The Mathematics of Political Policies and Economic Decisions – Dictatorial (Extremists) Versus Democratic. Note Quote. Part 1 Didactics.

If a strategy-proof, onto rule does not pick x∗ when it is the median of peaks and y_m‘s, then a contradiction is reached using preferences with peaks at p_i^L and p_i^H.

Let us take a look at single-peaked preferences over one-dimensional policy spaces. This domain can be used to model political policies, economic decisions, location problems, or any allocation problem where a single point must be chosen in an interval. The key assumption is that agents’ preferences are assumed to have a single most-preferred point in the interval, and that preferences are “decreasing” as one moves away from that peak.

Formally, the allocation space (or policy space) is the unit interval A = [0, 1]. An outcome is a single point x ∈ A. Each agent i ∈ N has a preference ordering ≽_i, which is a weak order over the outcomes in [0, 1]. The preference relation ≽_i is single-peaked if ∃ a point p_i ∈ A (the peak of ≽_i) such that ∀ x ∈ A\{p_i} and all λ ∈ [0,1), (λx +(1−λ)p_i) ≻_i x. Let R denote the class of single-peaked preferences.

We denote the peaks of preference relations ≽_i, ≽′_i, ≽_j, etc., respectively by p_i, p_i′, p_j, etc. Denote a profile (n-tuple) of preferences as ≽ ∈ Rⁿ.

One can imagine this model as representing a political decision such as an income tax rate, another political issue with conservative/liberal extremes, the location of a public facility on a road, or even something as simple as a group of people deciding on the temperature setting for a shared office. Here, the agents have an ideal preferred policy in mind, and would prefer that a decision be made as close as possible to this “peak.”

A rule f : Rⁿ → A assigns an outcome f(≽) to any preference profile ≽. A rule is strategy-proof if it is a dominant strategy for each agent to report his preferences truthfully when the rule is being used to choose a point.

Our purpose then is to see that this class of problems admits a rich family of strategy-proof rules whose ranges include more than two alternatives. In fact, the family of such rules remains rich even when one restricts attention to rules that satisfy the following condition.

We say that a rule f is onto if ∀ x ∈ A ∃ ≽ ∈ Rⁿ such that f(≽) = x. An onto rule cannot preclude an outcome from being chosen ex ante. It is not without loss of generality to impose this condition. For instance, fix two points x, y ∈ [0, 1] and consider a rule that chooses whichever of the two points is preferred to the other by a majority of agents (and where x is chosen in case of a tie). Such a rule is strategy-proof, but not onto. Similar strategy-proof rules can even break ties between x and y by using preference information about other points x′, y′, . . ., in [0, 1], even though x′, etc., are not in the range of the rule.

The onto condition is even weaker than what is called unanimity, which requires that whenever all agents’ preferences have the same peak (p_i = p_j ∀ i, j), the rule must choose that location as the outcome. In turn, unanimity is weaker than Pareto-optimality: ∀ ≽ ∈ Rⁿ, ∃ no point x ∈ [0, 1] such that x ≽_i f(≽) ∀ i ∈ N.

As it turns out, these three requirements are all equivalent among strategy-proof rules. Suppose f is strategy-proof. Then f is onto iff it is unanimous iff it is Pareto-optimal.

It is clear that Pareto-optimality implies the other two conditions. Suppose f is strategy-proof and onto. Fix x ∈ [0, 1] and let ≽ ∈ Rⁿ be such that f(≽) = x. Consider any “unanimous” profile ≽′ ∈ Rⁿ such that p_i′ = x for each i ∈ N. By strategy-proofness, f (≽′₁, ≽₂, . . . , ≽_n) = x, otherwise agent 1 could manipulate f. Repeating this argument, f (≽′₁, ≽′₂, ≽₃, . . . , ≽_n) = x, . . . ,f(≽′) = x. That is, f is unanimous.

In order to derive a contradiction, suppose that f is not Pareto-optimal at some profile ≽ ∈ Rⁿ. This implies that either (i) f(≽) < p_i ∀ i ∈ N or (ii) f(≽) > p_i ∀ i ∈ N . Without loss of generality, assume (i) holds. Furthermore, assume that the agents are labeled so that p₁ ≤ p₂ ≤ ··· ≤ p_n.

If p₁ = p_n then unanimity is violated, completing the proof. Otherwise, let j ∈ N be such that p₁ = p_j < p_j+1; that is, j < n agents have the minimum peak. ∀ i > j, let ≽′_i be a preference relation such that both p_i′ = p₁ and f(≽)≽′_i p_i.

Let x_n = f(≽₁,…, ≽_n−1, ≽′_n). By strategy-proofness, x_n ∈ [f(≽), p_n], otherwise agent n (with preference ≽′_n) could manipulate f by reporting preference ≽_n. Similarly, x_n ∉ (f(≽), p_n], otherwise agent n (with preference ≽_n) could manipulate f by reporting preference ≽′_n. Therefore x_n = f(≽).

Repeating this argument as each i > j replaces ≽_i with ≽′_i, we have f(≽₁,…, ≽_j, ≽′_j+1,…, ≽′_n) = f(≽), which contradicts unanimity. Since a strategy-proof, onto rule must be unanimous, this is a contradiction.

The central strategy-proof rule on this domain is the simple median-voter rule. Suppose that the number of agents n is odd. Then the rule that picks the median of the agents’ peaks (p_i ’s) is a strategy-proof rule.

It is easy to see why this rule is strategy-proof : If an agent’s peak p_i lies below the median peak, then he can change the median only by reporting a preference relation whose peak lies above the true median. The effect of this misreport is for the rule to choose a point even further away from p_i, making the agent worse off. A symmetric argument handles the case in which the peak is above the median. Finally, an agent cannot profitably misreport his preferences if his peak is the median one to begin with.

More generally, for any number of agents n and any positive integer k ≤ n, the rule that picks the k^th highest peak is strategy-proof for precisely the same reasons. An agent can only move the k^th peak further from his own. The median happens to be the case where k = (n + 1)/2.

The strategy-proofness of such rules stands in contrast to the incentives properties of rules that choose average-type statistics. Consider the rule that chooses the average of the n agents’ peaks. Any agent with peak p_i ∈ (0, 1) that is not equal to the average can manipulate the rule by reporting preferences with a more extreme peak (closer to 0 or 1) than his true peak.

This would also hold for any weighted average of the agents’ peaks, with one exception. If a rule allocated all of the weight to one agent, then the resulting rule simply picks that agent’s peak always. Such a dictatorial rule is strategy-proof and onto.

In addition to favorable incentives properties, rules based on order statistics have the property that they require little information to be computed. Technically a rule requires agents to report an entire preference ordering over [0, 1]. There is a need to transcend the rules, which, only require agents to report their most preferred point, i.e., a single number. In fact, under the onto assumption, this informational property is a consequence of the strategy-proofness requirement; that is, all strategy-proof and onto rules have the property that they can be computed solely from information about the agents’ peaks.

Let us generalize the class of “k^th-statistic rules”. Consider a fixed set of points y₁, y₂, . . . , y_n−1 ∈ A. Consider the rule that, for any profile of preferences ≽, chooses the median of the 2n − 1 points consisting of the n agents’ peaks and the n − 1 points of y. This differs in that, for some choices of y and some profiles of preferences, the rule may choose a point that is not the peak of any agent’s preferences. Yet, such a rule is strategy-proof.

Such rules compose the entire class of strategy-proof and onto rules that treat agents symmetrically. To formalize this latter requirement, we call a rule anonymous if for any ≽ ∈ Rⁿ and any permutation ≽′ of ≽, f(≽′) = f (≽). This requirement captures the idea that the agents’ names play no role in the behavior of a rule. Dictatorial rules are examples of rules that are strategy-proofand onto, but not anonymous.

A rule f is strategy-proof, onto, and anonymous iff ∃ y₁, y₂,…, y_n−1 ∈ [0,1] such that ∀ ≽ ∈ Rⁿ,

f(≽) = med{p₁, p₂,…, p_n, y₁, y₂,…, y_n−1} —– (1)

Suppose f is strategy-proof, onto, and anonymous. We make extensive use of the two (extreme) preference relations that have peaks at 0 and 1 respectively. Since preferences relations are ordinal, there is only one preference relation with a peak at 0 and only one with a peak at 1. Denote these two preference relations by ≽⁰_i and ≽¹_i respectively.

