Landscapes of Speculation – Case Brown

2010 Rome Prize Winner and P-Rex researcher Case Brown’s examination of the history of speculation makes fascinating reading , from when I first heard him discuss it in a Terragram’s interview to where I recently found this report  posted on his blog, it has struck a chord in me on how we view history and ourselves in relation to our context and restates the essentially global nature of cities from the earliest times till the present day, and that their formation, existence and survival is dependent on people and their inherent natures, which this article postulates are out of our control….

3 Questions:
-Is the primary economic object of speculation land?
-Are our herd-like speculation behaviors instinctual?
-Did speculation behavior first arise in Roman times?

Repeating the same behavior and expecting a different result generally describes insanity. Despite a four-hundred year period of successive speculative mania, populations continue to form asset bubbles decade after decade. The allure of profit from runaway growth triggers our most primal herd response while hijacking our risk perception. Theories abound as to the source of this group behavior–capitalistic abhorrence of limits, an intrinsic anglo-saxon sickness, ineffective regulation, or using the wrong economic model.

But what if the roots of the phenomenon are deeper? If the phenomenon crosses cultural lines, existed before true free-market capitalism, and occurs in various regulatory environments, then we may need to address speculation as part of our biological imperative, not our cultural contingencies. The following investigation comprises the first step in describing speculation as a behavioral trait of Homo economicus. It tentatively assesses whether the protean form of speculation lies scattered about in the rubbled foundations of the Roman villa system.

Monte Circeo, 2000 Years of Investment, modern villas (left) and ancient villas (right)

The rise and crash of the Roman villa system reads eerily like the modern story of American foreclosures crisis-profit schemes of land speculation, frenzied landowners seeking to expand their profits beyond the average market growth, farming negotium(business) from one villa to derive otium (pleasure) from another. The modern financial industry terms this quasi-magical level of compounded profit alpha returns, in contrast to the more average beta returns. Investors, day traders and ‘quants’ spend their intellectual energy feverishly chasing the strategies that will achieve alpha level returns. Their debt-fueled schemes spin out risky ventures like one more residential development in the south Florida swamps or yet another artificial island off Dubai. If this maniacal pursuit of alpha spans two millennia and vastly different cultures, then the roots of our speculative tendencies are perhaps more biological than cultural.

Episodes of Speculation, 1600-2010

The systemic behavior that leads to overdevelopment, real-estate price crashes, avalanches, phase changes in matter, and population crashes are strikingly similar. Theoretical biologists are making the nascent strides in mapping how normal population behavior can build into the more radical swarming behavior that reaches beyond ecological tipping points. In parallel, complexity theorists and economists are attempting to describe the same phenomena in financial markets, forming a new discipline and lexicon called econophysics. The history of speculation provides fertile ground to explore the bio-physical tendencies of Homo economicus
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s