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Calculating the Worst: the Cynical Economics of the Japanese Tragedy

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  • Hochschule für angewandte Wissenschaften Würzburg

Abstract

The German Finance Minister, Wolfgang Schäuble, said in the Süddeutschen Zeitung on March 19/20, 2011, about the catastrophe in Japan: "The drama there concerns us all. Humanly above all, but also economically. Nobody knows how great the effects will be on the world economy." Oh, what kind of "but" is this! One regrets, as a "human", the "human tragedy", yet in the next sentence turns on a thought machine that reveals only one thing: whatever the earthquake, tsunami, nuclear power plant catastrophe may hold in store – the folly of economic logic remains unimpressed. In the midst of the Japanese catastrophe, what is made crystal clear is the economic logic of the capitalist money economy in its destructive power. Economists divide the world into two spheres, the economically endogenous and the exogenous environment, the latter escaping commercial calculation. The inner world of economic rationality realizes itself in financial arithmetic. Being captured by the logic inherent to this inner world, which only attends to the "how much", economic thought – both of the everyday and of economics as a science – coldly stares at the outer world, which it considers a mere "data set". Thus, the whole living world of humans is reduced to reference objects of money vis a vis their price and, as such, is captured solely in the categories of costs and return on investment. The quality, the experiential content of events, has been purged from this point of view even before a catastrophe actually destroys human life and living environments. Politicians, who are tugged by this economic logic, follow the economic advisors and observe the world in the categories of more or less, calculated in money. How does this mindset perceive a technique like that of nuclear energy? It perceives it as an occasion for investment. Return and risks are folded into investments. The concept of risk, which originally emerged in games of chance, is a way of putting into one number all the factors which elude the calculative grasp of economic thinking. One ascribes to an event or a thing not simply a substance, but quantifies this substance in terms of its probability. And in this way, sotto voce, it is supposed that an event so qualified is the object of a private managerial power. The deadly cynicism may be seen – through the logic of this calculation itself – in the cost column of the accounting books for the construction of nuclear power plants. What is belittlingly denoted as "residual risk" in PR new speech is not a residual, but is, above all, a risk. The risk is quantified as a subjective valuation, but what is really meant here is the real possibility that there is a residuum of uncontrollability in the casual process that governs the generation of nuclear energy. There remains the positive probability of an occurrence that can't be comprehended in the formulas of the logic of money. Economists and technicians are well aware of this. For nuclear power plants, here are the numbers for this risk: The probability of a catastrophic accident per nuclear power plant per year comes to 1/10,000 = 0.0001. This is a "very small number". Yet even given this crude logic, this is pure eyewash. For if, at this time, there are about 443 nuclear power plants world wide on the grid, the probability of catastrophe mounts to 0.0443 per year. This means: every 22 years, according to this calculation, we may implicitly, on the global scale, expect to deal with a catastrophic accident. And if one only lines up the three most famous catastrophic accidents: Harrisburg 1979, Chernobyl 1986, and Fukushima 2011, one sees that the risk formula has been so far correct. With every nuclear power plant that is built, political policy makers and private for profit investors are calculatingly buying into the death of thousands and the
Calculating the Worst: the Cynical Economics of the Japanese Tragedy
by Karl-Heinz Brodbeck
(translated by Roger Gathman)
The German Finance Minister, Wolfgang Schäuble, said in the Süddeutschen Zeitung on
March 19/20, 2011, about the catastrophe in Japan: “The drama there concerns us all.
Humanly above all, but also economically. Nobody knows how great the effects will be on the
world economy.” Oh, what kind of “but” is this! One regrets, as a “human”, the “human
tragedy”, yet in the next sentence turns on a thought machine that reveals only one thing:
whatever the earthquake, tsunami, nuclear power plant catastrophe may hold in store the
folly of economic logic remains unimpressed. In the midst of the Japanese catastrophe, what
is made crystal clear is the economic logic of the capitalist money economy in its destructive
power.
Economists divide the world into two spheres, the economically endogenous and the
exogenous environment, the latter escaping commercial calculation. The inner world of
economic rationality realizes itself in financial arithmetic. Being captured by the logic
inherent to this inner world, which only attends to the “how much”, economic thought – both
of the everyday and of economics as a science coldly stares at the outer world, which it
considers a mere “data set”. Thus, the whole living world of humans is reduced to reference
objects of money vis a vis their price and, as such, is captured solely in the categories of costs
and return on investment. The quality, the experiential content of events, has been purged
from this point of view even before a catastrophe actually destroys human life and living
environments. Politicians, who are tugged by this economic logic, follow the economic
advisors and observe the world in the categories of more or less, calculated in money.
