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Synecdoche, NYSE (FTSE, NASDAQ…)

I have written another post in response to Catherine Malabou’s question – about which crisis and lack animates our attempts to (re)ground – here. There, I followed Heidegger to consider the crisis as a lack of any essential crisis in the ground of our being: an insufficient attunement to the processes that constitute us as subjects. Here, I want to discuss one obvious crisis of recent times – the near-collapse of the financial system in 2008, and the subsequent loss of all confidence in the aptitude of economists and Governments – through a single market event that took place over 20 minutes on 6 May 2010. This market event could be read as a synecdoche of the wider ongoing financial/economic/governmental crisis. This synecdoche could have a bearing on the recent philosophical interest – reignited by Meillassoux’s After Finitude (2006) – in the possibility of access to the thing-in-itself.

We all know about the implosion of the Western financial-governmental system since the subprime mortgage bubble burst in 2008. But one telling moment has received far less press attention, and it is this I will consider a synecdoche of the whole crisis. This moment was more precisely a period of around 20 minutes, from 2.40pm on 6 May 2010. According to the official report, over that time

the prices of many U.S.-based equity products experienced an extraordinarily rapid decline and recovery. That afternoon, major equity indices in both the futures and securities markets, each already down over 4% from their prior-day close, suddenly plummeted a further 5-6% in a matter of minutes before rebounding almost as quickly.

More interestingly, the prices of some individual stocks fluctuated enormously; as Donald MacKenzie writes in the LRB:

Shares in the global consultancy Accenture, for example, had been trading at around $40.50, but dropped to a single cent. Sotherby’s, which had been trading at around $34, suddenly jumped to $99,999.99.

With no reason in the financial news to spur this change, these shares dropped and jumped to the minimum and maximum prices possible. And as the official report states, ‘Over 20,000 trades across more than 300 securities were executed at prices more than 60% away from their values just moments before.’

This was a ‘flash crash’. What happened? Well, a large proportion of trades on modern stock markets are not made through human decisions but are conducted by algorithms. More than half of trades on US stock markets are algorithmic. These can drip-release sell orders to avoid the market dropping on a large sell; or can calculate movements against average prices across a number of shares in the same or related areas and buy and sell accordingly; or can detect and pre-empt the activity of other algorithms. MacKenzie, whose article provides most of the information in this piece about trading and the flash crash, shows the importance of speed for high-frequency trading (trades that make tiny profit margins and so are made very quickly and repeatedly). These trades are made algorithmically at speeds far quicker than any human could react:

Speeds are increasing all the time. … [In 2007-8] the salient unit of trading was still the millisecond, but that’s now beginning to seem almost leisurely: time is often now measured in microseconds (millionths of a second). The London Stock Exchange, for example, says that its Turquoise trading platform can now process an order in as little as 124 microseconds.

Because of this, it is of great importance how physically close your trading server is to the stock exchange’s computer systems. MacKenzie points out that if a trader is based in Chicago and trading on the NYSE, the fastest an electronic trade can get to New York is 16 milliseconds, through a fibre optic cable. This is a delay sufficient to time the trader’s algorithm out of contention. To get around the problem, traders run their algorithms on servers located at the Stock Exchange itself – which can cost $10,000 per month for a single rack space.

The 6 May 2010 ‘flash crash’ was caused by a complex interaction of algorithms, and resulted in a vicious downward spiral and in the market needing to be paused for five seconds (an age in trading) and then essentially frozen again for 15 minutes while algorithms caught up. Trades at erroneous prices were later cancelled, and, while the market was down overall at the end of the day, losses were not huge. Then followed the attempt to understand what had happened:

For five months, large teams from the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) researched what had gone wrong in great detail, ploughing through terrabytes of data.

 For more information on the specifics of the crash I recommend MacKenzie’s LRB article. What interests me is quite how non-human the stock market is, for an institution so socially significant, and the extent to which the 6 May 2010 event displayed its fragility. MacKenzie stresses that algorithmic trading is not necessarily any worse than human trading, and can balance out market instability: this is worth remembering in the face of tempting ‘rise of the robots’ narratives. But does it matter that we have constructed a financial system more complicated than we can understand (at any given moment of its operation), that operates at speeds much faster than we can follow?

