Mark C. Taylor’s Confidence Games: Money and Markets in a World Without Redemption is erudite, entertaining, and intellectually wide-ranging — and it has the virtue of dealing with a subject (money and markets) that rarely gets enough attention from people deeply into pomo theory. Why, then, did I find myself so dissatisfied with the book?
Taylor is a postmodern, deconstructionist theologian — if that makes any sense, and in fact when reading him it does — who has written extensively about questions of faith and belief in a world without a center or foundations. Here he writes about the relations between religion, art, and money — or, more philosophically, between theology, aesthetics, and economics. He starts with a consideration of William Gaddis’ underrated and underdiscussed novels The Recognitions and JR (the latter of which he rightly praises as one of the most crucial and prophetic reflections on late-20th-century American culture: in a book published in 1975, Gaddis pretty much captures the entire period from the deregulation and S&L scams of the Reagan 80s through the Enron fiasco of just a few years ago: nailing down both the crazy economic turbulence and fiscal scamming, and its influence on the larger culture). From Gaddis, Taylor moves on to the history of money, together with the history of philosophical reflections upon money. He’s especially good on the ways in which theological speculation gets transmuted into 18th and 19th century aesthetics, and on how both theological and aesthetic notions get subsumed into capitalistic visions of “the market.” In particular, he traces the Calvinist (as well as aestheticist) themes that stand behind Adam Smith’s vision of the “invisible hand” that supposedly ensures the proper functioning of the market.
The second half of Taylor’s book moves towards an account of how today’s “postmodern” economic system developed, in the wake of Nixon’s abandonment of the gold standard in 1971, the Fed’s conversion from Keynesianism to monetarism in 1979, and the general adoption of “neoliberal” economics throughout the world in the 1980s and 1990s. The result of these transformations is the dematerialization of money (since it is no longer tied to gold) and the replacement of a “real” economy by a “virtual” one, in which money becomes a series of ungrounded signs that only refer to one another. Money, in Taylor’s account, has always had something uncanny about it — because, as a general equivalent or medium of exchange, it is both inside and outside the circuits of the items (commodities) being exchanged; money is a liminal substance that grounds the possibility of fixed categories and values, but precisely for that reason, doesn’t itself quite fit into any category, or have any autonomous value. But with the (re-)adoption of free-market fundamentalism in the 1980s, together with the explosive technological changes of the late 20th century — the growth of telecommunications and of computing power that allow for global and entirely ‘fictive’ monetary flows — this all kicks into much higher gear: money becomes entirely “spectral.” Taylor parallels this economic mutation to similar experiences of ungroundedness, and of signs that do not refer to anything beyond themselves, in the postmodern architecture of Venturi and after, in the poststructuralist philosophy of Derrida (at least by Taylor’s somewhat simplistic interpretation of him), and more generally in all facets of our contemporary culture of sampling, appropriation, and simulation. (Though Taylor only really seems familiar with high art, which has its own peculiar relationship to money; he mentions the Guggenheim Museum opening a space in Las Vegas, but — thankfully perhaps — is silent on hiphop, television, or anything else that might be classified as “popular culture”).
I think that Taylor’s parallels are a bit too facile and glib, and underrate the complexity and paradoxicality of our culture of advertising and simulation — but that’s not really the core of my problem with the book. My real differences are — to use Taylor’s own preferred mode of expression — theological ones. I think that Taylor is far too idolatrous in his regard for “the market” and for money, which traditional religion has seen as Mammon, but which he recasts as a sort of Hermes Trismegistus or trickster figure (though he doesn’t directly use this metaphor), as well as a Christological mediator between the human and the divine. Taylor says, convincingly, that economics cannot be disentangled from religion, because any economic system ultimately requires faith — it is finally only faith that gives money its value. But I find Taylor’s faith to be troublingly misplaced: it is at the antipodes from any form of fundamentalism, but for this very reason oddly tends to coincide with it. In postmodern society, money is the Absolute, or the closest that we mortals can come to an Absolute. (Taylor complacently endorses the hegelian dialectic of opposites, without any of the sense of irony that a contemporary christianophile hegelian like Zizek brings to the dialectic). Where fundamentalists seek security, grounding, and redemption, Taylor wants to affirm uncertainty and risk “in a world without redemption.” But this means that the turbulence and ungroundedness of the market makes it the locus for a quasi-religious Nietzschean affirmation (“risk, uncertainty, and insecurity, after all, are pulses of life” — 331) which is ultimately not all that far from the Calvinist faith that everything is in the hands of the Lord.
