Will Have Been the Same: Future Perfectism, or Derivatives of the Tributary

There is no “economy.” There is only, as there always has been, ritual distribution from the center. I’m a little embarrassed that it took me so long, even after replacing the vocabularies of liberalism and democracy, to get to this conclusion—such is the power of propaganda. Mea culpas aside, though, I was able to get to that conclusion by getting interested in the question of derivatives, coming across some excellent work on it, like Benjamin Lee and Randy Martin’s 2016 edited volume Derivatives and the Wealth of Society (and Martin’s 2015 Knowledge LTD: Toward a Social Logic of the Derivative), to just mention a couple; work, moreover, I could make productive sense of in the context of Nitzan and Bichler’s Capital as Power. These thinkers have been drawing upon anthropological understandings of ritual and gift in order to make sense of the derivative against the narrow economism of market models and calculations based on the Black-Scholes equation. Two intertwined concepts that I have been insisting upon for years enable me to incorporate the derivative into an anthropology far more powerful than is dreamt of by any of these thinkers: first, my “derivation” from Gans’s notion of “linguistic presence” in The Origin of Language of the assumption that all human sign use aims at establishing presence; and, second, what is really the same thing, with a more grounded (in the semantic primes) and expansive cover, that we are always showing things (some things, on some scene) to be the same. The abovementioned thinkers, while as leftist as you’d expect academic humanist auto-didacts in economics to be, are all profoundly impressed by the social logic of the derivative—the fact that it involves a vast, cooperative, uncertain constitution of social reality which in times of crisis happens to draw upon the language of hope, prayer, the miraculous and so on. I also have little difficulty in acknowledging this logic, or their also held view that making more explicit the social logic of the derivative will transform that logic decisively.

The derivative is constituted by the attempt at arbitrage within a system of exchange that is theoretically predicated upon the impossibility of arbitrage and practically predicated on the volatility that makes achieving an arbitrage situation extremely difficult. Arbitrage, of course, is the opportunity for profit created by the differing valuations of the same asset in different markets, so that if one can buy it on the market where it sells cheaper and sell it (“simultaneously”) on the market where it is more expensive, one makes an entirely risk-free profit. I will here just point out the similarity between this scenario and my analysis of hearing the voice of God some posts back. I will return to this. A quick analysis will reveal that the two trades, though, can never be exactly simultaneous (can not an entire market turn bad in a milli-second?), so risk cannot be completely eliminated. But given the desire for arbitrage, the closest thing possible to simultaneity can be constructed, precisely through the examination of every possibility that would interfere with the two exchanges of the same asset, and the hedging against those possibilities. Here is where knowledge, or the disciplinary, becomes paramount—the study of risk, of all the things that can interfere with presence, with something being the same thing on two different scenes, involves an eventually all-encompassing study into all the institutional positions, rules and movements of the entire order. Not only that, there is only the thinnest of boundaries between the study of the interests, assets, liquidity, etc., of all of one’s nearest and more distant competitors along with the broader legal and political events and environments that will constrain both oneself and those competitors, and the intervention in these conditions so as to reduce one’s risk. Knowledge and power converge here. And, of course, it’s easy enough to see that everyone’s mimetic engagements on these markets keeps introducing new information into everyone’s calculations so as to make it possible to hope for only little islands of calculability (little islands, moreover, likely to sink back into the sea at any moment) with a broader incalculability created precisely by the frantic efforts at calculation.

