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spectacle economy
Nasdaq, Speculative Corrections and Investing in
the Fake
by Henrik Plenge
Jacobsen
In a span of five years, the Finnish company Nokia has become the
most valuable European company, if one considers the market value
of its stocks. Nokia has gone from being a small Finnish producer
of mobile telephones, to a company whose greatest potential lies
in making money through its stocks. Nokia is indeed making money,
but not more money than many other companies. However Nokia’s
shareholders believe in the company’s potential to expand its
market, not only by selling more phones, but also through other
types of products and services.
Limited liability has always been one of the excitements in capitalism,
and has brought us recessions and upturns, broken the curve, ruined
people’s lives, and even allows 20 year old investors to buy
a company through profits made from investments elsewhere (1). It
is now possible to accumulate fortunes at a never before seen pace,
that is if one is skilled enough in the play of one’s stock
portfolio. Speculation and overrating caused the Wall Street collapse
in 1929, and necessitated severe corrections once again during the
oil crisis and in the 1987 recession. Limited liability has been
one of the players that has ruled industrial capitalism, and made
it exciting to play the stock market for those who had money to
play with.
From the mid-90’s
and especially throughout the last two years the situation has undergone
drastic change. The stock market structure is no longer hooked up
on limited liability, but linked to no liability at all. Investors
have started to trust unreliable ideas, merely for the sake of an
accumulation of investor profits. The reason for this change is
the digital and biological revolution that has changed the thinking,
mentality and lifestyle of everybody in the western hemisphere,
and has generated the (greatest change in the investment mood since
1929 ??) largest change in the investors attitude since 1929. Investors’
fast profits are currently made out of the blue, due to accumula-tions
in companies not making any profits at all. Small or mid-sized internet,
communication, computer and bio-tech companies, for the most part
with a negative income, no income at all, or a marginal profit.
Wall Street is once more facing a mere speculative project, making
for an enormous flow of capital to these "small" companies with
one or two good ideas, where the speculation is based upon these
potential ideas. But almost all of them still have to prove that
they actually can turn a profit, or at least make their ideas work
in reality. None of the internet companies have ever made any surplus,
but several such as Yahoo, Amazon and AOL are rated as some of the
most valuable and profitable stocks on the current stock market.
These companies have such an influx of capital from the sales of
their stocks that they even can acquire other companies, as recently
was the case with the AOL take over of the media concern Time Warner,
though it was called a merger. These companies are listed in the
Nasdaq composite, which rates the stocks for hi-tech companies.
During the 80’s money was made buying shares in companies that
represented an actual product or service; such as Coca-Cola producing
lifestyle and drinks, IBM producing services and computers, Exxon
drilling, refining and distributing oil, or Deutsche Bank providing
financial products and so on. These companies are the blue chips
listed in the Dow Jones industrial index. It was the time of the
multinational corporations relying primarily on industrial products.(2)
Now there is, in many cases, only a virtual product or service.
These virtual products are driving the present wild card "casino
capitalism", and are the major force behind the current upturn in
American and Western economy. Money thrown into virtual ideas with
no exchange as normally has been the case with investments. Money
given as "grants or benefits" to people with ideas for the internet,
biotechnology, networks, semiconductors, robots and other hi-tech
performance potentials. These investments, however, are not handed
out due to a sincere interest in developing these technologies and
ideas, but because the investment can be exchanged or sold, after
six months time, normally at a significant profit. It is done with
a touch of fascination with a science fiction society, but money
comes before fiction. The actual stock trade accumulation and transaction
pulse, is another phenomenon that reinforces the economy. Since
the base of any economic system is exchange, the more exchange,
the more developed and accelerated the economy becomes. Nevertheless,
it also functions as a booster for the hi-tech business, and creates
an influx of money into the development of more or less successful
devices and services in the field of advanced technology.
1987 New York Stock Exchange (NYSE) Wednesday at 4 PM on the 16th
of February 2000, another record high day at the ant farm. A broker
walks across the floor from one booth to an other, with a disposable
paper cup containing coffee with cream in one hand, and some paper
notes in the other, all the while speaking on his hands free cell-phone,
with a customer somewhere, or maybe his wife. He probably enjoys
the excitement displayed on the LCD screens hanging above each exchange
stand. There is more data and communication power here than any
other place except NASA. I am observing the broker from NYSE visitor’s
deck, through bullet-proof smoked glass.
