Promises, Contracts and the Derivative Form

Derivatives (financial instruments that involve trading on the basis of differential assessments of the future prices of other underlying assets) are ways in which financiers have found ways to make money out of risk, rather than out of prices of assets. Derivatives therefore raise the question of whether they are themselves a version of the commodity form or whether they represent a new symbolic form in which money has become largely separate from commodities. This puzzle is central to the sense in which finance has become the dominant current form of capital. My lecture explores the relationship between promises, contracts and derivatives to suggest that derivative finance is the latest instance of Joseph Schumpeter’s idea of “creative destruction”, in which capitalism grows and expands by destroying its prior institutional axioms and forms.