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Framing Finance

FramingFinance [1]6,952 words

Alex Preda
Framing Finance: The Boundaries of Markets and Modern Capitalism [2]
Chicago: University of Chicago Press, 2009

How is it that formerly socially unacceptable activities become acceptable? One can point to numerous examples throughout history of seemingly sudden reversals or alterations of social norms. Some of these, of course, work in favor of the greater good (however defined), others clearly do not. But these cultural disruptions are rarely the revolutions their advocates claim them to be. They are the result of time and labor on the part of various types of human collectives to incrementally attain some particular goal. A revolution is really nothing more than a grand unveiling, the culmination of earlier processes, the historical moment at which time seems to accelerate for the disinterested onlooker as the revolutionaries’ efforts come to fruition and become too big to ignore. That is to say, “revolution” is ultimately just the name given to the final stage of a gradual transformation that simply caught non-participants off guard.

All ostensibly revolutionary social and cultural changes are, in essence, linear phenomena and can thus be more or less accurately traced back to their sources and analyzed. One of the more impactful of these changes in recent human history was the intrusion of the financial system into daily life, in particular the transition of financial speculation from a devilish “back alley” vice to a noble and visionary calling. The vast majority of us are so caught up in the financial system — as both the players and the played, both winners and losers — that we hardly notice its presence anymore. It is simply taken as a given.[1] The true extent of the invasiveness of financialization is undetectable without deliberate study. There is virtually no space in which the consideration of finance in one form or another is not prominent and, often, decisive. But it was not always this way. The forces of international capital — so often accompanied by Jews and Jewish values — have transformed Western attitudes and behavior by systematically and systemically subverting traditional white proscriptions against usury and gambling and substituting new values and norms designed to legitimize and expand predatory global finance.

Alex Preda, Professor of Accounting, Accountability, and Financial Management at King’s College London, has written a fascinating book entitled Framing Finance: The Boundaries of Markets and Modern Capitalism, in which he explains how speculators and financiers were able to step forth from the shadows of moral condemnation and insinuate themselves into respectable society. Grounded in a history of the stock exchange, the book examines the paths and implications of this transformation and how “observational boundaries [mediate] the relationship between financial markets and society” (p. 22). The following will be a highly simplified overview of this densely theoretical book with a focus on a selection of things that should be of particular interest to the New Right.

For Dr. Preda, stock markets are “the core component” of the perception that financial markets are “central with respect to social and economic stability” (pp. 5-6). He suggests that to understand how financial markets and the stock exchange became so integral to the economy we need to better understand the “boundaries between finance and society at large” (p. 6) and that the issue goes beyond the public merely “indifferently noticing” (p. 6) that financial markets exist. Dr. Preda wants to find out how “dispersed actions are coordinated and how uncoordinated actors engage on uncertain paths of action” (p. 6). How was it that international finance was able to take root in Western cultures so easily? How is it that so many of us have been manipulated into accepting not just the mechanics of financialization but its philosophical — even moral — value?

The market is neither entirely individualistic nor collectivist. Individual economic actors have their own reasons for pursuing a particular course of action but these generally fall into some kind of pattern. Those who follow similar patterns, who invest their faith, time and money in similar schemes ultimately form a type of collective. But what exactly sustains this collective is hard to pinpoint. Because the market cannot be explained exclusively in terms of either individual or collective action there must be other mediating factors. It is because of this that Dr. Preda rejects the traditional notion of a “spirit of capitalism” in favor of a more materialist explanation. He writes: “Instead of searching for an elusive ‘spirit,’ perhaps we would do better investigating concrete material arrangements. Instead of trying to find the Graal of a collective mind, perhaps we should set for ourselves the task of investigating how embodied, talking, adroit, ingenious, industrious actors can coordinate among themselves, albeit in a dispersed and uncertain fashion” (p. 8). There are two ways in which this is accomplished: indirect observation and boundary construction.

