Home Forum Research Cherizola’s “From Commodities to Assets” wins the 2021 RECASP Essay Prize

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  • #245544

    Jesús Suaste Cherizola wins the 2021 RECASP Essay Prize for his paper “From Commodities to Assets:
    Capital as Power and the Ontology of Finance.”

    ABSTRACT:

    Assets are a crucial concept of the practice and mindset of the capitalist class. Critical analyses of capitalism, however, tend to admit that the exchange of commodities is the foundation of the analysis of capitalism. This article takes a different approach. I claim that assets offer a solid starting point for a scientific research of capitalism. The analysis of assets allows us to elaborate a general description of economic transactions and, to that extent, it lays the groundwork for reconceptualizing the field of finance. These two issues are closely related. The answer to the question, ‘what are assets?’, will give us the coordinates to address the question: ‘what is finance?’

    HTML: https://capitalaspower.com/2021/05/cherizola-from-commodities-to-assets/

    PDF: https://capitalaspower.com/wp-content/uploads/2021/05/Suaste_Cherizola_From_Commodities_to_Assets.pdf

     

    • This topic was modified 2 years, 10 months ago by Jonathan Nitzan.
    • This topic was modified 2 years, 10 months ago by Blair Fix.
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    • #245546

      Congratulations Jesús! It is an excellent paper that looks at an important problem in political economy — the focus on ‘commodities’ when what capitalists care about is assets. Well done.

    • #245587

      I  read the essay quickly.

      It was very thought provoking and well written but not in my dialect.

      (I used to formally study theoretical biology and ecology and would go on trips with people out into ‘natural ecosystems’ with often ‘spiritual’ ecology types.
      I would be talking about the various floras and faunas, the dynamics of ecosystems and they’d say that’s reductionist and materialistic, and instead talk about the various ‘spirits’ that lived in these areas they learned from some ‘sacred text’–they said book learning obscured reality except the one they read.
      My view was we spoke different dialects and the floras and faunas also had different ones. )

      Of the paper, I mostly agree with what i understood but think it mostly overlaps with things that have been said before in other dialects.

      I am biased so I think pretty much all future ‘scientific (‘type’) research’ will be at least partly mathematical.
      (Its  also seems true that much applied math research to social/economic /environmental problems seems  irrelevant.
      Quite a few poeple get paid to study gun violence in USA universities with math methods while there are homicides occuring a few blocks away.
      They seem to think they can   put their academic paper on the web and this will solve these.)

      This article mentions ‘distortions’ (CASP uses ‘imperfections’) ,  as things economists use to fix up flawed theories.

      All the sciences i’ve studied use these to ‘fix up’ theories which are ‘imperfect’.

      People switch from saying the universe is made of perfectly round infinitely  small billiard ball atoms (or, say genes) which interact with ‘perfect rationality or information’ and then settle into ‘equilibrium’ configurations, to saying these atoms or genes actually are distorted or imperfect, and don’t settle to equilibirium because they are stuck in metastable nonequilibrium semio-optimal configurations.  The genes are less fit than predicted.

      I think CASP writers tend to overplay the successes of fields like physics and biology. For decades and even a century or more those fields have introduced distortions and imperfections—eg curved (relativistic) and quantized space, imperfect information (special relativity)  gene-environment interactions, etc.

      Most physics and biology deals with (like  in economics  standard  individual budgeting theory or in macro IS-LM) things they can solve.

      ‘You need a genetic cure? we got it’  .   You need a faster computer? we got one.  Need a drug cure? problem solved.
      Like for some economists, they claim they will solve all problems. .

      The Human Genome sequencing project suggested it would solve all health problems.   They got billions$ funding , sequenced the human genome, but some say health is still a problem.    Some scientists agreed they didn’t know what a gene was even though they found all of them.

      If you look at the more theoretical papers in  fields like biology and physics –and psychology—(the minority by far–i might guess 1% compared to applications to problems they can solve) you will find that basic things in physics like ‘mass’, ‘charge’ ‘spin’, and ‘inertia’ , or in biology things like ‘fitness’ , or psychology ‘mental health’ , basically noone knows what they are , and there many theories.

      There are ‘holdouts’ –say they know the answer—in economics to me Mankiw might be the best example.

      (There’s a very recent youtube debate with Mankiw versus some ‘heterodox or keynsian  economists’ criticizing his textbook.

      His basic view is it ‘represents the consensus scientific opinon’ based on the fact its had 24 million $ in sales and he’s a Harvard professor.)

      I don’t think the heterodox economists (nor the ones in other fields) really have a competetive paradigm, scientific theory  or religion at this point.