For any 1 ≤ m ≤ n − 1, let y_m denote the outcome of f when m agents have preference relation ≽¹_i and the remainder have ≽⁰_i:

y_m = f(≽⁰₁,…, ≽⁰_n−m, ≽¹_n−m+1,…, ≽¹_n)

By anonymity, the order of the arguments of f is irrelevant; if precisely m agents have preference relation ≽¹_i and the rest have ≽⁰_i then the outcome is y_m.

With a profile of preferences ≽ ∈ Rⁿ with peaks p₁, . . ., p_n, and without loss of generality (by anonymity), once one assumes that p_i ≤ p_i+1 for each i ≤ n−1, then,

f(≽) = x∗ ≡ med{p₁,…, p_n, y₁,…, y_n−1}.

If the median is some y_m, then suppose x∗ = y_m for some m. By monotonicity of the peaks and y_m‘s, since x∗ is the median of 2n−1 points this implies p_n−m ≤ x∗ = y_m ≤ p_n−m+1. By assumption,

x∗ = y_m = f(≽⁰₁,…, ≽⁰_n−m, ≽¹_n−m+1,…, ≽¹_n) —– (2)

Let x₁ = f(≽₁, ≽⁰₂,…, ≽⁰_n−m, ≽¹_n−m+1,…, ≽¹_n). Strategy-proofness implies x₁ ≥ x∗, otherwise agent 1 with preference ≽⁰₁ could manipulate f. Similarly, since p₁ ≤ y_m, we cannot have x₁ > x∗, otherwise agent 1 with preference ≽₁ could manipulate f. Hence x₁ = x∗. Repeating this argument for all i ≤ n − m, x∗ = f(≽₁,…,≽_n−m, ≽¹_n−m+1,…, ≽¹_n). The symmetric argument for all i > n−m implies

f(≽₁,…, ≽_n) = x∗ —– (3)

If the median is an agent’s peak, then the remaining case is that y_m < x∗ < y_m+1 for some m. (The cases where x∗ < y₁ and x∗ > y_n−1 are similar, denoting y₀ = 0 and y_n = 1). In this case, since the agents’ peaks are in increasing order, we have x∗ = p_n−m. If

f(≽⁰₁,…, ≽⁰_n−m−1, ≽_n−m, ≽¹_n−m+1,…, ≽¹_n) = x∗ = p_n−m —– (4)

then, analogous to the way (2) implied (3), repeated applications of strategy-proofness (to the n−1 agents other than i = n−m) would imply f(≽₁,…, ≽_n) = x∗, and the proof would be finished.

Thus, the parameters (y_m‘s) can be thought of as the rule’s degree of compromise when agents have extremist preferences. If m agents prefer the highest possible outcome (1), while n − m prefer the lowest (0), then which point should be chosen? A true median rule would pick whichever extreme (0 or 1) contains the most peaks. On the other hand, the other rules may choose intermediate points (y_m) as a compromise. The degree of compromise (which y_m) can depend on the degree to which the agents’ opinions are divided (the size of m).

The anonymity requirement is a natural one in situations where agents are to be treated as equals. If one does not require this, however, the class of strategy-proof rules becomes even larger. Along the dictatorial rules, which always chooses a predetermined agent’s peak, there are less extreme violations of anonymity: The full class of strategy-proof, onto rules, allows agents to be treated with varying degrees of asymmetry.

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Fascism’s Incognito – Brechtian Circular Circuitry. Note Quote.

Carefully looking at the Brechtian article and unstitching it, herein lies the pence (this is reproduced via an email exchange and hence is too very basic in arguments!!):

1. When Brecht talks of acceding to the capitulation of Capitalism, in that, being a historic phase and new and old at the same time, this nakedest manifestation of Capitalism is attributed to relationality, which are driven by functionalist propositions and are non-linear, reversible schemas existing independently of the specific contents that are inserted as variables. This may sound a bit philosophical, but is the driving force behind Brecht’s understanding of Capitalism and is perfectly corroborated in his famous dictum, “Reality as such has slipped into the domain of the functional.” This dictum underlines what is new and what is old at the same time.

2. Sometime in the 30s, Brecht’s writings corroborated the linkages between Capitalism and Fascism, when the victories of European fascism prompted consideration of the relationship between collective violence and regressive social configurations. At its heart, his corpus during the times was a defining moment of finance capital, an elaborate systemic treatment of economic transactions within the literary narrative with fascistic overtones. It is here the capitalist is consummate par excellence motivated by the rational calculus (Ayn Rand rings the bells!!!). Eschewing the narrative desire of the traditional dramatic novel, Brecht compels the readers without any recourse to emotional intensity and catharsis, and capturing the attention via phlegmatic and sublimated pleasures of logical analysis, riddle solving, remainder less, and bookkeeping. This coming together of the financial capital with the rise in European Fascism, despite leading to barbaric times in due course, brought forth the progeny of corporation merging with the state incorporating social functions into integrated networks of production and consumption. What Brecht reflects as barbaric is incidentally penned in these tumultuous ear, where capital evolves from Fordist norms into Corporations and in the process atrophy human dimensions. This fact is extrapolated in contemporary times when capital has been financialized to the extent of artificial intelligences, HFTs and algorithmic decision making, just to sound a parallel to Nature 2.0.

But, before digressing a bit too far, where is Brecht lost in the history of class consciousness here? With capital evolving exponentially, even if there is no or little class consciousness in the proletariat, there will come a realization that exploitation is widespread. This is the fecund ground when nationalist and fascist rhetoric seeds into a full-grown tree, inciting xenophobias infused with radicalization (this happened historically in Italy and in Germany, and is getting replicated on micro-to-macro scales contemporarily). But, what Brecht has failed to come to terms with is the whole logic of fascists against the capitalist. Fascists struggle with the capitalist question within their own circles (a far-fetched parallel drawn here as regards India is the right ideologue’s opposition to FDI, for instance). Historically speaking and during times when Bertotl was actively writing, there were more working class members of the Italian fascists than anyone else with anti-capitalist numbers. In Nazi Germany, there were close to 30 per cent within stormtroopers as minimal identifies and sympathizers with communism. The rest looked up to fascism as a stronger alternative to socialism/communism in its militancy. The intellectual and for moral (might be a strikethrough term here, but in any case…) tonic was provided for by the bourgeois liberals who opposed fascism for their capitalist bent. All in all, Brecht could have been prescient to say the most, but was too ensconced, to say the least, in Marxist paradigms to analyze this suturing of ideological interests. That fascism ejected itself of a complete domineering to Capitalism, at least historically, is evident from the trajectory of a revolutionary syndicalist, Edmondo Rossoni, who was extremely critical of internationalism, and spearheaded Italian fascist unions far outnumbering Italian fascist membership. Failure to recognize this fractious relationship between Fascism and Capitalism jettisons the credibility of Brechtian piece linked.

3. Althusser once remarked that Brecht’s work displays two distinct forms of temporality that fail to achieve any mutual integration, which have no relation with one another, despite coexisting and interconnecting, never meet one another. The above linked essay is a prime example of Althusser’s remark. What Brecht achieves is demonstrating incongruities in temporalities of capital and the human (of Capitalism and Barbarianism/Fascism respectively), but is inadequate to take such incongruities to fit into the jigsaw puzzle of the size of Capitalism, not just in his active days, but even to very question of his being prescient for contemporary times, as was mentioned in point 2 in this response. Brecht’s reconstructing of the genealogy of Capitalism in tandem with Fascism parses out the link in commoditized linear history (A fallacy even with Marxian notion of history as history of class consciousness, in my opinion), ending up trapped in tautological circles, since the human mind is short of comprehending the paradoxical fact of Capitalism always seemingly good at presupposing itself.

It is for these reasons, why I opine that Brecht has a circular circuitry.

