How is it that you can log into Robinhood at any time and sell a stock? There must be someone on the the other end who is willing to buy that stock at the exact same time. In reality, the people you’re selling to are market makers. They are not investors who want to make the opposite bet as you on the stock. Instead, they’re a company that will take the asset of your hands and sell it for a slightly higher price to a buyer who will come around in the near future.

Market makers are always willing to buy or sell an asset at the price they quote, and their profit is the spread between those two values. In exchange, they provide the market with liquidity, allowing buyers and sellers to make trades even when there isn’t a party willing to make the opposing trade at the same time.

Intellectual scenes also have market makers. These are popularizers who notice that some academic is shilling a theory or a study that could have far reaching implications. They realize that people aren’t paying attention to this idea right now, but they might in the future once its importance is understood and it is explained to the right audience in an engaging and accessible way.

Scott Alexander describes the experience of being an intellectual market maker very well:

Maybe the heap of already-discovered knowledge is so unwieldy that diving into it and retrieving a particular piece of already-discovered knowledge becomes its own form of discovery. I once won a research prize for a paper which was basically “HEY GUYS HAVE YOU HEARD DONALD KLEIN’S THEORY OF PANIC DISORDER?” Everyone who read my paper agreed that the theory was beautiful and important and they’d learned a lot from it, but my apparently prize-worthy contribution was just to dig it up and show how it applied to a particular patient whose condition was otherwise mysterious.

Other examples of intellectual market makers:

Tyler Cowen: Here you’ve written some esoteric book about avian evolution or Napoleon’s life told through the lens of gardens and forests. Lucky for you, there are infovores out there who are desperately looking to get nerd sniped by topics like these. The problem is that they don’t know that you have written just the kind of book they would be interested in. So they go to an intellectual market maker like Tyler Cowen. Every week or two, he’ll feature books like yours on his blog - he might even invite you on his podcast to discuss it. He’s a liquidity provider who is connecting interesting but slightly obscure intellectuals to a vast army of nerds that congregates on Marginal Revolution. The bid-ask spread he gains off providing this liquidity are loyal readers and listeners.
Malcom Gladwell: Whenever I hear the phrase “10,000 Hours”, I think of Gladwell’s book Outliers. Only later do I remember that the term actually comes from the Swedish psychologist Anders Ericsson. The summary of Gladwell’s entire career is “intellectual liquidity provider”. He’ll buy your study about the birthdays of Canadian hockey players when no one else is paying attention to it and sell it in the form of a popular psychology book - the spread on this trade is wide enough to make him a #1 best-seller.

People roll their eyes when you defend the financial industry by saying that it “provides liquidity”, and similarly people dismiss intellectual market makers who get famous off the spread between an interesting study and a New York Times best selling book. But without liquidity, ideas can’t spread, and the entire point of creating ideas is to spread them to where they can be useful.

Intellectual market makers increase the value of ideas (and thus the incentive to come up with new ones), because an asset is worth more in a liquid market than in an illiquid market. In a liquid intellectual market, you can be confident that if you come up with an important idea, some popularizer will come along and make you famous. So you’re willing to devote years of your life to researching ideas that are potentially important.

If anything, there is a greater shortage of liquidity providers in the intellectual marketplace than there is of actual idea creators. There are lots of interesting theories and datasets out there stuck in some academic press book that a hundred people will read. We need people who buy these forgotten intellectual goods (i.e. spend time explaining and synthesizing them) and sell them to others (i.e. incorporate these ideas in a viral blog post or a New York Times bestseller).

Understanding the value of intellectual market makers can help bloggers, podcasters, and popular science writers stop navel-gazing about how they’re just trading other people’s ideas, not creating any themselves. There can be no intellectual marketplace without liquidity.

In fact, since there is no such thing as a new idea, all intellectuals are market makers. They buy a cluster of existing concepts and reorganize them in a way that can give insight to other topics or be of interest to other audiences. The creators of the original ideas gain even more impact, the audience obtains a new thinking tool, and the market maker profits by being recognized for connecting the two.

The Lunar Society

Popularizers are intellectual market makers