      Many people might try to decide ‘to maximize my utility, or subjective  (fame, acclaim and popularity) and objective value (measured in prize money ) , should I try for the real fake Econ Noble (1 M$) or the CASP prize of 1G?
      You might have to spend a year working for it–thinking, writing, working to hire some grad students to write your paper, etc.   –and then decide if maybe it would be better to just play the lottery of life?

      One could do an RCT–randomly controlled trial.    Take several people  who each choose a different approach and see what their net value is after a year.  It could be a factorial trial.

      which factors lead people to rise or fall in the hierarchy?  or which small trees grow into big ones and which don’t?

    • #246871

      I am very late in commenting on this essay by Jesús Suaste Cherizola. In this first comment I want to touch briefly on the issue of ontology in economics. What a relief it is to find economic analysis which takes ontology seriously. Ontology is integral to the entire CasP project though understandably it does not get foregrounded in every text. The term “ontology” appears in Cherizola’s essay title and gets 8 more mentions in the text, excluding the citation. This is significant and refreshing. Mentioning ontology and the need for re-examining economic ontology on the RWER blog gets a very uneven response. Some understand the need for such an endeavour but many dismiss it as a presumed metaphysical side-show unrelated to economics or even anything real. Mentioning ontology on other economics blogs draws responses from being completely ignored to dismissive remarks that ontology is speculative, post-modern (sic) or already fully settled in economics.

      Of course ontology is not settled in orthodox economics. It’s obsolete. Much of it is still 19th C stuff and it was wrong then. The other issue is that many people don’t seem to understand that both scientific disciplines and formal disciplines have ontologies. Ontology is not the exclusive preserve of religious and speculative metaphysics. The ontologies of empirical and formal disciplines are very different (in derivation) from those of metaphysics. However, this thread is not the place for me to pursue this issue. At this stage I would like to know if;

      (a) I should write a more in-depth comment specifically on Jesús Suaste Cherizola’s essay? and

      (b) What would be the best thread for me to write a little on ontology and the need for applying ontological methods and schemas to economics?

      I hope I am not too late to give more detailed comments on the essay. at least.

      • #246872
        jmc

          Your comments are not late at all. In fact, the revival of discussion about Jesús’ essay is welcome–it deserves it!

          One extra nudge: please consider submitting something to RECasP.

      • #246879

        Part 1 of a “review” of ‘From Commodities to Assets: Capital as Power and the Ontology of Finance.’

        I have been turning over in my mind how to “review” Jesús Suaste Cherizola’s excellent essay. Of course “review” is altogether too presumptuous a word for me to use. I do not possess the breadth of knowledge to review it properly.  That said, it was the central importance of ontology to the argument that drew much of my attention. When reading any form of economics or political economy I pay great attention to the a priori ontological assumptions, implicit and explicit, and to the taxonomy of “ontological objects” presented. It is from its taxonomy of “ontological objects” that a discipline can be (or cannot be) logically or empirically constructed. The ontological objects, which may be any or all of objects, processes and abstractions, can be drawn from so-called pure reason and/or from experience (empiricism).

        I have a basic rule these days. “If the ontology is wrong, then everything is wrong after that.” The ontology of Jesús’s essay is NOT wrong. I am strongly of the opinion that it is correct in all points where I detected ontology at work. That doesn’t automatically mean that all observations and deductions made from the stance of a valid ontology will be correct. That, of course, depends on the accuracy of the observations and deductions themselves. Nevertheless, all the observations and deductions in the essay looked sound to me. Rather than doing a “blow by blow” review, I intend to focus on a very intriguing question Jesús posed near the end of the essay. “Many questions remain to be answered. For example, I have defined capital as a ‘virtual’ structure. This concept needs to be clarified: what are the ontological properties of the ‘virtual’?” This is a very important question. I feel I may be qualified to assist in answering it. I hope what follows will be more interesting and useful to people than a “blow by blow” review. In addition, Jesús has supplied the very kernel of the answer to his own question in his own essay. It leapt out at me when I saw it.

        First, let me justify my statement: “If the ontology is wrong then everything is wrong after that.” The history of the discipline of medicine is a great example. While medicine had a false ontology of ontological objects, as in the humors theory, it could never progress. It was trapped in unempirical falsehoods and false prescriptions, false “cures” and so on. When it developed a more accurate ontology of the basics of the human body and its organs and systems and also discovered pathogens as an ontological class it could begin to make progress. Modern conventional economics is still at its “humors” stage. Economic value is a humor theory.

