Capitalizing on Uncertain Futures: The Financialization of Catastrophic Risk Management and the Post-9/11 US National Security Resonance Machine

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Capitalizing on Uncertain Futures: The Financialization of Catastrophic Risk Management and the Post-9/11 US National Security Resonance Machine
  Mantzios | 1 Capitalizing on Uncertain Futures: The Financialization of Catastrophic Risk Management and US National Security, Post-9/11 I cannot believe anybody would seriously propose that we trade in death, that we set up a futures market on when a terrorist attack  would occur… Their view is that somehow, by those who invest, in watching and monitoring those who invest, they can better determine  where this terrorist attack may occur. What they don‟t fail to appreciate is that investors try to make good on their investments. So would it not stand to reason that once this investment was made and the market moved in the direction of assassinating a given leader, indeed, that would be the ultimate outcome? - An indignant U.S. Senator Tom Daschle, addressing Congress rega rding DARPAs, „Policy  Analysis Market‟ (July 29, 2003)  Of all the authors who have developed an apocalyptic or millenarian sense, it is to Paul  Virilio‟s credit to have emphasized these rigorous points: that the war machine finds its new object in the absolute peace of terror or deterrence; that it performs a technoscientific „capitalization‟; that this war machine operates against the „unspecified enemy‟; that there arose a new conception of security as organized insecurity or molecularized, distributed, programmed catastrophe.  –   Deleuze & Guattari,  A Thousand Plateaus   (1987: 467)  According to Immanuel Kant the 1755 Lisbon Earthquake designated the first modern catastrophe because it stimulated the „scientific development of technical instruments of measure ment and prediction‟, signaling the birth of the modern paradigm of actuarial risk   (cited in Ray 2004: 8). Since the terrorist attacks on 9/11, which in a single day resulted in an insurance market crash involving $30 billion worth of losses, securing against catastrophic threats has pioneered techno-scientific instruments of measurement and prediction informed by speculative financial logics of risk mitigation. In both cases, as risk object, catastrophe came to designate a specific problematization of governing the future through the development of a techno-economic apparatus of security. However, a qualitative difference between risk and uncertainty distinguish the processes by which catastrophic threats became configured into risk objects in each case. Whereas an actuarial science of statistical probability traditionally defined the catastrophic threat as a risk to be hedged against in the form of insurance (primarily fire insurance), in the contemporary moment,  Mantzios | 2 the globalization of financial innovations like derivatives have rendered the very uncertainty   of the next catastrophe into a resource of capital reproduction. Illustrative of Deleuze & Guattari‟s (   ATP  : 226) 1   assertion that the “stock exchange gives a better image of the flows and their quanta than does the State”, catastrophe risks like climate change and natural disasters are increasingly being preemptively underwritten as risks to be speculatively priced, leveraged and traded in financial capital futures markets, a process known as securitization.  Through securitization the financial market has come to designate a principle power center of the post-9/11 US national security apparatus whereby decoded flows that exceed state capture- the threat of terrorist attacks, natural disasters, bio-infectious epidemics, climate change, etc.- are conjugated into capitalized risks (e.g. through catastrophe bonds and derivatives). Consequently, in this way the corresponding catastrophic future is being rendered into a form of property right, a site of capital accumulation. However instead of focusing exclusively on how catastrophe risks like terrorism exceed the actuarial techniques of State foresight and control in the form of so many decoded flows, this paper seeks to critically engage Deleuze & Guattari‟s (198 7) theorization of full-spectrum war-in-peace, and the convergence of the capitalistic axiomatic, the nation-state as its model of realization, and the relative autonomy of the war machine, by providing an account of how the US government has taken initiat ives to engineer free market principles into its own war machine in order to „price‟ and leverage the uncertainty of the terrorist threat into a predictable target. As will be demonstrated, the financialization of catastrophic risk management in the US after 9/11 signaled a transformation in the national security apparatus whereby the machinic processes of military pre-emption and financial 1  Given the frequency of my references to them, and in order to economize space and reduce clutter, in-text citations pertaining to Deleuze & Guattari‟s,  A Thousand Plateaus   (1987), will be abbreviated to  ATP  . Likewise, references pertaining to their  Anti-Oedipus   (1972) will be abbreviated to  AO .  Mantzios | 3 speculation were mutually consolidated under a mandate of full-spectrum counter-proliferation  where „the next catastrophe‟ came to designate both a threat to be hedged against and an opportunity to be invested and leveraged in order to maximize profit and political power.  