Serge Galam’s Sociophysics: A Physicist’s Modeling of Psycho-political Phenomena

The Trump phenomenon is argued to depart from current populist rise in Europe. According to a model of opinion dynamics from sociophysics the machinery of Trump’s amazing success obeys well-defined counter-intuitive rules. Therefore, his success was in principle predictable from the start. The model uses local majority rule arguments and obeys a threshold dynamics. The associated tipping points are found to depend on the leading collective beliefs, cognitive biases and prejudices of the social group which undertakes the public debate. And here comes the open sesame of the Trump campaign, which develops along two successive steps. During a first moment, Trump’s statement produces a majority of voters against him. But at the same time, according to the model the shocking character of the statement modifies the prejudice balance. In case the prejudice is present even being frozen among voters, the tipping point is lowered at Trump’s benefit. Nevertheless, although the tipping point has been lowered by the activation of frozen prejudices it is instrumental to preserve enough support from openly prejudiced people to be above the threshold.

Serge Galam – Sociophysics A Physicist’s Modeling of Psycho-political Phenomena

 

Knowledge Limited for Dummies….Didactics.

Bertrand Russell with Alfred North Whitehead, in the Principia Mathematica aimed to demonstrate that “all pure mathematics follows from purely logical premises and uses only concepts defined in logical terms.” Its goal was to provide a formalized logic for all mathematics, to develop the full structure of mathematics where every premise could be proved from a clear set of initial axioms.

Russell observed of the dense and demanding work, “I used to know of only six people who had read the later parts of the book. Three of those were Poles, subsequently (I believe) liquidated by Hitler. The other three were Texans, subsequently successfully assimilated.” The complex mathematical symbols of the manuscript required it to be written by hand, and its sheer size – when it was finally ready for the publisher, Russell had to hire a panel truck to send it off – made it impossible to copy. Russell recounted that “every time that I went out for a walk I used to be afraid that the house would catch fire and the manuscript get burnt up.”

Momentous though it was, the greatest achievement of Principia Mathematica was realized two decades after its completion when it provided the fodder for the metamathematical enterprises of an Austrian, Kurt Gödel. Although Gödel did face the risk of being liquidated by Hitler (therefore fleeing to the Institute of Advanced Studies at Princeton), he was neither a Pole nor a Texan. In 1931, he wrote a treatise entitled On Formally Undecidable Propositions of Principia Mathematica and Related Systems, which demonstrated that the goal Russell and Whitehead had so single-mindedly pursued was unattainable.

The flavor of Gödel’s basic argument can be captured in the contradictions contained in a schoolboy’s brainteaser. A sheet of paper has the words “The statement on the other side of this paper is true” written on one side and “The statement on the other side of this paper is false” on the reverse. The conflict isn’t resolvable. Or, even more trivially, a statement like; “This statement is unprovable.” You cannot prove the statement is true, because doing so would contradict it. If you prove the statement is false, then that means its converse is true – it is provable – which again is a contradiction.

The key point of contradiction for these two examples is that they are self-referential. This same sort of self-referentiality is the keystone of Gödel’s proof, where he uses statements that imbed other statements within them. This problem did not totally escape Russell and Whitehead. By the end of 1901, Russell had completed the first round of writing Principia Mathematica and thought he was in the homestretch, but was increasingly beset by these sorts of apparently simple-minded contradictions falling in the path of his goal. He wrote that “it seemed unworthy of a grown man to spend his time on such trivialities, but . . . trivial or not, the matter was a challenge.” Attempts to address the challenge extended the development of Principia Mathematica by nearly a decade.

Yet Russell and Whitehead had, after all that effort, missed the central point. Like granite outcroppings piercing through a bed of moss, these apparently trivial contradictions were rooted in the core of mathematics and logic, and were only the most readily manifest examples of a limit to our ability to structure formal mathematical systems. Just four years before Gödel had defined the limits of our ability to conquer the intellectual world of mathematics and logic with the publication of his Undecidability Theorem, the German physicist Werner Heisenberg’s celebrated Uncertainty Principle had delineated the limits of inquiry into the physical world, thereby undoing the efforts of another celebrated intellect, the great mathematician Pierre-Simon Laplace. In the early 1800s Laplace had worked extensively to demonstrate the purely mechanical and predictable nature of planetary motion. He later extended this theory to the interaction of molecules. In the Laplacean view, molecules are just as subject to the laws of physical mechanics as the planets are. In theory, if we knew the position and velocity of each molecule, we could trace its path as it interacted with other molecules, and trace the course of the physical universe at the most fundamental level. Laplace envisioned a world of ever more precise prediction, where the laws of physical mechanics would be able to forecast nature in increasing detail and ever further into the future, a world where “the phenomena of nature can be reduced in the last analysis to actions at a distance between molecule and molecule.”

What Gödel did to the work of Russell and Whitehead, Heisenberg did to Laplace’s concept of causality. The Uncertainty Principle, though broadly applied and draped in metaphysical context, is a well-defined and elegantly simple statement of physical reality – namely, the combined accuracy of a measurement of an electron’s location and its momentum cannot vary far from a fixed value. The reason for this, viewed from the standpoint of classical physics, is that accurately measuring the position of an electron requires illuminating the electron with light of a very short wavelength. But the shorter the wavelength the greater the amount of energy that hits the electron, and the greater the energy hitting the electron the greater the impact on its velocity.

What is true in the subatomic sphere ends up being true – though with rapidly diminishing significance – for the macroscopic. Nothing can be measured with complete precision as to both location and velocity because the act of measuring alters the physical properties. The idea that if we know the present we can calculate the future was proven invalid – not because of a shortcoming in our knowledge of mechanics, but because the premise that we can perfectly know the present was proven wrong. These limits to measurement imply limits to prediction. After all, if we cannot know even the present with complete certainty, we cannot unfailingly predict the future. It was with this in mind that Heisenberg, ecstatic about his yet-to-be-published paper, exclaimed, “I think I have refuted the law of causality.”

The epistemological extrapolation of Heisenberg’s work was that the root of the problem was man – or, more precisely, man’s examination of nature, which inevitably impacts the natural phenomena under examination so that the phenomena cannot be objectively understood. Heisenberg’s principle was not something that was inherent in nature; it came from man’s examination of nature, from man becoming part of the experiment. (So in a way the Uncertainty Principle, like Gödel’s Undecidability Proposition, rested on self-referentiality.) While it did not directly refute Einstein’s assertion against the statistical nature of the predictions of quantum mechanics that “God does not play dice with the universe,” it did show that if there were a law of causality in nature, no one but God would ever be able to apply it. The implications of Heisenberg’s Uncertainty Principle were recognized immediately, and it became a simple metaphor reaching beyond quantum mechanics to the broader world.

This metaphor extends neatly into the world of financial markets. In the purely mechanistic universe of classical physics, we could apply Newtonian laws to project the future course of nature, if only we knew the location and velocity of every particle. In the world of finance, the elementary particles are the financial assets. In a purely mechanistic financial world, if we knew the position each investor has in each asset and the ability and willingness of liquidity providers to take on those assets in the event of a forced liquidation, we would be able to understand the market’s vulnerability. We would have an early-warning system for crises. We would know which firms are subject to a liquidity cycle, and which events might trigger that cycle. We would know which markets are being overrun by speculative traders, and thereby anticipate tactical correlations and shifts in the financial habitat. The randomness of nature and economic cycles might remain beyond our grasp, but the primary cause of market crisis, and the part of market crisis that is of our own making, would be firmly in hand.

The first step toward the Laplacean goal of complete knowledge is the advocacy by certain financial market regulators to increase the transparency of positions. Politically, that would be a difficult sell – as would any kind of increase in regulatory control. Practically, it wouldn’t work. Just as the atomic world turned out to be more complex than Laplace conceived, the financial world may be similarly complex and not reducible to a simple causality. The problems with position disclosure are many. Some financial instruments are complex and difficult to price, so it is impossible to measure precisely the risk exposure. Similarly, in hedge positions a slight error in the transmission of one part, or asynchronous pricing of the various legs of the strategy, will grossly misstate the total exposure. Indeed, the problems and inaccuracies in using position information to assess risk are exemplified by the fact that major investment banking firms choose to use summary statistics rather than position-by-position analysis for their firmwide risk management despite having enormous resources and computational power at their disposal.

Perhaps more importantly, position transparency also has implications for the efficient functioning of the financial markets beyond the practical problems involved in its implementation. The problems in the examination of elementary particles in the financial world are the same as in the physical world: Beyond the inherent randomness and complexity of the systems, there are simply limits to what we can know. To say that we do not know something is as much a challenge as it is a statement of the state of our knowledge. If we do not know something, that presumes that either it is not worth knowing or it is something that will be studied and eventually revealed. It is the hubris of man that all things are discoverable. But for all the progress that has been made, perhaps even more exciting than the rolling back of the boundaries of our knowledge is the identification of realms that can never be explored. A sign in Einstein’s Princeton office read, “Not everything that counts can be counted, and not everything that can be counted counts.”