Dr. Preda makes the distinction between direct and indirect observation because, except for a select few “actors concentrated in the same space, or who meet periodically” (p. 9), financial markets cannot be directly observed. The vast majority of us who participate in the system never get to “see” it. But some observation must occur for any social system to function because it is required for the determination of appropriate levels of trust/distrust. As such, those seeking social legitimacy cannot be entirely secretive in their actions. They need people to observe them. However, being able to control the methods of observation and select what exactly is observed is important. The author writes:

The willingness to be observed, to show a face to the world, results from the need for legitimacy, trust, and for attracting interactions or customers. Think of open kitchens in restaurants, for example, to build trust. Also, professionals like doctors and lawyers allow external (though controlled), direct (e.g. publications, documentaries, interviews) for this same reason. Since impersonal trust implies, among other things, reliance on (observational) procedures and processes, it follows that the object of observation cannot be independent of observational procedures. The “lenses” which mediate observation thus shape or “co-constitute” the object being observed. (p. 10)

Dr. Preda suggests that boundaries can be such lenses. They can, of course, physically distinguish between various actors but they can also be “communicative.” Communicative boundaries are “more than discursive distinctions, symbols marking the bodies of social actors, or institutional roles: communication boundaries can be incorporated in artifacts, theoretical models, and forms of knowledge” (p. 11). Boundaries allow controlled, indirect observation and they also channel behavioral paths. As such, boundaries generate “social entities” (p. 11) and “legitimate the group’s activities and integrate them into the society at large . . .” (p. 11). The group is observed just enough to render them unsuspicious, which then ultimately leads to legitimacy. After achieving legitimacy, the public’s behavioral patterns are conditioned by this same legitimacy. The public can (or must) now interact with this legitimate social entity and tailor their behaviors in accordance with its rules of inclusion/exclusion, its routines, its expectations, and its demands.

Having established his basic theoretical premise — that the legitimacy of financial markets relies on the boundaries with which they are framed — the author digs into the theory and history of financial markets. In the first chapter, “The Boundaries of Finance in the Sociological Tradition,” Dr. Preda examines four basic sociological capitalist archetypes: the manufacturer, the accumulating capitalist, the religious capitalist, and the entrepreneur. He compares each to the figure of the speculator. He begins with Adam Smith, who believed that the manufacturer was “superior to all other social characters generated by the capitalist economy” (p. 30). In the Smithian conception, increasing the economic health of the state is the primary role of the economy. The manufacturer represents this public spirit: “unencumbered by ideologies, skilled, practical, self-interested, yet in harmony with fellow citizens” (p. 31). The manufacturer provides a pivot upon which other aspects of the economy revolve and a social model to which others aspire. The speculator, on the other hand, is the opposite of the manufacturer. He is one who “lacks skills, knowledge, and care for productive capital” and “transforms self-interest into selfishness, endangers the harmony of interests, and enfeebles the state” (p. 33). In the Smithian economy there is “no difference between political and economic heroes” (p. 33) because one requires the other and each, ideally, works together for the benefit of the state which, ideally, exists to serve the greater good. The speculator, by producing nothing of value, exists outside of this symbiotic relationship and thus outside of the realm of the public good.

The accumulating capitalist is a Marxian figure. As is well known, for Marx “the key relationship of capitalism is that between the capitalist and the worker: while the former accumulates, the latter sells his only possession” (p. 35). This relationship is seen to be as much a social one as it is an economic one. One might think then that speculation as a social phenomenon would play a greater role in Marx’s analysis yet it does not figure all that prominently. Financial speculation is seen, in essence, as a form of primitive accumulation. Dr. Preda writes:

. . . on the one hand speculation participates in concentration processes, contributing to the general logic of capital. On the other hand, it transfers capital away from productive tasks. By doing this, individuals engaged in financial speculation undermine ownership relationship, and with that the system of characters (or figures) on which the capitalist order is based. (p. 36)

Is it any wonder that a Jew would somehow find an upside to speculation? The expansion of credit capital transforms savers into speculators and then investors and savings are transformed into capital. Financial markets thus aid the expansion of the capitalist order. But, as one might expect, even the transformation of ordinary people into capitalists via speculation is not so terrible for this grandson of a rabbi. The credit capital created by speculation which, as we have seen, Marx believed to be a form of primitive accumulation, allows capital to expand without the “direct violence” of labor exploitation (p. 37). So, all things considered, it is not so bad. The speculator absorbs some of the horrors of capitalist exploitation and helps to somewhat slow the spread of capitalism by removing capital from production. Adam Smith saw speculation as a destabilizing force and so did Karl Marx, but it should not come as a surprise that one saw this as an unqualified negative and the other as a (qualified) positive.

