ASA Globalog

Massimiliano Mollona

My hope was that this anthropological forum on the financial crisis would challenge some taken-for-granted assumptions about the often-mysterious realm of ‘the economical’. But discussions so far have shown that tensions between ‘the economy’ and ‘society’ exist within the realm of anthropology too. I do not understand what is all the fuss about Stephen’s post, an insightful attempt to talk about these tensions ‘from within’ the realm of economics and to avoid partisan positions. Sadly enough, comments about his post have been partisan, split – once again – between ‘society’ and ‘the economy’. Stephen is right to describe these opposite positions as ‘neoclassical’. Finance is a way of making profit by moving money in time and space (technically ‘arbitrage’), a process of value creation through a shift in context. So, I will look at the economy’s tensions from ‘outside’ economics, by looking at its ‘context’ – after all, this is what anthropologists can do best! My aim here is to challenge the idea of financial crisis itself, for lacking of historical and ethnographic depth. So, rather than dealing directly with the financial crisis, I will deal with its context, trying to answer to three simple questions: “Financial crisis – for whom? When? And where?”

Time is often an overlooked issue in current debates about the financial crisis. ‘Financial crises’ have been moments of capitalism’s regeneration (or ‘creative destruction’ for Schumpeter) since the time of mercantilism – as Stephen also pointed out. And yet one year ago the world was bracing (some jubilantly) for the end of capitalism. The core (micro) economic principles of capitalism are fixed and universal. And yet capitalism never repeats itself. Ben Bernake’s vast knowledge of the institutional failures of the 1929 Wall Street crash (a favourite theme of his Princeton lectures) did not spare him from a similar institutional failure as chairman of the US Federal Reserve. As Marx pointed out, capitalist profit relies on a double temporal register: universal and contingent. This double, some say schizophrenic, temporal nature of capitalism is the first important issue to bear in mind in our discussion. Neither discussing capitalism as a a-historical – amoral – entity nor ‘looking back’ at instances of just capitalism – two suggestions made by colleagues on this blog – will be of much help in our discussion because they overlook the self-transformative nature of capitalism.

Besides, whenever we ‘look at’ we are also ‘looking from’ specific political locations. Indeed, space is the second central dimension of finance. Martin Wolf in his Fixing Global Finance argues that the current economic crisis is the result of imbalances between the economies of the developing world and those of the developed world. For instance, China’s rapid growth since Deng Xiaoping’s reform in 1981 did not go into personal consumption (the national saving rate is nearly 50 per cent of the total annual output) but into stacks of US government debts. This imbalance between the massive deficit of the US government and households and the massive surplus of the Chinese state and households pushed the global financial system into meltdown. Finance does not have a fixed location, but relies on mobile spatial relations, often of subordination of the peripheries by financial centres.

So, how can we talk about the financial crisis without objectifying it, cutting it out from its spatial and temporal context? I will sketch a short travelogue of my trip from London to Volta Redonda – a Brazilian steel town in the middle of a coffee valley where I am currently doing fieldwork – as a way of dealing effectively with the context. During the travel, people’s ideas of the financial crisis changed and in the process my ideas changed too. Waiting to embark on the plane at London Heathrow, I read New York Times columnist Paul Krugman’s review of Robert Skidelsky’s book Keynes: The Return of the Master. In the book Skidelsky, the most famous biographer of Keynes, discusses the famous General Theory (1936) and focuses on an article written by Keynes in 1937 on the notion of economic ‘uncertainty’. Based on this article Skidelsky proposes boldly to abolish microeconomic models altogether. In dismissing the notion of uncertainty and championing the idea of rational behaviour these economic models created instability and ultimately the current economic meltdown. Declaring himself a Keynesian too, Krugman rejects Skidelski’s proposal, argues that some behavioural economists had, in fact, accounted for uncertainty in their models and predicted the current economic crisis. The debate, between a strong and a weak version of Keynesianism, reminded me of how, as the economic crisis unfolded, Freeman and the Chicago school of monetarism had became the villains and Keynes the new hero in conversations about the economy in UK. But the discussion also made it clear that even for such an enlightened economist as Krugman, Keynesianism is fundamentally an economic theory and not a social one. To reduce the unknown to the realm of rational behaviour (or even partially rational as another Nobel Prize economist Herbert Simon argued more than 50 years ago) means to rule out the political possibility of a new rationality emerging from uncertainty. Without a democratic political vision, Keynesianism is simply a theory of rational resource allocation by the state. When I finished the article I felt that this unresolved conflict between rationality and uncertainty emphasised by Krugman was reflected everywhere in the airport lounge. Businessmen expressed their anxieties about the recent fall in the stock-exchange; families were apprehensive about their bank statements; tourists counted their money, worrying about exchange rates. Split between anxiety and calculation, most of them were quick to blame it all on the financial crisis. Once I landed in Rio de Janeiro, the dark cloud of the economic crisis seemed to have disappeared in the sun of Ipanema. Cab drivers and hoteliers assured me that tourism had increased (the high dollar had increased internal tourism), entrepreneurs talked of how they had benefited from Lula’s fiscal incentives, and the povo (common people) talked of the generous credit expansion of their local banks. The Brazilians’ positive attitude towards their future was in such a stark contrast with the subdued, pessimistic and anxious economic ‘talks’ that I had just witnessed in London!

