Marcell Mars, Akseli Virtanen
Production of the Common – The Work of Robin Hood
Image: Harri Homi
Robin Hood Minor Asset Management is a cooperative, based in Finland and Silicon Valley, and owned by its members. It was established in 2012 in the middle of the Eurozone Crisis, with the goal of rethinking financial services and means of finance. Robin Hood uses the same methods as its “Wall Street enemies”; its weapon is an algorithm called “parasite,” which imitates their behavior. The intention behind the project, however, is not driven by hubris or greed. Robin Hood is a counter-investment bank for the precariat. It invests in the protection and production of the common. It aims to share and democratize the power of finance.
Originally, Robin Hood was a project of Future Art Base (http://www.futureartbase.org), an autonomous unit of artistic research, social innovation, and political interventions, initiated at Aalto University in Helsinki, Finland, approaching everything from the perspective of art. The project was presented as the flagship of innovation, but when higher management became aware of the initiative’s full dimensions, its members cut off the money supply. Nevertheless, Robin Hood continues its work. It is growing rapidly and preparing the next phase of its operations in Silicon Valley: the creation of an army of parasites and the launch of a Hood Note, a blockchain-based smart contract that merges the monstrous power of financial derivatives to the creation of common equity.
The following conversation about the work of Robin Hood between Akseli Virtanen, cofounder and chairman of the board of Robin Hood Minor Asset Management and former juror in the field of Economics at Akademie Schloss Solitude, and Marcell Mars, former fellow in the art, science & business program at Akademie Schloss Solitude, free software advocate, cultural explorer, and social instigator, took place at the Akademie under the auspices of the workshop “Chronicles of Work. The Dissensual Awareness of Labor,” held November 13–15, 2014.
Akseli Virtanen: Two years ago, in June 2012, we established our own hedge fund. We call it a counter-investment bank of the precariat. We established this bank, because the message from our background analysis was clear. The financialization of capital is a fact. The precarization of the labor market is not some kind of temporal phenomenon. It is going to be the permanent way the labor market is organized. These two things are connected. If we want to put the connection into monetary terms, we can call it disinflation. Something we know very well in Europe at the moment. So let me ask: how are such big deficits possible right now with no inflation? Where does the disinflation come from? Why the insecurization of labor market and social rights, the decreasing price of labor and downsizing of the welfare state, the austerity measures? Why do governments everywhere cut costs and spend less? Because they want to borrow more. Because the deficits are never meant to be paid back, but financed. And because derivatives now provide a means to manufacture liquidity, which does not devalue the base currency. The continuous supply of government bonds, which are a necessity for any finance and the safe means for capital preservation, is possible only through deficit cuts and excluding all inflationary spending. This supply is like the financial equivalent of raw material for industrial production. It means that our collective capacity to assume debt and pay taxes and be the direct bearer of austerity measures creates direct vehicles for financial asset accumulation. In a financial economy, the surplus is extracted more directly from this collective capacity to become more indebted and pay taxes than from the stagnating number of people employed to goods and services production. Today the growth in the forms of indebtedness is the condition for capital accumulation, just like expansion of labor force participation was for expanding commodity production. So let me give you some facts.
Akseli Virtanen stands up, goes straight to the flipchart behind him, and draws two rectangles. Pointing at the smaller one, he explains:
Akseli: This small square is the value of all the products and services in the entire world. Value of all products. Value of all services. Maybe you don’t see it, because the square is so small?
He points to the bigger rectangle that includes the small one.
Akseli: This is the size of the derivatives market at the moment. Nobody knows exactly how big it is, but it is estimated to be around 1,200 to 1,400 million billion dollars. Hold on, did I get the number right? It is so big that my head hurts. It is about 20 to 25 times bigger than the entire world gross national product. The value is not created in the commodity and service production (he points to the little square).
At the same time that the capital has become financial, the number of banks in the world has decreased by 40 percent. Basically, the entire derivatives market for example is controlled by nine big investment banks. There is no free competition or “may the best win.” It’s a total monopoly or at best an oligopoly. In the first three months of 2013, Goldman Sachs made a net profit of 2.3 billion US dollars. JP Morgan 5.4 billion US dollars and HSBC 6.3 billion US dollars profit – I repeat: in three months. It is a very lucrative business. That is why we wanted a piece of the action too.
We need to also understand that there are no financial virgins. We’re all already in the game. Our money is already there. As soon as your money hits your account, the banks start using it to expand credit. Every time you use your credit card, you take part in the creation of finance. Your retirement money is working days and nights at the market. We just never see the profits. We just carry the risks. And more fundamentally, our individual and collective capability to assume debt, pay taxes, and bear the austerity measures is used directly as raw material for making these profits.
