Why is finance impenetrable?

There's an argument that finance is complex and opaque because if it were transparent, we'd be put off investment due to the stark reality of risk, i.e. that many investments fail, relatively or absolutely. Most people want a guaranteed return, which is an oxymoron as nothing that produces a financial return can be guaranteed, at least outside of fairy tales.

This certainly rings true when you consider mortgage endowments in the 80s and 90s. The mis-selling was as much an unwillingness on the part of borrowers to consider them as anything other than a one-way bet as a deliberate case of over-promotion by the lenders. We wanted to believe, which is how all cons work.

However, this might be a little too neat, not to mention self-serving. If finance really is magic, the magician may have just successfully distracted us.

The history of trade unions, mutuals, credit unions and national insurance, can all be held up as examples of our pragmatic understanding of risk and how a collective approach can allow us to fund investments that we might not choose to make individually.

Most entrepreneurs avoid risk. They don't remortgage their house, they set up a limited liability company and try to raise funding. Indeed, if you do remortgage your home to bring your better mousetrap to market, that may be evidence that you are unhinged and in greater need of counselling than credit.

The invention of limited liability is generally considered to be one of the keys to economic development since the mid-19th century because it allowed entrepreneurs to "Try again. Fail again. Fail better". In other words, it mitigated risk.

I think we appreciate the reality of risk, but I think we also appreciate the value of social organisation to mitigate it. Limited liability works because it spreads risk out to creditors, who in turn recoup their losses through insurance or by putting up prices, thereby diluting the cost of failure through society.

The reality of risk does not seem to me to be sufficient justification for the willful impenetrability of finance. There's something else at work here, and it isn't maths.