There are some good reasons for Brazil to lull itself in the soothing feeling of national pride. Rio de Janeiro triumphed over Chicago as the Olympic town in 2016 and the Brazilian GDP grew by 1.9% in the second quarter of 2009 with an IMF growth forecast of 5% in 2010 – compared to 3% of global economy. In spite of the decline of industrial output, the unemployment rate fell off nearly 1% to 9.3% in 2009 and is expected to fall by a further 2% in 2010. Following the recent discovery of the Tupi field, one of the world’s biggest oil reserve, Brazil will soon be an OPEC member. At the G20 in Pittsburgh the Brazilian president Lula da Silva made it clear that Brazil’s current economic prosperity is grounded in an alternative vision of society to the neoliberal one which dominates the developed world. Raging against the bankers of the developed world who ‘say that states have to be managed like banks,’ he claimed that ‘banks do go bust and they must be regulated’. Indeed, during the crisis, Lula’ s economic cabinet put together an ambitious anti-crisis package. It expanded credit lines and tightened regulations for state banks (in Brazil the compulsory limit of capital reserve for banks is 11% against the 8% of the banks of most of the countries of the G20), slashed the benchmark overnight interest rate (Selic), promoted fiscal incentives to consumable industries and in the infrastructure sector, promoted export diversification and, most importantly, reduced its reserves of foreign currency through the Brazilian ‘sovereign fund,’ a massive reserve of capital from oil revenues.

These anti-crisis measures could be described as ‘Keynesian’. Yet, Keynesianism did not prosper in the tropics -mainly because it is an economic vision based on the ethnocentric abstraction of ‘the economical’ from ‘the political’ and on the separation between the Market and the State. In Brazil the economical and the political – personal interest and the interests of ‘The Nation’ – can hardly be distinguished and the state is recognised for what it is: an alliance between rich and politicians. No wonder that Keynes is not a popular figure in Brazil. The real hero is President Lula da Silva himself. Tiptoeing with ruthlessness, diplomacy and charisma between finance and industry, state and private interests, control and deregulation, nationalism and global capitalism, he managed to recast the Brazilian presidentialism of the populist leaders of the past in our neoliberal times. His plans to have state-run Petrobras as the sole operator of the new Tupi fields – and a minimum 30% stake in all of the fields auctioned to private operators – was opposed by the governors of the state of Rio de Janeiro and Sao Paulo (where most of the revenues are currently concentrated) and by some entrepreneurs, but was largely supported by the povo and the liberal classes. The very confederation of employers (Federaçao Unica dos Petroleiros FUP) together with some civic movements asked for Petrobras’ full nationalisation. The oil profits will go into a poverty-reduction fund and, according to the President, ‘herald a new independence day for the country’ [this is reminiscent of the civic coalition – involving entrepreneurs, students, professionals and members of the Communist Party of Brazil (PCB) – which under the slogan ‘O petroloeo é nosso’ (‘It’s our Oil’) called for a national oil monopoly under the populist regime of Vargas. This civic action led to the creation of Petrobras in 1953.] Lula’s unveiling, a few days later, of the most ambitious plan yet to date of fiscal deregulation in the micro-electric sector reconciled him with the disgruntled entrepreneurial classes. Will any half-baked (neo) Keynesianism stand the test of our uncertain time as well as of Lula’s skillful presidentialism?

