A Shift Realized: The Banking Crisis as the First Postmodern Event


We can easily understand the cultural logic inherent in the global financial crisis as a ‘world historical moment,’ a moment where the very tenets of globalization and mediation are being challenged at their most underlying theoretical core. However, the event also must be understood as the first global event that is wholly and uniformly a postmodern crisis. In the financial collapse of the banking and credit systems we see the most fundamental aspects of postmodernism revealing itself in material reality. I examine the crisis and how it is ultimately perfectly predicted and consummated in the ontological works of Lyotard (The Postmodern Condition), the global theories of Baudrillard (The Precession of Simulcra) and the mind–politics of Foucault (Discipline and Punish). I argue that high Modernism has remained the dominant socio–cultural mode despite the emergence of mainstream postmodern theory in the 1970s, but with the global capitalistic system in greater flux theoretically than ever before we are glimpsing the ultimate death of the last Grand Narrative in modern history. After the death of God (Nietzsche), the death of dialectic (Fukuyama, Zizek, Baudrillard), and now with the possibility of the death of late capitalism we find ourselves at another cultural cross–roads, one that can only find refuge in simulation.


This paper attempts to investigate and understand the cultural logic inherent in the global financial crisis as a worldwide historical moment, a moment where the very tenets of globalization and mediation are being challenged at their most underlying theoretical core. However, the crisis also must be understood as the first global event that is wholly and uniformly postmodern. In the financial collapse and subsequent bailout of the banking and credit systems1, AIG executive bonuses2 and Bernie Madoff Ponzi scheme3 we see the most fundamental aspects of postmodernism revealing itself in material reality.

Before the intertextual analysis begins it will behoove the reader to understand the interpretative definitions by which modernity, postmodernity and dialectic will be referred to throughout. The ideological differences inherit in modernity and postmodernity becomes as significant as any historical time period the two might be associated with. Modernity comes from the Latin word modo meaning “just now.” In relation to postmodernism we can think of the modern as a cultural or superstructural force in place since the late 19th century. Defined here modernity is historically reactionist, energized by attitudes with fixed relational ideological points or dialectical relations to the past or another. Ideological claims of absolutes or ultimate truths such as progress reign. The cultural logic of modernity can be defined by the rise of capitalism, industrialization, world wars, mass media and a democratic and socialist dialectic.4 Modernity as defined by Jean-Francois Lyotard also means a historical time period where grand or metanarratives are used to legitimate various projects political or scientific. 5 The aims of the modernist movement are for hyper-rationality, objectivity and progress.

While apparent that postmodernity follows modernity, any sort of teleological destination is absent with the arrival of a postmodern paradigm. Unlike modernity, postmodernity is not predicated on a fixed relational ideological point or dialectical other. Instead postmodernism can be defined as ideologically pluralist.6 The movement suggests a dissolved dialectic in relation towards an advancement of one specific ideal against another and also exhibits a possible cultural pluralism that allows for new socio-political possibilities. Postmodernity’s cultural logic is articulated through globalization, the end of the Cold War and the rise of information technology. Lyotard uses an aphorism to define postmodernity as “skepticism towards all metanarratives,”7 while Baudrillard calls the period a theory, a negation, an end and a simulacrum.8

Using the aforementioned definitions I believe western society has yet to experience a truly postmodern cultural event on the scale exhibited by the global banking crisis that has reached its apex during September 2008.

The Great Depression of 1929 must be seen as a modern counterpart to our current crisis because the dialectic was still very much in play. Had the United States government not intervened, the failure of capitalism could likely have led to totalitarian governments and communism under the semblance of the same modernist teleological progress.9 Today, the financial crisis of the banks in the United States comes during an era some of seen as the end of history10, a time that has come to be defined by global free market capitalism11 as the closest thing to ideal and liberal democracy as the only eschatology. Fukuyama’s end of history doctrine interprets a postmodern landscape as one where the failure of Marxism can be seen as a historical synthesis that heralds liberal democracy as the supreme end of ideology. While this provocative argument held serious consideration in the early 1990s when his Fukuyama’s thesis was published, today we are seeing the last modern moment capitulating to postmodernity with the failure of the banks. What happens when the dominant western ideology fails in an era without an obvious ‘other’ to engage in a synthesis towards an ideal? When the power structures reveal themselves flaccid? Has the last remaining Grand Narrative of endless consumer consumption and late-capitalism finally revealed the fictions that constitute that every dominant ideology?

