25 February 2020

On the Market

Taking stock of one’s soul

Justin E. H. Smith

At the museum, I am standing with my spouse in front of a Flemish vanitas scene. There is an old man hunched over his accounting books, surrounded by gold coins and jewels; a skull sits on his desk, and Death himself perches undetected above his shoulder. What, I ask her, is the “takeaway” of such scenes supposed to be? That one would do well to start thinking of one’s soul, she says. And I think, but do not say: I thought of nothing but my soul for forty years, never learned the first thing about how money works, and now time is much shorter than in our youth, and I’ve managed to save so little money, and I am worried about leaving you alone in this world without me, with only the small amounts we’ve been able to put away for us, for you, as we move about from country to country, renting one modest apartment after another, like dry old students. O my love, I hate to envision you alone and frightened. Is it wrong for me now to count our coins and to keep our accounting books? Am I compromising the fate of my soul? Is this vanity?

In November of last year, I opened a brokerage account. I had been reading simple, bullet-pointed introductions to financial literacy for a few months before that, manuals “for dummies” of the sort that I am conditioned to hold in contempt when their subject is, say, Latin, or the Protestant Reformation. After this period of study, I determined I was ready to invest the bulk of the money I had to my name, around $150,000, in the stock market (an amount large enough to make me already worthy of the guillotine, for some who have nothing, and small enough to burn or to lose with no consequences, for some who have much more). The fact that I had that amount of money in the first place was largely a bureaucratic mistake. When I quit my job at a university in Canada after nine years of working there, the human-resources people closed my retirement account and sent me the full amount in a single check. That check—the “retirement” I unwittingly took with severe early-withdrawal penalties at the age of forty-one when in fact I was only moving to a job in another country—plus some of the money I had saved over just the past few years from book-contract advances, was to be the seed funding for what I hoped, and still hope, might grow into something much larger through the alchemy of capital gains.

The author’s stocks in action. NB: Publishing this image is not to be construed as financial advice to other philosophers, and the magazine is in no way responsible for any losses incurred by those investing in the companies shown in the image.

It was driven home to me repeatedly in my early efforts to build an investment strategy that, quite apart from the question of whether the quest for wealth is sinful in the sense understood by the painters of vanitas scenes, it is most certainly and irredeemably unethical. All of the relatively low-risk index funds that are the bedrock of a sound investment portfolio are spread across so many different kinds of companies that one could not possibly keep track of all the ways each of them violates the rights and sanctity of its employees, of its customers, of the environment. And even if you are investing in individual companies (while maintaining healthy risk-buffering diversification, etc.), you must accept that the only way for you as a shareholder to get ahead is for those companies to continue to grow, even when the limits of whatever good they might do for the world, assuming they were doing good for the world to begin with, have been surpassed. That is just how capitalism works: an unceasing imperative for growth beyond any natural necessity, leading to the desolation of the earth and the exhaustion of its resources. I am a part of that now, too. I always was, to some extent, with every purchase I made, every light switch I flipped. But to become an active investor is to make it official, to solemnify the contract, as if in blood.

• • •

When I was eleven, I learned that a check is the form of currency you use when you do not have any other. My mother, recently divorced and under severe financial strain trying to get her family-law practice off the ground, used to take us to Kentucky Fried Chicken when cash reserves were depleted, since that was the only fast-food restaurant in town that accepted these strange promissory notes as a form of payment (and in those days there was no possibility of immediate verification of the availability of funds). We kept careful track of which KFC locations in town might have got a bounced check from us, and avoided them by moving out to ever more peripheral neighborhoods in search of dinner. This was among my earliest and most vivid lessons in what I now think of as my first financial education. When I turned eighteen, with no understanding at all of how interest works, I got my first credit card; when I ran it up to its limit, I got my second credit card; then I got a third. When I finished my undergraduate studies, and was admitted to several graduate programs, I decided I simply had to go to the only one of them that did not offer me a financial package, including tuition remission. So instead, I took student loans. I spent my twenties and thirties under constant pressure from collection agencies. Routine robocalls terrified me, calls from live agents often induced me to either break down in tears or fight back with ridiculous counterthreats, or some combination of the two. This condition, too, I can attest, is something like sin, and something like disease. I carry it with me still, in my body, as if as a child I had suffered from polio, and now must go through the world with a slight recurvatum in my gait, always announcing that because my freedom was delayed, I will never fully be free.