Taylor at one point works through Marx’s account of the self-valorization of capital; for Taylor, “Marx implicitly draws on Kant’s aesthetics and Hegel’s philosophy” when he describes capital’s “self-renewing circular exchange” (109). That is to say, Marx’s account of capital logic has the same structure as Kant’s organically self-validating art object, or Hegel’s entire system. (Taylor makes much of Marx’s indebtedness to Hegel). What Taylor leaves out of his account, however, is the part where Marx talks about the appropriation of surplus value, which is to say what capital does in the world in order to generate and perpetuate this process of “self-valorization.” I suggest that this omission is symptomatic. In his history of economics, Taylor moves from Adam Smith to such mid-20th-century champions of laissez faire as Milton Friedman and F. A. Hayek; but he never mentions, for instance, Ricardo, who (like Marx after him) was interested in production and consumption, rather than just circulation.
Now, simply to say — as most orthodox Marxists would do — that Taylor ignores production, and the way that circulation is grounded in production, is a more “fundamentalist” move than I would wish to make. Taylor is right to call attention to the eerily ungrounded nature of contemporary finance. Stock market prices are largely disconnected from any underlying economic performance of the companies whose stocks are being traded; speculation on derivatives and other higher-order financial instruments, which have even less relation to actual economic activity, have largely displaced productive investment as the main “business” of financial markets today. But Taylor seems to celebrate this process as a refutation of Marx and Marxism (except to the extent that Marx himself unwittingly endorses the self-valorization of capital, by describing it in implicitly aesthetic and theological terms). Taylor tends to portray Marx as an old-school fundamentalist who is troubled by the way that money’s fluidity and “spectrality” undermine metaphysical identities and essences. But this is a very limited and blinkered (mis)reading of Marx. For Marx himself begins Capital with the notorious discussion of the immense abstracting power of commodities and money. And subsequently, Marx insists on the way that circuits of finance tend, in an advanced capitalist system, to float free of their “determinants” in use-value and labor. The autonomous “capital-logic” that Marx works out in Volumes 2 & 3 of Capital is much more true today than it ever was in Marx’s own time. Marx precisely explores the consequences of these developments without indulging in any “utopian-socialist” nostalgia for a time of primordial plenitude, before money matters chased us out of the Garden.
Let me try to put this in another way. The fact that postmodern financial speculation is (quite literally) ungrounded seems to mean, for Taylor, that it is therefore also free of any extraneous consequences or “collateral damage” (Taylor actually uses this phrase as the title of one section of the book, playing on the notion of “collateral” for loans but not considering any extra-financial effects of financial manipulations). Much of the latter part of Confidence Games is concerned with efforts by financiers and economists, in the 1980s and 1990s, to manage and minimize risk; and with their inability to actually do so. Taylor spends a lot of time, in particular, on the sorry story of Long-Term Capital Management (LTCM), the investment firm that went bankrupt so spectacularly in 1998. After years of mega-profits, LTCM got called on its outrageously leveraged investments, found that it couldn’t repay any of its loans, and had to be bailed out to avoid a domino effect leading to worldwide financial collapse. In Taylor’s view, there’s a kind of moral lesson in this: LTCM wanted to make hefty profits without taking the concomitant risks; but eventually the risks caught up with them, in a dramatic movement of neo-Calvinist retribution, a divine balancing of the books. Taylor doesn’t really reflect on the fact that the “risks” weren’t really all that great for the financiers of LTCM themselves: they lost their paper fortunes, but they didn’t literally lose their shirts or get relegated to the poorhouse. Indeed their losses were largely covered, in order to protect everyone else, who would have suffered from the worldwide economic collapse that they almost triggered. The same holds, more recently, for Enron. Ken Lay got some sort of comeuppance when Enron went under, and (depending on the outcome of his trial) he may even end up having to serve (like Martha Stewart) some minimum-security jail time. But Lay will never be in the destitute position of all the people who lost their life savings and old-age pensions in the fiasco. Gaddis’ JR deals with the cycles of disruption and loss that are triggered by the ungrounded speculations at the center of the novel — but this is one aspect of the text Taylor never talks about.
