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THE EVAPORATION OF FUNDAMENTALS IN THE “NEW
ECONOMY”
The problematic ontology of turbo-capitalism
Alexander Dugin
November 2001

What does the specificity of the so-called “new economy” consist in? Among all
the criteria usually put forward, in our opinion it is especially necessary to
outline the de-materialisation of the real sector, namely the essential change of
proportions between the amount and structure of the capitals circulating in
traditional sectors of the classic economy (production, services, investment), on
the one hand, and in the field of stock exchanges, virtual finance, gamble on
securities markets and derivatives of a miscellaneous kind (swaps, futures,
warrants, put-options etc.), on the other hand. The well known American
economist H.B. Litvak, (who once, by the way, put forward and developed the
concept of "geoeconomics"), proposed to define the "new economy" as "turbo-
capitalism". In the turbo-capitalist economy – as against the economy of classic
industrial capitalism – the purely financial speculative sector, the stock-
exchange game, high-risk and short-term operations in financial credit
instruments (that earlier constituted no more than a fragment, a sector of the
classic economy) show a disproportionate growth, an autonomisation; they
elude the classical model of the market equilibrium, where the area of pure
finance always saves some correlation to production, to the dynamics of the
relation between supply and demand centred upon concrete goods. 

Some theorists of the “technical analysis” say that the modern stock exchanges,
and especially the securities and derivatives markets, operate in a separate
condition from the normal fundamentals of the capitalist economy, becoming
independent from the sphere of real production. The financial volumes involved
in the real sector’s credit and investment mechanisms appear to be many times
less than the volume of virtual capital circulating in the field of the stock-
exchange game. At some stages of this process there is an extremely
interesting phenomenon: at some definite gaps of stock market time, the
dynamics of price evolution becomes completely independent from the
economic component of the shares, as the velocity of rational calculation of
fundamentals appears to be considerably slower than the time needed by the
stock-exchange players for taking a decision. And consequently, some definite
moments of the stock-exchange game escape from the logic of the price
formation dynamics typical of classic capitalism. Similar phenomena were
detected even earlier, and some followers of the classical system were inclined
to reduce this phenomenon to random fluctuations (random walk theory), which
looked as anomalies only at a very great approximation, being inscribed in
medium- and long-term models within the normative logic of market evolution. 

A distinctive feature of turbo-capitalism is that as a matter of fact it insists on the

constitutive normal status of these anomalies, giving them an autonomous
theoretical value. Short-term fluctuations of price trends and high-risk
operations in financial credit instruments and derivatives turn out to be the
priority criterion for evaluating the pace of economic growth; and the growing

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volume of the capital involved in this sector, in comparison to the traditional
sectors, is the evidence of this growth. The accounts of the virtual sector of
capital circulation generate the impressive picture of prosperity of the "new
economy", and the frenzy-like involvement of simple citizens in the stock-
exchange game (in these days an unprecedented quantity of US middle-class
individuals are shareholders – that is 50% of all Americans!) supports this
illusion. 

Such drive to virtualisation in the conditions of turbo-capitalism is accompanied

by the increase of the services sector of the economy, as the main monetary
mass circulates not in the field of production, as in second-line sectors. The old
economy, bound to the real sector, depreciates and starts to be considered as a
minor, subsidiary area. Managers, specialists in the field of PR-technologies,
designers, stylists etc. are incomparably better paid than the workers in the
manufacturing sphere or even in the trade sphere.