The behavioral analogue to the Uncertainty Principle is obvious. There are many psychological inhibitions that lead people to behave differently when they are observed than when they are not. For traders it is a simple matter of dollars and cents that will lead them to behave differently when their trades are open to scrutiny. Beneficial though it may be for the liquidity demander and the investor, for the liquidity supplier trans- parency is bad. The liquidity supplier does not intend to hold the position for a long time, like the typical liquidity demander might. Like a market maker, the liquidity supplier will come back to the market to sell off the position – ideally when there is another investor who needs liquidity on the other side of the market. If other traders know the liquidity supplier’s positions, they will logically infer that there is a good likelihood these positions shortly will be put into the market. The other traders will be loath to be the first ones on the other side of these trades, or will demand more of a price concession if they do trade, knowing the overhang that remains in the market.

This means that increased transparency will reduce the amount of liquidity provided for any given change in prices. This is by no means a hypothetical argument. Frequently, even in the most liquid markets, broker-dealer market makers (liquidity providers) use brokers to enter their market bids rather than entering the market directly in order to preserve their anonymity.

The more information we extract to divine the behavior of traders and the resulting implications for the markets, the more the traders will alter their behavior. The paradox is that to understand and anticipate market crises, we must know positions, but knowing and acting on positions will itself generate a feedback into the market. This feedback often will reduce liquidity, making our observations less valuable and possibly contributing to a market crisis. Or, in rare instances, the observer/feedback loop could be manipulated to amass fortunes.

One might argue that the physical limits of knowledge asserted by Heisenberg’s Uncertainty Principle are critical for subatomic physics, but perhaps they are really just a curiosity for those dwelling in the macroscopic realm of the financial markets. We cannot measure an electron precisely, but certainly we still can “kind of know” the present, and if so, then we should be able to “pretty much” predict the future. Causality might be approximate, but if we can get it right to within a few wavelengths of light, that still ought to do the trick. The mathematical system may be demonstrably incomplete, and the world might not be pinned down on the fringes, but for all practical purposes the world can be known.

Unfortunately, while “almost” might work for horseshoes and hand grenades, 30 years after Gödel and Heisenberg yet a third limitation of our knowledge was in the wings, a limitation that would close the door on any attempt to block out the implications of microscopic uncertainty on predictability in our macroscopic world. Based on observations made by Edward Lorenz in the early 1960s and popularized by the so-called butterfly effect – the fanciful notion that the beating wings of a butterfly could change the predictions of an otherwise perfect weather forecasting system – this limitation arises because in some important cases immeasurably small errors can compound over time to limit prediction in the larger scale. Half a century after the limits of measurement and thus of physical knowledge were demonstrated by Heisenberg in the world of quantum mechanics, Lorenz piled on a result that showed how microscopic errors could propagate to have a stultifying impact in nonlinear dynamic systems. This limitation could come into the forefront only with the dawning of the computer age, because it is manifested in the subtle errors of computational accuracy.

The essence of the butterfly effect is that small perturbations can have large repercussions in massive, random forces such as weather. Edward Lorenz was testing and tweaking a model of weather dynamics on a rudimentary vacuum-tube computer. The program was based on a small system of simultaneous equations, but seemed to provide an inkling into the variability of weather patterns. At one point in his work, Lorenz decided to examine in more detail one of the solutions he had generated. To save time, rather than starting the run over from the beginning, he picked some intermediate conditions that had been printed out by the computer and used those as the new starting point. The values he typed in were the same as the values held in the original simulation at that point, so the results the simulation generated from that point forward should have been the same as in the original; after all, the computer was doing exactly the same operations. What he found was that as the simulated weather pattern progressed, the results of the new run diverged, first very slightly and then more and more markedly, from those of the first run. After a point, the new path followed a course that appeared totally unrelated to the original one, even though they had started at the same place.

Lorenz at first thought there was a computer glitch, but as he investigated further, he discovered the basis of a limit to knowledge that rivaled that of Heisenberg and Gödel. The problem was that the numbers he had used to restart the simulation had been reentered based on his printout from the earlier run, and the printout rounded the values to three decimal places while the computer carried the values to six decimal places. This rounding, clearly insignificant at first, promulgated a slight error in the next-round results, and this error grew with each new iteration of the program as it moved the simulation of the weather forward in time. The error doubled every four simulated days, so that after a few months the solutions were going their own separate ways. The slightest of changes in the initial conditions had traced out a wholly different pattern of weather.

Intrigued by his chance observation, Lorenz wrote an article entitled “Deterministic Nonperiodic Flow,” which stated that “nonperiodic solutions are ordinarily unstable with respect to small modifications, so that slightly differing initial states can evolve into considerably different states.” Translation: Long-range weather forecasting is worthless. For his application in the narrow scientific discipline of weather prediction, this meant that no matter how precise the starting measurements of weather conditions, there was a limit after which the residual imprecision would lead to unpredictable results, so that “long-range forecasting of specific weather conditions would be impossible.” And since this occurred in a very simple laboratory model of weather dynamics, it could only be worse in the more complex equations that would be needed to properly reflect the weather. Lorenz discovered the principle that would emerge over time into the field of chaos theory, where a deterministic system generated with simple nonlinear dynamics unravels into an unrepeated and apparently random path.

The simplicity of the dynamic system Lorenz had used suggests a far-reaching result: Because we cannot measure without some error (harking back to Heisenberg), for many dynamic systems our forecast errors will grow to the point that even an approximation will be out of our hands. We can run a purely mechanistic system that is designed with well-defined and apparently well-behaved equations, and it will move over time in ways that cannot be predicted and, indeed, that appear to be random. This gets us to Santa Fe.

The principal conceptual thread running through the Santa Fe research asks how apparently simple systems, like that discovered by Lorenz, can produce rich and complex results. Its method of analysis in some respects runs in the opposite direction of the usual path of scientific inquiry. Rather than taking the complexity of the world and distilling simplifying truths from it, the Santa Fe Institute builds a virtual world governed by simple equations that when unleashed explode into results that generate unexpected levels of complexity.

In economics and finance, institute’s agenda was to create artificial markets with traders and investors who followed simple and reasonable rules of behavior and to see what would happen. Some of the traders built into the model were trend followers, others bought or sold based on the difference between the market price and perceived value, and yet others traded at random times in response to liquidity needs. The simulations then printed out the paths of prices for the various market instruments. Qualitatively, these paths displayed all the richness and variation we observe in actual markets, replete with occasional bubbles and crashes. The exercises did not produce positive results for predicting or explaining market behavior, but they did illustrate that it is not hard to create a market that looks on the surface an awful lot like a real one, and to do so with actors who are following very simple rules. The mantra is that simple systems can give rise to complex, even unpredictable dynamics, an interesting converse to the point that much of the complexity of our world can – with suitable assumptions – be made to appear simple, summarized with concise physical laws and equations.

The systems explored by Lorenz were deterministic. They were governed definitively and exclusively by a set of equations where the value in every period could be unambiguously and precisely determined based on the values of the previous period. And the systems were not very complex. By contrast, whatever the set of equations are that might be divined to govern the financial world, they are not simple and, furthermore, they are not deterministic. There are random shocks from political and economic events and from the shifting preferences and attitudes of the actors. If we cannot hope to know the course of the deterministic systems like fluid mechanics, then no level of detail will allow us to forecast the long-term course of the financial world, buffeted as it is by the vagaries of the economy and the whims of psychology.

Why the Political needs the Pervert? Thought of the Day 102.1

Thus perverts’ desire does not have the opportunity to be organized around finding a fantasmatic solution to the real of sexual difference. The classical scenario of Oedipal dynamics, with its share of lies, make believe, and sexual theories, is not accessible to them. This is why they will search desperately to access symbolic castration that could bring solace to their misery. — Judith Feher-Gurewich (Jean-Michel Rabaté – The Cambridge Companion to Lacan)

Nonetheless, it is contradictory to see the extra-ordinary’s goal as the reinsertion of castration, when in fact there is nothing in his perverse scenarios that incarcerates him in misery. It is more a fantasmatic solution to the deciphering of the enigma of sexual difference, precisely by veiling difference. The extra-ordinary wishes to maintain this veiling, in as much as his jouissance is derived this way. Even if the extra-ordinary efforts to infinitize jouissance are eventually sealed by castration, this is more a side effect of the “perverse” act. At the end, desire always reinscribes itself. Symbolic guilt is inserted in the extra-ordinary’s world through castration, not because the latter relieves him, but because his fantasy has failed. This failure is what creates the misery of the pervert, as in any other subject.