Volta Redonda, where I am currently doing fieldwork, is an industrial town dominated by the biggest steel complex in Latin America – the Compania Siderurgica Naçional (CSN). The CSN employs 8,000 permanent workers and as many contract workers. Funded in the 1940’s by president Getulio Vargas in the interior of Brazil as the symbol of Brazil’s industrialisation, the CSN has been the core strategic steel complex throughout the history of Brazil. In the era of Vargas, the CSN was considered as ‘the mother’ of Volta Redonda (Vargas being the father) and the city its extension. Its directors elected the city’s mayor and ran its hospital, houses, airport, cinema and stadium. In spite of the tense relationships between civil society, trade unions and the management that followed its privatisation in 1992, the CSN is still widely considered the town’s mother – as well as being its main employer. ‘How did the financial crisis affect the CSN?’ I asked to its managers and workers. Managers were divided about it. Some claimed that the anti-crisis regulatory measures of the government had depressed foreign investments and industrial outputs. Others argued that the financial crisis had in fact translated into a net gain for the Brazilian steel industry vis-à-vis the American, UK and Korean steel producers. The CSN workers were mostly optimistic. Thanks to the expansion of their credit, they were able to buy a second car (in Volta Redonda there are on average three cars per person), TV plasma screens and modern furniture. After a period of layoffs, the CSN started to employ new workers and even the belligerent Metalworkers Union agreed that the financial crisis, if anything, increased workers’ militancy. Commenting on the recent expansion of families’ consumption by 2.5% in 2009, Lula declared that the ‘financial crisis in Brazil was avoided thanks to the struggles [read “debts”] of the povo’. Yet, there was no sign of struggle in the conversations of the povo of this Brazilian steel town.

Having spent a few months in Primavera, a deprived barrio of the city (favela is now considered a pejorative term), I am slowly realising that people’s lives are less rosy than their descriptions. For instance, the lucky neighbours of mine who work at the CSN have average monthly salaries of R$ 700 (roughly British £230) with which they struggle to pay for their children’s education, mortgages and health costs (these are entirely private and not covered by company schemes). Pensioners (20% of the population of Volta Redonda) earn R$ 300, and most of the other residents of the barrio are unemployed, surviving on the Bolsa Familia (a money transfer from the state of R$ 18 per child conditional on school attendance) and Fome Zero (a monthly transfer of R$ 58). When Gerardo, a friend of mine and CSN worker, learned that he had to have a R$ 14,000 dental implant made, he knocked at my door for advice. ‘What do you think Max? Shall I go for it or shall I try to eat mashed food for the rest of my life?’ At night, indigent kids wonder looking for food in the dustbins of the barrio. A few of these have died of crime or drug-related illness since I have lived here. This is barely a good life. And yet, people do not complain too much about it. My friend and neighbour Helton one day told me: “poor people do not worry about the financial crisis and about money in general. Our money is ‘poor’ (moeda pobre). It only circulates amongst ourselves. When it is given away it always returns back to us”. His last sentence made me think about Mauss’ discussion of the hau, the spirit of the gift, a magic force that invisibly connects people together so that the objects exchanged between them are never really lost. As for Mauss’ gift, Helton viewed money as a positive force, a social connector embedded in reciprocal relationships.

Traveling from the ‘centre’ to the ‘periphery’, I learned how stratified people’s perception of money and of the economy is. In London people talked about money and the financial crisis in terms of personal uncertainty, loss, guilt and alienation. In Brazil, people talked about money and the economy optimistically and with metaphors of social connection and national pride. Indeed, the more I ventured into the social periphery – into the periphery of Volta Redonda where Primavera is located – the more people seemed untouched by the financial crisis and positive towards their community and the little money they had. How to make sense of this paradoxical situation?

There are three possible answers.

