Algorithmic Capitalism in the Epoch of Digital Reason

Algorithmic trading (automated trading, black-box trading, or simply algo-trading) is the process of using computers programmed to follow a defined set of instructions for placing a trade in order to generate profits at a speed and frequency that is impossible for a human trader. The defined sets of rules are based on timing, price, quantity or any mathematical model. Apart from profit opportunities for the trader, algo-trading makes markets more liquid and makes trading more systematic by ruling out emotional human impacts on trading activities.

Volume 14 • Issue 1 • 2017 fast capitalism on living systems, Maturana's work on autopoiesis, i.e. self-production, Mandelbrot's (1977) work on fractal forms, Zadeh (1965) work fuzzy sets and fuzzy logic, Thom's work on the theory of catastrophes, and the development of chaos theory as the study of unpredictable behavior of deterministic non-linear systems that are complex by nature. This stage emphasizes important work on ecology and economics including Odum (1971), Daly (1973) on steadystate economy, Pimentel (1977) on the energy balance in agricultural production (François, 1999: 214). Fourth, in "Some Significant Recent Contributions" (After 1985) François (1999) examines the Hungarian Csanyi's (1989) work on the 'replicative model of self-organization, Langton (1989) on AL (artificial life), Sabeili's (1991) theory of processes, andMcNeil (1993) on the possibility of a better synthesis between physical sciences and living systems. He ends by referencing Prat's (1964) work on the "aura" (traces that remain after the demise of the system), Grassé on "stigmergy" (indirect communication taking place among individuals in social insect societies) and Gerard de Zeeuw (2000) on "invisibility." If modern cybernetics was a child of the 1950s, catastrophe theory developed as a branch of bifurcation theory in the study of dynamical systems originating with the work of the French mathematician Rene Thom in the 1960s and developed by Christopher Zeeman in the 1970s. Catastrophes are bifurcations between different equilibria, or fixed-point attractors and has been applied to capsizing boats at sea and bridge collapse. Complexity is concerned with theoretical foundations of computer science being concerned with the study of the intrinsic complexity of computational tasks and rests on understanding the central role of randomness. Complexity as an approach to knowledge and market systems now recognizes both the development of global systems architectures in (tele) communications and information with the development of knowledge production systems that increasingly rests not only on the establishment of new and better platforms (sometimes called Web 2.0), the semantic web, new search algorithms, and processes of digitization.
The term "cybernetic capitalism" was first used by Keon Robbins and Frank Webster (1988) in a chapter called "Cybernetic capitalism: Information, Technology and Everyday Life." They use to term to discuss the exploitation of microelectronics and information technology as an economic and political "mobilization" of society, after Bell's "postindustrial society" and the literature on "post-Fordism." They argue that the new information technologies (in 1988!) represent a significant stage in the strategy of "relative mobilization"-one in which technological domination becomes extensively and systematically used in spheres beyond the workplace" (p. 52). The authors make use of Gorz and Foucault to discuss the intensification of work and the increase in societal surveillance where information technologies "constitute a mega-machine, a systematic and integrated mechanism" where "information/knowledge becomes a site of the struggle for power (p. 72).
In 1994 Jerry Harris and Carl Davidson as part of The Chicago Third Wave Study Group in "The Cybernetic Revolution and the Crisis of Capitalism" argued "New technologies have changed the face of capitalism, affecting the economic base, the relations of production, and are impacting political strategy." Douglas R. Holmes & George E. Marcus (2006) write of para-ethnography and the rise of the symbolic analyst: Fast-capitalism thus designates the circumstances under which knowledge is created and effaced as the communicative space of the nation-state is eclipsed and our subjects; and we too must think and act within a communicative space mediated increasingly by supranational markets (p. 43).
In a previous paper I attempted to develop a grounded and literature-based analysis of the main forms of "new" or "advanced" capitalism referred to by theorists and scholars . I called the overall conception "cybernetic capitalism" and identified five major categories that fell under the heading. "Cybernetic" is a somewhat dated term and some would argue that the concept is also outmoded but there are good reasons to hang on to the term in its fourth and fifth generation iterations in how they apply to markets and to modern capitalism. Each of these conceptions emphasize an aspect of the conceptual change involved in the emergence of a global information system: speed, acceleration, mobilization, location, network, circulation, algebrification, formalization, mathematical modeling, bioinformatics, organicity. These features have become increasingly more evident over the last couple of decades as finance capitalism has developed and equity markets have become increasingly reliant on algorithms.

