Lozano’s Deleuze and Finance

Benjamin Lozano at UC Santa Cruz has a new (to me at least) website entitled speculative materialism that is largely devoted to Deleuze and finance. I’ve been reading the material there over the last week; my favorite move of his is to read Deleuze’s Difference and Repetition as heterodox political economy.

Some background on me, Deleuze, and economy before moving on. I have a superficially similar idea when I began graduate school. However, while Lozano is interested in Deleuze with respect to synthetic finance (its ontology), I was quite interested in Deleuze’s concept of repetition as a less deterministic way to think about economic reproduction.

My primary gripe with Deleuze (and Guattari) has always been over value theory. More generally, I’m typically put-off by arguments that some new development in capitalism – typically related to finance – has undermined the standard labor theory of value. I say put-off as a more polite way of saying “annoyed” as these criticisms typically imply that new economic activity that is very easily explained within the LTV framework – at times by Marx himself over a century ago- has rendered it irrelevant.

I’m still processing Lozano’s arguments in Of Speculative Finance (available from the website linked above), and hence this is more of a reflections/thinking-by-typing exercise than a critique or review, but I don’t think he quite falls in the typical the LTV is undermined by finance critique. On one hand, the whole argument is driven by the newness of synthetic finance. I am skeptical of that (not that some things are new but that they require a fundamental revision of political economy), but on the other hand, I feel like he is trying to say that we could think of economy differently. I’m more open to the idea that there are alternatives to or reinterpretations of the standard LTV, than the false assertion it no longer works because of derivatives or something.

One reason I’m still processing is because I get lost at times. Part of this might be because I’m an economist. I’ve read everything Deleuze wrote that was translated into English by 2004, but I am an economist and have spent most of the last 8 years reading less “theory” and more old-fashioned political economy (that is a matter for a different post).

I want to focus on the biggest stumbling points for me. At one point Lozano wants to discuss Black’s “Fundamentals of Liquidity.” If you haven’t read it, it is short and worth a read. It was written in 1970 and foresaw a number of financial developments. The problem is that Lozano is interested in a particular claim that Black makes about what is true in equilibrium. While the last 40 years have shown the power and influence of Black’s idea, they have also exposed the utopian neoclassical equilibrium as limited. Anticipating this objection, this is what Lozano has to say:

First, the traditional methodological sentiments may incline us to wonder about the plausibility of of the existence of a ‘world of equilibrium’ -i.e. of why we should care about something that happens ‘in a world of equilibrium’? Or even accept that ‘in a world of equilibrium’ anything happens at all? Why does it matter, one will believe themselves to be critically inquiring, that it does or does not make sense to think of liquidity let alone any property, as a that which affects the cash flow of an asset, when in actuality we inhabit no such ‘world of equilibrium’?

This may have once been a novel critique. But today we find this contention a bit sophomoric – and at any rate, it has now become rather worn-out through empty repetitions and its stand-alone use by those lack a willingness to require their imagination to envision what our world is capable of becoming, but which it currently in fact is not. (And how can we ever take out institutions further than they presently go, when our own creative engineering is unwilling to step foot down the path capable of being prepared by imagination?) (p.29)

There are three related things that make this hard to swallow. First, methodological critics of equilibrium (the vast vast majority of people who do heterodox political economy) are treated quite poorly. They “believe themselves to be critically inquiring,” are “sophomoric,” and advance “worn-out” ideas. That is not very nice, but such is academia. If these boring purveyors of empty repetition are really so empty and backward, perhaps they require ruthless critique. So what is Lozano’s critique? This is the second problem. I can’t honestly say he has one. It is basically an old and boring criticism. It doesn’t excite him. If I were to be very generous his critique is that our world could become Black’s utopian equilibrium, but boring political economists lack the imagination. I personally think of someone like Jim Crotty. Crotty has probably spent more time critically imaging what a world of equilibrium would look like and why this world doesn’t exist than I have spent thinking in general. If Lozano has reason to believe that it is really a lack of imagine we lack, he is implying the arguments we make about the impossibility of that equilibrium are incorrect, and it would be nice to see why. Finally, while I might be nit picking here, equilibrium is kind of a big deal. I don’t mind him using a neoclassical text to make his argument, but it is hard to get on board with a rethinking of finance that wants to abandon the critique of equilibrium (particularly without any reason for doing so). As for taking institutions where we want to take them, I’m not technically a realist but I think Crotty’s argument here is more convincing than Lozano’s (in a variety of philosophical dimensions I might be closer to Lozano than Crotty, but that is precisely what makes the lack of convincing concerning). Maybe the world of modern synthetic finance does not require radically new theories, but a return to boring political economy we’ve known for a long time.

