Foregrounding References: Expression

This is a (first) report on missing references for The Provoked Economy. There is nothing in the book really fully explicit about the notion of expression, but the rapprochement with the notion of explicitness (to which the author devoted more energy) is evident, as indicated in the first chapter:

“But the philosophical debate is not settled, and the concept of explication (explicatio in Latin, perhaps best translated as Explikation in German, or explicitation in French) is a tricky one that is also linked in a rather complex way to the concept of expression.” (p. 25)

Instead of going straight to a Deleuzian disquisition, the author should have made a pause there and referred to Emmanuel Didier. His take on the performative understanding of expression (or vice-versa), especially in “Do Statistics ‘Perform’ the Economy?” (but also in his book En Quoi Consiste l’Amérique?), stood as a fundamental input for the thoughts that led to whatever can be found there. That path has led Didier himself to some most remarkable developments, especially on the notion of “consistency”, which should stand high in the “to-read” list of anyone interested in these kinds of provocations.



Chapter 6: Earning Power and the Anthropology of Capitalization

After having looked at the medium of the pedagogy of business, chapter 6 of The Provoked Economy moves into the content proper of the act of business valuation. The vehicle here is again Arthur Stone Dewing, author of The Financial Policy of Corporations, a widely used textbook in corporate finance from the early 1920s to the 1940s. The chapter follows Dewing in his clarification of the nuts and bolts of capitalization:

“Is the value of the business only the value of what the businessperson has ready to sell right away, for example, a warehouse and some stored merchandise, plus some cash in a bank account? No, at least not entirely nor substantially. The value of the ‘going business’ is rather obtained by examining its ‘earning power’, that is, its capacity to meet the purpose for which business is intended: to earn a profit. ‘Earning power’: that is Dewing’s telling expression. The businessperson, Dewing told students, is ‘buying earning capacity’.” (p. 104)

The chapter sides in part with the “anthropology of capitalization” that the authors of Capital as Power have sketched out — a proposal that considers capital as the nexus of social relationships produced by the capacity of capitalization. It also contains a premonition of something that fine analysts of the provoked economy such as Tim Mitchell seem to be working on right now — intriguing! It is also very much inspired by the anthropology of investment developed by Horacio Ortiz — and on his focus on financial imagination. And it is also importantly stimulated by a wider project that should give birth to a collective publication sometime soon — the working title is Elements for a Social Inquiry into Capitalization. The chapter’s conclusion:

“Capital is a claim on earnings, and its value is a measure of the power to hold to that claim – earning power, as pedagogue Dewing would simply end up stating. My hypothesis is that getting just that, in one way or another, is what the business self is about. And that contemporary financial business culture consists, substantially, in the massive accumulation of simulacra that attempt to realize it.” (p. 107)

Chapter 6: The Case Method in Business Education

The Provoked Economy devotes the first part of its sixth chapter (“Realizing business value”) to a particularly vivid illustration of the problem of the simulacrum in business life: the case method of instruction in business administration (yes, the jewel of the particular blend of business pedagogy developed at the Harvard Business School). Well, the section is a bit short, alas. There is no in-depth ethnography of case teaching and learning (in this respect, the author is more than happy to refer the reader to Michel Anteby‘s excellent Manufacturing Morals). Instead, after a brief reference to Michel Foucault an a two-pages description of a case method session, the chapter goes straight to the point:

“This can surely be an entertaining experience, but sometimes also a deeply transformative one, too, especially for the ones who dare, for the ones who display the mental courage to stand up and defend their business views in an articulate and brilliant manner, i.e. the ones who find there, emerging, their business selves. You may be wondering why I have not used the world ‘simulacrum’ so far, right? Indeed, here we are. A simulacrum of the business act: really doing it, though not for real, so as to be able to bear it. A performance of the live act of business. Is not what lies beneath the very idea of ‘courage to act’ what the would-be businessperson ought to embrace? Is it not about enduring business decision?” (p. 99)

Then the chapter takes the reader to the early days (1920s, 1930s) and spends some pages on one of the author’s favorite authors. That would be Arthur Stone Dewing, professor of finance at the Harvard Business School, vitalist philosopher, and great early advocate of the existential features of the case method:

