A place for anthropogists to engage in discussion — Current focus: Financial crisis
Please see this article on the emergence of markets in new environmental products (e.g. carbon) in relation to the financial crisis, as a route through which capitalism is capitalising on crisis:
Sullivan, Sian Green Capitalism, and the Cultural Poverty of Constructing Nature as Service Provider in S Bohm & S.Dabhi eds. Upsetting the Offset: the political economy of carbon markets. Also online as a PDF at pp. 18-27 here.
Dr Gillian Tett, Anthropologist and Assistant Editor, Financial Times
While I was recently reading Karen Ho’s excellent ethnography of Wall Street, Liquidated, I was struck by a passage where she describes the difficulty that besets any anthropologist who is trying to conduct research on bankers. In the venues where anthropologists used to work a few decades ago – such as remote, thirrd world societies – a researcher could often simply pitch up, and observe the social group, confident that those subjects of research were less powerful than the anthropologist. But in modern finance, that power balance reversed: Wall Street or City bankers tend to be much more powerful than anthropologists, and bankers will almost never let outsiders through their doors, to conduct research (unless those aliens are management consultants conducting research which is paid for, and controlled, by the bank itself.) Thus the idea of ‘pitching your tent in the hall of JP Morgan’ is utterly ludicrous, as Ho points out; an anthropologist would probably be ejected by security guards long before any research occurred.
Some tenacious anthropologists have managed to duck around these constraints, usually by virtue of getting a job inside the bank, through a mixture of subterfuge or happy accident. Ho did that (although she later supplemented much of that research by conducting formal interviews along networks of Wall Street contacts) Caitlin Zaloom, an American anthropologist, also gathered fascinating ‘insider’ material by working on a trading floor for a period. Meanwhile, Horacio Ortiz, an Argentinian post graduate conducted some fascinating research on structured finance by working at three Paris-based financial institutions.
However, for my own purposes – working as a journalist with an anthropologist eye – I have often used another route to get access to the banking world: attending investment banking conferences. Every year, the banking community stages a plethora of these events, which tend to be very ritualistic in nature. To outsiders, these events can often appear deadly dull, if not almost pointless; indeed, that is how some bankers themselves sometimes portray them. However, in practical terms, these investment banking conferences play a role inside the banking system that partly echoes the function played by marriage rituals in other social groups.
Most notably, banking conferences – like marriages – provide a chance for a social group to assemble iin one place, in a way that reaffirms their common identity and enabled them to forge new alliances, often in opposition to others. It also provides a forum for the group to restate their core assumptions and ideas in a manner that allows the group to reproduce and disseminate a cognitive map, over time. Some of this is done overtly, and self-consciously, with power-point presentations on a podium, or deliberate, carefully chosen branding and marketing campaigns. However, the most powerful forms of intellectual ‘reproduction’ occur through more informal means: the gossip around the bar about bonuses (that reinforces the dominant assumption that bigger pay is tantamount to success); the use of complex mathematical language to discuss credit (which makes it acceptable to talk about money for hours on end, without ever mentioning a human being); the sartorial conformity, as bankers all wear chinos and expensive watches/ear-rings (which underlines the idea that wealth is unifying source of identity, but only when it is not overtly displayed); the widespread use of speaker ‘biographies’ (which also stress the common educational, quasi-kinship bonds that link the group), or the use of ‘on-the-record’, or ‘off-the-record’ conventions for journalists, (which reinforce the assumption that bankers have a right to control information flow to the outside world.)
However, the other feature which makes investment banking conferences oddly similar to marriage rituals is that they are also one of the few occasions when ‘outsiders’ have a chance to slip into the banking world, and properly observe the interactions of the group, and the way that they discuss and display themselves. This is not always possible: just as some weddings might be limited to a tiny group of invited guests, some conferences will tightly control the members, and ban outsiders, such as the media. Yet, the bar to entry can often be overcome, since investment banking conferences are so big, and bankers are meeting away from their own, private space in the office or trading floor. So I, for one, plan to keep attending as many of these events as possible – only this year, in a symbolic nod too the new mood of austerity, the conferences are no longer being staged in holiday resorts such as Barcelona, Cannes, Boca Raton or Las Vegas (which used to be hot destinations of choice), but instead in the more humdrum, ‘serious’ locations of Washington, or Edgware Road, London.