Lozano’s rethinking of political economy involves a rethinking of communism. He seems more concerned about critiques from the right (offended liberal progressives I suppose) so he never really explains how it is actually communist in some sense, or why communists should be interested in it. I don’t have my books with me, but I’m thinking of Deleuze and Guattari’s statement that schizoanalysis has no politics. My impression is that Lozano’s speculative materialism has no politics as well. In other words, even if it were very useful in informing us how to think about capitalism or communism there is nothing inherently more capitalist or communist about it. At times, Lozano’s desire sounds like one for more capitalism than less. Or, alternatively, that the distinction has collapsed (?):

The trick for Deleuze, however, is to realize that in an era that bears witness to the reign of the synthetic, the speculative is no longer our singular personal item, but is now our general carry-on! This means that, correlatively, our personal item is communism. And therefore, the wager of speculative materialism is that today, for the first time in history, what is equitable is now most profitable as well –that today individual profitability increasingly demands the equitable… (pp.73-74)

That seems like a fairly controversial and major wager but it isn’t clear (1) how the profitable=equitable claim follows from the ontology of the synthetic or (2) exactly what it means. As I understand profitable and equitable, the trade-off is complex. Sometimes a wage-led regime might improve profitability, but that is a relative increase in the equitablewithin the context of a general inequitable system. Furthermore, that is the result of the specific historical-institutional context; it is independent of the existence or prevalence of the synthetic. Maybe I am thinking of profit in terms that are too crude. That is possible but raises two questions- (1) what is the more nuanced Deleuzian view? (2)are not the crude concepts of profit and equity the ones we are politically interested in?

A final point of concern is that when Lozano distinguishes between different types of economic objects he appears (I honestly might be misreading him here) to commit commodity fetishism, which is odd since this is the idea of Marx’s he finds most illuminating. Here is his opposition between a hotdog and a bond:

Of course, while the hotdog is a natural object with a use value, it is also, and more importantly for us herein, an economic object, a physical commodity, or what we have called a classical object in order to denote its classification in the group of exchange of classical exchange. For this reason, when we see the natural object of the hotdog decompose in spacetime, we are also seeing the metrics, or material properties –in particular, the volume of its image of value– of the economic object of the hotdog metamorphosize as well. And while we are not interested in the physical properties of the hotdog, but rather in its economic or material properties, i.e. as an economic object, even if here it is the case that the physical properties of the object are tied to its material properties (a hotdog past its expiration date has little or no monetary value), it is also the case that former only matters, indeed is only economic and material, insofar as it is derived from and in-itself for the latter.

But now let us imagine that over a period of 3 months we sit and watch a 90-day Treasury bond age until it reaches maturity. And as we sit, watching, our eyes fixated on the document of the bond, in our peripheral vision we see the Federal Reserve pursue some quantitative easing, or (even relatedly) we see a rally in equities, or hard or soft commodities, and so on; and we see what this does to the volume of the image of value of the bond. Here too,
when sitting and watching the motion of the bond in space and time, we are observing the motion of the material properties –whether or not they are transformed– of the image of the object of the bond in space-time. We are observing the transformation of the economical object qua generic
financial object under the force of motion of a domain of action that is, yes, bilateral (i.e. its exchange is ostensibly a bilateral transaction between two parties), but even more importantly still, is n-dimensional, continuous, and defined. (pp.86-87)

While it is true that the decomposition of the hotdog influences its economic properties, the implication I see in this opposition is that while we see hotdog as an economic thing by looking at it alone, the bond requires our “peripheral vision.” As such, the bond is n-dimensional. The “motion” of the bond in “space and time” is a product of various financial processes. It is complex, as opposed to our simple hotdog. However, while the hotdog might be simple as a use value, it is not simple as a value. In my reading, the decomposing hotdog is like Marx’s commodities that could speak – trying to convince us that it is something in them, as opposed to social relationships, that give them value. Of course, while use-value is a necessary condition for value, it is not value. The deterioration of use would have an effect on (exchange) value but so would other things. We could tell a complicated story about the hotdog – But now let us imagine that over a period of 3 months we sit and watch a hotdog. And as we sit, watching, our eyes fixated on the hotdog, in our peripheral vision we see the developments in hotdog-production technology, regulations that impact pig production, and so on; and we see what this does to the volume of the image of value of the hotdog.

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