The process of virtualisation is mirrored also in the kind of companies which

become central in the stock-exchange game. It is the companies linked the
"high technologies", to informatisation and the logistics of informatisation. The
main expectations of the shareholders point to this direction, which is as much
as possible advertised on a global scale as the "economic destiny of mankind".
Curiously, these hi-tech companies are valued according to their share price,
essentially differing from their real profitability. And the gap between stock
capitalisation and real efficiency (profitability) sometimes reaches hundreds
percents. For example, in the case of the Internet company Yahoo this gap
reaches the unprecedented figure of 1000 %! In other words, people pouring
money into the shares of the flagships of the "new economy" (Microsoft, AOL
etc.) are guided by two different motivations. In a long-term perspective they
buy future efficiency, i.e. the pay for their conviction that these today not so
efficient companies sometimes later will realise a qualitative leap. By sticking to
such conviction, by causing expectations, the shareholders get the lion's share
of the profits received by the "new economy". Apparently, the categories of
"expectation" and even "conviction" are but virtual. Expectations may come
true, but may also not. The efficiency of these companies is also virtual. The
only non-virtual, real thing in this situation is the rise of the share price – and all
the participants to the process can be quite convinced of this, having changed
them on cash money. As the whole machine of the "new economy" is directed
on supporting these expectations, such controls do not reach a critical mass,
remaining but particular cases: having bought and having sold back the shares
with profit, without having any trouble, the holder will necessarily be exposed to
the temptation of repeating the deal. 

Thus in turbo-capitalism an evaporation of fundamentals takes place. What

does the term "evaporation" (in latin "evaporatio") stress? Not that capital
vanishes in the circulation process of the "new economy", but that it
considerably changes its quality. In the classical model money is the blood of
the economy. Credit, investment, financial instruments, shares, loans etc., in the
end only serve the real sector, creating an operating environment for the rise,
metamorphosis and disappearance of goods. The most abstract economic
models with reference to industrial capitalism do not attribute any autonomous
ontological value to the financial sphere. So capital remains bound to the
material (or semi-material) reality of economic life, being nevertheless a

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derivative element, though with a huge degree of independence. However
complex it maybe, it is nevertheless only a function of the real sector, its logistic,
ingenious projection. 

In the classical liberal theory the basic ontological reality of the market
nevertheless remain the so-called "fundamentals", i.e. the quite concrete and
verifiable balance between supply and demand, linked to concrete goods (or
services). These fundamentals are the objects of the most complicated, head-
breaking manipulations, which also form the living tissue of economic history.
The exposure of some of these manipulations is the essence of Marxism. But in
any case the fundamentals are saved, whatever the position held by the main
actors of economic process in relation to them. 

In the "new economy" these fundamentals undergo a qualitative transformation.

The sphere of virtual finance and financial credit instruments starts step-by-step
to affirm its rights to erase the reality of market fundamentals, as the bases of
the operating management system. And as a consequence of this, it
appropriates to itself the status of ultimate reality, postulating market
fundamentals according to its own inhering regularities, whenever and wherever
necessary. In turbo-capitalism the primary and the secondary, the base and the
superstructure change their places – in this the essence itself of its virtuality is
shown. Virtuality is a possibility, market fundamentals are the element of reality.
The “new economy” postulates that the processes in the sphere of possible are
autonomous in relation to reality. From now on, supply and demand and also
the concrete correlation between them are no more the “atomic facts” of
management. On the contrary, they are conceived as collateral consequences
of the oscillating trends in the stock market games. Supply and demand can be
fully provoked or artificially visualised depending on autonomous stock
exchange processes. 

Through evaporation, fundamentals are transferred to a special level of

existence – they are no more subjects and relations built with reference to
subjects, but signs and relations that rise with reference to signs (see
G.Debord, J.Baudrillard etc.). 

The sign becomes the basic equivalent of virtuality. Thus the sign, initially called
to only temporarily replace the thing, to serve as its relative and conventional
substitute, acquires an autonomous ontology, being released from the
association to the signified thing, showing - since some moment - only itself.
And the more so, the sign can be interpreted through different things, not having
a precise equivalent, hypnotising the consciousness by fact itself of its
presence, its inmost value. The contemplation itself of the sign acquires a value,
the confidence that it exists, that it is somewhere near. The sign can thus prove
its reversibility into fundamentals to those who are too mistrustful or backward;
but the sense of turbo-capitalism is that this reversibility is so “obvious” that any
attempts to check with reality are conceived as something annoying and
inappropriate, “not civilised”. “Conventional wisdom trusts the sign” – such is the
imperative of the “new economy”. Doubting it means showing absolute
unseemliness, “sailing against the current”. 

