Seeing the silver lining amid gloom and doom
Though there appears to be a continued sluggishness in the economy, market watchers need to keep faith that after every downturn in an economic cycle comes an upturn
We appear to have arrived at a place in history where the “sense-making apparatus” that was useful for us to figure out what was happening, seems to be breaking down.
Very little of what is being commented on in the media (print as well as online) has any coherence or bearing to what is going on in the world. And so, we have alternative sense-making networks that are sprouting up in order to comprehend.
Part of this network involves an “upgrade of the software” such that the ability to communicate moves to a higher platform. In the modern era, this network includes you — the reader — such that we can all establish common platforms as part of the “upgrade”.
First, the problem: There appears to be continued sluggishness in the economy, despite buoyant oil prices and increased fiscal spending.
Industries such as media seem to be suffering on account of the rapid transformation in advertising as online platforms proliferate; others such as the F&B and retail space seem to be going through a period of consolidation and retrenchment after supply had gotten ahead of itself.
This is exacerbated by asset movement volatility — which was the basis of much of the growth in the last decade — partly based on rising interest rates but more on account of the proliferation of fake news going viral.
And the exaggerated sense of panic that seems to have gripped some investors on account of news that seems astonishing and Kafkaquese in any other domain of discourse. For instance, Pakistan appears to be conducting inquires based off of “broker lists”. How are investors expected to compute rational decision making into the process?
Four key factors
It is important that a framework be in place to understand what it is that we are looking at. We need to consider four factors when looking at the economy in the 21st century
■ One, the ways of being — the companies that are formed in this process;
■ Two, the ways of believing — the role of emotions such as trust, confidence, panic, etc;
■ Three, the ways of ruling — the role of the state and government-related entities; and
■Four, the ways of seeing — the discourse in the media and representations that frame the knowledge on the economy.
Although all four are essentially symbiotic, it is the last factor that deserves the greatest scrutiny because the increasing ubiquity of commentary, the insights into the economy have become increasingly difficult to “see”.
In Dubai, real estate has become the symbolic capital of capital, with the health of the market standing synecdochically for the whole of the economy.
Therefore, and especially during the rise of online media, this breed of capitalism more generally creates crises of representation, when the faith that is necessary to maintain belief in the value of numerous narratives of growth periodically begins to crumble.
It is interesting that this phenomenon has been witnessed throughout the developed world for much of the 20th century, and even more so now in the last decade. There has been some work that has been done to develop “ways of seeing”.
Rise of alternative networks
In Dubai this is happening before our very eyes as alternative journalistic and economic networks begin to emerge to replace the traditional narratives that clustered around “exhibitory events”.
For the most part, this is still in its embryonic stages. The commentary for the most part — when not invoking the inscrutable mysteries of providence — is relying on the powerful ideas of insiders and their plotting.
This is patently nonsensical, yet it is comforting to note that there are many parallels throughout history where this form of narrative had taken popular root in society.
Imagining the market dynamics has become more difficult because of the rising importance of finance to the economy as a whole. This means that fortunes can be wiped out far quicker than what people have been used to.
Such acceleration notwithstanding, the role of the observer is the same now as it has been throughout the ages — a belief in the cyclicality of prices and markets.
To do this, the investor needs to understand more than ever the performative interplay between representations of the economy and the representations produced by the economy.
This conceptual framework, along with the feedback mechanism, becomes integral to the new navigational framework in the alternate sense-making apparatus.
■ Sameer Lakhani is managing director of Global Capital Partners.