His main target is centred in filling the Other with jouissance. However, it is not something he produces, but more something he unlocks. The pervert unleashes a jouissance, already present in the Other, by eradicating the primacy of the phallic signifier and revealing the Other’s jouissance (the emptiness, the feminine). The neurotic’s anxiety concerns the preservation of desire through the duplication of castration, whereas the pervert’s anxiety emerges from the reverse condition. This is the question of how to extract jouissance from the object without it falling. He does not want to let the object fall, not for fear of castration, but because of the wish to retain jouissance. Inexorably, the nagging question of how to obstruct desire from returning to its initial place grips the pervert because, together with desire, the lack in the Other returns, restoring and maintaining his desiring status, instead of his enjoying status. Without doubt, these are fantasmatic relations that sustain “perverse” desire for jouissance and, at the same time, impose a safe distance from the horror of the Thing’s return.

Anxiety intervenes as the mediating term between desire and jouissance. The desiring subject seeks jouissance, but not in its pure form. Jouissance has to be related to the Other, to occupy a space within the Other of signification, to be put into words. This is what phallic jouissance, the jouissance of the idiot, aims at. The idiocy of it lies in its vain and limited character, since jouissance always fails signification and only a residue is left behind. The remainder is the object a, which perpetuates the desire of the subject. But the object is desired as absent. Coming too close to it, one finds this absence occupied by a real presence. In that case, the object has to fall, like the phallus in its exhausted stage, in order to maintain the desiring status of the subject. The moment desire returns, the object falls, or, better, the moment the object falls, desire returns.

While the subject is engaged in an impossible task (that of inscribing jouissance in the place of the Other) she draws closer to the object. The closer she gets, the more anxiety surfaces, alerting the subject about the presence of a real Other, a primitive pre- symbolic being. In the case of the pervert, things are somehow different. It is not so much the inscription of jouissance in the Other that troubles him, but more the erasure of desire from the field of the Other and its return to a state of unconstrained enjoyment. So, for the pervert, it is essential that the object maintains its potency, not in the service of desire but in the service of jouissance. The anxiety of the extra-ordinary becomes an erotic signal that calls the Other to abandon the locus of desire and indulge in jouissance. But, eventually, desire puts an end to it.

It is not the extra-ordinary that aims at castration, so that he lets loose some of his anxiety. As an integral part of sexual jouissance, the extra-ordinary does not want to give up anxiety, which is what the neurotic does with his symptom, in the reverse way. The Other’s anxiety, the exposition of its truth, requests the confinement of the jouissance operating in perversion. Castration has to be imposed because of the contaminating nature of the object’s jouissance. The more it maintains its omnipotent character, the more it threatens the Other’s consistency, as provided by desire. The extra-ordinary dramatizes the staging of castration. It is not an actual event, as the phallus does not belong to the order of the cosmic world. None the less, politics and power locate the phallus in the imaginary realm. Emblems of patriarchal power are handed from one authority figure to the next, propelling the replication of the same power mechanism and concealing the absence of the phallus.

The social and the political world needs the “pervert” in order to redefine and reinscribe the imaginary boundaries of its morality and, hence, since the patriarchal orientation of the majority is taken as a gnomon, enhance the existing moral code. This reflects the underlying imaginary dynamics of what social constructionism has long now described: the exception of the pervert makes the rule for the “normality” of the present moral, social, political, and cultural organization of the world. As long as the pervert remains outside of this world, the safety from the perilous obscenity and odiousness of real jouissance is ensured. Concomitantly, this is translated to further distance from desire and its permanent endurance, something that nourishes guilt, as was previously argued. As if guilt suggested a privileged moral state, power uses it as an essential demagogic tool, in order to secure its good and further vilify the “pervert”, who also experiences guilt for “betraying” desire, not in the sense of staying away from jouissance, but failing to fully consummate it.

Licence to Violence. Thought of the Day 101.0

Every form of violence against fellow human beings is a problematic proposition for the overwhelming majority of people. With the exception of small minorities of individuals who are either morally indifferent to violence or categorically opposed to it, whatever the circumstances, the rest of the population operates in a context of ‘cognitive dissonance’ .

This state of mind is determined by fundamental conflicts between what is psychologically desirable, practically feasible, pragmatically expedient and morally justifiable. Violence against ‘contestant others’ may be (or may have become, depending on the circumstances) desirable to a number of people. Yet, the desirability of a life without others is usually offset by the much more profound notion of moral inadmissibility of the violent action per se, by a belief that such a prospect is impossible, by a fear of the consequences of such an action or by a combination of all these concerns.

With regard to the desirability of a violent encounter with ‘others’, nationalism, nation-statism and racialism had already made a significant contribution, accentuating the psychological distance between the national community and its particular ‘others’, often dehumanizing or delegitimizing them and fermenting negative passion against them. An act of physical elimination, however, requires much more than the mere desirability of violence or its outcomes. It is not just linked to a result but also to the action itself that involves a particular repugnant (violent) method. Therefore, authorization of violence and participation in its discharge require a negotiation of the state of cognitive dissonance, whereby desirability and expediency outweigh (even marginally or in ad hoc circumstances) the moral, legal and political impediments to violence or trivialize the problematic nature of the means used to achieve the desired goal.

The leap from abstract intention or desire to strong targeted passion and finally to concrete violent action presupposes a convincing resolution of the inner personal tension underpinning the state of cognitive dissonance. For genocide to take place, and for ordinary individuals to become active participants, this dissonance has to be first escalated by rendering the option of elimination more desirable or accessible. Then it has to be resolved one way or another by making the individual feel their actions are broadly consistent with their overall worldview. Cognitive dissonance may result either in the abandonment of the proposed action as irreconcilable with one’s ethical outlook or in the endorsement of the action through a process of changing the parameters of the dissonance itself-by endorsing new definitions of what is acceptable in the given circumstances, by ‘relativizing’ the problematic nature of the action in the light of expected outcomes or by altogether evading the dissonant mindset.

Cognitive dissonance, therefore, revolves around a tension between three main considerations: the psychological desirability, practical feasibility and moral admissibility of the action. Only a very small minority of people do not experience such tensions – either because they axiomatically reject any form of violence or because they do not see violence itself as problematic.

The majority usually find themselves pulled in different directions by each of these three considerations. They may distrust, fear or even despise ‘others’, but have fatalistically accepted the condition of coexistence, unable to conceive of a different scenario. They may long for a life without particular (or all) ‘others’, but perceive this condition as utopian, choosing instead to adapt to the awkward realities of living side by side. Alternatively, they may strongly desire the prospect of somehow ridding themselves of ‘others’, but nevertheless refrain from any violent action against them, either because they fear sanctions/reprisals or because they consider this course of action inadmissible in spite of the ostensible desirability of its effects.

In negotiating such tensions, the notion of external, authoritative licence is crucial in turning dissonance from an impediment into an incentive to unbound freedom of passion, behaviour and action. Licence is not a positive, normative freedom to act, but an ‘authorized transgression’, a special dispensation that creates a new, temporary and exceptional domain of diminished accountability. Its element of permissibility refers to particular circumstances of time and space, as well as goals and limits. Every licence redefines what is permissible in an expanded way, but it does not do so irreversibly or without caveats – conventional or new. Every new domain of licence constitutes a new moral order that is synonymous with the removal of sanctions and of accountability.

Whether authorized from above or claimed spontaneously in the absence of authority, licence makes sense only because of the awareness of the taboo nature of what it entails. However, its nature, scope and targets are determined by the authorization or by the circumstances that generated it. Like violence, it is not blind but is linked to predispositions and specific opportunities – there and then. As a form of special dispensation – exceptional in its devices, goals and particular targets – licence involved the conditional suspension of those hindrances that usually kept the exercise of sovereign violence at bay and prevented full decontestation. By removing, cancelling out or weakening constraints, it enables individuals and groups to accept the desirability of a violent scenario – even if the latter contradicts generic cultural understandings of defensible or just behaviour.

