Quarterly Journal of Speech

Vol. 100, No. 2, May 2014, pp. 139162

Banking on the Present: The Ontological

Rhetoric of Neo-Classical Economics and
Its Relation to the 2008 Financial Crisis
Joshua S. Hanan, Indradeep Ghosh & Kaleb W. Brooks

This essay performs a rhetorical criticism of neo-classical economics, with particular

attention to its methodological influence on a number of faulty mathematical models
that lay at the epicenter of the 2008 financial crisis. Going beyond Goodnight and
Greens mimetic conception of economic rhetoric, which positions rhetoric as a site of
mediation between symbolic and material spirals, we argue that the rhetoric of neoclassicism is best understood as an apparatus that attempts to suture two ontologically
incommensurable conceptions of time that we term intensive and extensive. We further
argue that the hinge of this rhetorical apparatus centers on a kairotic tactic of arbitrage,
which theoretically posits, at the same time that it negates, ontological market failure.
We end by exploring rhetorical alternatives to neo-classical economics that take the
internally contradictory structure of arbitrage to its emergent conclusions.
Keywords: Rhetoric of Economics; 2008 Financial Crisis; Neo-Classical Economics;
Arbitrage; Kairos

The difference between presecular and secular thought lies not in the elimination
of the function of God but in its transformation from an a priori conscious
assumption to a retroactive unconscious presupposition.A. Kiarina Kordela

Joshua S. Hanan (Ph.D., University of Texas at Austin) is Assistant Professor of Rhetoric and Communication
Ethics at the University of Denver. Indradeep Ghosh (Ph.D., Massachusetts Institute of Technology) is Assistant
Professor of Economics at Haverford College. Kaleb W. Brooks (M.A., University of Denver) is Doctor of
Jurisprudence Candidate at the Maurer School of Law, Indiana University. The authors would like to thank
Barbara Biesecker, Jeremy Grossman, and Atilla Hallsby, for their very thorough and thoughtful editorial
suggestions, as well as Chris Gamble, Raymie McKerrow, Sine Nrholm Just, and David Anderson, for their
contributions to current and previous drafts of this project. Correspondence to: Joshua Hanan, Department of
Communication Studies, Sturm Hall, Room 200, 2000 E. Asbury Ave, Denver, CO 80208, USA. E-mail: joshua.
hanan@du.edu
ISSN 0033-5630 (print)/ISSN 1479-5779 (online) 2014 National Communication Association
http://dx.doi.org/10.1080/00335630.2014.961529

140 J. S. Hanan et al.

I found a flaw in the model that I perceived is the critical functioning structure
that defines how the world works.Alan Greenspan

Introduction
For the many U.S. citizens not directly involved in the financial system, the Great
Recession of 2008 seemed to come out of nowhere.1 Although cracks began to
emerge in the subprime mortgage market and financial system in 2006, Federal
Reserve Chairman Ben Bernanke publicly stated in mid-2007 that the subprime
problem is likely to be limited and that total losses could be as little as $50 billion.2
Just days later, however, two hedge funds operated by Wall Street firm Bear Stearns
collapsed owing to soured bets on mortgage-backed securities.3 By the following
spring, Bear Stearns faced a company-wide liquidity crisis and was forced into a sale
to JPMorgan Chase (with the help of a partial government guarantee against future
losses) at a fire sale price.4 By October 2008, the investment bank Lehman Brothers
had declared bankruptcy and insurance company AIG required a bailout, eventually
totaling $182 billion to prevent the broader financial system from completely
disintegrating.5
Responding to this financial juggernaut, Congress passed emergency measures,
including the $700 billion Troubled Asset Relief Program (TARP), which was
originally created to fund purchases of impaired assets from imperiled financial
institutions and eventually used for temporary recapitalization.6 At the same time, the
Federal Reserve granted hundreds of billions of dollars in additional guarantees and
liquidity to commercial and investment banks, as well as other systemically important
financial institutions, in the form of direct loans and other cheap financing.7 More
recently, Congress passed the 2,300-page Dodd-Frank Financial Reform Bill, the
ostensible purpose of which is to regulate the financial industry in order to prevent
another financial crisis.8
Since this economic upheaval, there has been no shortage of literature designed to
help lay and academic audiences better understand the economic collapse, of which
an overwhelming majority now agrees is the worst downturn since the Great
Depression.9 In the six-year interim, from the onset of the collapse to late 2014,
thousands of pages of books, articles, essays, op-eds, and campaign speeches have
been generated about the cause of the crash and what should be done.10 By now, a
familiar narrative has emerged that generally places blame on the greed of Wall Street
firms that took on too much risk, bringing down the financial system. During the
2008 presidential campaign, Republican candidate John McCain cited Wall Street
greed as a primary reason for the meltdown.11 President Barack Obama, during his
first and second inaugural terms in office, referred on several occasions to arrogance
and greed and fat cat bankers on Wall Street.12 More recently, an international
social movement known as Occupy Wall Street surfaced, demanding accountability
from financial leaders for perceived extravagances.13
While this narrative has meritinsofar as it acknowledges that, in recent years,
private sector financial companies began pursuing self-interests in ways not seen

Banking on the Present 141

since before the stock market implosion of 1929it is at best incomplete because it
fails to account for how neo-classical economic theory, as propounded by academic
economists and adopted by policymakers and financial market participants, played a
major role in perpetuating several destructive asset bubbles that culminated in the
2008 financial crisis. Specifically, the mainstream narrative ignores how neo-classical
economic theorys reliance on a mathematical deductivist method led financial
regulators and private sector financial companies to develop a number of
statistical models for determining asset prices that took investors rational behavior
for granted and assumed that past asset performance could be used as a reasonable
proxy for predicting future expectations. Mostly, this entailed the use of models based
on the Rational Expectations Hypothesis (REH) in particular, asset-pricing models
such as the Efficient Markets Hypothesis (EMH), and more generally, a certain class
of tools known as Dynamic Stochastic General Equilibrium (DSGE) models. These
flawed technologies of representation included models used for assessing a firms
overall risk exposure (called Value at Risk or VaR models), and models used for
calculating the prices of illiquid synthetic securities such as collateralized debt
obligations (CDOs). Such models would ultimately be found at the epicenter of the
financial downturn.
In this essay, we argue that an adequate account of the 2008 financial crisis cannot
be provided from within the confines of neo-classical economic theory, but instead
necessitates an inquiry into the ontological rhetoricity of neo-classical thought. That
is, as economic thought per se is irreducibly rhetorical in nature, it does not so much
represent a marketplace that exists a priori as it simulates or performs a world that
is imagined in its models.14 In order to make this argument, we build on previous
scholarship engaging the rhetoric of economics first pioneered by Chicago
Economist Deirdre McCloskey.15 In particular, we expand the recent insights of
G. Thomas Goodnight and Sandy Green who have articulated the materiality of
economic rhetoric in terms of a mimetic surplus that traverses in and through
symbolic and material spirals.16 While Goodnight and Green illustrate the centrality
of rhetoric to mediating stable structures of economic equilibrium, we argue that
rhetoric can also be understood as the very condition of possibility needed to produce
an ordered and stable sense of equilibrium in the first place.17 By introducing an
important conceptual distinction between extensive time and intensive time, two
forms of time perception that implicate two different modes of causality, we argue
that neo-classical economic theory in general, and REH, EMH, and DSGE models in
particular, can all be understood as attempts to fold intensive time into extensive
time.18 The materiality of economic rhetoric is to be sourced precisely in the gap
between these two forms of time perception, and crisis phenomena may then be
understood as the failure on behalf of neo-classical modeling to transcend its
paradoxical articulation of time as both present and absent. We are thus not claiming
that neo-classical economic theory caused the 2008 financial crisis, but rather that it
gives rise to a rhetorical surplus that cannot help but presuppose economic crisis and
disequilibrium.19

