“In 1986 Fischer Black, one of the founders of contemporary finance, made a rather surprising announcement: bad data, incomplete information, wrong decisions, excess data, and fake news, all make arbitrage—purportedly risk-free investments, such as the profit that can be made when one takes advantage of slight differences between currency exchanges (or the price of the same stack) in two different locations—possible. In his famous article “Noise Trading,” Black posited that we trade and profit from misinformation and information overload. Assuming a large number of “small” events networked together as far more powerful than large-scale planned events, the vision of the market here is not one of Cartesian mastery or fully informed decision makers. Noise is the very infrastructure for value. For Black, who was the student of Marvin Minsky and also invented the revolutionary trading instrument the Black-Scholes Options Pricing Model, “irrationality” was not an exception, but the norm; the very foundation for contemporary markets. Noise, Black argued, is about a lot of small actions networked together accumulating in greater effects on price and markets than large singular or perhaps even planned events. Noise is the result of human subjectivity in systems with too much data to really process.
Neoliberal theory posited the possibility that markets themselves possess reason or some sort of sovereignty; a reason built from networking human actions into a larger collective without planning, and supposedly, politics. This understanding not only presumes an objective measure of value but also that models themselves represent or abstract from something real out there in the world.

According to Black, stocks behave more like the random, thermodynamic motions of particles in water than proxies or representations of some underlying economic reality. The market is full of noise, and the agents and traders within it do not know the relationship between the price of a security and the “real” value of the underlying asset.”

part of Orit Halpern’s text “Financializing Intelligence: On the Integration of Machines and Markets”