The figure of the “religious capitalist” is rooted in Weberian analysis. For Max Weber, the speculator is just one part of the inherent rationality of capitalism, itself based in a religious drive. Dr. Preda writes that, in this conception, accumulation “has to be obey certain rules: the virtuous capitalist accumulates by his own ingenuity, frugality, sustained work, and constant preoccupation with economic success” (p. 41). Yet how then does Weber justify speculation, which cannot easily be grounded in religious norms (at least not Christian norms)? The answer is that capitalism has a dual nature: one side is rational and the other is charismatic. The author summarizes Weber’s position: “The grand speculators whose daring exploits and ‘coups’ fascinate the public are the manifestation of a charismatic authority not entirely compatible with the rational, ethical constraints imposed by Puritanism upon profit-seeking” (p. 41). Financial markets rely on social trust and “tacit rules” (p. 41) for their ability to draw wealth into their orbits. For Weber, the speculator, by increasing the interdependence of citizens through social absorption into the accumulation process, strengthens the bonds that hold together societies. Dr. Preda writes: “The stock exchange does not simply fulfill economic functions: by processing wealth into reciprocal obligations, it makes social actors reciprocally dependent” (p. 43). These reciprocal relationships, however, necessarily rely on the ethical integrity of those at the top of the financial hierarchy. If one were to start reneging on obligations or behaving outside the norms of the society in which the market exists the financial system would ultimately fail to function.

In his analysis of the figure of the entrepreneur, Dr. Preda discusses the ideas of Werner Sombart and Joseph Schumpeter. Noting that earlier forms of wealth accumulation very often included “robbery, privateering, and treasure hunting” (p. 45), Sombart argued that part of the capitalist spirit was rooted in risky adventure. The author writes:

These potentially rewarding yet high-risk activities required daring, innovative, energetic participants, qualities which were later channeled into project making. This implied selling (not always ripe) ideas to a broader public, a process in which the projector’s powers of persuasion played a crucial role. Trading projects on financial markets combined these powers of persuasion with gambling fury in the figure of the projector, or entrepreneur (p. 46).

He notes that, while organizational skills are important, for Sombart, the “talent for persuasion is key: after all, the public must be convinced to part with their money on the basis of the simple promise that an idea will yield a profit in the future” (p. 46). In this conception, the entrepreneur is a character into which the high-risk behavior of unethical proto-capitalists is channeled towards legitimate activity by his rhetorical power “to convince and impress the public, to make promises and awaken hopes, [mediate] between markets and society,” something which “is essential with respect to the former’s legitimacy” (p. 46).

Joseph Schumpeter, in contrast, believed the entrepreneur to be less characterized by Sombart’s “gambling fury” than by a “desire to challenge existing organizational forms” (p. 47). Capitalism tends to drift toward routine (mechanization, for example) but the entrepreneur is, by nature, resistant to routine. He seeks innovation and represents a sort of elite human who is able to think beyond social restrictions while maintaining a grasp of their necessity — a tension which produces innovation. The speculator, on the other hand, cannot be included in this group because he is unconcerned with innovation and progress qua innovation and progress. He seeks simply to profit off the innovations and progress of others.

In the second chapter of the book, entitled “Prestige, at Last: The Social Closure of the Stock Exchange,” Dr. Preda analyzes the processes by which “financial groups anchor the world of the stock exchange into society not just at the site of economic interests and profits, but in more stable, multi-sited ways” (p. 52). He argues that financial markets arise out of a combination of networks and communication systems. Networks necessarily precede markets (how can one transact business without other individuals who are following some organizational and/or behavioral template?), but there are multiple networks involved in any given market which require communication systems to function.[2] The author writes: “Market actors continuously send observable signals to each other, around which relationships are built. This makes markets into self-validating signaling systems, which can process uncertainties into information patterns” (p. 53). It is through these “self-referential communication networks” (p. 54) that routines are created. Routine then becomes a stabilizing force within the network which “translates the logic of personal ties into that of impersonal transactions and vice versa” (p. 54). For these routines to function efficiently there must be tools with which “heterogeneous pieces of information are made comparable, interpreted, and used in financial decisions” (p. 54). And there must be people with expertise to use them. These people — economists, stock brokers, analysts and others — function as intermediaries who “[process] uncertainties” (p. 54) for those within the network. They also provide external legitimacy by suggesting to outside observers that there is an objective logic to the network (the financial market).

