Posts Tagged ‘value’
“Where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.”*…
In 2018, John Coates wrote a paper that argued that “in the near future roughly twelve individuals will have practical power over the majority of US public companies.” That article has now become a book in which he has expanded his analysis. FT Alphaville reports…
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The 2018 paper was focused on index funds, and that is the bit most people have freaked out about. After all, even Vanguard’s founder Jack Bogle raised the dangers of a narrow clutch of rapidly growing passive investment giants controlling more and more of the corporate world.
However, the book finally comes good on a promise made in the original paper to also explore the implications of the rise of private equity. It is the missing piece of the puzzle. As Coates puts it in the intro:
A “problem of twelve” arises when a small number of actors acquires the means to exert outsized influence over the politics and economy of a nation. In US history, problems of twelve have recurred, as the result of a clash of two fundamental forces: economies of scale in finance on the one hand, and constitutional commitments to fragmented and limited political power on the other. Each time, the “problem” has been two-sided. The concentration of wealth and power in a small number of hands threatens the political system and the people generally, and the political response can threaten the financial institutions in which wealth and power are accumulating, even when those institutions create economic benefits.
Today, two late-twentieth century institutions — index funds and private equity funds — are creating a new problem of twelve. As financial organizations, they amass and invest capital, and have been primarily scrutinized through a financial lens. As with other financial institutions, they pool savings from dispersed individuals and channel it to fund major projects. They facilitate capitalism, which has created huge benefits for humanity — wealth, health, and much longer life spans — along with inequality, misery, and the existential threat of climate change. Finance creates value by facilitating change, but distributes the gains unequally, and magnifies the gales of “creative destruction.”
But both kinds of funds are now so large, and have influence over so much of the economy, that they have economic and political power, whether they want it or not. Their power makes them targets of political threats. Both institutions exhibit “economies of scale.” Both are active politically — directly, and indirectly — through their control of businesses.
Their growing and concentrated wealth and power threatens the foundations of a democratic republic built on Montesquieu’s separation of powers as well as federalism — the “checks and balances” taught to every civics student. In a predictable response, the republic is increasingly threatening each type of institution with new restrictions, burdens, and limits. Because index funds certainly, and private equity funds possibly, create value within the US economy, the threats to them are as important as their potential threats to American democracy…
In a thoughtful analysis, FT Alphaville asks, is this a problem to be solved or a dilemma to be managed? “The ‘Problem of Twelve’ — redux” (gift article) from @FTAlphaville.
* Lord Acton (perhaps better known for his remark in an 1887 letter to an Anglican bishop, “power tends to corrupt, and absolute power corrupts absolutely.”)
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As we contemplate consolidation, we might spare a thought for Fischer Black; he died on this date in 1995. An economist, he is best remembered as the co-creator of the Black-Scholes model, a technique for valuing financial options. The model established that an option could be priced from a set-in-stone mathematical equation, which allowed the Chicago Board Options Exchange (C.B.O.E.), a new organization, to expand their business to a new universe of financial derivatives. Within a year, more than twenty thousand option contracts were changing hands each day. Four years after that, the C.B.O.E. introduced the “put” option—thus institutionalizing the bet that the thing you were betting on would lose. “Profit at all prices” had joined the mainstream of both economic theory and practice, and by 2007, the international financial system was trading derivatives valued at one quadrillion dollars per year.
The Nobel Prize is not given posthumously, so it was not awarded to Black in 1997 when his co-author Myron Scholes received the economics honor for their landmark work on option pricing along with Robert C. Merton, another pioneer in the development of valuation of stock options. However, when announcing the award that year, the Nobel committee did prominently mention Black’s key role.
As Warren Buffett (whose birthday is today) observed: “The Black–Scholes formula has approached the status of holy writ in finance … If the formula is applied to extended time periods, however, it can produce absurd results. In fairness, Black and Scholes almost certainly understood this point well. But their devoted followers may be ignoring whatever caveats the two men attached when they first unveiled the formula.” Indeed, the “ruthless” application of the model has led to a number of disasters for investors (c.f. Long-Term Capital Management).