One of the many virtues of this new thinking on derivatives (although there is a little unevenness here) is the liberation from the notion (common to Marxist and liberal economics alike) that there is some “real” value from which financialized values are a “deviation.” Like Nitzan and Bichler (to whom there is, I believe, a single, unelaborated upon reference in Lee and Martin’s volume), these thinkers accept (one senses it was a hard pill to swallow, but once it's down…) that capitalism is financialization, which is to say that value is nothing more than price which is the discounting of the asset’s expected future earnings. An asset is worth the future expected income flow derived from ownership of it, and ownership of it is participation in the juridical and disciplinary order involved in ensuring that future income flow. “Ownership,” and the vast panoply of legal and political institutions defining and protecting it, implicates the entire social order. Now, I would modify Bichler and Nitzan’s claim that capital is a mode of power by insisting it is so only under political conditions of continual turnover at the center, in which a ruler governing in an already divided state gambles on enhancing the power of whoever occupies the center by creating a central bank to loan the state money. As Christine Desan, in Making Money, points out, this shift from the monarch as creating and selling the currency used to pay taxes to the monarch to the financing of the state out of the general social income generated through the capacity to monetize assets is the beginning of capitalism. The political parties can jointly participate in centralizing the state apparatus while taking turns occupying the center and becoming one more set of assets for the central bankers (and their subsidiaries within the financial, insurance, etc., industries) to gamble on and intervene in. Continuous occupancy of the center would make this entire system impossible—the more deliberate the process of succession, the less there is to gamble on. Financialization is thus thoroughly social and political from the beginning, and the measures of value which gave the impression of some real, underlying value, whether it be labor or gold, were financialized from the beginning.

The social logic of the derivative, then, is that of the future perfect (a tense much beloved of Jacques Derrida): this value of the given asset will have been the same as itself. I have returned many times to the question of what, beginning on the originary scene, is needed for something to be the same—the same object or the same sign. Establishing sameness requires the sustained and energetically maintained and insured participation of everyone in the social order: what makes a country, a community, a law, any institution, words, etc., the same over the period of a day, a month, a year, centuries? In governance more specifically, this is the problem of succession: a political order is the same insofar as succession in power iterates the terms of succession. The derivative situates the problem of sameness within the financial system, but, as these new thinkers of the derivative make clear (their new thinking has its origins in the 2008 financial crisis), in times of crisis the entire social order is mobilized by the “financial.” I can return here, as these thinkers cannot (they are welcome to, though), to the distribution on the originary scene, and its successions in the distribution by the Big Man, and the sacred and then divine kings. Money has its origins in the distance of the congregants from the scene of sacrifice, and the need to provide them with (lend them) tokens to buy a sacrificial animal at the scene—it is very telling that, as we see in Richard Seaford’s study of Money and the Early Greek Mind, that philosophy emerges in the first thoroughly monetized societies of the Greek city-states and that these city states is where we also see the emergence of desacralized governance in the form of “tyrants” and democracy. The tyrant is “greedy” because he can only rule through money. Further developments in the use of money involve systems of indebtedness in the ancient empires, with coins distributed to soldiers far from home and the establishment of markets upon which to spend them, and then also as a means of dispossession and enslavement of the peasantry through debt.

Our relation to the center is if anything more devotional if less sacrificial than ever. We all hold up the center, regardless of the wretchedness of its current occupant, by donating our resentment to it; the monotheistic innovation on paganism is, in fact, that since no gift, not even our first borns, can be commensurate with the gift of life and world God has given us, the only reciprocity possible is the gift of our entire selves to God. (We are thus enjoined to see to the sameness of our self—which is just a tautology anyway—entering new scenes through a series of conversions ensuring that the self of yesterday or tomorrow will have been commensurable with the self of today.) The derivative represents our gift of ourselves to the center: we, on whatever scene we are on, guarantee (redeem) the signs proffered on that scene as the same as signs proffered on other scenes. (Think about the conversions and displacements needed to see, say, your child, as the same, despite all the growth and changes, at birth, 2 years old, 10 years old, 30 years old, etc.) We guarantee that following our use and recirculation of the signs they will have been the same as when we ourselves encountered them on the scene. This involves the equivalent (the likeness) of hedging, as we implicitly or explicitly pledge to step into the breach of any number of imperative gaps that might open into chasms in front of us. But all of this means we have been providing for making such pledges—our homes, our jobs, often our education, our health care, everything—has been mortgaged to the financial system through the ongoing assetization. This is a problem I have been addressing under the concept of converting assets into data, and now we can add more precision and breadth to this concept. Under capitalism, we can contribute to and receive from the center only under the condition that we submit to the process of having ourselves broken up into assets that can in turn be packaged into derivatives that in turn serve as collateral for further assetization and financialization. The key here, as Robert Meister argues in his contribution (“Liquidity”) to Lee and Martin’s volume, is money (even if, as you’ll see if you read Meister’s extremely valuable discussion [if very vague on this, his concluding, point], I take this argument in a very different direction).