Dr Nayanika Mookherjee, Ethics Officer, ASA
See the October 2009 issue of Anthropology News on ‘ECONOMIC CRISIS: ORIGINS’ – includes an article by Gillian Tett (Icebergs and Ideologies: How Information Flows Fuelled the Financial Crisis).
Download PDF here.
Dr Gillian Tett, Anthropologist and Assistant Editor, Financial Times
Back in the days when I first became a financial journalist – some 15 years ago – I would sometimes feel a touch embarrassed when I confessed to bankers or anyone else in the business world that I had a PhD in Social Anthropology. For back then, there was a widespread assumption that the only degrees which ‘really’ counted were those in economics, or the hard sciences – or, at a pinch, a Masters of Business Administration, preferably from a macho university such as Harvard.
And that, in turn, reflected a cultural pattern, or mindset, that bankers sometimes jokingly call ‘physics envy’ – namely a sense of inferiority relative to the so-called hard sciences. For during the last three decades, financiers have longed to convince themselves, and others, that they could use the laws of hard sciences to explain how money is likely to move around the financial system, with deceptively neat precision. After the beauty of physics, say, is that it offers a sense of certainty – and predictive powers – in an ot otherwise uncertain, unstable world. Thus, financiers have scrambled to find ways to copy that sense of certainty, not least because prediction has the potential to unlock fat profits – if, of course, the predictions turn out to be correct.
And within the world of finance, the type of training that commanded most respect was one that appeared to enable the recipient to transpose scientific concepts onto the financial world. Nobody in banking, in other words, ever commanded much respect by pointing out that financial markets were complex, unknowable – and unprediictable. Instead, the glory went to those who claimed to be able to analyze and predict those markets using complex, abstract, mathematical tools – and the fact that few people understood how those tools worked, simply conferred more, not less, respect on the new breed of banking ‘priests’. A training in complex finance-cum-science – or financial engineering, as it was often called – was thus widely admitted; anthropology, by contrast, just seemed rather ‘hippy’, as one banker observed – a polite phrase for saying ‘useless’.
No longer. As the financial crisis has exploded in the last couple of years, the bankers who once proudly touted the predictive power of financial models, have been losing faith in those quasi oracles to a starting degree. Oddly enough, it is not often the people who first dreamed up these models who are suffering the greatest intellectual shock as result; on the contrary, the true scientists-turned-financiers – or the ‘quants’, or ‘geeks’ – who invented these mathematical techniques were often well aware of the shortcomings of trying to apply laws of Newtonian physics to financial markets.
Instead, the people who have been most stunned by the failure of models, are those whose business was linked to these models, but which never really created them themselves – the salesmen who floogged the products, the traders who bet on price movements, or the senior executives of the banks. For them, the revelation that finance is more of an art, than science, has been a brutal shock. And as that sinks in, there is a renewed interest among some senior executives in trying to the social dynamics of finance – both in terms of trying to understand how their own banks have operated in the past (or, most accurately, failed to do so), but also in terms of broader market psychology. Courses on behavioural finance are becoming more fashionable. There is a new emphasis among regulators and risk managers on trying to understand the interconnectivity of markets. A group of powerful insurance companies in London have even hired an anthropologist to study their business. And when I travel around investment banking conferences and reveal my background in social anthropology, I am apt to get asked a plethora of questions – instead of a blank sttare.
Of course, this new trend may well prove temporary; if the markets continue to rally, and the banks start to make money again, there will be a big temptation for bankers to simply revert to their tunnel vision again. But the moment, at least, this financial crisis has served to remind financiers that ‘credit’ is not just about computer models, greek letters or complex maths; the roots of the word credit come from the latin credere, meaning ‘to believe’ – which is fundamentally a human construct. Or to put it another way, finance with faith is worth absolutely nought, no matter what a mathematical model might say. I just hope that this brief moment of shock helps to promote more reflection inside the banking world; and perhaps, more opportunity for social scientists to offer their skills and insights in modern finance.
