The speculative performance: a reply to Brian Holmes

By | March 9, 2009

In 2006 Brian Holmes, an art critic, activist and social theorist who lives near me in Paris, wrote a wonderful essay on art’s financial futures, ‘The speculative performance’. This stimulated me to reply in a letter which is reproduced below.

Dear Brian, I like your piece on financial speculation very much. The Goldberg example (an Australian artist who performed publicly as a speculator on Rupert Murdoch’s News Corporation) reminded me of the UBS trading floor in Chicago, the largest of its kind, buried at the centre of a black skyscraper on Wacker Drive. The trading floor has no outside windows; there is a lot of security stopping you getting near there. No-one can see in, but the traders see out through scores of TV screens on the walls carrying everything from weather reports to newscasts to flickering banks of money numbers. It is a concealed panopticon on the world economy. I felt the power of it all then and wrote about it in ‘Notes on the counter-revolution’.

Here is what I think about the central question you pose concerning what speculation means. I start from Max Weber’s analysis of capitalism in Part IV of the General Economic History. He defines it as ‘rational enterprise’, meaning the attempt to place an economic project with an uncertain future on a basis of means-end calculation. Capitalism is driven by two impulses: speculation (the desire to win money for nothing) and calculation (the desire to eliminate risk wherever possible). It succeeded because the second principle became dominant, at a terrible cost to those who were forced to shoulder the risks that capitalists passed on. Frank Knight in Risk, Uncertainty and Profit offered a narrower but sharper lens for looking at all this when he distinguished between risks you can calculate and those you can’t (uncertainty). Casinos can predict their profits on turnover with amazing accuracy. Insurance and banking traditionally kept within stringent actuarial limits.

This Faustian bargain with the future has universal qualities, according to my reading of Mauss. Everywhere economic relations have to be pushed beyond the boundaries of local society because none is materially self-sufficient. Money and markets in a wide variety of forms supply this function of social extension. Risk and uncertainty are always thereby increased, but the dangers are moderated by a series of institutions, both personal and impersonal. The locus classicus is the Trobriand canoe expedition where kula valuables exchanged between partners offer a measure of protection in foreign places.

What we saw in the last three decades, and especially since 1990, was a massive extension of economic relations on a world scale (globalization) with the development of new financial instruments seeking to take advantage of the opportunities of deregulated finance and at the same time trying to figure out ways of containing the increased risk. Arbitrage attempts to take advantage of small price discrepancies between markets that are separate. If these actions are successful, market compartments are broken down and one market replaces several. As you describe here, derivatives seemed to offer ways of making the shift to a single market more precise as well as highly profitable to pioneers.

These profits became so great in the later stages of Greenspan’s credit bubble that, in order to remain competitive and keep their jobs, CEOs embraced the riskier options. In the process banking became a species of betting in which the line between risk and uncertainty moved inexorably towards the latter pole. Many people saw the dangers of the asset bubble that developed as a result. But there was always the other story to counteract the doomsayers: capitalism had entered a new stage where what was once radical uncertainty had become calculable risk. According to this interpretation, the financial institutions who had pioneered this new stage (Wall St and the City of London) were leaving the rest of the world behind, stuck in conservative and unprofitable practices.

Where do you draw the line between speculation and calculation, between risk and uncertainty? My favourite definition of religion is Durkheim’s, that it is the attempt to build meaningful bridges between the known and the unknown, between everyday life and the disasters that lie in wait for all of us, especially death. Money takes on some of the qualities of religion in capitalist societies by mediating between the the finite desires and obligations of each of us and our human potential for universal society.

Like many people, I was caught up in the making of world society as a single market for communications. The end of the Cold War, the rise of the internet and the emergence of China and India as economic powers all pointed to a massive extension of commercial relations on a global scale. All the classical founders of social theory recognized that, for all its contradictions, capitalism’s historical role is to bring cheap commodities to the masses and to break down the insularity of traditional communities through commerce. These developments brought echoes of the classical liberal revolutions to the late twentieth century world: a massive movement of people with horizons less fettered by local political restrictions than before.

Whenever I visit a new country and extract local currency from a hole in the wall, I offer a mental toast to Harold Wilson, the British Prime Minister who stopped us from taking more than 300 quid a year out of the country in the 1970s. Angolan women jump on planes to Rio, Paris, London and Dubai to stock up on goods they can sell in the streets of Luanda. I know, it’s unsustainable; but the freedom of it, compared with any conditions they knew before, is something I cherish.