As mentioned earlier, the legitimacy of financial markets was not always taken as a given. In the 17th and 18th centuries financial transactions took place on the margins of society. In London and Paris, for example, they “took place in coffee houses and in adjacent streets, with traders and customers being often chased by the police, and forced to move across various locations” (pp. 60-61). The author points out that the neighborhoods in which these transactions took place were often already crime-ridden areas containing a mixture of social classes and groups. He quotes a pamphleteer who, in 1720, wrote of Exchange Alley in London as being inhabited by “Turks, Jews, Atheists, and Infidels” who “mingle there as if they were a kin to one another” (p. 61). This diversity and accompanying criminality was seen as socially disruptive by the larger society. Dr. Preda writes: “In London, it is the French and the Dutch, and everywhere the Jews [italics mine], the absolute foreigners, who are seen as the paragon of the stockbroker. Society’s incompatibility with the stock exchange is thought to be so great that the foreigner becomes a metaphor for the disreputable role of the broker” (p. 64). Of course, this is awkward reasoning on the part of the author. He characterizes resistance to foreigners as having resulted from resistance to the stock exchange itself rather than making the rather obvious connection that respectable society merely recognized that they were largely one and the same. And even when foreigners are not mentioned, as is the case in many of the moral pamphlets issued as warnings about speculation, speculators are portrayed as feminine, nasty, and brutish con men (pp. 64-65). There was obviously a common understanding that speculators were undesirable to begin with.

In addition to the marginal physical spaces in which speculators and traders met to conduct business at this time, they lacked a legal space for their transactions. Legal acknowledgement of marketplace transactions did not occur until the 20th century.[3] Not only were financial securities not seen as similar to goods but most transactions took place through the exchange of paper slips which could, quite obviously, be “easily destroyed, lost, or forged” (p. 62). With the frequent social condemnation and the haphazard transactional methods, those involved in the stock market had to acquire legitimacy in order to expand and further fill their coffers. They had to control and define both their physical and social space — to define themselves as a status group. The author writes: “Among the most important mechanisms involved in the creation of status groups were controls of (a) space, (b) access to membership, (c) securities lists, and (d) honor” (p. 65).

As stated above, it was in coffee houses, private clubs, special governmentally-designated areas, and the street where stock brokers conducted their business prior to the late 19th century. In France, for example, the government decreed in 1724 that all stockbrokers had to transact business in the Jardin Royal, which was surrounded by archers to prevent disorder (p. 66). This in itself is evidence of the social disorder wrought by speculators and speculation. By the late 19th century, brokers had organized to an extent that they could often rent or buy buildings to use as stock exchanges, although the street remained an important place of business. This bifurcation resulted in “official” and “unofficial” stock exchanges, with a degree of mingling between the two. Physical and social spatial contests helped to define the boundaries of legitimacy and illegitimacy.

As far as membership and securities lists are concerned, there had been attempts to regulate these from early on. From the late 17th century, for example, membership rules for various “legitimate” stock exchanges — including, at times, limits on the number of Jews, membership fees, and citizenship and age requirements (pp. 68-69) — had been attempted.[4] Additionally, “brokers had control of lists of traded securities” (p. 69). There were official lists and unofficial lists and, as would be expected, only official brokers could decide which securities would indeed be official. The author is quick to point out, however, that the existence of official lists “did not mean standardization of price data” (p. 71). The stock market was still a very rough and tumble world. Because financial markets were still, at best, a moral gray area and because the diversity of brokers resulted in a strange mix of elite and criminal, citizen and foreigner, gentile and Jew, which was repellent to average citizens, attempts were made to acquire a facade of honor.

Brokers banded together to create governing bodies with which to implement the membership rules and monopolization of securities lists outlined above but also to try to control brokers’ behavior. Dr. Preda writes: “In the absence of any adequate legal frame, honorability was the only means to ensure the inviolability of contracts” (p. 72). These efforts included such rules as brokers only being allowed to smoke after 4 o’clock in the afternoon, fines for standing on chairs or tables, and visiting other stock exchanges. Offenders were fined and repeat offenders would be black listed (p. 72). These seemingly odd rules, indicative as they were of the actual chaos of the stock exchanges, worked successfully to curb some of the outwardly “bad” behaviors of brokers.

