Short-Termism as a Rule : the Effects of Portfolio Management Delegation

Montagne, Sabine

doi:10.3406/ecofi.2009.5522

Cited by 2 publications

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“…Our central tenet is that, far from providing an engine for imagining substantive futures that guide (collective) actions, finance 'consumes' forecasts, plans or visions. They serve as mere signals (Langenohl and Wetzel 2011), fuelling an increasingly short-term (Montagne 2009), febrile hunt for novelties from which profit can be generated by beating others to it. In (economic) theory, prices will oscillate -more or less -evenly around the expected 'intrinsic' value in response to incoming signals, so that 'the time average of an observable [is] equal to its expectation value' (Peters 2019(Peters : 1216.…”

Section: Introductionmentioning

confidence: 99%

The Politics of Uncertainty

Scoones¹,

Stirling²

2020

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This collection fills an important gap in our understanding of the role of uncertainty in the science-society nexus. It illustrates the growing awareness that, in this context, uncertainty is essentially a political concern to be addressed by better governance rather than a scientific problem to be solved by improved techniques. Scientific uncertainty will continue to be a challenge for contemporary societies as long as the legitimacy of policy decision-making and action is based on trust in science.Professor Silvio Funtowicz, Centre for the Study of the Sciences and the Humanities, University of Bergen; formerly EU Joint Research Centre, Ispra What should we do with uncertainty? Not abolish it with facts, this wide-ranging essay collection argues. Introduced by two of our most incisive analysts of alternative social futures, the book delves into today's most significant governance challenges and shows how uncertainty leads us to reimagine the politics of modernity. In these turbulent times, this is a book to read, savor and read again. Professor Sheila Jasanoff, Pforzheimer Professor of Science and Technology Studies at the Harvard Kennedy School The old world order is fading into history: what a new one will look like is currently uncertain. In fields as diverse as climate change, finance, urban futures, pandemics, mass migration and many more, the future looks less predictable and demands alternative approaches. This well-timed book lays out what they might be.

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Section: Introductionmentioning

confidence: 99%

The Politics of Uncertainty

Scoones¹,

Stirling²

2020

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“…Our central tenet is that, far from providing an engine for imagining substantive futures that guide (collective) actions, finance "consumes" forecasts, plans, or visions. They serve as mere signals (Langenohl and Wetzel 2011) fueling an increasingly short-term (Montagne 2009), febrile hunt for novelties from which profit can be generated by beating others to it.…”

Section: Introductionmentioning

confidence: 99%

The assault of finance’s ‘present futures’ on the rest of time

Walter¹,

Wansleben²

2019

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The title of our contribution refers to Alexander Kluge’s movie, “Der Angriff der Gegenwart auf die übrige Zeit” (“the assault of the present on the rest of time”). The question we ask is how financialized capitalism shapes and formats the politics of the future. Our central tenet is that, far from providing an engine ’imagining’ futures that substantively guide (collective) actions, finance ‘consumes’ forecasts, plans, or visions in its present coordination process. While the “oscillation” between present futures and future presents has been identified as a defining feature of modern conceptions of contingency, freedom, and choice (Luhmann; Esposito), these two temporal modalities are collapsed in contemporary financial markets in an ongoing ‘pricing in’ of various possible future states. Projected futures do not substantively shape collective paths towards them or instruct social learning, but are calculatively assimilated to improve coordination between present prices. Fatally, central banks have been at the forefront of “synchronist” (Langenohl) finance, believing that as long as numeric calibration of their own and the markets’ expectations as expressed in prices align, they have rendered capitalism governable. Under this regime, central banks really do not govern inflation, but inflation expectations as expressed in the “yield curve” and built into interest rate derivatives. We argue that financial techniques built on the efficient market hypothesis and the Black-Scholes-Merton formula, as two theoretical articulations of this modern “synchronist” (Langenohl) temporality of finance, allow central banks to ignore possible “random” fluctuations in actual inflation and concentrate on the internal calibration of present futures as the sole criterion for monetary policy success. We show that the resultant “assault” on “future presents” was an important factor in the run-up to the crisis of 2007-9. Central banks deliberately attempted to eliminate uncertainties in markets about the future course of monetary policies. For that purpose, shared fictions about the underlying logics of Western economies (real interest rates, NAIRU etc.) were rigidly built into the structures of asset prices. Moreover, since central banks and market actors aligned their expectations over real interest rates, market actors could act as if their uncertainties about future liquidity needs could be neglected, since current money market and official lending rates were supposed to already define the price of liquidity tomorrow. In the last part of the contribution, we will extend this argument to contemporary quantitative easing, to show how it reinforces the pitfalls of generating expectations of economic prosperity and stability via the contemporary financial system.

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Short-Termism as a Rule : the Effects of Portfolio Management Delegation

Cited by 2 publications

References 0 publications

The Politics of Uncertainty

The Politics of Uncertainty

The assault of finance’s ‘present futures’ on the rest of time

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