Prof Karen Z. Ho, University of Minnesota
This entry is meant to provoke and continue our discussion on financial crises, and in particular, American finance capitalists’ roles in helping to produce the volatile and unequal conditions that manifest as financial market and “emerging market” crises. Perhaps one simple yet effective way to describe the link between Wall Street culture and the construction of market crises is through the deeply embedded ritual of the Wall Street bonus. Although hardly a media day goes by without a query into bonuses, most journalistic accounts range from incredulous disbelief (i.e. how can Goldman Sachs be poised to pay record bonuses despite its bailout and the still ongoing recession) to essentialized resignation (i.e. the “rules of the jungle” will never change) to a staunch defense of the strategic use of bonuses to maintain Wall Street “talent”. While most articles are either critical or skeptical of these bonuses, the central theme is usually one of surprise: although many investment bankers and traders are on an celebratory upswing, most people, not to mention “the economy” in general, continue to experience either “a jobless recovery” or “recession-like” symptoms. I would argue that the fundamental point for examining bonuses is not their irony, strangeness, indexing of out-of-touch privilege, or conspicuous compensation. Rather, in the spirit of bringing anthropological tools to bear on financial analyses, it is important to read Wall Street’s bonus and compensation culture as perhaps the central cultural distillation of the key contradictions and unequal effects of a finance-capital-dominated social economy. To a certain extent, bonuses embody the restructuring of American economic practices and large institutions according to financial values that often mine the productive assets of corporations. And, precisely because Wall Street’s key ethos is often expressed vis a vis bonuses, these compensation schemes can also serve as a culturally useful predictor, indicator, or sign of impending crises.
Bonuses, I would add, is also good to think with for anthropological theories of money and number. Bonuses (which Wall Street bankers and traders actually dub “the number”) are quantifications in which are embedded complex cultural practices; far from being abstractions, they index moral superiority, outrage, and debate. They are both calculations (and calculable) and distillations of neoliberal “excess” and “irrationality”. Bonuses, like many anthropological approaches to money, belie dominant assumptions of money as abstract, objective, and asocial.
So, I ask the reader to turn their attention first to this press release from the New York State Comptroller’s Office, where in January 2009, the Office of the State Deputy Comptroller compiled a chart of New York City securities industry bonuses from 1985 to 2008. Though, admittedly, there are multiple ways to interpret and contextualize these numbers, I read them as indicative of the growing influence of financial values and practices. With a cursory glance, it is striking how Wall Street bonuses have been increasing exponentially in the past two decades: in the 1980s, the “decade of greed,” bonuses hovered around a “mere” 2 billion; in the mid-1990s, around 5 billion; in 1999, around 9 billion; in 2003, around 16 billion; and in 2007, almost 33 billion! Not surprisingly, the massive rise of the total bonus pool (which is based on the number and size of financial deals generated by Wall Street investment banks) is indicative of “the financialization of everyday life,” where corporations, institutions, and even individuals went from being separated and protected from, avoiding, and/or faddishly dabbling in the financial markets to nearly conflating all their hopes and labors for growth with constant financial transactions. Financial deal-making has become the routine path for corporations to “demonstrate” growth, responsibility, and success, despite the fact that such narrow strategies often led to long-term decline in corporate productivity, not to mention shareholder value volatility. Simply comparing 2007 with 1987 – 32.9 with 2.6 billion– gives a sense of Wall Street’s stakes and interests in restructuring the global economy, not to mention the acceleration and intensification of the wide-reaching effects of financial crises.
Upon further examination, another interesting pattern and possible correlation emerges: notice how the bonuses peak and trough within the general upward climb. Reflecting on the multiple moments of crises and heightened financial market volatility that have characterized the past two decades, pay attention to how bonuses “peak” at precisely the moment of financial crisis. In 1987, bonuses culminate at 2.6 billion with the stock market crash of 1987 and the impending junk bond collapse; in 1993, bonuses rise to at 5.8 billion, right before the Mexican peso crisis of 1994; in 1997, bonuses crest at 11.2 billion, at moment of the Asian and Russian financial crises; in 2000, bonuses top out at 19.5 billion, right at the dot-com bust; and in 2006 and 2007, bonuses are at a record 34.1 billion and 32.9 billion, as the current subprime debacle implodes. Could bonuses, then, culturally index crises, i.e. be used as an approximate predictor and indicator of impending financial disaster? In other words, to the extent that stratospheric bonus numbers discursively demonstrate the frenzy of deal-making that help to constitute bubbles in the first place, they also notify the stage for the impending crash. As I argue elsewhere, many of my Wall Street informants actually sensed the impending bursting of bubbles precisely because through their daily practices, they often recognized they had pushed through as many financial transactions as the markets could bear. And, yet, this knowledge did not so much curtail their hype as it hastened their culture of expediency to eke out even more deals to count towards their year-end bonus. Given that investment bankers and traders themselves have jobs that are on the line – rife with insecurity – and that for them, a sacred cultural value is to “be one” with the market, to be simultaneous and “real-time” with it as their cultural embodiment, they are culturally constructed, even encouraged, to mortgage the future through their bonuses. Of course, Wall Streeters’ experiences of financial crises and job insecurities have historically been cushioned contrary to the average worker: they are amply resourced, highly networked, exorbitantly compensated, and valued as “the smartest.” As such, their understandings of what it takes to be a successful worker in the new economy, to be simultaneous with the market that they have had a strong hand in constructing, are internalized as challenges and sources of empowerment, however unstable, disciplinary, and disruptive such standards are for most people.
