To effect the project objectives of Lozano’s version of speculative materialism, we’re required to perform a disciplinary integration. To perform this disciplinary integration, we’re required to master three literature sets and their respective fields of inquiry: (i) dynamical systems theory and the sciences of morphogenesis, non-Euclidean geometry, topology, and group theory; (ii) the work of Gilles Deleuze; and (iii) the technical discourse of finance –especially on the topics of credit derivatives, securitization, and synthetically-structured debt, and whose historical-materialist development effects the institutional differentiation of shadow banking out of traditional intermediation.
When the philosopher sets his aperture to finance, he encounters a veritable pantheon of ontological profundities. The first result of this integration is discovery of an important isomorphism between the nonlinear dynamics of finance as a complex system, and the profound demonstration by dynamical systems theory of the ontological univocity characterizing complex behavior, writ large. Dynamical systems theory employs the analytical tools of topology, group theory, and natural studies on symmetry to study complex systems, therein revealing common characteristics among different classes of systems (e.g. biological, social, etc.). Speculative materialism, the study of the ontology of finance, under this approach discovers that finance is one such class of system, and from this discovery sets out to examine the singularities and affects endemic to its processes.
This gives birth to a new methodology and research project whose topics to begin with include, but are not limited to: study of the topological invariants of varieties of financial assets (e.g. options, credit derivatives, securitized products, convertible bonds, synthetic ETFs); study of reversible and irreversible processes endemic to financial phenomena; study of the basins of attraction and nonlinear causes of financial crises; experimentation with the critical values and nonlinear dynamics involving far-from-equilibrium conditions; and ultimately the theoretic union of a macroeconomic and microeconomic discourse consistent with the principles of each. Topological and group-theoretic conceptual resources developed by both dynamical systems theory and Deleuze lend us powerful analytical capacities for sifting-out some structure to finance’s spaces of possibility –even amidst ostensibly stochastic phenomena. The study of the ontology of finance seeks to trace these logics, the logics of the virtual, back to where possibilities for finance set up their camp. Only then, as operators, can we begin tinkering with its divergent evolutionary capacities.
The phases of Lozano’s research can be temporally divided between the present, a projected immediate-future, and a projected extended-future.
Of Synthetic Finance: Three Essays of Speculative Materialism (2014)
Of Synthetic Finance is scheduled for publication in 2014. This book is the formal event that convokes into being the field of study of the ontology of finance.
This book demonstrates:
(i) That synthetic financial assets have a hyperfungibility and higher degree of symmetry than generic financial assets, e.g. traditional debt and equity. This includes an ontological examination of generic finance and synthetic finance to outline the topological invariants of the latter.
(ii) That this means synthetic assets can not only “do” more things, plastically, effectively, and readily to create and distribute risk and cash flow, but that the universal distribution of risk and cash flow is organic to their technology. This includes an ontological exposition of credit derivatives and their securitized incarnation in synthetic CDOs; and an elaboration of the methodological resources Deleuze provides when in his philosophical treatment of dynamical systems theory, he illustrates the peculiar but profound material capacities of the synthetic.
(iii) That given the advanced plasticity, hyperfungibility, and radical materiality of synthetic finance, we really have no idea what our financial technologies are actually capable of. This includes the development of Deleuze’s concept of ‘nomadic distribution’ to wager that the progressive differentiation of synthetic finance signals the contingent historical development of an untapped awesome capacity for the universal distribution of risk and cash flow in a way that makes all parties wealthier.
Lozano’s 5 years of intensive research in the three aforementioned fields generated material for several topically-different books, but which still fall under the general project of speculative materialism: Infinite Leverage (2015); An Image without Likeness: A Nonlinear History of Finance (2016); Continuous Recalibration of Natural Leverage in a Universal Synthetic CDO (2017); and his magnum opus, Being & Finance (2018); followed by Promises of Utopia (2019). The following is an itemization of this projected future.
a projected immediate-future
Infinite Leverage (2015)
For strategic purposes, Of Synthetic Finance (2014) deliberately pursues a nontechnical ontological exposition of synthetic finance when outlining the methodology of speculative materialism. By contrast, Infinite Leverage provides a more technical description of the isomorphism between topological transformations and synthetically-structured financial exchange. This involves an examination of the nonadditive material capacities of ‘natural leverage’ –labeled ‘mechanical advantage’ or sometimes ‘virtual work’ in physics– through the ‘pooling and tranching’ processes of structured finance. The space of structured financial exchange is what topologists classify as a nonorientable surface.
