Why study the ontology of synthetic finance? a first note

Perhaps its time to say a few words clarifying one reason why speculative materialism is interested to study the ontology of synthetic finance (and as always, why a Deleuzian is uniquely situated to do so).

We began by noticing that the recent development of two financial technologies now exhibit a series of intensive properties and processes whose material specificities demand serious, sustained, ontological examination. A Deleuzian is especially interested in intensive properties, so when we noticed their presence in the domain of finance, we decided to take a closer look. What are they?

First is credit derivatives. The progressive differentiation of these synthetic objects (from out of generic financial objects) convey that finance is a system whose modality is homologous with other dynamical systems with multiple attractors. Indeed, credit derivatives are singularities, or attractors; and credit derivatives markets are basins of attraction for financial markets writ large. And basins of attraction -in whatever system they articulate themselves- always force upon us the problem of accounting for a mode of existence that has available and material, but unactualized tendencies that are nonetheless real . What is the ontological status of such objects and their constitutive economic properties at play herein?

Secondly is the process, method, and mode of asset production called securitization. A Deleuzian only needs to read a technical manual on securitization to be immediately struck by the fact that we’re dealing with a flexible de- and re-differentiating assembly process, capable of an open -not closed- set of potential combinations.

Together, these two technologies combined, comprise synthetically-structured finance. We also began to realize that together they are a method for the nomadic distribution of qualitative multiplicities.

What do we mean by this? A more thorough answer to this question is provided by Deleuze’s Guidebook to Synthetic Finance (the first post of which is found here), as we slowly, carefully, and comprehensively work our way through the political finance in Deleuze’s Difference & Repetition. But there is also a shorter answer to give herein.

We know from dynamical systems theory, but also from the other subfields from the sciences of morphogenesis that when a process or series of processes lead to a closed set of assemblages, that set comprises a numerical multiplicity, because its different potential actualities can be exhaustively enumerated -as Deleuze says, everything is already present in its reality; not of course that everything is realized in its actuality, but that all of its potential actualities have already been realized, it is now a closed set of potentiality.

But we also know that some processes yield open sets, that these sets are divergent, and that therefore any attempt to exhaustively enumerate their potentialities will always fail -and at that, will always fail for a number of reasons; but the easiest way to explain why is to simply observe that it is a qualitative multiplicity, and qualitative multiplicities are by definition divergent. Biological evolution -in which novel biological assemblages incessantly move by degrees to produce a qualitative change in kind- is the most obvious example of the divergent, open set of a qualitative multiplicity in a dynamical organism. But as we sought to show in Essay Three of Of Synthetic Finance, the progressive differentiation of synthetic finance is another, albeit perhaps less obvious example.

Therefore, and building on the findings elaborated in Of Synthetic Finance, our study of the ontology of synthetic finance has now brought us to three things that must be examined further: (i) that synthetic finance is a technology for nomadic (as opposed to sedentary) distribution; (ii) of using the powerful de- and re-differentiating techniques of securitization for organically creating (what in Of Synthetic Finance we called) ‘natural leverage’ in a universal synthetic CDO, in order to assume a kind of ‘infinite leverage’, and for the purposes of realizing a speculative materialist communism; and (iii) developing an ordinal theory of value to supplant the cardinal theory of value (the latter of which is any other theory of value -whether Marxist, marginalist, etc.), i.e. of thinking of value in  ordinal terms, rather than cardinal terms.

This will be one of the agendas of speculative materialism’s interest in synthetic finance moving forward.

Benjamin

LorenzAttractor

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