142 J. S. Hanan et al.

In what follows, we lay out our conception of economic rhetoric in several steps. In
Section 1, we summarize Goodnight and Greens rhetorical theory of economic crisis
and intervene by arguing that their conception of bubbles is unable to theorize
rhetorical mimesis outside of a more foundational economic rationality that works
in and through an a priori conception of temporal equilibrium. Sections 2 and 3
substantiate this argument: In Section 2, we offer a brief history of neo-classical
economics, and the development of REH, EMH, and DSGE models; in Section 3, we
transition toward a rhetorical criticism of these models, illustrating how at the
inoperative center of neo-classical economics is a kairotic tactic of arbitrage that
attempts to suture two ontologically interrelated but distinct conceptions of time. We
conclude by discussing the possibility of an economic rhetoric beyond neo-classical
articulations of arbitrage.
Section 1: Goodnights and Greens Rhetorical Theory of Bubbles
Goodnight and Green provide an account of the 19922002 dot-com bubble in terms
of three different trajectoriessocial, behavioral, and reflexiveof an
unfolding rhetorical movement. They argue that all three registers of movement
are necessary for an understanding of the dot-com bubble, and they begin by
considering the social register as articulated by new institutional economic theory,
which focuses on how economic models of valuation are institutionalized as market
practices through imitation:
As an institutional specific cultural system for generating and measuring value,
market practices are held to evolve incrementally over time. The social codes of
practice enable communication through a complex network of signals that
economic agents send to each other. The practices embody and are guided by
institutional logics that standardize rules, norms, and strategies suited to
calculative knowledge, itself a state-of-the-art practice.20

The emergence of bubbles entails, according to new institutional theory, a switch to

ever-increasing prices, from stable configurations of market equilibrium as the result
of widespread copying of popular but bad investment decisions.21 But even though
new institutional theory allows us to think the before and after of such switches, it
cannot explain the moment of the switch itself.
Seeking closure, Goodnight and Green turn to behavioral economics and argue
that behavioral explanations rationalize such switches as departures from normal
attitudes toward irrational risk taking on the part of investors:
In assessing risk under normal conditions, investors prefer to avoid loss before
making gain. A bubble reverses this preference. New presumptions regarding risk
appear to pour across investment communities. Information cascades occur among
peers who selectively share news. These investors ignore their private information
or preference and follow the crowd by imitating recent actions of those who have
achieved success.22

Behavioral explanations, then, rely on contagion and herd behavior that occasion
a departure from normal, rational patterns of behavior toward novel, irrational

Banking on the Present 143

ones. This dichotomy between rational and irrational behavior, however, leaves
Goodnight and Green dissatisfied, since behavioral explanations are able to identify
irrational behavior only after the fact, that is, after the bubble has burst. What is
needed instead, they argue, is an explanation of why such irrational behavior was
deemed to be rational during the time that the bubble grew in size. Therefore, in an
attempt to theorize bubbles from within normal market function, Goodnight and
Green turn to performative economics.
Drawing on performance scholarship, largely generated by the disciplines of
anthropology and sociology, they posit that markets are constituted by a reflexive
production of imitation.23 That is, buyers and sellers perform the world imagined in
the economic model and bring into existence structures of pricing that both drive
valuation and are reflexively shaped by the trades that result from such valuation.
This sets the stage for a description of bubble dynamics:
When bubbles proceed, the reflexive construction of markets is both amplified and
put to the test. The language of value conditions bubbles in unpredictable ways
because at times every strategy promotes a higher-order counter-strategy. Thus, a
bubble renders markets vivid as a vast macroeconomic and financial experiment.
At such times, investors escape disciplined terms of risk and embrace ambiguous
symbols of fortune; thus questions of competence multiply and challenges to
sustainability arise. Whether for social, psychological, or get-rich-quick reasons,
investors must choose to go with or against the flowto find in bubble-like moments
whether this time things are different or if its just another Ponzi scheme.24

Thus, according to Goodnight and Green, there is an entwinement of the reflexive

or performative trajectory with the social and psychological/behavioral trajectories,
and all three are implicated in a scenario in which system signals split, multiply, and
render symbolic and material connections self-confirming, unstable, or conflicted.25
This rhetorical movement generates a bubble that alters the symbolic and material
practices of a risk culture.26
Goodnights and Greens rhetorical theory of bubbles pivots on a collapse of the
rational-irrational dichotomy. We contend, however, that their methodological
instantiation of this form of critique fails to meet its burden of theorizing crisis
without a distinction between normal rational market performance and irrational
market failure. In their turn to reconstructing market phenomena through a
revamped vision of McCloskeys economic criticism, Goodnight and Green argue
that bubbles can be theorized in relation to, and in differentiation from, a preconstituted economic equilibrium. First, they maintain that the turn toward bubble
formation is different from rational market behavior, since the institutional pull of
bubbles generates contestation of legitimacy when participants question howand if
to return to recognized practices or extend novel opportunities.27 This attempt to
temporalize bubbles as novel episodes of economic behavior to be distinguished from
typical market behavior is reflected in their contention that economic bubbles
appear when credit is abundant and the economy is doing well, as evident in the
1990s United States,28 thereby locating bubbles as a causal departure from economic
equilibrium only possible under certain structural conditions. Second, the novelty of

144 J. S. Hanan et al.

bubbles is directly related to the way in which Goodnight and Green position
economic rhetoric as a space of performative mediation between economic models
and their materialization in practice. Rhetoric occurs in the splitting and
multiplication of system signals, moving the system in a self-confirming and
unstable manner away from what would otherwise be a stable and rational market
equilibrium.29 This moment of deviation is the moment of bubble formation, but
positing such a moment of deviation ultimately preserves an a priori notion of
equilibrium from which deviation is said to occur, and therefore implicitly
reconstructs the rational/irrational dichotomy from which Goodnight and Green
seek to escape.
Along this line of reasoning, their theorization of bubbles relies on strategic
moments of intervention that alter the normal function of neo-classical mimetic
structures. Despite their deployment of mimesis and performative economics,
Goodnight and Green still locate economic rhetoric in instrumentalist terms. While
they are sensitive to the idea that economic markets are constituted in and through
symbolic and material spirals, and therefore exceed any deterministic attempt to
effectively forecast market behavior, their advocacy of economic criticism as a
practice that initially reconstructs the interlocking trajectories constituting a bubble
across episodes of initiation, momentum, crash, and recovery re-instantiates the very
logic of economic forecasting that they want to critique.30 This position is
encapsulated by Goodnights and Greens argument that [f]rom a rhetorical vantage,
mimesis is strategic (contending and contesting) imitation.31
Our argument throughout this essay will be that Goodnights and Greens
instrumental conception of economic rhetoric is problematic because it assumes
that the market can be internally differentiated and marked in temporal terms.32
Put differently, Goodnights and Greens mimetic conception of economic rhetoric
perpetuates what Barbara Biesecker has termed a logic-of-influence model.33 A logic
of influence treats rhetoric as an autonomous agent of mediation that works inside a
pre-constituted situation and series of constraints. The problem with this conception
of rhetoric, as Ronald Walter Greene points out, is that it pushes the rhetorical
theorist in the direction of defending an essentialist theory of the subject. An
essentialist view of the subject figures the subject as possessing a substance that is
always already present no matter the contingent rhythms of political, cultural and
economic history.34 Put differently, while at one level Goodnights and Greens
notion of mimesis is an attempt to destabilize representational theories of discourse, it
simultaneously reinstantiates such a logic by defining rhetorics materiality as the
performative mediation in between symbolic and material spirals.
We attempt a different form of economic criticism that does not rely on a moment
of generation. In its place, we theorize an immanent spiral between material practices
and the core discursive postulates of neo-classical economics that affirms surplus
(the bubble) as an inherent condition of economic modeling. Our rhetorical
criticism of neo-classicism thus proceeds on very different conceptual grounds than
does Goodnights and Greens. Rather than articulate the materiality of economic
rhetoric in terms of mimesis, we show how the rhetoric of neo-classicism is better

Banking on the Present 145

understood as a problem of mnesis. Defined by Nathan Stormer as a problem

inherent to performing the present as a figurative event,35 mnesis allows us to
illustrate how neo-classical thought deploys rhetoric as an abstract machine, or
apparatus, that attempts to kairotically capture the present as if it naturally
conformed to a number of internal regulatory principles.36 In our view, then, the
rhetoric of economics emerges not in the meditational space between symbolic and
material spirals but in the very recursive act of suturing together a stable
equilibrium through which the idea of a timely or untimely response to the economy
becomes possible.37
To explore this temporal problematic, we begin, in the next section, by laying out
the methodological assumptions of neo-classical economics, starting with the concept
of REH, which forms the bedrock of EMH and, by extension, of DSGE models that
compose the bedrock of modern risk culture. We recount a brief history of the
development of these approaches, and argue that their widespread use by economists,
market participants and policymakers occasioned fundamental shifts in government
policy since at least the 1980s that set the stage for the 2008 financial crisis. In Section
3, we dig more deeply into the ontological presuppositions of neo-classical economics
as they relate to the kairotic treatment of time. Within this framework, time is
ontologically posited as occurring in a linear fashion that extends from the past, into
the present, and toward a future. This notion of time, which we label extensive,
authorizes the Newtonian, equilibrium framework within which neo-classical
economics functions. We then explicate a notion of intensive time that this logic
of equilibrium, and by extension Goodnights and Greens concept of mimesis, is
unable to capture. In affirming a criticism that takes into account both registers of
time, we contend that economics is not rhetorical at the level of instrumentality but is
instead rhetorical in the very way that it imagines temporality out of a virtual and
boundless present.38 In this way, we extend Goodnights and Greens thesis to
examine the rhetorical processes by which equilibrium itself is instituted.
Section 2: Neo-Classical Economics, REH, EMH, and DSGE models
Neo-classical economic theory grounds itself in a very specific construction of the
human subject, from which flows a very specific kind of scientific praxis. First and
foremost, the human subject is assumed to be atomistic, or self-contained, and
therefore not subject to any kind of structurally imposed constraints. The assumption
of atomism affords a certain kind of additive operation by which the neo-classical
economist may deduce the aggregate behavior of a large group of individuals by
simply adding up individual behaviors. In turn, individual behavior is assumed to
be guided by a single, positively stated normative orientation, one of instrumental
rationality, which requires that each individual employ the most efficient means to
achieve her or his ends.39 Moreover, ends as preferences are given, not contingent or
context-dependent, and are therefore assumed to be arbitrary. The above axioms set
the stage for a science that is essentially positivist in nature, admitting nothing under
the scope of analysis or by way of concepts that are not empirically measurable.

