Metacartel Thesis (Almost) Vindicated

Big battles looming on the horizon?

Revisiting the Metacartel thesis—I’m not going to go back and summarize the argument; referring the reader instead to my post that was run on here all the way back in February, an age that seems like a veritable lifetime ago. A follow-up post was originally planned and drafted to expand the theory of the Metacartel by closing the gap between the state-managerial role of central banks and the supposed anarchy of offshore finance, utilizing the Eurodollar markets and manipulation of interest rates as the key bridging points. Maybe that post will emerge someday! As it stands now it was far too complicated, too cumbersome an argument, and much too dry to try and foist it upon people.

What has brought me back to the Metacartel is the news of November 8th that, in the event that incoming president Trump would ask him to step down, Federal Reserve chairman Jerome Powell would simply decline—and perhaps even launch a legal fight to maintain his post until the end of his term (2026 I believe?). Per the New York Times:

Jay Powell and the Fed may have pulled off the improbable soft landing in taming inflation while not crashing the economy into recession, proving many a Wall Street naysayer wrong.

But an even bigger wildcard looms in another Donald Trump presidency — what Trump 2.0 might mean for interest rates, Fed independence and the Fed chair’s own job.

That tension burst into the open at the Fed’s news conference on Thursday. The usually dry event had moments of high drama that nearly overshadowed the decision to cut the benchmark lending rate by a quarter percentage point. Powell delivered a forceful “no” when asked by Victoria Guida of Politico if he would consider resigning if Trump asked.

He delivered a more emphatic response when pressed by another reporter on whether the president had the legal authority to fire him. “Not permitted under the law,” Powell said. [my emphases]

At the most immediate level, this brewing conflict revolves around various contingent factors, the most pressing of which is the approach to interest rates. The Fed has been taking a ‘moderate’ position, cutting them slowly, raising them when the need is perceived, but counted among Trump’s campaign promises is the proposal to have an accelerated lowering of the rates (this, and the renewed focus on tariffs on foreign goods, have garnered quite a bit of condemnation from the neoliberal camp, particularly the ‘left’ leaning side of that spectrum). The specter of Powell’s removal turns about on this issue: he could easily stand in the way of Trump 2.0’s economic platform.

This raises the problem to a slightly higher level, beyond the contingencies of the American economy in 2024-2025. This is the wider, more historical question of “Fed independence”. This refers, of course, to the central bank’s pseudo-autonomy from the flux and flow of political processes, the whims of presidents and the perceived threat of popular democracy—all warded off to try and maintain the stability of the dollar as a force in international markets. For Trump to execute his plan (and he’s by no mean the first president to try and do this), the independence of the Fed will have to be reigned in, and political control of the Fed and its processes would have to be exerted.

But to say that that the Fed operates as an independent body is itself a tangled statement. On the one hand, there are degrees of Congressional influence on the bank, and presidential administrations work closely with Fed leaders and help dictate the appointment of new chairman. On the other hand, these dynamics are epiphenomenal to the real, concrete functioning of the Fed itself, those esoteric processes that are more governed by the matrices and networks of occurrence within particular blocs of historical time than the whims of individual political actors.

To state that the Fed has independence from the political opens up the question of the own autonomy of the political itself with respect to capital and the class system—the old Marxist problem of the base and superstructure reasserts itself here, and I certainly have no answer here. We could cop out and speak of the ‘relative autonomy of the political’—it’s a boring answer for sure. Maybe it’s more productive to think of this as an unresolved issue precisely because it function as a real contradiction in the world, one can never be reconciled in the vacuum-sealed rooms of theoretical reflection. The longed-for resolution will instead be found at some yet-unknown point in history itself, deferred into the future, with an outcome dictated by the clash and clamor of class struggle. Only then will the twin tracks of action and theory find their ultimate coincidence.

Despite the abject impossibility of discerning the answer to this problem in theory, I think it’s provisionally safe to say that the relationship between the Fed and capital—as it currently stands—is not one in which capital dictates actions to the Fed, but one where the Fed is the foundation of capital itself. Theoretical and philosophical language does have its uses here: let’s go as far as to say that the Fed looks something like a transcendental structure, that it’s the conditions of possibility for the existence of capital.

Because the Federal Reserve, despite its own relative autonomy with respect of the political, is nonetheless a state agency, this means that the state has become the motor of capitalist abstraction. Moving in the opposite direction now is the question of political control of the state itself. A pyramidal problem: the Federal Reserve appears as something beyond both the political and capital alike, which is precisely the strange configuration that the concept of the Metacartel is intended to grapple with.

The point of theory, paraphrasing Deleuze and Guattari (I’m substituting ‘theory’ for ‘philosophy’ here), is the creation of concepts. This isn’t to say that it’s the free-form, willy-nilly creation of beautifully-crafted conceptual monuments out there in the void—though many take it to be this way—but that concepts must be built up, torn down, retooled, and reshaped in response to events taking place within the flowing bands of time. We can translate this easily back into something like historical materialism by looking to conceptual creation as the response to historical movement. A concept can never be complete; just like the society in which its genesis arises from and which it reflects itself upon, it is riddled with contradictions, subject to as much change as pure matter is as it cooks away deep within the earth.

A concept, in other words, is born in fragments, and can never rise itself to the level of pure completion.

My approach has been to view the arrival of the Metacartel (or something like it) as an indicator of not only the way capital functions in the world (its reduction to state management), but also of how new class formations are taking shape and exerting themselves against the bourgeoise. There are many names we can give this class, but they are concentrated in the upper-strata of corporate management, the executive levels, and the ‘universal ownership’ structures found in the asset management ‘industry’.

From this point of view, a potential conflict between Trump and Powell—really a fight between the political and the Fed over the latter’s autonomy—is itself a class conflict, a war to be waged between the traditional structures of bourgeois society and the possible hegemony of a new, rising class, albeit another iteration of class rule that we should never want. The historical contingencies of this present moment, in other words, express the flashes of lightening in the dark, the groans and shakes of a world spinning itself into existence, but an existence never guaranteed—symptoms of passage.

UPDATE: Metacartel theory recently received a shout-out in a provocative blog post titled “Fear of Free Time” by the inimitable Paul Luria. It’s worth a read.