MARKETS: WHERE IGNORANT ARMIES CLASH BY NIGHT

Chris Thurman (30 October) posts on Business Day live (South Africa) HERE

“All that shimmers does not turn into gold”

“Markets are whimsical and moody. What this really means is that the traders who decide what happens to markets are whimsical and moody. They are certainly not sentimental. The activity on the JSE [Johanesburgh Stick Exchange] had nothing to do with the death of Senzo Meyiwa.

It was based on educated guesswork about external factors such as the US Federal Reserve’s possible revision of interest rates, and on responses to updates by SA’s big corporations.

Nonetheless, we cling to the idea that markets somehow reflect national or global sentiments (as opposed to creating or precipitating them). Indeed, through a strange process of personification we conceive of a single entity called The Market, which has the capacity to experience emotion.

It is something of a contradiction to proceed — on a misapplication of Adam Smith’s notion of the "invisible hand" — as though The Market is essentially a rational creature, acting in its own best interest, which is to turn individual selfishness to universal benefit. Market self-regulation actually comes at appreciable human cost. The Market survives cycles of boom and bust, but only because taxpayers, mortgage owners, pensioners and unwitting investors take the hit.”

Comment

Interesting observations by Chris Thurman.  He is right about it being a “misapplication Adam Smith’s notion of the invisible hand” and and the nonsense of the “market” that “has the capacity to experience emotion”. 

People who act in market relationships experience emotions, individually and collectively, and that is a big difference between people acting in market relationships and carbon and other atoms, which do not have or feel emotions. Atoms do not have intended consequences and neither do they cause unintentional consequences. There is nothing intentional in natural science.

Second Comment

I liked this paragraph too:

“…Still, despite the crystalline and epiphanic quality of many of the images, viewing the ocean in terms of The Market (or vice versa) also brings to mind Matthew Arnold’s poem Dover Beach, which describes the "tremulous cadence" of the waves as a reminder of "the turbid ebb and flow / Of human misery”.

As an undergraduate (1965-9) I was struck by Arnold’s 'Dover Beach' poem and it introduced me to the role of figures of speech and metaphors, which sparked my interest years later in 2003-5 when I contemplated the enigma of Adam Smith’s use and meaning of the “invisible hand” metaphor and its economics.

Its last three lines stuck in my mind throughout those intervening years and ever since:

“And we are here as on a darkling plain

Swept with confused alarms of struggle and flight,

Where ignorant armies clash by night” (Mathew Arnold (Dover Beach).