Licence may facilitate the acceptance of a particular course of violent action against a particular ‘other’ in a particular setting by strengthening the scenario’s relative desirability and/or by reducing the force of inhibiting factors and, little by little, through precedent and repetition, it may also redefine the moral universe of an individual or community by rendering previously taboo feelings and actions less troubling and more admissible. Thus, licence can be both an ad hoc dispensation and a long-term strategy for preparing a group for a new form of moral conduct they would previously consider unacceptable or problematic.

Perverse Ideologies. Thought of the Day 100.0

Žižek (Fantasy as a Political Category A Lacanian Approach) says,

What we are thus arguing is not simply that ideology permeates also the alleged extra-ideological strata of everyday life, but that this materialization of ideology in the external materiality renders visible inherent antagonisms that the explicit formulation of ideology cannot afford to acknowledge. It is as if an ideological edifice, in order to function “normally,” must obey a kind of “imp of perversity” and articulate its inherent antagonism in the externality of its material existence.

In this fashion, Žižek recognizes an element of perversity in all ideologies, as a prerequisite for their “normal” functioning. This is because all ideologies disguise lack and thus desire through disavowal. They know that lack is there, but at the same time they believe it is eliminated. There is an object that takes over lack, that is to say the Good each ideology endorses, through imaginary means. If we generalize Žižek’s suggestion, we can either see all ideological relations mediated by a perverse liaison or perversion as a condition that simply helps the subjects relate to each other, when signification fails and they are confronted with the everlasting question of sexual difference, the non-representable dimension. Ideology, then, is just one solution that makes use of the perverse strategy when dealing with Difference. In any case, it is not pathological and cannot be determined mainly by relying on the role of disavowal. Instead of père-vers (this is a Lacanian neologism that denotes the meanings of “perversion” and “vers le père”, referring to the search for jouissance that does not abolish the division of the subject, her desire. In this respect, the père-vers is typical of both neurosis and perversion, where the Name-of-the-Father is not foreclosed and thereby complete jouissance remains unobtainable sexuality, that searches not for absolute jouissance, but jouissance related to desire, the political question is more pertinent to the père-versus, so to say, anything that goes against the recognition of the desire of the Other. Any attempt to disguise lack for instrumental purposes is a père-versus tactic.

To the extent that this external materialization of ideology is subjected to fantasmatic processes, it divulges nothing more than the perversity that organizes all social and political relations far from the sexual pathology associated with the pervert. The Other of power, this fictional Other that any ideology fabricates, is the One who disavows the discontinuities of the normative chain of society. Expressed through the signifiers used by leadership, this Other knows very well the cul-de-sac of the fictional view of society as a unified body, but still believes that unity is possible, substantiating this ideal.

The ideological Other disregards the impossibility of bridging Difference; therefore, it meets the perversion that it wants to associate with the extra-ordinary. Disengaging it from pathology, disavowal can be stated differently, as a prompt that says: “let’s pretend!” Pretend as if a universal harmony, good, and unity are feasible. Symbolic Difference is replaced with imaginary difference, which nourishes antagonism and hostility by fictionalizing an external threat that jeopardizes the unity of the social body. Thus, fantasy of the obscene extra-ordinary, who offends the conformist norm, is in itself a perverse fantasy. The Other knows very well that the pervert constitutes no threat, but still requires his punishment, moral reformation, or treatment.

Sino-India Doklam Standoff, #BRICS and Shanghai Cooperation Organization (SCO). How the Resolution Could Have Been Reached?

The National Security Adviser of India, Mr. Ajit Doval was posed with a blunt question by China’s state councillor Yang Jiechi when the two met on July 27 to make a settlement over the disputable patch in the Bhutan-owned Doklam stretch. He was asked: Is it  your territory? However, this tough question failed to faze Doval, who, according to reliable sources, had most calmly replied that the stretch of land in question is not China’s territory either – Does every disputed territory become China’s by default? Doval asked in return. This has the potential to read a lot in between and thus without getting awed by the response, deconstructing what transpired is the imperative. This sharp exchange between the two countries was followed by several rounds of negotiations between the two sides in Beijing, with India’s foreign secretary S Jaishankar and India’s ambassador to China Vijay Gokhale trying to reach out to a mutually acceptable solution. These meetings were also sanctioned by the prime ministers of both the countries, especially when they met in Hamburg on the sidelines of G20 meeting on July 7. In fact, the Indian Prime Minister Narendra Modi and his Chinese counterpart Xi Jinping also agreed to the fact that the negotiations should be held at the NSA level in order to let the dispute not escalate any more. Modi later asked his diplomatic team to reach to a solution at the earliest as this dispute had been the worst in numerous years and the two countries cannot afford to lose each other’s support any more.

This is Doklam, the tri-junction between India, Bhutan and China.

It was here that India and China were involved in a three-month standoff with the two largest militaries in the world in a eyeball-to-eyeball contact. While, it was in everybody’s interest that the countries do not spark a conflagration, the suspense over this tiny out-of-bounds area had consequences to speculations trajectory. It all started in June this year, when the Indian troops crossed over the disputed territory claimed by both China and Bhutan as its sovereign territory to halt a road construction at Doklam, which could have given China the surveillance and access mechanism over India’s Chicken Neck, the narrow strip that connects the NE Indian states with the mainland. But, other reason for India’s crossing over the boundary lies in a pact with Bhutan where the country would defend any incursions into Bhutan. The standoff was pretty tense with piling up of the war machinery and the troops from either side in a ready-to-combat stature, but still showed extreme presence of mind from getting involved in anything adventurous. China’s blistering state-owned media attacks from instigating to belligerent to carrying out travel advisories on the one hand, and India’s state-purchased media exhibiting peppered nationalism to inflating the 56″ authoritarianism on the other did not really help matters boil down to what was transpiring on the ground. We had pretty much only these two state-owned-purchased behemoths to rely upon and imagine the busting of the myths. But, this week, much to the respite of citizens from either side of the border and the international community at large keenly observing the developments as they were unfolding, the tensions eased, or rather resolved almost dramatically as they had begun in the first place. The dramatic end was at least passed over in silence in the media, but whatever noises were made were trumpeting victories for their respective sides. Even if this were a biased viewpoint, the news reports were quantitative largely and qualitative-ness was generally found at large. The resolution agreed on the the accelerated withdrawal of troops from the site of the standoff.

China still vociferously insists that the territorial dispute in Sikkim was resolved as long ago as in 1890, when Beijing and the British Empire signed the so-called Convention of Calcutta, which defined Sikkim’s borders. As per Article (1) of Convention of 1890, it was agreed that the boundary of Sikkim and Tibet shall be the crest of the mountain range separating the waters flowing into the Sikkim Teesta and its affluents, from the waters flowing into the Tibetan Mochu and northwards into other rivers of Tibet. The line commences at Mount Gipmochi, on the Bhutan frontier, and follows the above-mentioned water-parting to the point where it meets Nepal territory. However, Tibet refused to recognise the validity of Convention of 1890 and further refused to carry into effect the provisions of the said Convention. In 1904, a treaty known as a Convention between Great Britain and Tibet was signed at Lhasa. As per the Convention, Tibet agreed to respect the Convention of 1890 and to recognise the frontier between Sikkim and Tibet, as defined in Article (1) of the said Convention. On April 27, 1906, a treaty was signed between Great Britain and China at Peking, which confirmed the Convention of 1904 between Great Britain and Tibet. The Convention of 1890 was entered by the King of Great Britain on behalf of India before independence and around the time of independence, the Indian Independence (International Arrangement) Order, 1947 was notified by Secretariat of the Governor-General (Reforms) on August 14, 1947. The Order provided, inter alia, that the rights and obligations under all international agreements to which India is a party immediately before the appointed day will devolve upon the Dominion of India. Therefore, in terms of Order of 1947, the government of India is bound by the said Convention of 1890. However, India’s affirmation of the Convention of 1890 was limited to the alignment of the India-China border in Sikkim, based on watershed, and not with respect to any other aspects. However, India-backed Bhutan is convinced that Beijing’s attempt to extend a road to the Doklam area goes against a China-Bhutan agreement on maintaining peace in the region until the dispute is resolved.

