Creativity and the Stock Market

by Norman N. Holland

September 19, 2000


Usually, we call "creativity" the ability to put something "in" a work of art that causes an aesthetic experience in its audience. This model, however, does not define the something; neither does it account for changes in experience in different eras, cultures, and individuals; nor does it acknowledge the value judgment implicit in "creative." A better model analogizes the assignment of "creativity" to artists and scientists to investors' valuation of stocks. Efficient market theory can then account for vagaries in assigning the accolade "creative," the variety of explanations of "creativity," and our inability to predict it. The analogy applies to many other psychological terms, ultimately to all top-down processing.


    I'm not a clinician, but I'm told by clinicians that 90% of the problems patients bring to them have to do with sex or money. As a psychoanalytic literary critic, I write about sex all the time. In this essay, I thought I might vary my diet and write about money. That's the reason for my odd title. But what on earth does the stock market have to do with creativity? Except for Wall Street's creating ever new ways of losing our money.


    Most of us, when we think about artistic creativity, carry around in our heads a three-part model. There is A, the artist, B, the work of art, and C, the audience. The artist A has something called "genius" or "creativity" that enables him to make B, a work of art. Plato treated artistic genius as a sort of god-inspired insanity, and that idea has persisted through the Renaissance and down to us. Creativity equals some kind of divine madness. The only heavy competitor to that view is the psychoanalytic one: that creativity expresses unconscious urges, often conflicted or neurotic urges. Freud had some other ideas about the innate endowment of the artist: that he combines unusually large drives with unusually large capacity for sublimation and an unusual freedom to let go of repressions.1  Freud was, by the way, worried about artists. He thought of himself as a scientist, oriented toward reality, and he thought artists with their fantastic imaginations were likely to do better with women than he could.2 

    At any rate, this divine madness or libidinal endowment enables the artist to create a thing that has certain properties--call them, for the time being, "beauty." Then this "beauty" in the object evokes a certain aesthetic appreciation from us, its audience. A causes B which causes C. The artist's creativity causes the artistic object and the artistic object causes our response.

    Now this is all very straightforward and commonsensical, and surely something like this does take place. On the other hand, there are some problems with this picture.


    The chief problem is that we have been working with this neat, commonsensical model at least since Aristotle, that is, for over two thousand years, and the simple, straightforward picture has produced rather limited results. Most of all, psychologists and aestheticians have had trouble isolating those properties in the text that supposedly cause an aesthetic response in us.

    What are the properties in a work of art that we associate with aesthetic values? A famous literary formula was that of Monroe Beardsley: unity, complexity, intensity.3  That is to say, there should be a wholeness, an integrity, a unity, to a work, at the same time that it is sufficiently various or intricate or complicated to hold our interest. Then there is intensity, a certain passion or emotion or arousal--but literary works do not have passions, people do. So I suppose by "intensity," we mean something like the ability to arouse passion. How do we locate that in a literary work, or any artistic work for that matter?

    Ellen Winner in her thoroughgoing survey of psychological research in the arts suggests three slightly different criteria: repleteness, expression, and composition.4  Repleteness is an extremely interesting idea, that she gets, I gather, from the philosopher Nelson Goodman.5  Consider a zigzag line like the kind you see on stock charts. If we are concerned only with it as representing stock prices, then we will only be concerned with the numerical values represented by the line. We can, however, look at it as a work of art--and, by the way, I once saw an announcement for a show of tapestries by Jan Groth which look very like white stock market lines on a black background. If we look at a stock price chart as a work of art, we will be concerned with many more aspects of the line than simply the numerical values it represents: its varying thickness, its darkness, its size relative to the objects around it, its placement on the page. The relevance of these many different aspects of that line is "repleteness," as Nelson Goodman and Ellen Winner define it.

    "Repleteness," writes Winner, "refers to the fact that in a work of art, relatively more aspects of the symbol `count' than in a nonart object. And expression [another of her criteria] refers to the psychological states and sensory qualities metaphorically conveyed by a work of art" (170). By her third criterion, "composition," Winner means structure, arrangement, including, perhaps, theme and variation sorts of things. By "composition," I think she means what literary critics talk about as the combination of unity and complexity.

    All of these, however, the psychologist's entities or the critic's, are difficult to measure, difficult to isolate, difficult to replicate. That is, if you use a regular painting to illustrate structure, how do you isolate the effect of structure from the effect of subject matter? Most important, these qualities ostensibly in the work of art itself blur into the way we look at the work of art. Repleteness, for example. Is repleteness a property of the chart of a stock's price? Or is repleteness an idea that we bring to bear on that chart when we decide we shall look at it as a work of art? In other words, isn't repleteness a stance we take and not a property of the object at all?