So the bubble has burst and state power is everywhere on the rise. The state’s role as lender of last resort appears to be our only hope as we stare into the abyss. I doubt if the same politicians who supervised the boom will have the wit to get us out of the bust. In any case, where is the state these days? Is it the US acting alone, federations like the EU, surely not nation-states as in the 1930s? What price will we be expected to pay now for greater security, if indeed it can be bought? After all the looting that went on and still does, I can’t bring myself to denigrate money and markets without acknowledging some of the social benefits of that great commercial expansion.

Rather than rely on the central banks and their political masters to get us out of the mess, I envisage people in general taking advantage of the economic breakdown to assert their solidarity in new ways. The digital revolution in communications has been taking remarkable strides in the last five years, manifested as the rapid development of more personal ways of making society through networking sites, social bookmarking and much else. The failure of the institutions developed after 1945 (and not just neoliberalism) represents a huge opportunity for an economic revolution that would reinstate democracy as the guiding principle of our socieities. Maybe money in its speculative guise would be largely irrelevant to a society, but we are unlikely to be able to manage without relying on money in some other form.

I haven’t addressed your thesis on money and art directly and I would like to at some stage. My starting point would be Lawrence Weschler’s book on Boggs: a comedy of value. I read an interview with Charles Saatchi the other day where he was asked if he thought his role as a buyer of modern art distracted from the real value of the art and he replied, “The money is the message”. I couldn’t resist your use of the tulips story too since Anne Goldgar’s book Tulipmania tries to argue that most of what we think we know about it is bunk. But these are bits and pieces. I wanted to start by laying out some of the metaphysical foundations of my understanding of money’s potential in society.

As ever, Keith

2 thoughts on “The speculative performance: a reply to Brian Holmes

  1. brianholmes

    Hello Keith –

    Thanks for your generous comments, it is great to have some time for discussion.

    You take off from Max Weber: “Capitalism is driven by two impulses: speculation (the desire to win money for nothing) and calculation (the desire to eliminate risk wherever possible). It succeeded because the second principle became dominant, at a terrible cost to those who were forced to shoulder the risks that capitalists passed on.”

    You’re absolutely right about why it succeeded: as we are seeing today, people are forced to shoulder responsibility for the risks taken by the most powerful. What’s more, they (we) were even encouraged to emulate them, to take risks, to borrow in hopes of hitting an upswing on the housing market curve, or improving our human capital, or capturing someone’s desire, or whatever. But so far, there is no bailout in sight for these low-level risks…

    Taking a different approach, I used some opening lines from Castoriadis as a way to think about a component of speculation that cannot be considered in any way rational, one which is almost like a curiosity about or love for or thrill in the unknown, as the word speculation suggests outside the financial realm. Speculation, it seemed to me, had an imaginary or aesthetic side, it was not only a calculated but a felt reality. But that reality has to be felt somewhere: in the strange, computer-mediated theaters of greed and excitement where contemporary traders actually do their work. I wanted to ask a question that had been embodied in the performance by the artist Michael Goldberg: How does this thrill/curiosity/love for the movement of electronic signals representing money actually play out in the lived experience of a day-trader hooked up to a worldwide marketplace? Goldberg made it possible to look into the theater of a speculative performance. And as a critic, I also wanted to bring in the ethnography, epistemology and depth-psychology of one of those very smart people whom you find in university databanks: Karin Knorr Cetina. The aim was always to go further in understanding the process of speculation, somehow detaching it from the end result of money as such.

    Actually, this responds almost perfectly to one of your own comments on finance, which you link to in the post above. It’s the one where you wonder how the surviving remnants of leftist movements could possibly counter this frenetic and awesome activity of global trading:

    “I couldn’t help thinking of the huge UBS trading floor, the multitude of traders locked into their Panopticon on the world, all those screens with moving numbers in lights and televisions showing the weather everywhere, hidden away in an inaccessible place in a huge implacable building on North Wacker with black windows, seeing everything, but seen by no-one. How could this score of Trotskyites in a crummy high school room in a rundown Chicago neighbourhood compete with that? We have to find the points of possible alliance with those sectors of capital for whom the Bush strategy doesn’t work. I recalled a factoid about China’s 40% share of world economic growth last year. It reverberates in my skull. I wonder if I could get into Swiss banking as a fieldworker somehow. I have such a slender grip on this stuff. I have read most of the books on Drexel Burnham Lambert, Morgan Stanley, Lehman Brothers etc in the boom years. But I want to see that floor again, if only from the outside. It has become the symbol of what I am reaching for.”

    That’s just it. What I find really amazing about finance capitalism is the world-spanning technology, the communicational techniques it has developed. Knorr Cetina in her amazing work shows that the trader’s desire is focused on a communicational object, which is temporal and continually shifts, transforms, unfolds. This temporal object captivates his or her desire. But in our time it is not only traders who focus on such objects. Finance has been intimately bound up with the major transformation of the last three decades: the emergence of worldwide networked communications, and indeed, of world society.