“Forget about truth, look into purpose; forget about knowledge, look into action. It is interesting to observe how Dewing, once converted to the pedagogy of business, found in the case method a suitable medium for this kind of philosophical impulse: education is about ‘acquiring facility to act in the presence of new experience’, about training ‘to act’ rather than ‘to know’, about dealing with novelty rather than ‘with the departing old’” (p. 101)

Follows a look at the 1960s and 1970s — which means of course referring to C. Roland Christensen and his development of the experiential, pragmatist features of the case method — and at the 2000s — which means referring to the current, anthropological house motto, i.e. “knowing, doing, and being”. The case method of instruction in business administration is obviously performative in more than one sense of the word. But the focus on the production (felicitous of not) of nothing less than a “business self” through the crafts of the simulacrum (becoming a businessperson by doing the businessperson thing) is definitely an angle that deserves attention.

Chapter 5: Marketing, Testing and the Production of Preferences

Chapter 5 of The Provoked Economy (“Testing consumer preferences”) takes the reader to a consumer testing venue, the same one that Anne-Sophie Trébuchet-Breitwiller got us into in “Becoming a measuring instrument: an ethnography of perfume consumer testing”. What happened there? What kinds of things were provoked? Consumer tests and other kinds of experimental market research technologies are instruments for the observation of the reality of consumer markets. But the reality they really observe is an artificially generated reality that rarely looks like the mundane vagaries of people wandering in the shopping mall. And, still, this reality works well as a realization of the consumer. As the chapter argues, this is a perfect illustration of the problem of the simulacrum. In that sense, the chapter starts with a reference to studies that have emphasized the performative features of one comparable, quire widespread technology for the elicitation of attitudes, preferences and opinions: the focus group, as depicted in “A market of opinions: the political epistemology of focus groups” by Javier Lezaun, and in “Convoking the consumer in person: the focus group effect” by Catherine Grandclément and Gérald Gaglio (also available here).

The chapter is about perfume. Olfactory tests are a key element in the organization of the competition between fragrances. Fragrance firms test their fragrances before submitting them to brands, which again test them:

“Fragrance forms do actually conduct testing campaigns to identify the fragrances that should be submitted to testing campaigns. Mass-market perfumes are entangled within these layers of tests, hence constituted through this mille-feuilles of simulacra.” (p. 84)

Rather than looking as this industry-wide entanglement, the chapter examines what exactly happens inside the testing venue. One central claim here is that in order for the test to function test participants need to engage with the active task of becoming measuring instruments:

What happens to participants inside the testing venue? What do they do? The easy answer is, they are consumers; they express their preferences, so they act as proxies for the real market and the test records that. An ethnographic examination of what actually happens inside the testing venue tends to blur that answer a little. Participants do act as surrogates for something else, indeed; but this acting is an active performance, and active alteration of oneself. Participants we talked to thought of themselves as acting ‘naturally’ (as the facilitator actually requested of them), but they also repeatedly employed the vocabulary of learning and performing – and of becoming. The test did not measure something inside of them, rather the test turned them into ‘measuring instruments’.” (p. 86)

The chapter does then something rather unusual: it allows the author to just delve into his own experience as an “experimental subject” in one perfume testing session. Are “consumer preferences” really a performative achievement that is prompted within an elicitation device? Is this really true when one is true to oneself in the account of the effects of being plunged in such a device? The answer given in the chapter is yes.