In this way the flash crash can be read as a synecdoche of the whole financial crisis. In both cases we have an incredibly complex, deeply interlinked system, with more variables and factors than can be comprehended by any human or any regulatory system at any one moment. Regulations can always be put in place based on crises that have taken place in the past, but these guard only against recurrence, not against a different future meltdown. The issue here is not necessarily the existence of the stock market per se, but rather the extent to which people’s reality is exposed to the market’s inherently unstable fluctuations: the possibility of countries being made bankrupt, of a generation being out of work, of basic food prices rocketing or collapsing.

In our context, where the guess-based pseudo-science of economics rules Government policy, it seems our focus should be on emphasising the inherent unknowability of the systems we have constructed. Does a philosophical issue also emerge here? Arguably, yes: in the question of our access to the infinite and the finite, in Kant and Meillassoux.

Kant’s antinomies in the first Critique display the kernel of unknowability at the heart of infinite totalities. Kant depicts the four transcendental ideas of world, divisibility, freedom and God in terms of infinite mathematical series. The problem of dialectial illusion in Kant then becomes one of the possibility of an unconditioned condition in an infinite series. With the first two antinomies, this problem means that the antinomy cannot be resolved. The latter two antinomies can be resolved, but only at the price of freedom and God being transferred to the noumenal, i.e. as being absolutely unknowable for us. Kant rescues freedom and God, but not as phenomenal objects, rather as transcendental ideas that cannot be disproved.

So in Kant, the unconditioned conditioned within the infinite is unknowable, or, perhaps better put in ontological rather than epistemological terms, it has no being-for-us. It is instructive that Kant makes these arguments using mathematical infinite series (or at least the image of these), because Meillassoux’s challenge to Kant’s prohibition of things-in-themselves utilises mathematics as the privileged route to knowledge of the in-itself. Meillassoux writes:

 all those aspects of the object that can be formulated in mathematical terms can be meaningfully conceived as properties of the object itself.

Ultimately, in After Finitude, the aspect of any object that is unveiled by mathematics is its contingency. This result, strange as it is, can be put to one side, because it is more immediately significant that Meillassoux wants to regain direct access to the absolute, to total knowledge of the essence of things. There are two ways in which the flash crash and wider financial crisis may inform us here: firstly as a political argument, secondly as a starting point for an ontological argument.

We could say that it is politically vital to press the Kantian view, of the unknowability of things-in-themselves, because disastrous decisions have resulted from the belief of ministers and policy-makers that they have knowledge of the essence of financial systems or of the outcome of invasions. What is needed is to start in some way to loosen the grip of economically-informed thinking.

This political argument would not trouble Meillassoux, of course, who is operating on the level of ontology, of essence and logic. But it seems that the 20-minute implosion of the stock market shows that it is possible for systems to be consistent – there were reasons for the events, which the investigators dredged from the data in months of analysis – and not therefore completely contingent (whatever that would mean), but still absolutely unknowable for us, at the time. The ultra-complex network of interlinked high-speed financial algorithms, which are running each day and which freakishly imploded on 6 May 2010, constitutes a finite system, not even an infinite one. It could be said to run in tune with basic 19th century scientific determinism – every effect has a cause, the whole tangle can be unravelled after the fact with sufficient patience – but nevertheless at any given moment, the speed and complexity is such that the state and direction of the system is inherently unknowable for any human observer. That is why money can be made and lost on it. It’s why it should play a more minor part in the welfare of many of the world’s people. Does it also mean that Meillassoux’s challenge to Kant’s prohibition of the in-itself fails?

Here we have a finite system, with a clear starting point (each day’s trading starts with the trading bell, and picks up on the closed set of the previous day’s results and overnight news developments), made up of human-written mathematical algorithms. The trading on 6 May 2010, from the market’s opening until 2.40pm, is a finite system, containing, from the perspective of the subsequent trading, two unconditioned conditions. Firstly, a temporal starting point, the ringing of the bell; and, secondly, the mathematical content of the algorithms, pre-programmed to take various actions in the case of particular market conditions. The concept of a starting-point for the world is considered in Kant’s first antinomy: in our day’s trading, though, we do not have an infinite world but a finite, constructed system. From the starting point of these two unconditioned conditions, the market activity unfolds. There is human trading, of course, but this is not significant to the flash crash: here, algorithmic feedback loops interact in ways that, as 6 May 2010 demonstrates, are outside of human understanding at any given moment. Within the finite, let alone the infinite – within the human-created, let alone the natural – it seems that a combination of mathematised complexity and non-human timespans instills the Kantian noumenon (qua ontological void) into the stock market and, due to the latter’s political and social significance, into everyday reality.

