Having studied postmodernism in literary theory, I immediately recognized its implications in the financial markets, but since I'm no economist, I haven't been able to say anything more than general postmodern hyperreal theory ala Baudrillard. But, I found a pretty darn awesome paper on hyperreal economics. Deep stuff here, and definitely at an academic level, but very cool stuff. Skip to section 4 after the intro. if you want to get to the hyperreal stuff.
What is sort of exciting for me is that money and finance "signs" seem to operating in the same manner as language in many ways, as being once believed to be signs for actual real things, but eventually words and language become valued in and for themselves only as signs, and become nothing more than deferred meanings in constant tracing (or exchange).
Very very cool stuff. Since the formatting is a bit off, I just copied it all and put it in Word for easier reading.
The Hyperreal Finance<snip>
IV. The Hyperreal Economy
Hyperreality
This would be the successive phases of the image: --it is the reflection of a basic
reality --it masks and perverts a basic reality --it masks the absence of a basic reality
--it bears no relation to any reality whatever: it is its own pure simulacrum. In the
first case, the image is a good appearance--the representation is of the order of
sacrament. In the second, it is an evil appearance--of the order of malefice. In the
third, it plays at being an appearance--it is of the order of sorcery. In the fourth, it
is no longer in the order of appearance at all, but of simulation.
page 11]
With regard to money, the first stage is its familiar function as the generalized symbol (or
image) of wealth. The second stage is the basis for the concern that Baudrillard shares with Marx
that "political economy is this immense transmutation of all values (labor, knowledge, social
relations, culture, nature) into economic exchange value." The third
stage is exchange for the sake of exchange, but justified by the eventual exchange for the sake of
consumption. In the fourth stage, the justification is dropped. In stages one, two, and three, the
alibi for the exchange value of money is its use value, i.e., the money is still a symbol for the use
value of the things it can purchase. In the fourth, the hyperreal, stage, the alibi for money is purely
its sign value.
These stages might be applied more specifically to financial assets. For stock prices, for
example, stage one is a stock price that accurately indicates some intrinsic value of the corporation;
stage two, a stock price that because of distortions and noise, is an imperfect indicator of some
intrinsic value of the corporation; stage three, a stock price that is the only value one knows for the
corporation, as there is no such thing as intrinsic value; and stage four, a stock price that is in a
sense a "pure" value, as the corporation to which it is attached is irrelevant. (This last, hyperreal,
stage in reminiscent of technical analysis where it is not necessary to know anything about a
corporation in order to interpret the patterns of its stock price and to forecast the future.)
Why use the term "hyperreality" to describe this fourth stage?--because there is no
underlying real value. According to Baudrillard:
"Simulation is no longer that of a territory, a referential being or a substance. It is
the generation by models of a real without origin or reality: a hyperreal."
<snip>
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