green, “Rhetoric, Risk and Markets,” 119.
[31] Goodnight and Green, “Rhetoric, Risk and Markets,” 122.
[32] On the material relationship between “marking,” temporality, and economics see Jacques Derrida, Given time: I. Counterfeit money, vol. 1 (Chicago, IL: University of Chicago Press, 1992).
[33] Barbara A. Biesecker. “Rethinking the Rhetorical Situation from within the Thematic of ‘Différance,’” Philosophy & Rhetoric 22, no. 2 (1989): 110–30.
[34] Ronald Walter Greene, “Another Materialist Rhetoric,” Critical Studies in Mass Communication 15, no. 1 (1998): 23.
[35] Nathan Stormer, “Recursivity: A Working Paper on Rhetoric and Mnesis,” Quarterly Journal of Speech 99, no. 1 (2013): 30.
[36] On the relationship between the apparatus of capture and abstract machine see Gilles Deleuze, and Felix Guattari. A Thousand Plateaus: Capitalism and Schizophrenia, trans. Brian Massumi (Minneapolis, MN: University of Minnesota Press, 1987). On the attempt of neo-classical economics to reflect the ordering principles of the natural sciences see Philip Mirowski, More Heat than Light: Economics as Social Physics, Physics as Nature's Economics (Cambridge, MA: Cambridge University Press, 1991).
[37] We understand suturing as an act of articulation that produces a provisional sense of unity, identity, and coherence out of ontological difference. On the concept of the suture in rhetorical studies see Barbara A. Biesecker, Addressing Postmodernity: Kenneth Burke, Rhetoric, and a Theory of Social Change (Tuscaloosa, AL: University of Alabama Press, 2000).
[38] On the concept of the virtual and its relation to the actual see Gilles Deleuze, Bergsonism, trans. Hugh Tomlinson and Barbara Habberjam (New York, NY: Zone, 1988).
[39] For an exemplary discussion of such assumptions see Talcott Parsons, The Structure of Social Action (New York, NY: The Free Press, 1967).
[40] See Mirowski, More Heat than Light.
[41] Adam Smith, The Theory of Moral Sentiments (London, UK: A. Millar, 1790); Adam Smith, The Wealth of Nations (London, UK: W. Strahan and T. Cadell, 1776). See also: Paul Turpin, The Moral Rhetoric of Political Economy: Justice and Modern Economic Thought (New York, NY: Routledge Frontiers Political Economy, 2011).
[42] On the relationship between Smith's invisible hand and providence see Giorgio Agamben, The Kingdom and the Glory: For a Theological Genealogy of Economy and Government (Stanford, CA: Stanford University Press, 2011).
[43] See Alfred Marshall, Principles of Economics (London, UK: Macmillan & Co., 1890).
[44] One example of the new approaches made possible by these developments in mathematics is Dynamic Programming, see Nancy Stokey, Robert E. Lucas, and Edward C. Prescott, Recursive Methods in Economic Dynamics (Cambridge, MA: Harvard University Press, 1989).
[45] John F. Muth, “Rational Expectations and the Theory of Price Movements,” Econometrica 29, no. 3 (1961): 315–35.
[46] For a discussion of ergodicity, see Paul Davidson, “Rational Expectations: A Fallacious Foundation for Studying Crucial Decision-Making Processes,” Journal of Post Keynesian Economics 5, no. 2 (1982–83): 182–98.
[47] Eugene F. Fama, “Random Walks in Stock Market Prices,” Financial Analysts Journal, September/October (1965), reprinted January/February (1995): 75–80.
[48] Fama, “Random Walks,” 76.
[49] In his General Theory of Employment, Interest and Money, Keynes likened professional investment to “those newspaper competitions in which the competitors have to pick out the six prettiest faces from a hundred photographs, the prize being awarded to the competitor whose choice most nearly corresponds to the average preferences of the competitors as a whole; so that each competitor has to pick, not those faces which he himself finds prettiest, but those which he thinks likeliest to catch the fancy of the other competitors, all of whom are looking at the problem from the same point of view.” See John Maynard Keynes, General Theory of Employment, Interest and Money (New York: Harcourt, 1936/1965), 156. On the relationship between Keynes and economic rhetoric see Davis W. Houck, Rhetoric as Currency: Hoover, Roosevelt and the Great Depression, vol. 4 (College Station, TX: Texas A&M University Press, 2001).
[50] For a discussion of arbitrage see Donald Mackenzie, “Long-Term Capital Management and the Sociology of Arbitrage,” Economy and Society 32, no. 3 (2003): 349–80 and Hirokazu Miyazaki, Arbitraging Japan: Dreams of Capitalism at the End of Finance (Berkley, CA: University of California Press, 2013).