146 J. S. Hanan et al.

Further, a key feature of neo-classical scientific praxis is its emphasis on methodological equilibration, by which a state of equilibrium is axiomatically imposed upon
the interaction of instrumentally rational individuals, and this allows an economy to
be represented in a way that is aligned with the stabilizing and positivistic principles
of modern science (particularly Newtonian physics).40 Philosophically, the foundations of neo-classical economic theory, as described above, may be traced back to
eighteenth-century classical economics, specifically, the work of Scottish moral
philosopher Adam Smith, who believed that if each actor in an economy were to
follow his individual self-interest, then Gods divine plan for social organization
would manifest in the form of an invisible hand that would guide society to the
highest common good.41 This providential42 articulation of internal homeostasis
envisioned by Smith was, in the nineteenth century, placed on a firm mathematical
foundation by the first neo-classicists, notably Alfred Marshall, through the use of
Newtonian calculus.43 In the twentieth century, developments in mathematics in the
fields of set theory and topology allowed for a further refinement of the equilibrium
concept, and led to a profusion of sophisticated modeling approaches.44 Most of these
approaches sought to analyze decision-making from a dynamic perspective, acknowledging that economic activity unfolds alongside the passage of time and, therefore,
that it becomes important to account for ways in which actors extrapolated from a
known past into an unknown future. This required the development of a general
theory of how expectations (about the future) are formed. In 1961, John Muth
proposed REH, which appeared to provide a positivistic way forward.45
According to REH, markets and the economy are described by deep structures of
randomness and contingency that may be simulated in terms of stochastic structures
amenable to quantitative analysis using the tools of probability theory. In particular,
REH assumes that the underlying stochastic structure of the economy is fundamentally stable over timetime is said to be ergodic and representable by normal
distribution curves.46 Stability guarantees that the modeler can, by studying data
collected over long periods of time, uncover the statistical properties of the
underlying stochastic structure, such as its mean and variance. Moreover, it is also
assumed that actors in the model can do the same, that is, they are endowed with the
same powers of calculation and judgment as the modeler himself. These assumptions,
axiomatically adopted by REH, offered to neo-classical economists a mathematically
tractable way of incorporating uncertainty into their models, and soon REH began to
be used widely in dynamic economic models.
Eugene Famas EMH, proposed in the 1960s, was an early exemplar of the
application of REH.47 EMH provides a theoretical framework for valuing the
equilibrium price of a financial asset under the assumption that information about
the assets future prospects exists in an objective sense and is available for decoding,
via the mathematics of REH, by all decision makers. In an essay titled Random
Walks in Stock Market Prices, published in 1965, Fama summarized EMH in the
following way:

Banking on the Present 147

An efficient market is defined as a market where there are large numbers of
rational, profit-maximizers actively competing, with each trying to predict future
market values of individual securities, and where important current information is
almost freely available to all participants. In an efficient market, competition among
the many intelligent participants leads to a situation where, at any point in time,
actual prices of individual securities already reflect the effects of information based
both on events that have already occurred and on events which, as of now, the
market expects to take place in the future. In other words, in an efficient market at
any point in time, the actual price of a security will be a good estimate of its
intrinsic value.48

Under this articulation of neo-classical economics, it does not have to be the case that
the relevant information is available to all market participants at the same time. As
long as those market participants who do have privileged access to such information
use it to price financial assets according to the principles of EMH, then they will
stand to make profits. But according to Fama, such profit-making will alert other
market participants to the equilibrium price so that the market price of the asset need
never deviate from its equilibrium price for very long.
In this picture, there is no Keynesian-style newspaper contest.49 There is, in other
words, no room for market irrationality, since an objective, stable truth, namely
the equilibrium price, is assumed to exist. In turn, the existence of an objective
equilibrium price, and its actualization, depend on two factors. First, by assuming
REH, EMH ensures that a particular financial assets future prospects may be gleaned
in an objectively accurate sense from studying that assets past performance. This past
performance constitutes the information set to which all market participants sooner
or later have access. Second, the actualization of the equilibrium price as the market
price results from the elimination of profit-making opportunities, and this mechanism is called arbitrage.50 Essentially, arbitrage is a financial transaction predicated
on the capitalization of other financial transactions, which allows the objectivity of
the equilibrium price to acquire substantive theoretical content against the ontological possibility that no objective information set might exist as such. We will see later
that our critique of REH and models based on it hinges precisely on the failure of
arbitrage to neutralize the potential for market failure. Nevertheless, EMH, as
conceived by Fama, meant that Smiths invisible hand could now be represented and
dynamically simulated in the ephemeral sphere of finance. Not only was there
assumed to be an a priori reality that EMH purportedly mirrored, but there was also
the crucial implication that this a priori reality will be readily discernible from a
posteriori observations over the long run.
In 1972, Robert Lucas integrated REH into general equilibrium theory, but it was
not until 1982, with Finn Kydland and Edward Prescotts formulation of real business
cycle (RBC) theory, that a whole new class of models, namely DSGE models, came to
occupy center-stage in the neo-classical canon.51 DSGE models are meant to describe
and explain the economy-at-large (as opposed to EMH, which focused only on
the financial sector), or the economy in a state of general equilibrium, and are
constructed via aggregation from so-called micro-foundations having to do with
individual behavior modeled along the lines of a rationality characteristic of

148 J. S. Hanan et al.

neo-classical economic theory. DSGE models presently represent the core of

mainstream economics, and it is extremely difficult to publish in notable economic
journals without adopting a DSGE modeling approach. Even though advances in
computing power since the 1980s have enabled present-day DSGE models to be
much more sophisticated than their earliest counterparts, certain essential features of
neo-classical economic theory, such as methodological individualism, methodological
instrumentalism, and methodological equilibration, were from the very beginning,
and still remain today, hallmarks of this modeling approach.
An especially appealing feature of DSGE models is their applicability to a very wide
range of economic questions spanning the fields of macroeconomics, labor economics,
public economics, and financial economics, to name a few. In these applications, the
conceptual elements of arbitrage, REH, and EMH are all present in one form or
another, and DSGE models therefore represent the state of the art in applying
neo-classical economic theory to the practical problems of assessing policy prescriptions and forecasting macroeconomic and financial outcomes. Thus, not only neoclassical economic theorists but also policymakers and the private sector have, since
the 1980s, adopted DSGE models as the standard framework for thinking about
macroeconomic behavior and policy. In fact, we argue that it was the articulation
between REH, EMH, and DSGE models under the broader conceptual umbrella of
neo-classicism that in many respects informed the faulty economic policies that gave
rise to the 2008 financial crisis.
Referred to today in usually pejorative terms as neo-liberalism, the application of
neo-classical thought to policymaking has dominated policy discourse from the early
1980s onward.52 Whether understood in terms of Reagans trickle-down economics,
Margaret Thatchers monetarism, or the bipartisan Washington Consensus that
emerged during the years of Bill Clinton and George H. W. Bush, neo-liberalism has
consistently turned to the positivistic ideals of neo-classicism to justify the reduction
of government intervention in spheres as diverse as foreign policy and public
welfare.53 It should thus come as no surprise that neo-liberalism found an easy
alliance with the interests of large-scale financial firms who sought alternatives to the
strict regulatory regime of the Glass-Steagall Act that they had been operating under
for more than fifty years. Instituted in the wake of the 1929 stock market crash, the
Glass-Steagall Act (1933) sought to limit commercial banks securities activities and
separate the activities of commercial banks from those of securities firms or
investment banks. By 1999, however, the Act had been completely unraveled under
the direction of then Fed Chairman Alan Greenspan and Treasury Secretary Robert
Rubin, allowing commercial banks to originate and trade various kinds of new
derivatives instruments, largely predicated on the neo-classical insights of REH,
EMH, and DSGE modeling. Alongside government programs initiated by Bill Clinton
and intensified by George H. W. Bush to encourage home ownership by American
families, the Federal Reserve Bank slashed interest rates dramatically following the
collapse of the Internet stock market bubble in 20002001. At the same time financial
markets witnessed a wave of deregulation that began with the repeal of Glass-Steagall,
and continued into the 2000s in various other forms (for example, a substantial

