Issue 5 (Bastien Birchler) – discussion

Issue 5 of ASAonline is now out:
“I don’t wan’ it smooth, like salsa, I want a harsh sound bro”: Negotiating a rap sound in Cuba
by Bastien Birchler

If you wish to comment on this article you can do so via the Comment link.  You will need to register/login first, as part of the attempt to minimise spam. You can also read comments (if present) by clicking on the Comment link.

Posted in ASAonline | Leave a comment

Issue 4 (Heidi Härkönen) – discussion

Issue 4 of ASAonline is now out:
Girls’ 15-Year Birthday Celebration as Cuban Women’s Space Outside of the Revolutionary State
by Heidi Härkönen

If you wish to comment on this article you can do so via the Comment link.  You will need to register/login first, as part of the attempt to minimise spam. You can also read comments (if present) by clicking on the Comment link.

 

 

 

Posted in ASAonline | Leave a comment

Everyday life and business as usual

Everyday life and business as usual
Bob Jessop

In my first blog, I reflected on the return from panic in September-November 2008 to the appearance of business as usual some 12 months later. Wearing my political economist’s hat, I suggested that this was related in part to the role of economic crisis in facilitating the concentration of power in the hands of a few key decision-makers, in this case, the ‘usual suspects’ who knew where the bodies were buried because they had placed them there. In terms of the classical definition, this could be seen as a ‘dictatorship’ of limited duration, focused on crisis-management, and accountable to normal politics in due course. I might have added that such exceptional measures in response to an emergency were possible because the financial crisis had not been accompanied by a crisis in the state and a broader political crisis. The contrast between Weimar Germany and the United States in the Great Depression is interesting here. On some counts the economic crisis in the USA was more sudden and severe than in Germany but ‘normal politics’ prevailed and, eventually, institutional changes introduced through the New Deal (plus the demand generated by a war-time economy) enabled the US economy to return to prosperity. In contrast, an interlocking and mutually reinforcing series of crises in the state, political legitimacy, and class hegemony blocked ‘normal politics’ and created the conditions for a turn to dictatorship in the modern sense, i.e., a more durable set of political arrangements based on the suspension of normal democratic politics and a more expansive and extensive coordination of different institutional orders and social fields. I had intended to expand on these points in my second blog but have been diverted by a news item and an academic article that I have read in the past two days.
First, the news item: reading The Wall Street Journal on a flight from Manchester to Hong Kong (and, yes, a propos my last blog, I did manage to get past the temperature monitors in Hong Kong airport after having signing a form about my incipient recovery from the flu), I learned that a Bank of England survey has show that: “the financial crisis and the recession that followed appear to have changed Britons’ attitude to debt and spending. … The BOE poll data showed that households increased their saving for reasons largely connected to concern about the economic outlook. Reasons frequently cited were fear of losing employment, a desire to reduce debt, additional personal commitments and extra money from lower mortgage payments or bills, as well as a desire to save for retirement or the future, and having extra cash from a new job or inheritance” (The Wall Street Journal, 14 December 2009, p 6). Similar reports could no doubt be found covering other advanced economies in the grip of, or newly emerging from, recession. And, of course, anthropologists, above all, don’t need to be told about the resilience of households and social networks in relation to crisis, whether in advanced economies or, even more importantly, in economies where informal employment and informal work more generally are significant.
Second, the journal article: in the latest issue of Review of Radical Political Economics, there is a fine piece by three radical political economists, Dick Bryan, Randy Martin, and Mike Rafferty, on the topic: ‘Financialization and Marx: giving labor and capital a financial makeover’. They refer to a recent IMF paper on the crisis, which describes the household as the “shock absorber of last resort” in the current economic situation. In one sense, of course, this has always been the case in relation to emergencies, crises, and other forms of turbulence. But there is also something new in the present situation, which has been gathering speed for some time: the financialization of everyday life, reflected not only in changes in the practices of financial institutions but also in the practices of wage earners and households. The authors suggest that:
In the language of finance, the household is increasingly to be seen as a set of financial exposures to be strategically self-managed. Calculations and decisions must now be made about a range of issues. Some such issues have emerged because the management of certain exposures is no longer undertaken by the state: there is now need for private calculation and decisions about such things as health insurance, education investment, and investment in an asset portfolio for retirement. There are also issues that have emerged with increasing competitiveness within the financial sector: decisions about the proportion of (expected) income to dedicate to home loan interest payments; the time profile of loans, fixed or floating rate loans, the management of consumer credit options; the preferred pension scheme. Finally, there is an emerging set of choices to be made in the face of new financial products, in particular the emergence of derivative products that permit people to hedge exposure to risks relating to their employment and the value of their home (Shiller 2003). In each one of these calculations there are (at least retrospectively) right and wrong choices, requiring the household to be financially savvy, not just in the sense of prudence, but in identifying the range of financial risk exposures and knowing how to manage them. Hence the new and emphatic push by financial regulators at all levels to generate programs for financial literacy, so that households can be assumed to have the strategic financial capacity necessary to understand the financial pressures they now face. The corollary … is that the (assumed) financially literate worker can morally and legally take responsibility for their own financial success and failure.
Such observations are commonplace in work on consumption and I cite them here not only because they were the direct trigger for this blog but also because Bryan, Martin, and Rafferty relate them to a much more complex set of innovative arguments about financialization and class formation in contemporary capitalism. I don’t want to take us down this road here, however, but to relate these remarks to the return to “business as usual”.
In contrast to the 1930s, whether in Germany, the USA, or other developed metropolitan economies, wage-earning households are far more heavily enmeshed in the circuits of finance capitalism as consumers of and, indeed, investors in, financial products and services. This is reflected in several aspects of the financial crisis. First, one significant line of explanation for the financial crisis has been that it is really the fault of greedy consumers who took out mortgages that they had no realistic prospects of repaying should the housing bubble burst, used equity in their homes to finance personal consumption, borrowed too much on their credit cards, and generally consumed as if there would never be a day of reckoning. Whilst blaming consumers is a useful distraction from other causes and has the added advantage in the USA that it can be linked, however dishonestly, to claims that state intervention forced banks to relax loan requirements in order to democratize access to the housing market, there is also a kernel of truth in this one-sided account of the crisis. This leads to my second observation: that, insofar as consumers were sucked into debt and now realized that they were ‘suckers’ for being so seduced, they have accepted some measure of blame for the impact of financial crisis on their present condition. The household has then kicked in as the shock absorber of last resort, the crisis has been normalized, accepted as a fact of life, and business as usual has been restored in everyday life. Moreover, third, because of the opacity of many financial innovations, which exceeded the abilities (one hesitates to say ‘even’) of financial innovators themselves to fully grasp, it is difficult for ordinary wage-earners and households to see where else the blame for the crisis might be located. This is reflected in populist rage against ‘greedy bankers’, mis-selling of financial products, and poor regulation but is not translated into effective grass-roots resistance to the complex web of financialization that has emerged in the last twenty years.
In short, if one part of the story of the apparent return of ‘business as usual’ is the capacity of key financial decision-makers to dominate decisions over the financial rescue-package, another part is the self-responsibilization of households grounded in their integration into the circuits of financial capital, leading them to become shock absorbers of last resort in the current crisis. If the former aspect is ripe for further investigation as part of the political anthropology of the state and elite power, the latter is ripe for investigation into financial practices of everyday life and new practices of economic governmentality. None of these remarks imply, of course, that there these are the only two sets of causal factors or sites for further research.

