“Sovereign is he who can transform his own risks into others’ dangers, positioning himself as the creditor of last resort.”

With sentences like this, Joseph Vogl became one of the most rigorous German critics of the austerity politics enforced by the so-called Troika in the aftermath of the European Debt Crisis. In his latest work The Ascendancy of Finance (2017) he deals with the political power of central banks. In this interview, we especially focused on the Fed, but also on the rise of right-wing forces as a reaction to the financial crisis in Europe and the United States. Vogl confronts characterizations of neoliberalism as the withdrawal of the state from the economy. For him, there can be no market that is not embedded in politics. What is called the “free” market is actually a specific political regulation of the economy enforced by state actors and international organizations in close teamwork with private and central banks as well as business corporations. Therefore, to call for a strong state against an apparently ‘untamed’ economy leads to what Vogl has coined as a “sovereignty effect.” With this, he traces a line from a wrong critique of finance capitalism to the emergence of right-wing populism. The formalism of a state/economy-dualism has, also, already allowed the Troika to govern in an authoritarian fashion as a technocratic committee without considering the people being affected by it. According to Vogl, this misconception has to be tackled in a decisive critique of the monetary policy conducted by central banks and governments without the consideration of the people. We also talked about his new project, which is about platform-capitalism, and the way in which it is not only producing a wholly new economic bubble, but an economization of information in general.

Dennis Ohm-Fickler (DOF): Given your background in literary studies, how did you develop an interest in economics?

Joseph Vogl (JV): Since the 18th century, there is a close discursive relationship between literature and economics. Political economy emerged simultaneously with something one could call ‘adventurous’ knowledge: project makers, but also fraudsters, theologians, authorized signatories, writers, priests, all suddenly started to write about economic affairs and this spilled over into literature. However, the most serious reason comes from my impression that in critical theory — with a small “c” — economic questions remain hidden today. This is somewhat strange because economic questions were at the center of 19th century historical materialism. Surprisingly, since the post-war period at the latest, questions of contemporary capitalism have actually no longer been the privileged subject of critical theory, at least not in Germany. Maybe that’s a post-Habermas effect and its focus on ‘normative orders’.

Jochen Schmon (JS): How important are the Birth of Biopolitics lectures of Michel Foucault to you in this context? In 1978 — before Thatcher and Reagan — he analyzed neoliberalism, not as a mere economic policy, but as a new form of “governing economically.”

JV: I believe that people like Foucault or perhaps Gilles Deleuze were more sensitive to how certain political-economic constellations have changed. And this is because they were able to develop a perspective that was not exclusively focused on the systems-logics of the economy, but also concerned themselves with questions of governmental power. In these lectures, Foucault deals with the “history of governmentality,” that is, the economization of governing since the 17th and 18th centuries. In this history, German ordoliberalism of Ludwig Erhard and the American neoliberalism of the Chicago Boys plays a crucial role, especially in the post-war period.

But Foucault has a blind spot. He explicitly and repeatedly states that he is not at all interested in financial economics. For Foucault, finance and its connection with sovereignty rather entailed a blocking of the modernization of governing. Considering this, I devoted my book to the question of how finance served as a central driving force for the economic modernization of governing. That is why I am less interested in economic theories and instead concerned with a certain political-economic gray zone from which the financial system emerged in the first place.

DOF: And this is gray zone is exactly what you are trying to capture with the concept of “seigniorial power.”

JV: With the term ‘seigniorial power,’ I wanted to indicate a form of power that simultaneously produces state apparatuses and financial markets and can only become effective in this reciprocity or bipolarity. I would like to underscore that I borrowed a great deal from the works of other authors, such as Giovanni Arrighi and David Harvey. These authors understand Western capitalism as a consequence of crises of accumulation or over-accumulation. These crises, I found, were taking place where private financiers were consistently involved in the exercise of governmental power. This meant that this reciprocal alignment of interests, since the end of the Middle Ages, has, on the one hand, led to the politicization of private financial capital and, on the other hand, an externalization of the state.

