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

Of skyscrapers, economic cycles, speculation and Ozymandias

Is “irrational” speculative behavior an instinctive part of human nature, does it maybe arise from the deeply ingrained survival tactics of any species,  identified as a basic law by Darwin, that any species will multiply to fill all the available space, unless it is checked by environmental or competitive species, even if this results in the demise of that species. Despite the accumulated knowledge and availability of historical precedent human’s greed, ego and pigheadedness deny us the wisdom to contain our ego’s, we continue to build towers of Babel in the sky and the land, monuments to our transient self-importance.

In the words of Percy Blythe Shelley  

” I met a traveller from an antique land 
Who said: “Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away”. 

In a recent article on BBC news an old truth is trotted out as new “wine” as reported by Barclays Capital:

Skyscrapers ‘linked with impending financial crashes’

There is an “unhealthy correlation” between the building of skyscrapers and subsequent financial crashes, according to Barclays Capital. Examples include the Empire State building, built as the Great Depression was under way, and the current world’s tallest, the Burj Khalifa, built just before Dubai almost went bust.

China is currently the biggest builder of skyscrapers, the bank said. India also has 14 skyscrapers under construction.”Often the world’s tallest buildings are simply the edifice of a broader skyscraper building boom, reflecting a widespread misallocation of capital and an impending economic correction,” Barclays Capital analysts said. Read more of Skyscrapers and the Chinese & Indian “bubble”

I am reminded of an elaboration of this concept by Landscape Architect Case Brown of Clemson University, who won a 2010 Rome Prize used  the year abroad to work on his proposal, “Villas: Landscapes of Speculation,” an exploration of the first example of a fairly developed market economy. It’s a look at the villa system, the ancient Roman agricultural complex that spread the empire, fed the armies and grew the surpluses to make senators rich. Originally a farm, the Italian villa during the Renaissance came to be associated with a rich country house.

Brown is interested in the boom-and-bust cycle of any economy and the way it forges landscapes. His investigation will map the phenomenon “as a kind of bizarre behavior that continues today globally.”

That is where the landscape architect’s creative artistic/design background will enter: the mapping of the cycles and how they relate across space and time.

“The rise and crash of the Roman villa system reads eerily like the modern story of American foreclosures — profit schemes of land speculation, securitized and excessively mortgaged properties, rapid expansion and even more rapid decline.  … As a system, they provide a marvelous example of combining a food economy infrastructure and an elite leisure system, all the while staking claim to an enormous empire. How did this economy operate and did the Romans overextend their land ventures as many have in the modern United States?” Brown asks.

He saiid it is the nature of these markets to bloat beyond their own means, and the tendency continues today with such examples as oversized American vacation homes, elaborate golf course communities in China or ambitious skyscrapers in Dubai.

“We tend to overextend markets with gluttonous consistency. All these forms of extra-urban development, ancient and modern, draw on a common set of market-exploitation tendencies. Fertile land, urban respite and profit have provided the skeleton for centuries of speculation. To be able to document the birth of this trifecta could reformat our current landscape speculative practices,” Brown said.

A further discusion of Browns work can be found here: Terragrams – Casey Brown of PREX