Posted in Financial crisis | Tagged | 6 Comments

A Return to “Business as Usual”?

A Return to “Business as Usual”?

Unlike other contributors, I have no training in anthropology – unless one counts a first-year course taken 45 years ago, when I was introduced to the debate between, among others, Raymond Firth and Karl Polanyi, on formal versus substantive economics. My background is in sociology and political science and I am an autodidact in the critique of political economy – albeit not through first hand experience accumulated by Keith Hart in currency speculation or high tech bubbles of the kind. I will use my blogs to supplement the interpretations already aired by cultural, economic, and social anthropologists. In particular, I want to introduce some further dimensions and considerations that might help us to better understand the nature and dynamics of the crisis and some of its consequences. Before proceeding, let me apologise for the break in blogs – I have been suffering in the last few days from another aspect of globalization, a mild bout of swine flu and am now recovering.

Over the last month or so I have attended four events on the crisis – at an elite German research institute, a United Nations agency in Geneva, a global gathering of radical scholars in London, and an activist evening workshop in Amsterdam. What has impressed me most from these events is the broad consensus. Specifically, following the initial shock of the crisis and the fears, hopes, or blind panic that followed the collapse of Lehman Brothers and characterized the “exciting times” of September-November 2008, there has been a return to “business as usual”, which is a delightfully polyvalent term. Some of those who share this reading consider it as a sign of the flexibility of capitalism, some that it is a serious blow to the Global South, others that it is a sign of the failure of the left to prepare for crisis and to take advantage of the crisis – leaving the space open for recuperation by capital and its representatives, and yet others that the form of the recovery reinforces the need for a Green New Deal to be developed, ideally, from the bottom up rather than through securitized markets in carbon credits. It is also worth noting that discussions were courteous but heated: the nature of the crisis and its solutions were clearly politically contentious and not just matters of academic debate.

This small personal example illustrates the complexity of crises and the problems of interpreting them. I am sure that Gillian Tett must have experienced this many times over, even at banking conferences. This complexity has been evident from the initial signs of crisis in the first quarter of 2007 onwards and poses interesting questions of a more general nature about how complex events come to be interpreted.

Crises of the kind experienced in the last couple of years are hypercomplex. They are overdetermined moments of indeterminacy, providing historically conditioned challenges and opportunities for decisive intervention. Crises typically provoke profound theoretical, paradigmatic, policy and practical disorientation insofar as they disrupt actors’ previously taken-for-granted understandings of the world and how to “go on” within that world. This opens space for strategic interventions to redirect the course of events rather than ‘muddle through’ in the hope that the situation will eventually resolve itself. Crises never produce a particular response or outcome on their own. Responses are mediated through debates and struggles to define the nature of this crisis (and its uneven spatio-temporal incidence), to ascribe (rightly or wrongly) material, institutional, organizational, and personal responsibilities for the crisis, to assess whether it is a crisis ‘in’ or ‘of’ the relevant system(s), to chart alternative futures, and to promote specific lines of action for particular forces over different horizons of action.

Thus the forms and purposes of responses and their relative success or failure depend not only on the (typically contested) objective nature of the crisis but also on capacities to define its nature. Included here is the question of whether the crisis is one in or of a given structural or strategic context. Where a crisis is successfully defined as one within a system, it is likely to lead to a more reformist approach as compared to when it is defined as a systemic crisis, i.e., one that affects the survival of the system. Yet, if the crisis is systemic and the crisis is interpreted in reformist terms, the resulting measures will be insufficient to deal with the full depth and breadth of the economic, political and social repercussions of the crisis. Systemic crises of the global economy – especially when coupled with failures of governance on a global scale – are particularly likely to impact developing countries and/or the weakest and most vulnerable groups in all societies. Indeed, a useful definition of power, proposed by Karl Deutsch, is the ability not to have to learn from one’s mistakes – because their costs can be displaced or deferred elsewhere unless some form of de-coupling is possible.