Forms of Cybernetic Capitalism
Algorithmic Capitalism [2] The word algorithm comes from the name of the 9th century Persian Muslim mathematician Abu Abdullah Muhammad ibn Musa Al-Khwarizmi. The word algorism originally referred only to the rules of performing arithmetic using Hindu-Arabic numerals but evolved via European Latin translation of Al-Khwarizmi's name into algorithm by the 18th century. The use of the word evolved to include all definite procedures for solving problems or performing tasks. (http://www.scriptol.com/programming/algorithm-history.php0 Khwarizmi, Abu Jafar Muhammad ibn Musa al-(d. ca. 850 ) Mathematician, astronomer, and geographer. Synthesized extant Hellenic, Sanskritic, and cuneiform traditions to develop algebra, a term derived from the title of one of his books (containing the term al-jabr, meaning "forcing" [numbers). Introduced Arabic numerals into the Latin West, based on a place-value decimal system developed from Indian sources. The word algorithm is derived from a Latin corruption of his name.

Oxford Islamic Studies Online
(http://www.oxfordislamicstudies.com/article/opr/t125/e1305) Algorithmic capitalism and its dominance of the market increasingly across all asset classes has truly arrived. Rob Iati (July 10, 2009) writing for Advanced Trading asserts: Algorithms account for more than 25% of all shares traded by the buy side today -a number steadily rising for several years now. However, the incredible capabilities offered by technology have given meteoric rise to a relative few high-frequency proprietary trading firms that now wield far greater influence on the markets today than most people recognize. The familiar names of Lehman, Bear and Merrill are being replaced by less familiar ones like Wolverine, IMC and Getco… highfrequency trading firms, which represent approximately 2% of the 20,000 or so trading firms operating in the U.S. markets today, account for 73% of all U.S. equity trading volume. [3] Writing almost a decade ago Iati (2009) indicates that value of high-frequency algorithmic trading relies on "a Volume 14 • Issue 1 • 2017 fast capitalism real-time, collocated, high-frequency trading platform… where data is collected and orders are created and routed to execution venues in sub-millisecond times." Algorithmic capitalism is an aspect of informationalism or informational capitalism or "cybernetic capitalism," a terms that I prefer because it speaks to the genealogy of postmodern capitalism and recognizes more precisely the cybernetic systems similarities among various sectors of the postindustrial capitalist economy in its third phases of development-from mercantilism, industrialism to cybernetics-linking the growth of the multinational infoutilities (e.g., Goggle, Microsoft, Amazon) and their spectacular growth in the last twenty years, with developments in biocapitalism and the informatization of biology, and fundamental changes taking place with algorithmic trading and the development of so-called financialization.
It is in this context that also we can talk of "cloud capitalism" that is recentralizing the Net and creating large scale monopolies in the knowledge economy, on a vastly larger scale than anything imagined possible in the industrial era. Take for example Google's project of digitizing millions of books that will make its digital library bigger than the Library of Congress. By doing so as Charles Leadbeater (2010) argues "Google will acquire huge power over the future of publishing. It will be able to head off potential competition from other databases of digital books." As he goes on to explain: "Google is the first and most successful exponent of a new kind of economic power: cloud capitalism." He suggests that the Internet that the cloud capitalists want to give us is quite different from that of the "information superhighway" or "cyberspace": In cloud computing, our data -emails, documents, pictures, songs and software -will be stored remotely in a digital cloud hanging above us, always there to access from any device: computer, television, games console, hand-held and mobile. We should be able to draw down as much or as little of the shared cloud as we need (http://www.guardian.co.uk/ technology/2010/feb/07/cloud-computing-google-apple).
Leadbeater raises questions about the way cloud capitalism aims at complete control that ultimately excludes other databases while maximizing revenues and the capacity of clouds to hold vast amounts of data on us that occludes the interests of citizens and eludes the control of governments. We might see "cloud capitalism" as an aspect of a wider phenomenon of cognitive or cybernetic capitalism.
There is no doubt that speed is a central feature of global markets and of global networked capitalism. Agger builds on theorists like Paul Virilio (2006) who sees speed as a determinant of future society and economy. Some evidence for this philosophical orientation can be gained from HFT-high frequency trading-that is a kind of algorthmic trading characterised by high turnovers that uses a platform to transact large numbers of trades in very short time periods, shaving pennies off lightning bulk trades every mcro-second. Electronic exchange only came into being in 1998; by 2009 HFT comprised over 70% of all equity trading. It has since retreated somewhat. Yet, since its introduction the speed of HFT has increased from seconds per trade to milli-and microseconds. One investment analyst advises that "…algo-traders make trades in 10 milliseconds or less. some say it's as fast as half a millionth of a second -that's more than a million times faster than the human brain can process a decision."[4] He goes on to write: Today, high-frequency trading is even faster. According to Aequitas Innovations, the parent company of Canada's newest stock exchange dedicated to leveling the playing field for investors, 11% of all 2014 observable orders in the Canadian marketplace lasted less than one millisecond. In other words, by the time you blink your eye and before you even place a trade, a high-frequency trader may have already processed 400 orders ahead of you.
In a paper published online some years ago (Peters, 2012) entitled "Algorithmic Capitalism and Educational Futures: Informationalism and the Googlization of Knowledge"[5] I commented upon the rise of a new kind of capitalism that Agger had been one of the first to name and to begin to scrutinize its social consequences: Algorithmic capitalism and its dominance of the market increasingly across all asset classes has truly arrived. It is an aspect of informationalism (informational capitalism) or "cybernetic capitalism," a term that recognizes more precisely the cybernetic systems similarities among various sectors of the post-industrial capitalist economy in its third phase of development -from mercantilism, industrialism to cybernetics -linking the growth of the multinational info-utilities (e.g., Goggle, Microsoft, Amazon) and their spectacular growth in the last twenty years, with developments in biocapitalism and the informatization of biology, and fundamental changes taking place with algorithmic trading and the development of so-called financialization.