By Steve

Further reading on the 2010 flash crash:

MacKenzie, Donald, ‘How to Make Money in Microseconds’ London Review of Books 33.1 (May 2011)

US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), Findings Regarding the Market Events of May 6, 2010 (Sept 2010)


17 comments on “Synecdoche, NYSE (FTSE, NASDAQ…)

  1. tokyowitch
    November 20, 2012

    Isn’t there one thing we do know at every moment in the complex system, that its results are absolutely contingent? Doesn’t the ‘flash crash’ sort of articulate that as well?

  2. Pingback: Response to Steve on economics and the ‘flash crash’ « Groundwork

  3. Alice
    November 20, 2012

    Hi Steve I really enjoyed reading this. I started writing a comment, but it got a bit long so I’ve put it as a separate post

  4. Steve
    November 20, 2012

    Thanks for your comment, but I disagree! I think that the flash crash shows that even a finite, human-produced system, which isn’t contingent (there was a cause for the crash that could be unravelled with sufficent time/computer processing: a very complicated interaction between, predominantly, algorithms) can be inherently unknowable – or have a rationality which has no being-for-us. I think the key aspects of this are complexity – a large, finite, number of interactions – and ultra-fast timespans. So, as in Heidegger, time and temporality seem highly significant to this ontological issue.

    I think maths is important: for Meillassoux, maths provides a glimpse of the absolute contingency of the in-itself (and hence some absolute knowledge); whereas in the May 10th example, mathematised finance produces an ontological void within the for-us, *at the time*…

  5. Steve
    November 20, 2012

    The above was in reponse to Tokyowitch, just to clarify… Thanks for your response, Alice, really interesting – I’ll think about it and reply separately.

  6. tokyowitch
    November 20, 2012

    But isn’t the whole idea behind absolute contingency mean that even in the most structured calculated causal system, at any moment, ‘at the time’, it can all change? So in that sense it’s not completely unknowable because there is something we know about it which is that it can change?

  7. David
    November 20, 2012

    Very interesting Steve, but is it legitimate to consider a days trading as a finite system? As you point out, the starting position is conditioned by the closing position of the previous day, and the algorithms are conditioned by their purpose: to hide big transactions and ultimately to make money.

  8. Tim M
    November 21, 2012


    I enjoyed reading this. I appreciated the gesture of attuning to our profound lack of agency in a system, economics, where rational agents with the potential for perfect knowledge are the initial presumption. As we’ve touched on before, overcoming the fiction of the presumed ‘I’ is vital political terrain. Your comments reminded me of a comment made in Neither Sun nor Death by Peter Sloterdijk:

    “you cannot but notice that current business-societies are in general joined in a sort of cognitive strike against the knowledge of the human sciences. They do not want to see anything or hear of anything that has been brought to light by the pioneers of psychology, ethnology, pre-natal science, neuro-linguistics or psycho-acoustics. Were all that received, fissures would widen in the individualist armor of the majorities” [154]

    Initially I was left unclear about where you stood on our (always, but especially recently?) loosened grip on rationality and knowability. I first thought your critique of the stock market might have been a hankering after a simpler time when we had things more under our purview? Then I re-read it and decided you didn’t mean that. You are right of course that the (arbitrary and structural) iniquities of stock market effects ought to be challenged and re-thought. But the question remains whether the amendment of this paragon of de-territorialisation can only be carried out by, and in the name of, willed decisionist subjects; or whether a remedy is needed that somehow would endorse the ontological reality of excess, of de-territorialisation, of being-with, etc?

    One other thing: you seem to be coming down on the side of correlationism/phenomenology. Would Meillassoux and some speculative realists not argue that “no, the ‘in-itself’ has not been disproved by algorithms, and it is an anthropocentrism to say, just because humans cannot grasp the complexity of the stock market ‘at the time’, it doesn’t mean it does not have an ‘in-itself’ character?” By contrast, I currently sense that political and ethical potential lies precisely in affirming this ‘ontological void’ – rather than simply trying to plot all the myriad material movements and causations in a hyper-complex world (bryant), or trying to drill down to the always-withdrawing character of objects (harman). But i’m not sure any phenomenological overload of humans by material others would dissuade Meillassoux and co to abandon their own proposition. Is that right?