Economic and political ideas, models, and paradigms play a key role in reducing complexity as actors seek to render strategic and policy problems manageable in real time. This matters especially in crisis periods. In the current period, the crisis has been variously defined as a crisis of global capitalism, a crisis of globalizing neo-liberalism, a crisis of finance-led capital accumulation, a crisis in the pathological co-dependence between China and the USA, and so forth. It also has important regional and local dimensions. Definitions of the crisis also vary in terms of durée (e.g., short-, medium- and long-term, tied to the temporalities of financial or industrial capital, to the dynamics of political hegemony on a global scale or electoral cycles), in terms of geographical scope (e.g., global, triadic, city networks, national, regional, local), and in terms of the principal site of crisis (commerce, industry, finance; politics; hegemony; legitimacy; representation, and so on). It is particularly important to distinguish different accounts of “the” crisis because “its” manifestations vary significantly according to the position of particular economic and political spaces within the overall division of labour at a world scale as well as in terms of historically specific features of each social formation that is affected by the crisis in its various manifestations. In short, there is extensive scope for variation in narratives of crisis and, hence, in the responses to crisis that are likely to follow.

Viewed in these terms, the leading interpretations of the crisis have been scaled down in the past year compared to the initial period of maximum disorientation and panic. What has emerged and been consolidated is a reading favoured by the dominant transnational economic forces and superpowers that this is a crisis in finance-led economic expansion and inadequate regulation. This interpretation is used in turn to justify modest reforms within the existing neo-liberal order. One of the most surprising features of this account is the extent to which leading economic and political forces at national, regional, and the global scales have committed themselves to work against protectionism, to strengthen free trade, and to scale back the public sector even as the state acquires emergency powers to deal with the financial crisis. This has marginalized those most badly affected by the crisis, not only in the global north, but also, more significantly, the ‘global South’. How might we understand this? I sketch one approach below and will illustrate it in more detail in my second blog.

The first phases of a crisis trigger massive variation in interpretations, which appear in the form of narratives, arguments, etc. The plausibility of interpretations and their associated strategies and projects depends on their resonance with the personal (and interpersonal) narratives of significant classes, strata, social categories, or groups affected by the crisis and hence on their capacity to mobilize these forces. Much of this variation is arbitrary and short-lived, lacking long-term consequences for overall social dynamics; but some accounts and their associated practices are selected as the basis for strategic and policy initiatives in what becomes the second phase of the crisis. Where the latter gets defined as a crisis in the prevailing system, this sustains an impression of ‘business as usual’, consistent with routine crisis-management measures or minor reforms – responses that will last only as long as these measures to work. Otherwise, we have a crisis in crisis- management, which adds additional complications that need to be integrated into the analysis. If this fails or the crisis is initially interpreted primarily as a crisis of that order, more radical changes may be explored. In both cases conflicts are likely over the best policies to resolve the crisis and allocate its costs as different social forces propose new visions, projects, programmes, and policies and a struggle for hegemony develops.

What seems to have happened – and evidence will be provided in the next blog – is that the extent of the crisis, once its real magnitude became evident in September 2008, justified exceptional measures taken in a highly condensed time frame that by-passed normal political routines (including considered debate in legislatures) and concentrated crisis-management powers in the hands of a few key figures within a broader context of high-powered lobbying from key financial interests. The speed with which decisions were made effectively marginalized most social forces – apart from expressions of populist outrage against greedy “bankers” that were easily finessed in the short-term through rhetoric and symbolic punitive fiscal measures. Together with the billions of dollars (or their equivalent) invested in rescue packages and the return to profitability of major financial institutions (thanks in no small measure to effectively free money released through quantitative easing and the opportunities created by the crisis) has given the semblance of ‘business as usual’. Another part of the story here is the inability of forces on the centre and the left to exploit the crisis to provide a powerful alternative account of the crisis could challenge the progress of financialization and neo-liberalism, propose an effective set of short-term policy alternatives and a longer-term strategy to address the deeper causes of the crisis, and, above all, to translate these alternatives into effective policies in a period when power was being concentrated and centralized. In this sense the crisis can be seen as a crisis of the “left” as much as it is a crisis in neo-liberalism.

The effective spectrum of debate that has immediate policy relevance in the advanced capitalist economies is largely confined to six main approaches: (1) a return to a bastardized Keynesianism to boost demand; (2) recapitalization and re-regulation of banks; (3) calls for a new international financial architecture; (4) efforts to re-moralize capitalism by a stronger emphasis on responsible lending practices; and, in the medium term, (5) efforts to roll back public spending, the public sector more generally, and the roll-back of social rights; and (6) a Green New Deal that will help to resolve the environmental, food, fuel, and water crises that were temporarily knocked off the global agenda by the urgency of the financial crisis and its global repercussions. In all of these approaches, including the Green New Deal in its neo-liberal variant (oriented to market solutions to environmental crisis), the interests and views of the “global South” have been largely marginalized as have the views of social forces around the globe that question whether further economic growth can ever be the solution to current global challenges. Addressing such issues requires us to go beyond multi-site ethnographies of economic and political practices to consider bigger questions of economic, political, and social domination – to understand why, in short, some are better placed than others to ignore the lessons of their mistakes.

Posted in Financial crisis | Leave a comment

Why don’t more people make their own money?