fast capitalism
Volume 14 • Issue 1 • 2017 sophisticated "buy" and "sell" algorithms. Already researchers have demonstrated that data transfer using a single laser can send 26 terabits per second down an optical fiber and there are comparable reports that lasers will make financial "high-frequency" trading even faster. Tyler Falk (2013) reports on "How lasers will make financial trading even faster": In the world of computerised financial trading, every second counts and superfast fibre-optic networks may no longer be quick enough. Laser beam technology originally developed for the military is being rolled out to shave time off trades. It will compete with new microwave networks that are increasingly being used by traders. http://www.bbc.com/news/ technology-22380611 Assignment, the BBC program explored HFT and the behavior of some banks utilizing super-fast, computerized share-dealing systems that enable them to process nearly a half a million share deals every second, earning the sector some 21 billion in 2015 and giving bank using this technology and unfair advantage in the marketplace.
[6] Concerns have been raised about computerized financial services that allow high frequency traders to get faster access to information allowing firms to create sophisticated computer programs to buy and sell stocks in milliseconds, faster than any human. [7] Western modernity (and developing Global systems) exhibit long-term tendencies of an increasing abstraction described in terms of formalization, mathematicization, aestheticization and biologization of life. These are characteristic of otherwise seemingly disparate pursuits in the arts and humanities as much as science and technology and driven in large measure through the development of logic and mathematics especially in digital systems. Much of this rapid transformation of the properties of systems can be captured in the notion of "bioinformational capitalism" that builds on the literatures on "biocapitalism" and "informationalism" (or "informational capitalism") to develop the concept of "bio-informational capitalism" in order to articulate an emergent form of capitalism that is self-renewing in the sense that it can change and renew the material basis for life and capital as well as program itself. Bioinformational capitalism applies and develops aspects of the new biology to informatics to create new organic forms of computing and self-reproducing memory that in turn have become the basis of bioinformatics.
The notion of "algorithmic capitalism" as I have previously described it is "an aspect of informationalism" (informational capitalism) or "cybernetic capitalism," a term that recognizes more precisely the cybernetic systems similarities among various sectors of the post-industrial capitalist economy in its third phase of developmentfrom mercantilism, industrialism to cybernetics-linking the growth of the multinational info-utilities (e.g., Goggle, Microsoft, Amazon) and their spectacular growth in the last twenty years, with developments in biocapitalism and the informatization of biology. Fundamental changes are taking place with algorithmic trading and the development of so-called financialization." I used the notion to examine and explain the phenomenon of the "Flash Crash" when the Dow Jones lost 700 points (some $800 billion)-one of its biggest one-day falls in history-and recovered within minutes.
Algorithmic trading is sometimes seen as an explanation of market volatility especially when risk is not transparent or able to be effectively tracked and monitored. Automated buy-sell programs now account for over 80 per cent of all US equity trading. Increasingly, global information systems that operate at the speed of light are now harnessed by HFT (high frequency trading) firms to create Automated Trading Desks that are capable of trading hundreds of millions of shares daily. So-called "quant trading," after "quantitative trading programs" are now designed by mathematicians and underlie HFT, where stocks are held often for only microseconds. The staggering growth of the finance industry sometimes referred to as "financialization" represents a set of overlapping processes that refer not only to the rapid expansion of the financial sector of the capitalist system-to the growth of financial institutions of all kinds-but also to a qualitative change in the mode of production where banking systems jettison traditional banking practices to become commercial investors and multinational corporations develop as financial institutions able to invest and trade directly in financial markets.