Banking on the Present 149

relaxation of the maximum leverage ratio for investment banks). All of these factors
set the stage for a massive speculative bubble to form in real estate and related
financial markets (primarily, in markets for Asset-Backed Securities, such as
Mortgage-Backed Securities and Credit Default Swaps, whose pricing entailed
widespread adoption of EMH), which ultimately collapsed during the summer and
fall of 2008.54
Section 3: A Critique of Neo-Classical Economic TheoryKairotic Time,
Arbitrage, and Mnesis
Given the spectacular collapse of financial markets in 2008, whose very brief history
we have just outlined, we now inquire into the rhetorical processes by which REH
and the models based on it failed to account for the buildup phase of the bubble
before its sudden implosion. In particular, we attempt to address three interrelated
questions that derive from our brief history. First, why can the phenomena of
speculative bubbles not be accounted for by this kind of modeling approach? Second,
what effects do these models have on the material practices of market participants?
And, third, what implications do these effects have for our understanding of REHs
rhetorical shortcomings?
To answer these questions, we narrow in on the concept of arbitrage and the way it
attempts to kairotically capture a rhetorical ontology that Nathan Stormer terms
mnesis.55 By operating as a placeholder or mark of simultaneous presence and
absence, we show how arbitrage is what enables neo-classical economics to retroactively constitute a system of general equilibrium out of emergent market praxis.56
To develop our argument, then, it will first be necessary to understand how neoclassicism attempts to transcend irreducible market complexity through an articulation of time that is linear and assumes that times arrow moves from the past to the
present and into the future in an observable way. This notion of time, or of (what we
will call) the extensive form of time, admits a notion of causality that is also linear
and temporal, so that if event A causes event B, then it must be the case that event A
appears earlier in time than event B. To this conception of time as extensive, we have
already seen that neo-classical economic theory adds the epistemological assumption
that time is ergodic, which, as described earlier, posits that the structure of the
economy that persists through time preserves its form and so can be posited in
probabilistic terms as if it were an unchanging distribution of possible outcomes.
Extensive, ergodic time is Newtonian since it is reversible. That is, each moment in
time is marked as exactly similar to any other, so that if the modeler were to go
back in time and restart the clock, as it were, the same sequence of events would
repeat, as long as nothing else changed analytically.57 Extensive, ergodic time (and the
neo-classical logic that it calls into being) can therefore be understood as what
Giorgio Agamben calls an apparatus, since it orders events in a relational sequence,
allowing for a pairwise comparison of events, so that one event may be recognized as
having occurred before, after, or simultaneously with the other, but there is no
meaning to be attached to whether these events are experienced in the past, present,

150 J. S. Hanan et al.

or future.58 In other words, the historicity of the two moments in which the two
events occurred, and the lapses between those moments, are of no particular
significance in this conception of time.
Our contention is that the extensive, ergodic conception of time, epitomized by
neo-classical economics, does not offer a complete description of the real/virtual time
in which economic activity unfolds, because the latter also includes a second register
of temporality, one we term intensive time.59 This form of time cannot be
understood in representational terms, since it operates through what we call an
affective logic of causality.60 In this conception, times arrow cycles between the
present and the expectation of a particular future, and, as this cycling continues,
the present and that particular future are drawn closer in time to each other, so that
the mode of causality is circular or self-fulfilling. These expectations always
materialize differently than initially predicted in neo-classical modeling since they
are premised more so on ethos, the perceived authority and credibility of the models
producing the projected future, and pathos, the hope for continuing economic
stability, than logos, the logical structure of the model. In other words, affective logic
always guarantees that there will be a disjunction between the imagined expectations
of a given economic practice and its actual unfolding. Thus, we contend that affective
logic is always in conflict with extensive time and that this conflict plays out in a
different form of intensive time that is closed off to representation within neoclassical theory.
Our critique of neo-classical economic theory thus proceeds on ontological as well
as epistemological grounds.61 Actual economic activity unfolds for an actor in both
registers of time perception, and involves an element of chance, or what Agamben
terms collateral effects, that always exceed an ergodic conception of time.62 The
ontological critique, however, is primary because once intensive time becomes
admissible as an element of theoretical construction, a space naturally opens for
human intentionality to harness the power of non-probabilistic chance. Herein lies
the genesis of novelty or hitherto unforeseen possibilities for innovation that radically
and irreversibly alter the economic landscape. Insofar as neo-classical thought cannot
accommodate that which is at play outside the bounds of an extensive and ergodic
notion of temporality, its mimetic rhetoric functions not at the pre-given level of an
institutional risk culture, but in the very move to render intelligible an economy in
and through a stable past, present, and future.63 This collapsing of the ontological and
the epistemological into the same relational plane of symbolic meaning is the
rhetorical apparatus that enables neo-classical theory to cohere in terms of a singular
register of time perception. However, to fully understand how this apparatus works it
is necessary now to turn our attention to the rhetorical hinge that allows neo-classical
modeling to assume a persistent notion of equilibrium: the paradoxical discourse
formation of arbitrage.
As we noted in Section 2, arbitrage is a peculiar condition of thought that stems
from REH and becomes specified explicitly with EMH. Arbitrage ensures that the
market price of an asset does not deviate from that assets equilibrium price for long
periods of time. In substance, however, this is an ad hoc proposition deriving from

Banking on the Present 151

the assumptions of extensivity and ergodicity that are imposed on time by fiat. These
assumptions assure us that objectively accurate information about the assets actual
future prospects exists, by virtue of which an objectively accurate equilibrium price
may be deduced. If, however, the intensive form of time is always already in
simultaneous operation alongside the extensive form, no such assurance can be had
because an affective logic can realize any possible value for the equilibrium price.
It would appear that by admitting the possibility of a deviation of the assets market
price from its equilibrium price, EMH acknowledges the presence of the surplus that
arises in the disjunction between the two forms of time and so acknowledges the
inverse necessity of ontological market failure. But at the same time, by invoking
arbitrage, EMH attempts to systematically negate this failure. It does so by positing a
general principle of opportune, or kairotic, timing that presents an incentive for
traders-as-arbitrageurs to respond to disequilibrium pricing through their decisions
to buy, sell and short, which in turn is thought to move the market back toward
equilibrium. Arbitrage is thus the rhetorical placeholder that allows the entire
system of neo-classical thought to cohere in equilibrium form by theoretically
positing that market disequilibrium will be neutralized in praxis.64
In this way, arbitrage functions rhetorically by providing the conditions of (im)
possibility for suturing a particular economic relationship between past, present, and
future.65 We use Nathan Stormers recent theory of mnesis as a way of understanding
this premise. Stormer argues in his essay Recursivity: A Working Paper on Rhetoric
and Mnesis that an extensive conception of past, present, and future is impossible
because all understandings of temporality work in and through a recursive structure
of memory. As Stormer explains:
[A] lesson to be drawn is that discursivity is contingent on recursivity, or the
tireless circulation between past and present. The importance of recursivity was
recognized long ago in the canonical art of memory. Implicitly, the art was not for
building levies against the rising tide of forgetfulness but to direct endeavor and
thought by orienting the rhetor and audience within a shifting present.66

The contingent relation between discursivity and recursivity is captured in the

activities of remembering and forgetting which are always interdependent on one
another in the construction of discourse. The interdependency arises because the
dilemma of discourse is to have some place to start from, or a now in relation to a
present that is receding into the past, and also some place at which to end up, toward
which discourse is oriented, or a later in relation to a future that is emerging from
and renewing the present. Mnesis is Stormers name for this endless flow of
recursivity in and through discursivity.
For Stormer, the recursivity of memory is not instrumental but is instead an
underlying rhetorical condition of ontology. To be a speaking subject is to reside in
a virtual field of potentiality predicated on a retroactively imposed temporal
construction of the present. By this logic, ontology is itself contingent upon an
always shifting conception of past, present, and future, whose sequential movement
through time is a product of the rhetorical processes of remembering and forgetting.

