Dark Pools

“Narratives of financial complexity obscure how capitalist realisms are made—and might be unmade”

“The post goes on to attempt a partial explanation, but that first line is telling. It has the ring of a familiar joke, one that practically writes itself. For literary critic Leigh Claire La Berge, it’s part of the abstraction side of popular financial-media discourse that tends to unfold through the twin poles of scandals and abstractions.”

“In her book of the same name, La Berge argues that during the 1980s, finance became the discursive metonym for the economy at large, and a rhetoric of abstract complexity became a favorite method for talking about finance. “Is capital, or life, more abstract than it was 30 years ago?” she asks. In some ways, it doesn’t matter. The rhetoric precludes the question: “Abstraction, by its very nature, isn’t quantifiable.””

““Representation,” she writes, “constitutes the value [finance] is supposedly representing.” Finance isn’t just shaped by narration but requires it for substantiation. This is what La Berge, borrowing from and building on Mark Fisher, calls capitalist realism: the chicken-or-egg manner in which finance capital and new cultural forms help one another emerge.”

“In her book Debt to Society, cultural theorist Miranda Joseph writes about the ways people are constructed through accounting practices, broadly understood—not just literal banking but related machinations in criminal law, popular discourses about responsibility and trustworthiness, and ways of valuing knowledge.”

“It follows that people are constructed differentially through accounting practices, according to race and class and gender and geography and family structures.”

“Michael Lewis’s Flash Boys might appear a strange place to draw inspiration. Lewis is a prime purveyor of the popular explainer-of-finance genre, and Flash Boys, which reports on exploitative high-frequency-trading practices, inevitably mines the rhetorical status quo that precedes it.”

“Yet there are useful cracks to that facade. If at times the book presents finance as incomprehensible, it also presents it as opaque, and the two tend to be linked, if only implicitly. The opacity is a relational one. A quant doesn’t know what his algorithm does in the world because his department is purposely isolated from others in the firm. Mutual-fund managers find stock prices rising mid-trade because hidden advantages are doled out to high-frequency traders. Big investment banks open unregulated private exchanges called dark pools not (as the official logic goes) to protect clients but to protect their own profits from more agile HFT competitors and gain, as a bonus, a screen from behind which to better fleece clients.”

“On the whole, the financial world depicted in Flash Boys seems impenetrable less because it is fundamentally too complex to grasp than because it is so systematically full of obfuscations.”

“There is likely something to be made of the fact that both shadow banking and dark pools are industry-accepted terms; I haven’t fully sussed it out but would guess it had to do with a counter-account financial institutions could call on in response to growing calls for transparency. Don’t worry, it’s probably already reassuring us, opacity is an important part of a healthy market system.”