“It takes all the running you can do, to keep in the same place.” – Lewis Carroll in Through the Looking-Glass
“Let me tell you the story of the most successful organism of all time: this is the story of the parasite. Early on, evolution branched into two distinct paths: independent organisms—those that exist on their own in the natural world—and parasites—organisms that live on other organisms. And it was, by far, the parasites that proved the more successful of the two branches. Today, for every independent organism in nature, there exist three parasites. These two strains of evolution have been locked in a primordial arms race, constantly evolving to best each other for supremacy of this planet. As parasites evolve to perfect their systems against a species of host, the host evolves to evade their attack. Scientists call this theory of an eternal genetic struggle the Red Queen Hypothesis—a name taken from Lewis Carroll’s Through the Looking Glass. Animal behavior has evolved to battle parasites. In fact, we have parasites to thank for the existence of sex. Sex is a costly and time-consuming method of reproduction. Experiments have shown that, in the absence of parasites, species evolve towards parthenogenesis – or cloning – as the reproductive method of choice. In parthenogenesis each individual is able to self-replicate. But this produces almost no genetic variation. In the presence of parasites, cloning, while more energy-efficient, is not a viable reproductive strategy. It presents a stationary target to parasites, who, once introduced into such a system, will quickly dominate it. … And parasitism evolves and moves through any system – not just living things. The less variation there is in a system, the more readily parasites will evolve to infest it…” — Daniel Suarez, Daemon (2006)
Andy Xie: The Financial Industry Is A ‘Gigantic Parasite’ We Don’t Need Anymore
Vincent Fernando / Sep. 8, 2010
These are pretty strong words, given they are coming from ex-Morgan Stanley Andy Xie: “But institutional investors are intermediaries, too. Why should savers give them money to manage? Not for superior performance: More than 90 percent of institutional investors underperform market indexes. The main justification is that they bring down costs of information acquisition and processing, as well as transactions. This justification looks shakier by the day. Any individual can have access to as much information as a fund manager at virtually no cost. I’m afraid the financial services industry is likely to decline structurally. As financial services industry loses value-added to customers and the real economy, it is increasingly dependent on gaming the system and profiting from customer ignorance. This makes the industry and financial market more volatile and bubble-prone. In the last financial crisis, the financial sector survived by holding the real economy hostage. Unless policymakers understand that the financial industry isn’t necessary for the real economy anymore, and that it should scale down dramatically, the sector will remain a gigantic parasite on top of the real economy.”
KILLING the HOST
Financial Parasites Have Killed the American Economy, and They Are Sucking as Much Money Out as They Can Before Jumping Ship
Michael Hudson is a highly-regarded economist. He is a Distinguished Research Professor at the University of Missouri, Kansas City, who has advised the U.S., Canadian, Mexican and Latvian governments as well as the United Nations Institute for Training and Research. He is a former Wall Street economist at Chase Manhattan Bank who also helped establish the world’s first sovereign debt fund.
Hudson has frequently described Wall Street as “parasitic”. For example, in a 2003 interview, Hudson said: “The problem with parasites is not merely that they siphon off the food and nourishment of their host, crippling its reproductive power, but that they take over the host’s brain as well. The parasite tricks the host into thinking that it is feeding itself. Something like this is happening today as the financial sector is devouring the industrial sector. Finance capital pretends that its growth is that of industrial capital formation. That is why the financial bubble is called “wealth creation,” as if it were what progressive economic reformers envisioned a century ago. They condemned rent and monopoly profit, but never dreamed that the financiers would end up devouring landlord and industrialist alike. Emperors of Finance have trumped Barons of Property and Captains of Industry.”
More recently, Hudson said: “You can think of the financial sector as being wrapped around the real economy, almost like a parasite, and that’s why it’s been called parasitic for so long. The financial sector extracts interest from the economy, the property sector extracts economic rent, as do monopolies. Now the key thing about parasites, is that it’s not simply that they extract nourishment from the host. The parasite takes over the host’s brain, to make it think it’s part of the economy, to make it think it’s part of the host’s own body, and, in fact, that’s it almost like a child of the host, to be protected. And that’s what the financial sector has done today. You have Obama coming out and saying, “We have to save the banks in order to save the real economy”. The fact is, you can’t serve both the parasite and the host.”