The question then is: how could have the tensions that were simmering just short of an accident resolved? Maybe, for the Indians, these were a result of diplomatic procedures followed through the time of tensions, whereas for the Chinese, it was a victory and yet another lesson learnt by the Indians after their debacle in the 1962 conflict. The victory stood its claim because the Chinese maintained that even if the Indians were withdrawing from the plateau, the Chinese would continue patrolling the area. Surprisingly, there isn’t a convincing counterclaim by the Indians making the resolution a tad more concessionary as regards the Indians. It was often thought that amid tensions over the dispute, there had been growing concerns over whether Indian Prime Minister Narendra Modi would skip the upcoming BRICS summit in China as he did in May when Beijing hosted an international event to celebrate the One Belt One Road Initiative championed by Chinese President Xi Jinping. Harsh Pant, a professor of International Relations at King’s College, London, and a distinguished fellow at Observer Research Foundation, said,

If the road is not being built, it’s legal enough for India to pullback, because the boundary dispute is not the problem and has been going on for ages. The real issue was China’s desire to construct a concrete road in this trijunction under dispute. If the Chinese made the concession to not build the road, the whole problem went away.

The Chinese Foreign Ministry’s spokeswoman said on Tuesday that China would adjust its road building plans in the disputed area taking into account of various factors such as the weather. In his turn, Prime Minister Modi would not have gone ahead with the visit to China if the border dispute remains unresolved, according to the expert. Following the resolution of the border dispute, India’s MEA said that Modi plans to visit Xiamen in China’s Fujian province during September 3-5, 2017 to attend the 9th BRICS Summit. But, the weather angle refused to go, as in the words of Hu Zhiyong, a research fellow at the Institute of International Relations of the Shanghai Academy of Social Sciences,

The weather condition is still the main reason. We all know that heavy snowfall is expected in the Donglang region by late September. The snow will block off the mountain completely, making it impossible to continue road construction. This incident has allowed China to clearly understand potential threat from India. I would call India an ‘incompetent bungler.’ That’s because India always is a spoiler in all the international organizations it becomes a part of. It always takes outrageous and irrational actions. After this incident, China realized that India is not a friendly partner, but a trouble-maker.

The Shanghai-based expert pointed out that the recent standoff has helped China better understand the potential harm India can cause. Chinese Foreign Minister Wang Yi said that Beijing hopes that New Delhi will remember the lessons of latest border confrontation and will avoid such incidents in the future. Despite both China and India agreeing to deescalate the border dispute for the sake of the BRICS summit, the temporary compromise may not last long, as tensions could quickly flare again. In the words of Brahma Chellaney, a professor of strategic studies at the New Delhi-based Center for Policy Research,

The standoff has ended without resolving the dispute over the Doklam plateau. The Indian forces have retreated 500 meters to their ridge-top post at Doka La and can quickly intervene if the Chinese People’s Liberation Army (PLA) attempts to restart work on the military road – a construction that triggered the face-off. As for China, it has withdrawn its troops and equipment from the face-off site, but strongly asserts the right to send in armed patrols. A fresh crisis could flare if the PLA tries again to build the controversial road to the Indian border.

Hu, the Shanghai-based Chinese professor, asserted that the recent standoff has allowed China to better prepare for future border disputes with India. The Chinese Defense Ministry said that China will maintain a high combat readiness level in the disputed area near the border with India and Bhutan and will decisively protect China’s territorial sovereignty.

So, where does Shanghai Cooperation Organization (SCO) fit in here?

With India and Pakistan as newly installed members of the Shanghai Cooperation Organization, or SCO, China is likely to face an increasing amount of divisiveness within a regional economic and security organization accustomed to extreme comity and cooperative discussions. India’s entry could especially frustrate Beijing because of rising geopolitical competition between the Asian giants and different approaches to counterterrorism. Beijing may not have even wanted India to join the SCO. Russia first proposed India as a member, likely in part to complement bilateral economic and security engagement, but mainly to constrain China’s growing influence in the organization. Russia is increasingly concerned that post-Soviet SCO members  –  Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan – are drifting too far into China’s geostrategic orbit. Moscow had long delayed implementing Chinese initiatives that would enable Beijing to reap greater benefits from regional trade, including establishing an SCO regional trade agreement and bank. As China gains more clout in Central Asia, Moscow may welcome New Delhi by its side to occasionally strengthen Russia’s hand at slowing or opposing Chinese initiatives. Indeed, during a visit to Moscow, Modi said, “India and Russia have always been together on international issues.”

Going forward, this strategy is likely to pay big dividends. New Delhi has a major hang-up related to the activities of its archrival Pakistan – sponsored by Beijing at the 2015 SCO summit to balance Moscow’s support of India – and continues to be highly critical of China’s so-called “all-weather friendship” with Islamabad. In May, New Delhi refused to send a delegation to Beijing’s widely publicized Belt and Road Initiative summit, which was aimed at increasing trade and infrastructure connectivity between China and Eurasian countries. According to an official Indian statement, the flagship project of the Belt and Road Initiative – the China-Pakistan Economic Corridor – was not being “pursued in a manner that respects sovereignty and territorial integrity.” Indian opposition stems from the plan to build the corridor through the disputed Kashmir region and to link it to the strategically positioned Pakistani port of Gwadar, prompting Prime Minister Narendra Modi to raise the issue again during his acceptance speech at the SCO summit last month. New Delhi likely will continue to criticize the corridor in the context of the SCO because, as a full member, India has the right to protest developments that do not serve the interests of all SCO members. The SCO also offers another public stage for India to constantly question the intent behind China’s exceptionally close ties to Pakistan.

India-Pakistan tensions occasionally flare up, and Beijing may have to brace for either side to use the SCO as a platform to criticize the other. In the absence of a major incident, Beijing has admirably handled the delicacy of this situation. When asked in early June whether SCO membership would positively impact India-Pakistan relations, China spokesperson Hua Chunying said: “I see the journalist from Pakistan sit[s] right here, while journalists from India sit over there. Maybe someday you can sit closer to each other.” Additionally, the Chinese military’s unofficial mouthpiece, Global Times, published an op-ed suggesting that SCO membership for India and Pakistan would lead to positive bilateral developments. Even if that is overly optimistic, it would set the right tone as the organization forges ahead. But the odds are against China’s desired outcome. Beijing needs to look no farther than South Asia for a cautionary tale. In this region, both India and Pakistan are members of the multilateral grouping known as the South Asian Association for Regional Cooperation. New Delhi, along with Afghanistan, Bangladesh and Bhutan, boycotted last year’s summit in Islamabad because it believed Pakistan was behind a terrorist attack on an Indian army base. Even with an official ban on discussing bilateral issues in its proceedings, SAARC has been perennially hobbled by the intrusion of India-Pakistan grievances. Beijing can probably keep its close friend Islamabad in line at the SCO, but this likely won’t be the case with New Delhi. Another major issue for the SCO to contend with is the security of Afghanistan. An integral component of the organization is the Regional Anti-Terrorist Structure, aimed at combating China’s “three evils” – terrorism, extremism, and separatism. India, however, is likely to reliably and reasonably highlight the contradiction between China’s stated anti-terrorism goals and the reality of its policy. Most notably, Beijing has consistently looked the other way as Pakistani intelligence services continue to support terrorist groups in Afghanistan, including the Afghan Taliban and Haqqani Network. Moreover, because India is particularly close to the Afghan government, it could seek to sponsor Afghanistan to move from observer status toward full SCO membership. This would give India even greater strength in the group and could bolster Russia’s position as well.

