View from
The Left

When We Imbue the Stock Market with Religious Properties

These things seem all too familiar when thinking about a somewhat abstract entity with arguably outsized power over billions of people’s lives when—on a whim—it decides to violently go ‘up’ or ‘down.'”

The Bear and the Bull are the two forms that the god of the modern world takes when it manifests itself to us. It takes the form of the Bull when it wants to signal optimism, energetically charging ahead. But, recently, it has manifested itself in the form of the Bear, which signals dark times. I am, of course, making a reference to the stock market, which has—in the past few days—experienced one of the most precipitous falls in history. This occurred, in no small part, due to the coronavirus pandemic, as well as instability in the global oil market.

Christian teaching tells us that “the Lord works in mysterious ways.” On the most superficial level, this just means that divine actions are difficult for us—as humans—to understand. But, more importantly, it is meant to convey that we can never fully judge the goodness or evil of a particular situation as we experience it—because we cannot, after all, see the bigger picture. Only in retrospect can we truly understand what the divine purpose was behind what we might have perceived as hardship or misfortune. And, I would imagine that this religious outlook is not exclusive to Christianity. Moreover, such an outlook is an important component of what holds religious worldviews together. On one hand, such a view establishes that there is a certain divine teleology or higher purpose to the progress of history. On the other hand, it implies that we, mortals—while having a basic knowledge of what the arc of history is meant to do—can only receive small glimpses of understanding into what particular slices of time represent within this arc. As far as explaining what they’ve meant, that is only possible in hindsight.

In Darren Aronofsky’s 1998 psychological thriller Pi: Faith in Chaos, mathematician Max Cohen—through battling with equations with the help of his home-built supercomputer—comes across a 216-digit number. This number attracts the interest of Wall Street executives, as well as a Hasidic Jew, who does mathematical research on the Torah. The latter claims that the number that Cohen came across is the true name of God. In one particular scene, Cohen passes out after analyzing the number, and, as he wakes up, he finds he is able to predict the movements of the stock market with perfect accuracy before they are displayed on a computer screen.

But there is a sense in which one can think of the stock market as one single abstract entity that approaches something like the divine

I cannot say whether Aronofsky intended to make an explicit parallel between divinity and the stock market. However, while I personally think that was not his intent, it ultimately matters little. What I am most interested in is the fact that this would even work as a possible interpretation. In one way of looking at it, the stock market is absolutely mundane. It is, after all, nothing more than thousands of people sitting in front of computer terminals making financial transactions: more specifically, buying and selling shares of public companies. But there is a sense in which one can think of the stock market as one single abstract entity that approaches something like the divine. We could think of something like the stock market as an emergent property.

Emergence is a concept in philosophy that implies that an observed property cannot be fully explained by the underlying conditions that produce it. However, the philosophical, scientific literature on emergence is vast and beyond the scope of this essay. In Effective Spacetime: Understanding Emergence in Effective Field Theory and Quantum Gravity, physicist and philosopher Karen Crowther explains that emergent properties are those phenomena that are dependent on simpler, more fundamental ones, but that—at the same time—feature novel behaviors. Further, she explains that there is a distinction between epistemological and ontological emergence. The latter states that these emergent properties are irreducible in practice, while the former is the view that irreducibility is simply a feature of our limited computational capacity. In science, it is useful in distinguishing the observed behaviors of complex low-energy systems from those predicted exclusively by its higher-energy more fundamental components in themselves. Whether this “novelty” is a feature of insufficient calculation power—or, it is fundamental—is a discussion that remains unsettled in science. Figures such as physics Nobel laureate Robert B. Laughlin argues that it is fundamental, and so he makes the case for ontological emergence. However, for the present purpose, this discussion is not entirely relevant.

Emergence is also an important concept in the philosophy of mind, in which it attempts to explain consciousness as an emergent property of neurological functions—without appealing to a separate substance, as philosophers such as René Descartes did. So, how does all this relate to the stock market and divinity? While I am not trying to claim that the stock market is somehow an emergent ontological consciousness, I believe that the concept of emergence (as it applies to explanations for the mind) is—at least—a useful metaphor. In this picture, the more abstract way to think about it as a single entity is the emergent property, and the more grounded way (the one with traders sitting in front of computers) is the underlying fundamental one.