Various literary guides to trading began to appear as well. These positioned brokers as being privy to a specialized “scientific” knowledge (esoteric yet seemingly accessible to those who wanted to learn at the masters’ feet). This literature tried to “counteract negative views and to represent the stock exchange and its figures as examples of a successful bourgeois life and career” (p. 80). By the late 19th century, stock brokers were generally thought of as upstanding citizens. This, of course, enabled them to draw those who might have previously been repulsed by their choice of occupation and their personal behavior into the fold. By creating and then policing their borders — both physical and “communicative” — these men were able to expand their hold on the public’s imagination and thus their hold on the economy.

In chapter three, “Financial Knowledge and the Science of the Market,” Dr. Preda delves more deeply into the guise of science applied to financial markets in order to further claims of respectability. He observes that part of the traditional resistance to speculation was that it was incapable of being understood in terms of calculation. There was an inherent chaos to the practice which was clear to most observers of the day. Trades took place with hand gestures and glances, and between different classes, nationalities, and races. He notes a French Revolution-era source as describing brokers and speculators as “vampires thirsty for blood, shrouded in darkness” (p. 84). In 1719, one London observer wrote:

To all Men whose Eyes are to open’d with Reason and Argument it shou’d be onough to fill them with Abhorence, to think that the scandalous Mechanick, Upstart Mistery of Job-brokering should thus grow upon the Nation; that ever the English Nation should suffer themselves to be impos’d upon by the New invented Ways of a few needy Mercenaries, who can turn all Trade into a Lottery, and make the Exchange a Gaming Table: A Thing, which like the Imaginary Coins of Foreign Nations, have no reality in themselves, but are plac’d as things which stand to be calculated, and reduc’d into value, a Trade made up of Sharp and Trick, and Mang’d with Impudence and Banter (pp. 84-85).

The chaos of the stock market did not jibe with the notion of a world that could and should be understood as rational and ordered. Resistant to classification and calculation, with a corresponding air of devilry and immorality, speculation and financial markets could not be seen as legitimate. In the Smithian conception of economy, for example, the speculator was not “enhancing the wealth of nations [or] the well-being of their citizens” (p. 87). These notions persisted for quite a while. Over time, however, as brokers and stock exchanges became “respectable,” the public, which now had a greater capacity to observe these people through boundaries established by the brokers themselves, had to come to terms with competing notions of outward legitimacy and the “radical unknowability” (p. 87) of the market.

In the mid-19th century, there was a marked increase in publications about finance by interested parties. This greatly shifted the discourse away from morality and unknowability and towards the idea that speculation was a science. As the author points out, it was around this time that gambling itself was medicalized. That is to say, the gambler was transformed from an immoral figure to someone with a mental illness: “individual cases were treated as pathologies, as deviations from normal social behavior” (p. 89). This took the moral edge off the question of speculation and helped turn it into an object of rational study. The speculator, like the gambler, was now a focal point of scientific inquiry, divorced from traditional morality. And, like the gambler, the speculator could be conceived as following some internal logic that could be deciphered and understood rationally by experts. Financial markets themselves then also had to follow some internal logic. Dr. Preda writes: “If [financial markets] were to be made into an object of inquiry, an inquiry led by its own rules, then the eighteenth-century mode of seeing markets as an amalgam of people, cries, plots, plans, staged performances, and manipulations — in short, as an observable chaos — had to be replaced” (p. 90). The new financial literature “promoted the notion that financial markets are governed by principles which are not controlled by any single individual or group [italics mine]” (p. 91). If financial markets were governed by scientific laws, then individuals or groups taking advantage of their position to engage in fraud or other shady behavior were necessarily aberrations within a rational financial universe. The behavior of particular groups could go unnoticed. Everything that needed to be known about the functioning of markets and the behavior of investors and brokers could be determined scientifically with little need to resort to moral or ethical judgment.

Chapter four is entitled “Close Up: Price Data, Machines, and Organizational Boundaries.” In it, Dr. Preda argues that technology — in particular the stock ticker — facilitated the notion that financial markets were knowable and scientific while at the same time creating a new boundary to selectively reveal, and thus further legitimize, the mechanics of speculation. This new technology created a distance between human actors and actions. He writes: “With respect to financial data, trust and authority are dissociated from individuals and transferred to technology: trustworthy data are data produced or recorded by authoritative technology, which can be transferred across heterogeneous contexts without losing their properties” (p. 117). Just as the medicalization of gambling brought speculation out of the realm of morality, the stock ticker brought financial markets out of the realm of human agency. With a machine to filter knowledge and action into standardized chunks, financial markets began to look more and more like fields of objective and impersonal natural law.

