Template:M intro systems financialisation
Definitions: let us call “financialisation” the goal of reducing things to their most calculable, and manipulable values. So: David Graeber’s social indebtedness versus monetary indebtedness.
The most manipulable, fungible, calculable, aggregatable articulation of value known to western society is cash — degenerate fiat cash, sorry crypto bros— and it is what we describe our relationships in. Hence “financialisation”, but it needs not involve money. Reviews, five point performance appraisals, RAG statuses, star ratings, measurable criteria — anything which can be ordered, pivoted, Pareto ratioed, and put into a ranked, tranched order.
Things that can’t be ranked and counted — that aren’t legible to this great high powered information processing system — have no particular value in it, whether or not that actually have any value. And conversely things that can be counted can acquire value even if they don't have value. There are plenty of examples of this — things that sell at a greater margin than they cost — carbonated soft drinks, bottled water — or bitcoin, fashion, cosmetics professional sports, commercial music.
The will to financialisation distils down to a worldview that analogue, informal, unique, requiring judgment, requiring metis is expensive, slow and unscalable and therefore bad.
These things used to be premium. Now we have premium mediocre — artificially scarce, novel for its own sake, expensive for its own sake — see above.
We are all out here desperately searching for meaning, and it is up to us what we settle for. But if we settle for the premium mediocre the authentic will wither and die.
Our own attitudes, and the stories we tell ourselves, and each other, matter. If we settle for premium mediocre that is what we will get
The ineffable value of uncertainty and the difference between risk (a calculable probability) and uncertainty (intractable, black box, non-linear).
The modernist yen — imperative — need — to reduce uncertainty to risk, and the false comfort this gives. The Viniar problem.
But non-linear loss is the consequence, and corollary of non-linear opportunity and vice versa. If we put our selves on a linear track that approximates the non-linear reality we will be fine until there is actual event at either end. Persuading everyone else to get on the linear track is a good strategy. As long as it works. If you can persuade everyone in the system to behave, the system will “behave” — in the sense of not producing unexpected outcomes, and not necessarily optimising, or producing particularly good outcomes. Volatility will drop. As long as everyone behaves.
Not behaving is arbitraging: exploiting structural differentials you are not meant to see, and that the loyal behavers cannot see. They may be obscured by the behaver’s internal model/narrative, or by moral principles. In either case arbitrage behaviour is destructive to the present configuration of the system, and those who stand to gain from the present configuration will be hostile to arbitrage. Arbitrage is defection. The system will be set up to make arbitrage difficult, and to eradicate it, that is to say. The system will self purge. To the extent it doesn’t this will be because of novelty — a previously undetected arbitrage opportunity has arisen. This could be a latent arbitrage — that was always there, but no-one noticed, or one arising from new technology, new language or a new independent event presenting itself to the system
The longer the system has been in play the less likely a latent arbitrage is to have lain undiscovered, and the fewer existentially threatening independent, non-agent events (force majeure) there will be (Lindy effect). New technology and new language arising spontaneously within the system can be largely controlled, if you so wish, but extraneous technology and language cannot, and for these the Lindy effect does not apply.
What if I turn out to be wrong?
Consequences of this instinct
- Private equity
- Outsourcing/management consulting
The desire for digital certainty
James C. Scott’s observation that a top-down organisation can only operate by what it sees, which necessarily misses nuance. Centrally planned states have the blessing and the curse of scale. A relatively small governing class can effectively accommodate — satisfice — the needs of a great many people as long as everyone’s needs are suitably generic. The more generic they are the better margins can maintain.
The normal offsetting effects of competition are muted in an interconnected world where the scale advantage can usually drown out market entrants as long as the market/product demand stays relatively constant. There are few but significant disruptions (computers, internet, mobile internet — not yet clear whether AI is another one). Beyond these market dominators can generally defend their positions.
Robert Michels’ iron law of oligopoly, that at all organisations concentrate “power” and become top-down
The madness of crowds and our interconnectedness: if it was hard to be exceptional before the internet, it is so much harder now. Yet we kid ourselves that we are all exceptional. If we are all competing at the same thing, we have almost no chance of excelling. These are the Bayesian priors. But everyone of us is different.
Outsourcing and offshoring as the relentless financialisation of the internal firm.
The Peter Principle that we rise to our own level of incompetence so will be dispositionally bad at the hard parts of our job. The basic narcissism or Dunning Krugerism of those prepared to do what it takes to climb the greasy pole required to want to be a chief executive officer or politician - those who want the job enough to get it
Data modernism and the conviction that everything now can be solved, and mankind is something to be overcome.
Fundamental ineffability
Stand for something, or you’ll fall for anything.
- —Anon.
It is there but we really have to want it - and stand up for it.
James C Scott: Metis.
Chris Anderson’s The Long Tail: How Endless Choice is Creating Unlimited Demand: there really is a long tail out there — proverbial doom metal merchants lecturing insightfully on Nietzsche — but we are allowing it to wither on the vine. Our moral responsibility, if we want to keep it, is to support it. But are they dying out like local bookstores? We need to nurture them.
The informal and formal lines of information in any organisation - in this take Jane Jacobs, desire lines
1 battleground: onworld v offworld====