Notes on a Theory…

Thoughts on politics, law, & social science

There’s always another market: Liquidity, Wall Street and Ed Reform

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Guest post by Dan Greene

I wanted to chime in and talk about a liquidity, character, and the social mission of these institutions because I think there’s another parallel between Wall Street and ed reform that we can draw out from Karen Ho. She writes:

For Wall Street bankers, one of their key imagined social roles as ‘market doers’ is to create liquidity, to speedily unlock and allocate money (as in the takeover movement) to its ‘best’ use. Through their own immersion in the market, especially the anxious, difficult experiences of constant downsizing and reinvention, their skills and lives—embodying the market and their roles in it—have also become “more liquid.” (244)

Traders justify their high pay not only by their smartness and overwork but by their perceived social benefit: They inject liquidity into illiquid markets or commodities, they make markets where there weren’t markets before. This generates shareholder value but, by a neat trick of historical revision, shareholder value is conflated with economic value more generally. So not only are they justified in theirs risks and bailouts and what not by providing liquidity to businesses who need it, but by a sort of trickle-down cultural intervention where staid institutions are liquidated and become better able to adapt to quickly changing and increasingly global economic conditions. So bigger institutions and different people get modeled on the personal lives of financial elites: constant downsizing and reskilling is prized above all, and rewards are based on bonuses and other deal-related incentives and not on anything related to the underlying asset, let alone anything approaching a long-term investment like a salary or a pension.

This again sounds a lot like ed reform. In a lot of ways schools are an easy target. Like any good democracy, we identify the fate of our communities with the fate of our schools and so doing something, anything, can make us feel empowered and community-oriented; and like any bad democracy we use schools as proxy battlegrounds for everything from segregation to income taxes to eugenics. So the cultural battleground is cleared in advance for reactionary school-grabs, because we’ve already been trained to treat these institutions as corporations in which we hold shares and see returns rather than institutions we build through consensus. Folks like Rhee then use meaningless phrases like ‘competition’ (over what?) and ‘efficiency’ (towards what?) to justify restructuring because any restructuring, any injection of cultural liquidity (union-busting) or financial liquidity (privatization via Gates et al), is an a priori good, a shake-up that makes schools more nimble, inventive, and productive. In this way, test scores are valuable not as proof of student learning but as something, anything, that can act as a metric for increased institutional liquidity. Test scores don’t have to actually stand in for anything meaningful as long as they can be tracked, changed, compared, wagered on and argued over. Just like the stock market.

And here we start to see to the most important contradiction that comes out of the broader embrace of Wall Street professional values, this culture of liquidity. Financial elites and ed reformers must introduce liquidity in order to help us survive a rapidly changing market. But that market is produced, it’s not natural. So we have to liquidate ourselves to survive the liquid world that was produced without our consent. This increased liquidation always ends up undermining the underlying assets (homes, schools, factories) because all these use values can’t survive the conversion to pure exchange. The financial approach to the world, the liquid self, really is not that well adapted to the world beyond Wall Street but we’ve been convinced otherwise.

Whatever, there’s always another market.

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Written by David Kaib

June 16, 2014 at 11:41 am

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