A Nobel critique of Wall Street

In an interesting turn of events, this year’s Economics Nobel has gone to a trio of experts who, collectively, have forwarded a major critique of excessive financialisation of capital and speculative investment, claiming that it is impossible to accurately predict the prices of stocks on a short-term basis, thereby dealing a blow of sort, at least a theoretical one, to the over-emphasis on stockbroking as exemplified by the culture of Wall Street. The three economists – Eugene Fama, Robert Shiller and Lars Peter Hansen – who share the top prize of 2013 for their contribution to the predictability (or, in real terms, the unpredictability) of stock prices, have, in their individual and disparate capacities, arrived at the general conclusion that debunks a big chunk of myth surrounding finance and speculative capital that Wall Street bets on, riding troughs and crests of stock prices, depending on the so-called ‘predictions.’ Eugene Fama, by proving that markets are efficient, and therefore, it is technically impossible to beat the market forces since they are scientific and would always result in the sum of all contingents, effectively dismisses that speculation plays any role in determining stock prices. On the other hand, Robert Shiller asserts markets are inefficient, and therefore, no amount of speculation can accurately compute all the possible factors that would eventually decide the exact price of a stock over a short period of time, say from day to day or weeks. In other words, both the theoreticians, through their unlike models, have offered up intriguing criticisms of the volatile and extremely overhyped profession of stock-broking, since either way, through its efficiency or inefficiency, the market cannot be tamed by current application of mind.

The three economists, all American, through their different academic paths, stand at the crossroads of the US-driven, neoliberal international capital market that is undergoing an extended crisis of sort, with the 2008 crash still resonating in the current budgetary gridlock that has resulted in the ongoing US government shutdown. Even as Wall Street fumbles and gets up on its feet again, it is, in fact, still scrounging for the hold it once had over popular imagination, as showcased in cult Hollywood movies like Wall Street (1987) starring Michael Douglas as the iconic Gordon Gekko. The fact remains that fetishisation of Wall Street in films and popular culture has been coterminous with worldwide churns of capital, leading to globalisation of finance, labour, production and consumption. But, essentially, what remains beyond the grasp of even the most celebrated stock brokers as well as theoreticians of relatively newer subjects such as financial and business management is that markets, in their most efficient and inefficient avatars, are nevertheless the sum total of the ‘undiagnoseable animal spirits of the investment community’, which can only be gauged in the longer, and not the shorter, terms.