    As I point out in a footnote to the piece, “the first networked price-display screen, the Reuters Monitor, was introduced in 1973 – exactly when the Bretton-Woods fixed-rate currency system was scrapped and floating exchange rates were introduced.” But of course, those are exactly the years when the Internet itself was being invented. For the two following decades, finance and the military were the two sectors where networked technology was developed most extensively. And we all recall that the explosion of Internet connectivity in the mid-nineties involved a mutually reinforcing spiral between the desire of the expanding user-base and the belief of avaricious speculators that investment in cables and routers would be profitable in the future. Even if HOW it would be profitable was usually not known by the supposedly rational speculators…

    So you see, my aim to separate out the lived experience of speculation from the more limited fact of making money is directed toward a larger question: how can inquiry into the unknown, and aesthetic experimentation with human potential, be multiplied and shared via communications technology, so as to continue moving outside the currently dominant social pattern where risks are undertaken in the quasi-certainty that any responsibility for failure will be borne by those on the bottom of the pyramid? How to create a currency of the imagination with which to speculate on other possible futures – and how to enact that speculation, in a live, embodied way, and also in an electronically mediated way? The end of the article tries to broach these questions, which tend to return all throughout my work.

    And this is where we coincide. You write above:

    “Rather than rely on the central banks and their political masters to get us out of the mess, I envisage people in general taking advantage of the economic breakdown to assert their solidarity in new ways. The digital revolution in communications has been taking remarkable strides in the last five years, manifested as the rapid development of more personal ways of making society through networking sites, social bookmarking and much else. The failure of the institutions developed after 1945 (and not just neoliberalism) represents a huge opportunity for an economic revolution that would reinstate democracy as the guiding principle of our societies.”

    Yeah, exactly, *if* it’s possible to invent new desires. Because for human beings, necessities are always outstripped and reinterpreted, reshaped, by desires and speculations on the future. The big question is really how we map out the future, how the dominant maps are enforced, how dissenting or simply different ones sometimes break through and offer a different vision of what live could be, a different pattern for the distribution of roles, responsibilities, access, pleasure and potential. Mapping is now about creating the territories, it’s a speculation on the future. That’s what I have tried to show in two longer texts on my blog, “Future Map” and “Guattari’s Schizoanalytic Cartographies.”

    Of course we have to remember that social relations are irremediably complex. Like Polanyi, I think that that it’s interesting to consider the market, redistribution and reciprocity to be three different things. Your point that the market has an historical role to play in giving access to the fruits of the industrial revolution is well taken. Still the market has been totalitarian in these last years, subjugating the other functions of redistribution and reciprocity. The state has to come back in, and everyone with any sense of history is a little worried about that, for sure. But beyond or before the problem of the state, and outside the rigorously instituted currencies of exchange that make possible what we call the market, there are the dimensions of reciprocity, which Mauss saw as such a resource for critique, for imagination, indeed for speculation on the possibility of non-capitalist economies.

    Reciprocity is the realm of human relations where the most fabulous languages of gift, debt and repayment are worked out in ways and at temporal rhythms now immeasurably multiplied through the possibilities of communication and travel, and through the spread and mixture of the most widely varied cultural motifs. Mind you, this is deterritorialized reciprocity, shaken from most of its traditional patterns and increasingly reinvented in fragile but also wonderful and enticing patterns of exchange. Such ad hoc patterns are what artists have been fascinated by ever since democracy developed as an incomplete promise and an unfulfilled desire looking for some place to begin becoming real. It seems to me that in reciprocity there may be great resources for a kind of revolutionary activity that can not only develop itself, for itself, but also push for some transformations in the neighboring spheres of state-instituted redistribution and of the market, changing the rules so that some more interesting human games can be played. For this to happen, though, all the potentials of human communication and exchange have to be detached from their existing norms, they have to be brought into the realm of decoded and deterritorialized reciprocity where new currencies of value can be invented. New funds for the Memory Bank! The image of a mobile crowd of intellectuals and artists, shifting their professional activity into a trans-Siberian train on the way to China, focusing their exchange of inquiries on pure human potential, seemed to me like a metaphor of possible reciprocities that could go much further and produce much more invention, pleasure and desire, even within the less mobile realms of well-known cities and bordered countries and everyday lives. Or anyway, that’s the kind of speculation that I like to make on the future – at a time when the other ones are literally bankrupt!

    all the best, Brian

Leave a Reply