Taylor sharply criticizes the founding assumptions of mainstream economists and financiers: the ideas that the market is “rational,” and that it tends toward “equilibrium.” And here Taylor is unquestionably right: these founding assumptions — which still pervade mainstream economics in the US and around the world — are indeed nonsensical, as well as noxious. It’s only under ideal, frictionless conditions, that almost never exist in actuality, that Smith’s “invisible hand” actually does operate to create “optimal” outcomes. Marginalist and neoclassical/neoliberal economics is probably the most mystified discipline in the academy today, wedded as it is to the pseudo-rigor of mathematical models borrowed from physics, and deployed in circumstances where none of the idealizations at the basis of physics actually obtain. It’s welcome to see Taylor take on the economists’ “dream of a rationally ordered world” (301), one every bit as out of touch with reality, and as harmful in its effects when people tried to bend the real world to conform to it, as Soviet communism ever was.
But alas — Taylor only dismisses the prevalent neoclassical version of the invisible hand, in order to welcome it back in another form. If the laws of economic equilibrium, borrowed by neoclassical economics from 19th-century physical dynamics, do not work, for Taylor this is because the economy is governed instead by the laws of complex systems, which he borrows from late-20th-century physics in the form of chaos and complexity theory. There is still an invisible hand in Taylor’s account: only now it works through phase transitions and strange attractors in far-from-equilibrium conditions. Taylor thus links the physics of complexity to the free-market theories of F. A. Hayek (Margaret Thatcher’s favorite thinker), for whom the “market” was a perfect information-processing mechanism that calculated optimal outcomes as no “central planning” agency could. According to Hayek’s way of thinking, since any attempt at human intervention in the functioning of the economy — any attempt to alleviate or mitigate circumstances — will necessarily have unintended and uncontrollable consequences, we do best to let the market take its course, with no remorse or regret for the vast amount of human suffering and misery that is created thereby.
Such sado-monetarist cruelty is clearly not Taylor’s intention, but it arises nevertheless from his revised version of the invisible hand, as well as from his determination to separate financial networks from their extra-financial effects. I’ll say it again: the more Taylor celebrates the way that everything is interconnected, and all systems are open, he still maintains a sort of methodological solipsism or blindness to external consequences. The fact that financial networks today (or any other sort of self-perpetuating system of nonreferential signs) are ungrounded self-affecting systems, produced in the unfolding of a “developmental process [that] neither is grounded in nor refers to anything beyond itself” (330) — this fact does not exempt these systems from having extra-systemic consequences: indeed, if anything, the system’s lack of “groundedness” or connection makes the extra-systemic effects all the more intense and virulent. To write off thesse effects as “coevolution,” or as the “perpetual restlessness” of desire, or as a wondrous Nietzschean affirmation of risk, is to be disingenuous at best.
There’s a larger question here, that goes far beyond Taylor. When we think today of networks, or of chaotic systems, we think of patterns that are instantiated indifferently in the most heterogeneous sorts of matter. The same structures, the same movements, the same chaotic bifurcations and phase transitions, are supposedly at work in biological ecosystems, in the weather, and in the stock market. This is the common wisdom of the age — it certainly isn’t specific to Taylor — but it’s an assumption that I increasingly think needs to be criticized. The very fact that the same arguments from theories of chaos/complexity and “self-organization” can be cited with equal relevance by Citibank and by the alterglobalization movement, and can be used to justify both feral capitalism and communal anarchism, should give us pause. For one thing, I don’t think we know yet how well these scientific theories will hold up; they are drastic simplifications, and only time will tell how well they perform, how useful they are, in comparison to the drastic simplifications proposed by the science of, say, the nineteenth century. For another thing, we still need to be dubious about how the idea of the same pattern instantiated indifferently in various sorts of matter is just another extension — powerful in some ways, but severely limiting in others — of Western culture’s tendency to divide mind or meaning from matter, and to devalue the latter. For yet another, we should be very wary of drawing political and ethical consequences from scientific observation and theorization, for usually such drawing-consequences involves a great deal of arbitrariness, as it projects the scientific formulations far beyond the circumstances in which they are meaningful.