There is a movement among moral philosophers, particularly those attuned to the sensibilities of the tech world, that is known as “effective altruism,” and that encourages its proponents to give away as much of their income as they can: late capitalism transiting, perhaps, to a variety of potlatch as the greatest signifier of high social status. I know some academic philosophers who periodically post on social media the precise amounts they have given to charity (some prefer to post simple percentages), on the presumption that this sort of open bookkeeping is beneficial to the success of the movement as a whole. They give what to me appear to be astonishingly large amounts of money. And I will not speak here of the academic philosophers who publicly declare their contributions to electoral campaigns; in every case I can recall, I know the philosopher in question is bankrolled by a spouse in a much better-paid profession. When I see public reckonings of these sorts, I always think it would be nice also to see some information about what the effective altruist’s overall financial state is like: what properties they own, what investments they have, how much money their spouses make, how much they’ve inherited, and so on. If we’re going to make it public, let’s make it all public. Otherwise, there can be little meaningful normative pressure in revealing the fact that you have just handed over $10,000 to the GiveWell organization.

I know one thing with certainty: my next $10,000, and the next $10,000 after that, and after that, will not be going to GiveWell. Nor will I be giving a red cent to any political candidate. For the foreseeable future, my income after taxes and living expenses will be going to corporations making semiconductors, electric cars, quantum computers, video games, and trash-disposal equipment. Some of it will be tracking the S&P 500, the Dow Jones Industrial Average, the CAC 40. The rest will be diversified into treasury bonds, money market funds, and gold. I don’t know how much money I will have to have saved up or invested before I might stop fearing a relapse of my childhood disease, but I know I have not arrived there yet. In the past ten years, I have crossed over from debt into solvency, and then into some small but measurable “net worth,” and this passage feels too much like a recovery for me to be able to be convinced that it is entirely morally blameworthy. I behave and look more and more like the old man in the vanitas, and yet I feel that if Death were to make himself visible to me, I would have to protest to him that, no, this is not vain, that this, too, is care of the soul: to know where one is in the world with respect to money; to know what money is, in both its positive and negative valences, as both wealth and debt; and to live unmolested by the swarming demons of Equifax.

What I am trying to say is that both paths are the paths of sin in its widely divergent inflections. No one is more preterite than the debtor. Every fault my father is held by our family to have had, for example, during his curious and rambling life—that he took advantage of people, that he overstayed his welcome wherever he went, that he knew no constancy in friendship—arose from the fact that he could not afford to pay the required cost of insurance against these faults. And no one is more despicable, in turn, than the miser, who has money, but is so afraid to lose it that he becomes warped and withdrawn from the common causes of humanity. I’ve known both conditions, and though I’ve read my Aristotle I don’t imagine I will ever attain any permanent or long-lasting virtuous mean between these. I will always be correcting and rebalancing.

• • •

A common caricature has it that a philosopher does not, or should not, care about money. Thus Spinoza was the authentic philosopher, who retreated to grind lenses and make a meager living free from the cares of the world, while Leibniz (my guy) was the sell-out philosophaster, offering his services, and whatever intellectual cachet he might provide, to any royal court willing to pay. This has not prevented the institutions of philosophy over the past millennia from migrating fairly closely and constantly along the same paths as the globe’s most important financial institutions. What gets counted as philosophy has come from Rome, Baghdad, London, Amsterdam, the New York metropolitan area, Palo Alto; the thinking that goes on deep in the Amazon or in Greenland, or in a community college in South Dakota, generally gets called by other names. Whether living as courtiers or as ascetics, philosophers, like the most corrupt of politicians, follow the money.

That the more high-minded professions are no less immune to the attractions of wealth than the crasser ones has been a familiar irony since antiquity. Thus in the Rig Veda, composed around 1500 BC, we find this reflection from a young intellectual:

I am a poet; my dad’s a physician
and mom a miller with grinding stones.
With diverse thoughts we all strive for wealth,
going after it like cattle.

My dad, similarly, was a computer guy, my mom was a rural family-law attorney, known to accept chickens and goats from destitute clients in lieu of legal tender; I am a philosopher. And we’ve all spent our lives, with varying degrees of success, chasing after that sweet, sweet cash.