This examination illustrates that in finance, as in other nonlinear systems, the introduction of a subtle or small stimulus at a specific time, for a definite duration, and at a critical value, can induce dramatic effects incommensurate with the amplitude of its causes. In this respect, the book also provides an outline of a theory of financial crisis: when an operator or sets of operators induce nonlinear conditions of far-from-equilibrium, the principle of superposition is supplanted by a new principle; this is the principle of nonadditivity. However, there’s a flip side to system instability: from the principle of the nonadditivity of nonlinear causes we derive Deleuze’s concept of ‘nomadic distribution’ –which does not entail a redistribution of economic objects in a pre-produced space, but now rather an ex nihilo distribution of economic space itself. When the principle of superposition breaks down, a high volume of natural leverage, if correctly channeled, can also activate a nomadic distribution of economic space itself. It is this potentially ex nihilo and ad infinitum capacity of leverage we must seek to tap. For this would realize the all-upside-promise of infinite leverage.
An Image without Likeness: A Nonlinear History of Synthetic Finance (2016)
This book is a history of synthetic finance, from the Ancient to Medieval to Modern and now contemporary world. It provides a nonlinear account of the historical differentiation of the class of exchange of synthetic finance (e.g. credit derivatives and synthetically-structured financial assets) from out of the class of exchange of generic finance (e.g. traditional debt and equity), and therein maps the phase transition from traditional intermediation (aka the “Jimmy Stewart” model of banking) to shadow banking.
This book also draws on Felix Klein’s powerful group-theoretic method of arranging non-Euclidean transformations according to their geometric invariance requirements, in order to both outline a mathematically-intoned philosophy of the history of finance, and to illustrate that the differentiation of synthetic finance signals a progressive becoming-topological of the financial asset.
a projected extended-future
Continuous Recalibration of Natural Leverage in a Universal Synthetic CDO (2017)
This book advances a short, dense, technical argument that the technological fusion of, on the one hand, contemporary reworkings of the Black-Scholes-Merton options pricing model’s method of continuous recalibration, with on the other hand, the fungible risk and cash flow distributive technology of a synthetic CDO, can effect a dynamically-hedged universal distribution of risk and cash flow that makes all parties better-off.
Lozano is currently in the inaugural stages of modelling this proposal (note: he also needs a mathematician, a financial engineer, an accountant, a behavioral economist, a (Laplanchian) psychoanalyst ((LPNNA) Lacanians please need not apply), and a game theorist). In actuality this book is a tax-policy proposal which, if tested, adopted, and found viable, would inaugurate a concrete speculative materialist economic program. At the very least, it’s a test model –whose experiment draws on scientific, philosophical, and psychological studies on altruism and egoism– to translate and synchronize several profound analytical contributions from financial engineering, social philosophy, behavioral psychology, and dynamical systems theory to build more robust (and hopefully accurate!) financial risk models, albeit now, and essentially so, with universal economic equitability as its aim.
Being & Finance (2018)
This book explicitly illustrates the becoming-topological or regressive differentiation of capital in its synthetic-systemic incarnation. It comprehensively exposits the complete philosophical synthesis of the combined insights of dynamical systems theory and the study of the ontology of finance.
Promises of Utopia (2019)
Starting next year (2014), Lozano will commence intensive research on the history and ideologies of utopias. He will then weave Nietzsche’s advocation for a politics of difference grounded in joy and affirmation into an itemized account of the promises of utopias. Drawing on his technical understanding of synthetic finance, Lozano proposes a project for radically reengineering synthetic financial technologies for universal equitability –or in a word, to realize the promises of utopia.
…But wait a minute, Lozano’s only one guy. What else will speculative materialism have been 5 years from now?
*Thanks to Jon Rafman for the featured image in this post.