The ritual of the bonuses also begets yet another key cultural quandary: how can investment bankers be arguably the most highly compensated workers in the world when their practices so often generate crisis and economic decline? Veteran Wall Street observer Michael Lewis wondered why, after the collapse of Long-Term Capital Management, the world’s leading hedge fund, in the wake of the Russian and Asian financial crises in the late 1990s, didn’t hedge funds, which had been blamed for exacerbating these crises, lose credibility? He wrote, “But the panic – like all panics – did nothing but strengthen the booming hedge fund industry.” (Not surprisingly, the IMF and US Treasury step in during emerging market crises to demand policies that enhance repayment for western creditors and investors, and compromise economic sovereignty). The commonsense understanding on Wall Street is that hedge funds, i.e. financial architects and innovators, have demonstrated the ability to create entirely new market opportunities characterized by immediate exploitation and high growth; such is the culture of expediency, where market simultaneity, not wisdom, is a central goal. In a similar vein, the head of AIG’s Financial Products division, which was responsible for the credit-default swaps now explained as largely responsible for the extent of Wall Street’s spreading of toxic debt, used to work at Drexel Burnham Lambert, an investment bank that went bankrupt due to junk bonds and insider trading.
At issue here, also, is a fundamental misapprehension of Wall Street’s practices of compensation, which is largely represented as “pay for performance.” There is not so much a contradiction between Wall Street bonuses and the larger performance of our social economy as a misplaced understanding of what actually constitutes financial “performance.” Investment bankers and traders measure performance according to the number of deals executed, regardless of their impact on the corporation or society at large. Even in a recession, transactions such as selling off toxic assets or bankruptcy advice count towards the bonus. The essentializing of banker smartness is again important here: despite their roles in failed deals and financial crises, the discourse of awarding bonuses as a vehicle of retention, to retain talent, still has traction. The dominance of short-term, transaction-led compensation schemes, the understanding that Wall Street investment bankers, as the smartest investors in the world, are deserving, and the taken-for-granted divorce of executive pay (and stock prices) from the livelihood of most workers in the service of quick shareholder value are at work here. The persistence of high bonuses despite Wall Street’s instigation of global financial meltdown raises the question of who bears the brunt of high-risk practices. And, yet, precisely because bonuses are a core part Wall Streeters’ sense of themselves, totally eliminating bonuses for still-employed bankers would be all but culturally unthinkable.
References Cited:
1. New York State Comptroller. 2009. “New York City Securities Industry Bonuses.” January 28, www.osc.state.ny.us.
2. Martin, Randy. 2002. Financialzation of Everyday Life. Philadelphia: Temple University Press.
3. Lewis, Michael, ed. 2009. Panic: The Story of Modern Financial Insanity. New York: W.W. Norton & Co.
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.
Stephen Gudeman
We are living through a distressing economic crisis, the dimensions of which none of us has previously experienced. Around the globe, unemployment and sub employment have risen, salaries are frozen, homes are being repossessed, economic inequality continues, and many are experiencing heightened emotional distress. We cannot foresee the full consequences of this downturn, and even if some forecasters glimpse a turning point recovery will be slow.
We have heard many explanations for this economic and social mess, and the accounts have proliferated. Just as economists and commentators have not agreed about the causes of the crisis, so only a few predicted its appearance.1 We listen to these accounts with shock at their diversity, with anger at the consequences of the events, and with incredulity that we could have been caught in a fool’s paradise.2
In spite of the distress it has brought, I am fascinated by the crisis, because it displays some of the fault lines, terrors, inequities and inequalities of capitalism, which only a few years ago had seemed to be the world’s welcome future – as visualized in the US and the UK. Governments may treat the crisis as a cyclical downturn to be managed by post Keynesian policies, however I think it also represents a tectonic shift in material life that calls for rethinking our image of economy. Because the normal discourse of economics does not explain this world of contradictions, ironies, and unpredictability, perhaps anthropology’s moment has arrived. I offer a sketch of the contemporary situation based on my anthropological vision of economy as a structure and combination of different value domains. Today, through the impact of growing specialization, these faces of material life exhibit escalating forms of economic power. If the idea of the division of labor with increasing specialization has been a central thread in economics since Adam Smith, its counterpart in anthropology has been the assumption of value diversity within and between cultures. Material life is a shifting combination of the two.