It should not be so surprising that philosophers, even if they should disdain trashy opulence, might at least be interested in money as a concept and a problem. It is, after all, interesting like everything is interesting, and perhaps even more so in the way it straddles the boundary between existence and non-existence, like all of the best of philosophy’s objects. Nor should it be surprising that a hidden gem of early modern philosophy, disguised as a satirical dialogue on the workings of the Amsterdam stock exchange, should have appeared not far from where Spinoza, from his seclusion in Rijnsburg, was a few years earlier rethinking the fundamental ontology of substance and property. In his 1688 Confusión de confusiones, the Amsterdam-based Spanish Jewish author Joseph de la Vega remarks on the “goblin-like,” or ever-changing and mercurial, quality of profits derived from the stock market: “At one moment, it is carbuncles, the next it is coal; one moment diamonds, and the next pebbles. Sometimes, they are the tears that Aurora leaves on the sweet morning’s grass, at other times, they are just tears.”

It is not just that shares in the stock market can bring good fortune at one moment and bad fortune at the next, but also that it does not matter what sort of real object the good fortune is anchored in. For de la Vega, shares are held not so much in things as in abstractions, theoretical percentages or slivers of ships, for example, which set out in the promise of bringing back things, or bringing back coins or promissory notes that in turn stand for these things: no difference, in truth, since here at the center of the global circulation of things, in Amsterdam, the things themselves fall away. To have to deal with them directly is work for the colonies. For things are heavy; even when the raw stuffs of nature are extracted from the earth and sculpted into fine commodities, they nevertheless remain heavy, so heavy that any financially significant quantity of them would be far too much for any one person to bear around. And in fact, the men at the exchange have no interest in bearing them at all, but rather only in trading actions, which, being non-bodily, have no weight, and which, since the founding of the Dutch East India Company at the beginning of the same century, had become, though weightless, the source of all money and earthly power.

• • •

My strategy, for the most part, is not to beat the market, but to buy and hold. There are a few exceptions to this; I do experiment in momentum investing, but with sufficiently small amounts that a misfire will not result in devastation. I monitor closely enough to serve as my own non-mechanical stop-loss limit at 10 percent, but there are some stocks, notably Tesla, that I am willing to watch plummet much lower than that without feeling the need to quickly cut my losses. I am not reckless. I am aware that there may be a financial crisis or collapse in the coming years, and I have sought to minimize the potential ruin through both portfolio diversification and a lucid understanding of the market’s historical cycles. And if there is a total collapse on the way, well then, I am doomed whether I have investments or not.

I feel as though I know what I am doing, more or less. The market is endlessly interesting to me, in the illustrations it gives of indeterminacy and uncertainty, of the limitations of predictions based on past regularities, of the strange layers of abstraction our species has added to its transformation of the natural environment. The market has this peculiar quality of being both an obvious illusion and the most real thing there is. Seeing the world through the lens of MarketWatch graphs and tickers gives one a feeling comparable to the first epiphany of Marxist historical materialism: all of a sudden, the events reported in other sections of the media, even in the politics section, seem like so many ephemeral distractions; what is really happening is right there in the tickers. At the same time, though lithium is being pulled from the ground in Chile, and iron ore in Lapland, the thing we call the market is no more truly the cause for this than whatever phantasms that strike the dim neurons of an ant are responsible for the transformation of dirt into its colony.

Another thing, curiously, that has this dual quality of being both an obvious illusion and the most real thing there is, is the soul, and this surprising ontological fit might help to explain the equanimity I feel in my new role as investor, as if I were made for it (and not only to prove that a philosopher may be multifaceted, like Thales of Miletus, who is said to have grown rich speculating on olive presses when he had tired of being mocked for having his head in the clouds). When I say I know what I am doing I mean in part that this entry into the market, which involves the taking of responsibility for future fortune, even in the face of objective indeterminacy, has at least a subjective character that I can only describe, against the background trauma of my long debtor’s damnation, as the opposite of vanity. One would do well to start thinking of one’s soul? I’m trying. Lord, I’m trying.

  1. Rig Veda, 9.112, trans. Wendy Doniger (London: Penguin UK, 2005), p. 105.

Justin E. H. Smith is currently the John and Constance Birkelund Fellow at the Dorothy and Lewis B. Cullman Center for Scholars and Writers, New York Public Library. His most recent book is Irrationality: A History of the Dark Side of Reason (Princeton University Press, 2019).

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