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I'm about to sign off for the year - actually, I was ready to do it yesterday, but then I happened upon a brief piece of writing that was so perfect that I decided I'd do one more edition of Pluralistic for 2025.
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If you'd like an essay-formatted version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
https://pluralistic.net/2025/12/18/self-licking-ice-cream-cone/#job-creators
1/
The piece in question is John Lanchester's "For Every Winner A Loser," in the *London Review of Books*, in which Lanchester reviews two books about the finance sector: Gary Stevenson's *The Trading Game* and Rob Copeland's *The Fund*:
https://www.lrb.co.uk/the-paper/v46/n17/john-lanchester/for-every-winner-a-loser
2/
It's a long and fascinating piece and it's certainly left me wanting to read both books, but that's not what convinced me to do one more newsletter before going on break - rather, it was a brief passage in the essay's preamble, a passage that perfectly captures the total social uselessness of the finance sector as a whole.
3/
Lanchester starts by stating that while we think of the role of the finance sector as "capital allocation" - that is, using investors' money to fund new businesses and expansions for existing business - that hasn't been important to finance for quite some time. Today, only 3% of bank activity consists of "lending to firms and individuals engaged in the production of goods and services."
4/
The other 97% of finance is *gambling*. Here's how Stevenson breaks it down: say your farm grows mangoes. You need money before the mangoes are harvested, so you sell the future ownership of the harvest to a broker at $1/crate.
The broker immediately flips that interest in your harvest to a dealer who believes (on the basis of a rumor about bad weather) that mangoes will be scarce this year and is willing to pay $1.10/crate.
5/
Next, an international speculator (trading on the same rumor) buys the rights from the broker at $1.20/crate.
Now come the side bets: a "momentum trader" (who specializing in bets on market trends continuing) buys the rights to your crop for $1.30/crate. A *contrarian* trader (who bets against momentum traders) short-sells the momentum trader's bet at $1.20. More short sellers pile in and drive the price down to $1/crate.
6/
Now, a *new* rumor circulates, about conditions being ripe for a bounteous mango harvest, so more short-sellers appear, and push the price to $0.90/crate. This tempts the original broker back in, and he buys your crop back at $1/crate.
That's when the harvest comes. You bring in the mangoes. They go to market, and fetch $1.10/crate.
This is finance - a welter of transactions, only one of which (selling your mangoes to people who eat them) involves the real economy.
7/
This is a small personal instance of Bonfire in the Fediverse.