Economists may see economies as flat or smooth plains consisting of markets and market-like behavior that lead to equilibrium situations, but I think they consist of overlapping and conflicting spheres of value and practices. I label these fuzzy-edged spaces House, Community, Commerce, Finance, and Meta-finance. The domains are separate but mingle; individuals and cultures emphasize them differently; their prominence changes over time; and they represent contesting interests and perspectives. The market part of economy, consisting of commerce, finance and meta-finance, often colonizes or cascades into the other two spheres, influencing them to conform to its pattern, although they also help structure market practices.These five domains – from house to meta-finance – exhibit increasing reach in space and inclusiveness of material activities, services, and institutions. They also are increasingly liquid: the speed and number of transactions multiply in the upper domains, especially in meta-finance. This liquidity and ability to shift resources and insert them into different parts of the economy give the upper spheres greater control of the economy and opportunities for sequestering value from elsewhere. Today, in high market economies the financial domains tend to dominate the others for they encompass all value or asset forms, such as land, manufacturing capacity, technology, capitalized human skills and ideas, as well as house production and community sharing.
I shall focus on the relation between commerce and finance in the changing global economy. My theme, the division of labor, is an old one but it has many new forms, especially in high market economies. Traditionally, the division of labor referred to specialization in the tasks of work. Today it is sometimes called ‘slicing and dicing,’ and can refer to splitting property rights to material things, to labor, to risk, to corporations, to services, to technologies, to financial instruments, and even to education which can be securitized as debt to yield a return over time. According to most theories, the division of rights propels markets and the expansion of wealth.
At the outset of The Wealth of Nations (1776), which is considered to be the founding text of modern economics, Adam Smith presented his leading theme: the division of labor. It is not often recognized that he distinguished two forms: the division of labor within a manufacturing unit and the division of labor between units. Within a manufacturing entity, output increases with the division of labor. Smith’s famous example was the pin factory. He observed that if each worker made a pin by carrying out all the tasks on his own, he might be able to make one pin per day. When there is a division of labor in the pin factory, however, everything is different. In his words, ‘One man draws out the wire, another straights it, a third cuts it, a fourth points it, a fifth grinds it at the top for receiving the head; to make the head requires two or three distinct operations; to put it on, is a peculiar business…the important business of making a pin is, in this manner, divided into about eighteen distinct operations’ (Smith 1976 [1776]:8). By dividing the tasks of making pins among laborers, each worker effectively makes thousands of pins a day. This is the first form of the division of labor.
Smith also discussed the division of labor between manufacturers or tradesmen. This second division of labor arises not from an urge to divide work into parts and specialize but from self-interest and the propensity “to truck, barter, and exchange one thing for another.” (Smith 1976:17). When people trade, they find they can obtain more goods by specializing in one product, and exchanging it for their other needs than if they produce everything for themselves. This double division of labor argument is Smith’s famous justification for markets, for it leads to “universal opulence” in a well-governed society (Smith 1976 [1776]: 15). His claim has since received formal, mathematical treatment by economists, and most of his conclusions are still found in contemporary arguments, which is to say that self-interest and specialization lead to affluence.3
Smith considered the division of labor principally within the commercial sphere of an economy. Forty years later, David Ricardo showed how specialization and the division of labor could be both an international and national benefit. Since Ricardo, the theme of comparative advantage has provided the narrative foundation for supporting international trade: national economies should specialize in what they do best, relative to the marginal returns of their other products, and trade with others who also calculate and specialize. Everyone benefits because more is produced, although it may be unequally distributed. Anthropologists have long seen the local effects of one form of international trade. Primary products from the ‘third world’ may be traded to commercial centers in the ‘North’: tin from Bolivia, sugar cane from Panama, rubber from Brazil and Malaysia, coffee from many parts, and the list continues. In many cases, the primary products are processed in ‘first world’ commercial centers that reap the returns of the value added. Broadly, this division of labor that separates national economies occurs within the commercial realm, but it is supported by differential control of finance.