And this: “A zombie bank is supposed to be a bank that has negative equity. And the word “zombie” comes basically from parasitology. Everybody—people often say the financial sector is a parasite extracting. But a parasite does more than that. It doesn’t just take nourishment from the host; it takes over the host’s brain, so the host thinks it’s actually part of the host’s body and, in fact, it’s its child, and it nurtures it. And the financial sector represents itself as being part of the economy. Mr. Geithner said that we can’t have a recovery of the economy without making the banks healthy and whole and profitable. And that’s just the wrong thing. We can’t have a recovery in the economy until we let the banks take the losses and we let the hedge funds essentially take their losses. There was no need to give $135 billion to AIG, which was raided by Britain’s office of serious crimes for financial fraud, when the US government refused to move against it for fraud. It’s paying the fraudsters instead of paying the victims, and then it’s blaming the victims as if somehow the bank’s a zombie instead of the bank turning the economy into a zombie economy run by insiders in Washington giving themselves what Bloomberg Financial said was $9 trillion two months ago and two days ago an added two-and-a-half trillion, which, to me, makes up $12 trillion, rounding off.”
On August 10th, Hudson went even further. Specifically, he said: “The giant financial institutions have already killed their host – the real American economy. … Since they realize that the American economy is dead, they are trying to suck as much blood out of America as possible while the corpse is still warm. … Because the American economy is dead, their plan is to soon jump to another host. They will ship all of their money overseas.”
GLOBALIZATION and the RED QUEEN
by John Robb / 25 August 2009
The Red Queen hypothesis (the name was taken from Carroll’s book) is a simple concept from evolutionary biology that describes the evolutionary arms race between competitive species — predator/prey and parasite/host. It was found by the evolutionary biologist Leigh Van Valen via extensive analysis of marine biological record. In short, it posits that the probability of extinction isn’t a function of how long the species exists. It doesn’t get easier or harder as time goes on. It’s random. Which implies: Constant evolution is necessary just to stay competitive. If your rate of evolution falls behind your competitors: You die (become extinct). Your evolution must be relative to the evolution of your competitor. If they zig, you must zag (if not, you die).
The US, Globalization and the Red Queen
Since the treaties of Westphalia nearly 400 years ago, competition between nation-states was the primary driver of social evolution. The method or model of competition was between predator and prey and between predators, made stable through creeping global expansion (new competition) and a wide diversity of competitive models. That competition narrowed during WW2 and again through the cold war down to two keystone competitors, each with a different model/ecosystem. The US and the USSR. With the elimination of USSR as a competitor, the US social and economic ecosystem became dominant and now blankets the world through globalization. However, as a result of this victory, the US lost it’s drive/imperative to evolve. It has became increasingly stagnant as a social and economic system, and it is now merely a participant in the much larger global capitalist system.
The flaw in this set-up is that evolutionary competition NEVER stops. It just changes its form. In this case, since the global social system is now a singular entity — capitalist — evolutionary competition changed into a model of parasite and host (conflicts, reflecting traditional state vs. state predator vs. prey competitions, like those with Iran and N. Korea are a sideshow joke). Worse, the global system is becoming increasingly homogenous — it expands via cloning itself and improves itself merely through incremental innovation and not evolution. In short, it has become a homogenous static target for parasites (the most vulnerable type of target).
So, what are the parasites to this homogenous global system? Networks. They range from financial/corporate networks (per the recent financial crash) to terrorist networks (al Qaeda, etc.) to criminal networks (narco-gangs, MEND, etc.). All of these parasites are post-modern in that they don’t adhere to any meaningful ideology that can replace the state (even al Qaeda envisions a decentralized feudal Caliphate as an end game). They all are in the process of co-opting global system functions (host functions) to achieve operational space for the advancing their evolutionary advantage. Unfortunately, per the Red Queen hypothesis, a rapidly evolving parasite’s competition against a static, non evolving, homogenous host likely results in extinction of the host.
The only likely process of evolutionary competition against globally systemic parasites is to decentralize core functions of the global system (resilience through scale invariance). The process of decentralization, one model being resilient communities, manufactures geographic and social heterogeneity. Heterogeneity makes it possible for the host to develop solutions to parasitic predation (be it financial, criminal, biological, technological, or purely violent disruption). In this way, any potential extinction event visited on the global system would be met by solutions emerging out of systems hidden in a socially/economically heterogenous geography. It’s only in this way that a stable relationship between parasite and host can develop.