Keith Hart Open Anthropology Cooperative

What can anthropology offer someone who wants to understand money better? Most anthropologists don’t like money and they don’t have much of it. It symbolizes the world they have rejected for something more authentic elsewhere. This lines them up with the have-nots and against the erosion of cultural diversity by globalization. Accordingly, what they had to say about money until recently was the same old story. Bill Maurer, in our conversation on the politics, pragmatics and promise of money, sums up the story as follows:

“Capitalism comes to town and suddenly all that is solid melts into air. Things fall apart. It’s the end of the world. And we already know what happens next: dispossession, exploitation, wealth flows up and so on. Yes, that is what happens. But if we say it is all there is to the kind of monetization or commoditization associated with ‘capitalism’, we’ll never see its other effects, when they are right in front of our noses.”

Modern anthropology had its origins in the democratic revolutions of the eighteenth century. Even in the nineteenth century, anthropologists sometimes studied stateless peoples in search of models for a better society. We lost sight of that possible application of our knowledge in the last century. Economic anthropology today should aim, in part, to help people manage their own economic affairs.

We could, for example, show that the numbers on their financial statements, bills, receipts and transaction records constitute a way of summarizing their relations with society at a given time. (This is what I mean by calling money a ‘memory bank’ ).The next step would be to show where these numbers come from and how they might serve in building a viable personal economy. When individuals are able to take responsibility for their own economic actions, they will understand better the social forces impinging on their lives. Then it might become more obvious how and why ruling institutions need to be reformed for all our sakes.

Immanuel Kant produced the first systematic text in our discipline, Anthropology from a Pragmatic Point of View (1798). Both Kant and his pragmatic perspective have more or less disappeared from anthropology. What is a ‘pragmatic’ approach? The question is not so much ‘How can our knowledge provide an adequate representation of the world?’ but rather ‘Can it help us to get something done that we set out to do?’ Then it would matter less if it is true or not, just whether it works. The closest that my public research has come to such a pragmatic approach has been through the study of community currencies, although I have also found many applications for my knowledge in my own financial practices.

I first heard of LETS, a system for trading with its own money circuit, and its inventor Michael Linton in the mid-80s and later met him in Manchester. I spent two years around the millennium working with him and his partner Ernie Yacub on their Open Money project, sometimes physically, but mostly online. Linton, an engineer, has brought immense creativity and dynamism to developing systems that are suited to the digital age and are scalable; but he has been less successful in persuading people to adopt them. I was supposed to disseminate the results as a writer and this made me focus on the unacknowledged handicaps that people promoting LETS have to overcome. One of these is the dominance of the nation-state as a stand-alone model for forming a community. Another is the deep investment people have in a belief that the money they know is eternal.

I was a professional gambler for a number of years, and I sometimes made the mistake of trying to explain to people how I lived. But all they wanted to know about gambling was that you lose. The only winner is the bookie or the casino. And even the way they gambled was guaranteed to make sure that they lost, so that they really had no alternative than to go back to work and accept the system.

When I wrote about money’s persuasive power (for Steve Gudeman’s Economic Persuasions), I was thinking about LETS. Smith and Keynes changed how we think because they understood that theirs was a rhetorical exercise before anything else. There was a time when I was more sanguine about the immediate prospects of a breakthrough with these community currencies. In my lifetime, these approaches may or may not actually change economic conditions for very many people. But whether they ‘work’ or not, they are a terrific source of political education.

Just by entering a currency experiment, people get to argue about what form the money should take, who should be in the circuit, what is its relationship with the national currency? Should the currency be scrip or something else? But, because these things are usually conceived of as stand-alone and local, the resulting form of association is some kind of micro nation-state. They end up being like every other similar organization in which a few people put in a lot of time and argue about the minutes, so that the whole thing becomes a kind of parish politics and most people get alienated from it. People who entered these self-generated money circuits with real economic purposes get frustrated and move on. Michael Linton knows this and for years now he has been developing multiple-currency systems using internet-based technology. But that is another story.

It is a curious fact that complementary currency schemes seem to flourish more in rich countries than in the poor countries that would appear to need them most. That may now be changing. Maurer’s Institute for Money, Technology and Financial Inclusion at UC Irvine has received a grant from the Gates Foundation to explore, among other things, the impact of mobile telephony on poor people’s access to and use of money. East Africa, and Kenya in particular, has recently emerged as the world’s leading innovator in this area. Africans largely missed out on the infrastructure associated with the development of electricity grids, but they have leaped to grasp the opportunities offered by mobile phones. These, unlike the World Wide Web and other aspects of the digital revolution, have a built-in payment system whose potential has been blocked in more advanced economies by entrenched financial interests.

At a time when the hardware manufacturers in the rich countries are wondering how to sell more and fancier computers in a sated market, Kenyans have taken the lead in adapting cheap old machines for use by the world’s poor masses. Nowhere else has the use of mobile phones for banking, commercial and administrative purposes been taken further than here. M-PESA (short for mobile money in Swahili) was first launched by the Kenyan affiliate of Vodafone  in March 2007. It quickly captured a share of the market for cash transfers and grew rapidly, with 6.5 million subscribers by May 2009 and 2 million daily transactions in Kenya alone. In December 2008, a group of banks successfully lobbied for an audit of M-PESA, in an attempt to slow down its growth; but the audit found that the service was robust.

There is a lot more to this revolution than just banking. Instead of walking to a distant town and queuing to pay taxes and fees, often unsuccessfully, people can now pay them instantly with their mobile phones. Relatives of the victims of road accidents in remote areas can buy blood to be sent from a regional hospital in time to save lives. Farmers can check market prices around the country before deciding when and where to send their produce for sale. Families dispersed by migration can keep in touch by phone, using highly sophisticated methods at little or no cost. Now this is a financial revolution that anthropologists ought to have plenty to say about. And not just because it is in an exotic part of the world.

That’s all folks. It’s been a pleasure.