Mark C. Taylor’s Confidence Games: Money and Markets in a World Without Redemption is erudite, entertaining, and intellectually wide-ranging — and it has the virtue of dealing with a subject (money and markets) that rarely gets enough attention from people deeply into pomo theory. Why, then, did I find myself so dissatisfied with the book?
Taylor is a postmodern, deconstructionist theologian — if that makes any sense, and in fact when reading him it does — who has written extensively about questions of faith and belief in a world without a center or foundations. Here he writes about the relations between religion, art, and money — or, more philosophically, between theology, aesthetics, and economics. He starts with a consideration of William Gaddis’ underrated and underdiscussed novels The Recognitions and JR (the latter of which he rightly praises as one of the most crucial and prophetic reflections on late-20th-century American culture: in a book published in 1975, Gaddis pretty much captures the entire period from the deregulation and S&L scams of the Reagan 80s through the Enron fiasco of just a few years ago: nailing down both the crazy economic turbulence and fiscal scamming, and its influence on the larger culture). From Gaddis, Taylor moves on to the history of money, together with the history of philosophical reflections upon money. He’s especially good on the ways in which theological speculation gets transmuted into 18th and 19th century aesthetics, and on how both theological and aesthetic notions get subsumed into capitalistic visions of “the market.” In particular, he traces the Calvinist (as well as aestheticist) themes that stand behind Adam Smith’s vision of the “invisible hand” that supposedly ensures the proper functioning of the market.
The second half of Taylor’s book moves towards an account of how today’s “postmodern” economic system developed, in the wake of Nixon’s abandonment of the gold standard in 1971, the Fed’s conversion from Keynesianism to monetarism in 1979, and the general adoption of “neoliberal” economics throughout the world in the 1980s and 1990s. The result of these transformations is the dematerialization of money (since it is no longer tied to gold) and the replacement of a “real” economy by a “virtual” one, in which money becomes a series of ungrounded signs that only refer to one another. Money, in Taylor’s account, has always had something uncanny about it — because, as a general equivalent or medium of exchange, it is both inside and outside the circuits of the items (commodities) being exchanged; money is a liminal substance that grounds the possibility of fixed categories and values, but precisely for that reason, doesn’t itself quite fit into any category, or have any autonomous value. But with the (re-)adoption of free-market fundamentalism in the 1980s, together with the explosive technological changes of the late 20th century — the growth of telecommunications and of computing power that allow for global and entirely ‘fictive’ monetary flows — this all kicks into much higher gear: money becomes entirely “spectral.” Taylor parallels this economic mutation to similar experiences of ungroundedness, and of signs that do not refer to anything beyond themselves, in the postmodern architecture of Venturi and after, in the poststructuralist philosophy of Derrida (at least by Taylor’s somewhat simplistic interpretation of him), and more generally in all facets of our contemporary culture of sampling, appropriation, and simulation. (Though Taylor only really seems familiar with high art, which has its own peculiar relationship to money; he mentions the Guggenheim Museum opening a space in Las Vegas, but — thankfully perhaps — is silent on hiphop, television, or anything else that might be classified as “popular culture”).
I think that Taylor’s parallels are a bit too facile and glib, and underrate the complexity and paradoxicality of our culture of advertising and simulation — but that’s not really the core of my problem with the book. My real differences are — to use Taylor’s own preferred mode of expression — theological ones. I think that Taylor is far too idolatrous in his regard for “the market” and for money, which traditional religion has seen as Mammon, but which he recasts as a sort of Hermes Trismegistus or trickster figure (though he doesn’t directly use this metaphor), as well as a Christological mediator between the human and the divine. Taylor says, convincingly, that economics cannot be disentangled from religion, because any economic system ultimately requires faith — it is finally only faith that gives money its value. But I find Taylor’s faith to be troublingly misplaced: it is at the antipodes from any form of fundamentalism, but for this very reason oddly tends to coincide with it. In postmodern society, money is the Absolute, or the closest that we mortals can come to an Absolute. (Taylor complacently endorses the hegelian dialectic of opposites, without any of the sense of irony that a contemporary christianophile hegelian like Zizek brings to the dialectic). Where fundamentalists seek security, grounding, and redemption, Taylor wants to affirm uncertainty and risk “in a world without redemption.” But this means that the turbulence and ungroundedness of the market makes it the locus for a quasi-religious Nietzschean affirmation (“risk, uncertainty, and insecurity, after all, are pulses of life” — 331) which is ultimately not all that far from the Calvinist faith that everything is in the hands of the Lord.