Never before have these questions been so pertinent. However, they have at least been broached in critical theory. This paper seeks to argue that upon examination, the crisis appears to be the ultimate consummation of the works of two postmodern theorists, Jean-Francoise Lyotard and Jean Baudrillard. Lyotard provides a strong starting point to position how we can understand the postmodern and offers a possibility for hope and change amid crisis. Baudrillard offers a bleaker outlook, but one with relevant and literal correlations to postmodern culture and the financial crisis. After influential postmodern arguments on the death of God (Nietzsche12), the death of the dialectic (Fukuyama, Zizek13, Baudrillard14), and now the possible end game as the death of capital, we find ourselves at unique historical crossroad. Revealing itself slowly, the financial crisis gives most in society little choice but to take refuge in simulation and delusion: the first thoroughly postmodern event.

Lyotard and Legitimation

In many ways, the most logical place to begin understanding the financial crisis as ultimately one of postmodern significance is with Jean-Francois Lyotard. The Postmodern Condition describes a shift in western knowledge that has realized itself during the last half of the 20th century. The shift is still very much in play, unraveling itself in myriad ways, but one area that comes to the fore in relation to the financial crisis is the postmodern theory of legitimation.

For Lyotard, postindustrial, computerized society brings with it a crisis of legitimation.15 The competing structuralist language games used in western culture are vastly different and incapable of legitimating rules, structures or truths when adhered to in relation to each other. Lyotard says in other words, scientific empirical knowledge structures can never be truly resolved with narrative qualitative knowledge structures and vice versa. 16 They have different sources of legitimation and play by their own rules and compatibilities. So how does culture progress? Scientific and narrative tools are used hand-in-hand in economics, finance and government. The answer to this is that these different types of knowledge are all ultimately subservient to teleological and fundamental ideologies vis-à-vis institutions. Certain truths are accepted, while others ignored simply because they certain types of knowledge serve the institutional structure better than others. This is the modernist narrative. In Late-Capitalism, the only knowledge that matters as a means to an ends is capital itself.17

So what happens when the ultimate knowledge in a modern society, capital, becomes challenged or deeply devalued? That is symptomatic of the postmodern break we are currently witnessing. Suddenly, the infallible worship of the almighty dollar is thrown into question and we are left with no answers. We retreat into the basic language based structuralist knowledge games that are insufficient as pointed out in Lyotard’s critique of Wittgenstein. In turn, we have economists, politicians, governments, CEOs, workers, lawyers, judges, tax payers, businessmen, academics, etc. arguing to determine the fate of global capitalism. The problem is they are not speaking the same language. This is a communication model predicated on unintelligible noise when taken in total, encoders with no decoders. As the institutions themselves face impotency, there is no ultimate arbiter of the language games that occur. The great irony of course comes to be seen when governments attempt to take over the free market, in effect a group of people trillions of dollars in debt attempting to regulate those with billions of dollars in debt. This is the only legitimation that can occur. It is at once completely illogical and also completely necessary if liberal democracy is to assert itself as the dominant ideology. Beneath this disquieting period, where languages inadvertently undermine fictions, the central postmodern questions arise: Is legitimation even possible? Is money legitimate? Is western hegemonic socio-political dominance predicated on grand narratives? And if the grand narratives are untrue, must we believe them anyway to maintain our place in the world?

Lyotard points out that the types of understanding institutions tend to strive for are ones of ideological purity and universalism, concepts at odds with the chaotic nature of man.18 Further Lyotard understands the appearance of the grand narrative as the development of a “truth” for a reason. And the reason at the heart of the lie can almost always be seen as one of wealth and more importantly, power. When a grand narrative proves to be neither purely rational nor universal it fails to exert its power. A history of ideology during the 20th century finds plenty of examples of the fall of modernist grand narratives: the rise and fall of Nazism, the fall of the Soviet Union, the detonation and aftermath of the atomic bomb on Hiroshima and Nagasaki, and perhaps most telling, the People’s Republic of China’s rise as a global capital leader. Each of these events had profound impact on the ideological development of late capitalism. And now it is late capitalism that is in fear of failure with the financial crisis. But not necessarily because it is being posed as a diametrically opposed ideology to an Other, as seen in the modernist dialectic. Instead it is facing the worst kind of failure, an internal collapse under its own Lose Weight Exercise. A self-inflicted blow that reveals far more fictions than truths in a dominant system without an obvious dialectic challenge: a postmodern failure.

