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SPECTACULAR SPECULATION

STANFORD UNIVERSITY PRESS

Contents

LIST OF ILLUSTRATIONS.......................................................................................................VIIACKNOWLEDGMENTS.............................................................................................................IXIntroduction................................................................................................................11 Gambling and Speculation: Entertaining Contingency?.......................................................................192 The Normalization of "Wild Contingency": Stabilizing the Distinction Between Gambling and Speculation.....................43Introduction................................................................................................................953 Charles Mackay: The Spectacle of Equality.................................................................................984 Speculative Vistas: Crowds and Speculation in the United States during the Nineteenth Century.............................1105 Alone Against the Crowd: The Communicative Techniques of the Contrarians..................................................1466 The Eroticism of the Market and the Gender of Speculation.................................................................1717 The Rhythm of the Market..................................................................................................197Epilogue....................................................................................................................237NOTES.......................................................................................................................243REFERENCES..................................................................................................................271INDEX.......................................................................................................................291

Chapter One

ENTERTAINING CONTINGENCY?

What's your game? ... Speculation I believe. —Jane Austen, "The Watsons"

"The Watsons" is the surviving fragment of an unfinished novel by Jane Austen, who refers here to a card game called "speculation," which was popular in the nineteenth century. The term also alludes, of course, to stock speculation. Reflecting on the pleasures remaining for a modernity that had become monotonous, the behavioral psychologist John B. Watson immediately thought of speculation: "Sex is so free and abundant that it hardly comes any more in the realm of excitement.... We all get bored. Stock gambling is about the only thing that offers the same kind of thrill that big game hunting does, and you can play the market right at your desk" (Watson in Fred C. Kelly 1962 [1930], xiv; emphasis added).

Watson was thinking of stock speculation, not as an economic activity, but as a first-class form of entertainment—the last thrill left to moderns for whom routine and boredom stifled any form of excitement. The French economic historian Robert Lacour-Gayet also noted the fact that thrill seeking was a distinguishing feature of American speculation. A few months before the stock market crash in 1929, Lacour-Gayet referred to Americans' having indulged over the past five years in the "luxury of a permanent thrill" (1929, 159). For the French, the English word "thrill" became the term that best fitted American culture.

The euphoric affirmation of the thrill of the stock market is logically (and not historically) the suspension of the distinction between speculation and gambling. Terms like "stock gambling" and, later, "the money game" may have appeared to create a self-evident link between gambling and speculation. However, these terms owed less to polemics against the stock market than to an enthusiastic plea for speculation by figures like Watson and Lacour-Gayet. This articulation of gambling and speculation proved to be based on complex presuppositions and conflicts. In order to be combined with gambling as a thrill, speculation had first to be separated from gambling as a "serious" economic operation and only later to be reunited. This re-articulation of gambling and speculation did not simply form a cyclical pattern based on their division and recombination. Rather, the figure of the speculator arose from their dialectic. The speculator was born as a privileged figure of economic subjectivity in the conflict between gambling and speculation—a figure that had to assert itself in the tension between diverting thrill and economic communication. The intense conflicts surrounding this distinction can be better understood in light of the provocation behind the gambling metaphor. Gambling contrasted with the stock exchange, often represented as the perfect market. No other form of economic communication seemed as appropriate to embody the neoclassical ideal of an efficient market. The stock trader was always supplied with current information on transactions, something that had to be painstakingly determined in other markets. Moreover, the stock trader was also spared the elaborate procedure of acquiring products and could devote all his attention to observing and producing prices. The French economist Léon Walras (1834-1910) saw the stock market as a quintessential market model, since it combined perfect competition and ideal pricing—which, moreover, took place with minimal delay (Walras 2005 [1880]; Goux 1997, 162; Walker 2000). A similar belief in the stock exchange as the perfect market can be found in contemporary American discourses on speculation. William C. Van Antwerp (1867-1938) of E. F. Hutton & Co. wrote, for example: "Buyers seek the largest market they can get in order to obtain the lowest prices; sellers in order to obtain the highest prices ... and so it was learned long ago that economy of time and labor, as well as a theoretically perfect market, could be best secured by an organization under one roof of as many dealers in a commodity as could be found." The stock exchange produced a fair price under "ideal conditions" by temporally and spatially condensing the communication of prices. Hence, the stock exchange became the domain of homo oeconomicus—the central fiction of economic rationality—embodied in speculators who found scope to pursue their calculated self-interest in its institutionalized economic freedom.

The stock exchange constituted the economic imaginary through a process of rigorous self-referential abstraction. Precisely because the stock market bracketed customary economic external references, it figured as a self-referential system par excellence. To a large extent, this notion of the stock exchange replaced external references with instances of payment continuously linked to each other: "The financial market exists, so to speak, as the proper market of the economic system.... The operations of this market are, to the highest degree, determined self-referentially, that is, are oriented toward the self-reference of the economic system, and towards the reflexivity of its medium: money" (Luhmann 1988, 116).

Speculation did not have to relate either to the labor process or to a business's fundamental data. Products also played a reduced role as interchangeable signs that, in the best case, served as points of reference for the speculative imagination of traders. Speculation acquired...