How does this mindset perceive a technique like that of nuclear energy? It perceives it as an
occasion for investment. Return and risks are folded into investments. The concept of risk,
which originally emerged in games of chance, is a way of putting into one number all the
factors which elude the calculative grasp of economic thinking. One ascribes to an event or a
thing not simply a substance, but quantifies this substance in terms of its probability. And in
this way, sotto voce, it is supposed that an event so qualified is the object of a private
managerial power. The deadly cynicism may be seen through the logic of this calculation
itself in the cost column of the accounting books for the construction of nuclear power
plants. What is belittlingly denoted as “residual risk” in PR new speech is not a residual, but
is, above all, a risk. The risk is quantified as a subjective valuation, but what is really meant
here is the real possibility that there is a residuum of uncontrollability in the casual process
that governs the generation of nuclear energy. There remains the positive probability of an
occurrence that can’t be comprehended in the formulas of the logic of money. Economists
and technicians are well aware of this. For nuclear power plants, here are the numbers for this
risk: The probability of a catastrophic accident per nuclear power plant per year comes to
1/10,000 = 0.0001. This is a “very small number”. Yet even given this crude logic, this is pure
eyewash. For if, at this time, there are about 443 nuclear power plants world wide on the grid,
the probability of catastrophe mounts to 0.0443 per year. This means: every 22 years,
according to this calculation, we may implicitly, on the global scale, expect to deal with a
catastrophic accident. And if one only lines up the three most famous catastrophic accidents:
Harrisburg 1979, Chernobyl 1986, and Fukushima 2011, one sees that the risk formula has
been so far correct. With every nuclear power plant that is built, political policy makers and
private for profit investors are calculatingly buying into the death of thousands and the
Karl-Heinz Brodbeck: Calculating the Worst
1
© 2011 Karl-Heinz Brodbeck
desertion of living spaces. These are the already discounted costs in the economic calculation.
That these costs must actually come to pass is also something that is clear to every investor
who can master a small bit of probability math; it is just as clear, how a politician who deludes
the public over “negligible residual risks”, reckons with the death and misery of human
beings, books them as costs, but mostly as opportunities for return.
To fight over whether the negatives outweigh the potential utilities in a catastrophe even has a
traditional place in economic debates. And this tradition was reactivated in the days after the
Japanese catastrophe. The advocates of this calculative cynicism emphasized the positive
effects. Larry Summers, a former head of the World Bank and later Clinton’s Treasury
Secretary said, concerning the catastrophe in a CNBC-Interview: „(The disaster will) add
complexity to Japan’s challenge of economic recovery. It may lead to some temporary
increments ironically to GDP as a process of rebuilding takes place.” The rebuilding is an
economic stimulus program making use of capacities currently latent anyway as Japan
found itself before the Quake in a deflationary spiral, as they say. This school of thought,
founded by John Maynard Keynes, is opposed by economists who refer to Claude-Frederic
Bastiat and his essay of 1850, Ce qu'on voit et ce qu'on ne voit pas („What is seen and what is
not seen“). Bastiat, in that essay, formulates the parable of the broken window („the broken
window fallacy“). It goes like this: when someone breaks a window, demand arises in the
glass industry. This observable effect, the seemingly economically positive affect of an act of
destruction, faces an invisible affect: the money spent the glass pane can’t be spent on
clothing, food, etc. The new pane only functions as a substitute for the old, but the underlying
expenditure actually shrinks the amount of wealth. Here, I am not interested in continuing or
bringing to a close this economic debate, but instead want to leave open the unquestioned
assumption that is the base, as well, for the calculation of risk. This assumption is simple to
spell out: whatever happens, the meaning of all events are grasped in the horizon of the
financial calculation, which abstracts it from all contents before the costs are calculated and
whole stretches of landscape are written off.
