OOne of John Maynard Keynes’ most famous claims is that financial markets are driven by “animal spirits”. But Keynes’ reasoning is less well known. The danger of financial markets, he argued, is that traders focus not only on the price and quality of the products themselves, but also on the behavior of other traders.
Unlike consumer goods or commodities markets, financial markets circulate things with no intrinsic value: pieces of paper that should be priced up or down, but largely because everyone expects them. In such circumstances, the behavior and emotions of the herd become decisive. The result is volatility – not just when things go wrong, but as a normal feature of these markets. Bubbles are inevitable and bubbles inevitably burst.
In societies as dominated by finance as ours, this logic permeates well beyond the bond and equity markets. Housing is perhaps the most prominent and controversial case of “animal spirits” invading an area outside the financial realm itself. But as Belgian social theorist Michel Feher argued, many aspects of our social and personal life are now treated as financial assets. As individuals, we actively nurture our reputation, online and offline, in the hope of earning investment, if not necessarily in a monetary sense, at least in the form of attention and positive reviews. These are all forms of “credit” (literally “belief”) of one kind or another.
The volatility of “animal spirits” was perfectly demonstrated by the 2017 Fyre Festival (recounted in a 2019 Netflix documentary), one of the great moral tales of our time. One entrepreneur convinced ‘influencers’ to generate buzz online around an island music festival he was planning, but neglected to organize basic installations or upscale acts. Once the first guests arrived on the island, the mood took a turn for the worse when a single disgusting photo of a cheese sandwich in a Styrofoam box went viral.
As the consequences of the Tories’ sleaze finally eat away at Boris Johnson’s lead in the polls, such examples may offer clues to something that has long been difficult to understand: How does the Johnson era end? It’s possible that if Johnson’s shares become marked as a “sell” rather than a “buy,” things could fall apart quickly. Could Andrea Leadsom’s amendment, tabled to defend Owen Paterson, prove to be the “cheese sandwich” of the Boris festival? The fallout has certainly been spectacular.
Johnson’s political capital looks like a financial asset in several ways. First, it has no intrinsic value. The fact that he had no aptitude or interest in governing was known before the pandemic, but took on a fatal dimension in March 2020, at the cost of several thousand lives. He lacks a coherent political vision or ideology and is afraid of difficult decisions, beyond following the last advice he received. We know he’s also hedonistic and lazy, hence the incessant vacations. Considering all of this, his compulsive lying isn’t even his worst trait as a leader.
All of this raises the obvious question of how he ended up in such a job in the first place. This is the second way Johnson looks like a financial asset: his value is based on his followers all looking at each other as much as he does. Like a dotcom company circa 1999, he is someone to support, as long as everyone is behind him – but especially the media. Johnson was originally an artifact of the newspapers he worked for, from The Times to The Spectator to the Telegraph. Have I Got News For You made him a familiar face and name beyond the reach of the conservative press (a fact the presenters of the first never acknowledged). It is in many ways a public relations ploy.
Of course, the media profile is far from worthless in today’s political climate, but its value ultimately comes down to the ability to coordinate and control public attention. In his blog explains The result of the 2016 referendum, Dominic Cummings acknowledged Johnson’s unique role, but more specifically as a means of directing the media:
“Without Boris, Farage would have been a much bigger face on TV over the crucial last few weeks, possibly the most important face. (We had to use Boris as leverage with the BBC to keep Farage away and even then they almost fucked us like ITV did.) It is extremely plausible that this would have cost us over 600,000 votes. vital to the middle class.
Being recognizable and entertaining, Johnson provides a focal point; and because everyone knows it, it is then possible to rally people around it, much like people might meet near a famous monument. Indeed, his entire political career (whether in Westminster, London or the country at large) has depended almost entirely on his inordinate levels of public recognition and his willingness to exploit it.
But financial assets also suffer from a major shortcoming: the lack of investor loyalty. There is no doubt that Johnson has close friends scattered throughout the upper echelons of the media and the Conservative Party, but it is difficult to identify ‘Johnsonites’, given the little he represents beyond himself. . As a celebrity, he is more adept at attracting fans than allies. The recent tightening of the polls and negative headlines about corruption may not represent a bursting of the Boris bubble, but they do spell out how far Johnson must fall back, if the press gets really hostile. Cummings probably prides himself that, like a hedge fund wizard, he started selling the stock at the right time.
It’s always a mistake to underestimate Johnson’s tenacity and lust for power, but a political opportunist can hardly expect anything other than opportunistic support. It is likely that once a group of “investors” pull out (like the Murdoch press), many more will flee. The fallout could be embarrassing, but not for Johnson himself, who will return to a life of parties, vacations and risky jokes for money.
Instead, the shame he is unable to feel will be shared among all those who have collectively agreed to put him in power. When over, what the Johnson era will have illuminated is the utter void of moral purpose or judgment at the heart of the Conservative Party, establishment newspapers, and the individuals (including Cummings) who used it. as a vehicle.
Some refused to invest at the start. The resignation of Johnson’s full brother Jo from the cabinet in September 2019 was as clear a wake-up call as one might imagine. Many more will find excuses for their support and rewrite the past. But the depressing fact remains that, for now, columnists, MPs, editors and voters are mostly in the game because everyone is. As Chuck Prince, then CEO of Citibank, put it in July 2007, three weeks before the onset of the credit crunch: “As long as the music is playing, you have to get up and dance. We are still dancing.