Taylor at one point works through Marx’s account of the self-valorization of capital; for Taylor, “Marx implicitly draws on Kant’s aesthetics and Hegel’s philosophy” when he describes capital’s “self-renewing circular exchange” (109). That is to say, Marx’s account of capital logic has the same structure as Kant’s organically self-validating art object, or Hegel’s entire system. (Taylor makes much of Marx’s indebtedness to Hegel). What Taylor leaves out of his account, however, is the part where Marx talks about the appropriation of surplus value, which is to say what capital does in the world in order to generate and perpetuate this process of “self-valorization.” I suggest that this omission is symptomatic. In his history of economics, Taylor moves from Adam Smith to such mid-20th-century champions of laissez faire as Milton Friedman and F. A. Hayek; but he never mentions, for instance, Ricardo, who (like Marx after him) was interested in production and consumption, rather than just circulation.
Now, simply to say — as most orthodox Marxists would do — that Taylor ignores production, and the way that circulation is grounded in production, is a more “fundamentalist” move than I would wish to make. Taylor is right to call attention to the eerily ungrounded nature of contemporary finance. Stock market prices are largely disconnected from any underlying economic performance of the companies whose stocks are being traded; speculation on derivatives and other higher-order financial instruments, which have even less relation to actual economic activity, have largely displaced productive investment as the main “business” of financial markets today. But Taylor seems to celebrate this process as a refutation of Marx and Marxism (except to the extent that Marx himself unwittingly endorses the self-valorization of capital, by describing it in implicitly aesthetic and theological terms). Taylor tends to portray Marx as an old-school fundamentalist who is troubled by the way that money’s fluidity and “spectrality” undermine metaphysical identities and essences. But this is a very limited and blinkered (mis)reading of Marx. For Marx himself begins Capital with the notorious discussion of the immense abstracting power of commodities and money. And subsequently, Marx insists on the way that circuits of finance tend, in an advanced capitalist system, to float free of their “determinants” in use-value and labor. The autonomous “capital-logic” that Marx works out in Volumes 2 & 3 of Capital is much more true today than it ever was in Marx’s own time. Marx precisely explores the consequences of these developments without indulging in any “utopian-socialist” nostalgia for a time of primordial plenitude, before money matters chased us out of the Garden.
Let me try to put this in another way. The fact that postmodern financial speculation is (quite literally) ungrounded seems to mean, for Taylor, that it is therefore also free of any extraneous consequences or “collateral damage” (Taylor actually uses this phrase as the title of one section of the book, playing on the notion of “collateral” for loans but not considering any extra-financial effects of financial manipulations). Much of the latter part of Confidence Games is concerned with efforts by financiers and economists, in the 1980s and 1990s, to manage and minimize risk; and with their inability to actually do so. Taylor spends a lot of time, in particular, on the sorry story of Long-Term Capital Management (LTCM), the investment firm that went bankrupt so spectacularly in 1998. After years of mega-profits, LTCM got called on its outrageously leveraged investments, found that it couldn’t repay any of its loans, and had to be bailed out to avoid a domino effect leading to worldwide financial collapse. In Taylor’s view, there’s a kind of moral lesson in this: LTCM wanted to make hefty profits without taking the concomitant risks; but eventually the risks caught up with them, in a dramatic movement of neo-Calvinist retribution, a divine balancing of the books. Taylor doesn’t really reflect on the fact that the “risks” weren’t really all that great for the financiers of LTCM themselves: they lost their paper fortunes, but they didn’t literally lose their shirts or get relegated to the poorhouse. Indeed their losses were largely covered, in order to protect everyone else, who would have suffered from the worldwide economic collapse that they almost triggered. The same holds, more recently, for Enron. Ken Lay got some sort of comeuppance when Enron went under, and (depending on the outcome of his trial) he may even end up having to serve (like Martha Stewart) some minimum-security jail time. But Lay will never be in the destitute position of all the people who lost their life savings and old-age pensions in the fiasco. Gaddis’ JR deals with the cycles of disruption and loss that are triggered by the ungrounded speculations at the center of the novel — but this is one aspect of the text Taylor never talks about.