Thus, events appear only in the window of this perception if they are the cause of either costs
or returns. All human experience is purged. One might of course still recognize the rhetoric
of sympathy, but it can only manifests itself in an act of financial expenditure. Then one
returns to the economic everyday – through our above mentioned “but”. Financial calculation
always requires a reference object to which it can relate itself by attributing a price. Even
misery has a price tag. We observe a small kaleidoscope of this mindset in our reflections on
Japan: First calculations, how much the Japanese catastrophe costs, are already in the process
of being made –the DekaBank assesses the cost of damages in Japan at 135 billion Euros.
Apart from this, the economic effects on the world market are totaled up. The temporary
stoppages of the chip industry lead to delivery delays for iPods and Computers, even at
General Motors. BILD-online (a German newspaper) fears that “computers will now be more
expensive.” The temporary idling of the auto industry - according to an AP report, the
Japanese auto brands will lose around 150 million U.S. dollars per day – opens up substitution
opportunities for competitors; in reaction to this, Toyota has, as a precaution, announced that
the factories in Europe will speed up production. The Yen, attacked by speculators, was
supported through interventions by the G-7 states, because the stability of the global financial
system would have otherwise come under fire. Stocks in the construction and solar industry
soared, while shares of the great Energy insurance companies were pummeled, etc. – Thus the
misery of millions, the death of thousands, are touted up.
Meanwhile the “nuclear accident” reveals a seemingly self evident fact: it lies with the private
energy producers alone, embedded within the lax legal regulations, to decide the kind and
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© 2011 Karl-Heinz Brodbeck
scope of security measures to be implemented. The exploitation is purely private, while, on
the contrary, the potential danger is not only ‘public’, it reveals a global interconnectivity.
The unremarked duality that has already been seen in the financial crisis and the “saving of
the banks” which is composed of private, profitable exploitation of “market opportunities”
and the simultaneous socialization of external costs is once again being reproduced in the
Japanese crisis. The primary concern of the central bank remains the stability of the financial
market, of which the Bank of Tokyo, in an press announcement shortly after the Earthquake,
had this to say: „The Bank of Japan will pursue powerful monetary easing and, to ensure
stability in financial markets, will continue to provide ample liquidity.“ Thus, more loans on
favorable terms were made to banks – in the first week amounting to 37 billion Yen in order
not to disappoint the greed of the speculators in the financial markets. Nothing was heard of
the suggestion that these sums might have been employed in order to quickly buy supplies in
foreign countries. To demand any such thing would be to betray one’s naiveté against the
“natural laws of markets” and would have only brought an apologetic smile to the lips of the
economists and bankers who are supposed to be the financial experts.
The economic, or dominant view, of the world through the narrow window of financial
calculation recognizes humans and things only in the cost-benefit-calculus and discounts
them. This is the basis of decisions even in the midst of almost incomprehensible events. The
illusive foundation of a world of pecuniary arithmetic is reproduced in the Japanese
catastrophe even before the aftershocks have ceased. The right to limitlessly exploit humans
and nature for private gain counts, furthermore, as a self-evident assumption. The cities, the
industrial sectors and the development of the energy business and infrastructure are supposed
to expand limitlessly in a chaotic jungle of private self-interested reckoning after the damages
have been put to one side – because only growth creates return on equity. Because it is just
this process, which creates the unforeseeable social and ecological catastrophes, that is
supposed to be the way out of that which it has caused. This is the basis for the extraordinary
scale of the Japanese catastrophe, leaving aside all the many causes that one may discover in
technical calculation, in city and traffic planning, and in the trade-off of risks, etc.
Nature knows no catastrophes; it only knows its own process. If we stand too near it, it will
make its own essence unmistakable. And this essence reveals itself in the midst of the world
of our living experience, into which we have assimilated the powers of nature, surrendering to
them our living space. Money and the form of subjectivity proper to it only see what appears
in a price tag. It thus fabricates a fiction of security, controllability and calculability. And this
fiction of financial math, to have fixed everything in one price, becomes more and more a
death trap. An empty abstraction void of all content, driven from the unspeakable limitedness
of the always-more-and-more, dominated globally by human trade. It is a delusional and
erroneous kind of mentality and subjectivity, to which nevertheless humans have bowed
down. Yet therein lies still a hope in the face of the Japanese catastrophe: an error is always
still an idea, even one that has got things backwards. One can still change this mindset and
thus take away its power. It is high time.
March 21, 2011
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© 2011 Karl-Heinz Brodbeck
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