    Indeed, experiments with children like those of Gardner and Winner at Project Zero raise a question about the whole idea of "effect."6  That is, does a certain "repleteness" or "complexity" in the work "effect" a certain response in the viewer? No, say Winner and Gardner, not unless the individual is mature enough or sophisticated enough to recognize and enjoy those features. Not unless the individual has acquired the internal systems necessary to do the right kind of perceiving for that work of art. The simple A-causes-B-and-B-causes-C model, in which the artist puts in repleteness and repleteness causes pleasure, needs to be complicated to take into account the differing skills of different members of the audience.

    My own studies of students' responses to short stories also suggest that responses vary too much for us to assume that they are "caused" or "the effect of" some property in the text. There is, for example, great variability from culture to culture. For example, do you like the music of Chinese opera? Most Westerners don't, for that music is not part of our "interpretive community," as Stanley Fish calls it.7  Japanese men find whitefaced geisha with big upswept hairdos sexy, but most Western men don't. Guerníca looks unified to us, but it didn't to the people who first saw the painting. In my graduate school days, we looked down on Byron and Shelley and revered Donne and Herbert. Nowadays, I think, the opposite would be true, that is, if anyone reads poetry in English departments any more.I could ask the men in the audience do you find a geisha attractive with white make-up painted on, little tottery shoes, her hair piled high on top of the head, and so on?

    Even within a given culture, there is great variation. For example, when I collected responses to stories from a group of graduate students in English at one university, that was surely a very narrowly defined culture or "interpretive community." Yet even they showed a tremendous variability.8  To give you a brief sample of this variability, here is a sentence from that famous story of Faulkner's, "A Rose for Emily":

We had long thought of them as a tableau, Miss Emily a slender figure in white in the background, her father a spraddled silhouette in the foreground, his back to her and clutching a horsewhip, the two of them framed by the back-flung front door.

One of my student readers, Sam, read it this way:

The father was very domineering. One of the most striking images in the book is that of the townsfolk looking through the door as her father stands there with a horsewhip in his hands, feet spread apart and between or through him you see a picture of Emily standing in the background, and that pretty much sums up exactly the kind of relationship they had.

Sam saw a dominating, tyrannical father. By contrast, a second reader, Saul, read the father this way:

The father `a spraddled silhouette.' He's no longer stern and erect. He's spraddled across the door.

And Saul took the image to be one of the father's decline and impotency.

    Now this kind of variation in people's readings is not the exception but the rule. Nor does it have much to do with the amount of training people have in critical reading. Sam and Saul were graduate students in English, but more recently, when I collected responses from forty-four professors of English, they showed equally various repsonses even to simple grammatical questions.9 

    In short, people's responses vary tremendously, not only in matters of complex interpretation but even the reading of a simple word or sentence. That is a second reason why I have trouble with the three-part, cause-and-effect picture of creativity in which an artist's creativity causes a work of art which causes a response. It is awfully hard to work with the idea that a work of art causes this or that response, independent of what its audience brings to it, when the responses are so various. Yet surely the general direction in which the transaction movies is artist to work to audience. Something like A-causes-B-and-B-causes- C must be what takes place. How then can we improve that simple, three- part picture?


    I'd like to work by analogy from a field that seems very different, but presents the same problem: the stock market. By the way, the stock market may not be very different. I think, for example, stock pricing is the only subject on which the literature is larger than creativity. Moreover, I can appeal to the authority of Marcel Proust, hardly your average broker. It was Proust, I believe, who first analogized between the stock exchange and the rise and decline of various composers and novelists.10  Today, we could say that on the current literary stock market, Wordsworth and Wallace Stevens are up, Tennyson and T. S. Eliot are down.

    I am suggesting that we can perhaps draw an analogy between literary value and the value of a share of stock. Or perhaps I should not say "value," but "price." The problem in what is called pricing theory is, What sets the price of a certain share of stock? It is the same problem as Proust's with literature: What sets the value of Wordsworth or Tennyson?

    With stock pricing as with creativity, there is a traditional, commonsensical, A-causes-B-and-B-causes-C, point of view. In the world of stock prices, this established point of view is called "fundamental analysis" and associated with a famous book by Benjamin Graham and David Dodd, published in 1934, called Security Analysis.11  That is just what Graham, the "father of fundamental analysis," proposed: analysis of the properties of a security. Investors were to examine balance sheets, profit and loss statements, sales trends and every piece of information they could get about the company behind the stock so that they could arrive at the true value of the stock (just as a literary critic might fully examine a poem to determine its true value). Then the investors' strategy becomes elementary, my dear Watson. Buy stocks that the market has underpriced relative to that true value and sell stocks that the market has overpriced. When the market comes to its senses and gives the stock its true value, the investor is bound to make money.