        The practical ontology of a discipline is the taxonomy of “ontological objects” fundamental to that discipline. This ontology will include fundamental objects, forces and fields and their fundamental relations. The periodic table of elements (a taxonomy) is fundamental to chemistry as are atoms, ions, electrons, protons and other fundamental objects plus fundamental process categories (exothermic and endothermic for example) and even fundamental laws, like the laws of thermodynamics. To look at a formal ontology, most of us could easily name off the ontological objects, categories, parameters and rules of chess, which together establish chess ontologically and formally:- King, queen, pieces, pawns, board and movement rules. Chemistry deals with real systems and has an ontology of real objects. Chess is a formal system and thus has an ontology of formal objects. They both have formal notations which is interesting to note at this point. A real system discipline has a formal notation and a formal system discipline has a formal notation. This is an obvious point, but surely intriguing at some level.

        Real system ontologies can be wrong, empirically speaking. The ontology of alchemy was wrong. The ontology of early medicine was wrong. While the ontology of these disciplines was wrong their practitioners couldn’t do much… except fool the credulous! Kind of sounds like conventional economics does it not? Completely formal system ontologies cannot be empirically wrong (as they refer to nothing real) but they can be any or all of internally inconsistent, unworkable in practice, aesthetically unpleasing and even incomprehensible to the human mind if the formal ontology is a real mess. The human mind itself has to be able to work with formal system ontologies and this puts limits on what and which formal ontologies will work. I will give a small example. Imagine I rewrite one new rule of chess while leaving all other rules, parameters, board and chessmen the same. The rule I rewrite is the pawn promotion rule for when it reaches the 8th rank. “When you promote a pawn it has to become a Wyvern”. The rule is non-executable as I have not defined the Wyvern as a piece, nor its movement rules. The formal ontology is now inconsistent / incomplete. The new rule will ruin a subset of Chess games at the juncture where a pawn promotion is a player’s best move, surviving move or even only move.

        Now, I will get back to Jesús’s key question: “What are the ontological properties of the ‘virtual’?” This question is key because we want to integrate the real and virtual or rather perhaps the real and the formal in one ontology. This is absolutely crucial and it should become clear why as we proceed. A virtual construct is a formal construct, or an expression or product of a formal construct, which is very clearly either modelling the larger real or else directing the larger real in the sense Jesús talks about in his essay with the expression “performative power”.  A useful virtual construct will either model the larger real usefully in some way or it will influence (creorder) the larger real in some required way (via ordered performances by humans as agents). Jesús’s essay has made this very clear to me in a new way and permitted the extension of my own ontological conceptions. Of course, the idea that finance reflects (models) the world is the basis of much conventional economic ontology. The idea that finance influences (creorders) the world comes out of CasP and comes out in a well demonstrated and particularised way in Jesús’s essay.

        Jesús’s basic ontology for political economy is partly explicit and partly implicit. I hope I am not wrong in saying this. It is explicit in that it is expressly materialist or physicalist. It is also implicitly monist. That is to say, he is clearly dealing with one substance throughout in terms of substance philosophy, namely the material. The key question then comes as follows. How is the virtual actually material (by implication) and how does it interact with the rest of the material world? Jesús gives a couple of more-than hints which essentially answer his own question. As I say, he has the full kernel of the answer already in his essay. In part 2 below I will start from my end of the matter and get back to Jesús’s answer and what it means, to me at least. But I won’t keep people in suspense about Jesús’s very clear answer to his own question:

        “The central idea of this ontology is that the financial realm is not the ‘mirror’ of the real economy, but a language that participates in the creation of social reality — a code that makes possible a specific form of social interactions and power relations.”

        As a sometime programmer and a sometime modifier (modder) of virtual reality games, the word “code” leapt out at me. The virtual reality is coded; first encoded, then decoded, then executed. And the reality it all happens in is one monistic reality. But how is it all “one substance” as per the monistic assumption necessary to make the theory work? That is what I will deal with in Part 2.

        • This reply was modified 2 years, 5 months ago by Rowan Pryor.
        • This reply was modified 2 years, 5 months ago by Rowan Pryor.
        • This reply was modified 2 years, 5 months ago by Rowan Pryor.
      • #246882

        Part 2 of review.

        We will start out again bearing in mind Jesús’s key question: “What are the ontological properties of the ‘virtual’?” This question is crucial given that we are trying conceptually to fit the virtual, as a “puzzle piece” into the monistic, real, material system and determine the virtual’s mode of existence in situ and in operation in that system: how it transmits effects to the other non-virtual parts of the real system and how it receives feed-backs in return. To jump ahead the answer to this is information and the field is information theory. I can take people to the gate of information theory (maybe) but I cannot really enter that field. I do not have the erudition necessary.