The first is that people in Brazil do not complain about the financial crisis because the country has successfully disentangled itself from the financial mechanisms and ideological appendages of the old centres. What I am witnessing here then, is a shift from the old centres of the developed world to the new centres of the developing world. Listening to the many stories of Brazil’s relative insulation from the worse effects of the financial crisis, it is tempting to argue that Brazil gained in detaching itself not only from the dollar but also from the ethnocentric and sterile economic visions of the developed world. In this light, the financial crisis can be seen as a philosophical crisis of the developed world, which failed to produce an adequate political theory out of its economic visions (monetarism and Keynesianism). Brazil could become one of the next world powers not only because of its economic strength (so evident in the steel industry that I am currently researching), but also because of its alternative political vision, incarnated so effectively and dramatically by Lula da Silva himself, a poor metalworker from the interior who miraculously became Brazil’s Presidente. Self-improvement and the fight for social justice – the story of Lula himself – are the cornerstones of the new Brazil. Indeed, Lula’s Presidentialism, with its global scope and market aperture, looks closer to the Presidentialism of the other BRIC (Brazil, Russia, India and China) countries than to the insular one of the Brazilian leaders of the past. May be this new hegemonic regime will replace the defunct industrial democracies of the North. Listening to the many accusation of corruption, ruthlessness and authoritarianism against the Lula government, it must be asked whether this shift is desirable. Keith Hart in this blog highlights the positive aspects of money that, like the Trobrianders’ kula ring expands societies beyond their limit. But as Malinowski describes vividly in Argonauts of Western Pacific, imagination and stratification go hand in hand. In the kula exchange, the chiefs are able to expand the circle of gift-exchange to their own advantage thanks to the belief in reciprocity shared by the common people. So maybe the optimistic view of the economy and of the financial crisis held by the Brazilian povo is a reflection of their powerlessness vis-à-vis the compelling charisma of the president, Brazil’s hybrid state capitalism and the ruthless ambitions of the Brazilian political elite.

But looking at Brazil’s astonishing social inequality and poverty (15 millions of people – 20 % of the population –live on the minimum wage of £120 a month), a second, less optimistic possibility emerges – that the Brazilian people have in fact, been affected by the financial crisis due to their only partial connection with the global economic system and that they are not fully aware of it. In this second view, Brazil might soon follow the path of the developing world and be incorporated into a revitalized global capitalism. In the midst of credit expansion, commodification, outsourcing, privatisation and the ambiguous positioning of President Lula between the market and the state, the people of the barrio are suspended between poverty and self-improvement, self-sufficiency and middle class aspirations. Even the space of the city seems to reflect this split between affluence and starvation with the massive steel plant, its mechanical noises and steel workers in blue uniform entangled in the spaces of small plots, squatters in ragged clothes and scavenging animals of the favelas.

A third possibility is that a different consciousness exists among the ‘poor’ of the world periphery, which openly opposes the world of profit and finance. By ‘poor’ I do not mean the romanticized subject of the world peripheries held by ‘subaltern theorists’. I am talking about the workers, unemployed and rural dwellers of this particular Brazilian barrio, who daily turn personal insecurity and uncertainty into positive social forces and self-organized political ‘labour’. After all, in the midst of some violence, gang assaults, ill health and hunger, life continues steadily in the barrio Primavera, with the little wealth trickling down from the CSN being distributed among the residents according to some sense of justice. The local Neighbourhood Association provides a democratic decision making forum on local matters (from street cleaning to energy allocation), the drug trade is kept at a reasonable distance through a mixture of self-policing and intra-household help and people queue patiently for bread and medicines. In the barrio poverty, optimism and communitas seem to go hand in hand. ‘Uncertainty’ rather than ‘rational behaviour’ and a political aversion to free market individualism are the common denominators for daily cooperation. This political consciousness emerges not only people’s desultory conversations at the churrascos (barbeques) in the square on Sundays. It also informs their everyday actions. On the day that I hurriedly bought some fruit at the market, the old vendor asked me if I was a foreigner. Having responded positively, he added: “I knew it. Only gringos buy things without thinking. They are not able to wait. Cannot you see that the fruit that you are buying is not good?” In his own language, the old guy showed me his political aversion to the ideas that ‘time is money’ and that ‘vendors and buyers are competitors’, two core principles of microeconomic.

To conclude, my Brazilian experience suggests that people do not talk so much about the financial crisis at the periphery. Some may wish to transmit to them our precious knowledge and vocabulary. My opinion is that ‘financial crisis’ is at best a useless term, a sterile intellectual remainder of our failed social vision and at worse a powerful ideology for forcing people into imagining the world the way we imagine it. This is a sad imagination indeed, made of individualistic fears and anxieties and an unresolved tensions between ‘the unknown’ and ‘ the rational’. I prefer to listen to their ‘conversations’, tuning into their different language and imagination and in the process – maybe a participative process – trying to build a more equal world and a new ‘centre’.

References

Bronislaw Malinowski 1984 [1922]. Argonauts of Western Pacific. Waveland Press.
Robert Skidelsky. 2009. Keynes: The Return of the Master. Allan Lane.
Martin Wolf. 2009. Fixing Global Finance. Yale University Press.