Today we are witnessing a new pattern of trade that grew in the second half of the twentieth century. This division of labor is connected to the difference between finance and commerce and to shifting corporate borders, or to the interaction of Adam Smith’s two forms of the division of labor. Consider the example of General Electric. When I grew up it was known for manufacturing and selling household appliances, such as dishwashers, refrigerators, and of course light bulbs. Sometime in the later 1950s or 1960s it instituted a form of internal governance by which its product divisions were evaluated by their return on assets. Divisions with a higher return on investment (or profit rate) received more resources for expansion. Divisions with lower rates of return received less. The internal division of labor was measured and monitored financially, which provided a more efficient use of capital. General Electric’s commerce was brought under financial control, or the qualitative differences between light bulbs and refrigerators were seen in terms of quantities.
I view this financialization of commerce or financial cascading as an initial step toward outsourcing commercial capacities. The outsourcing revolution grew in the 1990s, and GE was a major player, under the guidance of Jack Welch. As General Electric and other companies increasingly focused on products they thought would bring the highest returns, lower returning parts of the company were sold or outsourced. This process is now explained as focusing on core competence. Broadly, core competency refers to a competitive niche that a firm has in a product or service, in relationships with buyers or sellers, or in its organizational form, such as making pins, producing wine, or manufacturing microchips. By comparing units internally according to their return on assets and allocating funds in accord with the results, GE set the stage for comparing its functional divisions to external providers of the same product. When it was less costly to outsource to places like India, GE would shed parts of the company. Late in the day, GE even outsourced some of its back office activities.4 From this perspective, defining a company’s core competence is not a qualitative judgement about how the work is being done or whether the product is well fashioned but also a quantitative one in light of the economy’s division of tasks and competition. Or, core competence is what is left standing after less competitive parts are sheared off. Anthropologists know about the other side of the core competence revolution because in many of the places where we work, we have observed the appearance and disappearance of light assembly plants that employ people at low wages. Less expensive to operate than if they were in high market regions, these centers move about as wage rates shift among nations. Profits may be kept off-shore or flow back to metropoles; usually they are not dramatically reinvested in the assembly plant or region.
By outsourcing its less profitable divisions both nationally and internationally, GE increasingly became a financial organization. It may surprise some to know that General Electric’s major revenues in the past years have not come from the realm of real commerce – or light bulbs – but from the realm of finance – or credit cards. From 2006 through 2008 consumer and industrial products contributed 7% to overall revenues and 3% to profits, however the financial division contributed 37% to overall revenues and 39% to profits, including the recent difficult times. Similarly, the former giant automobile company, General Motors – now effectively nationalized in part – was most profitable in its lending operations.5
Out sourcing the production of commercial wares from high market economies while controlling finance is the middle part of my story. I suggest that the slicing and dicing, outsourcing, and core competence revolution also seeped into the financial realm through the impact of the financing of finance, which is my fifth sphere. We enter here the realm of derivatives and the innovation of investment vehicles, such as a CDO squared.6 In the latter part of the 20th century, following innovations concerning asset allocation and the pricing of futures’ contracts, risk became a commodity or property that could be separated or sliced from a stock, bond or commercial venture, and bought and sold.7 Through the commoditization of risk, one can buy and sell the price of a price. Derivatives allow one to separate the risk of a price change in an asset from the price of the asset in order to assure a particular price in the future. House mortgages, for example, are risky loans. By slicing off their presumed risk, and outsourcing it, banks can separate the principal and interest of a loan from its risk, at a cost. Specializing in derivatives and other financial instruments is a new core competence or division of task specialization. Of course, therein lies a tale: the problematic assessment of risk. Perhaps we can begin to assess risk through local knowledge or by extrapolating from the past. But how does one assess the risk of an asset’s price that has no history, such as a mortgage issued to a subprime borrower? Yet, risk was computed, sliced off, and outsourced, and we have seen the disaster wrought by this financial revolution. Its effects have cascaded down on the rest of us, and we are calling on community in its governmental form to save us from this excess market expansion. (Should we refer to this botched specialization as core incompetence?).