152 J. S. Hanan et al.

Stormer returns to Augustines analysis of time to concretize his depiction of these

processes. He writes, The movement is circulatory but the metaphoric structure
matches an unfolding with an exfoliation. Augustine describes memory as a vast
sinus, sinus being Latin for curve, fold, bend, pocket, bay, and the like.67 The
metaphor of a fold is a particularly fruitful way to describe mnestic processes. If we
imagine time as a plane that is bent over itself, a fold produces a horizon of secrecy,
obscuring portions of the plane within others.68 In this way, there is always an excess;
the experience of time in the present is always mnestically represented as a failed
totality, obscured by a multiplicity of secret creases that nevertheless give rise to the
fantasy of a linear narrative between past, present, and future.69 Stormer concludes:
Mnesis as folding sees remembering and forgetting not as copying, but as bending
one time and place into another virtually.70
By rendering mnesis intelligible as a logic of folding rather than copying, Stormers
theory highlights the difference between mnesis and mimesis. Whereas Goodnight
and Greens theory of mimesis defines economic rhetoric in terms of its deviation
from a pre-constituted structure of temporal equilibrium, Stormers theory of mnesis
shows how the very move to create an origin or place of beginning in economic
reasoning requires the smoothing over of numerous striations that cannot but
internally contradict the predictive success of its modeling. Copying presupposes a
temporality that is extensive and ergodic, and therefore an enclosure in which one
can move back and forth between the past and the present, if only in memory, and
always encounter the same events in the same sequence each time. This reversibility
of time enables the conception of a stable equilibrium from which deviations may be
experienced as rhetorical movements in the form of mimetic spirals. Folding does not
admit the reversibility of time because the bending of one time and place into another
inevitably obscures the perfect reconstruction of events in terms of content as well as
sequencing. Each fold is a new ontological moment.
We argue that arbitrage can be understood as the attempt by neo-classical theory
to transcend the mnestic folding of time by positing a kairotic temporal scheme
which, consistent with John Poulakos use of the concept, seeks to capture in
opportune moments that which is appropriate and attempts to suggest that which is
possible.71 To understand this homology, we must further attend to the rhetorical
processes by which discourse calls a particular folding into being. Stormer depicts this
process as implicating three distinct tasks: inflecting, positioning, and including.
He writes:
A practice creates an inflection when it modulates between then and now,
creating points at which the present can vary its course by virtue of re-crossing the
past just here or just there. Inflections become positions when forms of modulation
become recurrent, performative sites of the present, from which the past can
reliably be viewed as such. These become points of inclusion when, once the present
has an established position relative to the past, the past is enveloped by the present,
creating a sense of closure such that the past seems fully retrievable through this
inflection, from this position.72

Banking on the Present 153

In practice, arbitrage attempts to construct a mnestic present by undertaking all of the

three above-mentioned tasks. When arbitrageurs form expectations about the future,
they inflect between the past and the present in search of an information set that will
rationalize the past performance of the asset that they are looking to price. Different
information sets will yield different values of the equilibrium price in the present, and
each such equilibrium price will yield a prospective position for the arbitrageur
wherein she can buy, sell, short, or otherwise profit from any deviation between the
equilibrium price of the asset and its market price. Inclusion requires that the
arbitrageur decide on a particular information set as the objectively accurate (or
truthful) one, whereby the arbitrageurs position in the present gets fixed in relation
to a particular past out of which it derives and a particular future into which it leads.
In theory, however, arbitrageurs construct a kairotic rather than a mnestic present.
This is because, under the EMHs image of inclusion, the present moment that the
arbitrageur fixes stands in the flow of extensive, ergodic time. Thus, there is no
disagreement between arbitrageurs as to what the objectively, accurate (or truthful)
information set is, and in theory it takes only one arbitrageur to realize the profits to
be had from such discovery for the market price to instantaneously coincide with the
equilibrium price. The crucial theoretical move is the presumed nature of times flow
because it ensures that the arbitrageur always positions herself in relation to a stable
past and future wherein her market interventions always occur at the opportune
moment of disequilibrium and yield market-correcting profits. In this sense, arbitrage
is a kairotic act.
The disjunction between the theory of arbitrage (as explicated in neo-classical
economics) and the practice of arbitrage arises precisely because the theory does not
adequately account for the intensive form of time. In practice, because intensive time
admits an affective logic, there can be no objectively accurate information set.
Arbitrage is, therefore, always risky and profits are not assured.73 The foreclosed
surplus that secretly separates the discursive present from the now, and that renders
recursivity immanent to the materiality of discourses,74 is not only uncaptured by
arbitrage but also liable to become amplified over time. The failure of each successive
cycle or loop of arbitrage is carried over to the next. The mimetic spiral between
the model and the world it addresses compounds the surplus, fueling the formation
and maintenance of speculative bubbles.
Whereas Stormers mnesis points to a rhetorical ontology that can never fully
express the virtual present that it discursively purports to actualize, the kairotic
function of arbitrage is believed to flatten out all such virtual folds so that
temporality can be seamlessly rendered extensive and ergodic. This smooth,
creaseless temporal horizon in turn renders the future of market performance
rationally predictable. The problem is that such an image of inclusion is always
illusory because it imagines a totalizing gaze of immanent positionality which sutures
the past to the present moment. Such a positionality offers a particular anticipation of
the future under the ideal of objective valuations, but like any mnestic process this
discursive act of suturing cannot be perfect. Remembering and anticipating are

154 J. S. Hanan et al.

inescapably selective processes. There is always a surplus between extensive time and
intensive time that escapes representation within the model.
For Stormer, discourse is always in the middle of itself and working toward
particular ends. There is no pre-discursive space in which the present contracts a past
before giving itself over to discourse.75 Thus, emergent reasoning is a characteristic
feature of Stormers mnesis.76 But there is no room in neo-classical articulations of
arbitrage for this kind of reasoning. Put differently, arbitrage is the difference
engine that fuels the broader rhetorical apparatus of neo-classicism, making possible
a certain imaginary diagram of equilibrium that makes the future predictable and
governable.77 In the absence of this difference engine, the theory would run up
against a deep rhetorical paradox arising from the notion of an equilibrium price that
is simultaneously preexistent in the minds of would-be arbitrageurs and only
ontologically secured through the act of arbitrage.
Here, then, is where we locate the rhetoric of neo-classical economic theory as a
necessary component of the 2008 financial crisis. The rhetorical apparatus of neoclassical economics in general and the kairotic rhetoric of arbitrage in particular,
blinded the subject to the surplus uncaptured within its models until it grew into an
inconceivable contradiction. The idea that a bubble-type incongruency between
the prices and the objective values of Mortgage-Backed Securities could grow to the
extent that it did without being consumed by arbitrage at every turn was
inconceivable from the position of EMH adherents and, unfortunately, continues
into the present. In 2007, with the national meltdown in housing clearly underway,
Eugene Fama, the original EMH advocate, said, The word bubble drives me nuts
people are very careful when they buy houses. Its typically the biggest investment
theyre going to make, so they look around very carefully and they compare prices.
The bidding process is very detailed.78 On the high level of unemployment currently
afflicting the U.S. labor market, John Cochrane, another University of Chicago
economist, offered, We should have a recession. People who spend their lives
pounding nails in Nevada need something else to do.79 Cochrane is suggesting, in
other words, that the recession is merely a kind of market adjustment or rebalancing
and therefore consistent with the corrective function of arbitrage. In the same vein,
Casey Mulligan, another University of Chicago economist, went so far as to theorize
that the recent rise in unemployment reflected a voluntary choice taken by members
of the labor pool:
Employees face financial incentives that encourage them not to work decreased
labor is explained more by reductions in the supply of labor (the willingness of
people to work) and less by the demand for labor (the number of workers that
employers need to hire). 80

Only Greenspan seemed chastened. In a testimony to Congress, he admitted that he

had put too much faith in the self-correcting power of free markets and had failed to
anticipate the disastrous results of under-regulated mortgage lending: Those of us
who have looked to the self-interest of lending institutions to protect shareholders
equity, myself included, are in a state of shocked disbelief, he told the House

