PRICE WARS - How to draw a 'crisis picture'?

Thinking about Adam Tooze's Krisenbilder and making Price Wars

Every picture hides far more than it reveals. Consider this still from a drone I flew in Mosul, Iraq.

It captures, better than any prose ever could, the physicality of the apocalypse. A window into a life once lived, and the infernal landscape its now condemned to. It really has to be seen to believed, and it’s why I insisted on visiting so many war zones at great personal risk.

But much is hidden among the pixels. The apocalypse is also psychological. One resident described his life as a ‘zombie existence’, technically alive but not living; surrounded by ghosts of missing neighbors, most presumed buried beneath our feet. The apocalypse is also materially constructed from global political economy. Erected through cascading crises with its own casual arrows: wildfires in Russia —> food price spike —> Arab Spring —> civil wars in Libya and Syria —> the ISIS apocalypse in Iraq.

For me, the story of chaos across the tumultuous twenty-tens needed all three of these dimensions depicted. Chaos was a physical geography, a psychological state, a social accomplishment. That is why Price Wars was both a book and a documentary film.

Adam Tooze’s recent posts on his own ‘crises pictures’ (Krisenbilder) of 2022 has got me thinking about my unusual mixed-media method. My notes were always filled with those crises ‘—>’ arrows. And as I wrote the book, I realised that they were hiding causality as well as revealing it.

For one, the causal relationships I was investigating were not linear. The revolutionary idea behind ‘chaos theory’ in the 1970s was not, as is often presented in pop culture, that the world is made up of hidden ‘connections’. But rather that very simple systems can become wildly unpredictable with the addition of one ingredient: amplification.

Hidden inside each ‘—>’ was an engine of amplification. The mechanism was not just transmitting something, it was growing it, spreading it, mutating it. It was powered by feedback. And these engines are embedded in our institutions: politics, the media, markets. This is why crises appear to be constantly exploding all around us. Small disturbances, like the flap of a butterfly’s wings, become global hurricanes.

I kept coming back to four such engines that fed off one another:

• Media Magnification. Whether a TV news bulletin of a dead refugee washed up on the beach, or a Facebook algorithm pushing anti-migrant protests, crises narratives themselves were magnified in scale, reach, and immediacy.

• Political Entrepreneurs. News headlines were turned into existential threats by opportunistic politicians, turning images of migrants into ‘rapist hordes’ and ‘invading caravans’. Their statements were, in turn, amplified by the media.

• Resource Curse. This complex phenomenon pushes events to the extremes. Oil busts bring ruinous recessions, while booms bring autocratic belligerence. The curse amplifies the social and political effects of any price swing.

• Financialisation. As speculators come dominate markets, they tend to increase the ‘boom-bustiness’ of the system by amplifying price swings in either direction. Because they impact prices directly, and prices incorporate the three other mechanisms listed above (‘pricing in’), it became my focus. The 2010 wildfires in Russia did not destroy enough wheat to dent the global food supply - it in fact increased that year - but the speculators traded on the media narrative and turned the small disturbance into a global price event.

These four fed of each other, and to my mind at least, lie behind the chaos of the last decade or so. The civil wars that began with the food price spike of 2010 fueled the global refugee crisis, which dominated headlines across Europe and America, which provided oxygen to once fringe figures - Trump, Farage, etc. - who adeptly exploited the circulating images of foreign ‘invaders’. It was through these mechanisms that the chaos went from Global North to the South and then back to the North.

We saw the same dynamic in 2019: hedge funds took historic short positions in the coffee market on news of Brazilian over production, the price plummeted, central American coffee farmers were bankrupted, and their forced migration to the US was exploited by Trump as Fox News helicopters stalked invading ‘caravans’. In both cases, the crisis arrow ‘—>’ begins not ‘over there’ but ‘over here’.

Indeed, the arrow’s direction is itself a function the meta-mechanism running through these amplifying engines: narrative. The media, the politicians, the speculators are all telling stories. The causal power of their narrative is determine by its heroes and villains, omissions and exaggerations.

When I’ve been discussing Price Wars, one counter-argument I almost always get is: ‘but the narratives are true!’

To which I say, that’s evidence for it being a good narrative. Go and see a Steven Spielberg sci-fi epic, and you walk out feeling that Tom Cruise really is a Pre-Crime Detective. I’m currently listening to the Three Body Problem trilogy, and there’s a part of me that truly believes that the Trisolaris Fleet really is on its way to Earth from Alpha Centauri (ETA: 400 years).

You may not find those arguments convincing, so I’m going quote what someone with a Nobel Prize told me. Take it away, Robert Shiller:

‘People who believe that financial markets are perfect and efficient will readily say that price is determined by stories about the future, but the difference is that they think of these stories as rational and optimal forecasts of the future. The Efficient Market Hypothesis says that the stock market or other speculative markets represent a vote of all the smartest people in the world about what the future will be. The other view of speculative markets that I’ve been pushing is a narrative view. Yes, the markets do respond to stories, but it’s not the optimal forecast. It’s the popular story, the one that is tellable and contagious that gets invited into market prices . . . The strength of these narratives does not correspond to scientific reality. It represents feedback and contagion of stories.’

When I have quoted Shiller, most accept that while he is right in a broad sense, his point is not applicable to 2022: wheat is stuck in Ukraine, Russian oil is embargoed, droughts have hit India.

But narrative is the epic gulf between fact and meaning. Consider this hypothetical scenario: a world power bombs and then launches a full-scale invasion of one of the world’s biggest oil-exporters in the center of the world’s biggest oil exporting region. What do you think happened to the oil price once hostilities began? And finish this (single) crisis picture:

War —> oil price ???

Did you say: the oil price went down?

That would have been the correct answer, if the scenario was the Iraq War of 2003. Even Osama Bin Laden was surprised at this outcome. ‘Its price today should be $100 at the very least,’ he complained in 2004.

Back then, the commodity markets were still dominated by those trading physical barrels of oil. The flood gates to speculation had been opened in 2000 with the Commodities Futures Modernization Act, but the Iraq War was before the narrative hype around commodities sucked in financial capital in 2005. Instead, commodity traders rationally reasoned that the United States would not bomb oil infrastructure - its safe capture was mostly likely the whole point of the war - and that the oil would continue to flow.

Contrast this to 2014, when global oil prices jumped $5 on the news that ISIS was heading towards Kurdistan’s oil refinery. They never captured it, but the markets had now long been dominated by speculators who traded oil like Euros or Gilts and did not know that most of Iraq’s oil was in the South, or that once ISIS captured oil facilities they too would keep the oil flowing. Why wouldn’t they?

Or March 2022, when oil prices suffered daily $20 a barrel swings, as speculators ‘price in’ - and then ‘out’ - the latest headline. Not only are these traders disconnected from the physical markets, but they’re often not even human: algorithms programmed to automatically trade on news wires. As one hedge fund manager explained to me: they read ‘Iraq’ + ‘war’ and execute ‘buy’ before the words have even landed on a human retina.

This is what I mean when I say so much is hidden in the linear arrow ‘—>’ of a crisis picture.

This is not an argument for complexity, for creating a map so detailed it becomes indistinguishable from the very thing that it’s supposed to describe.

It’s an argument for questioning the often taken-for-granted assumptions behind so many of those arrows. That so many of the self-evident connections we see in the world - between war and inflation, droughts and famines - may be no more ‘real’ than Pre-Crime Detective Tom Cruise or the Trisoloran Fleet.