    Very sensible, and it has a very sensible model behind it, just like the commonsensical A-causes-B-and-B- causes-C model we have been considering for the artistic process. The management of Behemoth Industries is in the position of the artist. Management makes the company earn more, that is, show more profit. That profit causes investors to pay more for the stock in the same way that certain properties of a work of art cause its audience to appreciate it more. Then the price of the stock goes up.

    This is a perfectly simple, straightforward model and very widely credited. When you listen to E. F. Hutton, this is the model that E. F. Hutton will be talking from. Behemoth Industries is "undervalued," and it's time to buy, or your broker may say that is "overvalued," and it's time to sell. The earnings of are likely to go up next year, and therefore its price will go up--let's buy. That is what you will hear from your broker in an industry that depends precisely on your buying and selling because of the broker's forecasting and advising.

    When you turn from the securities industry to the professors who teach courses in finance (and who do not profit from your buyings and sellings), you find an altogether different model of stock market prices. The professors' research relies on computer studies of stock prices over many, many years, even pre-computer years. They try to correlate those prices with past stock prices, with market indexes, with earnings and profits, with inflation, with interest rates, even with baseball averages or the height of women's skirts. With a unanimity quite rare among academics, Nobel prize winners and assistant professors all come to the same conclusion, and it is a conclusion altogether different from the Wall Street professionals' model. They do not find any correlations--or only the most limited.

    From the professors' point of view, wisdom in the stock market begins in typically academic fashion, with a Latin quotation. Res tantum valet quantum vendi potest.12  That simply says, A thing is worth as much as it can be sold for.

    In other words, what determines the price of a stock or anything else, for that matter, your house or your Picasso, is what somebody else will pay you for it. The management of can make all the profits in the world, but if investors believe that Hotscheme isn't so hot or that interest rates will go back up to 15% where they were in the early 1980s or that the stock market will crash, the price of a share of stock will go down regardless of the profits management has made. It is not the properties of the company that determines the price, but the thinking of the investor and the investor's ability to make that thinking felt in the efficient market of a stock exchange.

    "Efficient market" is a term of art among professors of finance. It refers to a special property of stock exchanges. In a stock exchange, all the prospective buyers and sellers come to the same open place at the same time to do business. As a result, any one buyer's move or any one seller's move is immediately known to all the other players. If has been selling at 100, but you are willing to pay 102 for it, all the sellers in the market will immediately know that, and if they are willing to sell at 102 that will become the new price of the stock. Conversely, if has been selling at 100, but you and all the other buyers are only willing to pay 98 for it, the price of the stock will immediately drop to 98. There can only be one price, but it will move quickly up and down in response to what individual buyers and sellers agree to do.13 

    Contrast that kind of market with selling your home, the real estate market being a relatively inefficient one. You cannot be sure that ten minutes after you have sold your ranch-type Cape for a modest sum, some billionaire collector of ranch-type Capes will not come along and say, "I wish I had known your house was for sale. I would have given you a half a million for that house." You cannot be sure, in other words, that there was an efficient flow of price information between potential seller and potential buyer.

    Furthermore, you may be the kind of house seller who does not happen to mention that the basement leaks and the chimney needs pointing and the roof has to be replaced. In the stock market, in principle, anyway, all relevant information is supposed to be immediately public: profits, losses, loans, new products, hirings and firings, or executive trading. According to the Securities and Exchange Commission, all are supposed to be public knowledge, although, as you know from the cases of insider trading on stocks that were being merged, the Securities and Exchange Commission's rules are sometimes broken.

    The instantaneous flow of price and other information and the fact that all the buyers and all the sellers pass through the same exchange make the stock market an efficient market. That efficient market ties the price of any given security very tightly to the evaluation of that stock at any given moment by buyers and sellers. That evaluation in turn rests on the open flow of information about earnings, profits, assets, and so on. In other words, how investors value a certain stock impinges immediately on the price of the stock. The Latin quotation, a thing is worth only what it can be sold for, gets translated immediately into price.

    Notice, the efficiency of the market does not tie the stock price to any supposed fundamental value in the stock or to some previous price or to a "baseline" or a "trend" or a "head and shoulders formation." It ties the stock to the buyers' and sellers' evaluations of that value.