My story is not finished. With other anthropologists, I have recorded how a house and communal economy that partly relied on self-sufficiency was destroyed by market expansion through the arrival of a cash crop, which was an innovation in the service of efficient production. This shift was driven by the search for profit through commercial operations. More recently we have lived through a commercial outsourcing revolution in high market economies, which includes downsizing to core corporate activities that produce a financial profit; it too is a revolution in efficiency and an example of creative destruction with task specialization.8 Now we are living through a crisis in the financial sector, done again in the name of enhancing efficiency in the use of capital, and fuelled by a focus on “alpha.” Sophisticated professionals talk about the “search for alpha,” which was one of the mantras of Goldman Sachs in New York. Alpha is the label for the excess return relative to a benchmark index; or it is the abnormal return above the expected financial return. A calculated return about other returns (meta-finance), the profit of alpha lies at the center of the finance of finance sphere. Securing alpha became the core competence of financial firms. This ultimate profit on profit was the Holy Grail of Wall Street and the City of London.9 Economists may not speak about economic bubbles, but certainly we experienced one in the mortgage market, in the stock market and even in high-yielding instruments. 10 But I think they were all facilitated by the bubble in meta-finance, which was the innovation or creation of new instruments, one after another, in an uncontrolled, competitive bout to out-do others and soak up finance. That bubble burst. For example, in 2007, Goldman Sachs’ supreme, task specific hedge fund, the Global Alpha Fund, managed12 billion dollars. But with the crisis, by mid 2008, it was worth 2.5 billion dollars, or 20% of that amount. By April 2009, Goldman Sachs had dismissed its founding managers, who had been lauded as the drivers of this “Cadillac of funds.”11 I think back to Marcel Mauss and his characterization of the Kwakiutl potlatch as the “monster child” of gift-giving. To gain prestige and out-do others, chiefs ultimately would burn blankets and throw pieces of copper into the sea. Was this destruction different from the financial potlatch in our metropoles?
My view of economy as a structure and hierarchy of value spheres and their interactions portrays the current crisis as an emergent phenomenon that is continuous with the expansion of the division of labor to task specialization to core competence, and of economy from house, to community, to commerce, to finance, and to finance of finance. But the tale has a prickly tail. We may be in the midst of a double, tectonic shift. The division of labor in its many guises and developed form, whether in making pins, focusing on core competency, slicing and dicing risk, or outsourcing lies at the heart of these changes. The US especially has been outsourcing commerce or manufacturing to countries such as China and India, while securing gains in the financial sphere; but reinvestment in manufacturing has dropped, workers have not shared in the gains, and unequal distribution of income has increased. As dollars have accumulated abroad they have been used to purchase US Treasury and other forms of debt. The economy of the US and other countries was supported and pumped up through the finance, and finance of finance sectors. Does the US face a double crisis from the bursting of the financial bubble, on the one side, and from evisceration of its commercial sector, on the other? Has the commercial sector been debased by the outsourcing of manufacturing and the focus on financial profits as the zone of core competence.12
I am hinting that high market capitalism may have a tendency to debase itself through creative destruction in the search for profit. I am not an evolutionary anthropologist, but I do picture alpha males chasing alpha profits across the rooftops of Wall Street and the City. But on what is alpha – the profit above a profit – based? If in the alpha competition we cut away the underpinnings of houses, community, and commerce, can we expect a return to economic life as it was before the crisis? Is destruction of itself, through concentrating on finance, core competence, outsourcing, and slicing and dicing, the future of high market economies – has the division of labor run amok and have the spheres of value become unbalanced? Or, will the experiences of capitalism, socialism, and ethnographic economies be combined in creative ways to support social relationships, decent material living, and individual well-being? Will there be a creative destruction of the contemporary economy itself? These are some of my questions about today’s economy and its future.
Footnotes
1In the spirit of the times, I am inclined to suggest that there is always a risk that a statistically small number of people will accurately predict a crash, or a boom.
2 “How Did Economists Get It So Wrong?” Paul Krugman. New York Times, 6 September 2009.
3 The concept of the division of labor is probably most familiar to anthropologists from Durkheim’s writings on organic solidarity. But Durkheim did not distinguish between the two forms, and neither Smith nor Durkheim discussed their interaction. Like Adam Smith he largely viewed the increasing division of labor as a positive change in society.
4Back office work refers to keeping records of sales, inventories, and purchases, and to assembling other data bases as well as accounting.
5 “We are GE.” Annual Report 2008. General Electric Corporation.
6 Numbers of mortgages may be assembled into mortgage pools, which are then divided into tranches (slices) or different risk levels for sale as securities. Then slices from one mortgage pool may be combined with risk levels from another or with slices from yet a different type of pool. These mixed securities, backed by debts, are Collateralized Debt Obligations. Finally, risk slices of different CDO’s may be combined for sale as a CDO squared.
