This book … sets out to ask which failures are being forgotten, and which failures enter the collective memory and reshape our understanding of the world.

Horizontal Rule with Colgate C

The idea of the promise is central to our analysis of failure. We wish to distinguish between three categories of promise: Austinian, agonistic, and delayed. As different as these might seem, they all function as performative utterances that create the conditions of their own truth. By making a promise, one creates a world in which such a promise might be fulfilled. Often, a promise is thought of as an option followed by a conclusion: it is based on an if/then statement such as, “if you finish your homework, then you will be allowed to eat ice cream.” These kinds of promises mostly take place under conditions of certainty: there is nothing that might prevent the parent from buying and providing the ice cream, for example. The triadic structure of the promise that we are interested in, on the other hand, relates to uncertainty, risk, and contingency. These are promises that either are made to be broken or are very unlikely to be fulfilled. Their failures are thus intrinsic and predictable, and yet these performative acts still define the underlying logic of the financial markets and, to a lesser degree, the tech industry.

A. Austinian/performative promise. Named after J. L. Austin’s (1975) work on performatives and their conditions of felicity, this general category of speech acts includes (among many others) any con­tract between two sides in which the losing party promises to pay the winning party an agreed-upon sum of money based on the future prices of vari­ous types of assets. Thus, the contract is a promise about the uncertain future. This kind of promise is performative to the extent that the very act of stat­ing the promise has the effect of binding the two participants. The agreement and the promise are one and the same. More importantly, it is speculative as it takes into account probabilities and contingencies and therefore consists of a risk factor, because the price at the end of the stipulated period is unknown and unknowable. When one signs such a contract, one knows that one might lose money or assets.

B. Agonistic promise. Unlike the pure Austinian prom­ise, an agonistic promise requires two parties whose promises to pay one another have to be simultane­ous and mutually exclusive, so that both promises (which together compose the contract) meet the same conditions of felicity. The second key feature of this sort of agonistic promise is that it depends on the endless tradability of any particular bundle of assets (such bundles are often called securities), something that resembles the endless circulation of money. Failure — or collapse — occurs when the systemwide relations between the buyers and sellers of these assets enter into a crisis because there are no buyers for large amounts of these instruments, thus creating a monumental pile of debt without another buyer left to pick up the mountain of accumulated risk. This distinction — between too many sellers and very few remaining buyers — is crucial, as it will help us move the discussion from individual failure to collective failure. The agonistic promise underlying derivative trades, which will be studied in chapter 4, is an example of what legal theorists call “alea­tory” contracts, contracts whose fulfillment depends on future conditions which are unknown to both contracting parties. Both aleatory contracts and agonistic promises, in our argument, can be seen in the light of Austin’s theory of promises as per­formatives, because their utterance as speech acts (followed by written or electronic confirmation) is also the guarantee of their moral and legal capacity to bind the contracting actors together.

C. Delayed promise. A promise made by a company or a person who knows full well that they cannot meet the necessary conditions for its fulfillment, and therefore endlessly delays its lifespan. This can be seen as a sub-category of false promises. It is a model that fits well with the idea of the “uni­corn:” a startup that will generate profit in the ratio of millions in relation to the initial venture capital investment or purchase price. The inves­tors who make these financial decisions, which are almost always in the tens of millions of dol­lars, belong to a new breed of wealthy speculative capitalists specializing in delayed promises. Another example of delayed promise is the ROI (return-on-investment) model, which describes a ratio between the net future profit and the current cost of invest­ment of some resources.

That Silicon Valley has come to rely on delayed prom­ises is made obvious by the fact that many of its most successful companies have failed to produce profits or have only become profitable after many years. Writing about Silicon Valley’s “tolerance for failure,” Adrian Daub reminds us that

failing seems to carry opposite meanings depending on who does it. If a traditional brick-and-mortar business hemor­rhages money as unregulated digital competition moves in, then that’s just a sign that the brick-and-mortar business deserves to die. By contrast, if a disruptive New Economy startup loses money by the billions, it’s a sign of how revo­lutionary and bold they are. (2018, 23)

Within a discourse of “disruption” and “scalability,” the promise for profit might be forever delayed.

It is important, however, to distinguish between bankers and venture capitalists (VCs): The first accrue debt, while the latter invest in equity of a startup and as such buy into the potential of its success. Unlike bankers, VCs are willing to fail and lose their investors’ money. Success in this case means growing a company over a decade into a more highly valued one and then selling their equity share at a multiple of the initial investment. This is not necessarily a false promise, but rather a patient bet on a possible success. Losing money, in the case of VCs, is often seen as a temporary necessity that drives innovation. Still, this is an experiment whose results are delayed and uncertain. It also divides the economy into those who can afford to wait and those who cannot. VCs and investors know full well that they will have to wait years or even decades before they can enjoy the fruits of their success, while low-or middle class citizens cannot afford to wait that long or risk losing their savings. We will return to this distinction between venture capital and banks in our discussion of the derivative form and the Great Recession in chapter 4.

At the same time, users who complain about slow products, limited battery life, or brittle hardware are answered with the promise that the problem will be fixed in the next model or “upgrade.” Instead of being acknowledged as such, the failure is therefore co-opted into the business model of planned obsolescence and the inculcation of the constant need to upgrade their soft­ware and devices. Planned obsolescence and the delayed promise thus sustain and enable one another since the affective economy of planned obsolescence guarantees the endless temporal horizon of the delayed promise.

"Failure" book cover

Excerpted from Failure (Polity), by Arjun Appadurai, Paulette Goddard Professor of media, culture, and communication at New York University, and Neta Alexander, assistant professor of film and media studies at Colgate University.