Thus the orienting problematic of my investigation is to map out certain constitutive features of the post-9/11 national security-market landscape by theorizing the status of the relationship between national security and financial securitization when confronted with the radical uncertainty of unpredictable future catastrophes like „the next terrorist attack‟. Configured in US national security discourses as „not a matter of if, but when‟, the next terrorist attack interpolates a specific tense of governance that renders the future-anterior as a space of prospective imperial State capture. Consequently, elaborating the machinic processes- military pre-emption and financial speculation- and national security imperatives through which this space is produced, occupied, and leveraged will require a critical engagement with Paul Virilio‟s thesis that the political power of the state resides in the policing of speeds and absolute movements. Supplementing this inquiry is a consideration of how preemption-speculation and catastrophe together consolidate an anticipatory regime of organizing the social so as to make the catastrophic future profitable and, by extension, actionable. Nowhere is this imbrication of finance and national security more blatant than in DARPA‟s  (Defense Advanced Research Projects Agency) 2003 formulation of PAM (Policy Analysis Market) in response to the US Department of Defense‟s call for mechanisms that could facilitate „electronic market- based decision support‟ (DARPA 2011). PAM was a politic al prediction market designed to harness the predictive power of the market to address some sort of uncertain future scenario pertaining to US national security in relation to possible instabilities in the Middle-East (i.e. the economic, political, and military futures of Egypt, Jordan, Iran, Iraq, Israel, Saudi Arabia, Syria, and  Mantzios | 4  Turkey and the impact of U.S. involvement with each). Basically PAM was engineered as an online futures market where investors could bet and trade real financial stakes in various futures contracts (i.e. derivatives) concerning the speculated likelihood of comparative terrorist attacks/scenarios taking place against the United States. The aggregated price mechanism across these trades was believed to be predictive, pre-emptively indexing the likelihood of any specific scenario coming to pass.  As DARPA‟s (2003) website explicated, “[T]his price discovery process, with the prospect of profit and at pain of loss, is at the core of a market‟s predictive power”. And yet, the profit motiv  e  was the professed means, not ends, of DARPAs design of PAM. Financial logic was being retrofitted to the security needs presented by the uncertain terrorist threat. By way of analogy  , DARPA (2003) stated on its website for PAM, “analysts often use prices  from various markets as indicators of potential events”. The price mechanism can thus be read as a kind of machinic index, a means of evaluating the force of possible deterritorializations; that is, an index for the likelihood of relative catastrophic scenarios coming to pass (Deleuze 1982). In this way, PAM signified a mode of counter-proliferation that brought together capital accumulation in the form of financial speculation, and military pre-emption in the form of catastrophe simulations, somehow generating knowledge about the unpredictable future in the process. However as the spasm of political and public moral outrage directed against it indicates, PAM somehow exceeded the professed intentions of its designers to figure as a sort of death casino in the popular imaginary. Branded as a „bizarre‟ and „absurd‟ „terrorism casino‟ in Congress, and aborted within the span of a single day in late July, 2003, in the midst of an intense media frenzy and public uproar, PAM exposed the fragility of state securitization by flagrantly enacting the neoliberal pretensions of state security, namely, that securitization designates a privatizing logic of economic governmentality where even life and death are commoditized as risk investments to be leveraged for financia l gain (Hansen 2005; Aitken 2011). As Maurizio Lazzarato (2011: 113) has argued, “finance is  Mantzios | 5 a war machine for privatization, which transforms social debt into credit.” Indeed, reviewing the 2003 Congressional Record concerning PAM reveals that it was met with moral outrage on several fronts, including: opening conditions for possible profit-making in relation to terrorist events; contaminating the pursuit of security with the logic of profit (a perennial capitalist axiom); creating a terrorism casino that turned catastrophe and the livelihood of the population into a game of chance. Punctuating these themes was Senator Tom Daschle‟s (2003) fear that, “once this is in the marketplace, as we say, there is no telling what the market may do”. As will be elabora ted throughout, incipient in Daschle‟s fear was the implicit recognition that as a financial war machine PAM would hijack the political aims of the State, submitting national security to the dispossessing operation of financial securitization.  Therefore the case of political prediction markets like PAM not only foregrounds the intersections between post-9/11 security and finance along the parameters of pre-emption, but also invites the following key questions: 1.    What is the status of sovereign power in such markets where the determining force is the price mechanism, an intelligence that is nothing but the aggregation of the opinions of so many anonymous investors? 2.    To what extent do political prediction markets depolitize national security by commoditizing life chances; what are the biopolitical dimensions of managing catastrophic risks through their counter-proliferation as so many imaginative scenarios that can be leveraged through bets, swaps, and trades (i.e. derivatives)?  At the same time as the conflation of speculation and preemption provides a mobilizing condition for imperial modes of US economic and political reproduction- whereby the future itself designates a specific kind of frontier, catastrophism (i.e. the configuration of catastrophe as a threat and an opportunity) evokes the precarious distinction between risk and uncertainty that has shaped the genealogy of finance in America since at least the 19 th   century „speculation debates‟ and continues to animate the libidinal investments in „destructive creation‟ that qualify the neoconservative -neoliberal
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