And you do know that of all the wealth produced in the world 2009–2012, so after the financial crises of 2008, the wealthiest top ten percent has taken 116 percent, while the bottom 90 percent has seen a 16 percent decline. And that the wealthiest one percent got 95 percent of all income growth. In the United States, the wealthiest ten percent owns more than 70 percent of all capital. The situation is very close to monarchial Europe in 1911. This is the meaning of financialization and connection between financialization and precarization.
There is a new asymmetry between those who are able to turn their money into financial capital, who have access to money that is not tied to the necessity of work, and those whose only access to money is through work – or who first take debt, and then work. And furthermore, these two forms of money, the money you get for doing work (money as means of payment, money as means of exchange),
and money as capital, have very different powers. Or more precisely, the former has no power at all, it is money castrated of any power, while the latter has a power to organize and command the future, to reduce and submit what will be (all potentiality, change) into what is now (existing power relationship). It represents nothing; it has no equivalent, except in the future exploitation of labor, nature, and society.
This is why we started to think ... would it be possible to turn the financialization of capital into something that would benefit precarious workers? Would it be possible to share the means of production that the financial capital has in its use? Would it be possible to appropriate the power of money? Would it be possible to create a relationship with money that works as a means of independence and freedom? Would it be possible to give this other group of people access to money that is not tied to the necessity to work?
And we think it is.
Marcell Mars: It would now be good to hear: how do you do that?
Audience: And how much money do you have?
Akseli: Like all the interesting start-up companies, we do “big data.” We operate a massive, dynamic data-mining algorithm that we call the “parasite.” To get an idea of the dimensions – in the New York Stock Exchange alone, there are about 2.5 billion transactions a day. And we are not only following New York, but all the stock exchanges. Or to be more precise, at the moment we follow only stakes that are 100 million dollars or more; you know, big money, which does not take extra risks.
From this data the “parasite” starts to identify critical patterns and relationships of intensities and tendencies. To put it very simply, it is able to identify the players who for some reason are constantly able to make money with certain instruments. They simply are able to buy and sell at the right time, it seems. So after we identify the best players of the world with each instrument, we start to follow them, becoming a swarm – is there an emerging consensus action among the financial oligarchy? Last year, for example, we noticed that the best investors of Nokia stock in the world practically all started to buy Nokia. So what should we do? Yes, you are right, we should buy Nokia, too. And that is what we did. And it was an extremely profitable investment. So this is what we do – we just imitate. We let the bankers do all the work and we just imitate. Why? Because, as Michel Serres writes, the one who plays the position will always beat the one who does the content. The latter is simple and naïve, the former complex and intelligent. By playing the position we dominate the relationship. It means that we have a relationship with the relationship itself. It is the meaning of the prefix “para” in the word “parasite”: to be on the side, not on the thing, but on the relationship. A parasite has relationships; it makes a system out of them.
Like Serres’s parasites, we hook to the brains of the financial elite on Wall Street, and they don’t even know it. We appropriate the most important knowledge and capabilities of financial capital and its representatives and put them to work for us – just like capital normally puts to work our abilities and knowledge for the increase of its own value. This is minor asset management. Another way to occupy Wall Street.
Audience: And how would you deal with financial collapse?
Akseli: First of all, we only follow patterns, so there needs to be consensus action, or consensus “overweight” among the best players for us to go into a position. To put it in another way, we are very conservative. Often we play only semi-long positions, often we stay away from the market totally. And the stakes that we follow are so big that it takes months to unload them. The market is like a big tanker in the ocean, it does not move very quickly, in fact. Our positions are based on the best players’ consensus action, their swarming. But when we see that there is no pattern, that there is no consensus, we just back off. This year for instance, we’ve been in a 100 percent cash position many times, in the end of January and the end of March, for example. We also stayed away from the market a little bit too long, so we fell behind when it picked up more quickly than the parasite and the good players’ actions indicated.
Marcell: It seems to be really simple! If this is the winning strategy, why are other players on the market not doing the same? And what would happen if all the others did the exact same thing?
Akseli: Well, we have been wondering about the same thing! But economic thought and understanding of the rational and efficient market is based on something very different than how we approach it, through imitation, swarming, inefficiency, finance as creation of spread, parasitism, deconstruction of market actors into databanks. And when the first articles about us appeared in the papers, the journalists were also very concerned. They thought it must be a hoax or a scam. Then they asked some “economic experts” and the answer was always, “No, it does not work, it has already been tried” or “even if this worked for a little while, it won’t work in the long term.” But this clergy does not know what it is talking about, their “knowledge” is maybe our best cover.
