The cautious merchant and the keen manufacturer were equally unable to resist the speculation. It spread among them like a leprosy. It ruined alike the innocent and the guilty. It periled many a humble home; it agitated many a princely dwelling. Men hastened to be rich and they were ruined. They bought largely; they subscribed eagerly; they forsook their counting-houses or companies; if successful they continued on their course, and if the reverse they too often added to the misery of the homes they had already desolated, by destroying themselves.

—John Francis on the 1846 Railway Mania


The only thing that makes life possible is permanent, intolerable uncertainty: not knowing what comes next.

—Ursula K. Le Guin

Whether in markets or philosophy, speculation tosses the coin of uncertainty in the hope of seeing through a haze-draped future. A mirror (speculum) and a watchtower (specula), it animates a certain vision. From the leaps of scientific revolutions and technological futures to the pursuit of dreams and mystical theologies, speculators have always sought to capture what lies ahead.

At the dawn of finance capitalism, markets vied fervently for control over the power of speculation.

Speculation encompasses a duality at the core of all financial activity. When pushed to its outermost limit, it can unleash formidable destructive forces and lead to the burst of market bubbles, such as seventeenth-century Amsterdam’s notorious tulip craze, the Victorian era’s railway manias, last century’s Great Depression, or the more recent 2008 global financial crisis. During these periods, market “passions” take hold: traders venerate ethereal values with no material referents or links to “fundamentals.” Yet speculation is also the market’s indispensable lubricant. All speculative trades calibrate risks to generate yields and prevent markets from “overheating.” Here’s the definition of “speculation” provided by the Oxford Dictionary of Finance and Banking:

The purchase or sale of something for the sole purpose of making a capital gain. For professional speculators the security, commodity, and foreign exchange markets are natural venues as they cater for speculation as well as investment and trading. Indeed, speculators help to make a viable market and thus smooth out price fluctuations. This is particularly true of commodity futures and option markets.

Speculation’s greatest gift to markets is stability, not crisis: absorbing volatility by “smooth[ing] out price fluctuations” and generating liquidity. For those in the business of trading, speculation means betting on possible future movements of asset prices, but it also involves dealing in risky assets (including derivatives and futures) with the goal of providing insurance against price movements. Speculators, in other words, both “short” and “hedge” uncertainty. Throughout capitalism’s history, defenders and opponents of speculation have foregrounded one function over the other to mark it as a virtue or as a vice.

Iconic anarchist thinker Pierre-Joseph Proudhon, in his 1857 Stock Exchange Speculator’s Manual, famously distinguished between the greedy financiers of the Paris stock market—whom he lamented as “pure, corrupt, and unproductive gamblers”—and what he saw as more productive forms of speculation. When sought for its own sake, speculation is circular, autotelic, and parasitic on the real economy. When put to “productive use,” however, it can also be generative, exciting, and imaginative: a source of the “the genius of discovery . . . that invents, innovates . . . [and] creates something from nothing.”

As markets in the global centers of capitalism sought to expand their insatiable financial activities over the course of the nineteenth century, they vied fervently for control over the power of speculation. Just as Proudhon was writing his Manual, a new kind of speculative market was being established some four thousand miles west of the Paris Bourse. In 1848 the Chicago Board of Trade (CBOT) was founded. In the coming decades, it would become the world’s first organized exchange for futures contracts: standardized agreements to buy or sell an “underlying asset” (predominantly grains such as wheat from the city’s hinterland), at a guaranteed price for delivery at a specified future time. Trading futures ostensibly served the hedging side of speculation’s coin, functioning as insurance against volatility for farmers whose harvest was exposed to radical and incalculable weather uncertainties.

This essay is featured in Speculation.

Speculators stepped in to take on the unwanted risk at a discount (thus performing a social function), while farmers received security and the market remained liquid. Yet no bushels of grain were being moved because of these trades, and actual contracts never exchanged hands in the CBOT. Soon after the launch of the future contract, the circulation of “phantom wheat” in the pit vastly overtook that of the real grain produced in farms; futures traders engaged in “fictitious dealings” that were entirely unmoored from the corporeal economy. Was this kind of speculation ethical? Was it different from ordinary gambling? Advocates of futures contracts and the CBOT’s influential allies believed so. State courts enshrined the legal right of futures traders to short sell for their alleged positive effect on setting off prices in the real economy, and successive governments sanctioned the promise of even the most fictitious of trades “to financially stabilize an inherently unstable capitalism.” Importantly, speculative bets made in the pit were painstakingly distinguished from the wagers placed outside of incorporated commodities, which were systematically slated. In the mushrooming bucket shops (informal establishments open to anyone who wanted to wager small sums on the price movements of stocks in formal exchanges) strewing U.S. cities of the fin de siècle, speculation was becoming a game for the many.

