How is it that a company like Carillion, with 43,000 employees, can go bust and vanish overnight? How can a listed company, with millions of audited profit and cash in the bank, like a recent retail bakery, suddenly collapse with a massive overdraft and huge losses? How can a financial system or a market support entities with such complex activities whose existence or otherwise is catastrophically binary?

If engineers erected buildings like financial engineers build companies, skyscrapers would be collapsing in every city, in every country, every year. It’s not just small enterprises that fall to bits but huge companies apparently run by super-smart people being monitored by highly paid private and public sector regulators. Even behemoths like GE, an industrial giant of over a century’s vintage, can show cracks.

It wasn’t long after science discovered quantum theory that philosophy came up with the postmodern concept that nothing can be certain.

Not only can a cat be both dead and alive in science, postmodernism suggests we are all in an impenetrable state of permanent inescapable uncertainty, but sadly there is no collapse of probabilities to help us out.

You might doubt it, but postmodernism owes a debt to quantum physics. Stretched metaphors from science and technology are not uncommon. Our brains were said to function like telephone exchanges when telephone exchanges were the pinnacle of technology. Then they were computers when computers became a thing, and now that we have got our heads around simulation, the universe itself might be a simulation. Clearly our brains are like dark matter, predicted to be critical but hard to locate.

So what has this to do with markets?

Money, markets, companies and economics as a whole carry a huge amount of uncertainty with them and are often like Schrodinger’s cat, both alive and dead at the same time.

You might think this is an unsustainable statement to make, but if for example you take the companies in the FTSE 100 and strip their intangible assets from their books, almost a third of them will not have enough assets to cover their liabilities. Now you might defend the value of intangible assets and from a postmodern perspective that works, but I would say that no one ever bought lunch with intangible assets and that billions of pounds worth of them disappear ever year without leaving a trace. This is why companies like Carillion simply vanish in a puff of smoke. Carillion was a company with £1.6bn of intangible assets but only a margin of £700m between its assets and liabilities. With a deficit of tangible assets of £900m it ended up with not enough to pay its bills.

Accountancy, which has always had a reputation for fantasy, underlines this post-modernity and it really can seem that a packet of money can pass through as both liabilities and assets at the same time. Does money have a wave-particle duality? You could probably make a case for it.

Modern money has no intrinsic value while at the same time it is a store of value.

The way modern money works seems to many impossible in the same way as most people thought the world was obviously and palpably flat and that the sun went around the Earth. In the same vein today, huge numbers of apparently smart people still believe that precious metals can and should be the only money. Many people have not been able to leave the historic beliefs about money behind in the same way as even scientists found it hard to leave their old scientific theories behind as shocking new ones replaced them.

Money has become ‘magic money’, not just in monetary outer reaches like cryptocurrency. Without understanding that ‘magic’, a person’s ability to acquire it is inhibited just as a navigator’s journey is curtailed if they think the Earth is flat.

 As paper money fast heads for extinction, money is just tiny electronic spin states on a whirling hard-disk platter, representing only the tip of a monetary iceberg of ever increasingly abstract monies. Money is fast becoming nothing but an idea and is nearly – and will soon be completely – detached from any physical reality.

Meanwhile, the operation of central banks liquefying and solidifying assets to change their velocities and tweak their variables to influence economic deltas filters down into concrete realities like the ability for people to pay their mortgages, or for companies to hire, retain or fire workers.

This ever-increasing abstraction of money and the piling up of financial instruments into layer upon layer of derivative causality has changed and is changing the economic and political landscape. It might lead to a reality of vast supplies of money or a Star Trek reality of no money at all. Even today with just a credit card in your wallet, you can’t be sure if the money is dead or alive and you won’t know until it’s observed by the ATM. Money might not be quantum but it is certainly post-modern. 

How is it that a company like Carillion, with 43,000 employees, can go bust and vanish overnight? How can a listed company, with millions of audited profit and cash in the bank, like a recent retail bakery, suddenly collapse with a massive overdraft and huge losses? How can a financial system or a market support entities with such complex activities whose existence or otherwise is catastrophically binary?

If engineers erected buildings like financial engineers build companies, skyscrapers would be collapsing in every city, in every country, every year. It’s not just small enterprises that fall to bits but huge companies apparently run by super-smart people being monitored by highly paid private and public sector regulators. Even behemoths like GE, an industrial giant of over a century’s vintage, can show cracks.

It wasn’t long after science discovered quantum theory that philosophy came up with the postmodern concept that nothing can be certain.

Not only can a cat be both dead and alive in science, postmodernism suggests we are all in an impenetrable state of permanent inescapable uncertainty, but sadly there is no collapse of probabilities to help us out.

You might doubt it, but postmodernism owes a debt to quantum physics. Stretched metaphors from science and technology are not uncommon. Our brains were said to function like telephone exchanges when telephone exchanges were the pinnacle of technology. Then they were computers when computers became a thing, and now that we have got our heads around simulation, the universe itself might be a simulation. Clearly our brains are like dark matter, predicted to be critical but hard to locate.

So what has this to do with markets?

Money, markets, companies and economics as a whole carry a huge amount of uncertainty with them and are often like Schrodinger’s cat, both alive and dead at the same time.

You might think this is an unsustainable statement to make, but if for example you take the companies in the FTSE 100 and strip their intangible assets from their books, almost a third of them will not have enough assets to cover their liabilities. Now you might defend the value of intangible assets and from a postmodern perspective that works, but I would say that no one ever bought lunch with intangible assets and that billions of pounds worth of them disappear ever year without leaving a trace. This is why companies like Carillion simply vanish in a puff of smoke. Carillion was a company with £1.6bn of intangible assets but only a margin of £700m between its assets and liabilities. With a deficit of tangible assets of £900m it ended up with not enough to pay its bills.

Accountancy, which has always had a reputation for fantasy, underlines this post-modernity and it really can seem that a packet of money can pass through as both liabilities and assets at the same time. Does money have a wave-particle duality? You could probably make a case for it.

Modern money has no intrinsic value while at the same time it is a store of value.

The way modern money works seems to many impossible in the same way as most people thought the world was obviously and palpably flat and that the sun went around the Earth. In the same vein today, huge numbers of apparently smart people still believe that precious metals can and should be the only money. Many people have not been able to leave the historic beliefs about money behind in the same way as even scientists found it hard to leave their old scientific theories behind as shocking new ones replaced them.

Money has become ‘magic money’, not just in monetary outer reaches like cryptocurrency. Without understanding that ‘magic’, a person’s ability to acquire it is inhibited just as a navigator’s journey is curtailed if they think the Earth is flat.

 As paper money fast heads for extinction, money is just tiny electronic spin states on a whirling hard-disk platter, representing only the tip of a monetary iceberg of ever increasingly abstract monies. Money is fast becoming nothing but an idea and is nearly – and will soon be completely – detached from any physical reality.

Meanwhile, the operation of central banks liquefying and solidifying assets to change their velocities and tweak their variables to influence economic deltas filters down into concrete realities like the ability for people to pay their mortgages, or for companies to hire, retain or fire workers.

This ever-increasing abstraction of money and the piling up of financial instruments into layer upon layer of derivative causality has changed and is changing the economic and political landscape. It might lead to a reality of vast supplies of money or a Star Trek reality of no money at all. Even today with just a credit card in your wallet, you can’t be sure if the money is dead or alive and you won’t know until it’s observed by the ATM. Money might not be quantum but it is certainly post-modern.