The Future of Futures
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The Future of Futures

The Time of Money in Financing and Society

Elena Esposito

This book reconstructs the dynamics of economics, beginning explicitly with the role and the relevance of time: money uses the future in order to generate present wealth. Financial markets sell and buy risk, thereby binding the future. Elena Esposito explains that complex risk management techniques of structured finance produce new and uncontrolled risks because they use a simplified idea of the future, failing to account for how the future reacts to attempts at controlling it. During the recent financial crisis, the future had already been used (through securitizations, derivatives and other tools) to the extent that we had many futures, but no open future available.
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Chapter 5: The Market

Elena Esposito


Although the market is the fundamental concept of the modern economy, it has no actual definition. Theories do not explain what it is, but how it works or, rather, how it should work, based on the dubious idea of a perfect market, where price expresses the balance between supply and demand in the most advantageous conditions for all participants (section 1). A market of this kind, which lends itself to the idea of maximal efficiency, is, curiously, governed by randomness – that is, by absolute unpredictability. If the movements of a market were reasoned, then they would be exploited and the market would no longer be balanced. The best working market, reportedly, cannot be observed by anyone and, in fact, cannot even be rational. Much information circulates in the market, information that can be exploited for profit, and that mainly concerns the expectations and prospects of the operators. These expectations and prospects are in no way in equilibrium. They are also never complete, because they are continually reproduced by market operations (section 2). The more information produced, the more imperfect the market becomes. The market works because its task is not to observe the world or the needs and state of production, but to observe observers, what they see, what they expect, and how they observe each other (section 3). The market works as a mirror, from which operators obtain the information they need in order to develop their strategies. Competition ensues because no one has all the information. Everyone infers...

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