In the conclusion of Ivan Ascher’s interview about Portfolio Society: On the Capitalist Mode of Prediction, the author discusses the definition of neoliberalism, the book’s cover art, Donald Trump, and more.
Since this book is published in Zone’s Near Futures Series, which is considering the consequences of neoliberalism: how do you define neoliberalism?
Frankly, I tend to stay away from definitional debates over what constitutes neoliberalism properly so called. There is much to be said for recognizing neoliberalism as a distinct class project, and there is much to be said for recognizing it as a distinct form of rationality. Both strike me as reasonable approaches, so long as they help us acknowledge the continuities and discontinuities between our contemporary formations and what came before. I suppose I am closer to Wendy Brown’s line of thinking than to David Harvey’s, but I don’t think one always has to choose. My own contribution is to focus on one particular aspect of the story, which is financialization.
The cover of Portfolio Society features a horse race and later in the book you tell the story of accompanying your grandfather to the track. Can you briefly explain how this metaphor relates to the markets?
I wish I could take credit for that cover. It was designed by Julie Fry, a Brooklyn-based artist who does beautiful work for Zone. I do think she got the idea from the passage you mention, where I experiment with different metaphors that might capture the structure of today’s financial markets. Some people describe them as giant casinos, which is helpful, but I also like the image of the racetrack: there are the jockeys, who are racing in the hope that they might win a prize (rather like the subprime borrower, say, who bought a house hoping it would appreciate), and there are those like my grandfather (or the fund manager) who get to bet on the outcome of the race. People in both groups are formally free, but running and betting are not quite the same thing. And while both groups need each other, theirs remains a very asymmetrical relationship. This could also be said of the casino, of course: the house needs gamblers, and gamblers need the house. Most of us would still rather be the house.
Many of the guiding principles of finance that played a role in the crash had their roots in theory (Black-Scholes options, or Markowitz’s portfolio theory)—do you think there will be a role for theorists—economic or otherwise—to provide a correction?
To be fair, I don’t think the “guiding principles” you mention had to lead to a financial crisis. And while theoretical innovations in the 1970s were certainly a part of the financialization story, what really set stage for the crisis of 2008 was more an epistemological confusion over what constitutes a theory and what constitutes a model. This is something that Emanuel Derman and Nicolas Bouleau have written about and that needs to be more widely discussed among practitioners and theorists alike. And if a “correction” is ever to be provided from within the existing system, I suspect it will require a fair bit of self-reflection on the part of the professorate as well. It turns out that what gets taught in business school matters.
As for a more radical transformation, yes, some kind of “theory” will surely be involved – but I wouldn’t presume to know what form it will take or where it will come from. From the world of political theory? From the world of open source? Who knows? Hopefully from some place that is attuned to the relation between capitalism and the environment, something I do not write about, that demands our collective attention.
You say your analysis is derivative, but shifting Marx’s interpretation of value from labor to predication seems important. What are you working on now—are there ways you plan to extend the project?
My analysis is very much derivative, and I try to acknowledge my debts to Marx as much as possible. But in political theory as in finance, the value of a derivative product can seem quite removed from that of its so-called “underlier.” So yes, I do think that shifting from production to prediction and protection is warranted and potentially significant, but I wouldn’t want for such a shift to conceal the continued importance of production—whether as an analytic category or as a site of struggle. In fact, that is partly the point of the book: to restore the link between our understanding of production and the categories of contemporary finance, which seem so divorced from it. As for my current research, it has more to do with the rise of Bayesian probability and its prominence in the various algorithmic processes that govern our lives—whether in the world of finance, warfare, advertising, etc. In the book I say a few things about the importance of controlling the “means of prediction”; this is my attempt at going further in that direction.
How is Trump a fitting emblem for our age of modern finance? You wrote a blog post that says he traffics in unpredictability—do you think the markets will carry on regardless of his politics?
There are all kinds of ways in which the election of Donald Trump to the US presidency is a disaster of planetary proportions. One of them is that the various aspects of Trump’s temperament—be it his pathological commitment to privatization, inequality, environmental devastation, or his equally pathological disregard for the truth—are perfectly in accord with the world of speculative finance. As I put it in the blog post, today’s financial markets are not unlike the news on Breitbart: they are fueled by rumor as much as by fact. It doesn’t matter to the hedge fund manager whether the price of company’s stock at any given time “accurately” reflects anything about the company, any more than it seems to matter to the President whether his latest tweet is based in fact or entirely fanciful, or whether it contradicts whatever he tweeted yesterday. All that seems to matter is the volatility induced by these unpredictable quotes. And though we may be told that markets “don’t like” instability, it is also the case that those who are able to trade in financial derivatives may well stand benefit from the increase in volatility. Sad.