Financial engineering naturalizes crisis to justify yet more markets

Evidence

It was one thing to reduce the tortured history of finance to a science-fiction narrative of the technological sublime; it has been quite another to turn it into the ne plus ultra of the full-spectrum neoliberal response to the crisis. As in the case of geoengineering, it has been necessary to recruit scientists who concede that they will never rectify the underlying crisis debility, so they must turn their efforts instead to fashioning Band-Aids to treat the symptoms. As the economist Paul Romer is reported to have said, “Every decade or so, any finite system of financial regulation will lead to a systemic financial crisis.” Never mind the history of the agent practices or the neoliberal capture of politics (or economic history, for that matter); the market will always periodically experience indigestion. Options, CDOs-squared, credit default swaps, high-frequency trading, dark pools, repo, rehypothecation, shadow banking, SIVs: you can’t hold back the ocean. Financial complexification is as inevitable as the tides. If nature will never be thoroughly tamed, then it behooves us to at least develop instrumentalities to ride its chaotic complexity. And it follows that the response to apparent market glitches is to double down with even more markets. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 958

Categorization

• XREF: This naturalization-of-finance move parallels the geoengineering argument the author draws elsewhere; also fits the reader’s thought-collective framework of how austerity’s defenders render their position inevitable. — connects to: Chicago economics directly inspired the financial derivatives and deregulation behind the crisis — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 497; Finance escaping crisis consequences legitimated the economics profession dodging blame — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 583; Economists involved in financial innovation disappear their own roles when narrating crises — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 571 (+9 more)
• DEEPTHINKING: The move from ‘crisis is natural and agentless’ to ‘therefore even more markets’ is a tight ideological syllogism worth sitting with — it shows how catastrophic failure is repurposed as validation of the very system that failed.

Broader Connections

• Finance escaping crisis consequences legitimated the economics profession dodging blame #complicates (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 583
• Financial economics actively alters markets rather than merely describing them #expands (0.78) — Donald MacKenzie, An Engine, Not a Camera, 64
• Financial engineering is promoted as outsourcing social problems to entrepreneurs #expands (0.78) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 963
• Finance’s resilience stems from imagination, not rationality #qualifies (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 28
• Financialization treats risk as probabilisable, displacing close knowledge of the object valued #expands (0.75) — Ève Chiapello, Financialisation of Valuation, 35
• The discovery-then-acceptance narrative misdescribes how financial economics shaped markets #responds-to (0.75) — Donald MacKenzie, An Engine, Not a Camera, 386
• Economists involved in financial innovation disappear their own roles when narrating crises #responds-to (0.72) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 571
• Economics escaped crisis blame because the banking sector it protected escaped unscathed #contradicts (0.70) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 555