ASA Globalog

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!”