Each year the Silicon Alley Reporter shows (publishes ?) a top 100
list of new American media and hi-tech businesses. This paper shows
possible targets for investors, by rating the most "profitable"
and innovative people within the new industry. This is one of the
sources for brokers, banks and investors that are ready to play
the high risk market. This present interval is dominated by the
introduction of new technologies, rather than new thoughts and new
ideas. It is an interval represented by media, networks, small and
large circuits, digital and biological modifications. What strikes
the societies now is the acclimatization, superficiality, mobilization,
pace and aggressive changes dictated by the new technologies. It
is an adaptation that causes apathy and indifference in the fields
that have normally dominated and dictated the changes. Structures
such as politics, reflection and contemplation are not powerful
tools for regulation and intervention in the new economy and in
the new technology. Since the introduction of the personal computer
in the early 80’s, more than half of the western workforce
is now seated everyday in front of a data screen, as their contribution
to productivity and progress. It is a development that probably
has taken everybody by surprise, where now most of the workforce,
and furthermore most people in their private sphere, are concerned
with getting their internet connection to work, learning new software,
playing games, executing home banking and spending their assets
on e-shopping, etc. The personal computer combined with the mobile
telephone has and will increasingly change our daily life. These
devices increase mobility, globalization, alienation and isolation,
despite the growth in transmitted data and exchange of knowledge,
weather reports and pornography. The effect on human beings is interesting,
the digital and biological change cultivates a will to adaptation
and conformism. It seems as if the digital revolution has absorbed
the interest in other questions, such as politics, history and human
relations. Digital congestion. The only thing that the new economy
has not assimilated is the interest for capital. No wonder all the
economic acceleration is linked to the digital change.
Economics has, for quite some time, been the catalyst for change
within culture, production and politics. The phenomenon was first
made clear by Adam Smith when he published "An Inquiry into the
Nature and Causes of the Wealth of Nations" in which he developed
the theory behind market economy. (1) Presently we are facing a
period where economics seems to even have out competed other theoretical
disciplines. Thinkers who are now relevant and referred to in the
power structures, are either working within this field or in the
area of economics merged with new technology and globalization.
We see an intense interest whenever Steve Jobs from Apple, Bill
Gates from Microsoft or the inventor behind the Linux system, Linus
B. Torvalds, appears in the media. As the digital is the heart of
the new economy, these are the people to understand and refer to,
especially while dealing with power and politics.
Adam Smith was right at one point about (was right on one count
with regard to ) the current economy, we are facing a universal
"laissez faire" politics. Few governments have interfered or restricted
the digital and bio-tech based industries. No government is opposed
to the profits made via services or devices, or profits made on
the global and local stock market trough investments in the field
of hi-tech. Furthermore every country and city wants to attract
the new economy and the new technology, and provide the best infrastructure
to support such. Cities try to provide as much entertainment and
amusement as possible for the well educated employees in the hi-tech
industry, to distract them in their steadily growing leisure time.
(the well educated employed within the hi-tech industries, to distract
them during their steadily growing leisure time.) Everybody wants
to please and satisfy the Nasdaq companies.
Institutional investors are another major player on the NYSE and
secondary stock exchanges. The institutional investors’ capital
originates from trust funds, insurance companies, investor groups
and many other forms of mutual funds. Individuals, families and
groups hooked up on trust funds are spinning gold from this new
economy. It is new money, but most of it is accumulated via old
money, dating back from inheritances and fortunes saved in real
estate and traditional blue chip shares. These funds and institutional
investors are the true benefactors and they will remain benefactors,
due to their knowledge and professionalism, that will protect them
before eventual large corrections in the stock market.
Real estate is the backbone of Nasdaq economy, and has also been
the insurance behind the blue chip economy. When the market fails
or is undergoing corrections, the money flows back into real estate.
Real estate investors hold their property for longer periods, generally
resulting in a slowdown of the economy, since real estate does not
generate the same exchange and circulation rates as stocks.
Fake Estate represents a visionary, but imaginary attack on this
backbone. When Artist Gordon Matta-Clark bought up slivers of land
in New York, slivers in-between "real parcels", these were small
awkward parcels, leftovers from the architects’ or city planners’
drawing boards. These parcels went on auction as a result of the
former owners failure to pay their taxes. These Fake Estates where
acquired by the artist for 35 $ (per parcel?), and converted into
artworks. (3) Real fake investment could be acquired for 35,000
$. Artist Tom Friedman showed his piece "1000 Hours of Staring",
for the first time in 1997. The piece consists of a blank piece
of paper, that the artist had been staring at for 1000 hours, between
1992-97. He made up a wage of 35 $ per hour, in total 35,000 $,
which the piece was sold for.
Giving it all away for free, such as when Rirkrit Tiravanija hands
out soup to the audience, is another important new economy principle.
It is the same generosity that the company Netscape was into when
they launched their browser "Netscape 1" for the internet, and made
the internet a platform for free exchange. Investors from the "market
economy" saw the interest in passing on services and products for
free. As a consequence both Rirkrit Tiravanija and Netscape have
become rather wealthy, and thus rewarded for their generosity. 2/1/2000
Market closed? Nasdaq - 100 3701.78 ? +3.69 % ? AMEX 873.00 12.83
? +1.49 %
The exchange that economy is based upon shares similarities with
what is going on in a work of art, an exchange of ideas, from the
producer of the idea to the perceiver of the idea. And so it is
for the companies presently dominating the Nasdaq composite - they
do not represent a product or a profit as such, but an idea or a
service, that might be profitable in the future. Currently art is
affected by various economic upturns around the globe, and this
micro- or one could say medium-economy which the art world represents,
is injected with capital from companies, funds, governments and
individuals as never before, more exchange of artworks than ever,
more artists, more dealers and more institutions. The current art
market and general artistic practice is analogue with current spectacle
economics. As an investor in art one is investing in a hypothetical
value, the actual canvas or sculpture does not represent a material
value in itself. Nor is the outcome of the investment insured in
any sense. Fashion and importance may change, and the investment
in itself does not earn money. One is investing in a system that
has little or no income. The artist and the gallery as well as the
young hi-tech company, is more about consuming and parasiting on
other economies, than about being profitable. Most contemporary
artists (and ?) agreeing on the economic system, becoming slaves
to the ultra capitalistic system, controlled by the gallery system
and the rules of profit surplus invested in luxury. Similar are
newcomers to the digital business granted by the capital overflow
made from banking, real estate and blue chip, the bourgeoisie of
capitalism, the old money.
