Capital and Time by Martijn Konings

Rating: ★★★★

You can find my complete personal notes on Capital and Time at this link.

Capital and Time is about uncertainty, speculation, and why the most common critiques of neoliberalism are flawed. I picked this book up because the veb account recommended it in a thread about the nature of money.

I found the writing frustrating. There are plenty of fresh ideas in here - that speculation is the natural result of pervasive uncertainty; that valuation is a performance that can be self-fulfilling; that economic power often doesn't come from knowing the truth but can instead come from being known and increasing the world's exposure to your risk - but so many of them are buried in inelegant prose.

Here are some of the ideas I found most interesting:

Value is inherently speculative

Valuation is not some objective measurement. Valuation is an active performance, not a passive measurement, because it aims to generate the value that it claims to represent. That valuation makes fictitious projects real by letting us recruit labor to make them happen.

For example, take a VC investing in a firm before there's meaningful revenue. In their investment, they might value the firm at many millions of dollars, but there's no guarantee of future profit. But by investing at that valuation, the VC is is trying to make create a future where the firm's profit does justify the valuation. Uncertainty and speculation are inherent to this kind of valuation, and there's no way to determine what the "real" value of the firm is.

Being known is more important than knowing

The world is inherently uncertain, and to a large extent, our investments are driven by what other agents choose to invest in. If we can get other people to take the same positions as us, our investments have a better chance of working out. (This is kind of like the Keynesian beauty contest, but one where people loudly communicate their preferences in an effort to coordinate and do better.)

"[The] outcome of our investments is to a large extent determined by the investments they induce, and so it is often much more important to be known in this or that way than to expand one's knowledge."

Pervasive uncertainty causes smaller actors to spontaneously centralize around the positions that larger actors take. If we are smaller actors, we "can improve our own prospects of persistence by associating ourselves with a larger, more powerful entity, even if in the process we increase its leverage over us".

In this way, economic power can spontaneously centralize: if you know a large actor or well-known is going to take a certain position, it makes sense to follow them because you know others, having limited information like you, will also follow seeking certainty.

The critique of speculation is an intellectual dead end

A lot of critiques of orthodox economics rely on critiquing speculation. This is a sloppy and ironic critique because it relies on the existence of some "real" value that our current system strays from – but there is no objective, "real" value. The critique of speculation "appears more as a moral stance" than a serious attempt to understand capitalism.

Some bad sentences

As a treat, here are some sentences that drove me up the wall:

"Plasticity refers to the constitutive character of contingent associations, the way one connection inflects the generation and patterning of new connections and thus adjusts the course of history, allowing for the emergence of determinate entities in a world that has no external mover."
"Here the notion of performativity has become closely allied with the theory of speech acts,which states that utterances can sometimes bring about their own truth conditions (as in "I hereby promise") and so highlights the constructive aspects of discourse and language."
"Key here is his differentiation of biopolitical normalization from the disciplinary norm: wheras the latter is associated with a transcendental understanding of power, the former involves a more pragmatic and relational understanding of normativity, seen as an endogenously generated point of reference that exerts organizing effects on the contingent processes from which it is born"

Yeah, not great. But this book has so much good stuff in it that it's worthwhile.