Acquaintance with the codes and operations of the stock ticker further bound investors and brokers: “as an investor, one had to learn a special telegraphic code from the broker’s manual and spend as much time as possible in his office. Brokerage houses advertised their codes as a sign of seriousness and reliability” (p. 130). Obviously, this enhanced the image of the broker as being privy to specialized knowledge. But at the same time the public had to be granted a certain degree of access to this world, both in order to maintain observable legitimacy and to increase the influx of capital by attracting investors. As such, brokerage houses often freely published their transaction codes, statistics, and diagrams (p. 131). This new public access worked very well. Investors were not only drawn into the brokers’ world but often became emotionally attached to their stocks, with the “gambling fury” like that described by Werner Sombart. The author writes that the “observer of the market was now the observer of abstract variations, not of picturesque and more or less morally dubious characters . . .” (p. 143). These abstract variations — seemingly following scientific laws — created entirely new fields of study within economics.

In the fifth chapter, “From Afar: Charts and Their Analysts,” Dr. Preda discusses the perception of finance as open to the public yet controlled by experts by analyzing the history of financial chartism. Also known as technical analysis, financial chartism is defined by the New York Institute of Finance as a “method of forecasting the prices of stocks, futures contracts, indexes, or any kind of financial instrument.”[5] Considered by many economists to be a sort of pseudo-science, financial chartists claim to be able to “detect patterns in market action that they can identify as having happened often enough in the past to be reliable as an indicator of future price levels.”[6] By focusing on this popularly successful but academically marginalized movement, the author seeks to draw the reader’s attention to the ways in which the presentation of expertise shapes market behavior and public perceptions of finance. Financial chartists developed their techniques, made strategic connections with brokers, and managed to convince clients that they were “buying protection” (p. 162). Individual practitioners were then able to develop in ways analogous to the earlier creation of stock market boundaries: “cult status and inaccessibility, public presence and distance from the public” (p. 163). Again, the ability to selectively reveal information and to pose as scientific and ordered allowed for the appearance of legitimacy. Dr. Preda observes: “Seen in a broader perspective, [financial chartism] is part of the process through which the power of representation, the authorial, authoritative voice about finance, is concentrated within specific groups tied to financial institutions” (p. 170). The public was invited to participate in a seemingly open market yet, at the same time, held at a distance by “expertise,” allowing financial chartists to ensure their status and wealth. It also allowed for the development of cults of personality around particularly charismatic industry authorities.

The sixth chapter, entitled “The Kaleidoscope of Finance: Speculation, Economic Life, and Society,” deals with the idea that speculation, once legitimized, becomes a way to view the world in and of itself. The premises of speculation are no longer contested and any and all objections or concerns are viewed “through” legitimacy. It is worth quoting the author at length:

Once their domain of action (i.e., financial speculation) is seen as meaningful within the world, it can be accepted or contested within a given categorical system. In the same way in which a kaleidoscope produces various images combined from the same little pieces of colored glass, the boundaries of finance provide different programs of action based on categorical combinations.

This means that voices of authority writing about stock exchange and financial speculation not only claim that true access to financial transactions (and success) is ensured by special knowledge; they also elaborate representations of the social and natural order in which to integrate financial speculation with its successful occurrences, as well as with its failures, representations supported by and emanating from this special financial knowledge. Such representations, based in classificatory operations about financial speculation and the stock exchange, can support reformist (changing the world starting from speculation) or conservative programs (keeping the world as it is). They can compete or clash with programs generated by exogenous social groups. Seen from this angle, the boundaries of finance go beyond the walls of stock exchanges and offer a blueprint for the whole of society. (p. 173)

The idea that speculation was a part of the natural order led to its being incorporated into various discourses from the 19th century on: progress, science, patriotism, education, and philosophy were all connected to financial markets (p. 177). Indeed, in contrast to their previous social position, speculators were seen as being manifestations of the highest forms of the human spirit. Some saw speculation as a civilizing force that could harmonize socio-economic relationships; others saw it as the “wild spirit of adventure” (p. 178). But whether it stabilized or vitalized, speculation itself was seen as a universal and permanent social fixture. It is no surprise then that discussions of speculation increasingly incorporated biological metaphors, with the stock exchange being seen as the heart of a living financial market (pp. 184-87).

