In this, the podcast’s last episode, I finally, absolutely, and almost completely definitively, tell you how to build a stock exchange (and who invented unicorns).

Transcript

‘It had been a bad trip … fast and wild in some moments, slow and dirty in others, but on balance it looked like a bummer. On my way back to San Francisco, I tried to compose a fitting epitaph. I wanted something original, but there was no escaping the echo of Mistah Kurtz’ final words from the Heart of Darkness: ‘The horror! The horror! … Exterminate all the brutes!’

That’s Hunter S Thompson finishing up the tale of his long encounter with the San Francisco Hells Angels. In this classic bit of gonzo ethnography Thompson has been in the thick of it, drinking hard and hitting the drugs, riding loud bikes too quickly, and generally being a nuisance – although as he is quick enough to point out, the real nuisance came not from the bikers but from more refined figures who dropped in on the party. The unnamed poet who threw a bin under the wheels of a passing bus, for example.

Social theorist Eve Chiapello tells us that capitalism feeds off critique, and the ill-behaved gonzo has been absorbed into the rhetoric of business.[1] Christopher Locke, the author of the 2001 hit business book ‘Gonzo Marketing’ is, like all good marketers, a master of the un-ironic pastiche: ‘wandering barefoot on the Lower East side of New York, over $1000 cash in my pocket, looking to score… Also in my pocket, the tarot …I went into The Eatery on Second Avenue and my waitress saw the cards…I had just dropped another tab and had little time left…but she sat with me…‘You have two Magicians,’ she said’. As Martin Hirst, from whom I’ve borrowed this choice quotation, points out, Locke’s prose is Thompson with Easton Ellis namedropping thrown in.[2] Still, the book sold and the strapline, ‘winning through worst practices’ epitomises everything that’s wrong with contemporary business: the acceptance of winner-takes-all competition and the seductive notion that it somehow could be cool to get ahead by means that dance around the edge of acceptable. Finance is not immune from this aesthetic: the cinematic portrayal of finance as lubricated by booze, cocaine and trips to brothels marked down as expenses, in the quasi-autobiography of Jordan Belfort’s Wolf of Wall Street or the post-crash analysis of Inside Job.

What is gonzo anyway? Something with a bit more integrity than barefoot and stoned in Manhattan, and the drugs seem to be peripheral. Rather, it’s an intimate, first person take that emphasises spontaneity and raw authenticity over form and polish, where ‘deliberate derangement of the senses… de-familiarises reality, opening the door to paradoxically clearer perceptions, a twisted perspective..’ So says literary scholar Jason Mosser.[3] What’s more, the spontaneity turns out to be artifice: Thompson’s prose is a result of a strange collaborative production involving his own demented writing and inability to meet a deadline, tearing pages out of the notebook and faxing them in; the transcribing typist making whatever sense she could out of what she received; editors and copywriters doing their best. Sociologist Jesse Wozniak calls for ‘gonzo sociology’, an ‘immersive, reflexive methodology which eschews rigidity and formulaic design in favour of innovative and imaginative research on places and peoples ignored by the academy’.[4] Gonzo academic is never going to be that gonzo: it’s rather a reaction against the ‘staid practices of the field’ (in Wozniak’s words). We can permit ourselves a certain licence – an element of reflection, of the personal, a struggle to find a voice that speaks more widely than the dry prose of the academic journal. So I have told you of breakfast in the Cadogan Hotel with the global-heavies, of Sextus’ croquet and business angels, of how one family’s world changed and reflected the shape of London’s markets across three generations, and how my own experiences took me briefly into their world. Rather than the pastiche of the two Magicians, an honest telling of our own stories is the best way we have of finding our moral compass in this complicated world.

Hello, and welcome to How to Build a Stock Exchange. My name is Philip Roscoe and I am a sociologist interested in the world of finance. I teach and research at the University of St Andrews in Scotland, and I want to build a stock exchange. Why? Because, when it comes to finance, what we have just isn’t good enough. If you’ve been following this podcast you’ll know that I’ve been talking about how financial markets really work, and how they became so important. I’ve been deconstructing markets: the wires, and screens, the buildings, the politics, the relationships, the historical entanglements that make them go, all in the hope of helping you understand how and why finance works as it does. As well as these, I’ve been looking at the stories we tell about the stock market. You might be surprised how much power stories have had on the shape and influence of financial markets, from Daniel Defoe to Ayn Rand. I’m trying to grasp the almost post-modern nature of finance, post-modern long before the term was invented, the fact that finance is, most of all, a story.

Here’s the thing.

Financial markets rule our world. Governments tremble at their feet. In the very first episode, recorded early last year, I set out how financial markets are a linchpin of inequality, deeply complicit in the approaching environmental catastrophe, the wellspring of current populist politics, and goodness knows what else. I have spent the last seventeen episodes following the threads of financial markets through their history, all to answer the question: why do we have stock markets and what are they for?

The answer, as best as I have it, is that they just are. They co-evolved with modernity, and with the nation states that we know today; as globalization transcended the nation states, so financial markets spread their electronic wings and became global tapestries of transactions, circling the globe with the sun: Tokyo, Frankfurt, London, New York..

Look at the London Stock Exchange.[5] This venerable institution, now a global provider of exchange services, can trace its history back to 1698, when John Castaing began publishing a list of commodity and foreign exchange prices to a loose gathering of speculators who bought and sold stock in the coffee houses of Exchange Alley. They traded shares in the new joint-stock corporations, the Bank of England, the East India Company, the infamous South Sea Company and the not nearly as infamous as it should be Royal Africa Company. These corporations acted as quasi-governmental organisations to which the English government delegated the profitable task of pillaging the globe in the name of Empire. They operated under licence from the English crown, backed by the might of the English navy. In return they offered money. The corporations lent the English government huge sums, marking these down as assets on their balance sheet. They then issued stock, raising money from investors and in doing so made a link between the pockets of the merchants and the empty coffers of the Treasury.

Trading in London has continued uninterrupted since that time, mirroring and supporting first empire, then globalization. In the nineteenth century as Britain’s dominance extended the exchange’s members developed specialisms in the Far East, in minerals, in the woefully named kaffir market where the stocks of South Africa and then Rhodesia were traded.

When the exchange was turned upside down in the Big Bang of 1986, with trading simultaneously deregulated, re-regulated and pushed onto screens, this wasn’t an out of the blue decision. It was part and parcel of Margaret Thatcher’s brave new world of free markets, pushed on by ideology, by the global capital by then flowing through London and by the technological ambitions of the engineers slowly taking over the Exchange from inside. Today’s global exchanges are the seemingly inevitable result of a confluence between politics, economic theory, and technological advances.

We can say the same of Chicago. We saw how, as the city established itself as a centre of agricultural power and might, a group of energetic citizens, leaders in politics and business, got together to form the Chicago Board of Trade as an association to build upon this newfound wealth. Soon enough trade i