How well-oiled are our democracies? Maybe they’ve had too much unsaturated fat for their own health. The Daily Devil’s Dictionary explains.
Though it has happened before, confusion appears to be greater than ever in the global oil markets, with its usual exaggerated effects in the Middle East. Some are placing the blame on the Trump administration for its inconsistent behavior and mixed signals. Bloomberg’s energy and commodities expert, Liam Denning, quotes an “anonymous oil boss” who complained to the Dallas Fed that the “biggest distraction to conducting business is the uncertainty provided by the erratic and dysfunctional behavior of the current presidential administration.”
Here is today’s 3D definition:
Moving in unpredictable directions because the control of those who have no business being in control has been relinquished
Capitalism, by definition, thrives on the existence of a sacrosanct free marketplace. At the same time, effective management requires constraints on that freedom to produce minimum stability in the economic and political environment, what some call visibility.
According to free market thinkers, freedom should be absolute but, at the same time, the aim of business must be control, which is only possible when conditions are stable. This highlights an obvious contradiction in the system itself, since the very principle of a free market implies the permanent possibility of disruptive change. And as we have seen in the recent evolution of financial culture, the quality of being disruptive, once deemed to be hugely negative, has now come to be considered a major virtue.
So which is it: freedom or control? This article highlights one of the central problems that has now emerged in the starkest terms for both a free market economy and democratic politics. Does freedom of movement and decision-making — which necessarily allows for erraticism — mean opportunity or danger?
The Bloomberg article contains this sentence: “The [Trump] administration’s head fake with the Saudis regarding Iran sanctions, followed by leverage on Saudi Arabia with the [Jamal] Khashoggi murder, have compromised oil price market dynamics.” If we are to follow the theory of Friedrich Hayek and Milton Friedman, market dynamics should be entirely independent of political control. Dynamism comes from the natural operations between supply, demand and the opportunities this dynamic creates for entrepreneurial initiative. So, what can it mean to say that market dynamics have been “compromised” when the situation described is one in which political control has in some sense vanished, meaning the market has become freer?
This “erratic” situation — attributed to “dysfunctional behavior” — demonstrates that the very concept of pure market dynamics can only be an unattainable as well as undesirable ideal. All markets work within complex human social frameworks and traditions that include various types of institutions and related value systems. They combine to stabilize relationships and create a sufficient level of trust for the relatively smooth conduct of all human activities, from the purely economic and pragmatic to the creative expression of the arts.
The current problems of the oil industry throw an interesting light on the growing crisis of democracy. Democracy should theoretically allow for a considerable degree of erraticism and disruption, as “the people” collaborate to solve problems rather than simply defend the status quo.
But the governments of today’s democracies increasingly function as guarantors of the stability of otherwise erratic marketplaces, rather than as institutions designed to respond to their population’s human needs. An ill-defined network of anonymous, global financial interests plays the major role in attempting to impose the stability it requires in its marketplaces. It achieves this by guiding governments through various pressures and means of communication invisible to the public.
It’s this stability that has been compromised by the voluntary actions and “dysfunctional” behavior of leaders such as Donald Trump and Saudi Arabia’s Mohammed bin Salman.
Denning offers this important insight: “If it’s a novel feeling in Houston’s c-suites, imagine how it plays in the palaces and ministries of the Middle East. A region where virtually every state has come to either rely on U.S. support (or regard it as a reliable adversary) must now adjust to not merely a more transactional Washington, but also one with conflicting voices and a changing set of faces.”
Over the past century, in which fossil fuel has, in some real sense, united a humanity still divided by nation-states, democracies and authoritarian nations alike have become the instruments of a global marketplace dominated by commodities and finance. Greece’s fate is one illustration of this state of affairs. In contradiction with its democratic vote in 2015, the Greek government was forced into conformity with the financial community just to survive. France finds itself in a similar situation where the increasingly vehement expression of the popular will can threaten President Emmanuel Macron’s authority, but cannot influence the pressure on a president to “respect” a system designed to protect the rich at the expense of the masses.
For the US, it is a little different, because of its central role in the system. When a free electron like Trump, who makes his own rules, reverts to the populist role of acting in the name of the people against what he sees as an unjust system, the markets that have been dictating to governments their required behavior suddenly become erratic. One result is a lack of visibility for the managers across the globe. Another is increased doubt by Americans and Europeans who still want to believe they live in a democracy “of the people, by the people and for the people.”
*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]
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