DOF: Using the example of the Federal Reserve Bank in the U.S., you demonstrate how a decisive change in the role of central banks took place in the 20th century.

JV: It is very important to see that central banks were first established to finance public debt. The increasingly precarious and crisis-prone exchange between private financiers and public debtors was institutionalized with the establishment of central banks. But these banks, starting with the 1694 establishment of the Bank of England, completely changed their function in the 20th century. The Bankers’ Panic of 1907, one of the most prominent events in a series of banking crises in the U.S., led to the founding of the Fed in 1913. In particular, major banks such as Chase National Bank or J.P. Morgan and Co. feared the collapse of the financial system and pleaded with the American government to create a Federal Reserve System. There is another aspect of our current financial system that requires attention, and has become essential since the Second World War — namely the decoupling of monetary policy from politics. The Deutsche Bundesbank and the European Central Bank are important examples of institutions that were installed as radically ‘independent’ central banks based on the basic assumption that monetary policy is essentially technical, but not a political, matter.

JS: In this context, you talk about central banks forming a new security dispositif. What exactly is that about, ‘protecting the population from market forces,’ ‘the survival of the economy,’ or something entirely different?

JV: First of all, it was about protecting the banking system, in particular against crashes and crises. Central banks became highly independent from other branches of government. In the case of the Fed, this immunity goes so far that meeting minutes don’t have to be made accessible to lawmakers. Actually, the Federal Reserve System was in fact conceived in such a way that representatives of all branches of industry were supposed to have a say in the so-called Federal Reserve Boards in 12 different reserve banks, which were distributed differently across the country based on the sector: bank representatives, small businesses, craftsmen, trade unionists, and farmers, etc. However, this was never realized. These Federal Reserve boards consist exclusively of representatives of major banks. The Fed is thus structurally and almost systematically set up to serve the interests of the financial markets.

JS: Would you now describe what is discussed in terms of a shift to the political right, especially in Western democracies, as a consequence of this “sovereignty effect” of finance? Significantly, the founding act of the nationalist AfD in Germany consisted in a criticism of the financial regime of the Troika.

JV: Critiques of capitalism are as old as capitalism itself. In the Communist Manifesto it says: “All that is solid melts into air.” In other words, capitalist economic methods create extremely uncomfortable situations for certain groups of people, indeed for the vast majority of them. That is why, since the emergence of capitalism, there has always been some form of resistance and uneasiness. Very often, however, this critique takes the shortest route and allies itself with resentment or ressentiment. As a result, different scapegoat figures appear again and again, such as the ‘Jewish banker’ in the 19th century, the ‘greed of brokers’ in the 21st century, or the tales of the ‘world conspiracy.’ Resentment is thus a constant companion of capitalism, not least because critiques of capitalism themselves can be formulated in a way that doesn’t touch the capitalist logics of governing at all. Historical materialism had already fought against these phenomena by insisting from the outset on the structural, systematic character of problems instead of referring to personal misconduct or malice. Neglecting the structural conditions: this is in fact the appearance of a right-wing critique of capitalism, albeit one that reinforces the system.

The financial crisis in 2008 inevitably led to something, especially in Europe, that would have to be called a political antinomy: on the one hand, international markets are invoked to combat nationalist politics; on the other hand, national sovereignty is invoked to combat international markets. This antinomy creates false friends. By this I mean that the international financial industry, combined with the policies that tried to combat the last crisis, made it very easy to invoke national sovereignty and the ‘strong hand’ — i.e. protectionist trade policies. One can observe everywhere that people long for substrates of sovereignty, such as the burlesque or ‘ubuesque’ form of a figure like Trump. This is a basic effect of the international financial economy and an effect of crisis management. The Left is not spared from this either. As much as I agree with the analyses of Wolfgang Streeck, I am doubtful about his policy suggestions: the nation-state will not help us combat neoliberalism. For me, the idea of Europe — if freed from its neoliberal articles of incorporation — is still the most promising one.