This is the fight Timothy Geithner and Ben Bernanke take up on a daily basis. It is the fight for grand narrative, for late capitalism, for western hegemonic dominance. The fight to reassert capitalism and the stock market as systems of exponential monetary growth is being questioned as economic imaginary. As Geithner and Bernanke testify in Congressional hearings, the stocks fluctuate as if to suggest if we all believe the lie we might be ok. This is a fight being made all the more difficult by technology. Lyotard might say that now more than ever the stakes of knowledge are in a vulnerable position. They are in a stable disequilibrium: the power still appears to remain in the hands of the institutions, but discourse and resources are more readily available and waiting to be moved like pawns in a chess game by anyone willing to challenge policy and the past. After all, only in a postmodern environment can a society exhibit enough pluralist attitudes, often through technology, to elect the other19 as president.

So what of Barack Obama? Is there hope for a transparency in a free market economic structure that allows for a truly egalitarian, democratic discourse? When the present is in flux and guidance is deeply desired, what will the new era look like? Is Obama doing the same work as Geithner and Bernanke or is something else at play? Have we truly moved past the modern with the election of Obama or will Grand Narratives be re-introduced?

On paper it appears Obama would side with Lyotard. Both seem to understand the monumental stakes at play for power, knowledge, capital and technology. However, it is also clear Obama is not an overt postmodernist. Obama attests to believing in Grand Narratives (God, the United States, Democracy) but in a way that might suggest he actually is the first postmodern president. Simon Critchley notes that while Obama subscribes to certain dominant ideologies, he does so in a way that he is personally able to reconcile them, so although they may guide his principles, he understands they are likely not teleological, universal truths.20 For Critchley, and in theory Lyotard, this is absolutely critical to Obama’s character and allows him to negotiate a postmodern political landscape with an open mind. It is not surprising that Obama is a proponent of net neutrality and free content systems, as is Lyotard. How will a president with such complex, seemingly contradictory fundamental ideologies handle a crisis of capital and finance?

Perhaps instead of perpetuating financial impossibility in a no-option, no-exit, endless economic crisis that we can escape only by believing a lie, perhaps Obama will live up to his credo of “change” and announce a return to modernist thinking and put cultural grand narratives back on the table. Just as Foucault, Derrida and Lyotard21 fought to reconsider the Grand Narrative philosophers like Kant, Hegel and Marx in an attempt to find meaning in the rapid gyre of history, Obama might find respite from a turbulent postmodernism by attempting to reinstitute the foundational democratic theories and liberal practices of Rousseau, Jefferson and FDR. The reappearance of romantic ideals is something missing in our daily lives and something that would likely lead back to modernism. The first truly postmodern event as evident in the financial crisis could likely also be the last, an impetus back towards the modern. The possibility of a complete transformation, one referenced by Lyotard that uses technology to move beyond even postmodernism, still seems too far distant and ahistorical at this point. For example, the idea of the Internet as a liberating and completely revolutionary concept seems to be rendered hopeful idealism today. Ideas like this might as well be considered romantic. That is to say, modern.

While Lyotard allows for an ambiguously possible liberation in and through postmodernism, this paper seeks to argue that this does not appear likely in the current historical situation. The other option for extrication from the financial crisis is one that simply moves farther down the road of postmodernism into deeper and deeper simulation and delusion. In the wake of bailouts and government interventions, simulations and strategies, the postmodern condition is revealing itself as never before. The postmodern theorist whose ideas exemplify this view most is Jean Baudrillard. Baudrillard’s Simulations can be read as having disturbingly prophetic accuracy today. Using Simulations as a guide, this analysis explains how Baudrillard’s theories provide further evidence that the global financial crisis of 2008 is the postmodern apotheosis fully realized.

Baudrillard and Simulation

The procession of simulacra in Baudrillard provides an excellent model when we look at how modern capital has become distorted out of reality. In the successive phases of the image, Baudrillard identifies the first as a reflection of a basic reality.22 In this first stage the “image” is clearly an artificial placeholder for the “real” item. Although Baudrillard often associates this period with pre-history, we can think of it in terms of the monetary system as the point when money and tokens were first invented. Early tokens stood in place for actually commodities such as goats and grains.23 That is to say money was invented to more easily trade commodities in reality. It was a specific placeholder that had a specific referent. For example, one coin actually meant you actually had one goat in tactile reality.