When sought for its own sake, speculation is circular, autotelic, and parasitic on the real economy.

This was the disorganized speculation associated typically with farmers and people of color, with migrant urban workers and women—groups that were not only excluded from the futures markets (even through, for some, these markets defined the prices of their products and hence their livelihoods) but were also derided as morally repugnant. The imagined netherworld of dingy gambling houses served as a convenient scapegoat to the celestial halls of futures trading. By transposing the evils of speculation to outcast lay bettors, the pits’ denizens and their powerful institutional allies buttressed the legitimacy of Homo economicus. They cast it as a noble figure and stood it at the helm of U.S. capitalism.

Yet speculative activities across organized exchanges and informal bucket shops had deeper affinities in the Victorian era. Speculators from all walks of life wielded a vivid imagination to navigate the inherent opacity of staking the future. Flight from reality was not the exclusive purview of irrational and exuberant “crowds.” Professional financiers, too, regularly turned to occult technologies of market prognostication, their speculations meandering through the worlds of magic, superstition, and tarot card reading. Stock markets’ close encounter with astrology is perhaps the most telling of this enmeshment of the rational/scientific and the irrational/spiritual: Wall Street traders lined up to heed the predictions of financial astrologers such as the notorious Evangeline Adams, while mainstream financial technologies were adopting horoscopic methods that sought to map the movements of markets onto those of stars.

In the dawn of finance capitalism’s modern era, speculation created a world that was at once obscure and spectacular, full of stardust and bitter conflicts—a world that was far from insulated from broader social reality. Speculators were a mirror image of society rather than a deviation from it, reflecting its drive to lay wagers on the unknown in the face of radical uncertainty.

This world is one we can still recognize as ours. Following a period of unbridled financialization during the later part of the twentieth century (heralded by the momentous repeal of the Glass-Steagall legislation allowing commercial banks to act as financial traders), contemporary economies and societies are once again steeped in the whirlpool of speculation. In today’s turbocharged financial markets, speculation is even more opaque because of the highly complex technologies on which it relies: machine learning, algorithmically powered, superfast trading systems whose inner workings are often indiscernible even to traders themselves. High-frequency automated trading takes place in virtual pits, with data scientists and coders quietly monitoring a ceaseless search for patterns through stacks of data, including predictive analysis of social media content that informs trading decisions (not all that different from the practices of yesteryear’s financial astrologists).

On the most obscure end of these markets, speculators submerge themselves in “dark pools,” which are exclusive forums for block trading securities that evade transparency requirements of formal exchanges, where dealings appear even more detached from reality. The complexity of this kind of trading means that it is often impossible to tell whether a product like the derivative will be used to hedge an uncertain event or derive profit from it. At the same time, speculative wagers are now placed not merely on the uncertainty of the future, but also on the volatility of uncertainty itself. At Chicago’s CBOE, a spinoff of the CBOT and the largest modern options exchange in the United States, volatility has its own index commonly called the VIX or “fear index”—a measure of expected price swings in the S&P options market. CBOE’s virtual pit even trades volatility as an “asset class” with its own “index futures.”

The denizens of these new temples of finance continue to fire up the public imagination. On first blush, we may intuitively recall the greedy yet charming hedge funders—immortalized by Leonardo DiCaprio’s gregarious performance as Jordan Belfort in the 2013 film The Wolf of Wall Street—as the exemplary speculators of our time. But on closer inspection, a new and more tragic figure is emerging to usurp the suave megatrader of financialized capitalism from its throne. The modern-day speculator resembles Dr. Alexander Hoffmann, the tragic high-tech Frankenstein protagonist of Robert Harris’s 2011 bestseller The Fear Index: a tormented physicist-cum-financier confronted with VIXAL-4, an omniscient AI algorithm with the power to predict fear—including Dr Hoffmann’s own fear of losing himself entirely in a battle with the mercurial forces of finance. The novel was adapted to a TV series with actor Josh Hartnett rummaging the streets of Geneva injured, haunted, limping, and sweating while searching for clues to his own past and future, plunged into a nightmare reality where it is impossible to distinguish fact from fiction.

