Fall 2022 Colloquium - William Deringer

Science, Technology, and Society, MIT

Title: Hazardous Nature: Coalmining Engineers, Discounting Calculations, and the Price of Risk, c. 1800

Abstract: Coal has long played a starring role in historical explanations of the development of industrial capitalism and the dawning of the Anthropocene. Yet the contributions of the coal industry to the intellectual infrastructure of modern capitalism has gained far less attention. This presentation reconstructs the role that coalmining practitioners played in developing one of the foundational conceptual practices of modern economic life: the ability to put a price on things, particularly things with an uncertain future. In the years around 1800, the engineers—called “viewers”—tasked with managing mines in the rich coalfields of northeast England developed remarkably sophisticated mathematical techniques for the valuation of unmined deposits of coal. Combining geological data, engineering know-how, and market intelligence, colliery engineers reimagined subterranean seams of carbon-laden rock as orderly financial assets that could be projected to produce a flow of regular profits. The linchpin of these remarkably modern business models was a calculative technique called “exponential discounting,” which made it possible to assign a “present value” to expected future income using the logic of compound interest. (This paper is drawn from a larger book project on the history of these discounting calculations.) Viewers’ transfiguration of the earth’s products into profit-generating assets marked a key turning-point in the intellectual genealogy of the carbon economy. It also exemplified a critical development in modern ideas and technologies of risk. Colliery viewers found that adjusting just one parameter in their calculations, the “discount rate,” enabled them to adjust for the myriad financial risks that faced investors given the “precarious and hazardous nature of a Colliery property.” At the same time, this clever computational device effaced the very different kinds of risks—noxious gases, mine collapses, catastrophic explosions—that shaped, threatened, and frequently ended the lives of those workers who descended into the mines.