    If we state this model more precisely, investors have their individual psychologies of risk acceptance and risk aversion. Each individual investor uses the information available to all to arrive at a particular price at which to buy or sell. The investor uses the record of past prices, the balance sheet, the profit and loss statement, the history of sales, the records of officers' trading, the calculation of a price-earnings ratio or a return on assets, all those fundamental things that Graham and Dodd pointed to. All our past experience of that stock and all of our future hopes for it go into its present price. From all these things each investor works out a price, and that price is thus a financial phenomenon wrapped in a psychological one.

    Hence, the model I have been giving you, the efficient market theory of stock pricing, is really the notorious "random walk" theory. Random walk is another term of art for the professors of finance. That is, running the tables of stock prices through their computers, the professors find that the price of a stock, and indeed all the averages and indexes follow what statisticians call a "random walk," or, more picturesquely, a "drunkard's walk." Any given step in the walk (or price) starts where the preceding step stopped, but otherwise it is completely independent of all the steps (or prices) that preceded it.

    On the stock market, each movement is random and unpredictable, because the price is caused, not directly by any factor in the stock, but by the way people interpret factors. That means that a sudden move by OPEC, the crash of a space shuttle, a president's heart attack--any random event that enters the consciousness of investors can affect stock prices. A stock price is hooked to a random process, namely, the psychological evaluation of the stock by hundreds or thousands of investors. The present price of the stock is "caused" by people's present expectations about the future of the stock. Hence, to investigate the price of a company's stock, rather than investigate the company, you should begin by investigating what the potential purchasers of the stock are thinking.

    John Maynard Keynes was a brilliantly successful investor. King's College, Cambridge, for whom he he was investing, still benefits from the splendid profits he made when he was managing their portfolio in the 1930s. Nevertheless, he believed in random walk. Writing about the same time as Benjamin Graham, Keynes described the stock market as entering a newspaper beauty-judging contest, not a beauty contest, but a beauty-judging contest.14  The aim is to select the six prettiest faces out of a hundred photographs, but the prize goes to the person whose selections come closest to those of the rest of the judges. In other words, you don't judge who is the most beautiful. You judge who the other judges will judge is the most beautiful. In effect, Keynes is saying, the only way to make money in the stock market is to psych out the other investors.

    The price of any given stock is tied very tightly to the evaluation of that stock by those buyers and sellers at that moment. The clever investor in is trying to guess, not the price a year from now--no one can do that--and not the earnings a year from now--no one can do that either. He is trying to guess how other investors will value those earnings a year from now or, still more precisely, he is trying to guess how other investors will guess other investors will value those earnings a year from now or two years from now or five years from now. The problem is to predict what the average opinion will be of the average opinion. Indeed it is an infinite series: the problem is to predict what the average opinion will be of the average opinion of the average opinion of the average opinion (and so on, for as many stages as you have patience for) of the value of the stock. All of these, of course, are quite impossible tasks, some more impossible than others--if there are degrees of impossibility--and as a result, no matter how much research you do, you cannot predict whether a given stock will go up in price or not.

    The editors of Forbes magazine were sufficiently distressed by this conclusion from the efficient market model that they put it to the test. In June 1967, they tacked up on a wall the long lists of stocks from the stock pages in the Wall Street Journal and picked stocks by throwing darts at the lists. Seventeen years later, the Forbes Dart-Throwing Fund showed a 370% gain, that is to say a 9.5% annual return. This was far ahead of the market indices, and indeed ahead of most market analysts, for professional market analysts beat the market only about one-third of the time.15 


    Now what does all this have to do with literature? Well, notice that the literary stock exchange is also an efficient market with a free flow of information. Once I have read a poem by Wordsworth or Tennyson, I have all the relevant information. There is no possibility of insider trading in literature, is there? Notice, too, how similar the question of evaluation is. When I say John Barth is a great novelist, I am really saying something like, People will be reading Barth a hundred or two hundred years from now, kids will be studying him in school, professors will be writing learned articles about him, and so on. Note that this is the same impossible prediction as trying to say how the investing public will value the earnings of five or ten years from now. When you say Barth is not as good as Bellow, your valuation is immediately available to me, like the price of stock.

    Further, it seems to me that the literary world has a counterpart to the theoretical tug-of-war between the securities industry's fundamental analysis and the finance professors' random walk or efficient market theory. In the world of finance, "fundamental" analysis suggests the price is a function of certain properties of the stock itself (the company's balance sheet, say). That is like saying aesthetic appreciation is a function of certain properties of the poem or the picture. But it is clear that investors' expectations will drive up the price of dot-com stocks regardless of fundamental properties. And it must be equally clear that a fad for postmodernism or metaphysical wit or projective poetry will change all our evaluations of previous literature. Indeed, in T. S. Eliot's famous epigram, "The past [is] altered by the present as much as the present is directed by the past."16  His epigram applies just as well to the stock exchange as to literature.