Here can be an objection: the described model represents but a thick illusion.
The “old economy”, you see, does not disappear anywhere, its laws have not

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been abrogated by anyone. And if the real sector will not develop or generally
operate, the phosphorescent system of virtual pyramids and overheated
markets, despite of all hypnotic cogency, will fall in any time… When the gap
between the evaporated fundamentals (founded on the ontology of the sign)
and the real, classic fundamentals will reach a critical size there will be collapse,
recession, stock-market crack, and everything will return again to the
inescapable classic pattern, to the real sector etc. Actually, everything is more
complex than this. 

But let's see, what is the source of such point of view of the manifest or implicit
actors of the “old economy”, criticising turbo-capitalism and forecasting its
inevitable demise? In order to conveniently understand the ontology of the “new
economy” it is necessary to go back to the past. True, today the reality of the
“evaporation of fundamentals” of the economy is looming closer. But those
same fundamentals – when and how did they acquired the quality of basic
reference of ontological reality? The supporters of the “old economy” generally
overlook such problem. For them the ontological content of the economic
understanding of reality belongs to the category of postulates: the economy and
its laws of development are the fundamentals, since they are connected with
the basic, primary, fundamental aspects of human life - with the satisfaction of
primary material needs and with the complex social-psychological and political-
economic superstructure surging on their base. Classic economics – both liberal
and Marxist (as its heterodox derivation) – started (silently, but also explicitly)
from the acknowledgement of the deep ontological nature of the economic
development. The economy, the economic pole were seen as the deepest
foundations of human life, as a feature of “reality”, in its etymological sense -
“thingness” [veschnost’]. 

Economocentrism is the general denominator of the majority of the social and

political views of modernity. The economy is seen as the original reality of social
development and at the same time as a destiny. The debate with those who
defended different ontological equations was won a long time ago. For this
reason the philosophical context in which are found today the subject of the
“new economy”, the revealing of the “ontology of turbo-capitalism”, and in
particular, the alarmist signals about the catastrophic “evaporation of
fundamentals”, is strictly limited by paradigmatic presuppositions – the ontology
of the classic market and the alarming perspective of its loss (transmutation) in
the new trends of transition to virtuality. Thus the growth of virtualisation is
acknowledged by the supporters of the “old economy” as a disastrous
aberration, as some historical case of “blind alley evolution”. In the longer term
their prognosis is either the great collapse of turbo-capitalism and the return to
the classic standards of the economy, or the total catastrophe. Interestingly, the
apologists of the “new economy” (whose philosophical conclusions, however,
must be listened to with great caution, since the tactically motivated (and solidly
paid) nature of their conclusions is obvious) solve this problem in a wittier and
(in our view) more consequent way: they affirm that the virtualisation of the
economy and the autonomisation of signs do not bear in itself any special
drama, and that mankind (maybe not all mankind) will find a good place in the
self-generated show, as it earlier assimilated the challenge of the Modern Ages
and further deepened its economocentrism. This position – taken with some
corrections – is more interesting than the "warning of the classics" (not to
mention the rear-guard volleys of some kind of Marxists, stuck into post-

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industrialism). There, where the apologists of the “old economy” identify an
unprecedented break, the supporters of turbo-capitalism see a continuum; what
the “classicists” consider as a random deviation, the “virtualists” identify with a
uniquely logical stage, differing from all the previous ones. 

For a more adequately overview of the essence of the problem, it is necessary

to turn to the historical and paradigmatic context in which the first economic
theories appeared. Certainly, some definite aspects of the understanding of the
economy were always common to all societies. But up to a definite, strictly fixed
historical moment they did not claim (and for a set of causes could not claim) to
the status of independent discipline, and furthermore to a function of priority
philosophical interpretation. This became possible only then, when the general
attention of mankind was absorbed by the unchained search for unexpected
interpretation systems - in the field of ontology, epistemology, methodology etc.
- where success was sometimes defined by an extravagant nihilistic
(concerning the conventionally settled standards - liable discrediting estimated
cumulatively as "relics" and "prejudices") approach. Certainly, we are talking
about the Modern Age, about the Age of Enlightenment etc. Let us remark that
in the beginning the theoretical constructions of Adam Smith and other founders
of political economy did not claim to ontological generalisation, as they were
considered as an instrumental and applicative development of the general
liberal-mechanicist approach, applying the social-philosophical settings of
Francis Bacon, John Locke and Thomas Hobbes and the physical and
mathematical method of applications of Galileo Galilei and Isaac Newton to the
area of the economy. But in this initially applicative field of political economy
were centred the main motives of the Modern Age, expressed into simplistic
physical and mathematical formula. The derivation of man and human
experience, and consequently of human life, from some lowest, material-ontical,
primary realities – from the pattern of things and its inhering regularities, and
also system of exchanges and lusts with them bound – became a remarkable
and bold conclusion from the fundamental intellectual drive of the Modern Age,
easily embodied in the rational enumerative structure, visual and finely
applicable in practice. As it often happens, a whole set of ontological
implications from such turn was also carried over to the classics of political
economy; yet their most serious and true opponent, Karl Marx, ingeniously
recognised in the economic field a pole of the eschatological struggle of
mankind for the meaning and destiny of reality. 