Banking on the Present 155

Committee on Oversight and Government Reform. This modern risk-management

paradigm held sway for decades, he said. The whole intellectual edifice, however,
collapsed . . .81
Section 4: ConclusionA Rhetoric of Economics as Emergent Kairos
Our rhetorical criticism of neo-classical economics has pointed to a number of
conceptual flaws in this ostensibly rational and positivistic discourse formation. By
illustrating how neo-classical economics is an apparatus that attempts to capture
emergent market complexity through a variety of mathematical models (such as REH,
EMH, and DSGE), we have shown how it fails to adequately account for the
irreducible rhetoricity of its methodological undertaking. For us, this problematic is
best understood, temporally, in terms of Stormers conception of mnesis and the
ontological gap it establishes between what we have called extensive time and
intensive time. If mnesis can be conceptualized as a recursive logic of folding that
always already calls into question the linear relationship between past, present, and
future, then no mimetic conception of economic modeling can capture the elided
surplus hidden in the innumerable creases of historical becoming.
Hence, rather than perpetuate the failures of neo-classicism by continuing to ask
how the rhetorical surplus might be mathematically captured, we suggest beginning
with a radically different question. If our essay has shown that any attempt to bank
on the present is likely to produce a mimetic specter of crisis whose visage may be
glimpsed in myriad manifestations but never adequately measured in the form of
economic equilibrium, then we ask, what might the practice of economics look like if
it began with ontological failure as an epistemic precondition for market positivity?
To answer this question, we believe it is not necessary to turn away from the
insights of neo-classical economics, and instead emphasize the paradoxical positionality of arbitrage that makes its entire system of thought possible. If neo-classical
economics can only assume market equilibrium by positing that arbitrage will act
retroactively as a particular kairotic response to market disequilibrium, then its
internal organizational logic points to a rhetorical contradiction between theory and
praxis that can never be adequately transcended. Arbitrage cannot exist in any
objective sense of the term unless it generically abstracts itself from the very
conditions of praxis within which it proposes to operate. Put differently, it is only by
first subtracting itself from intensive time and then repositioning itself as a secondary
response in extensive time that arbitrage can be understood as timely or untimely.
Hence, if arbitrage is indeed a kairotic act at all, this practice must be located beyond
extensive time and in the indeterminable relational space between extensive time and
intensive time.
In his book, The Future of Invention, John Mucklebauer offers a way of imagining
what this practice of kairos might look like in a way that is consistent with our
rhetorical criticism of neo-classical economics. He writes:
When attempting to render the responsive character of kairos, contemporary
scholars frequently have recourse to the metaphorics of harmony and rhythm.

156 J. S. Hanan et al.

Singular and situated responsiveness is best thought as a kind of ontological

attunement or rhythmicity, a being in synch from which more recognizable
difference emerges.82

This sort of ontological attunement is precisely how neo-classical economics

understands its kairotic relationship to arbitrage. As the means through which the
complexity and disharmony of various contradictory information sets are competitively put to the test and ranked against one another in a hierarchy of proximity to an
objective ideal, arbitrage provides a kairotic rhythm that allows neo-classical
economists to describe the present market as under- or over-valued by a measurable
margin.
Against this unifying account of kairos, which we have shown to be always already
prone to failure in the context of arbitrage, Muckelbauer suggests an indeterminate
account of kairos capable of grappling with an ontological condition of absolute
discord. He continues:
The resonance evoked through a kairotic connection is not the completion of some
abstract and natural wholeness, but the very distribution of difference itself, the
actualization of a nonindivdiual response through individuation. In other words,
far from causing unity, kairos effects a dissolution through the connection of
singular (non-individual) rhythms.83

Such a conceptualization of kairos does not rely upon increasing proximity to an

objective representation. Instead, it posits resonance as a product of a rising discord
between economic actors. In such a conception, arbitrage need not be understood
within the context of an increasingly complete information set that prompts arbitrageurs
to correct the arrhythmias of a present disequilibrium and reinstate harmonic order.
Rather, multiple arbitrageurs signal an ontological condition of disequilibrium, each one
acting upon a partial, often mutually contradictory, information set.
Through Mucklebauers description of kairos as a logic of irreducible discord, an
image of arbitrage emerges wherein the circular law of economy is always already in
crisis and, more importantly, prone to creative displacement. Put differently, if at the
center of arbitrage is not the mimetic possibility of neo-classical equilibrium, but the
mnestic impossibility of economy itself, then arbitrage, as a kairotic act, points to an
immanent space of rhetorical invention where something new and novel might
surface. Such an orientation suggests an understanding of rhetorics materiality
capable of moving beyond the timely and untimely in neo-classical economics and
toward a horizon of action attuned to the relational ebbs and flows of both intensive
and extensive time. Seen from this vantage point, crisis is not an opportune
moment to be overcome or transcended but, instead, the very rhetorical condition
of kairotic movement through which the forces of assessment and calculability that
constitute the heart of economic matter become possible. Indeed, only with a deep
appreciation of the emergent nature of kairos will the rhetoric of economics project
deliver a thoroughgoing understanding of how the materiality of rhetoric arises as a
force of social and political production in the face of radical contingency, thereby
realizing its trans-disciplinary potential.84

Banking on the Present 157

Notes
[1] The Great Recession has become a popular synonym for the financial crisis of 2008.
Economists point to December 2007 as the start of the Great Recession. See Chris Isadore,
Its Official: Recession since Dec 07, CNNMoney.com, December 1, 2008, http://money.
cnn.com/2008/12/01/news/economy/recession/index.htm.
[2] Evelyn Rusli, Bernanke Believes Housing Mess Contained, Forbes.com, May 2, 2007, http://
www.forbes.com/2007/05/17/bernanke-subprime-speech-markets-equity-cx_er_0516
markets02.html; Trouble at HSBC Stemmed from Household Purchase, The New
York Times Dealbook, February 23, 2007, http://dealbook.nytimes.com/2007/02/23/trouble-at-hsbc-stemmed-from-household-purchase/?scp=2&sq=hsbc&st=nyt; Rhys
Blakely and Tom Bawden, Bernanke says sub-prime crisis cost could be $100bn,
The Sunday Times, July 19, 2007, http://business.timesonline.co.uk/tol/business/
economics/article2105558.ece.
[3] Dissecting The Bear Stearns Hedge Fund Collapse, Investopedia.com, last modified 2009,
accessed December 18, 2013, http://www.investopedia.com/articles/07/bear-stearns-coll
apse.asp.
[4] Adam Shell, JPMorgan increases Bear Stearns bid to $10 a share, USA Today, March 29,
2008, http://abcnews.go.com/Business/story?id=4516500.
[5] Lehman Brothers Files For Bankruptcy, Scrambles to Sell Key Business, CNBC.com,
September 15, 2008, Bankruptcy_Scrambles_to_Sell_Key_Business; Ronald Orol, Geithner,
Paulson defend $182 billion AIG bailout Marketwatch.com, January 27, 2010, geithnerpaulson-defend-182-bln-aig-bailout-2010-01-27
[6] Megan Barnett, Start Bailing, Upstart Business Journal, October 3, 2008, http://upstart.
bizjournals.com/news-markets/top-5/2008/10/03/House-Passes-Bailout-Bill.html.
[7] Edmund Andrews, Fed Loosens Standards on Emergency Loans, The New York Times,
September 15, 2008, http://www.nytimes.com/2008/09/15/business/15fed.html?ref=business.
[8] Obama Signs Bill Overhauling Financial Rules. The New York Times Dealbook, July 21,
2010, 202010&st=cse
[9] See Nouriel Roubini and Stephen Mihml, Crisis Economics: A Crash Course in the Future of
Finance (New York, NY: Penguin, 2010).
[10] For an excellent review of this literature see Philip Mirowski, Never Let a Serious Crisis Go to
Waste: How Neoliberalism Survived the Financial Meltdown (New York, NY: Verso, 2013).
[11] John Bentley, McCain: Greed of Wall Street To Blame for Economic Meltdown, CBSNews.
com, September 16, 2008, http://www.cbsnews.com/news/mccain-greed-of-wall-street-toblame-for-economic-meltdown/.
[12] David Jackson, Obama: Fat-cat Bankers Owe Help to US Taxpayers, USA Today,
December 18, 2009, industries/banking/2009-12-13-obama-bankers-small-business_N.htm.
[13] Sarah van Gelder, ed., This Changes Everything: Occupy Wall Street and the 99% Movement
(San Francisco, CA: Berrett-Koehler, 2011).
[14] Our understanding of economic performativity is not novel and is a relatively established
orthodoxy in the fields of anthropology and sociology. Our aim is to specify the rhetorical
dimensions of economic performativity, which, in this essay, we locate primarily at the
theoretical and methodological levels of neo-classical discourse. For an outstanding overview
of economic performativity see Donald A. MacKenzie, Fabian Muniesa, and Lucia Siu, eds.,
Do Economists Make Markets?: On the Performativity of Economics (Princeton, NJ: Princeton
University Press, 2007).
[15] Deirdre N. McCloskey, The Rhetoric of Economics (Madison, WI: University of Wisconsin
Press, 1998). It is worth noting that McCloskeys project is situated in a larger movement
within rhetoric known as the Project on the Rhetoric of Inquiry (POROI). For a definitive
essay on POROI, see John Lyne, The Rhetoric of Inquiry, Quarterly Journal of Speech 71,
no. 1 (1985): 6573.

