The article develops political implications of the late Randy Martin’s idea of “derivative sociality” as the real subsumption of human life under the option form. The option form, beginning with the hedge, allows realized surplus value to be preserved (locked in) and eventually accumulated by securing its convertibility back into money—its “liquidity.” The opposite, financial illiquidity is capital disaccumulation in Marx’s sense. It follows that the acceptability of capital accumulation depends on making financial market illiquidity politically unimaginable. This limitation on political imagination can, however, be largely overcome in the spirit of Marx (and Randy Martin) by using the conceptual resources of options theory itself. In options theory, for example, privately produced financial derivatives are priced as though a component of them is synthetic public debt (“risk-free”). But this can be true only because in crisis scenarios the government guarantees to swap its own debt for synthetic equivalents to it at par. However, such guarantees are themselves options that can be priced. That price in 2008, the “liquidity premium,” has been calculated by leading financial economists to be trillions of dollars. This is equivalent to the premium that a justice-seeking democracy could have extracted for wiping out the cumulative effects of capital accumulation, had doing so been understood as a political option that could be rolled over for a price. The goal of this article is to identify financial market liquidity as a political choke point in today’s capitalism so as to focus political attention on reversing the cumulative effect of capital markets in compounding historical injustices.
Market-makers’ supply and pricing of financial market liquidity