A number of conclusions are then drawn together in relation to the sociology of testing, a specialty whose lineaments were already sketched out in a number of notable contributions to science and technology studies — see in particular Trevor Pinch’s. Testing, as this literature shows, is about establishing relationships between something that happens in the testing venue and something else:

“Putting all of this in terms of translation is also a nice alternative, one that insists on the performative endeavour of the act of establishing relationships. This alternative has been investigated extensively throughout actor–network theory: reality does not travel well without material, generative operations of translation, and this applies to the claims that circulate within and outside the experimental site.” (p. 92)

The chapter pulls Michel Callon’s original idea of “operations of translation” in that direction:

“What happens inside the testing venue amounts to a series of problematic statements (e.g. ‘this fragrance records the highest hedonic performance’ or ‘participants can express their personal preferences quantitatively’) that undergo more or less felicitous operations of translation within the testing venue, but also externally in order to meet the terms of problematic statements that characterize other sites, outside the testing venue (e.g. ‘this perfume is a blockbuster’ or ‘men do not like dark, soft perfume’). These operations produce knowledge: to know things is to operate schemes of transformation on the ensembles that contain them. But they also require the formation of a welcoming reality: operations of translation amount to the creation of metric connections, the development of habits and the circulation of objects. When something is subject to testing, it is indeed a thing to which something happens in the testing laboratory; but it also translates something else, distant from the testing laboratory. The problem of the distance between the test and the tested is not to be solved through a faithful copy of the original, but through the proliferation of operations of translation that can be severely transformative.” (p. 93)


Is the Economy a Mode of Existence?

“Economic reason is perhaps the toughest and gravest chapter in Latour’s philosophical anthropology” (p. 36), reads The Provoked Economy in reference to Bruno Latour‘s Inquiry into Modes of Existence and its accompanying collaborative venture. The problem indeed was there well and alive in earlier installments of the project, always at hands with economic naturalism, progressively reconstructed in terms of a problematic amalgamation of three different “regimes of veridiction” (or, as put in newer versions of the project, “modes of existence”): that of human commerce and lived transaction (ATT); that of tabular containment and patterned reticulation (ORG), and that of moral elevation and optimal resolution (MOR). The Provoked Economy does not dig into the Inquiry‘s jargon — for lack of time, mostly. But the scars are there! Good luck to the AIME crowd with the resolution of the quandary.



Chapter 4: Virtual Prices and Second-Order Transparency

Damn it! Markets turned into algorithms! Yes, indeed. Chapter 4 (“Discovering stock prices”) takes The Provoked Economy to the land of the financial automated exchange — digging into the technical trenches of exchange automation, exploring its intellectual meanders, and looking quite narrowly at some eccentric exemplars. In short:

“‘Price discovery automation’ – a wave of electronic interventions that characterized financial markets all over the world and which culminated, sometimes quite resoundingly, with the abolition of open-outcry and face-to-face trading – was presented as both a unique contribution to the purification of price formation (i.e. the removal of the barriers that prevented the expression of the market in the form of truly transparent prices) and a blatant demonstration of the fact that price formation is a technological service (i.e. something that does not happen in and by itself, something explicitly manufactured, utterly unnatural).” (p. 62)

Financial exchanges today (e.g. Euronext) are technology vendors: they sell machines that produce prices. The jargon of equilibrium, efficiency and transparency stands as a marketing argument on the quality of this particular kind of merchandise that prices are. The chapter focuses first on the problem of explicitness that the algorithmic formulation of ‘price discovery’ (as economists put it) entail:

“All situations are to be considered and all possible courses of action solved unambiguously in a finite (and preferably elegant) number of steps. No ‘We will deal with that when the situation arises’; no ‘It depends on how you interpret it’. All possibilities will be contemplated, all combinations will be exhausted. An algorithm is indeed exhausting in a sense not dissimilar from the one Gilles Deleuze spotted in the combinatorial procedures for (desolate) optimization in Samuel Beckett’s characters.” (p. 66)

The reference there is on Deleuze‘s take on Beckett’s Quad. Deleuze is still at work in the chapter when it reaches the problem of virtual and actual prices:

“Something virtual, a virtual price for example, would be something real, in a sense, something living in a particular place, or in many (perhaps only in the mind of Léon Walras, although this was a very real mind), or perhaps in none particularly, but that can be actualized in another place. And the terms of this displacement (it is, literally, about changing place) are not the repetition, the immutability, the adequacy or the conservation of shape and features. The terms are the multiplicity, the transformation, the opportunity and the generation of occasions. Actualization is enactment, and not all acts look alike. But enactment is enrichment of the virtual, not impoverishment.” (p. 70-71)”

