Friday, August 11, 2006
Economic criminology - The Gold-Collar Crime in America
The Origin of Species - the best-of-breeds for High-power defrauding
and other great feats: (featuring)
The LTCM type of other-people's-money ploy
The Enron-type of "who's in the know" triple-jeopardy game
The Newspeak of "General-equilibrium-ed" conversions (which by the way,
is not a crime, as yet)
And then most importantly, the institutionalized "best of breeds" new feudal aristocracy emerged elsewhere lately. Featuring asset stripping, misappropriation, predatory conversion of public assets, third-party victimization, and finally, how to get lawless enrichment ratified in a system where the concepts of rights and obligations remain ill-defined (and therefor largely unenforceable - thanks to the non-judiciable nature of these great deeds in such system). And much more...
The secrets to boundless enrichment by
"Gold-Collar Crime"
This web-posting is meant to contribute to the Economic Criminology of the 21st century.
"[a] more serious threat to society is left out. This threat is caused by corporate practices that are within the letter of the law and yet have multiple adverse social consequences. Thus, just when more effective regulatory action and oversight is imperative, the global neo-liberal agenda and practice promotes de-regulation and a further reduction of the role of the state. Not only does this have criminogenic consequences of its own, it furthers types of misconduct undermining democratic processes and sustainable economic growth."
- ‘Legal Corporate Crimes’
Nikos Passas,
Northeastern University, Boston
Part I. The America League
(of Gold-Collar Crime)
Where Corporate Governance is formulated in ways to plot the abusing of Financial Engineering and other ploys;
and how organized unaccountability can be empowered by Ethernomics
George Orwell Lee
The Newspeak species in Orwell's novel "1984" has got a new incarnation - the 'Newspeak' of Neo-Walrasianism - the more depicting nomination should be Ethernomics.
(remember that fictional theory of "ether" in the 19th century physics?)
Nobel Prize economist Stiglitz called this kind of Ethernomics Newspeak the "Cookie-cutter" economics.
And then let's get to hear something from statisticians and non-Walrasian economists:
"Anyone investing ...may make ruinous mistakes if they do not ask questions such as 'what happens if...?' These questions, typically, are not easy to answer if we demand closed-form solutions." - James Thompson (professor of statistics) and Edward Williams (Henry Gardiner Symonds professor at Rice University)
The modeling behind the LTCM is formulated as combining statistical technique and some equilibrium concepts in economics, a focal point should be made here is that, it is a "belief" in the eventuality of those equilibrium conditions (or the "convergence" scenario) that justify the deterministic feature in the formulation.
It is an Idola, a term this author borrowed from Francis Bacone, in economic modelling, which doctrine preaches that: “the system is automatically self-adjusting and self-regulating”, such that any intervention to the free market is a source of distortion to this opportune Laissez-faire optimality. In this paradigm, it is self-evident that the market-wide self-regulating forces warrant an optimally efficient outcome.
One reason for the successfulness of this Idola, in having gained the existing prominence is that the believers of this paradigm are able to actually outsell other types of economic theorizing with their version of the story, by taking pride of using a more “rigorous” method in their analysis.
In this context, the irony of the relevance of a theory is being foreclosed to such a game where swift trickeries tend to win and a theory’s relevance to reality is obscured to an extent that outside the trade (of academic economics) people are not able to discern any true meaning of the theory’s relevance to real world problems.
How to fool the the layman by explaining away what matters for what does not? You can sell a 'lemon economics' if you are really good enough in kept everyone fooled.
Neo-Walrasian economics - is it "science", or Video Game?
The theoretic economics model behind the scene in both of the calamities brought by Long Term Capital Management and Enron is the Neo-Walrasian paradigm, which embraces a religion-like belief in what they see as the almighty model called the General equilibrium. Unlike the economics of J.M. Keynes, and the New Keynesian schools (which are also mathematically sophisticated), the Neo-Walrasians do not regard that economic reality should come before mathematical models, so they are actually take pride of a theorizing which amounts to a thing that is to be depicted as “the tail wags the dog”.
The reliance on set algorithmatic predispostions that can very much be called 'spurious quantification'. By explaining away a host of vital elements in the economic reality, the Neo-Walrasian economics, and the ascendancy of this 'undue influence' in how economic theorizing takes place, was in my opinion the origin for the collapse of LTCM and also partly the reasons for the fall of Enron. By which I mean, the use and abuses of financial derivatives amounts to an 'organised irresponsibility' in that these manipulations facilitate illicit conducts that vitiate legitimate corporate governance and was what enabled the fraudsters to hide the losses for such an extended period of time.
I see these were created an artificial universe of arguably a cluster of Walrasian-stylised model construct, with which traders play among themselves, it embraces untoward risks in ratifying unjust enrichments and pass the burden and costs eventually to society. It enables the misdeed perpetrators to abuse instruments in high finance, without having to subscribe to the due diligence and accountability by which its legitimacy in corporate governance ought to have been defined.
All these "medical misadvanture" in modern economics (this is understood by the fact that Neo-Walrasian economics came into prominence by claiming that it has got the cure for the stagflation of the 1970s, whihc was allegedly caused by the Keynesian economics)
And all these greatly helped the abuses of financial derivitaives (like what's in the Enron case) to pervade, and it is therein to advance the (allegedly "victimless") divesting of public accountability and deserve the name of a "Gold-Collar Crime".
Why was is being alleged as "victimless" a fraud? Because there are in general no specific victim that was being targeted (in law this would be called not a "in personum" cause) - and what it means is that the consequential detriment of the fraud is diluted across-the-borard to the society - for everybody to share a piece of it.
And then we found that such "Gold-Collar Crime" is actually topologically equivalent with the "Red-Collar Crime" as we will see in Part II.
Part II
(Member only)
Part III
The Green-Collar Revolution
(Member Only)