    Let's go back to Tennyson and Wordsworth on the literary stock market. Wordsworth is up and Tennyson is down. Why? Not because of any properties intrinsic to Wordsworth or Tennyson. What they wrote has not changed since it was published. Rather, we no longer value rhyme very highly, and we might well prefer Wordsworth's rather eccentric blank verse to Tennyson's rhyme and stricter form. We no longer value philosophical rumination or dramatic monologue, Tennyson's favorite forms. We do value a study of childhood like Wordsworth's Prelude.

    So with T. S. Eliot and Wallace Stevens. Their writings have not changed, but our tastes have. Critics are no longer so interested in arcane literary references or conservative political and social commentary like Eliot's. We tend to prefer Stevens' playing with philosophical paradoxes and his deconstructing the questions of perception and knowledge. Hence Stevens and Wordsworth go up on the stock exchange and Tennyson and Eliot go down, not as a result of anything they wrote, but because of the way readers and critics value what they wrote.


    Now what does this say abut literary creativity? We regard Shakespeare as creative and a genius, but we do not so regard Edgar Guest. I suppose that if this devaluation of Tennyson went far enough, we would say that he was really just a versemonger, a mere poetaster. He does not show that extraordinary poetic ability that we call genius or "creativity."

    Evidently, when you think about it, we only award the epithet "creative" at the beginning, if we grant the appreciation at the end. Then perhaps creativity means finding that something is worthwhile, satisfying, valuable, wanted. To talk about Tennyson's creativity or Shakespeare's, then, is analogous to talking about prices on the stock market. Creativity is not so much a property of the stock or the artist as of the evaluation. We need to look at the whole transaction, and we would do well to look at it starting with the result: how the investor values a given stock or what the reader or the audience does with the work of art.

    Indeed, we may do better by starting at the end of the aesthetic transaction rather than the beginning. We may need to think of aesthetic ideals like unity, complexity, intensity, repleteness, or expression, not as if they were things "in" our texts or pictures, but psychological processes in our audiences. More precisely, just as a Shakespeare uses skills to create, so a reader uses skills to appreciate Shakespeare and to give him the accolade "creative."

    Literary genius, then, defined precisely, means openness to the reader's creativity. In a way, then, for psychiatrists, psychoanalysts, psychologists, and literary critics to explore Shakespeare's creativity we need to explore the creativity of his readers four centuries later.

    What I am calling for, obviously, on both the literary and the financial stock markets is an analysis of that magical thing, creativity, that begins with a psychological study of the ultimate consumer. Now you might think that psychologists and psychoanalysts would be sufficiently imperialistic to welcome this takeover of the whole of aesthetics, but so far, I have found only one psychologist who has wholeheartedly taken this stance, and he, strangely enough, a behaviorist. I am thinking of Robert S. Albert of Pitzer College, who published in 1975 an article called "Toward a Behavioral Definition of Genius."17 

    By "genius" Professor Albert meant the kind of thing we call extraordinary or exceptional creativity in the arts or the sciences. Then Professor Albert's "behavioral definition" of "genius" comes out the way I am suggesting. That is, he says, "Genius is inferred from behavior having protracted influence." More fully:

A person of genius is anyone who, regardless of other characteristics he may possess or have attributed to him, produces, over a long period of time, a large body of work that has a significant influence on many persons for many years; requiring these people, as well as the individual in question, to come to terms with a different set of attitudes, ideas, viewpoints, or techniques before all can have "peace of mind," that is, a sense of resolution and closure.

    Several things follow from Professor Albert's definition. For one thing, "There are no "might-have-beens," no undiscovered geniuses, no potential geniuses cruelly snuffed out or mysteriously prohibited . . . genius is, at best, a judgment placed on the degree of influence of a person's work and cannot be meaningfully placed on the origins . . . of that work . . ." He is saying the same thing that the perfect market theorists say when they say there are no undervalued stocks, no bargains on the stock exchange.

    Similarly, says Professor Albert, "One knows of persons of extraordinary abilities by the use of these abilities and by the subsequent influence they have." "One does not have genius, one does genius-level work." In stock market terms, you know that a stock is going up when it goes up. You can't predict that it is going to go up from any analysis of the properties of the company that originated the stock. A person does not, in other words, have some property called genius. A person does work that others value so highly they attribute genius to its author. Professor Albert concludes, with typical behaviorist bravado, as for genius per se, "There is no such thing."