        First, I will have to convince the reader that my metaphysics make sense and do relate to the empirical. It is easy in itself to posit a monistic real system. That’s part of the fun of philosophy. It’s easy to posit things. It doesn’t mean they are right but they are easy and fun to posit. Then, if we make logical deductions from a posited a priori with some epistemic justification, we find we can end up in interesting places and possibly even with hypotheses that are testable. In the words of a great American Pragmatist philosopher:

        “The best that can be done is to supply a hypothesis, not devoid of all likelihood, in the general line of growth of scientific ideas, and capable of being verified or refuted by future observers.” – C. S. Peirce.

        The project of unifying ontology for real and formal systems must begin, as in all metaphysics, with a priori justification. “A priori justification is a type of epistemic (knowledge) justification that is, in some sense, independent of experience.” [1] The a priori justification follows.

        All that exists is best understood as a single, complex system. Modern physics interprets the cosmos as a single relational physical system and this understanding informs its entire research program. Progress continues in discovering further dependable laws and relationships within the posited single system. Confirmation of the existence of the Higgs boson [2], as hypothesized, and the detection of gravitational waves [3] from a spacetime distant cosmological event, are recent demonstrations of the predictive power and experimental reach of modern physics. The overarching and clearly monist principle in modern physics is that of Relational Theory. The positions and properties of any detectable object, process or field value can be determined only in relation to the positions and properties of other objects, processes and field values.

        Metaphysics must, I contend, take this lead from the relational system monism of modern physics and employ the thesis of a single connected system to potentially resolve, by logical deduction from the specific a priori, the central philosophical problems of ontology and epistemology; the problems of being and knowledge. The relational system monism of physics yields successful theoretical and applied results over much of its investigative domain. By extension, relational system monism may be used in metaphysics as an Occam’s Razor (simplest consistent explanation) to generate solutions for some of the most difficult problems in metaphysics (and to dismiss philosophical non-problems which are controversies arising solely from poorly justified suppositions). More importantly, from the point of view of this review, the ontology of formal system / real system interactions can be logically systematized and possibly even investigated empirically, within a monist framework.

        Let us look at a simple monistic systems/sub-systems schema which can be developed. The pipe symbol (||)  is used to indicate a system interface. Each system is a sub-system of the system to its left.

        A.            Cosmos || World || Human || Brain || Mind || Formal System

        The schema may also be rendered in the plural on earth as;

        B.            Cosmos || World || Humans || Brains || Minds || Formal Systems

        Schema B explicitly posits systems of systems in the World (meaning on Earth). For example, we can think of a system of human brains, a system of human minds and a system of formal systems.

        The above schema B. would necessarily posit, via strict physicalism or materialism, that each system is a real physical system as defined by physics and do so as simply and naively as follows. Each system is a sub-system of the system to its left. A sub-system of a real system must be a real system. This chain of reasoning  finally results in the seemingly contradictory assertion that a Formal System is a Real System. Yet this contradiction is only seeming, not actual.  In this purview, a Formal System is simply a special case of a Real System. It is possible to demonstrate how and why it is a special case. A book, for example of Euclidean geometry, contains a Formal System yet the book physically is a real system comprised of the atoms and compounds which make paper, glue, ink and so on. In turn, the implied concept that “A Real System can contain a Formal System” can be developed out as operative via and solely via real physical processes between real physical systems.

        We are compelled to ask, where does human-generated Formal Euclidean geometry in its entirety exist? It exists in the real systems of brains, instruments, books, computers and other media where physical substance and physical processes encode it. (Systems are not static structures in space but processes in space-time. Put another way, processes are structures moving and changing in space-time and exchanging matter, energy and information.) This view in turn notes that brains (and minds) both encode and decode Formal Systems in patterns and processes of physical substance involving matter, energy and information.

        This firm insistence on complex real system, monist consistency across all systems has finally resulted in the seemingly contradictory assertion that a Formal System is also a Real System, as stated above. Yet the contradiction is only seeming, not actual. A Formal System is indeed also a Real System and it is simply a special case of a real system. Real systems and formal systems are nominally and epistemologically separate but they are not ontologically separate. In a unified Physicalist ontology, the “formal system” is still a real subsystem of the larger or full real system. It is in the transmission of information both ways and in the operations on and with that information, via human action, that we see the nominally Formal and the Real interact. Information and information transfers are the key issue when it comes to considering the relationship of formal and virtual systems (as special types of real systems) with the rest of real system reality.