Marcell: But apparently this is not an unknown thing. There are quite a few companies who are playing on the market. They might do well for a certain amount of time, but then they will fail miserably. The difference is that they don’t earn as much money as you do. It seems that you have much better yields. What I’m interested in is: how much money is in charge? How is it related to the whole market?
Akseli: What we do is not that different from Google, for example, or other algorithmic productions technologies. We make databanks of market players, we gather and select millions of data on market-player behavior, purchases, sales, habits, competences, inclinations, tastes, preferences. They have no idea how much we know about them. But this information concerns not individuals but “dividuals,” whose profiles are mere relays of inputs and outputs in our production-consumption machine. We deconstruct them from individuals into “dividuals” to extract their most important knowledges and capabilities, and to put them to work for us. It is important to understand that without devices and apparatuses like this, one remains “aphasic,” incapable of “speaking,” incapable of politics, of grasping and intervening in processes of value creation and distribution. I mean, it is so evident that the old political means … like voting, demonstrating, occupying, striking, creating a community … mean nothing. They are incapable of changing anything.
In the first official year of Robin Hood’s operation, the value of our portfolio rose 30.74 percent. With this result, we were the third best hedge fund in the world. Now after two years, we are up 41 percent. There are thousands of hedge funds in the world and you are called a small hedge fund when your assets under management are under 500 million. 500 million to one billion are the mid-sized hedge funds, over one billion are the big hedge funds. There are hundreds of them, too. Our assets under management are about half a million at the moment. But we want to grow now, to start really kicking some ass. They’ve done it, why can’t we? I think it’s decision time, that every one of us should decide where, with whom, for what, do they want to have their money working. There are no financial virgins. Robin Hood is an invitation to start creating something new together.
Marcell: For any serious player, what you are doing is almost like a laboratory simulation. But at the same time, for the world in which we are operating, the world of art and culture, half a million is already something. The project is well recognized in the art world and it also has bigger market shares in this area than in the financial area. Personally, I think this is connected to the title “Robin Hood.” A name like this generates a common connotation. You already told us a little bit about how you take from the rich and mentioned that you don’t care about the circumstances. So possibly, you could take from a place where the poor are the weakest. In that sense, your profit could also come from the poor. It is like in protests, where they burn mid-sized cars. So you do harm, but in the end you don’t harm the richest, but the poorest. Do you give to the poor? How do you do it? And how much do you give?
Akseli: Yes, we didn’t choose the name just for fun. Everybody knows what Robin Hood does. In times of semiotic inflation, we want to be able to tell people immediately what we do. He took from the rich and gave to people in need. But do you know why he did that?
Around 700 years ago, the Forest Law was enforced in Britain. It allowed the Norman kings to take common lands and forests into their private ownership. Robin Hood got his death penalty because he poached the king’s deer in a forest that had once been a common place to hunt and forage. At the moment, our political analysis is very clear: the common is again under threat. New forest laws are being enforced everywhere. The common needs protection again. That is why we talk about commonfare and the production of the common. We need the financial services of Robin Hood again. Our methods are just a little different, but the strategy is the same. We “tax” the routes of asset accumulation. The consequences are also the same – the Sheriffs of Nottingham are again clueless when they can’t withhold the king’s deer, or guard the routes of the wealth expropriated from the people.
But, to be honest, the giving part, the question of the production of the common has turned out to be much more difficult than we expected. The money-making part is in fact easy, but to be really able to provide access to capital, to understand and organize the production of the common is much harder. How do you do it? How do you not let the commonly created wealth become privatized again? How to move from common debt to common equity? We are working on this only now with the emphasis it requires.
Marcell: How do you give to the poor? And how much do you give? There is probably a little bit more that you can tell us about producing or generating the common.
Akseli: In the beta phase, 50 percent of the profit was returned to the members and the other 50 percent stayed in the common pool, the use of which we decide together. With this money we fund the “Robin Hood Projects,” which are about the production of the common. In two years we have gathered about 40 thousand euros. Which is not bad, considering that the first year our assets under management were only 70 thousand or so.
We decided to form a cooperative in Finland. But the cooperative has turned out to be quite inefficient, inflexible, expensive – just dumb. We are organized just like the poor and stupid people have always done it: we obey the laws, we do everything in the nice way, in the way that we are under double taxation so by the time the money gets back to the member, it has already lost almost all its power. The structures are using us, and not the other way round. I mean, a cooperative in one of the most taxed countries in the world? Rich people would never organize like this. So right now, we’re in the middle of establishing an American Robin Hood in Silicon Valley, which will simulate and leverage the start-up structure. And we are also – the nice people in the room should now shut their ears – putting up a black operations organization in a more tax-friendly environment. We want to grow.