DOF: For the last question, can you tell us a bit about what you’re working on right now?

JV: I’m currently dealing or struggling with the relationship between platform economy and financial capitalism. There is a peculiar paradox at the center of platform capitalism, which also explains why these companies attract so much financial capital despite not generating profit, and even incurring great losses. So far, Amazon Prime has had only negative returns and still has a higher market value than entire branches of industry put together. Investors from all sides are involved in these projects. For instance, Goldman Sachs holds immense shares in almost all of these platform companies. These companies are driven to the stock market by the financial economy and shareholders are happy to jump on board despite the company itself returning losses. There are, probably, at least three reasons for this. First, we are dealing with companies that succeed in freeing themselves from fixed capital and associated obligations: for example, they don’t have to provide their drivers with cars or pay for their maintenance. Second, these companies manage to move away from fixed employment relationships that involve certain responsibilities, such as social security. Third, and this is a crucial point for the financial economy, these companies do not compete to bring a new product onto the market. In fact, they are far more concerned with creating a new market — one in which they themselves can act as monopolists. Finance capital’s love for monopoly is already built into these platform companies and this is also what makes them so attractive. One takes bad business balance sheets as an opportunity to recognize particularly high development potential in them.

DOF:In that case, how do you envision the relationship between the state and financial capital?

JV: I think there is a third player in this platform capitalism and that is really the question of media power and information: what role has the media played in the development of capitalism? I can only hint at it here, since I am still in the middle of the project. A first point would be that the news system itself, even the concept of news, has emerged from early modern business transactions. The first newspapers that actually deserve this name were founded by merchants and merchant bankers in the Renaissance, reports from emporia and fairs. This means that the financial sector in particular was fundamentally interested in a survey of certain information and repeatedly became directly or parasitically involved in the modernization of the news sector. The first optical telegraph, built under Napoleon, was abused by bankers to receive news faster than through the newspaper or letter post. This is why financial companies in particular invested very quickly in innovations in media technology.

A second important point here is the type of news. I would agree with Keynes that the interesting thing about stock market news is that the facts are nothing but opinions. One has to be able to get an idea of the average opinion of others in order to make a decision about one’s own investments. In this respect, stock market information erases the difference between knowledge and opinion. This leads to the creation of a separate opinion market in which information technologies and the public are directly linked, which is my third point. For instance in the so called South Sea Bubble, it was crucial to invent legends for the trade with raw materials and slaves from Africa to South America in the 1720s. The production of a South Sea exoticism was fueled by the emergent news media: authors such as Jonathan Swift or Daniel Defoe, as well as shareholders who propagated the slave trade, were involved in the creation of, in Freud’s words, fables — these fabulations are central to a certain form of financial markets.

I would argue that opinion becomes the fact itself. It probably goes more in the direction of an information concept that prevails in systems theory — for Luhmann, the mere ‘value of the new.’ It is interesting to see how the valuations of the so-called real value have become completely uninteresting, one wants to say goodbye to the investigation of what economists call fundamental values: the most profitable company is one that disbands obligations concerning fixed capital and human wetware. Instagram had thirteen employees and was bought by Facebook with one billion. This is a new charter of independence declared by these companies: an independence from wage earners, societies, and populations.

Joseph Vogl is Professor for German Literature and Cultural Studies at Humboldt-University of Berlin and as Permanent Visiting Professor at Princeton University. In his recent books The Specter of Capital (2014) and The Ascendancy of Finance, (2017), he explores the history of financial economy, literature and economics.

Dennis Ohm is an MA student in Social Sciences at Humboldt-University of Berlin. Currently, he is a visiting scholar at The New School for Social Research for archival studies on the AIDS crisis, intimacy and affect.

Jochen Schmon is an MA student in Social Sciences at Humboldt-University of Berlin. As an activist he is part of the political action art collective Centre for Political Beauty.