Grounded there on a pragmatist appraisal of prices as signs (and on market technologies as enunciation apparatuses), the chapter interprets the “referential escalation” (p. 71) prompted by exchange automation as the medium of high-frequency, algorithmic trading — a phenomenon aptly scrutinized by colleagues in the social studies of finance (see in particular Lenglet’s “Conflicting codes and codings” and MacKenzie, Beunza, Millo and Pardo-Guerra’s “Drilling through the Allegheny Mountains”). It is there where the chapter introduces the discussion of second-order transparency:

“Transparency means anonymity. This understanding of transparency may sound counter-intuitive if considered from a literal vantage point. The transparency-making device prevents you from seeing directly who you are trading with, making that irrelevant. It is also counter-intuitive if considered from the angle of face-to-face interaction, an angle notoriously reclaimed by a sociological understanding of sensemaking in the market. You lose the insight gained from watching people and you must cope with a faceless representative of the market – namely, the screen (a notion which can convey, paradoxically enough, both an idea of displaying or broadcasting and an idea of partitioning or concealing).” (p. 72-73)

This problem — and its cybernetic guise — is examined in the light of what Jean-Pierre Dupuy has termed “Von Foerster’s Conjecture”:

“A system in which members recognize themselves is transparent to them since they situate themselves, artificially, in a position of exteriority that we usually call ‘society’, but opaque to a second-order observer who finds it messy. A system that prioritizes second-order transparency requires trivial rules, and is therefore somewhat opaque (putting sense out of reach) for internal participants. But, in contrast, it provides a neat delineation of behaviour and rationale from the second-order angle.” (p. 74)

The material culture of financial markets is to a great extent a culture of second-order transparency, the chapter claims, which translates into escalation in meta-observation. The trouble is, it adds, “that what we are now left with is an overcrowded, saturated mass of externalities, blind spots and cracks whose dangers no aggregative magic is likely to cancel “(p. 75).

The chapter concludes on two slightly radical ideas about how to make sense of prices in finance today. The first is about their “uncommercial condition”. Can we interpret prices as the sign of “supply” meeting “demand” in a “single point” with the purpose of engaging a commercial exchange? Perhaps still a little bit:

“But the fact is that price discovery automation produced, above all, a medium for the rapid, automatic production of prices, irrespective of their commercial purpose. To want to buy or sell a determined quantity of stock shares might be fairly common motives for putting an order through the electronic system, but definitely not the only ones, and perhaps not the most common ones nowadays.” (p. 75)

The second conclusion is about the “substrate function” of prices. Prices are not there to refer to mercantile transactions, but to serve as merchandise in an by themselves — as bulk matter for the derivative business:

“The commercial purpose of the immense quantities of prices produced by the automated stock exchange is to provide the stuff (‘underlying’ prices) that serves as a substrate for all kinds of derivative financial activities. The idea that derivative finance emerges on top of plain finance as an overarching probabilistic technique for assessing, insuring, hedging and underlying reality is quite passé. Rather, it is the other way around: first comes derivative finance, and then matter is produced that can serve as its substrate.” (p. 77)

In this respect, the chapter quite connects with current metaphysical developments that try to consider prices as a “medium of contingency”.

Chapter 3: Writing the Investment Bank

Chapter 3 (“Recounting financial objects”) is the first explicitly empirical chapter of The Provoked Economy. It tells what happens in the back office of a large investment bank (referred to as “Thoth Bank”, the same bank that was dealt with here) with attention to the quandaries of description and finalization — the finalization of description.

Why description?

“If one looks at the activities carried out in the trading rooms of large international investment banks, one notices how prevalent the problem of description is. Investment banking is about describing financial products, writing them, checking their terms, re-describing them in different terms, forwarding and verifying these descriptions, making sense (especially financial sense) of them. This is even more visible when one examines the locus of the paperwork: that is, the back office.” (p. 45)

Why finalization?

