This chapter looks at how issues around rights, partiality and accountability test the luck-neutralization impulse that is at the core of luck egalitarianism. The chapter reviews Williams’ arguments on equality, counterposing them to Nozick’s outright rejection of the egalitarian terms of reference. This is to show the limits of both liberal and conservative critiques of equality as well as open the door to assess whether Marxian conceptions of equality might have more merit.
A breakfast meeting in March 2000 sets the scene for a discussion of the role London’s markets have played in financing colonialist endeavours. The book’s narrative continues with an account of the closure of the London Stock Exchange’s junior market and the subsequent outcry from the financial community. This, and strategic pressures from the new market OFEX, led to the formation of the Exchange’s Alternative Investment Market, or AIM, which was by 2000 becoming a hub for mineral exploration finance. Chapter 11 concludes with an account of the Shanghai rubber bubble of the early 20th century and the British plantations in Malaya, where indentured labour generated high returns for investors that funded them. The chapter notes the similarities in deal structure between these financings and those of the dotcom era discussed in Chapter 10.
Arising from disagreement with Rawls and Nagel, Parfit and Nussbaum, this chapter offers an alternative approach to conceptualize and to demonstrate the unfairness of exploitation predicated upon structural oppression. Drawing upon Williams’ and Cohen’s comments upon and contributions to moral and political philosophy, I point to ‘luck egalitarianism’ arguments as a more suitable model to identify, assess and direct interventions to overturn existing social inequalities. The underlying appeal of luck egalitarianism is to demonstrate that much of what a person seeks to claim as their own is contingent; what remains is the material dividends of social relations.
Through a discussion of how social inequality is treated in the liberal view of the world, this chapter asks whether the strongest form of liberal reasoning really deserves our allegiance. By plotting key contours of liberal social theory – which include the presumption of liberty, the freedom of consciousness and the necessity of representative government – the chapter shows liberalism as emerging from a particular philosophical anthropology and metaphysics of reason. Admirably, liberals resist reducing the person to always and nothing but this or that. But liberals have not given enough attention to how capitalism and its private property regime hinder the values that liberals cherish.
This final chapter stages a dialogue between the author and the stock exchange. It equivocates after Chapter 14’s abrupt dismissal of the possibilities of finance: perhaps there might be a role for new financial markets in very focused cases. It suggests a market in recyclable materials and a Scottish stock exchange as two such possibilities. The stock exchange defends itself against the book’s accusations: it is a social technology, a reflection of the society that created it.
Chapter 12 continues the theme of Chapter 11, with a focus on the financing of mining. It shows that neocolonialist thinking is still ingrained into contemporary mining finance, especially in the valuation practice known as the ‘discount rate’. It highlights the role of spectacle in finance, via a brief detour into the mining fraud of Bre-X. The chapter then moves to the construction of mortgage-backed collateralized debt obligations (CDOs), the financial device responsible for the 2008 crash, arguing that there are similar asymmetries of power and practices of extraction at work. It concludes with a return to the OFEX story, where the market’s founders suffer a failed fundraising and lose control of the market.
The narrative segues to the investors themselves, and a discussion of decision-making as embedded in socio-technical networks. Chapter 10 suggests it is more interesting to focus on the mechanisms through which decision-making is made possible than on deviations from textbook rationality. Explanations here are sociological rather than behavioural. The chapter explores the concept of ‘distributed cognition’ by way of a hedge fund, and then moves to an account of the heterogeneous strategies of non-professional investors, identifying the strategies of ‘charting’ and fundamental analysis. A discussion of the GameStop affair concludes the chapter.
Theorists have argued that capital always seeks to break free from the circuits of production, and Chapter 13 shows how such a leap took place. It follows the transformation in finance as it moves to a fully electronic high-speed form of trading. It looks at the technological innovations and transformations to the architecture of markets that made this possible – London’s Tradepoint market and New York’s Island and the ‘SOES’ bandits – how these were mimicked and outcompeted by a fully automated system; and how these innovations made their way into the mainstream. It follows the final unsuccessful transformation of OFEX into a high-speed trading venue or dark pool.
What is the stock market, and why is it always on the news? Why is finance so important? How do stock markets work, and what do they really do? Financial markets are an inescapable part of the modern world but remain poorly understood. How to Build a Stock Exchange sets out to answer these questions by way of a journey through the histories and narratives of finance, combining meticulous historical-sociological research with anecdotes, reflections on the narratives and ideologies of finance and the author’s autobiographical reminiscences. The book takes the stock exchange both as an institution in its own right and as a rhetorical figure to explore finance more broadly. It focuses on the material and technological drivers of the markets, as well as the social relationships and rituals that keep markets functioning. It identifies exchanges as embedded in specific historical and political trajectories, showing the mutually constitutive relationship of modern nation states and financial markets. It shows how financial institutions are equally constituted by narratives, which work to set rules of participation, identity and conduct. Most of all, it makes the case that stock exchanges – and the other institutions of finance - are products of chance and circumstance. Finance, it argues, is a social technology, a reflection of its makers. While the stock exchange as we know it is central to so many contemporary global problems, it is not, the book suggests, entirely beyond change.
Setting out from Joseph Wright of Derby’s two paintings of scientific discovery (‘An Experiment on a Bird in the Air Pump’ and ‘The Alchemist, in Search of the Philosopher’s Stone’), Chapter 6 explores two rival conceptions of economic activity: discovering and making of prices. It sets out the proposition, drawn from science and technology studies, that financial facts are made through networks of experimentation and debate. These ideas are fleshed out using examples: the daily LIBOR (London Interbank Offered Rate) fixing, and then, in more detail, the development of the CBOE (Chicago Board Options Exchange) underpinned by new ideas in mathematical finance. The chapter concludes with the construction of the first mortgage-backed securities by Salomon Brothers in the 1980s, an example of ‘securitization’, a novel mode of financial operation.