Posted in Financial crisis | 3 Comments

Surfing the credit crunch with Abdul Aziz

Keith Hart www.thememorybank.co.uk

The fall of the Berlin Wall was famously heralded as ‘the end of history’, but in fact it restored a sense of history for many of us by catapulting us back to before the Cold War and even to the origins of the USSR in the Russian revolution. Questions that had been frozen for decades reappeared, such as ‘What will be the glue of the new Russian Federation?’, ‘Will Germany resume its dominance of Central Europe?’, ‘What should be the boundaries of the European Union?’ and so on. The war in former Yugoslavia reopened the history of genocide in Europe and Serbian nationalism confronted the complacent powers of Western Europe with an ugly reminder of their own history.

The failure of the New York investment bank, Lehman Brothers, in September 2008 triggered a financial collapse whose ramifications are still with us. Predictions of the outcome of the ensuing global economic crisis vary widely. Following a sustained equities rally in mid-2009, some commentators now argue that the recession following Lehman’s demise is already over and the free market ready to assume its inexorable rise, while others talk of a double dip recession, persisting debt deflation and a recovery that could take 25 years.

From the beginning this crisis has invited speculation about the closest analogy in the twentieth century to our current experience. Most commentators were sure at first that we were entering a period unprecedented since the Second World War. Roosevelt, Keynes and the other principals of the Great Depression became familiar figures on the oped pages. Was 2008 like 1929? No. More likely, 1931 or 1933; some said 1938. Which was the greater threat, inflation or deflation? Cue in the history books once more, since deflation had been unknown since the 1930s.

These comparisons lacked an overview of what led up to the Great Depression, namely three decades of financial imperialism that ended in 1913 with what Churchill called ‘The second thirty years war’ as its aftermath. No, world war was not thought to be likely; but, after three decades of neoliberal globalization, when the science of free markets ruled for ever, the shock of the ‘credit crunch’ certainly renewed the interest of the chattering classes in history. Then suddenly the apparent recovery of stock prices emboldened even bailed out bankers to sing the praises of the market once more.

A break in economic history did occur in 2008. After the fall of the Berlin Wall, it was claimed that the world had entered a new stage of economic evolution to which all countries would eventually have to conform, where money flowed without political restriction and the market penetrated everywhere. There were a few doubters, of course, who identified the shaky foundations of the boom long before it crashed. But it took courage then to go against the prevailing orthodoxy that all was best in the best of all worlds. What happened next did change a lot, if not everything.

Economic growth can now be seen to have been sustained by a regime of cheap consumer credit, especially in the United States; many banks and other financial houses, notably the insurance giant AIG, exposed themselves to unacceptable levels of risk, particularly in the new market for credit derivatives; these became ‘toxic assets’ which were bought by taxpayers at huge cost in order to preserve the banking system as a whole; access to loans dried up overnight, despite these government subsidies; the leading exporters of manufactures, such as China, Germany and Japan, suffered massive reductions in demand for their products; the newly ‘liberated’ Eastern Europeans went into free fall, as did countries like Ireland (hitherto a ‘Celtic tiger’) and Spain; despite governments printing money like there was no tomorrow, the threat of deflation was real; business bankruptcies and rising unemployment contributed to the economic malaise in rich and poor countries alike.

The economy, which had been understood as an eternally benevolent machine for growth, was suddenly pitch-forked into the turmoil of history. The market was now seen to require massive state intervention if it were to have any chance of surviving. The financial ‘masters of the universe’ quickly brought out the begging bowl and in some cases had to suffer nationalization. Anglophone governments who once claimed to be leading the world to a free market future, desperately embraced remedies they called ‘Keynesian’, incurring the risk of hyperinflation if the bond market collapsed. The French ‘social model’ suddenly looked a lot better than it had before, not least to its ex-Thatcherite president, Nicolas Sarkozy. After the dust settled, the so-called ‘emerging markets’, particularly China, India and Brazil, were seen to be doing not as badly as once feared. The global shift of economic power from the West to Asia has probably been accelerated by these events. It is all rather murky, but even at the best of times the present is like that.

Whatever place the ‘credit crunch’ eventually finds in economic history, one certain victim of the crisis has been free market economics. It is impossible any more to hold that economies will prosper only if markets are freed from political bondage. Attacks on the economists by politicians and journalists have become commonplace. Even the Queen of England asked publicly why none of them saw it all coming. The ideological hegemony of mainstream economics, especially since the 1980s, has been holed below the water. This is not to say that the free marketers have been silenced, but public acceptance of the notion that the economy is social, institutional and in need of political guidance is now commonplace. And Karl Marx, after being sidelined for decades, is once again a best-seller in Germany.

It has long seemed to me a defect of economic anthropology that we don’t engage with historical questions of the sort triggered by the economic crisis in the real time context of the daily news. Of course to do so would expose us to the need for continuous revision of our ideas and facts. But suppose we wanted to, how could it be done? I had been mulling over this question and had some provisional answers which I rolled out on my website as soon as Lehman folded. Ideas are cheap. Everyone has ideas. That’s why writers and artists come cheap too. New social and intellectual forms for expressing our ideas are scarce, however. So I turned to fictional dialogue as a way of engaging with history and the news. ‘Conversations with Abdul Aziz’ was the result.

I divided myself into someone called Abdul Aziz and an academic called me. I did not advertise the fictional basis for the exchange, but was prepared to if asked. (No-one did, but several expressed disappointment to learn the truth later). “Abdul Aziz (not his real name) is a minor Saudi royal with a degree in economics from a Midwestern university who now lives in London where he manages some of his immediate family’s wealth.” This allowed me to express both sides of the pressing questions of the day: Was Obama the world’s saviour or just another failed US politician? Were we on the cusp of a great depression or world war? Was Britain a basket case or brave beneficiary of an early devaluation? How long would the recession last? Was it safe to buy assets again or not? And so on.