[51] Robert E. Lucas, “Expectations and the Neutrality of Money,” Journal of Economic Theory 4, no. 2 (1972): 103–24; and Finn E. Kydland and Edward C. Prescott, “Time to Build and Aggregate Fluctuations,” Econometrica 50, no. 6 (1982): 1345–71.
[52] David Harvey, A Brief History of Neoliberalism (New York, NY: Oxford University Press, 2005).
[53] For a general discussion of these trends and policies see Mirowski, Never Let a Serious Crisis Go to Waste. On the concept of the “Washington Consensus,” understood as a bipartisan orientation toward neoliberal economic reform, see M. Lane Bruner, Democracy's Debt: The Historical Tensions between Economic and Political Liberty (Amherst, MA: Prometheus Books, 2009).
[54] For a more detailed genealogy of these policies and practices from a communication perspective see Joshua S. Hanan, “Home is Where the Capital Is: The Culture of Real Estate in an Era of Control Societies,” Communication and Critical/Cultural Studies 7, no. 2 (2010): 176–201 and Megan Foley, “From Infantile Citizens to Infantile Institutions: The Metaphoric Transformation of Political Economy in the 2008 Housing Market Crisis,” Quarterly Journal of Speech 98, no. 4 (2012): 386–410.
[55] Stormer, “Recursivity.”
[56] On the concept of the “placeholder” see Annelise Riles, Collateral Knowledge: Legal Reasoning in the Global Financial Markets (Chicago, IL: University of Chicago Press, 2011). Jacques Derrida's metaphor of the “supplement” is also a useful way to think about the paradoxical positioning of arbitrage as both inside and outside extensive time. See Jacques Derrida, Of Grammatology (Baltimore, MD: Johns Hopkins University Press, 1998).
[57] Derrida, Given Time.
[58] See Giorgio Agamben, What Is an Apparatus? and Other Essays, trans. David Kishik and Stefan Pedatella (Palo Alto, CA: Stanford University Press, 2009). In Kingdom and the Glory, Agamben develops his notion of the apparatus in significantly more detail by tracing its etymology origins in the Greek phrase oikonomia and its translation through the latin/Ciceronian phrase dispositif. For a more extended discussion of Agamben's treatment of apparatus and dispositif, in the context of economic rhetoric, see Catherine Chaput and Joshua S. Hanan, “Economic Rhetoric as Taxis: Neoliberal Governmentality and the Dispositif of Freakonomics,” Journal of Cultural Economy (2014, doi: 10.1080/17530350.2014.942349)
[59] There are many articulations of rhetoric today that attempt to problematize this pre-representational space of temporality that we are referring to as intensive time. These range from the rhetorical uptake of Lacan's “Real and Symbolic,” to Deleuze's “virtuality,” to Plato's “chora” (read largely through Kristeva and Derrida). While this essay lacks the space to unpack the assumptions of these, at times, incommensurable pre-representational paradigms, the remainder of this essay problematizes intensive time in terms of an affective logic (see subsequent footnote). For recent books that explore rhetoric from a pre-representational standpoint see Diane Davis, Inessential Solidarity (Pittsburgh, PA: University of Pittsburgh Press, 2010); Bradford Vivian, Being Made Strange: Rhetoric beyond Representation (New York, NY: SUNY Press, 2004); Lundberg, Lacan in Public; John Muckelbauer, The Future of Invention: Rhetoric, Postmodernism, and the Problem of Change (New York, NY: SUNY Press, 2009); and Thomas Rickert, Ambient Rhetoric: The Attunement of Rhetorical Being (Pittsburgh, PA: University of Pittsburgh Press, 2013).
[60] We take our notion of “affective logic” from Brian Massumi's “preemptive logic” that “operates on an affective register and inhabits a nonlinear time operating recursively between the present and the future.” Brian Massumi, “The Future Birth of the Affective Fact: The Political Ontology of Threat,” in The Affect Theory Reader, eds. Melissa Gregg and Gregory J. Seigworth (Durham, NC: Duke University Press, 2010), 56–57.
[61] In this respect our mode of economic criticism must be understood as a deviation from the rhetoric as epistemic project inaugurated by Robert Scott and taken up in the 1980s with POROI. Robert L. Scott, “On Viewing Rhetoric as Epistemic,” Communication Studies 18, no. 1 (1967): 9–17.
[62] See Agamben, Kingdom and the Glory, 142.
