Finance embraced computers because algorithmic complexity hides gambling as innovation

Evidence

It is in the nature of financiers to gamble with the money clients ask them to process on their behalf, even if they only get to handle it for a few minutes. That’s how they turn a profit. Their only constraints are the alertness of their clients and the occasional snoopings of a financial regulator. That’s why complexity is the financiers’ friend – for it allows them to disguise cynical gambles as smart financial products. Is it any wonder, then, that from the start financiers loved computers? As described in the previous chapter, from the late 1970s onwards bankers shrouded their debt-fuelled bets in layers of computer-generated complexity that made the gargantuan risks invisible and their own profits correspondingly vast. — Yanis Varoufakis, Technofeudalism, 294

Categorization

• XREF: Connects to the broader platform-capitalism and financialization literature the reader has gathered (e.g., Financialization and U.S. Income Inequality, Constructing a Market, Performing Theory). — connects to: Computer-generated complexity caused herd buying of incomprehensible derivatives — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 223; Algorithm-driven finance prepared the ground for enclosing the early commons-like internet — Yanis Varoufakis, Technofeudalism: What Killed Capitalism, 296; Patenting financial algorithms made finance seem scientifically grounded — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 957 (+5 more)
• SEED: Seed for an article tracing how complexity functions as rent-extraction camouflage across both finance and Big Tech platform ecosystems.

Broader Connections

• Computer-generated complexity caused herd buying of incomprehensible derivatives #expands (0.85) — Yanis Varoufakis, Technofeudalism, 223
• Black-Scholes theory erased the stigma of options as gambling #exemplifies (0.85) — Donald MacKenzie & Yuval Millo, Constructing a Market, Performing Theory, 100
• Finance profits by representing and concealing social complexity simultaneously #corroborates (0.82) — Aris Komporozos-Athanasiou, Speculative Communities, 208
• Patenting financial algorithms made finance seem scientifically grounded #corroborates (0.80) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 957
• Financial technology deepened traders’ detachment and made finance increasingly game-like #expands (0.78) — Max Haiven, Cultures of Financialization, 331
• Framing speculation as gambling inadvertently legitimizes rational homo economicus #contradicts (0.75) — Aris Komporozos-Athanasiou, Speculative Communities, 29
• Financialization treats risk as probabilisable, displacing close knowledge of the object valued #expands (0.75) — Ève Chiapello, Financialisation of Valuation, 35
• Algorithm-driven finance prepared the ground for enclosing the early commons-like internet #expands (0.72) — Yanis Varoufakis, Technofeudalism, 296