“Everything / is not itself”*…
Toward an ecology of mind: Nathan Gardels talks with Benjamin Bratton about his recent article, “Post-Anthropocene Humanism- Cultivating the ‘third space’ where nature, technology, and human autonomy meet“…
The reality we sense is not fixed or static, but, as Carlo Rovelli puts it, a “momentary get together on the sand.” For the quantum physicist, all reality is an ever-shifting interaction of manifold influences, each determining the other, which converge or dissolve under the conditions at a particular time and space that is always in flux…
The human, too, can be seen this way as a node of ever-changing interactions with the natural cosmos and the environment humans themselves have formed through technology and culture. What it means to be human, then, is not a constant, but continually constituted, altered and re-constituted through the recursive interface with an open and evolving world.
This is the view, at least, of Benjamin Bratton, a philosopher of technology who directs the Berggruen Institute’s Antikythera project to investigate the impact and potential of planetary-scale computation. To further explore the notion of “post-Anthropocene humanism” raised in a recent Noema essay, I asked him to weigh in on the nature of human being and becoming when anthropogenesis and technogenesis are one and the same process.
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“I can’t accept the essentially reactionary claim that modern science erases ‘the Human.’ Demystification is not erasure. It may destabilize some ideas that humans have about what humans are, yes. But I see it more as a disclosure of what ‘humans’ always have been but could not perceive as such. It’s not that some essence of the Human goes away, but that humans are now a bit less wrong about what humans are,” he argues.
Bratton goes on: “Instead of science and technology leading to some ‘post-human’ condition, perhaps it will lead to a slightly more human condition? The figure we associate with modern European Humanism may be a fragile, if also a productive, philosophical concept. But dismantling the concept does not make the reality go away. Rather, it redefines it in the broader context of new understanding. In fact, that reality is more perceivable because the concept is made to dissolve.”
How so? “The origins of human societies are revealed by archaeological pursuits. What is found is usually not the primal scene of some local cultural tradition but something much more alien and unsettling: human society as a physical process.
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All this would suggest, in Bratton’s view, “that cooperative social intelligence was not only the path to Anthropocene-scale agency for humans, but a reminder that the evolution of social intelligence literally shaped our bodies and biology, from the microbial ecologies inside of us to our tool-compatible phenotype. The Renaissance idea of Vitruvian Man, that we possess bodies and then engage the world through tools and intention, is somewhat backward. Instead, we possess bodies because of biotic and abiotic ‘technologization’ of us by the world, which we in turn accelerate through social cooperation.”
In short, one might say, it is not “I think therefore I am,” but, because the world is embedded in me, “thereby I am.”
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Bratton’s view has significant implications for how we see and approach the accelerating advances in science and technology.
A negative biopolitics, so to speak, would seek to limit the transformations underway in the name of a valued concept of the human born in a specific time and place on the continuum of human evolution. A positive bio-politics would embrace the artificiality of those transformations as part of the responsibility of human agency.
Bratton states: “Abstract intelligence is not some outside imposition from above. It emerged and evolved along with humans and other things that think. Therefore, I am equally suspicious of the sort of posthumanism that collapses sentience and sapience into an anti-rationalist, flat epistemology that seeks not to calibrate the relation between reason and world, but is instead a will to vegetablization: a dissolving of agency into flux and flow. Governance then, in the sense of steerage, is sacrificed.”
To mediate this creative tension, what is called for is a theory of governance that recognizes the promise while affirming the autonomy of humans, albeit reconfigured through a new awareness, by striving to shape what we now understand as anthropo-technogenesis.
In the political theory of checks and balances, government is the positive and constitutional rule is the negative. The one is the capacity to act, the other to amend or arrest action that could lead to harmful consequences — the “katechon” concept from Greek antiquity of “withholding from becoming,” which I have written about before.
An ecology of mind, in the term of anthropologist Gregory Bateson, would encompass both by re-casting human agency not as the master, but as a responsible co-creator with other intelligences in the reality we are making together…
“The Evolution of What It Means To Be Human,” from Nathan Gardels and @bratton in @NoemaMag. Both the conversation and the article on which it is based are eminently worth reading on full.
Pair with: “Artificial Intelligence and the Noosphere” (from Robert Wright; for which, a ToTH to friend MK): a very optimistic take on a possible future that could emerge from the dynamic that Bratton outlines. Worth reading and considering; his visions of the socioeconomic and spiritual bounties-to-come are certainly enticing.