The Epoch of Digital Reason [8] Global finance capitalism (and "financialisation") is but one prominent and rapidly growing aspect of "cybernetic capitalism." Western modernity and the developing global systems spawned by Western (neo)liberal capitalism exhibit long-term tendencies of an increasing abstraction that can be described in terms of long-term modernization Volume 14 • Issue 1 • 2017 fast capitalism processes including the "formalization," "mathematicization," "aestheticization," and "biologization" of everyday life (Peters, Britez & Bulut, 2009;Peters, 2011). These cybernetic processes are characteristic of otherwise seemingly disparate pursuits in the arts and humanities as much as science and technology and have been driven in large measure through the development of logic and mathematics especially in the world architecture of emerging global digital systems. In this respect, we can talk of the emergence of digital reason and of the university in the epoch of digital reason. By this description I mean principally a set of developments in foundations of mathematics and the algebra of logic that predate the founding of cybernetics as a discipline with the 1946 and 1953 conferences sponsored by the Josiah Macy, Jr. Foundation in New York City on the subject of "Circular Causal and Feedback Mechanisms in Biological and Social Systems" (Umpleby, 2005). The prehistory of cybernetics that result in the problematic history of the development of digital logic including Boolean algebra, gates that process logic signals, switching theory, flip-flops and memory elements that store logic signals and in general the representation of binary information in physical systems. In this tangled genealogy George Boole (1847) wrote The Mathematical Analysis of Logic that provided the calculus for a two-valued logic, applying algebra to logic, representing true or false within assertion logic that is the basis for all modern programming languages and digital electronics. Claude Shannon discovered that the rule of Boolean algebra could be applied to switching circuits and introduced switching algebra in order to design circuits of logic gates. (The algebra of 0 and 1 was applied to electrical hardware comprising logic gates to form a circuit diagram). [9] Digital reason is a wider and a more philosophical notion than digital logic, named here in the tradition of Kant and Foucault. It governs the historical emergence of a techno-epistemological epoch that is so recent but indicates a deep transformation of the knowledge economy or knowledge capitalism, society and knowledge institutions. Its concepts are the concepts of speed and velocity-involving limits of the physics of light-as well as system, feedback and control. Much of this rapid transformation of digital logic and the properties of systems can be captured in the notion of "algorithmic capitalism" (Peters, 2012a(Peters, ,c, 2013 as an aspect of informationalism (informational capitalism) or "cybernetic capitalism," a term that recognizes more precisely the cybernetic system similarities among various sectors of the post-industrial capitalist economy in its third phase of development-from mercantilism, to industrialism and finally to cybernetics-linking the growth of the multinational info-utilities (e.g., Goggle, Microsoft, Amazon) and their spectacular growth in the last twenty years, with developments in biocapitalism (the informatization of biology and biologization of information), and fundamental changes taking place in the nature of the market with algorithmic trading and the development of so-called "financialization".