Lingering border disputes and fierce geostrategic competition in South Asia between China and India is likely to temper any cooperation Beijing might hope to achieve with New Delhi in the SCO. Mutual suspicions in the maritime domain persist as well, with the Indian government recently shoring up its position in the strategically important Andaman and Nicobar island chain to counter the perceived Chinese “string of pearls” strategy – aimed at establishing access to naval ports throughout the Indian Ocean that could be militarily advantageous in a conflict. Such mutual suspicions will likely impact SCO discussions, perhaps in unpredictable ways. Although India may be an unwelcome addition and irritant to Beijing at the SCO, China does not necessarily need the SCO to achieve its regional objectives. From its announcement in 2001, the SCO gave Beijing a productive way to engage neighbors still dominated by Moscow. But today, China’s economic and military strength makes it far more formidable on its own – a point that is only magnified as Russian influence simultaneously recedes, or rather more aptly fluctuates. For instance, even though India rejected Beijing’s Belt and Road Initiative overture, China remains India’s top trading partner and a critical market for all Central and South Asian states, leaving them with few other appealing options. India’s entry into the SCO, however, could put Beijing in the awkward position of highlighting the organization’s value, while increasingly working around or outside of it. Outright failure of the SCO would be unacceptable for China because of its central role in establishing the forum. Regardless of the bickering between countries that may break out, Beijing can be expected to make yet another show of the importance of the SCO, with all of the usual pomp and circumstance, at the next summit in June 2018. China as host makes this outcome even more likely.

Taking on the imagination to flight, I am of the opinion that its the banks/financial institutions, more specifically the Shanghai Cooperation Organisation (SCO) and the upcoming BRICS Summit that have played majorly into this so-called resolution. India’s move to enter Doklam/Donglang was always brazen as India, along with Pakistan entered the Shanghai Cooperation Organisations (SCO) shortly before India entered Chinese territory. In this sense, India was almost mocking the Shanghai Cooperation Organisation by refusing to utilise the SCO as a proper forum in which to settle such disputes diplomatically. So, even if diplomatically it is a victory for #BRICS, materially it is #China‘s. Whatever, two nuclear-powered states in a stand-off is a cold-threat to….whatever the propaganda machine wants us to believe, the truth is laid bare. This so-called diplomatic victory has yielded a lot of positive, and in the process have snatched the vitality of what economic proponents in the country like to express solemnly of late, growth paradigm, wherein the decision is rested with how accelerated your rate of growth is, and thus proportionally how much of a political clout you can exercise on the international scenario. India’s restraint is not to be taken as how the Indian media projects it in the form of a victory, for that would indeed mean leading the nation blindly at the helm of proto-fascism. This could get scary.

Hegelian Marxism of Lukács: Philosophy as Systematization of Ideology and Politics as Manipulation of Ideology. Thought of the Day 80.0

In the Hegelian Marxism of Lukács, for instance, the historicist problematic begins from the relativisation of theory, whereby that it is claimed that historical materialism is the “perspective” and “worldview” of the revolutionary class and that, in general, theory (philosophy) is only the coherent systematisation of the ideological worldview of a social group. No distinction of kind exists between theory and ideology, opening the path for the foundational character of ideology, expressed through the Lukácsian claim that the ideological consciousness of a historical subject is the expression of objective relations, and that, correlatively, this historical subject (the proletariat) alienates-expresses a free society by means of a transparent grasp of social processes. The society, as an expression of a single structure of social relations (where the commodity form and reified consciousness are theoretical equivalents) is an expressive totality, so that politics and ideology can be directly deduced from philosophical relations. According to Lukács’ directly Hegelian conception, the historical subject is the unified proletariat, which, as the “creator of the totality of [social] contents”, makes history according to its conception of the world, and thus functions as an identical subject-object of history. The identical subject-object and the transparency of praxis therefore form the telos of the historical process. Lukács reduces the multiplicity of social practices operative within the social formation to the model of an individual “making history,” through the externalisation of an intellectual conception of the world. Lukács therefore arrives at the final element of the historicist problematic, namely, a theorisation of social practice on the model of individual praxis, presented as the historical action of a “collective individual”. This structure of claims is vulnerable to philosophical deconstruction (Gasché) and leads to individualist political conclusions (Althusser).

In the light of the Gramscian provenance of postmarxism, it is important to note that while the explicit target of Althusser’s critique was the Hegelian totality, Althusser is equally critical of the aleatory posture of Gramsci’s “absolute historicism,” regarding it as exemplary of the impasse of radicalised historicism (Reading Capital). Althusser argues that Gramsci preserves the philosophical structure of historicism exemplified by Lukács and so the criticism of “expressive totality,” or spiritual holism, also applies to Gramsci. According to Gramsci, “the philosophy of praxis is absolute ‘historicism,’ the absolute secularisation and earthiness of thought, an absolute humanism of history”. Gramsci’s is an “absolute” historicism because it subjects the “absolute knowledge” supposed to be possible at the Hegelian “end of history” to historicisation-relativisation: instead of absolute knowledge, every truly universal worldview becomes merely the epochal totalisation of the present. Consequently, Gramsci rejects the conception that a social agent might aspire to “absolute knowledge” by adopting the “perspective of totality”. If anything, this exacerbates the problems of historicism by bringing the inherent relativism of the position to the surface. Ideology, conceptualised as the worldview of a historical subject (revolutionary proletariat, hegemonic alliance), forms the foundation of the social field, because in the historicist lens a social system is cemented by the ideology of the dominant group. Philosophy (and by extension, theory) represents only the systematisation of ideology into a coherent doctrine, while politics is based on ideological manipulation as its necessary precondition. Thus, for historicism, every “theoretical” intervention is immediately a political act, and correlatively, theory becomes the direct servant of ideology.

Historicism. Thought of the Day 79.0

Historicism is a relativist hermeneutics, which postulates the incommensurability of historical epochs or cultural formations and therefore denies the possibility of a general history or trans-cultural universals. Best described as “a critical movement insisting on the prime importance of historical context” to the interpretation of texts, actions and institutions, historicism emerges in reaction against both philosophical rationalism and scientific theory (Paul Hamilton – Historicism). According to Paul Hamilton’s general introduction:

Anti-Enlightenment historicism develops a characteristically double focus. Firstly, it is concerned to situate any statement – philosophical, historical, aesthetic, or whatever – in its historical context. Secondly, it typically doubles back on itself to explore the extent to which any historical enterprise inevitably reflects the interests and bias of the period in which it was written … [and] it is equally suspicious of its own partisanship.

It is sometimes supposed that a strategy of socio-historical contextualisation represents the alpha and omega of materialist analysis – e.g. Jameson’s celebrated claim (Fredric Jameson – The Political Unconscious) that “always historicise” is the imperative of historical materialism. On the contrary, that although necessary, contextualisation alone is radically insufficient. This strategy of historical contextualisation, suffers from three serious defects. The historicist problematic depends upon the reduction of every phenomenal field to an immanent network of differential relations and the consequent evacuation of the category of cause from its theoretical armoury (Joan Copjec-Read My Desire: Lacan against the Historicists). It is therefore unable to theorise the hierarchy of effective causes within an overdetermined phenomenon and must necessarily reduce to a descriptive list, progressively renouncing explanation for interpretation. Secondly, lacking a theoretical explanation of the unequal factors overdetermining a phenomenon, historicism necessarily flattens the causal network surrounding its object into a homogeneous field of co-equal components. As a consequence, historicism’s description of the social structure or historical sequence gravitates in the direction of a simple totality, where everything can be directly connected to everything else. Thirdly, the self-reflexive turn to historical inscription of the researcher’s position of enunciation into the contextual field results, on these assumptions, in a gesture of relativisation that cannot stop short of relativism. The familiar performative contradictions of relativism then ensure that historicism must support itself through an explicit or implicit appeal to a neutral metalinguistic framework, which typically takes the form of a historical master narrative or essentialist conception of the social totality. The final result of the historicist turn, therefore, is that this “materialist” analysis is in actuality a form of spiritual holism.

Historicism relies upon a variant of what Althusser called “expressive causality,” which acts through “the primacy of the whole as an essence of which the parts are no more than the phenomenal expressions” (Althusser & Balibar – Reading Capital). Expressive causality postulates an essential principle whose epiphenomenal expressions are microcosms of the whole. Whether this expressive totality is social or historical is a contingent question of theoretical preference. When the social field is regarded as an expressive totality, the institutional structures of a historical epoch – economy, politics, law, culture, philosophy and so on – are viewed as externalisations of an essential principle that is manifest in the apparent complexity of these phenomena. When the historical process is considered to be an expressive totality, a historical master narrative operates to guarantee that the successive historical epochs represent the unfolding of a single essential principle. Formally speaking, the problem with expressive (also known as “organic” and “spiritual”) totalities is that they postulate a homology between all the phenomena of the social totality, so that the social practices characteristic of the distinct structural instances of the complex whole of the social formation are regarded as secretly “the same”.