That said, I’ll just suggest that, even if AI is ultimately as capable as many assume it can/will be– by no means a sure thing– unless we address the kinds of issues raised in last week’s (R)D on this same general subject (“Without reflection, we go blindly on our way”) we’ll never get to Bratton’s (and Wright’s) happy place… The same kinds of things that Bratton implicitly and Wright explicitly are mooting for AI (as a knitter of minds in a noosphere) could have been said— were said— for computer networking, then for the web, then for social media… in the event, they knit— but not so much so much in the interest of blissful, enabling sharing and growth; rather as the tools of rapacious commercial interests (c.f.: Cory Doctorow’s “enshittification”) and/or authoritarians (c.f., China or Russia or…). Seems to me that in the long run, if we can rein in capitalism and authoritarians: maybe. In the foreseeable future: if only…
* Rainer Maria Rilke
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As we contemplate collaboration, we might send mysterious birthday greetings to Alexius Meinong; he was born this date in 1853. A philosopher, he is known for his unique ontology and for contributions to the philosophy of mind and axiology– the theory of value.
Meinong’s ontology is notable for its belief in nonexistent objects. He distinguished several levels of reality among objects and facts about them: existent objects participate in actual (true) facts about the world; subsistent (real but non-existent) objects appear in possible (but false) facts; and objects that neither exist nor subsist can only belong to impossible facts. See his Gegenstandstheorie, or the Theory of Abstract Objects.
“When somebody says it’s not about the money, it’s about the money”*…
Further to yesterday’s post (about the relevance of Edith Wharton’s observations of her Gilded Age to ours), Dorinda Evans takes a look at rough contemporary of Wharton’s, and at his (similarly relevant) work…
After supposedly stealing 500,000 francs from his bank, the mysterious Victor Dubreuil (b. 1842) turned up penniless in the United States and began to paint dazzling trompe l’oeil images of dollar bills. Once associated with counterfeiting and subject to seizures by the Treasury Department, these artworks [are nowconsidered] unique anti-capitalist visions among the most daring and socially critical of his time…
The fascinating story of Victor Dubreuil’s cryptic currencies and the questions they raise about value and values: “Illusory Wealth,” in @PublicDomainRev.
For an illuminating look at Dubreuil’s spiritual successor, see Lawrence Weschler’s wonderful Boggs: A Comedy of Values.
For a loosely analogous artist: “Nobody knows what a dollar is, what the word means, what holds the thing up, what it stands in for… what the hell are they? What do they do? How do they do it?”
And for an appreciation of trompe l’oeil (and its influence on Cubism), see “Feinting Spells.”
* H.L. Mencken
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As we contemplate currency, we might pour a cup of birthday tea for English mathematician, logician, photographer, and Anglican cleric, Charles Lutwidge Dodgson– better known as the author Lewis Carroll– born on this date in 1832.
“There is no use in trying,” said Alice; “one can’t believe impossible things.”
“I dare say you haven’t had much practice,” said the Queen. “When I was your age, I always did it for half an hour a day. Why, sometimes I’ve believed as many as six impossible things before breakfast.”
– Alice in Wonderland (nee “Alice’s Adventures Underground,” then “Alice’s Adventures in Wonderland”)
Oh, and… Happy Mozart’s Birthday!
“To pay attention, this is our endless and proper work”*…
The Attention Economy…
“Attention discourse” is how I usually refer to the proliferation of essays, articles, talks, and books around the problem of attention (or, alternatively, distraction) in the age of digital media. While there have been important precursors to digital age attention discourse dating back to the 19th century, I’d say the present iteration probably kicked off around 2008 with Nick Carr’s essay in the Atlantic, “Is Google Making Us Stupid?” And while disinformation discourse has supplanted its place in the public imagination over the past few years, attention discourse is alive and well…
Attention discourse proceeds under the sign of scarcity. It treats attention as a resource, and, by doing so, maybe it has given up the game. To speak about attention as a resource is to grant and even encourage its commodification. If attention is scarce, then a competitive attention economy flows inevitably from it. In other words, to think of attention as a resource is already to invite the possibility that it may be extracted. Perhaps this seems like the natural way of thinking about attention, but, of course, this is precisely the kind of certainty [Ivan Illich] invited us to question…
His crusade against the colonization of experience by economic rationality led him not only to challenge the assumption of scarcity and defend the realm of the vernacular, he also studiously avoided the language of “values” in favor of talk about the “good.” He believed that the good could be established by observing the requirements of proportionality or complementarity in a given moment or situation. The good was characterized by its fittingness. Illich sometimes characterized it as a matter of answering a call as opposed to applying a rule.