158 J. S. Hanan et al.

[16] G. Thomas Goodnight and Sandy Green, Rhetoric, Risk and Markets: The Dot-Com
Bubble, Quarterly Journal of Speech 96, no. 1 (2010): 11540.
[17] In this respect, our project is consistent with the thesis put forward by John Bender and
David E. Wellbery, who argue for an ontological conception of rhetoric, or generalized
rhetoric that penetrates to the deepest levels of human experience. Our aim is to situate this
generalized rhetoric, or what they call rhetoricality, in the material conditions of economic
theory and practice. See John Bender and David E. Wellbery, Rhetoricality: On the
Modernist Return of Rhetoric, in The Ends of Rhetoric: History, Theory, Practice, eds. John
Bender and David E. Wellberry (Stanford, CA: Stanford University Press, 1990), 25. Our
premise regarding the ontological rhetoricity of economic marketplaces in also touched on
briefly in Christian Lundbergs discussion of Milton Friedman. See Christian Lundberg,
Lacan in Public: Psychoanalysis and the Science of Rhetoric (Tuscaloosa, AL: University of
Alabama Press, 2012), 9193.
[18] The distinction between extensive and intensive time is introduced in Indradeep Ghosh, The
Form of Time, the Logic of Affect, and a Frame of Subjectivity, Journal of Contemporary
Thought 37 (Summer 2013): 3550.
[19] We understand rhetorical surplus as an affective remainder, or irreducible excess, that goes
beyond any system of representation, or totality, that would desire to contain and capture its
meaning. For a detailed exposition of this conception of surplus see Kiarina A. Kordela,
Surplus: Spinoza, Lacan (New York, NY: SUNY Press, 2008).
[20] Goodnight and Green, Rhetoric, Risk and Markets, 117.
[21] Goodnight and Green, Rhetoric, Risk and Markets, 117.
[22] Goodnight and Green, Rhetoric, Risk and Markets, 118.
[23] Goodnight and Green, Rhetoric, Risk and Markets, 118.
[24] Goodnight and Green, Rhetoric, Risk and Markets, 119.
[25] Goodnight and Green, Rhetoric, Risk and Markets, 119.
[26] Goodnight and Green, Rhetoric, Risk and Markets, 119, italics in original.
[27] Goodnight and Green, Rhetoric, Risk and Markets, 119.
[28] Goodnight and Green, Rhetoric, Risk and Markets, 122.
[29] Goodnight and Green, Rhetoric, Risk and Markets, 119.
[30] Goodnight and Green, Rhetoric, Risk and Markets, 119.
[31] Goodnight and Green, Rhetoric, Risk and Markets, 122.
[32] On the material relationship between marking, temporality, and economics see Jacques
Derrida, Given time: I. Counterfeit money, vol. 1 (Chicago, IL: University of Chicago
Press, 1992).
[33] Barbara A. Biesecker. Rethinking the Rhetorical Situation from within the Thematic of
Diffrance, Philosophy & Rhetoric 22, no. 2 (1989): 11030.
[34] Ronald Walter Greene, Another Materialist Rhetoric, Critical Studies in Mass Communication 15, no. 1 (1998): 23.
[35] Nathan Stormer, Recursivity: A Working Paper on Rhetoric and Mnesis, Quarterly Journal
of Speech 99, no. 1 (2013): 30.
[36] On the relationship between the apparatus of capture and abstract machine see Gilles
Deleuze, and Felix Guattari. A Thousand Plateaus: Capitalism and Schizophrenia, trans. Brian
Massumi (Minneapolis, MN: University of Minnesota Press, 1987). On the attempt of neoclassical economics to reflect the ordering principles of the natural sciences see Philip
Mirowski, More Heat than Light: Economics as Social Physics, Physics as Natures Economics
(Cambridge, MA: Cambridge University Press, 1991).
[37] We understand suturing as an act of articulation that produces a provisional sense of unity,
identity, and coherence out of ontological difference. On the concept of the suture in
rhetorical studies see Barbara A. Biesecker, Addressing Postmodernity: Kenneth Burke,
Rhetoric, and a Theory of Social Change (Tuscaloosa, AL: University of Alabama Press, 2000).

Banking on the Present 159

[38] On the concept of the virtual and its relation to the actual see Gilles Deleuze, Bergsonism,
trans. Hugh Tomlinson and Barbara Habberjam (New York, NY: Zone, 1988).
[39] For an exemplary discussion of such assumptions see Talcott Parsons, The Structure of Social
Action (New York, NY: The Free Press, 1967).
[40] See Mirowski, More Heat than Light.
[41] Adam Smith, The Theory of Moral Sentiments (London, UK: A. Millar, 1790); Adam Smith,
The Wealth of Nations (London, UK: W. Strahan and T. Cadell, 1776). See also: Paul Turpin,
The Moral Rhetoric of Political Economy: Justice and Modern Economic Thought (New York,
NY: Routledge Frontiers Political Economy, 2011).
[42] On the relationship between Smiths invisible hand and providence see Giorgio Agamben,
The Kingdom and the Glory: For a Theological Genealogy of Economy and Government
(Stanford, CA: Stanford University Press, 2011).
[43] See Alfred Marshall, Principles of Economics (London, UK: Macmillan & Co., 1890).
[44] One example of the new approaches made possible by these developments in mathematics is
Dynamic Programming, see Nancy Stokey, Robert E. Lucas, and Edward C. Prescott,
Recursive Methods in Economic Dynamics (Cambridge, MA: Harvard University Press, 1989).
[45] John F. Muth, Rational Expectations and the Theory of Price Movements, Econometrica 29,
no. 3 (1961): 31535.
[46] For a discussion of ergodicity, see Paul Davidson, Rational Expectations: A Fallacious
Foundation for Studying Crucial Decision-Making Processes, Journal of Post Keynesian
Economics 5, no. 2 (198283): 18298.
[47] Eugene F. Fama, Random Walks in Stock Market Prices, Financial Analysts Journal,
September/October (1965), reprinted January/February (1995): 7580.
[48] Fama, Random Walks, 76.
[49] In his General Theory of Employment, Interest and Money, Keynes likened professional
investment to those newspaper competitions in which the competitors have to pick out the
six prettiest faces from a hundred photographs, the prize being awarded to the competitor
whose choice most nearly corresponds to the average preferences of the competitors as a
whole; so that each competitor has to pick, not those faces which he himself finds prettiest,
but those which he thinks likeliest to catch the fancy of the other competitors, all of whom
are looking at the problem from the same point of view. See John Maynard Keynes, General
Theory of Employment, Interest and Money (New York: Harcourt, 1936/1965), 156. On the
relationship between Keynes and economic rhetoric see Davis W. Houck, Rhetoric as
Currency: Hoover, Roosevelt and the Great Depression, vol. 4 (College Station, TX: Texas
A&M University Press, 2001).
[50] For a discussion of arbitrage see Donald Mackenzie, Long-Term Capital Management and
the Sociology of Arbitrage, Economy and Society 32, no. 3 (2003): 34980 and Hirokazu
Miyazaki, Arbitraging Japan: Dreams of Capitalism at the End of Finance (Berkley, CA:
University of California Press, 2013).
[51] Robert E. Lucas, Expectations and the Neutrality of Money, Journal of Economic Theory 4,
no. 2 (1972): 10324; and Finn E. Kydland and Edward C. Prescott, Time to Build and
Aggregate Fluctuations, Econometrica 50, no. 6 (1982): 134571.
[52] David Harvey, A Brief History of Neoliberalism (New York, NY: Oxford University
Press, 2005).
[53] For a general discussion of these trends and policies see Mirowski, Never Let a Serious Crisis
Go to Waste. On the concept of the Washington Consensus, understood as a bipartisan
orientation toward neoliberal economic reform, see M. Lane Bruner, Democracys Debt: The
Historical Tensions between Economic and Political Liberty (Amherst, MA: Prometheus
Books, 2009).
[54] For a more detailed genealogy of these policies and practices from a communication
perspective see Joshua S. Hanan, Home is Where the Capital Is: The Culture of Real Estate

160 J. S. Hanan et al.

[55]
[56]

[57]
[58]

[59]

[60]

[61]

[62]
[63]

in an Era of Control Societies, Communication and Critical/Cultural Studies 7, no. 2 (2010):