The online format allowed me to insert links to articles from the newspapers in weekly instalments (like a serialised Dickens novel!) and many of these came from participating in Twitter, the network that has been called the first real-time medium for the expression of human consciousness. I enjoyed making predictions that could be contradicted at the time and revised a week or two later. I realised that a life of betting had prepared me for a career as a small-time prophet. My two characters began to assume stable positions on either side of some big questions. But I grew tired of it by the New Year and gave up. More than anything else, I escaped from academic responsibility for a while. I doubt if I will convince my anthropologist colleagues that this experiment has anything in it for them. I learned a lot.

Posted in Financial crisis | Leave a comment

The limits of naivety for the anthropology of money

Keith Hart   The Memory Bank

What would happen if anthropologists, for some limited purposes, abolished the division between academic writing and journalism that Mauss himself observed and that has prevented us from grasping how they fed into each other at a key moment in his life? The dominant presence before the war of his uncle, Émile Durkheim, obviously contributed to this compartmentalization, as perhaps did Mauss’s sexuality too. He was, after all, one person not several; and, in The Gift, he lays out a totalizing method of approaching individuals, groups, institutions and events, so he was certainly aware of the problem. For us, Mauss himself is a “total social fact” who lights up our own predicament.

My first attempt to approach money as an object of anthropological inquiry was a Malinowski lecture given at LSE more than two decades ago (‘Heads or tails? Two sides of the coin’, Man 1986). Malinowski set a trend for anthropologists to dispute economic universals in polarized terms, juxtaposing exotic facts and western folk theories, without acknowledging the influence of contemporary history on their own ideas. My lecture had three parts which, taken together, constituted a method.

“First, we should be more explicitly aware of the concrete conditions that stimulate our interest in some abstract problems rather than others. This means asking what it is in the world as we experience it that informs our researches, whether directly or indirectly. Second, it is no good taking potshots at vulgar reductions of economic ideas, when the history of western economic thought is itself extremely plural, even contradictory. A constructive reading of that intellectual history might have served Malinowski’s ethnographic analysis better than the straw man he chose to attack. Finally, when historical awareness and a more sophisticated intellectual apparatus are combined with our discipline’s standby of ethnographic fieldwork, the resulting anthropological analysis offers a more secure foundation for critical understanding of the world in which we live.”

So I first located the problem of money in contemporary economic history, arguing that state control of money was being undermined in the leading capitalist societies. Then I traced two strands of western monetary theory explaining money as a token of authority issued by states or as a commodity made by markets. These strands came together in the writings of Keynes. But, rather than acknowledge the interdependence of top-down and bottom-up social organization (“heads and tails”), economic policy has swung wildly between the two extremes (“heads or tails?”). Last I showed that the token/commodity pair could inform a reanalysis of Malinowski’s ethnography.

“Anthropologists have to be capable of comparing their exotica with a more profound picture of ideas and realities in the industrial world that sustains us. Conventional economic reasoning fails to enlighten us because it is so unremittingly one-dimensional. The coin has two sides for a good reason – both are indispensable. Money is at the same time an aspect of relations between persons and a thing detached from persons….Today’s effort is an act of bricolage rather than brokerage, formed from a vision of the anthropologist as a handyman who can help repair the damage done by professionals.”

Some anthropologists have drawn on this piece for their own ethnographic purposes, without embracing world history or the theories of economists. In other words, the academic division of labour still reigns supreme and most anthropologists prefer to stay on familiar ground rather than risk being exposed as naive interlopers on territory made familiar through common journalism or already colonized by experts.

In Closed Systems and Open Minds (Max Gluckman editor, 1964), an anthropologist and an economist explored “the limits of naivety” in social anthropology. They argued that anthropologists, given their pretension to address humanity as a whole, are obliged to open themselves up to the full complexity of social reality. At some stage they must seek analytical closure in order to draw simple patterns from these open-ended inquiries; and these abstractions may often seem to be naive from the perspective of other disciplines. Gluckman had in mind the rich texture of ethnographic encounters, whereas I was suggesting that conjectural history, overthrown by fieldwork-based ethnography, should be rehabilitated, even if specialists can easily show the naivety of anthropologist’s accounts. Specialization can be an obstacle to the growth of knowledge; for specialists become prisoners of their expertise (Popper). Anthropologists have long enjoyed a certain intellectual freedom that can be invigorating for the more conventional sciences. We just have to be more explicit about how this comes about.

Michel Foucault ended his “archaeology of the human sciences” (The Order of Things, 1973, translation of Les mots et les choses, 1966) with some reflections on why psychoanalysis and social anthropology (ethnologie) “…occupy a privileged position in our knowledge”:

“…because, on the confines of all the branches of knowledge investigating man, they form a treasure-hoard of experiences and concepts, and above all a perpetual principle of dissatisfaction, of calling into question…what may seem, in other respects, to be established.”

“[They] are not so much two human sciences among others, but they span the entire domain of those sciences, they animate its whole surface…[They] are ‘counter-sciences’; which does not mean that they are less ‘rational’ or ‘objective’ than the others, but that they flow in the opposite direction, that they lead them back to their epistemological basis, and that they ceaselessly ‘unmake’ that very man who is creating and re-creating his positivity in the human sciences.”

Foucault attributed anthropology’s originality to its being both “traditionally the knowledge we have of the peoples without histories” and “situated in the dimension of historicity”, by which he meant “within the historical sovereignty of European thought and the relation that can bring it face to face with all other cultures as well as with itself”. He was sure the human sciences had reached their limit and this was doubly true of a discipline whose premises were being undermined by the collapse of European empire.