    Pursuing your themes further, a good read on the topic of financial markets, complexity and herd affects, is this article by Nigel Thrift:


  9. David
    November 22, 2012

    Nothing that we observe is absolutely knowable “at the time” – it always takes a certain amount of time for the brain to process sense data, so your example of the flash crash is only quantitatively and not qualitatively different from understanding a very simple event. So you are saying that: 1. Nothing is knowable in itself at the time and 2. The Flash Crash is knowable given enough time. If you are saying that the flash crash is the entire financial system in microcosm, then the entire system is therefore knowable given enough time. If you are arguing that there is an ontological void at the heart of the financial system, then you have to also conclude that there is an ontological void at the heart of everything else as well.

    But our brains are finite, there is a limit to the complexity that can be grasped by the human understanding irrespective of the time involved and the complexity of the entire financial system is surely beyond this limit, so epistemologically (and ontologically?) is it not in a different category to the flash crash which is therefore not a synecdoche?

  10. Steve
    November 25, 2012

    Thanks all for your comments. They’ve made me recognise a few issues which overlap across comments so I’ll respond to them in one go.

    Thinking about it, ‘synecdoche’ wasn’t a great figure to make use of – I did so mainly because it allowed me to give the post a title I thought sounded clever. The crash is not a synecdoche – it obviously doesn’t model every aspect – of the whole crisis. So, as John implies, there are lots of other factors behind the crisis – the broader economic system, social relations etc – which don’t feature in the flash crash. What I meant was that the flash crash demonstrates one aspect of the whole stock market (and perhaps, then, of the whole economic system of which the stock market is a part). This one aspect is what I’m calling an ontological void, or if you’re feeling more epistemological you can call an inherent unknowability.

    There’s then the issue of the relation between, on the one hand, this void I find in the flash crash (/in the crisis/in the stock market generally), and, on the other, the Meillassoux-Kant debate over the thing-in-itself. I’m arguing that each side of this is instructive for the other. So 1) the void in the stock market is an example (in the mode of Meillassoux’s arche-fossil), aimed at Speculative Realism, of the void over the in-itself (= ontological significance of the political); and 2) Kant’s noumenon is a useful corrective for arrogant economic prediction (= political significance of the ontological).

    David’s, Tokyowitch’s and Tim’s points are aimed at 1). Again, the ‘synecdoche’ figure is confusing because the flash crash doesn’t exactly map on to the wider financial system, and neither is there an identity between the financial example and the in-itself. I consider a day’s trading to be a finite system (David, I don’t see how the aspects you mention would trouble that view) insofar as it is mathematised: the algorithms are pre-programmed to respond with behaviour x to condition y. There is, however, also human trading – does this expand the system beyond the finite, because humans are reflexive? That’s a bigger question…

    But disregarding that, and assuming that the flash crash was caused by the mathematical interactions of the system (which may not be completely true, but it doesn’t matter), I’m arguing that this example shows that the ontological void is present in the for-us, let alone the in-itself; in the finite, let alone the infinite; in the human-created, let alone the ‘natural’. So the financial example doesn’t map exactly onto the domain of the debates over the in-itself, but it shows, I think, that the void is present in this smaller case, ‘let alone’ the broader case. Does this mean it applies in the broader case – ie that there is an ontological void at the heart of everything? That would be the Kantian structure that I’m just reaffirming, and, although it won’t, I can’t see why it shouldn’t persuade Meillassoux et al to give up on attempts to transcend the correlation! Yes, there may be an in-itself, but that doesn’t mean it could ever be for-us. I don’t know Bryant’s and Harman’s projects as well as I should but I find Meillassoux’s use of maths as a means of gaining access to the in-itself unconvincing mainly because this seems to require realism to have definitively won out over constructivism in the debate in philosophy of maths, which I don’t think is the case.

    Finally – contingency – I take this to be the opposite of necessity, so meaning: to be free from causality. So it would be aligned with (but not the same as) Kant’s ‘spontaneity’. Is that how you understand it, Tokyowitch? So I don’t find contingency in the flash crash example – there are reasons for things happening, they’re just too complicated to know at the time. I don’t therefore equate what I find here – quantitative complexity/non-human timespans – with contingency at all. Knowing that things can change is to have positive knowledge of the system’s capability. I don’t think we know that it can change: we don’t know anything about its capability; we just know that things have changed in the past.

