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<nettime> R is for Reality...
McKenzie Wark on Tue, 21 Aug 2001 03:20:59 +0200 (CEST)

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<nettime> R is for Reality...

VECTORAL TIMES / 20th August 2001

R is fo REALITY…
McKenzie Wark

In this vectoral world, where nothing you can touch matters, and where 
nothing matters that you can touch, the definition of reality is in the 
hands of lawyers and accountants. How much money did Lucent Technologies 
make in 2000? Is it this number, or is it this other number, a mere $679 
million lower than the company originally claimed?

During boom times, and during the collapse of booms when desperation sets 
in, reality becomes particularly elusive. Silicon Valley, where the tech 
boom was born, is now home to one in five "accounting restatements" across 
the land.

Take the case of Indus International, which paid $4.3 million to settle 
investor law suits concerning its statements of revenue. The company neither 
confirmed nor denied any wrong doing. It simply ponied up enough green to 
make the disputes about its version of reality go away.

Indus is still under investigation by the Feds, and the current state of 
accounting reality may soon give way to that other kind of reality, 
adversarial reality, decided by lawyers in courtrooms. But one group not 
getting its day in court are investors misled by brokerage firms about the 
stocks into which they sank their money. The brokers would rather push the 
disputes into arbirtration, where they expect a more lenient time from a 
more financially informed panel than from mug jurors in a court case.

Not everything is going the broker’s way in artibration, however. Merrill 
Lynch shelled out $400,000 to settle a case against one of its ‘analysts’. 
Arbitration panels are ruling against brokerage firms who recommended stocks 
touted by biased analysts. The brokerage firms that insisted on arbitration 
rather than a court venue for testing the reality of their machinations may 
soon change their minds and insist that the courts arethe best place to 
decide what’s what and who owes who.

In the liberal imagination, a public sphere exists in which competing view 
points slug it out, and the canny citizen can decide for herself what’s what 
in the world. But in reality, there is no such sphere of consensus reality. 
When it comes to reality, you get what you pay for.

In the go-go world of boomtime business, the device of the stock option gave 
a financial officer an incentive to make his firm look as profitable as 
possible. The law is vague enough to encourage a very optimistic 
interpretation of things like licencing agreements and other such 
information age instances of what may or may not be ‘revenue’. The somewhat 
optimistic view on a firm’s revenue might get a further optimistic 
interpretation by, say, an analyst at a brokerage firm, given that the same 
firm is in charge of floating the company on the stock market.

And so on. The linkage of the work of deciding on the reality, to the 
profitability of that reality makes for a highly imaginative reality. If 
there are disputes about this reality, a new reality may be decided by the 
arbitrators or the courts out of the competing realities spruiked by the 
advocates, who of course may want a cut of that reality if it goes their 
client’s way.

In the classical liberal understanding of how markets are supposed to work, 
the competitive market is a reality machine that matches buyers and sellers 
by measuring flows of desire against flows of what may be desired. It’s a 
pure, perfect, relativist world. But its proper functioning assumes ‘perfect 
information’, or in other words, the ability of sovereign subjects to know 
what is actually going on in the market. If at least the majority of 
participants know the score, then the market overall will price everything 
more or less right. Those prices will determine further activities of buying 
and selling. Which is to say, prices are reality.

This was the dream of capitalist society. But we don’t live in capitalist 
society. We live in vectoralist society. The vectors along which information 
travels have become commodified to the point where they don’t provide a map 
of ‘perfect information’ on which buyers and sellers express their desires 
through their purchases, and align consumption and production along the 
magic axis of price.

Information is itself a commodity. Those able to pay a premium may be able 
to get the jump on the mugs who put their money down based on what they hear 
on TV or read in the paper. But the more imperfect the means of distributing 
information about the market becomes, the more imperfect the market becomes. 
The door opens to some highly creative legal and accounting definitions of 
reality. To the vector the spoils.

Of course, the market usually catches up with firms who don’t earn what they 
claim, but not before a good many people have lost a great deal of money. 
And often enough that money is the retirement nestegg or junior’s college 
fund. What Thomas Frank calls ‘market populism’ may have persuaded people 
that we can all participate in the great democratising dream of capitalist 
society, but many woke up to the nightmare of vectoralist society. The only 
aspect of the market that has been ‘democratised’ is the downside. Everyone 
is at risk of sudden redefinitions of reality. Except those able to pay for 
the most up to date and reliable definitions of reality on which to place 
their bets.

For more on information on vectoralist society, see:


Karl Schoenberger, ‘When the Numbers Just Don’t Add Up’; and Gretchen 
Morgenson, ‘Why Investors May Find Arbitration on Their Side’, in Money & 
Business, New York Times, 19th August, 2001, http://www.nytimes.com
Thomas Frank, One Market Under God: Extreme capitalism, Market Populism and 
the End of Economic Democracy, Doubleday, New York, 2000


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