“The transformation of the good into values,” he answers, “of commitment into decision, of question into problem, reflects a perception that our thoughts, our ideas, and our time have become resources, scarce means which can be used for either of two or several alternative ends. The word value reflects this transition, and the person who uses it incorporates himself in a sphere of scarcity.”
A little further on in the conversation, Illich explains that value is “a generalization of economics. It says, this is a value, this is a nonvalue, make a decision between the two of them. These are three different values, put them in precise order.” “But,” he goes on to explain, “when we speak about the good, we show a totally different appreciation of what is before us. The good is convertible with being, convertible with the beautiful, convertible with the true.”…
“Your Attention Is Not a Resource“: L.M. Sacasas (@LMSacasas) wields Illich to argue that “you and I have exactly as much attention as we need.”
(image above: source)
* Mary Oliver
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As we go for the good, we might recall that it was on his date in 1965 that NASA launched Hughes Aircraft’s Early Bird (now known officially as Intelsat I) into orbit. It was the first communications satellite to be placed in synchronous earth orbit– and successfully demonstrated their (subsequently explosively growing) use for commercial communications.
“I’d ask, ‘Is this dish good enough to come downtown and wait in line for’ If not, it’s not what we’re after”*…
We’re in the middle of a global crisis of extraordinary proportions. This is a memo we started writing months ago. It was meant to be a sort of elegy to the economic and cultural cycle in which we were living, which was clearly coming to an end – the experience economy in particular. However, that cycle came to a rapid conclusion before we managed to hit publish. We’re publishing it now, knowing things are likely to get far worse in the coming days, making the reality during which it was conceived feel increasingly distant. Nonetheless, we hope it will be entertaining to you during quarantine….
We believe that umami has been both literally and figuratively the key commodity of the experience economy. Umami, as both a quality and effect of an experience, popped up primarily in settings that were on the verge of disintegration, and hinged on physical pilgrimages to evanescent meccas.
We also believe that the experience economy is dying, its key commodity (umami) has changed status, and nobody knows what’s coming next.
What do we mean by umami? Not only the meatiness of the French dip sandwich at that restaurant, but also the light as it refracted through the amber liquid of the cocktails, the reflection off the back bar, the quivering of the cake, and, most significantly, the way those elements read in a photo. Umami was the quality of the media mix or the moodboard that granted it cohesion-despite-heterogeneity…
Umami could have been anywhere, but we smacked our lips in the moment. It was liquid in the sense that it flowed from place to place, airy in the sense that it was ungrounded, and earthy in the sense that it might have been in your mouth.
“Advanced consumers” became obsessed with umami and then ran around trying to collect ever-more-intensifying experiences of it. Things were getting more and more delicious, more and more expensive, and all the while, more and more immaterial.
Umami is what you got when you didn’t get anything…
The recent historically long market expansion began with the recovery from the 2008 global financial crisis – and its inevitable end seems to have arrived via virus. Your impression of these high times might vary. You might remember the period for austerity, the Arab Spring, Trump, Brexit, Yellow Vests, the rise of the far right, rising costs of housing and health care, the student debt bubble, youth unemployment, and to top it all off, an accelerating climate crisis. But if you worked in finance, received tech compensation or VC money, or just happened to be rich in the first place, you’ve had a pretty sweet decade.
But now, amidst market turmoil and a public health crisis which much of the world – in particular the US – is fully unequipped to handle, it’s a flaming question mark whether any real growth occurred during this period, or if the high times were merely a fantasy created mainly by capital injections (or “money printing”) from central banks in the US, China, and Europe. What was actually happening was the enrichment of financial assets over the creation of any ‘real wealth’ along with corresponding illusions of progress.
As very little of this newly minted money has been invested into building new productive capacity, infrastructure, or actually new things, money has just been sloshing around in a frothy cesspool – from WeWork to Juicero to ill-advised real estate Ponzi to DTC insanity, creating a global everything-bubble.