Given the disappearance of the traditional object of social anthropology, “primitive societies”, we have to find not only a new one, but also a theory and method appropriate to it. This means identifying the historicity of our own moment, as well as complementing ethnographic fieldwork with world history, critical philosophy and more besides.

Posted in Financial crisis | Leave a comment

“The great economic revolutions are monetary in nature” (Mauss)

Keith Hart Open Anthropology Cooperative

For Marcel Mauss, the years 1920-25 were packed and fruitful. His political party and the Left in general had a real shot at winning power in France and did so in 1924. Two-thirds of his occasional political pieces (Écrits politiques) were written in this period. He was able to relaunch his group’s journal, Année sociologique, by the period’s end, contributing to it his most famous essay, on The Gift. He suffered some reverses at this time, including a serious illness, but remained optimistic for both political and intellectual regeneration on a social scale that was increasingly international in scope.

He began serious work on a book dealing with the main political currents of the day, nationalism and socialism. His interest in the American “potlatch” was expanded by the publication of Malinowski’s Argonauts of the Western Pacific in 1922, confirming his belief that competitive gift-exchange was endemic in Melanesia and Polynesia, as well as elsewhere. And the Institut d’ethnologie was formed in 1925 with Rivet, Lévy-Bruhl and Mauss himself in charge.

In the late 1920s, things began to unravel on all fronts. Mauss’s personal standing as a savant grew inexorably; but his party suffered political reverses, its newspaper and journal folded, the cooperative movement foundered and the Année sociologique could not continue. Mussolini’s version of the “nationalization of socialism” must have raised doubts about Mauss’s own political programme. His closest friend, Henri Hubert, died in 1927, compounding Mauss’s loss of family and colleagues during the war.

The years 1920-25 stand apart for the energy and fulfillment they brought. Mauss himself kept a sort of Chinese wall between his academic and political interests; so it is not so surprising that the two have been kept apart, especially in the Anglophone world, where his political writings are virtually unknown. He allowed himself one public attempt to bridge them, the concluding chapter of The Gift. Even so, the essay itself does not provide an effective intellectual link between the two compartments of Mauss’s life.

When Malinowski produced his account of native adventurers in the Western Pacific, latter-day heirs to the archaic tradition of noble heroes, his story found a receptive audience. The kula ring of the Trobriand Islanders and their Melanesian neighbours provided an allegory of the world economy. Here was a civilization spread across many small islands, each incapable of providing a decent livelihood by itself, that relied on foreign trade mediated by the exchange of precious ornaments. There were no states, money or capitalists and, instead of buying cheap and selling dear, the trade was sustained by an ethic of generosity. Homo economicus was not only absent, but revealed as a shabby and narrow-minded successor to a world the West had lost.

Marcel Mauss was excited by all this, but he felt Malinowski had gone too far. One of his key modifications to Émile Durkheim’s legacy was to conceive of society as a historical project of humanity whose limits were extended to become ever more inclusive. The point of The Gift is that society cannot be taken for granted as a pre-existent form. It must be made and remade, sometimes from scratch. How do we behave on a first date or on a diplomatic mission? We make gifts. Heroic gift-exchange is designed to push the limits of society outwards. It is ‘liberal’ in a similar sense to the ‘free market’, except that generosity powers the exchange, self-interested for sure, but not in the way postulated by economists.

Malinowski’s account of the kula ring is the contested origin for Mauss’s discussion. “The whole intertribal kula is merely the extreme case…of a more general system. This takes the tribe itself, in its entirety, out of the narrow sphere of its physical boundaries and even of its interests and rights.” No society is ever economically self-sufficient, least of all these Melanesian islands. So to the need for establishing local limits on social action must always be added the means of extending a community’s reach abroad. This is why markets and money in some form are universal, and why any attempt to abolish them must end in catastrophe.

For this reason Mauss argued, against Malinowski in a long footnote, that the kula valuables were money, if not the impersonal kind with which we are familiar. His famous essay needs to be juxtaposed to his political journalism of the same period and in particular to a series of articles he wrote for his party’s newspaper, Populaire, on the exchange rate crisis of 1922-24. These have generally been treated as being lightweight, even boring, unconnected to his academic work; but they do offer insight into his economic ideas and hence into his arguments in The Gift, both analytical and programmatic.

The financial turmoil that Keynes predicted would be the consequence of the Versailles treaty was soon realized. The stability of the franc was a matter of acute public concern, since it was taken to be a measure of France’s international standing; and political panic when the franc dropped was commonplace. The Left blamed it all on a few rich families. Mauss wrote about the exchange rate crisis from December 1922 and returned to the issue a year later. Taken together, these articles constitute 150 out of the 700 pages assembled in Écrits politiques.

This financial journalism is notable on several counts. Mauss sets out in alarmist fashion, but soon settles down into a voice of reason, seeking to steer a pragmatic course of stabilization in the national interest. Being able to take a position on the economy was vital to political engagement: “Every socialist is obliged to have a few notions about political economy, or economic sociology as we now say”. The problems were both urgent and complex. More striking still is the tone Mauss adopts when discussing what we would call “the markets”, as if he were himself an expert player. After studying the price curves, exchange rates and money supply since the end of the war, he makes the “bold assertion, which militants and scientists must venture only very scrupulously” that “the dollar will float between 20 and 25 francs, but will not go much higher than that”. The dollar exchange rate had been 11 francs in 1921.

Mauss concluded that panic in the markets, not fiduciary inflation, was the cause of exchange rate depreciation. Storms were brewing from every direction: “These are human phenomena at work: collective psychology, imponderables, beliefs, credulity, confidence, all swirling about”. Another striking feature of these articles is personal attacks. Mauss insisted on pointing the finger at real persons, especially right-wing political leaders such as Clemenceau, rather than indulge the convenient abstractions beloved by left-wing conspiracy theorists.