There seems to be no alternative for anyone. Not that the art produces
that much of an income in itself, the only way to have a real profitable
income is to start to invest, raw capitalism is what is generating
wealth. Many older established artists and dealers are making their
money that way. Not exclusively from artistic practice. (4) Nobody
can seriously propose Marxism as an alternative to the present market
economy. Therefore it is also difficult to see Marxism as a relevant
instrument for a critical view, nor base any model of analysis on
that despite its key role as a major vision of 20th century intellectuals
and politicians. It has broken down as a method. Not only is Marxism
irrelevant as an economic model, most other capitalistic derived
economic models are no longer relevant for the Nasdaq economy. The
European community governments are all busy giving up all of the
Marxist and Keynesian features that were significant for European
economics of the last century. The global economy requires that
change, as well as in the industry, the stock markets and currencies.
The Nasdaq economy and the development has eliminated the belief
in models other than the market economy.
Green Economy, understood as development not based upon the Adam
Smith’s growth principle, has been launched as an other alternative,
often combined with micro-economics, as the potential for progress
without expanding consumption and accumulation of objects and services.
This movement is actually grounded in 19th century ideas about co-ops
and other self-organized structures. These "non growth" economies
have been widely applied in European agriculture and various housing
projects. This has even been applied in the art sector, known as
self-organization and non-profit structures. However most tendencies
in that direction have become evermore marginalized and today are
completely unacceptable to the Nasdaq spectacle economy, because
of the rejection of the idea of profits as a goal in itself. Micro-economies
have also been a part of these ideas concerning Green Economy, but
they will never be a serious player in the market economy. They
are not geared for the first principle concerning distribution and
circulation. Therefore, they will never gain any substantial political
or economic power. No distribution, no profit. We are watching the
death of the alternative. It is not possible to be part of the world
economy unless one obeys the chaotic rules of the new economy. The
Nasdaq composite economy even seems to overrule all other traditional
stock exchange ratings, and the optimism related to the last years
economic growth is primarily related to stocks within this field.
This economy is, in many ways, not included in the existing economic
models, and the Nasdaq capital is in many ways a wild anarchistic
structure without traditional logic for how a stock market is composed.
It is neither possible to escape nor be unaffected by the spectacular
Nasdaq economy, whether one wants it or not. It is the determining
factor for politics, intellectual practice, love, everyday life,
and the distribution of wealth. The difference from blue chips,
savings bonds and real estate is that it is an economy that is similar
in structure to the internet, and as such full of slits, slivers
and holes open to interference and disturbance. It is a fragile
phenomenon, but so far insisting on its limited liability, and semi-anarchistic
chaos. It is open for intervention and spectacles. Are we winning?
The brokers are winning, the banks are winning, and probably most
investors are winning, and as long as they are winning almost everybody
else will be winning too, since the players are the key to the global
game of growth and speculation.
The United States of America is the world leader in politics, culture,
economics, consumption, distribution and generating profits. The
world leader’s heart is Wall Street, inside NYSE the world
is monitored, controlled, transformed. NYSE is the machine for the
New World. The Nasdaq is the dream weaver of man’s drive towards
prosperity and growth of capital. The most fashionable economic
miracle spectacle so far.
1 Brian Holmes: TNCS
Networkers, Transnational Corporations-Democratic Governance.
2 Quote from an e-mail sent from Jonas Maria Schul.
3 "When I bought these parcels at the new York City Auction, the
description of them that always excited me the most was inaccessible...What
I basically wanted to do was designate spaces that wouldn’t
be seen and certainly not occupied. Buying them was my own take
on the strangeness of existing property demarcation lines. Property
is so all pervasive. Everyone’s notion of ownership is determinated
by the use factor ." Gordon Matta-Clark
4Source; Kirstine Roeppstorf investigation on NYC artists economy.
Sources Pamela M Lee, Objects to be Destroyed, MIT Press, 2000 Guy
Debord, La societé du spectacle. MIT Press, 1999 Dictionary
of Economics, Penguin Books, 1999 An Inquiry into the Nature and
Causes of the Wealth of Nations, Adam Smith, 1776.
Thanks to Feature Inc, Liisa Roberts and Theresa Duncan for providing
information, and thanks to Sarah Gavlak for inspiration and editing.
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