Biologizing Digital Reason
The third phase of "cybernetic capitalism" itself has undergone further development from first to fifth generation. I described above the first four generations to the point of complexity theory. The fifth is what I call "bioinformationalism" representative of bioinformational capitalism (Peters, 2012) that articulates an emergent form of capitalism that is self-renewing in the sense that it can change and renew the material basis for life and capital as well as program itself. This represents a massive change to the notion of digital reason as also a biological notion-biologizing digital reason. Bio-informational capitalism applies and develops aspects of the "new biology" to informatics to create new organic forms of computing and self-reproducing memory that in turn has become the basis of bioinformatics. I begin with a review of the successes of the "new biology," focusing on Craig Venter's digitizing of biology and the creation of new life from the digital universe and provides a brief account of bioinformatics before brokering and discussing the term "bioinformational capitalism." Genomic capitalism represents a phase of global biocapitalism that, when harnessed with a new generation of information processing, itself organically enhanced, comprises a 'bio-informationalism' that expresses a new kind of utopian perfectionism about the possibilities for a new age of genetic self-renewing capitalism that is capable of programming itself (Peters, 2012: 99).

As Venter (2008) claimed:
we've been digitizing biology, and now we're trying to go from that digital code into a new phase of biology, with designing and synthesizing life…. We've been digitizing it now for almost 20 years. When we sequenced the human genome, it was going from the analog world of biology into the digital world of the computer. Now we're trying to ask: can we regenerate The development of the new biology has in large measure been possible through the application of informatics to biology and more recently of the new biology to informatics, using data-intensive-so-called "big data"-to develop a "evo-devo" program that integrates biological theory across the hierarchy of life. This involves the development of a dialectic of information and biology ("bioinformatics") as a scientific logic and rationality that leads to the biologization of the digital (in the long term) and an informatization of biology. We have entered the digital age of synthetic biology. With biotechnology and advanced computer information systems converging, we are at a point when we can design gene sequences, connect them into more complicated arrays, and insert them into the DNA of a developing organism, resulting in life that had not naturally evolved in the global ecosystem (p. 428).
Synthetic biology harnesses computer power in the production of genomic scientific capitalism augmenting the capacity of digital reason through organic memory and the possibility of new forms of bioinformatics. There are close connections between biology and information where forms of informational biology and biological information demonstrate how the concept of information since the 1950s has made its way into the heart of biological studies. Theorists in biology have utilized Claude Shannon's concept of information as described in his mathematical communication theory and more recently moved to introduce the notion of teleosemantics, signaling systems of the genetic code and the role of information in evolutionary processes.
My speculation is that the biologization of digital reason is a distinct phenomenon that is at an early emergent form that springs from the application of digital reason to biology and the biologization of digital processes. In this space we might also talk of digital evolution, evolutionary computation, and genetic algorithms.
Most accounts of digital capitalism that emphasize algorithmic governance or cloud storage tend to prefigure a notion that falls under what I call "digital reason" that instrumentalizes knowledge and information as a stage in the evolution and transformation of modern capitalism. Thus, Luciana Parisi (2016) in a lucid account argues: Algorithmic cognition is central to today's capitalism. From the rationalization of labor and social relations to the financial sector, algorithms are grounding a new mode of thought and control. Within the context of this all-machine phase transition of digital capitalism, it is no longer sufficient to side with the critical theory that accuses computation to be reducing human thought to mere mechanical operations. As information theorist Gregory Chaitin has demonstrated, incomputability and randomness are to be conceived as very condition of computation. If techno-capitalism is infected by computational randomness and chaos, the traditional critique of instrumental rationality therefore also has to be put into question.
She foregrounds the emergence of cognitive labor as the dominant form and also presages the financialization of life and the dominance of finance culture. Yet now we are now entering and biocognitive era of capitalism where "machinic phyla are agents productive of being" featuring "ontological heterogenesis" and "collective assemblages of subjectivity" (Guattari 2011: 50).
[11] As Charles T. Wolfe (2016: 175) argues a thesis concerning the "social brain""Biological, aesthetic and we might add, cerebral machines are constitutive parts of the production of subjectivity, rather than its 'other.'" He reminds us of one kind of materialism that indicates "Brains are culturally sedimented, permeated in their material architecture by our culture, history, and social organization; and this sedimentation is itself reflected in cortical architecture"(p. 177), where creating new circuits in art or philosophy, as Deleuze contends, "means creating them in the brain" (cited in Wolfe,p. 179). Thus, the brain is ontological opening to shaping that advertises a new neuroplasticity able to escape biological determinism.
In this new era of "biocognitive capitalism" -what I refer to as "biologizing digital reason" -we encounter the realm of augmented intelligence and also "deep learning" both of which have critical consequences for digital labor. Matteo Pasquinelli (2016: 203)

reminds us:
Augmented intelligence must be distinguished from artificial intelligence, which implies a complete autonomy of machine intelligence from human intelligence despite sharing a logical and technological ground; and from swarm intelligence, which describes decentralized and spontaneous forms of organization in animals, humans, and algorithmic bots… The second machinic moment of automation as a discernible stage that may not entirely detach itself from Volume 14 • Issue 1 • 2017 fast capitalism augmented intelligence has the power to go beyond any human-machine interface into the realm of deep learning where human labor and life is not a requirement for production. This is the stage where automation reaches its limit creating autonomous technological learning systems that are able to learn from large amounts of data that are feed to it in a continuous stream and is based on incremental self-improvement in machine performance.

Endnotes
1. Multitude is a political concept at the limits of sovereign power dating from Machiavelli and Spinoza naming a population that has not entered into a social contract and retained it capacity for political selfdetermination and, after Hardt and Negri, resistance against global systems of power. The journal offers the following description: "The concept of "multitudes" refers to the immanence of subjectivities (rather than "identities") acting in opposition to established power structures and mapping the way for new futures.' 2. This section draws on my "Speed, Power and the Physics of Finance Capital" http://www.wpfdc.org/ blog/economics/18793-speed-power-and-the-physicsof-finance-capitalism