With interest rates approaching zero, or even going negative, it simply means capital is having difficulties finding profitable places in which to invest itself. Or, to phrase it differently, those in charge of capitalist societies were failing to see worthwhile futures in which to invest. The market expansion of the past 12 years has felt like a very inappropriately timed self-congratulatory party, situated at the end of a much longer period of stagnation and decadence.
Value, in an economic sense, is theoretically created by new things based on new ideas. But when the material basis for these new things is missing or actively deteriorating and profits must be made, what is there to be done? Retreat to the immaterial and work with what already exists: meaning.
Meaning is always readily available to be repeated, remixed, and/or cannibalized in service of creating the sensation of the new.
How has this manifested? For example, by calling things that were actually old → new; mediocre → premium; bad → good; low value → high value etc. This was Premium Mediocrity. Or by taking existing meanings and mixing them into increasingly novel, bizarre and random combinations and calling them new. This was creative direction. Or by putting people into proximity with newly created meaning of dubious status, and selling it as an experience. This was festival season.
The essential mechanics are simple: it’s stating there’s a there-there when there isn’t one. And directing attention to a new “there” before anyone notices they were staring at a void. It’s the logic of gentrification, not only of the city, but also the self, culture and civilization itself.
What’s made us so gullible, and this whole process possible, was an inexhaustible appetite for umami…
Cultural umami is the vague sense that yes, for some reason, it is. ““This shouldn’t be good but it is” “this doesn’t seem like what it’s supposed to be” “I shouldn’t be here but i am” “this could be anywhere but it’s here” If you tried to unpack your intuition, the absence of the there-there would quickly become evident.
Yet in practice this didn’t matter, because few people were able to reach this kind of deep self-interrogation. The cycle was simply too fast. There was never time for these concoctions to congeal into actual new things (e.g. create the general category of K-Pop patrons for Central European arts institutions). We can’t be sure if they ever meant anything beyond seeming yummy at the time.
Let’s take an example. The luxury sector, fashion in particular, has increasingly become a key theater for umami. Throughout the history of human civilization, luxury was premised on being expensive, meaning it resulted from investing an unreasonable amount of work, material or other scarce resources into the making of a thing.
But today’s rich don’t generally wear the 2020 version of royal purple, something like parametrically fitted garments made of nanofibers embellished with synthetic mother of pearl (which might be the results of real growth). Instead, they wear $500 cotton t-shirts with inscrutable references and visual motifs pulled from a smörgås-moodboard that makes little “sense” in any generalizable way. The t-shirt’s price clearly isn’t a function of its material makeup, but rather a result of some form of manipulation of meaning associated with it. But because meaning (or its substrate information) is infinite, it can only become a luxury once it carries the illusion of scarcity.
Meanings that only a few have access to are secrets. In the absence of meaning, the illusion of a secret is created by imposing a subcultural barrier to entry where only through an opaque process of scene work can one ‘get’ it (or, if you’re unlucky: if you gotta ask you’ll never know…). Alternatively, they are wrapped in the veil of an elusive X-factor, to which only a privileged few, i.e. the creative director, have direct access.
The key referent of luxury brands used to be one thing they made really well at great cost. But today they have gentrified themselves by discarding any fixed material basis: the only referent that does any work is the price, and the wealth associated with it.
By combining the traditional symbols of wealth with a pool of meaning that was made to seem scarce but was in fact infinite, brands created the umami equivalent of free energy. Everyone wanted money and everyone wanted umami. And there was more money around than ever before. What could go wrong?…
Excerpts from a fascinating essay by Emily Segal (forecaster, writer, and former principal at the pioneering K-Hole) and Martti Kalliala (architect, musician, and designer), the partners in Nemesis; do read it in full: “The Umami Theory of Value: Autopsy of the Experience Economy.”
* chef David Chang (Momofuku, et al.) in his 2016 essay on umami
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As we contemplate consumption, we might recall that it was on this date in 2005 that police descended on a Clovis, NM middle school after a report of a concealed weapon (a student carrying something “long and wrapped” onto the premises). The force posted armed shooters on nearby roof-tops and cordoned off the classrooms.
The lock-down was lifted when an eighth-grader realized that he was likely the source of alarm. He approached the principal and explained that he was carrying a 30-inch, foil wrapped burrito, part of an extra-credit assignment to create commercial advertising. “We had to make up a product and it could have been anything. I made up a restaurant that specialized in oddly large burritos.”
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