The Blank Swan: The End of Probability
The current crisis has led us to a conceptual impasse regarding the financial market. No prediction model can apply to the market, someone like Nassim Taleb, author of The Black Swan, would say and derivatives, which are the product of the most sophisticated brand of financial mathematics and engineering, should be banned. I claim that the way of the market falls outside probability and prediction, and for this reason it should be preserved.Probability has to be discarded and a new category has to emerge instead, which will mediate contingency. This new category is something called "price." While probability mediates abstract possibilities, or pure metaphysical fictions, price mediates concrete and real contingencies, which typically take place in a market.Philosophers and financial academics alike seem to be missing the point. Philosophers of contingency and the event are for the most part of leftist obedience. They believe that the crisis signals the end of capitalism and Wall Street.In fact, the market has nothing to do with Wall Street or with the investment banks. Market-making is a creative activity. The market is a category of thought that is independent of ideology. It replaces probability altogether and discarding the market, like the philosophers of the radical change claim we should do, is like discarding probability!As for financial academics, they aren't in the least interested in learning about the onto-genesis of the market, or the very investigation that I have attempted in this book. They deal with prices and values as if they were numbers and mathematical functions. How can they listen to someone who claims that the price only looks like a number but doesn't "compute" like one and that one needs to very carefully  examine a long thread of philosophy of the event and of contingency, extending  from Bergson to Deleuze to Badiou and Meillassoux, in order to understand what's inside a price ?* * * * *Simplest ideas are sometimes the most revolutionary and, consequently, the most difficult ones. Here is the simple idea that my whole book revolves around: If contingency is truly to be considered absolute (as in Meillassoux), then it should no longer be thought in terms of possibilities (what, in probability theory, we call "states of the world," or in metaphysics, "possible worlds"). It should be thought absolutely, independently of any "system of coordinates" represented in possibility.In Meillassoux, contingency comes even before existence, before the ontology of existing things, let alone states. I find astonishing that no one seems to be worried about the medium where such contingency-without-possibility, if it must be conceived at all, could be "represented." Not to mention the metaphysics, or even the mathematics, where it could find an expression.It is very hard to think of a contingent thing without representing in mind the possible other things that it might be. Philosophers are trained to form and develop just these kinds of "impossible" thoughts. All I am saying is that - with all due respect to the philosophers - this conception of absolute contingency finally finds in the  market of contingent claims (and in its translation in the "mathematics of price")  the adapted category of thought.My point is simply that philosophers might be missing a whole new way of writing philosophy. Just think what the real amazing implications would be if we were truly to start writing and thinking without the idea of probability and prediction! As for the financial and economical experts, they might be missing the opportunity to elevate their field above the level of human or political science. --Book synopsis