An unpublished paper, “A means of overhauling society: the manipulation of currencies”, provides a link between these reflections on national political economy and The Gift. Here Mauss claims, following his colleague, François Simiand and anticipating Maynard Keynes, that the great economic revolutions are “monetary in nature” and that the manipulation of currencies and credit could be a “method of social revolution…without pain or suffering”. Mauss wished to give an economic content to juridical socialism. “It suffices to create new monetary methods within the firmest, the narrowest bounds of prudence. It will then suffice to manage them with the most cautious rules of economics to make them bear fruit among the new entitled beneficiaries. And that is revolution. In this way the common people of different nations would be allowed to know how they can have control over themselves—without the use of words, formulas or myths”.

Posted in Financial crisis | 2 Comments

“In the long run we’re all dead” (Keynes)

Keith Hart Open Anthropology Cooperative

Maynard Keynes stormed out of the Versailles treaty negotiations after his advice not to pulverize the German economy was rejected by Lloyd-George and Clemenceau. He published a book about it in 1919, The Economic Consequences of the Peace, in which he predicted the depression that his own theories later helped to correct. But he also made heavy bets against the German economy, selling the deutschmark short in anticipation of its fall. Unfortunately for him, the German banks maintained an irrational attachment to their currency throughout 1920 and he was almost bankrupted. His father, professor of political economy at Cambridge, bailed him out by remortgaging the family home. In the markets, as in life, timing is everything and that is the meaning of his remark about the long run. He never speculated with his own money again (but he made King’s College, Cambridge rich in the bear market of the 1930s).

I sold two houses in 2004-5, my own and my father’s. I was convinced that asset markets were over-priced and heading for a bust, so I kept the money as cash and refused to invest in the speculative instruments and mutual funds my bankers were peddling. I chose to rent rather than buy property. Whenever the deflation came, my money would be worth a lot more. Then I watched the markets roar ahead. Doubt crept in. What if the masters of the universe actually had found a way of transcending the iron law, “what goes up comes down”? Didn’t I owe it to my young daughter to put at least some of the money into medium- and long-term investments? So I caved in and bought a chunk of mutual funds. The timing was brilliant, February 2007, just before the sub-prime mortgage crisis broke. I lost half of what I invested in the next two years. Now I am a currency trader, switching cash between euros, dollars,  yen, sterling, Swiss francs, Norwegian krone and South African rands in moves that I hope take advantage of the huge instability in foreign exchange markets. As the optimist who fell off a skyscraper was heard saying, when he passed the 35th floor on the way down, “So far so good”.

I was asked at a conference not long ago why I am an economic anthropologist. I answered that, like most people, I care passionately about my own economic circumstances and prospects.  I study the economy because I want to understand better my own situation in the world. I would like to be able to protect my family from the disasters unfolding around us all. Maybe I will do no better than Keynes in that early foray into the markets, but I can try. When I was 12 years old, I looked at my dad and thought I didn’t want to be what he was when I grew up, a wage slave in a bureaucracy. I was committed to entering the free professions through passing examinations, but what if I failed the exams? The only alternative I could think of was betting on the horses, making money with money. So I became in time a scientific gambler. It worked. I financed my higher education and two periods of unemployment that way. But it is indescribably boring and, when given the chance, I always took an academic job, much more interesting. Now I would rather learn and write about money than make it. But I haven’t lost the same pragmatic impulse that prompted me once to learn statistics: there ought to be some application of my knowledge to everyday concerns.

Rational models don’t usually serve us well in the real world. It is worth recalling that, whereas classical political economy embraced an objective theory of value driven by class struggle in the long run, the marginalist revolution of the 1870s saw value as the outcome of subjective decisions made by many actors in the short run, whatever the economists did with the idea next. Weber, Simmel and Mead took their lead from this modernist move to launch 20th century sociology and social psychology as a project that aimed to be grounded in what ordinary people think and do. Rationality is calculation framed as a means-end relationship, a projection into the future based on knowledge of the past. I always thought that it works best backwards, as rationalization, not forwards as prediction. In any case it is too laborious for most practical purposes and useless for everyday decisions, where habit or magic in most cases just have to do the job. We muddle through. So do the masters of the universe, as it turns out, except when they fall flat on their ass and ask us to pick them up.

This series of blog posts is supposed to be about how anthropologists can throw light on what used to be called the “financial crisis”. But now that Goldman Sachs is raking it in again and Lula is riding high on Brazil’s booming economy, we are not sure whose crisis it is or even whether there is one. I have been struck by how many of the really original analyses relevant to the ‘crisis’ are by anthropologists: Gillian Tett’s Fool’s Gold, Karen Ho’s Liquidated, Alexandra Ouroussoff’s War on Wall Street (under review by publishers), Horacio Ortiz’s The Political Anthropology of Contemporary Finance (a doctoral thesis in French, but now coming out as articles in English). John Kay, reviewing ten books in the Financial Times not long ago, wondered if we might be on the verge of a new synthesis involving anthropology, history and economics.

Exciting times indeed. So why does this series of blog posts come across as dead as a dodo? I won’t try to answer that here (again). But I will post several items over the coming two weeks, maybe as often as every 2-3 days. We need to be attuned to life, as most ethnographers are at least when they are in the field, but our writing should reach out to more people than just other anthropologists. That means engaging with long-run historical questions like what this crisis is, with the news as it unfolds in real time and with issues that matter practically to people who don’t have to be reminded that “It’s the economy, stupid!”

Posted in Financial crisis | Leave a comment