Taylor sharply criticizes the founding assumptions of mainstream economists and financiers: the ideas that the market is “rational,” and that it tends toward “equilibrium.” And here Taylor is unquestionably right: these founding assumptions — which still pervade mainstream economics in the US and around the world — are indeed nonsensical, as well as noxious. It’s only under ideal, frictionless conditions, that almost never exist in actuality, that Smith’s “invisible hand” actually does operate to create “optimal” outcomes. Marginalist and neoclassical/neoliberal economics is probably the most mystified discipline in the academy today, wedded as it is to the pseudo-rigor of mathematical models borrowed from physics, and deployed in circumstances where none of the idealizations at the basis of physics actually obtain. It’s welcome to see Taylor take on the economists’ “dream of a rationally ordered world” (301), one every bit as out of touch with reality, and as harmful in its effects when people tried to bend the real world to conform to it, as Soviet communism ever was.
But alas — Taylor only dismisses the prevalent neoclassical version of the invisible hand, in order to welcome it back in another form. If the laws of economic equilibrium, borrowed by neoclassical economics from 19th-century physical dynamics, do not work, for Taylor this is because the economy is governed instead by the laws of complex systems, which he borrows from late-20th-century physics in the form of chaos and complexity theory. There is still an invisible hand in Taylor’s account: only now it works through phase transitions and strange attractors in far-from-equilibrium conditions. Taylor thus links the physics of complexity to the free-market theories of F. A. Hayek (Margaret Thatcher’s favorite thinker), for whom the “market” was a perfect information-processing mechanism that calculated optimal outcomes as no “central planning” agency could. According to Hayek’s way of thinking, since any attempt at human intervention in the functioning of the economy — any attempt to alleviate or mitigate circumstances — will necessarily have unintended and uncontrollable consequences, we do best to let the market take its course, with no remorse or regret for the vast amount of human suffering and misery that is created thereby.
Such sado-monetarist cruelty is clearly not Taylor’s intention, but it arises nevertheless from his revised version of the invisible hand, as well as from his determination to separate financial networks from their extra-financial effects. I’ll say it again: the more Taylor celebrates the way that everything is interconnected, and all systems are open, he still maintains a sort of methodological solipsism or blindness to external consequences. The fact that financial networks today (or any other sort of self-perpetuating system of nonreferential signs) are ungrounded self-affecting systems, produced in the unfolding of a “developmental process [that] neither is grounded in nor refers to anything beyond itself” (330) — this fact does not exempt these systems from having extra-systemic consequences: indeed, if anything, the system’s lack of “groundedness” or connection makes the extra-systemic effects all the more intense and virulent. To write off thesse effects as “coevolution,” or as the “perpetual restlessness” of desire, or as a wondrous Nietzschean affirmation of risk, is to be disingenuous at best.
There’s a larger question here, that goes far beyond Taylor. When we think today of networks, or of chaotic systems, we think of patterns that are instantiated indifferently in the most heterogeneous sorts of matter. The same structures, the same movements, the same chaotic bifurcations and phase transitions, are supposedly at work in biological ecosystems, in the weather, and in the stock market. This is the common wisdom of the age — it certainly isn’t specific to Taylor — but it’s an assumption that I increasingly think needs to be criticized. The very fact that the same arguments from theories of chaos/complexity and “self-organization” can be cited with equal relevance by Citibank and by the alterglobalization movement, and can be used to justify both feral capitalism and communal anarchism, should give us pause. For one thing, I don’t think we know yet how well these scientific theories will hold up; they are drastic simplifications, and only time will tell how well they perform, how useful they are, in comparison to the drastic simplifications proposed by the science of, say, the nineteenth century. For another thing, we still need to be dubious about how the idea of the same pattern instantiated indifferently in various sorts of matter is just another extension — powerful in some ways, but severely limiting in others — of Western culture’s tendency to divide mind or meaning from matter, and to devalue the latter. For yet another, we should be very wary of drawing political and ethical consequences from scientific observation and theorization, for usually such drawing-consequences involves a great deal of arbitrariness, as it projects the scientific formulations far beyond the circumstances in which they are meaningful.