COMM 337: PoMo on Wall Street

If you're taking COMM 386, you ought to read this too. It has a clear exposition of how one of the theories of postmodernism we're studying plays out in the world of finance and government.

An article in The New Yorker explains the Wall Street credit crisis from a standpoint of literary theory. Unexpectedly, it makes sense.

The story is by John Lanchester, who is a novelist, a literary critic and a a member of the editorial board of the London Review of Books.

Lanchester compares the derivatives or

The crisis began with defaulting subprime mortgages, and spread throughout the international financial system. Thanks to the new world of derivatives and credit-default swaps, nobody really knows who is at risk from the wonderfully named “toxic debt” at the heart of the trouble. As a result, banks are reluctant to lend to each other, and, since the entire financial system depends on interbank liquidity, the entire financial system is at risk. It is for this reason that Warren Buffett was doubly right to compare the new financial products to “weapons of mass destruction”—first, because they are lethal, and, second, because no one knows how to track them down.

If the invention of derivatives was the financial world’s modernist dawn, the current crisis is unsettlingly like the birth of postmodernism. For anyone who studied literature in college in the past few decades, there is a weird familiarity about the current crisis: value, in the realm of finance capital, evokes the elusive nature of meaning in deconstructionism. According to Jacques Derrida, the doyen of the school, meaning can never be precisely located; instead, it is always “deferred,” moved elsewhere, located in other meanings, which refer and defer to other meanings—a snake permanently and necessarily eating its own tail. This process is fluid and constant, but at moments the perpetual process of deferral stalls and collapses in on itself. Derrida called this moment an “aporia,” from a Greek term meaning “impasse.” There is something both amusing and appalling about seeing his theories acted out in the world markets to such cataclysmic effect. Anyone invited to attend a meeting of the G-8 financial ministers would be well advised not to draw their attention to this.

The result of our era of financial deconstruction has been a decades-long free-for-all of deregulation and (for the most part) bull markets, ending in partial nationalization. It’s like a surreal parody of what happened in the former Soviet Union, with decades of socialism ending in the overnight transition to a full market economy. ...