Yet beyond this dreamlike world of hyper-technologized finance, contemporary markets’ thirst for volatility is reminiscent of our own immersion in the gamified reality of financialized digital media, where speculation breaks out of the organized digital pits to become a mass spectacle. With retail trading of highly volatile assets exploding in the post-2008 crisis era, meme stocks and crypto trading platforms, decentralized finance (“defi”) and decentralized applications (“dApps”) provide the online bucket shops for our time’s virtual punters. Mass “shorting” events such as the GameStop saga—a grassroots short squeeze on the price of the iconic video game retailer organized via social media and making headlines in January 2021—betray a world where volatility is treated as an opportunity in society writ large, with ordinary people sowing (rather than averting) uncertainty to reap profit. Following a long trail of speculators for whom the worlds of wizardry and reason were never too far apart, today’s short-sellers care little about untangling reality and fiction in their “augmented” everyday lives, from the Metaverse and Web 3.0 to the in-game trading of nonfungible tokens. They are drawn to strange narratives, increasingly untethered from material reality and woven into the mainstream. Perhaps most alarmingly, the confusion sown by this radical fragmentation of everyday experiences promotes right-wing conspiracy fantasies and regressive movements such as QAnon, which are moving rapidly from the fringes of political discourse to center stage.

Speculation is not just a tool of finance: it can be a weapon mobilized against it.

Under such conditions speculation once again emerges as an apt and imaginative response to the chaotic volatility wrought by financialized life—importantly, as a collective rather than merely individual act. The kind of speculation involved in these gamified worlds evokes a yearning for community and imagined connectivity, a joint “hedging” of uncertainty. Wagers across the economy and politics—from “crypto bros” coordinating their short sells around meme stocks to profit from destabilized prices to voters in Middle England sowing Brexit chaos in the hope of disrupting the liberal-technocratic status quo—are oriented toward new solidarities and often confusing political alliances. Such speculations place demands on the future in ways that encompass (rather than redress) doubt, ambivalence, and cynicism.

Speculation is a definitive feature of contemporary life across the spheres of economy and politics. Since the early stages of nineteenth-century financialized capitalism, it has often been understood as a phantasmatic or parasitic logic driving the financial markets’ rapacious pursuits. But under the increasingly uncontrollable uncertainty of our financialized world, speculation also becomes a more productive mechanism to imagine community and collective coping with disorienting volatility. Speculation, in this sense, is not merely a symptom (as mainstream critiques in both economic and political theory often suggest) but a structure, something more foundational and generative. Therefore, it may also contain valuable answers to the financialization of modern life: if the only certainty about our future is its inherent indeterminacy, another future will always be possible, and fighting for it will never be futile. But how do economies and societies take up this challenge?

This proposition has implications for how we might rethink the political use of speculation. Speculation can be a weapon mobilized not only against (neo)liberal democracy (for example, in the case of nativist conspiracists and right-wing populists), but against finance itself: as an instrument for orienting a radical collective imagination toward more inclusive myths and future narratives that help those in the margins of capitalist society resist the logic of capital. As such, speculation should also be understood as a field of action that may enable movements to challenge the paradigm from which they emerge, by encouraging us to figuring out who we are and who we can be in the face of radical uncertainty. How can we envision resistance in the sense of genuinely alternative life patterns, capable of defeating the oppressive forces of finance capitalism? What are forms of struggle and subjectivity that exceed the set menus of political choices offered by neoliberal risk management? How can the communities formed under the fog enveloping homo speculans nurture such alternatives? And, finally, how can the necessity of imagining the future without access to adequate resources become an instrument for overturning the conditions producing financialization in the first place?

We may call these types of radical and progressive speculation “counter-speculation”: collective political action to pursue solidarity amid uncertainty. Today we find the traces of counter-speculation when groups that are traditionally subjected to the speculative violence of finance (women, racialized, and queer people) rise to wage their own bets on the future. In doing so, they reimagine that future. As new speculative communities emerge from the allegedly invincible “There Is No Alternative” doctrine, the challenge for progressive movements will be learning to occupy this new uncharted territory of possibility. We can expose the nefarious forces of exclusionary ignorance while finding ways to retain trust in a shared reality. Better yet, we can acknowledge that such a shared reality contains the myths of our own making.

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