        The above must be true under the a priori assumption of priority monism IFF (if and only if) the a priori assumption itself is true. A theory model (descriptive or prescriptive) is (or becomes in the emergent sense) a novel subset of the monistic system. A sub-system model of a system never fully replicates or models the entire system. The model must always be incomplete. If finance modelled the real economy in a manner analogous to the way a Newtonian finite state machine for a computer game models real terrain and real action, then the finance model would certainly be incomplete with respect to the real economy. However, following Cherizola, we posit that the finance model is prescriptive not descriptive. It prescribes real operations, it does not describe them. And it prescribes them to trained persons. We are educated and encultured to receive and execute the coded instructions from the virtual and prescriptive finite state machine of capital and finance.

        Any formal system instantiates data or information in patterns of real matter or energy. An “agent”, a human mind for example, encodes and decodes these formal patterns. Every operation is real; meaning every operation is a real system operation including the operations where information is instantiated (encoded) as patterns in real media and then decoded from the real medium, interpreted and acted upon. I refer here to the transmitting of matter, energy and information between real systems, including minds and formal systems instantiated in real systems. The information in formal systems is instantiated (in some real medium) as patterns which can influence the development of further patterns. That is the key: patterns which, with other additives like algorithms, controls, directions plus added new materials and energies, influence and engender the production of new and often more and/or larger entities exhibiting pattern (as “finished productions”) in what we may well say is an overall kind of auto-catalytic sprawl process. Clearly, all of this must refer to aspects of information theory. Humans (human agents) perform the role of conceptualisers, planners, encoders, decoders, translators and transformers of the information in these patterns into productions.

        With the above in mind, let us examine another of Peirce’s key statements critically.

        “That truth is the correspondence of a representation to its object is, as Kant says, merely the nominal definition of it. Truth belongs exclusively to propositions. A proposition has a subject (or set of subjects) and a predicate. The subject is a sign; the predicate is a sign; and the proposition is a sign that the predicate is a sign of that which the subject is a sign. If it be so, it is true. But what does this correspondence or reference of the sign, to its object, consist in?” – Charles Sanders Peirce

        We can now answer Peirce’s crucial concluding question and the answer illuminates Cherizola’s key question. Valid ideas, models and virtual models (descriptive or prescriptive) are able to demonstrate some truth or some creordering power (via dependable correspondence with linking and descriptive or prescriptive potential) in modelling or creordering broader reality and are able to do so precisely because they contain linked relations as formal systems just as broader reality itself contains linked relations as real systems. The linking of objects and relations (laws) each to each is the key meta-homomorphic principle. IFF (if and only if), the a priori assumption for Complex System Monism (the essential and complete monism of the cosmos as a monistic system of sub-systems) is true, then the assertion that formal systems are a special subset of real systems and thus real as well as formal, is entirely supportable. What this means in detail, and what meaning-possibilities follow, from positing that formal systems are also real and a special sub-set of real systems, must be explored.

        Models (descriptive or prescriptive) are a system subset of monistic system reality and share the same characteristic of being systems, specifically sub-systems, of the whole system. I contend that it is this shared systems nature itself, within the system-monistic cosmos, which crucially suggests the likely inescapable sharing of fundamental Laws relating to information and entropy by real and formal systems and which ensures that real connection (as truth correspondence or command-response correspondence) is possible between the formal and the real and that a model (a physical scale model, a mathematical model, a computer model, an algorithmic model, an heuristic model or a language statement as a model) can successfully reference and describe what we colloquially term broader, external or objective reality.

        To reiterate, these considerations very simply and completely answer the key philosophical question, “what does this correspondence or reference of the sign, to its object, consist in?” Its ontological connection, with the mind and body mediating, consists in the transfers of matter, energy and information (especially information) between two real systems, one nominally formal but still real (the model) and the other demonstrably and classically real in the physicalist sense, as the object in the physical monistic system. Its potential truth correspondence or reference as epistemological connection consists in the degree of analogical congruence or homomorphism exhibited by the idea system or model system in relation to the real system and the meta-homomorphism of each being systems (as mentioned above).

        I hope I have made sense. These are not easy ideas and they are not easy ideas to get across.

        Notes:

        [1] Stanford Encyclopedia of Philosophy – Online.

        [2] Nobel Prize in Physics 2013, Englert and Higgs – “for …discovery of the predicted fundamental particle…”

        [3] Sep 14 2015, LIGO (Laser Interferometer Gravitational-Wave Observatory) sensed distortions in spacetime caused by passing gravitational waves generated by two colliding black holes 1.3 billion light years distant.

        • This reply was modified 2 years, 5 months ago by Rowan Pryor.
      • #246894

        Thank you for the detailed review, Rowan. I’m glad this essay is getting the attention it deserves. And I definitely agree with James about writing up something formal for RECASP.

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