In the second phase of the simulacra, the image masks and perverts a basic reality. This can be understood as the distinction between the “image” (the artificial placeholder) and the real beginning to break down. At this point the image’s ability to imitate the real threatens to replace the original referent altogether. Baudrillard often associates this period with the industrial revolution and the proliferation of mass production/copies. In terms of the monetary system, we can compare this with the rise of a modern financial system. Abstract numbers instead of goods become how wealth is accounted for, a credit system is put into place and the referent has begun to be replaced. For example, the ability to check bank statements online reduces the reality of physical legal tender to mere binary code of the data base. The power of the real becomes subsumed. This becomes a problem of power and legitimation when those who can bypass the language of the medium can easily manipulate the real. With the recent news suggesting the U.S. is not ready for cyber attacks24, we see not only Baudrillard’s theory of the Simulacra having real world consequences, but also Lyotard’s worries of open source power struggles.

The third stage in the precession of the Simulacra occurs when the simulation masks the absence of a basic reality. That is to say the real no longer exists – only a simulation that attempts to uphold the real. This phase is associated with postmodernity and is found precisely in the financial markets leading up to the crisis. It is a system where people trade abstract numbers whether or not they actually exist in reality. Tokens without goats in the earlier example, credit without money in the housing and credit crisis. The loan practices in place by the financial institutions clearly had no real referent when the bubble burst. Banks had given out billions more than they actually had because the power of the copy (money in its image form) didn’t need a real referent to actual financial reality.

The global financial crisis now finds itself on the precipice of the fourth stage of the simulacra, as described by Baudrillard, where the market bears no relation to any reality whatsoever. It is its own pure simulacra. The danger at this phase is monumental for Late-Capitalism. Once society begins to understand the market as ultimately unreal, all institutions making up the world economy are put at risk of relevance and power. Timothy Geithner and Ben Bernanke are desperately trying to go back to Baudrillard’s third state of simulacra. The American public meanwhile is seriously beginning to question the work being done on Wall Street. It would appear that the stock market trades in a simulation that has totally preceded reality, a hyperreal that has displaced the real. The apotheosis of the Post-Modern age is at last here.

Baudrillard sees this sort of anti-scandal as endemic in postmodernism. Disneyland is a hyperreal imaginary,25 not unlike credit. While Disneyland works as a perfect model of America, it is also becomes the real not unlike the images of God or credit system. Baudrillard argues Disneyland is more real than Los Angeles just as the prison system is more real that the outside world because it is society that is carceral in its banality.26 This is the postmodern landscape, constantly at a third phase in its procession of Simulcra, where as far as the established order is concerned, all is real that is in simulation. This is the model predicated on Baudrillard’s famous saying that art has totally penetrated reality.27

In the background, peeking through the whole time like an omniscient observer, have been notions of power. Baudrillard quotes Lyotard when he says that only capital takes pleasure, before coming to think that we take pleasure in capital.28 Capital is a tool, a sorcery relation; it is a challenge to society and should be responded to as such.29 Capitalism is in the process of proving itself through a crisis of capital, proving itself as unreal, through hyperreality. However, this will forever change the way we understand Capitalism critically. Only through a reinjection of the real will a Grand Narrative become wholly rational and re-establish itself as an unchallenged dominant ideology. The question that remains to be seen is how exactly it plans to go about this process. Is it even possible? Has it ever been possible?

The government and private sectors are going about an attempt to re-establish power and economic equilibrium not through a reinsertion of material reality and dialectical reasoning, but through more abstraction and simulation. This can be thought of as a thoroughly postmodern solution to a modernist narrative. It is in this fact we see the cure to the last modern crisis revealing itself and solving itself through postmodern practices. This is clearly evident in the financial bailout, auto bailout and stimulus packages. In fact, almost no debates have been considered regarding a complete overhaul of the financial and credit markets. The idea to dissolve and start anew seems absurd. The iconoclastors fight a notion that there is a possibility to live with mass Capital. We are too entrenched historically and ideologically to go back now. And furthermore, where would we go?


It appears that capital continues to be the ends, while simulation and delusion will continue to be the means. The financial crisis marks itself ultimately as the first postmodern crisis because we have moved into a pluralist, anti-telological landscape as the last remaining grand narrative, that of America and Late-Capitalism, threatens to reveal itself as a mere shadow of itself. It appears at this point the institutions believe a shadow to be sufficient. But what then of Lyotard’s potential for hope and epistemological emancipation? What of Obama? Perhaps someone will come along and try to save the modern in a different way. Perhaps through romanticism and idealism we can begin to see something new and reinvigorate the dialectic through a move back towards modernism. However, maybe technology has allowed reality to be penetrated irreparably and the future will forever be seen as a coalescence of simulation and delusion.