At the same time, the various stock exchanges morphed into symbols of nationhood. Architecturally, they stood for national power, wealth, and prestige. The buildings themselves were a source of pride. Conceptually, they stood for national vitality. The power of finance was recognized across the political spectrum. Even preachers got in on the act. Forgetting the old religious injunctions against gambling and usury, men such as Thomas de Witt Talmage, a Presbyterian preacher from New Jersey, encouraged his flock to invest, pray for financial health, and give a little of the profits to Christian charities (p. 190). And, during times of national crisis, speculation was considered to be a patriotic duty in much the same way as shopping is now. Speculation had gone from being a sinful vice to a mental disorder to a life-giving biological organ and, finally, to an expression of love for one’s country and people. It was now an entirely legitimate field of human endeavor.

Chapter seven, “On the Dark Side of the Market,” deals with what happens conceptually when the rational calculation of speculation meets the chaos of the human emotional response: “The biggest problem of the speculator is not errors of calculation; the biggest problem is given by these seemingly uncontrollable emotions which take hold of you, spread like wildfire, and, in an eye’s blink, seem to annihilate all calculative efforts” (pp. 201-202). The author discusses a bit more the contradictions between the notion of speculation as “anchored in knowledge, discipline, hard work, observational skills, and specific cognitive tools” (p. 205) and the idea that speculation is “driven by a vital force” (p. 205). In typical contemporary academic Leftist fashion however, Dr. Preda spends much of this chapter on literary characterizations of speculators and merely repeats on a different canvas, as it were, much of what he has already theorized.

In chapter eight, entitled “Panic!,” he discusses, as one might guess, the problem of financial panic as it pertains to “psychology, sociology, and economics” (p. 215). He begins by providing a very brief background of panic as a subject of pathology. He references experiments done in Germany in the early 20th century in which evidence was sought for how panic spreads in collectives. Based on an understanding common in the late 19th century of panic as a response to visual stimuli and related to hysteria, these experiments were strictly utilitarian and only tried to discern how leadership techniques could quell panic in group situations (p. 215). It was not until the 1960s that “panic became a clinical term” and not until 1980 that panic “was recognized as a separate psychiatric entity” (p. 215). Preceding the medical investigation of panic was the sociological investigation. The author discusses Gustave Le Bon’s work, in which panic was defined as “dispersed individuals acting in step and sharing the same beliefs, in spite of their spatial dispersion” (p. 216). These medical and sociological definitions cannot be easily reconciled though. How, he wonders, can there be “mob hysteria” when the “herd” (the crowd or other dispersed actors) cannot be seen (p. 218)?

If, as a medical phenomenon, panic (hysterical as opposed to rational) is an abnormal bodily reaction to stimuli, and if, as a sociological phenomenon, panic is a form of collective behavior spread by imitation, how does one conceptualize panic without undermining “any attempt to treat collective behavior as rational” (p. 219)? The author suggests that the ideas of sociologist James Coleman could provide at least part of the answer.[7] Dr. Coleman “emphasized the role played by transfer of control in the emergence of panic phenomena” (p. 220). Using the classic theater fire scenario, he theorized that panic was a question of agency. Those who take the lead in exiting a burning theater are exhibiting non-conformity by not complying with the burgeoning panic of the others and the others, by conforming to these non-conformists, can ensure an orderly exit. That is to say, panic can be avoided if some in the crowd refuse to transfer control, i.e. refuse to abandon agency (p. 220). Others have argued that emotion must play a larger role in the panic response: tension, conflict, verbal exchanges, bodily contact, fear of a loss of control (p. 220), but financial panic can be neither entirely of a medical nature nor of a sociological nature. The author turns next to how economists have analyzed panic.

Economists have tended to deal with panic in terms very similar to those of medicine and sociology. Herd behavior, hysteria, mood-swings, and mania have all figured prominently in analyses of financial panic (p. 222). The author points out, however, that “symbolic elements” (p. 222) are neglected in these diagnoses. He writes:

. . . when social or personal hierarchies perceived to support the order of the marketplace crumble, this latter can unravel. When personal symbols of power and authority suddenly disappear or lose their charismatic force, disorder can spread. Social arrangements relying in combinations of rational and irrational elements (of knowledge and personal charisma) can be particularly susceptible to the unravelling of symbolic elements. Such unravelling does not have to be observed directly: symbols work on the basis of their representational force (pp. 222-23).