    I'm not sure my own point of view is so drastic as Professor Albert's behaviorist angle. I would put it this way. If we define creativity exactly, it seems to be the ability to make something that is open to the creativity of a great many other people in the audience. People are able to do things for themselves with a poem by Stevens, a novel by John Barth, or a theory by Niels Bohr. The creative person makes something I can use to re-create my identity in a way that satisfies me, and you can use that same something to re-create your identity in a way that satisfies you. Our responses are various, but we agree that we can use Shakespeare or Stevens or Freud to do that re-creating.

    Hence I prefer another quotation from Albert. "Important work, like all behavior, is transactive." 146a9. Instead of saying creativity is a property of one person, the artist, something "in" the artist, I suggest we think of creativity as a process that includes other people alongside the artist. In other words, we should think of art as a process rather than a thing. If so, then we need to look at the whole artistic transaction, not just one part singled out as the "production" or "creation" of a work of art.

    If you take this point of view, looking at the whole transaction starting at the end rather than the beginning, that implies something about how we shall go about investigating creativity. Traditionally, psychoanalysts and psychologists look at a writer and his biography and find traits or influences that will account for the ability to create poems or stories. Literary folk tend to look at the text. They find certain properties "in" the text, and they define creativity as the ability to put those things in the text. (That word "in" introduces a "container" metaphor for literature that I, following the psycholinguists, have strenuously objected to in The I and elsewhere, but that is another paper . . . )

    Now, all of that seems familiar and commonsensical. What I am suggesting seems, by contrast, paradoxical. To investigate Shakespeare's greatness, we start with Shakespeare's audience. Even and perhaps especially his audience today, four hundred years after he was beginning his writing career. What do you and I manage to do with Hamlet, The Tempest, Taming of the Shrew? Surely that is a little silly. But if we accept the idea that a work of art involves a whole transaction that is not complete until we have heard from the audience, then we have to listen to them. Indeed we have to start there, because they are what we have. We do not have Shakespeare, and his plays are nothing in isolation, nothing, that is, until we turn our minds to them and become an audience for them. Let us accept the paradox, then.

    That does not mean that we cannot identify characteristics of creative people. I agree wholeheartedly with Ellen Winner, for example, when she notes that it is characteristic of creative people that they are driven (16-17). They can't stop writing or painting or composing. If something should happen to make them stop, an illness, say, military service, or prison, they find a way, or, if they can't find a way, they just about go crazy. I believe, too, and Howard Gardner reports research along these lines, that a creative genius in the arts establishes early in childhood a special relationship with the particular kind of seeing or hearing or speaking that marks out his special medium in the visual arts, music, or literature. Somehow an artist's medium has something to do with his identity at the deepest, earliest level. I agree with all that, but these things alone do not define creativity. In a logical sense they are necessary but not sufficient to explain the artist's successful creation. Finally, the artist's creation is a creation only when we give it the value judgment creative, and that happens at the end of the process. If so, then when we think about creativity, we need to think about the whole transaction from creator to audience, not just one end of it.

    The same admonition applies to predicting creativity. Can we look at a person and predict they will be creative? Sort of. But take Emily Dickinson. During her lifetime, the few people to whom she showed her poems were at best patronizing. At the time of her death in 1886, she had published only seven poems, and no one paid any particular attention to them. When poetic tastes changed a half century after her death, she was "discovered" and pronounced one of the great geniuses of American literature, a judgment that we would still agree with today. No one could have predicted in 1886 that we would call her a great genius, although it was undoubtedly true as of 1986 that she was. Isn't it clear that the "creativity" of Emily Dickinson is not simply something she "had," but a complex interaction between the poet and her audiences, even audiences a century after her death?

    In short, my argument is a simple one. I am trying to get us away from the naive A-causes-B-and-B-causes-C picture of creativity. The artist has something called "creativity" such that the artist can put things in an object that make it "great art" (or science) and that object causes us, its audience, to have an experience of greatness. Instead, I argue, we ought to look at the whole transaction. To be sure, the artist creates the work of art, but also the audience seeks out and praises the kinds of things that open up the audience's creativity. That being in principle indeterminable, we can never identify creativity solely in the artist or, for that matter, "greatness" solely in the work of art. We need to look at the whole artistic transaction.