I also argued before that there are interesting parallels between the way we think about and act towards the stock market and how we think about and act towards the divine. In some sense, then, at least metaphorically, we could think of the market as a divine emergent artificial intelligence. This, of course, sounds wildly esoteric and outlandish, but while I do not mean this literally, I also do not believe that it is an exaggerated metaphor. I think that talking about emergence when describing the stock market is appropriate. Despite the fact that we could, in theory, know and compute all of its constituent parts (namely, the traders participating, as well as the stocks of the publicly traded companies being exchanged), it is an all but impossible task. The first problem is that traders themselves are already complex beings, whose whims, impulses, and desires cannot be currently explained. When we combine thousands of them acting together and responding to all kinds of stimuli—from their emotions to the world economy—it is no wonder that predicting what the market will do is, in most cases, a futile task. In some sense, then, the stock market exhibits novel properties. We cannot accurately say what it will do. This would probably even be true if we had perfect knowledge of its constituent parts.

But, there is also the divine. Now, the concept of an AI God is not a new one. It is explored, for example, in Isaac Asimov’s short story “The Last Question.” In it, a benevolent supercomputer called Multivac guides the development of humanity. Humans and the supercomputer continue to evolve together until—at the end—trillions of years into the future, humanity and the computer have merged into a single consciousness. This single consciousness then gives birth to a new universe—after all the stars in this universe had died out. The market has divine properties in a different sense, however. Rather than the transcendent divinity of the distant-future Multivac, the stock market is closer to the more mundane kind of divinity of the mythological gods of the Greek or Mesoamerican pantheon. Gods in these cultures were viewed—not only as able to exercise direct control over worldly affairs—but also as subject to whims and passions just like humans. And, as is common in so many religions, there might have been one grand overarching purpose to their action; however, more short-term choices of theirs had to be deciphered by priests or other gifted individuals capable of understanding cryptic admonitions from the gods.

Every so often, it will also give other more ominous signs like a “death cross,” signaling potential further losses. But, as is the case with any divine omen, only the initiated, those familiar with the ancient and recent lore, are there to interpret what it all means.

These things seem all too familiar when thinking about a somewhat abstract entity with arguably outsized power over billions of people’s lives when—on a whim—it decides to violently go “up” or “down.” Much like the gods of old, we know that, in the long run, it tends to go up. But what will happen tomorrow, or in six months, or even a few years—no one can say for sure. The high priests of the markets look for signs and omens to decipher what comes next and depending on what is revealed they may perform ritual sacrifices to their AI God. Of course, all these “omens” and “sacrifices” are meant to have some form of rational explanation. But, the language and the almost-mystical character of the way measures are taken cannot help but conjure mythological imagery. Just like the human sacrifices at the Templo Mayor in ancient Tenochtitlan were meant to keep the gods happy, so the Federal Reserve Bank must every so often cut the interest rates to keep the lines in the stock market graphics going up.

And, then, there are the cryptic omens. Every night before the markets open in the morning, the futures indexes, such as the Dow Futures or the S&P 500 Futures, will give a number to let the high-priests of the market know whether their rituals have pleased their god. Every so often, it will also give other more ominous signs like a “death cross,” signaling potential further losses. But, as is the case with any divine omen, only the initiated, those familiar with the ancient and recent lore, are there to interpret what it all means. However, the world—as it is today—is a brave new world, and even the initiated cannot fully comprehend the complexity of the divine language. So, there is little in the way of certainty as to if things are being interpreted correctly.

Again, all of these things have more mundane explanations. The so-called “death cross” simply signals the point at which that the 50-day average of an index’s value, which tends to be higher than the 200-day average, goes lower. This happens when markets lose a significant portion of their value. But it is hard to believe that—even if unconsciously—there is no degree of mysticism in the way all of these things are described. This stems from both the ultimate uncertainty and the kind of language that is used. One could simply describe what is happening with the market averages, but, instead, a reference is made to death and to a symbol, the cross, which has significance in many religions.