“What the empirical examination of Thoth Bank reveals, in any case, is that the concern for finalization and its consequences stands almost as the essence of the back office — the banking anus (technically speaking).” (p. 49)

The chapter looks there at several things. One is the mess of coping electronically with a compound of multifarious descriptions. Another one is valuation (e.g. calculating profits) considered as a problem of description (e.g. coping with discrepancies between the descriptions of the value of a “same” product, with emphasis on the ontology of those quotation marks). And another one is the unpacking of the unsettling question of the technocratic power of description of financial objects, and its role in the proliferation of descriptive escalation (or, in order words, financial complication). The chapter quite naturally ends with a comment on Kerviel.


Chapter 2: Economizing Against Economic Nature

Talking about the Colloque de Cerisy: the second chapter of The Provoked Economy is inspired, in part, by what happened there on between in July 2006, at the workshop on “The Historical Anthropology of Scientific Reason” orchestrated by Bruno Latour and Philippe Descola. The topic was naturalism in modern, scientific style of reasoning:

“The crucial hypothesis shared at the Colloque de Cerisy was of course that the particular style of Western modern reason is plainly naturalistic. The modern scientist can talk about multiculturalism (several cultures, several ways of thinking and of seeing things, several ways of experiencing human interiority), but never about multinaturalism (since there is only one nature).” (p. 36)

Well, and hypothesis not shared by all:

“For Latour, naturalism corresponds to the picture modern science keenly provides of itself, but is at odds with what modern science really does. According to Latour, the archetypical modern thinker speaks with a forked tongue, praising naturalism, prentending to be a naturalistic-minded enquirer, but in practice failing to refrain from producing hybrids between nature and culture, and continuing to be entirely performative.” (p. 36)

The chapters asks where is economic reason situated in that debate, using recent debates on the performativity of economics as a naturally-occurring anthropological experiment (spoiler: the chapter sides with Latour on that).

It also provides a quick working definition of the processes that are at the heart of the constitution of the economic: economization, abstraction, valuation and capitalization, all considered as material acts of signification rather than as substantive things. The idea is not new: it is about dropping the idea of value and looking instead at valuation:

“From the pragmatist perspective put forward by authors such as John Dewey, the intellectual problem of value (whether it is objective or subjective, and so forth) could be better approached through a ‘flank movement’ which basically consists in abandoning value as a substantive feature and considering valuation as an empirical act.” (p. 40)

And this is an essential ingredient of the provoked economy:

“But immersing things in networks of valuation is not only about considering these things from an economic viewpoint. It is first and foremost about getting these things prepared for an economic act (e.g. the act of selling or purchasing, the act of investing).” (p. 40)

The chapter closes with a remark on Gilles Deleuze and Féliz Guattari (capitalization considered as a particular form of encoding).

First Public Presentation

The Provoked Economy had the privilege of (discretely) using this week’s meeting at the Colloque de Cerisy (a venue that is actually mentioned in the book, p. 35-36, in reference to an earlier gathering) for a first encounter with “the public”, shared with Calculating the Human, Luigi Doria‘s fantastic Heideggerian interrogation on the calculation of the qualities of life. Thanks to Alexandra Bidet and Florence Jany-Catrice for their kind invitation! And to Luigi for his thoughtful and suggestive reading.

Chapter 1: Description, Simulacrum, Provocation and Explicitness

As mentioned in a previous post, the second part of The Provoked Economy‘s first chapter dives into “For Distinctive Philosophical Problems” — a slightly pompous way to refer to the four notions (description, simulacrum, provocation and explicitness) that constitute the bulk of the contribution.

The section starts with the problem of description. A classic discussion in matters of performativity is on the famous disquisition proposed by John L. Austin in the William James Lectures that he gave at Harvard University in 1955. This is supposedly where a sharp distinction between constative and performative utterances took shape (i.e between situations in which the purpose is to describe an external state of affairs and situations in which the purpose is to institute this very state of affairs). But it is also where Austin himself objected to the robustness of the distinction (Lectures XI and XII, especially). To state something is an act, obviously, even if the purpose of the statement is just to institute a description. Descriptions add to the world and enter therefore the vast and all-encompassing realm of the performance. Any written text, any uttered speech supplies reality with more reality:

“Descriptions may differ in their style of reference. Here, I am afraid that there are more than two categories, and I believe Austin would agree. But they are all facts, things that happen, events. They may refer to something that is already there but they definitely add to reality, too. They provoke a new situation, a new ontological deal: one in which there is a description.” (p. 18)

But the point of the book is to not engage into a savant commentary of Austin. The purpose is to decide what to do with the fact that ordinary business is cluttered with descriptions that indeed add to the stuff of business. The chapter goes straight to finance. What is a financial derivative contract? It is a text. It is a document that describe conditional terms of payment. A description that is in turn described in other terms (e.g. risk assessment, potential price) in other texts, and forwarded to the market, which is in fact another pile of such documents. And these descriptions are obviously performative: they do things indeed, they constitute the market. The idea of the performative that is envisioned in the philosophy of financial writing proposed by Elie Ayache, for example, clearly takes in my view that path. And this performative condition clearly matches the fact that in his understanding of derivative finance the point is not to assess an underlying reality with a good or bad probabilistic science: his book is about “the end of probability” because it is about the end of the underlying reference.

Of course, putting things this way can precipitate the usual fear of the “virtual” in finance — “virtual” in the sense of “not quite real”, “not quite referring to an underlying reality”. Many scholars using the notion of virtuality in the consideration of economic matters seem to imply that. The point of The Provoked Economy is to counter that. This is where the chapter shifts attention to the problem of the simulacrum. I quickly acknowledge there the debt towards Gilles Deleuze, whose take on the simulacrum I present as a fine antidote against the view popularized by Jean Baudrillard. The simulacrum is not a hollow representation, but a medium of realization. And this applies to the myriad situations of ordinary business life in which reality is conveyed through the usual incantatory display:

“The problem of the simulacrum can be dealt with, in these situations, through a rather discouraging angle inspired by Baudrillard (i.e. the lack of truthful reality within the manipulation of symbols in business remediation) or through a more Deleuzian movement, which I would like to call openly pragmatist (i.e. the realization of business through the business simulacrum).” (p. 22)

I refer in this section, for example, to the work of Ellen Hertz on stock markets as simulacra: a crucial contribution to the understanding of the potentials of a Deleuzian view for an object that can easily favor a Baudrillardesque temptation. As Deleuze would put it, the simulacrum refers to the power of producing an effect. This leads in the chapter to the problem of provocation, an idea that a contemporary philosophical mind would readily link to Martin Heidegger (technique provokes what is, rather than unveiling it). I rely rather on Bruno Latour and his take on the experimental event (where he makes an explicit use of the notion of performance) — and on Javier Izquierdo an his philosophical anthropology of the hidden-camera prank:

“The hidden camera prank is a perfect model of the fundamental problem of provocation. It intensifies both the revelatory power of experimental orchestration and its generative thrill. It problematizes reality.” (p. 24)

The idea, which has been also explored elsewhere in relation to psychology, is to remark both the performative condition of economic interventions and its challenging character:

“Provoking, effecting, performing something is a way of exposing it to consideration. It is a way, in other words, of making something explicit. Here again we hit upon a well-known philosophical problem, because saying that something is being made explicit can very well mean that the thing was there already, implicit, existing in a latent, veiled, secret or potential form, for instance, in the form of an idea. On the other hand, one can claim that explicitness is a quite demanding state to be in, which affects what is at stake in a truly inventive fashion, with no particularly transcendental antecedent.” (p. 24)

In this first chapter, I rather side with the second interpretation of explicitness: it is not about a clarification of the prefigured, but about a provocation of the possible. In short, the quick exploration that this chapter offers through a glance at these four problems (description, simulacrum, provocation and explicitness) is meant to redefine the way one might want to consider the whole business of performativity in the rest of the book:

“We are quite far away from any idea of thoughts having effects on things, of theories having an impact on practices, of principles informing particulars, of representations influencing whatever it is that it is represented. We depart from the two-layer setting in which that would make sense. There is only one layer — a cracked, filamentous and turbulent layer, bumpy and shaggy, but quite horizontal.” (p. 26)