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:
pluralistic.net/2025/12/18/sel…
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Cory Doctorow
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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*:
lrb.co.uk/the-paper/v46/n17/jo…
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John Lanchester · For Every Winner a Loser: What is finance for?
John Lanchester (London Review of Books)Cory Doctorow
in reply to Cory Doctorow • • •Sensitive content
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.
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Cory Doctorow
in reply to Cory Doctorow • • •Sensitive content
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."
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Cory Doctorow
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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.
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Cory Doctorow
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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.
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Cory Doctorow
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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.
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Cory Doctorow
in reply to Cory Doctorow • • •Sensitive content
Everything else is "speculation on the movement of prices." The nine transactions that took place between your planting the crop and someone eating the mangoes are all zero sum - every trade has an evenly matched winner and loser, and when you sum them all up, they come out to zero. In other words, *no value was created*.
This is the finance sector. In a world where the real economy generates $105 trillion/year, the financial derivatives market adds up to *$667 trillion/year*.
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Cory Doctorow
in reply to Cory Doctorow • • •Sensitive content
This is "the biggest business in the world" - and it's useless. It produces nothing. It adds no value.
If you work a job where you do something useful, you are on the losing side of this economy. All the real money is in this socially useless, no-value-creating, hypertrophied, metastasized finance sector. Every gain in finance is matched by a loss. It all amounts to - literally - *nothing*.
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Cory Doctorow
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So *that's* what tempted me into one more blog post for the year - an absolutely perfect distillation of the uselessness of "the biggest business in the world," whose masters are the degenerate gamblers wh buy and sell our politicians, set our policy, and control our lives. They're the ones enshittifying the internet, burning down the planet, and pushing Elon Musk towards trillionairedom.
It's their world, and we just live on it.
For now.
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Cory Doctorow
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I'm at the end of my tour for my new book, the international bestseller *Enshittification*!
My last two events are CCC in #Hamburg, Dec 27-30:
events.ccc.de/congress/2025/in…
and the Tattered Cover in #Denver, Jan 22:
eventbrite.com/e/cory-doctorow…
I hope you can make it!
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39th Chaos Communication Congress Infos
events.ccc.deCory Doctorow
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Image:
Sam Valadi (modified)
flickr.com/photos/132084522@N0…
CC BY 2.0:
creativecommons.org/licenses/b…
eof/
Charging Bull - New York City
FlickrCaliCarol
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The Ignorant Savage
in reply to Cory Doctorow • • •youtu.be/0X0-NpZpx6U
The Big Short (2015) - The CDO Manager & Mark Baum Scene (7/10) | Movieclips
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Knut Branson
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Wayne Werner
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honestly, if you want the easiest to grasp proof of this being 100% accurate all you have to do is look at the outcome of RobinHood and the Gamestop diamond hand bros.
They *fought* and won. Except the whiny billionaires couldn't handle it so they manipulated more stock companies and pulled other strings because turns out when people realize we have more power, we have more power.
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🐕
in reply to Cory Doctorow • • •Sensitive content
The first transaction is a loan to the farmer of cash which she repays, in mangoes, in say 3 months time - cash which she uses to pay her workers. It's a loan to someone for the production of goods, so shouldn't it be in the 3%?
The remaining transactions are trading of the right to receive those mangoes. It is just a slow auction drawn out over several months.
Merc
in reply to Cory Doctorow • • •Also think about why the farmer is selling their harvest early at a set price. A rich farmer could wait for the money and take the gamble on the final price. Most farmers have to hedge their risk because they're not rich.
As for the other side of that hedge, the person taking that gamble is, by necessity, rich. They can front the money, and can gamble on poor crops. And, in many cases, they can manipulate the risk itself by say buying up canned mangoes and choosing if and when to sell them.
So, even in the narrow, best case where the financiers are offering risk hedging as a service, like in gambling "the house always wins".
Ryan Johnson
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Murdoc
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gregg r
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Richard Beaumont
in reply to Cory Doctorow • • •wall-e / Daniel
in reply to Cory Doctorow • • •the source article linked by Cory is quite long but really good! Definitely give it a read if you have some time:
lrb.co.uk/the-paper/v46/n17/jo…
John Lanchester · For Every Winner a Loser: What is finance for?
John Lanchester (London Review of Books)Cory Doctorow reshared this.
wall-e / Daniel
in reply to wall-e / Daniel • • •atraidez
in reply to wall-e / Daniel • • •wall-e / Daniel
in reply to wall-e / Daniel • • •Consider all the "retail broker" apps people are using. Robinhood, Webull, Trade Republic and the like. All these apps generate tracking and telemetry data, all those orders go through large market makers.
Have you read those privacy policies? I'm willing to bet that the data these generate end up in some Quant models, allowing them to predict how "retail" moves
Angus McIntyre
in reply to wall-e / Daniel • • •@wall_e I used to work for a startup that built a smartphone stock trading game and mined player activity for signals that were then used to drive investment decisions.
The results were … not great. The in-house quant (very smart guy) identified a few signals that seemed promising, but they never really made a ton of money from it.
So I'm 100% sure that the retail broker apps are tracking user activity, but I also suspect it may not be making them super rich.
The Janx Devil
in reply to Cory Doctorow • • •The way all this theory was sold to me when I worked in it was that yeah derivatives may all be zero-sum trades but they all generate valuable telemetry that can be mined for signals to use in refining the effectiveness and efficiency of the market.
That’s a more nuanced and subtle point to consider. It’s also complete horseshit, and it’s reinforced and fortified horseshit that costs a whole lot more to effort to debunk than the bullshit used to snow the retail investors.
One suspects the real purpose of all that derivative froth has long been to provide a maze of twisty passages in which to hide to the world’s vast money laundering operations.
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Jakub Narębski
in reply to The Janx Devil • • •The Janx Devil
in reply to Jakub Narębski • • •@jnareb Yeah, it makes some sense in physical commodity markets, where the time value of money and high cost high latency logistics means buying and selling futures helps long traders avoid volatility.
Problem is there have to be short traders on the other side of all those long traders, and they thrive on volatility. The more volatile the market the more they can take out, and they are in a position to cause the volatility they are trading on.
Of course, the obvious way to nerf the short traders is to take away the long traders on the other side of their trades. Give commodities markets a way to hedge their long risks without throwing them to the wolves in the derivatives market.
But you know… that would be socialism. And so here we are.
MartinF
in reply to The Janx Devil • • •V
in reply to Cory Doctorow • • •Sensitive content
So, a bit under 14% of global economic activity is actually meaningful?
That's horrific, in a sense, but on the plus side, it implies that with a reasonable response to a global economic crisis, ~86% of it can collapse without a meaningful loss in quality of life, no?
Not that it would, the poor always get stuck with the fallout, but hypothetically at least.
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geolaw
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Anand R
in reply to Cory Doctorow • • •The parable of the ox
Financial TimesCory Doctorow reshared this.