    Notice that this stock market analogy applies to many other phenomena. After all, I'm simply updating for the dot-com era the old saying that beauty is in the eye of the beholder. For example, why is a best seller a best seller? Publishers say such a book "has legs," that is, it walks right out of the stores. But surely it isn't the book that has legs, but the people who buy it. We are not talking about a property in the book that makes it a best-seller. If we were, we could all be millionnaires. All we would have to do is to examine a number of best sellers, find out what quality they have in common, and write a book with that quality. Would it were so easy. Rather, what happens is that readers find they can do something they want to do with a certain book. When enough readers find that they can use a given book to their own satisfaction, then enough people buy the book to make it a best-seller.

    Similarly with advertising. The test of an advertisement is not the ingenuity of the so-called "creative" group that composed it. The test of an advertisement is whether or not it sells the product. Advertising research, unlike literary research, does not concentrate on the text of the advertisement. The advertising researcher assembles a "focus group" of consumers who discuss and free associate to the ad so as to give the advertiser an idea of how real people really respond to it. The ultimate test comes when the advertiser places the ad in a test market area and sees whether sales of the product go up.

    The same argument applies to movie stars. Traditionally, we say that a Gwyneth Paltrow "has something" that brings in audiences and sells tickets. They have "sex appeal" or "box office" or "star quality." We locate the cause of the transaction in the stimulus. But again, isn't there an alternative model that turns the transaction the other way around? Isn't it a matter of what we are able to do for ourselves with a Humphrey Bogart or a Raquel Welch? If enough moviegoers can satisfy their psychological needs with Raquel Welch, Raquel Welch becomes a star.

    As long as we are speaking of movie stars, doesn't the same model apply to a political leader? At least the modern blow- dried political leader with his TV-5 make-up and his speech and media coach. That is, we speak of something called charisma, which once meant a grace or talent that was a gift from God. In recent centuries, we have secularized it, as in my American Heritage Dictionary: "A rare quality or power attributed to those persons who have demonstrated an exceptional ability for leadership and for securing the devotion of large numbers of people." But like price in the stock market, charisma really, in all behavioral rigor, rests on the fact that many people give devotion to a certain leader or consent to be led by him. What were people able to do for themselves with a Roosevelt, a Hitler, a Gandhi, or a Reagan? To study charisma, we should ask the citizenry rather than look into the biography of the leader.

    Isn't this true of beauty as well? We have the old saying that beauty is in the eye of the beholder. I'm not sure we really believe it when I read of researchers who measure to the millimeter faces that college undergraduates find attractive. Yet I hear a classic question as I watch my tan, blonde students stroll around the University of Florida campus. What does she see in him? What does he see in her? The question seems to accept the idea that beauty is in the eye of the beholder. It isn't that this or that tanned, blond young thing has sex appeal as that some person finds the tanned, blond young thing sexy.

    Notice that the same issue applies in psychotherapy. Meaning is not "in" the symptom, dream, verbal slip, or association. That was the kind of dream interpretation from "ancient times" Freud so sharply distinguished his methods from. Rather the patient says something about the symptom, dream, verbal slip, or association, and then an act of interpretation and evaluation by patient or therapist completes the transaction. We or our therapist endow our words about a symptom, dream, slip, or association with meaning by our subsequent actions.

    The reason we find ourselves going from the stock market to literary creativity to political charisma to the role of free associations in psychoanalytic interpretation is not that I am scatterbrained, although that is a possibility not to be lost sight of. The reason is that when we try to understand these so very different processes, we we begin to recognize that our understanding of creativity rests on one of two different ways we model the human being in our culture. As I argued in The I,18  you can hardly make any statement about human activities without assuming some sort of model of the human being. It is well to be aware of what your model is and, if need be, to question it.

    Here I have tried to point out that not only the word "creativity" but a whole lot of other words--pizzazz, glamor, charisma, charm, sex appeal, beauty, box office, oomph, attraction, magnetism, allure, symbolism, structure, we could go on and on--a whole lot of the words we use both in ordinary discourse and in trying to think through problems like creativity, rest on a stimulus-response model of the human. They base response on a certain property in the stimulus, be it Bill Clinton's charisma or the unity of a poem by William Wordsworth. A certain property evokes a certain response.

    I am proposing what I think is a more complex but more realistic model, in which response directs the artistic transaction as a whole much as a movie director directs a film. This more realistic model is available to us through psychoanalytic identity theory and such newer versions of psychology as "cognitive science." In this newer model, any given response is not simply a result of a stimulus poking from outside into the psyche or from bottom-level sensation causing top-level thoughts and emotions. Rather, any given response is a combination of human action on the world and the world's response to that human action. Any given response involves the interaction of top down and bottom up, inside out and outside in. So far as creativity is concerned, when you conclude that Wordsworth was "creative," you are bringing to bear on his work your values and wishes. You are concluding that Wordsworth provides the kind of thing you value in a poem.

