What fashion and finance have in common

In finance, as in fashion, products are constantly redefined by freshly enveloping layers of abstraction. To succeed, one must keep up to date. And this is no accident.

James Surowiecki's writing on finance in the New Yorker has been concise and understandable. Modern financial instruments are as abstract as all hell. Remember, we started out trading concrete objects - bananas for coconuts, that sort of thing. Then somebody invented money. Then corporations, then stocks, then index funds, futures, mark-to-market accounting, etc., ad nauseam. The people making the most money are those on the cutting edge of abstraction.

This line of thinking came to me as I looked at my car's steering wheel. It's wrapped with perforated leather. Why? Aren't there a dozen synthetic materials that would be better functional choices? But leather means luxury; in fashion, a material or a shape derives its meaning from a historical reference that was probably functional at one time. Fur was warmth. Leather was tough. Plastic still suffers from 'bakelite syndrome', the aura of cheapness it got from the early products made from brittle polymers. So why perforated leather? In the last 5-10 years, luxury cars have been shipping with seats that are both heated and cooled. The cooling is accomplished by blowing refrigerated air into a bladder inside the seat, then through the perforations on the surface. So perforated leather seats became the next signifier of luxury. And that's why they wrapped my steering wheel with it - not because it actually needed to be ventilated, but because the perforations had become an abstract representation of state-of-the-art technology.

The abstractions in fashion and finance evolve at a rate that creates an exclusive club for the leaders in the field. It preserves their advantage because nobody else has the time to understand as much as they do. A person's understanding of the meanings within fashion gives them social capital. And it's pretty clear what mastery of financial instruments provides.