Anyway, just then – at the historical turning point of the incoming Modern Age,
and in the context of a general epistemological revolution, rejecting the
traditional society’s normative feature of confidence, and actively seeking for the
roots of ontology in the systems of material objects and in their representation –
were engendered the first seeds of the ontology of the market, i.e. those same
fundamentals whose evaporation inspires today such severe fears in so many
people. Thus the deontologisation of the economy is not an exclusive property
the “new economy”. Turbo-capitalism, the domination of virtual sector only
extends and develops an impulse already present in the source itself of the
modern economy. 

In the system of values of the traditional society, which was acknowledged and
successively overthrown by the Modern Age, the economy had a secondary
quality: it was the field of consequences, the sphere of coagulation of more

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subtle and tenuous relations. The ontology of the economy was a particular
case of the ontology of the society (politics), and this in turn a particular case of
the ontology of the Church. Life was concentrated in the thin worlds of the spirit,
in theological dogmas, in cults, in the sacred bases of social institutions. The
world of things and their circular motion, the cycles of primary needs and
elementary reactions, were considered as the periphery of ontology, as the area
of the most arbitrary and random phenomena. The economy as a whole could
not be fundamental, and autonomous logic of the market was permanently
prevented by higher instances obeying to a plan of different priorities,
connected with a system of ideas rigidly dominant above the system of things.
Man and his economy were instruments of the ontology, and not its constituting
poles. 

The Modern Age in itself was the unique period of evaporation of different
fundamentals – the fundamentals of the traditional society. This fundamentals
did not vanish forever (therefore we speak about “evaporation”, instead of about
deletion), but interchanged their nature, being embodied into something
different. Shaky and bodily depending from the will of the noblemen, the
autonomous bourgeois logic, up to that time as light as the swell of waves
swinging the merchant's ships, began to turn into the firm basement of the new
society. The values of the aristocracy began to have a new equivalent, valour
and honour received a new meaning. Each issue began to be measured by its
price. Economic cycles and monetary instruments became the common
measure, replacing spirit, knowledge, will, force. The ontology of the traditional
society was dissolved. It seemed then that this phase of nihilism meant the “end
of the world”. Inflexible conservatives prophesised that a world without
fundamentals would not last long … 

History has shown, however, that new systems of values are quite capable to
condense into something relatively steady; and the epoch of the coming of
capitalism, its expansion, its materialisation, its penetration into all the pores of
human life and social institutions have generated a large scale picture of its
dynamic stability. The fundamentals of market equilibrium coped with many
challenges. Marxism, whose signs were placed on an ethical evaluation of the
coming socio-political change –  going the opposite way than those who,
without any special reflection, went along the main road of capitalism – was
defeated with great difficulties and at incredible costs. And just in that moment,
when the victory above Marxism looked like final, and the heritage of the
Modern Age without alternatives had gone to the liberal-capitalist system, again
on the agenda there was the issue of the severe qualitative mutation of the
ontology of capitalism – on the side of the virtual logic of turbo-capitalism, of the
paradoxical labyrinths of the “new economy”. 