176201 and Megan Foley, From Infantile Citizens to Infantile Institutions: The Metaphoric
Transformation of Political Economy in the 2008 Housing Market Crisis, Quarterly Journal
of Speech 98, no. 4 (2012): 386410.
Stormer, Recursivity.
On the concept of the placeholder see Annelise Riles, Collateral Knowledge: Legal
Reasoning in the Global Financial Markets (Chicago, IL: University of Chicago Press,
2011). Jacques Derridas metaphor of the supplement is also a useful way to think about the
paradoxical positioning of arbitrage as both inside and outside extensive time. See Jacques
Derrida, Of Grammatology (Baltimore, MD: Johns Hopkins University Press, 1998).
Derrida, Given Time.
See Giorgio Agamben, What Is an Apparatus? and Other Essays, trans. David Kishik and
Stefan Pedatella (Palo Alto, CA: Stanford University Press, 2009). In Kingdom and the Glory,
Agamben develops his notion of the apparatus in significantly more detail by tracing its
etymology origins in the Greek phrase oikonomia and its translation through the latin/
Ciceronian phrase dispositif. For a more extended discussion of Agambens treatment of
apparatus and dispositif, in the context of economic rhetoric, see Catherine Chaput and
Joshua S. Hanan, Economic Rhetoric as Taxis: Neoliberal Governmentality and the
Dispositif of Freakonomics, Journal of Cultural Economy (2014, doi: 10.1080/17530350.
2014.942349)
There are many articulations of rhetoric today that attempt to problematize this prerepresentational space of temporality that we are referring to as intensive time. These range
from the rhetorical uptake of Lacans Real and Symbolic, to Deleuzes virtuality, to Platos
chora (read largely through Kristeva and Derrida). While this essay lacks the space to
unpack the assumptions of these, at times, incommensurable pre-representational paradigms,
the remainder of this essay problematizes intensive time in terms of an affective logic
(see subsequent footnote). For recent books that explore rhetoric from a pre-representational
standpoint see Diane Davis, Inessential Solidarity (Pittsburgh, PA: University of Pittsburgh
Press, 2010); Bradford Vivian, Being Made Strange: Rhetoric beyond Representation (New
York, NY: SUNY Press, 2004); Lundberg, Lacan in Public; John Muckelbauer, The Future of
Invention: Rhetoric, Postmodernism, and the Problem of Change (New York, NY: SUNY
Press, 2009); and Thomas Rickert, Ambient Rhetoric: The Attunement of Rhetorical Being
(Pittsburgh, PA: University of Pittsburgh Press, 2013).
We take our notion of affective logic from Brian Massumis preemptive logic that
operates on an affective register and inhabits a nonlinear time operating recursively between
the present and the future. Brian Massumi, The Future Birth of the Affective Fact: The
Political Ontology of Threat, in The Affect Theory Reader, eds. Melissa Gregg and Gregory J.
Seigworth (Durham, NC: Duke University Press, 2010), 5657.
In this respect our mode of economic criticism must be understood as a deviation from the
rhetoric as epistemic project inaugurated by Robert Scott and taken up in the 1980s with
POROI. Robert L. Scott, On Viewing Rhetoric as Epistemic, Communication Studies 18, no.
1 (1967): 917.
See Agamben, Kingdom and the Glory, 142.
The emergence of novelty may also be understood in terms of path dependence ( la Paul
David), which typically will render extensive time non-ergodic, reconstituting the underlying
stochastic structure of the economy in such a way that historically applicable probabilistic
calculi are no longer valid. Even worse, the underlying stochastic structure may be
reconfigured to such an extent that no analytically tractable probabilistic calculus is able to
truly capture its new complexity. The epistemological insistence, on the part of neo-classical
economic theory, that the underlying stochastic structure of the economy is not only stable
but also essentially Gaussian, or representable by the normal distribution, is then rendered

Banking on the Present 161

[64]
[65]

[66]
[67]
[68]
[69]

[70]
[71]
[72]
[73]

[74]
[75]
[76]

[77]
[78]

[79]
[80]
[81]
[82]
[83]
[84]

doubly suspect, as critics of EMH such as Nicholas Nassem Taleb have frequently pointed
out. See Paul A. David, Clio and the Economics of QWERTY, The American Economic
Review 75, no. 2 (1985): 33237; Nicholas Nassim Taleb, The Black Swan: The Impact of the
Highly Improbable Fragility (New York, NY: Random House, 2010); and Nicholas Nassim
Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
(New York, NY: Random House, 2005).
Riles, Collateral Knowledge.
On the importance of the impossible to rethinking rhetoric in the twenty-first century see
Barbara A. Biesecker, Prospects of Rhetoric for the Twenty-First Century: Speculations on
Evental Rhetoric Ending with a Note on Barack Obama and a Benediction by Jacques Lacan,
Reengaging the Prospects of Rhetoric: Current Conversations and Contemporary Challenges,
ed. Mark J. Porrovecchio (New York, NY: Routledge, 2010): 1636.
Stormer, Recursivity, 28.
Stormer, Recursivity, 41, italics in original.
Stormer, Recursivity, 41.
Our use of failed totality is borrowed from Ernesto Laclau, who defines it as a
tropologically constituted place of an irretrievable fullness. See Ernesto Laclau, On Populist
Reason (New York, NY: Verso, 2005), 70.
Stormer, Recursivity, 42.
John Poulakos, Toward a sophistic definition of rhetoric, Philosophy & Rhetoric 16, no. 1
(1983): 36
Poulakos, Toward, 42.
This is why Hirokazu Miyazaki argues, for example, that the relationship between arbitrage
and speculation is untenable. See Hirokazu Miyazaki, Between Arbitrage and Speculation:
an Economy of Belief and Doubt, Economy and Society 36, no. 3 (2007): 396415.
Stormer, Recursivity, 43.
Stormer, Recursivity, 43.
For a discussion of emergent reasoning in financial markets see Mark C. Taylor, Confidence
Games: Money and Markets in a World without Redemption (Chicago, IL: University of
Chicago Press, 2008). For a more general discussion of emergent reasoning see Diana Coole
and Samantha Frost, The New Materialisms: Ontology, Agency and Politics (Durham, NC:
Duke University Press, 2010).
Deleuze and Guattari, A Thousand Plateaus.
Paul Krugman, Paul, How Did Economists Get It So Wrong? The New York Times
Magazine, September 2, 2009, http://www.nytimes.com/2009/09/06/magazine/06Economic-t.
html?pagewanted=all.
Krugman, How.
Krugman, How.
Edmund Andrews, Greenspan Concedes Error on Regulation. The New York Times,
October 23, 2008, http://www.nytimes.com/2008/10/24/business/economy/24panel.html.
Muckelbauer, The Future, 117.
Muckelbauer, The Future, 117.
A rich conversation over the multi-dimensional importance of kairos for rhetorical theory
has surfaced in recent years. For an important collection of essays providing ancient and
contemporary context for that conversation, see Phillip Sipiora and James S. Baumlins edited
volume Rhetoric and Kairos: Essays in History, Theory, and Praxis (Albany, NY: SUNY Press,
2002). Those essays fall largely into either an accommodation or creation model of kairos
(see Carolyn R. Millers Forward, xixiii). We wish to complicate these models by
emphasizing an emergent, relational, non-rational, and partly improvisational account of
kairos. In addition to Muckelbauers book, a number of other works offer excellent
theoretical treatments of kairos that are, to varying degrees, allied with our own perspective,

162 J. S. Hanan et al.

including Eric Charles Whites Kaironomia: On the Will-to-Invent (Ithaca, NY: Cornell
University Press); Dale Sullivans Kairos and the Rhetoric of Belief, Quarterly Journal of
Speech 78, no. 3 (1992): 31732; John Poulakoss Sophistical Rhetoric in Classical Greece
(Columbia: University of South Carolina Press, 1995); Janet M. Atwills Rhetoric Reclaimed:
Aristotle and the Liberal Arts Tradition (Ithaca, NY: Cornell University Press, 1998); Scott
Consignys Gorgias: Sophist and Artist (Columbia: University of South Carolina Press, 2001);
Debra Hawhees Kairotic Encounters, in Perspectives on Rhetorical Invention, ed. Janet M.
Atwill and Janice M. Lauer (Knoxville: University of Tennessee Press: 1635); and Rickerts
Ambient Rhetoric. For an excellent and concise overview of this conversation and the basic
stakes involved, see Debra Hawhees discussion in Bodily Arts: Rhetoric and Athletics in
Ancient Greece (Austin, TX: University of Texas Press, 2004), 6571.