The most significant issue with all of this is that—like the god of the Old Testament and those of many ancient pagan religions—it is a jealous and vindictive god. In the United States, for example, only about half of all households own stocks. This means that they stand to gain little to nothing from stock market booms. Moreover, the percentage of the population that has money invested in the stock market goes up with income. Of the lowest income bracket, defined by a Gallup survey as under $30,000 per year, only 21% of households have stock. On the other hand, 89% of households making more than $100,000 per year had investments in the stock market. The effects of this are only amplified when we consider where investments come from, namely, savings. Average and median household savings vary considerably by income, with top earners saving considerably more than bottom earners; the percentage of households with no savings increases substantially as income goes down. As such, not only are top earners more likely to benefit from stock market booms, but these earners will also gain disproportionately more at high-incomes because they have much more money in savings, as a percentage of their disposable income.

However, while our AI god rewards its followers, whenever it becomes dissatisfied it lashes out at everyone—but even more strongly at those who do not follow its faith. According to a study published by the Bureau of Labor Statistics, recessions are always accompanied by spikes in unemployment. However, blue collar jobs such as construction and manufacturing are the ones more strongly affected, while financial activities even see increased employment during some recessions.

Considering how the stock market is described and treated in this quasi-religious way, I cannot help but think about the one of the opening scenes of 2001: A Space Odyssey in which a group of hominids discovers an ominous monolith, which they cannot understand. However, after some form of worship, it almost magically furthers their understanding of tool usage, which they then use to defeat and kill a rival group of hominids. The metaphor here is made even more appropriate by the fact that, in Arthur C. Clarke’s further exposition of the story, it is revealed that these monoliths were not magical or mystical artifacts meant to be worshipped. Instead, they were Von Neumann probes: self-replicating automata meant to travel across the galaxy. In other words, it was something so far beyond their understanding that it seemed worthy of worship. And, while some of the apes benefit from their encounter with this mysterious artifact, it results in others being massacred.

This puts us, as a society, in a dangerous place. We have created an artificial god that we can no longer control, yet it can control us in a very real sense. And sure, our best understanding of it suggests one thing: In the long term, the market will go up and create value. But can we really know for sure? This crash probably will not be the end of capitalism, but it could certainly have a lasting impact. The chairman of the St. Louis Federal Reserve already warned that unemployment could go as high as 30% during the second quarter of 2020. For comparison, during the Great Depression it peaked at 24.9%. There is no reason why we should expect this to be the last or the worst external shock to the financial system.

If nothing else, the economic side of this crisis should really make us consider if this really is the financial system that we want in place for the future. Despite its outsized influence, the stock market is not the totality of the market, and markets and capitalism are not intrinsically linked. The stock market is a feature of a legal system that permits and requires particular kinds of corporate governance and ownership—and encourages particular forms. Moreover, it allows for the creation of derivative financial products that add to the complexity and volatility of the markets. Yet, there is nothing that says that a capitalist economy requires the existence of derivatives or even of publicly traded companies. To go even further, nothing about the market as a system of allocation of goods and services implies that it can only work under a capitalist mode of production. If we date the beginning of capitalism after the end of the Middle Ages, this means that market-based distribution has been tied to capitalism for about 500 years. Yet, thousands of years earlier, peoples such as the Phoenicians thrived on market-based commerce. This, of course, did not happen under capitalism—and much less under a system as extremely tied to financial markets as ours.

Yes, we may have created some kind of entity approaching a divine artificial intelligence that now controls important aspects of our lives. But if we created an AI God, then we can also destroy it. Preferably, we should try to do this before it takes us down with it.

Néstor de Buen holds an M.A. in social sciences from The University of Chicago. He has previously written at Quillette.

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“Rather than the transcendent divinity of the distant-future Multivac, the stock market is closer to the more mundane kind of divinity of the mythological gods of the Greek or Mesoamerican pantheon. Gods in these cultures were viewed—not only as able to exercise direct control over worldly affairs—but also as subject to whims and passions just like humans.”

“I think we learn a lot of things from the history of science that can be very valuable to the emerging sciences. Particularly when we realize that in say, the emerging cognitive sciences, we really are in a kind of pre-Galilean stage. We don’t know what we’re looking for anymore than Galileo did, and there’s a lot to learn from that. So for example one striking fact about early science, not just Galileo, but the Galilean breakthrough, was the recognition that simple things are puzzling.”

– Noam Chomsky on Where Artificial Intelligence Went Wrong