Everyone follows more or less closely the developments in digital currency, including me, even if I have never said anything about it (that I remember, anyway). Whether currencies like Bitcoin are ultimately practical, capable of replacing fiat currency, or flat-out pyramid schemes, they make explicit what conventional economics obscures in theory but renders inescapable in practice—that money is created and, even more, ultimately depends upon nothing more than the general “agreement” (centrally enforced, of course) to treat it as legitimate legal tender. And money is created in a lot of ways, by actors and institutions other than governments and banks. Reward points from your credit card company or frequent flier miles from an airline are a kind of currency which it’s easy to imagine exchanging and speculating on in various ways. Now, what I have mentioned here and there is the need for a political party to bind its supporters to itself through the issuance of currency (through loans and investments) and I would insist that no party or organization intent upon establishing the continuity of occupancy of the center can avoid doing so. If you join the party you receive, say, coupons, redeemable at places of business that donate to and receive the protection of the party (legal and, where necessary, physical protection). The party becomes an increasingly “total” one. (If there are laws against operating a political party in this way then central to the party’s program must be changing those laws.) The reciprocity between party and its members, a multifaceted mutual loyalty and interdependence, increases the power of the party, which in turn opens new avenues of reciprocity. (The provision of insurance would be crucial here—the full blown financialization of capitalism has been, among other things, a way of dismantling here and curtailing there the welfare state, but the welfare state was itself an attempt to bring insurance within the state and financial systems, so the remedy to financialization must include a resituating of insurance within relations grounded in loyalty and reciprocity.)

Now, even if there is no “real” value, money always has to be tethered to something, even if only the promise of a government we take to be stable and capable of at least minimal maintenance of its commitments. The political party I’m imagining tethers its currency to the success of its various enterprises, social and directly political. It bets on itself, in other words, and asks its members to join the bet and make the bet a favorable one by occupying socially significant positions from which donations in various forms can flow. The party in this way ranges itself against by simultaneously drawing resources from the entire financial order. This would be extraordinarily difficult, not only because of the threat this would pose to the “vested interests,” but because of the high level of trust within the organization that must be sustained over an extended period of time. There will be no shortage of people willing to accuse the organization and its leadership of being frauds, sell-outs, controlled opposition, etc., etc. And there may be no shortage of occasions giving such accusations credibility—this will be a learning process. But only by creating such elevated levels of trust can the current order be overcome, so if it’s impossible to do something like this it’s probably impossible to do anything. As with all transactions, the party will be an immense data-gathering operation (requiring an extremely efficient and trustworthy data security arm), and our phobias about data collection will have to be overcome—the party will draw upon data gathered by the financial system and its enemies as well. The entire operation will be a vast, no doubt international, experiment in whether distribution, even in an advanced technological order, i.e., an order comprised or layered and distributed scenes, can be tethered to increasing continuity rather than increasing volatility in occupancy of the center. (Finance is often said to be dependent on “political stability,” but while this might be true generally, it is untrue of those who most forcefully drive the system, which is those best positioned to seek out arbitrage possibilities.) This is the ultimate tethering of currency—to the ongoing ceremony and festivity of our common human origin as “sampled” by the idiomatic mode of singularized succession discovered and invented (“found(ed)”) in the particular order. Money is eventually translated back into the centered ordinality of the team, which establishes its social “value” by serving as a hub of resources distributed from and contributed back to the center—tributarianism.