As an example of this, he refers to the stock ticker. Although real-time price data are conveyed, the observer must be able to narrativize the information and relate it to the hierarchy of market actors. “A questioning of the force underlying this hierarchy can generate disorder and uncertainties, and imitations of represented behavior can amplify the perceived disruptions” (p. 223). The observer of a downturn in the market identifies with others who he knows (or assumes) are observing the downturn elsewhere. If he feels that the social hierarchy of market actors is incapable of preventing a negative outcome panic will ensue. Dr. Preda observes that this greatly diminishes the notion of the speculator as a force of charisma and vitality — that is, as a symbol of human freedom, will, the battle against the market — and bolsters the notion of the speculator as existing in the herd or in the “dark shadow of the crowd” (p. 233). For Dr. Preda, if “the boundaries of finance include representations of financial ‘heroes’ (be they individuals or institutions) having exemplary force, panics delegitimize these representations” (p. 234). We saw this in 2008 when the failure of prestigious and “trustworthy” financial institutions was exacerbated by that very perception of prestige and trustworthiness.


So what does all of this mean for the New Right? The history of the stock exchange is not merely an economic one. It is also the history of deception, of human weakness, and of predation. It is the history of whites trying to reconcile tradition with progress, instinct with propaganda, the national with the international. The stock exchange serves not only as a vehicle for Jewish power but as a formula for Jewish deception: subvert, routinize, fake honorability, claim legitimacy, attract collaborators, and then pretend that there is no alternative, that this is the natural order, the way things have always been. Just as the stock market serves as a discursive kaleidoscope so too does Jewish power — indeed, the latter props up the former. We are all too familiar with the fact that Jews selectively open themselves to the public while keeping their physical and intellectual boundaries strictly policed. We know why they do it. To understand how is crucial. To understand how is to do more than collect facts: it is to understand how facts are arranged and manipulated; to understand the interplay between the empirical and the theoretical.

As the capitalist order is the current primary economic arm of Jewish hegemony, all aspects of capitalism are worthy of investigation. To expose the mechanics of this internationalist order is crucial. We need to ruthlessly dissect and study the ways it works against us so that we may dig ourselves out from underneath it and ensure that it never happens again. The idea that revolutions are, in actuality, gradual transformations must always be at the forefront of our minds. Many of us have come to perceive these incremental changes in other areas — movies, advertisements, art, literature, philosophy, politics — and recognize them for what they are: efforts at dispossession and cultural subterfuge. Economics must play a larger part in our critique if we are to be successful. It is safe to say that the wool will not be pulled over our eyes in the future. The goal now is not only to spread the message but to continue to tear apart the Jewish narrative, to find every last remnant of harmful Jewish intellectual residue and steel ourselves against it. And much of it festers in our notions of economic “freedom” and fetishization of “the market.” We need to recognize that the intellectual and cultural milieu in which we live is based on assumptions and assertions which require our consent and our obedience. But we need not provide them. We will no longer transfer control.


1. For an interesting and accessible examination of this notion (from a decidedly Leftist perspective) see: Randy Martin, The Financialization of Daily Life (Philadelphia: Temple University Press, 2002).

2. This (that networks precede markets) is not precisely what Dr. Preda argues. He believes that markets are networks. This is, of course, true but provides no answer as to how financial markets originate in the first place. Markets do not–indeed cannot–appear deus ex machina.

3. In both New York and the United Kingdom these transactions were codified in law in 1909. (p. 62).

4. One might think that because the number of Jews was limited (only at certain times and in certain places) that Jewish influence was minimal. But this actually only confirms the disproportionate number of Jews engaged in speculation. Why limit them unless they are deemed to be overrepresented? And if group legitimacy is one’s goal, why limit the numbers of a particular group of people unless they were shady individuals who would not aid any attempts to claim legitimacy?

5. New York Institute of Finance 1989, p. xiii. Quoted in Preda, p. 146.

6. New York Institute of Finance 1989, p. 2. Quoted in Preda, p. 149.

7. On an unrelated note, James Coleman came under intense fire from the American Sociological Association (ASA) in the mid-1970s for reversing his position on busing black students into white schools. Observing that white parents moved away from forcibly integrated schools, he determined that the program undermined the integrity of the educational system. His expulsion was called for but the effort failed. See: Barbara J. Kiviat, “The Social Side of Schooling,” Johns Hopkins Magazine, April 2000, http://pages.jh.edu/~jhumag/0400web/18.html [3] (accessed December 7, 2015).