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The Information Standard
On the Episteme of the Finance Economy

Neither the precondition for such value creation nor the dominance of the modern financial regime can be explained, however, without the symbioses and convergences between finance capital and information technologies. The tight interconnectedness of commercial businesses and news publishing has been documented from late medieval merchant letters to the emergence of news agencies. Moreover, the dynamics of banking operations and especially of stock-exchange trading have always been defined in terms of their dependence on media infrastructures. The commercial deployment of postal riders or carrier pigeons, and of optical or electromagnetic telegraphs, all came about in the pursuit of marginal advantages in market information. It manifested itself both in the overlapping of financial and press metropolises and in the tendency toward technologically driven acceleration. It was chiefly bankers who, from the mid-nineteenth century onward, financed new telegraph lines between financial centers, became their main users, sometimes opposed state monopolies, used business news to promote trade, stoked channels with economic and stock-exchange data, and, in doing so, accounted for between 40% and 60% of all telegraph traffic. Right up to the laying of undersea transatlantic fiber-optic cables around the turn of the twentieth century, it was the needs of the finance economy for acceleration, as in high-frequency trading, that drove the expansion of global networks.1

In this context, it was once again in the 1970s that financial markets were able to expand through a dynamic merger of business information and information economy, and, in so doing, mobilize privileged venues. To cite one of the most prominent examples, the creation of the electronic stock exchange Nasdaq in New York, for instance, initially dates back to the 1920s, a time that resulted not only in the Great Depression but also in new and promising interest groups such as that of securities traders. Starting in the 1930s, the US National Association of Securities Dealers (NASD) had been especially concerned with those stock and capital transactions that were conducted off of the trading floor in amorphous networks and over-the-counter between individual investors and brokers. In 1971, around the end of the Bretton Woods Agreement, NASD created the National Association of Securities Dealers Automated Quotations, or NASDAQ, an automated quotation information service for securities traders. It began as an electronic display system, a news agency operating in real time for a few thousand club members, which acquired the reputation as the first computer network - initially still linked via telephone lines. It subsequently developed into a platform on which brokerage firms operated electronic trading systems, enabling online investment, direct buying and selling of stocks, and, since the 1980s, the automatic processing of orders. The organizing of price information was transformed into an automated brokerage system; market information was no longer merely transmitted, but immediately evaluated and modified by means of buying decisions. This replacement of traditional floor trading by mainframe computers did more than just interconnect buyers and sellers without human intermediaries and minimize transaction costs. More importantly, the accompanying relaxation of stock-exchange laws, the lowering of access thresholds for individual investors and day traders, and the proliferation of private electronic communications networks with some 300,000 terminals all contributed to Nasdaq's emergence from over-the-counter trading: it became the scene of a stock market that was as volatile as it was fast-growing. By the end of the millennium, this had nourished the vision of an inclusive financial engine "available to anyone, anywhere in the world 24 hours a day."2

The adoption of information technology modernization by the finance economy was complemented by targeted investments made by the financial industry in the IT sector. In this context, initial public offerings (IPOs), which, since the 1980s, have been driven primarily by technology, media, and software companies as well as by Internet start-ups, provided particular momentum. "New markets" were not only stimulated by expanding companies such as Netscape, Microsoft, Cisco, Intel, or Oracle, but also by the alliance of Nasdaq premieres and so-called venture capital. The relaxed listing requirements facilitated accelerated IPOs, often accompanied by baroque advertising campaigns. Even for companies that had previously made no profit or only losses, they sometimes triggered stock price jumps of several hundred percent per year and contributed to the Nasdaq index increasing by 80% and market capitalization by more than 350% in the late 1990s alone. As early as 1994, Nasdaq's trading volume exceeded that of the old New York Stock Exchange (NYSE); moreover, Nasdaq's merger in 1998 with the American Stock Exchange, which was, among other things, specialized in financial products, also created access to trading in financial derivatives and listed investment funds. The example of Nasdaq could be seen as the creation of a "market of all markets" and the largest global "liquidity pool,"3 whose systemic importance was also manifested in the crash of April 2000, with the destruction of two trillion dollars in stock values within a week. It owed this immense development to an effective combination of communications technology, finance, and information economy. The Nasdaq could thus become a synonym for the boom and bust of a new economy.

Such interlinkages of information and finance can also be practically demonstrated in the cycle of corporate shareholdings. For example, let us take the Reuters news agency: it was founded in the mid-nineteenth century as a service provider for financial information, then expanded its range to include journalistic news of all kinds, becoming one of the largest agencies worldwide. Nonetheless, the 1960s saw it on the verge of bankruptcy. However, after the end of the Bretton Woods Agreement, fluctuating exchange rates and various financial instruments opened up broader scope for speculative trading. Then, in the early 1970s, Reuters began to specialize in financial news on foreign exchange, securities, and money markets by means of a new screen technology (Videomaster) and an electronic communications system, Reuters Monitor Money Rates. After gaining subscribers and achieving high increases in profit, the company was admitted to both the London Stock Exchange and the New York Nasdaq in 1984. Parallel to this, the electronic trading system Institutional Network Corporation (Instinet) started operations in 1969. Even before Nasdaq was launched, it had begun decentralized trading in securities between banks, investment funds, and insurance companies, considering itself to be a competitor to traditional stock-exchange transactions on the NYSE. As probably the oldest of the electronic communications networks, it was involved in setting up Nasdaq, coordinating, as a brokerage firm, supplies and demands for securities. It was ultimately bought by Reuters in 1987. Thereafter, with a steadily growing market share, Instinet ended up handling 15 to 25% of Nasdaq's trading volume. As in many other similar or related cases, such as the takeover of the Dow Jones Industrial Average by Rupert Murdoch's News Corporation in 2007, this could also be seen as an example of the way in which the consolidation of the financial regime since the 1970s owed much to the interconnection of information and financial markets, to an interlocking of media and financial companies.4

Such consortia, like the functioning of Nasdaq, which one might want to designate as the first worldwide network, as a precursor of the Internet, as well as a prototypical platform company,5 have not only functioned as drivers of financialization and ensured the notorious expansion, proliferation, and acceleration of financial operations. They also point to a technical, economic, and strategic elective affinity between communications media and financial markets that has intensified since the structural changes of the 1970s and found its privileged arena in electronic trading systems. This involves, not least, a two-fold, self-reinforcing movement at the heart of recent finance(-market) capitalism, in which the informatization of financial markets is combined with a financialization of information on the basis of network technologies. This suggests that, in addition to knowledge breakthroughs in cybernetics and information technology, it was primarily work commissioned by the finance economy that contributed to the theoretical and systematic virulence or dissemination of modern conceptions of information. The alliance of media technology and finance, in any case, finds its critical factor, or commitment, in the operational status of "information."

In the process, various technical and theoretical lines of convergence had initially emerged. For example, the Nasdaq system was set up by companies such as Bunker Ramo Corporation, a Pentagon supplier specializing in military electronics, and equipped with the latest UNIVAC mainframes, tried and tested in air traffic control systems or in the personnel management of the US military. But apart from this fact, the installation of Nasdaq also coincided with a period characterized by a wide-ranging coming-to-terms with conceptions of information. On the one hand, the fierce promotion of military information and communications...