Probability and Contingency



To begin with the obvious: there are many markets, and many kinds of markets. It would be easy to insist as a result that the use of the indefinite article in ‘ the market’ is nothing more than a matter of convenience, and that any attempt to elaborate a theory of the market in the singular is bound to fall into either triviality, overgeneralization, or both. Perhaps.


Option Price Price Model Future State Implied Volatility Strike Price 
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    I note in passing that, for Ayache, Meillassoux’s engagement with this ‘neces sitarian probabilistic argument’ (BSEP 135) constitutes the weakest moment of After Finitude, insofar as it impoverishes the temporal dimension of the analysis. In a passage whose obliquity should not distract from its import (as the discussion of the temporal character of the market and of debt in chapters to come will argue), Ayache writes that ‘Meillassoux’s speculation is relieved from the depth of the past, as well as from its debt […] As to the future of the world as such, my claim is that Meillassoux is relieved from its responsibility too because of his responsibility only towards speculation and of his escape from philosophical credit’ (BSEP 151). The necessity of refounding the project of After Finitude in relation to time is treated in the final chapter below. In a related series of passages (BSEP 155ff), Ayache aligns this weakness in Meillassoux’s argument with an impoverished theory of the event, and argues that, rather than trying to derive the necessity of contingency finally from the impossibility of mathematical totalization (which he cannot achieve in absolute terms, something Meillassoux himself admits [AF 105]), a theory of the event qua form of the future is what is missing, it is ‘his missing derivation’ (BSEP 156). It is also worth pointing out that this line of critical argumentation is grounds for rejecting some of the more ridiculous suggestions about the underlying cause of the credit crisis, such as the claim advanced by the president of the rating agency Standard and Poor’s that losses of the kind experienced in the credit derivatives market are rare but predictable, and would likely take place every 763 years: ‘the implied risk-neutral probability of a catastrophic meltdown scenario is very small with an expected (risk-neutral) waiting time of about 763 years on average.’ (Francis Longstaff and Arvind Rajan, ‘An Empirical Analysis of the Pricing of Collateralized Debt Obligations,’ The Journal of Finance 63:2 [April 2008], 551.)CrossRefGoogle Scholar
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    Ayache also argues, traders themselves have no particular investment in the implicit metaphysics of probability and make use of BSM and the other forms of probabilistic inference in just this direct fashion. He is supported in this view, as it happens, by Nassim Taleb — see Emanuel Derman and Nassim Taleb, ‘The Illusions of Dynamic Replication,’ Quantitative Finance 5:4 (2005), 323–6, esp. 323.CrossRefGoogle Scholar

Copyright information

© Jon Roffe 2015

Authors and Affiliations

  1. 1.University of New South WalesAustralia

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