One of the moves is issuance of a “cryptoequity” – a Hood Note – which is a “cryptocoin” backed by real assets. So we’re talking about security backed with assets and cash flow. With your investment of 30 dollars, you would no longer get a “share” of the cooperative, but a coin, or more precisely a note, a Hoodie, which gives you partial ownership of the Robin Hood dynamic portfolio and its cash flow and which you can also use – you can sell, save, spend, or use it. We are in a sense taking the role of a central bank. It is like government bonds. For example United States bonds are backed up by the fact that the US government can tax people. Our money is backed up by the ability to tax the financial elite by following their emerging consensus action. I think this is genius. Or another way to think about this is a structured synthetic financial product where you pool together risks and cash flows of certain assets and then create notes to redistribute cash flows and risks in a different form. With instruments like this, it’s possible to move from common debt to common equity as the basis of your relationship.
Marcell: This doesn’t sound like a welfare state proposal to me. When you say you take taxes from the “rich people,” it is more like a promise of a colonial state. The colonies are like the rich people. We take money from them in order to grow. So you think these people should be exploited? I’m fine with that. But, in order to trust this kind of colonial state, I have to know more about the political organization. How transparent is it? Who am I trusting? At the moment, it seems that there’s a lot of enthusiasm that the allocation of the authentic resources you offer is through digital currency. So it is pretty much ascribed to a technical solution, which has never really worked out. Even if I understand the technology, I’m not subscribed to the solution characteristics of the technology. Why do you believe that there’s a technical solution in general?
Akseli: Of course there’s not. And you’re absolutely right, especially with the Bitcoin. There are some mistakes or elements in its architecture that make it go in the wrong direction. For example, there is a strange belief in the market and neoclassical economics and game theory. And the same with political theory. Technology can’t solve politics, even if there seems to be a strong belief in this in parts of the developer world. Yet blockchain technology offers very interesting possibilities, for example on distributing or decentralizing our organization. I most certainly think that this is the future. That automatisms will take on more organization and control. Politics are played at the algorithmic and machinic level, where it’s about the axioms and self-evidencies that become the automatisms, which don't care at all what we “will” and “want” and that we and our interaction will just have to follow and obey. This is the basic premise of arbitrary power. And that is why this moment is also so important. What is at stake is the future and our ability to affect it. But here is also a concrete possibility to affect how it will play out if we are able to insert the Robin Hood code into the development. The code will start turning common debt to common equity, which will introduce poetry into finance.
We have approached this in Berlin, for instance. We opened a cooperation with the FairCoop, the Earth cooperative for a fair economy (https://fair.coop) and the FairCoin (http://fair-coin.org).The co-funder of the Catalan Integrated Cooperative Enric Duran, …
Marcell: … the Robin Hood from Spain …
Akseli: … yes, who borrowed half a million …
Marcell: … in 70 loans …
Akseli: … from different banks. He never intended to pay them back, but he started to finance political actions and organizations with this money. He has already been in jail for a while, but he got out, and has been on the run ever since. The Catalan cooperative that he has built, the Catalan Integrated Cooperative (CIC), is the most impressive in Europe at the moment. The new project that they are working on is called FairCoop and FairCoin. So we’re working together especially on the production of the common. That also means that we don’t have that much work to do, as they are already very well organized in this respect. The only thing they need is capital, and new instruments for creating common equity, which we can provide.
Audience: I have a question regarding transparency – a term that has replaced the word ethics in the past years. You are saying that transparency is hard work. I would like to hear more about the Robin Hood project’s ideology of transparency. What do you mean when you speak of 50 percent for the Robin Hood projects? And secondly, how do you connect with the poor and the precarious? I think this question has not at all been answered so far.
Akseli: As I said, the question of how to organize and how to establish access to capital money has turned out to be much more difficult than we thought. So this is a move with which we think we can make it more transparent, more pragmatic. We are trying to create the financial instruments and services that correspond to our subjectivity. The Fair Cooperative is trying to do the same thing. They are also in the business of finding and creating these financial instruments we need. We want to democratize the power of finance. Finance is a good thing. Money as capital can be a good thing. The precariat should have access to it, too.
The conversation was interrupted due to the exceeded time, and a murmur went through the crowd. Audience members’ faces reflected a mixture of curiosity and skepticism. Akseli Virtanen is used to this reaction, which he experiences every time he talks about Robin Hood. There is undeniable mistrust and the project’s impossiblity of categorization – is it a hoax, an art project, greedy business, or a philosophical experiment? Then there’s the “impossibilty to accept Robin Hood as it is – as a monster and a parasite” (Akseli Virtanen).
For more information about Robin Hood Minor Asset Management, please click on the links below:
http://www.robinhoodcoop.org
https://www.facebook.com/RobinHoodMAM
http://www.futureartbase.org/portfolio/robin-hood/