    But I am talking about more than creativity. I am also asking which of two fundamental models of the human being we find more telling. Is a human being a passive creature determined by various stimuli ranging from advertisements and political manipulators to the poems of Milton and Shakespeare? Or is a human being an active creature who uses advertisements and movie stars and political figures and poems to form and to satisfy his own psychological needs? Is a human being really creative or is creativity itself only another form of determinism?

    These are large questions, and this essay is long enough. Let me retreat to the sentence with which Freud ended his essay on creativity: "This brings us to the threshold of new, interesting and complicated enquiries; but also, at least for the moment, to the end of our discussion."19 


 1  Norman N. Holland, Psychoanalysis and Shakespeare (New York: McGraw-Hill, 1966; rpt., Octagon Books, 1976), ch. 2, pp. 9-11.  Return to main text.

 2  Norman N. Holland, "Freud and the Poet's Eye," Literature and Psychology 11: 36-45. Rpt. in Hidden Patterns: Studies in Psychoanalytic Criticism, ed. Leonard and Eleanor Manheim (New York: Macmillan, 1966), 151-170.  Return to main text.

 3  Aesthetics (New York: Harcourt, Brace, 1958), chs. 10-11.  Return to main text.

 4  Ellen Winner, Invented Worlds: The Psychology of the Arts (Cambridge, Mass.: Harvard UP, 1982), 7-8.  Return to main text.

 5  Nelson Goodman, Languages of Art, 2d ed. (Indianapolis: Hackett, 1976). "When is Art?" The Arts and Cognition, ed. David Perkins and Barbara Leondar (Baltimore: Johns Hopkins UP, 1977), 11-19.  Return to main text.

 6  Howard Gardner, Art, Mind, and Brain: A Cognitive Approach to Creativity (New York: Basic Books, 1982).  Return to main text.

 7  Stanley Fish, Is There a Text in this Class? The Authority of Interpretive Communities, {Cambridge: Harvard UP, 1980).  Return to main text.

 8  Norman N. Holland, 5 Readers Reading (New Haven: Yale UP, 1975).  Return to main text.

 9  Norman N. Holland, "The MIller's Wife and the Professors: Questions About the Transactive Theory of Reading," New Literary History 17 (1986): 423-447.  Return to main text.

 10  Marcel Proust, Cities of the Plain, Part 2, ch. 2. Remembrance of Things Past, trans. C. K. Scott Moncrieff and Terence Kilmartin, 3 vol. (New York: Random House, 1981), 2: 844.  Return to main text.

 11  Benjamin Graham and David L. Dodd, Security Analysis, 1st ed. (New York: McGraw-Hill, 1934).  Return to main text.

 12  Clive W. J. Granger and Oskar Morgenstern, Predictability of Stock Market Prices (Lexington MA: D. C. Heath, 1970), epigraph.  Return to main text.

 13  An engagingly readable account of the theories put forward in this and succeeding paragraphs is Burton G. Malkiel, A Random Walk Down Wall Street, 4th ed. (New York: Norton, 1985). See also Richard A. Brealey, An Introduction to Risk and Return from Common Stocks, 2d ed. (Cambridge MA: MIT Press, 1983); Paul H. Cootner, ed., The Random Character of Stock Market Prices (Cambridge MA: MIT Press, 1964); John G. Cragg and Burton G. Malkiel, Expectations and the Structure of Share Prices (Chicago: University of Chicago Press, 1982).  Return to main text.

 14  Quoted by Malkiel 23-24.  Return to main text.

 15  Reported by Malkiel 164.  Return to main text.

 16  T. S. Eliot, "Tradition and the Individual Talent" (1919), Selected Essays, New Edition (New York: Harcourt Brace, 1950), 3-11, 5.  Return to main text.

 17  Robert S. Albert, "Toward a Behavioral Definition of Genius," American Psychologist 30 (1975): 140- 151.  Return to main text.

 18  Norman N. Holland, The I (New Haven: Yale UP, 1985).  Return to main text.

 19  Sigmund Freud. "Creative Writers and Day-Dreaming." Std. Edn. 9: 142-153.  Return to main text.

To cite this article, use this bibliographical entry: Norman N. Holland "Creativity and the Stock Market". PSYART: A Hyperlink Journal for the Psychological Study of the Arts. December 15, 2009. Available September 19, 2000 [or whatever date you accessed the article].
Received: August 25, 2000, Published: September 19, 2000. Copyright © 2000 Norman N. Holland