[63] The emergence of novelty may also be understood in terms of path dependence (à la Paul David), which typically will render extensive time non-ergodic, reconstituting the underlying stochastic structure of “the economy” in such a way that historically applicable probabilistic calculi are no longer valid. Even worse, the underlying stochastic structure may be reconfigured to such an extent that no analytically tractable probabilistic calculus is able to truly capture its new complexity. The epistemological insistence, on the part of neo-classical economic theory, that the underlying stochastic structure of the economy is not only stable but also essentially Gaussian, or representable by the normal distribution, is then rendered doubly suspect, as critics of EMH such as Nicholas Nassem Taleb have frequently pointed out. See Paul A. David, “Clio and the Economics of QWERTY,” The American Economic Review 75, no. 2 (1985): 332–37; Nicholas Nassim Taleb, The Black Swan: The Impact of the Highly Improbable Fragility (New York, NY: Random House, 2010); and Nicholas Nassim Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (New York, NY: Random House, 2005).
[64] Riles, Collateral Knowledge.
[65] On the importance of the impossible to rethinking rhetoric in the twenty-first century see Barbara A. Biesecker, “Prospects of Rhetoric for the Twenty-First Century: Speculations on Evental Rhetoric Ending with a Note on Barack Obama and a Benediction by Jacques Lacan,” Reengaging the Prospects of Rhetoric: Current Conversations and Contemporary Challenges, ed. Mark J. Porrovecchio (New York, NY: Routledge, 2010): 16–36.
[66] Stormer, “Recursivity,” 28.
[67] Stormer, “Recursivity,” 41, italics in original.
[68] Stormer, “Recursivity,” 41.
[69] Our use of “failed totality” is borrowed from Ernesto Laclau, who defines it as a tropologically constituted “place of an irretrievable fullness.” See Ernesto Laclau, On Populist Reason (New York, NY: Verso, 2005), 70.
[70] Stormer, “Recursivity,” 42.
[71] John Poulakos, “Toward a sophistic definition of rhetoric,” Philosophy & Rhetoric 16, no. 1 (1983): 36
[72] Poulakos, “Toward,” 42.
[73] This is why Hirokazu Miyazaki argues, for example, that the relationship between arbitrage and speculation is untenable. See Hirokazu Miyazaki, “Between Arbitrage and Speculation: an Economy of Belief and Doubt,” Economy and Society 36, no. 3 (2007): 396–415.
[74] Stormer, “Recursivity,” 43.
[75] Stormer, “Recursivity,” 43.
[76] For a discussion of emergent reasoning in financial markets see Mark C. Taylor, Confidence Games: Money and Markets in a World without Redemption (Chicago, IL: University of Chicago Press, 2008). For a more general discussion of emergent reasoning see Diana Coole and Samantha Frost, The New Materialisms: Ontology, Agency and Politics (Durham, NC: Duke University Press, 2010).
[77] Deleuze and Guattari, A Thousand Plateaus.
[78] Paul Krugman, Paul, “How Did Economists Get It So Wrong?” The New York Times Magazine, September 2, 2009, http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?pagewanted=all.
[79] Krugman, “How.”
[80] Krugman, “How.”
[81] Edmund Andrews, “Greenspan Concedes Error on Regulation.” The New York Times, October 23, 2008, http://www.nytimes.com/2008/10/24/business/economy/24panel.html.
[82] Muckelbauer, The Future, 117.
[83] Muckelbauer, The Future, 117.
[84] A rich conversation over the multi-dimensional importance of kairos for rhetorical theory has surfaced in recent years. For an important collection of essays providing ancient and contemporary context for that conversation, see Phillip Sipiora and James S. Baumlin's edited volume Rhetoric and Kairos: Essays in History, Theory, and Praxis (Albany, NY: SUNY Press, 2002). Those essays fall largely into either an “accommodation” or “creation” model of kairos (see Carolyn R. Miller's “Forward,” xi–xiii). We wish to complicate these models by emphasizing an emergent, relational, non-rational, and partly improvisational account of kairos. In addition to Muckelbauer's book, a number of other works offer excellent theoretical treatments of kairos that are, to varying degrees, allied with our own perspective, including Eric Charles White's Kaironomia: On the Will-to-Invent (Ithaca, NY: Cornell University Press); Dale Sullivan's “Kairos and the Rhetoric of Belief,” Quarterly Journal of Speech 78, no. 3 (1992): 317–32; John Poulakos's Sophistical Rhetoric in Classical Greece (Columbia: University of South Carolina Press, 1995); Janet M. Atwill's Rhetoric Reclaimed: Aristotle and the Liberal Arts Tradition (Ithaca, NY: Cornell University Press, 1998); Scott Consigny's Gorgias: Sophist and Artist (Columbia: University of South Carolina Press, 2001); Debra Hawhee's “Kairotic Encounters,” in Perspectives on Rhetorical Invention, ed. Janet M. Atwill and Janice M. Lauer (Knoxville: University of Tennessee Press: 16–35); and Rickert's Ambient Rhetoric. For an excellent and concise overview of this conversation and the basic stakes involved, see Debra Hawhee's discussion in Bodily Arts: Rhetoric and Athletics in Ancient Greece (Austin, TX: University of Texas Press, 2004), 65–71.