1 Matthew Ericson, et al. “Tracking The $700 Billion Bailout.” New York Times. 1 April 2009. <http://projects.nytimes.com/creditcrisis/recipients/table>

2 Priya David. “After Rescue, Bonuses Still Flow At AIG.” CBS News. 11 December 2008. <http://www.cbsnews.com/stories/2008/12/11/earlyshow/main4661900.shtml?source=mostpop_story>

3 “Ponzi Squared.” The Economist. 15 December 2008. <http://www.economist.com/finance/displaystory.cfm?story_12795543>

4 David Macy, editor. Dictionary of Critical Theory. (New York: Penguin, 2000). 259.

5 Jean-Francois Lyotard, The Postmodern Condition. (Minneapolis: University of Minnesota Press,1979). xxiv-xxv.

6 Richard Appignanesi, Introducing Postmodernism. (Cambridge: Icon Books, 2007).

7 Lyotard, 39.

8 Jean Baudrillard, Simulations, (Cambridge: MIT Press, 1984).

9 Arthur Schlesinger Jr, The Coming of The New Deal, (New York: Mariner Books, 1988).

10 Francis Fukuyama, The End of History and The Last Man, (New York: Free Press, 1992).

11 Frederic Jameson, Postmodernism, or, The Cultural Logic of Late-Capitalism, (Durham: Duke University Press, 1991).

12 Friedrich Nietzsche, The Gay Science, (New York: Vintage, 1974).

13 Slavov Zizek, “Resistance Is Surrender” The London Review of Books, November 2007, <http://www.lrb.co.uk/v29/n22/zize01_.html>.

14 Baudrillard.

15 Lyotard, 30-37.

16 Ibid, 67.

17 Ibid, 51.

18 Ibid, 67.

19 Jacques Derrida, Monolinguism Of The Other, (Palo Alto: Standford University Press, 1998).

20 Simon Critchley, “The American Void,” Harpers Magazine, November 2008.

21 Richard Appignanesi. Introducing Post-Modernism, (Cambridge: Icon Books, 2007) 54.

22 Baudrillard, 11.

23 Denise Schmandt-Besserat, “The Earliest Precursor of Writing,” Scientific American, June 1978, 50-59.

24 Reuters, “U.S. Not Ready For Cyber Attack,” New York Times, December 19, 2008. <http://www.nytimes.com/reuters/2008/12/19/technology/tech-us-security-usa-cyber.html?partner=rss&emc=rss>

25 Ibid, 23.

26 Ibid, 25.

27 Appignanesi, 54.

28 Baudrillard, 35.

29 Ibid, 30.




Works Cited

Appignanesi, Richard. Introducing Post-Modernism. Cambridge: Icon Books, 2007.

Baudrillard, Jean. Simulations. Cambridge: MIT Press, 1984.

Critchley, Simon. “The American Void.” Harper’s Magazine. November,

2008, <http://www.harpers.org/archive/2008/11/0082235>

David, Priya. “After Rescue, Bonuses Still Flow At AIG.” CBS News. 11 December 2008. <http://www.cbsnews.com/stories/2008/12/11/earlyshow/main4661900.shtml?source=mostpop_story

Derrida, Jacques. Monolinguism of the Other. Palo Alto: Stanford

University Press, 1998.

Ericson, Matthew et al, “Tracking The $700 Billion Bailout.” New York Times. 1 April 2009. <http://projects.nytimes.com/creditcrisis/recipients/table>

Fukuyama, Francis. The End of History and The Last Man. New York: Free Press, 1992.

Jameson, Frederic. Postmodernism, Or, The Cultural Logic Of Late-Capitalism. Durham: Duke University Press, 1991.

Lyotard, Jean-Francoise. The Postmodern Condition. Minneapolis: University of Minnesota Press, 1979.

Macy, David, editor. Dictionary Of Critical Theory. New York: Penguin, 2000.

Nietzsche, Friedrich. The Gay Science, New York: Vintage, 1974.

Reuters. “U.S. Not Ready For Cyber Attack,” New York Times, December 19, 2008. <http://www.nytimes.com/reuters/2008/12/19/technology/tech-us-security-usa-cyber.html?partner=rss&emc=rss>

Schmandt-Besserat, Denise. “The Earliest Precursor of Writing,” Scientific American, June 1978.

Schlesinger, Arthur. The Coming Of The New Deal. New York: Mariner Books, 1988.

The Economist Web site. “Ponzi Squared.” The Economist.com 15 December 2008. <http://www.economist.com/finance/displaystory.cfm?story_12795543

Zizek, Slavov. “Resistance Is Surrender.” The London Review of Books, November 2007, <http://www.lrb.co.uk/v29/n22/zize01_.html>.

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