On the one hand, the deontologisation of capital it is represented as a

disastrous phenomenon. On the other hand, it is an objective process: the
autonomous ontologisation of the economy, implicitly present already in the
classics and up to the end acknowledged by Marx (in an alternative ethical
system of coordinates), meant the deontologisation of the more massive system
of values of the traditional society, where the worlds of the material objects were
but the extreme periphery. These objects and their cycles (“shenanigans of the
commodity” – Hakim Bay) look like a rather small reality in comparison to the
massively spiritual and after political-feudal ontology of the traditional societies.

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Then the sphere of metaphysical principles was considered to be
unconditionally real and even actual, while the economic field was a secondary
and random sphere. This meant that the economic model could be varied
depending on deeper social (and sacred or forced) trends. 

The transition to the bourgeois system separated the economy from those
fundamentals, to the participation to which it was assigned before. Something
interesting occurred in the world of the subject we are investigating: in the
traditional society reality was a sign (even in a Catholicism tomist-aristotelic
realism prevailed, instead of the pre-bourgeois nominalism of Roscellier-
Ockam). This sign also yielded the ontology of the thing, as its soul. Echoes of
the ontology of the sign can be met even in Paracelsus and Jakob Boehme -
signatura rerum. This “signature” was the quintessence of an ontology
producing the reality of "rerum" (things) strictly speaking. Translating with Latin
derivatives: the “thingness” of things was non-real (=sign-like). The transition
from live signs and their systems (embodied in priests theology and soldiers
heraldry) to the systems of things was the precise expression of the “third state”
– the one which generated the modern political economy and an ontology
applicable to it. Fundamentals became the fundamentals of the merchants. In
its time it was not less advanced and bold than the theories of the modern
apologists of the stock market “technical analysis”. 

It follows from all these considerations that the “new economy”, by corroding
those fundamentals that have been familiar to us in the last centuries, is doing
something similar to what occurred when those fundamentals affirmed
themselves for the first time. In turbo-capitalism we reach not simply the borders
of ontology, as the borders of the ontology of the third state, the limits of the
bourgeois system of measures. And the “new economy” itself is not yet a new
era – it is an ambiguous and pluri-significant challenge to say goodbye to the
old, but not offering at the same time anything new. Already on the horizon of
the “new economy” confusedly appear absolutely unfamiliar and unusual virtual
figures - "Lawnowerman", living into digital computers, or human clone-mutants.
At the same time, there are some curious semi-restoration moments of the “new
economy” – eroding the system of things and invoking a system of signs, in
which the essential element is not so much possession, as contemplation and
sensorial simulation (from here the proliferation of narcotics, television networks
and computer games), turbo-capitalism makes reality moving and bodily, borne
out of tight frameworks of material and rational chains, of mechanical alternation
of demand-offer. True, the extreme conservatives (R.Guénon) say that the
present phase of post-materialism corresponds to the “opening of the cosmic
egg from below”, while in the epoch of the traditional societies it was opened
from above, and later (during classic capitalism) it was closed from all sides.
And, true, signs in the traditional society played an essentially different role,
than in modern advertising and trademarks. However these differences are
relative: in the societies of the East, where traditional motives have never been
completely deleted, post-modern elements quite easily combine with pre-
modern relics. Very significant in this sense is Japan, where the most recent
technologies are elegantly inscribed in shintoist polytheism, and stock exchange
gambling is interlaced with zen-buddhist meditation – the theory about “reading
stock market graphs” through visual associations – the "candles", “five-pointed
buddhi" of the Tokyo brokers etc. 

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The process of the evaporation of fundamentals in the “new economy” easily
enough yields to fixation. Much more complex is to define in what he will be
poured out. 
Will it generate something new? Or will it fall, being unable to stand border
tension – as the human view proliferation of new technologies, automatic
machines, virtualisation and genetic engineering is put into question? Will
mankind turn back to what was thoughtlessly abandoned by it on the threshold
of the Modern Age, terrorised by where its logic of desacralisation is leading to?
Will the sphere of the “new economy” become a fighting ground among different
geopolitical, cultural and civilisational trends? 

We said above that we stand before the "transition from a system of things to a
system of signs". There is one weak point in this expression: will this new
“system of signs” be a true system, i.e. a hierarchically ordered set? And if so,
according to what criteria? 

This is an open problem, to the solution of which we all should contribute.