    • David
      November 26, 2012

      In your original post you seemed to link the status of the days trading as a finite system to what you see as the unconditioned conditions – the starting position and the algorithms. I will concede that a days trading can be seen as a mathematically finite series in terms of the transactions as a temporally limited sequence of interacting events which it is alleged can be fully grasped as a causal sequence given enough time, but I still question your use of the term “unconditioned” in the Kantian sense in this context. The two conditions are clearly not unconditioned in the sense that the idea of God or the soul are unconditioned for Kant. You are therefore saying that we can think of them “as if” they are unconditioned in this context – in other words setting conditions for the unconditioned!

      • Steve
        November 30, 2012

        Yes, but I say that they are unconditioned ‘from the perspective of the subsequent trading’ and I think that caveat’s important. So only in relation to the subsequent trading are these things unconditioned conditions – they’re starting points for that particular causal sequence that entails. They’re not really unconditioned in the Kantian sense. I was trying to use that Kantian conceptual framework to consider something that isn’t just God/world/freedom – perhaps like Bernasconi on race/Stella on sex as regulative ideas. Dunno if it seems convincing.

  11. tokyowitch
    November 25, 2012

    I do agree that contingency is the opposite of necessity and is therefore free from causality but i wouldn’t equate it with spontaneity, which is something tied to the subject in Kant. I’ve not looked into this further but I would say spontaneity is an example of a certain type of contingency. This is different from aligning the in-itelf with absolute contingency. We know the system can change because to put very simply everything changes necessarily, we can count on it.

    • Steve
      November 26, 2012

      So if something contingent escapes causality, would you still say that this flash crash event was contingent? Because I think there was a causal series of which it was part, so it was complex not contingent…

      (And I just came across this paper by John Van Houdt who spoke at the CRMEP grad conference – not read it yet but it looks instructive on this

  12. tokyowitch
    November 26, 2012

    I wouldn’t say the flash crash, as a phenomena in a causal series, is/was contingent but rather that the contingency is inherent in its occurrence at that time. What you might regard as something unknowable is not the flash crash, that is something that can be measured, but its occurrence at a certain time was supposedly unknowable because of its complexity etc.. What I’m suggesting is that this occurrence is something that we can expect if we adhere to Meillassoux’s concept of the necessity of absolute contingency. I might be wrong. I’m going to read the article. Looks good.

  13. Pingback: Russell contra Meillassoux « Groundwork

  14. Emiddio
    January 19, 2013

    Interesting post Steve. Happy to see someone delving into finance to make sense of the political. Especially given the current crisis.

    It would help clarifying what kind of “infinite” you have in mind. Is this set theoretical, or some sort of “that which has no bounds” or “that which you can always imagine something greater” – and, thus, “finite” being its mere negation?

    As you probably already know, there are level of infinities (at least in mathematics), and some highly counter-intuitive ones. For example, Cantor proves that there are more points in a line (geometrically postulated as an infinite series of points) than in a plane (geometrically postulated as an infinite series of lines). Nonetheless, the question of the infinite has to do more with time than with space and perhaps Bergson is right to point out the confusion over this: the projection of time into space.

    My personal findings on this topic is that financial speculation utterly exploits micro-infinities and macro-infinities, the infinitesimal as well as the perpetual. The former through the advances of technology (as you pointed out, high-frequency trading), while the latter is primarily based on gullibility and whims. For example, for financial instruments such as “perpetuities” there is a gross assumption that certain cashflows do and can go on forever, ad infinitum. Therefore, the UK government can print more money on the assumption that it will exist, for ever. There must be an association of this kind of assumptions with the obscene notion of “infinite rehypothecation”, only practiced in London, as far as I can tell.

    In terms of the infinitesimal, for things such as “continuous compounding” there is an assumption that value can continuously compound itself through the infinitesimal. That is, if we can grant the infinitesimal with any substantial significance and associate it with mathematical continuity. If so, then the question of the individual and the political, in real economic life, understood in a continuously perceived time, but at times deliberately considered finite (i.e. “annuities”), takes a whole new meaning.

    Anyway, if interested, I try to speak about this and about crises in general, here (issue 3, p.61-62):

    Carry on the great work on this blog.

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