7 For an inside account of this new financial world, see Gillian Tett (2009) Fool’s Gold.
8I have drawn liberally on William Milberg, 2008, “Shifting Sources and Uses of Profits: sustaining US Financialization with global value chains,” Economy and Society 37:420-451and on William Milberg and Deborah Schöller, “Globalization, Offshoring and Economic Insecurity in Industrialized Countries” ms. 11 March 2008.
9 “The Search for Alpha Continues,” (2001); “Active Alpha Investing.”
10 But see John Kenneth Galbraith (1993), A Short History of Financial Euphoria.
11 “Global Alpha Founders Are Out at Goldman Sachs.” FINalternatives. http://www.finalternatives.com/node7441. For an earlier laudatory description, see “Information Processing: Alpha geeks.” http://infoproc.blogspot.com/2006/04/alpha-geeks.html.
12 See, for example, Krugman, “Reconsidering a Miracle,” NY Times, 16 April 2009; van Ark, O’Mahony, and Timmer (2009).
Sandy Robertson – 10 September 2009
My education in capitalism began in a tiny branch of the Royal Bank of Scotland. It was perched above the suburban railway line in Edinburgh, facing the Reid Memorial church (brewery money). The immaculate teller, who looked like Harold Macmillan, towered over the single monumental counter. Reaching up from the floor below, I made small deposits and furtive withdrawals from my savings account, my eyes shielded by my school cap.
‘Five shillings please, Mr McAlister’
‘FIVE shillings? What would a wee boy like you want with five shillings?’
‘It’s my mum’s birthday.’
‘I’m sure your mother will be quite content with something that costs no more than half a crown.’
Since those days the gap between me and my bank has widened inexorably. For reasons that escape me I now have a ‘Personal Banker’, a teenager who phones me occasionally to nag me about idle money in my savings account. A few years ago, before the gap between Fred ‘the Shred’ Goodwin’s pension and mine became a personal grudge, I got interested in Greed, so I thought I’d kick-off this blog with a few thoughts on the role of this ancient vice in the current Crisis.
‘Greed’ is an insult which strikes right to the gut. The word doesn’t fuss around the head or the heart, it jabs just below the navel. It sounds angry, taunting, emetic. It cuts back at the fancy talk of the self-fixated, the rich and powerful. It is a nice little weapon of the weak.
Greed is a tell-tale, pointing to the presence of our bodies in contexts where we would prefer to ignore them or deny their relevance. Not so long ago greed, and most other things we would regard as moral vices and virtues, were understood as properties of the human body – its organs, fluids, excretions, temperatures. In popular usage, Greed still uses the visceral indices of hunger and disgust to monitor our entitlements, giving license to the voracious teenager’s need to grow, but excoriating senile avarice.
For centuries, we have been trying to find nicer ways of talking about the vice, but our best efforts (‘rational self interest’, ‘egoism’) always sound devious and apologetic. Worse, we have created the lethal illusion that modern institutions like banks, businesses or governments have transcended human passions, and can thus absolve us from blame.
The medieval burghers sought to dodge accusations of greed by political bluster or conspicuous acts of charity, but nothing provided better moral cover than their most successful and durable invention, the corporation. This transcendent meta-body is no freak of nature, no historical accident. It was invented by European merchants in the 15th century, along with enough moral latitude to allow great commercial ventures to flourish, and many rogues to prosper. Chambers’ excellent Dictionary tells us that the corporation is ‘a succession or collection of people authorized by law to act as one individual and regarded as having a separate existence from the people who are its members’. It allows real people to join forces for private gain, to mask their personal identities, dodge their liabilities, and defy mortality. Moral ambivalence is intrinsic to the corporation. It is the framework in which individuals are piously held to account, and yet can get away with almost anything. Back in the 18th century, an English Lord Chancellor asked: ‘Did you ever expect a corporation to have a conscience, when it has no soul to be damned, and no body to be kicked?’
The earliest Oxford English Dictionary citation (1425) of the modern meaning of corruption as ‘perversion from uprightness and fidelity in the discharge of duty’ dates from this epoch; and of course the etymology of ‘corruption’ is also rooted in the body, this time its physical decomposition. Nor is it a coincidence that Chambers’s second definition of ‘corporation’ is ‘a belly, especially a pot belly’. Feeding is the universal metaphor for bribery and peculation. As they say cheerfully in West Africa ‘the state is meat … people eat the state’. And vomit is the moral remedy for gluttony, witness the amazing Romanesque tympanum of the last judgment at Conques in France, which shows devils squeezing the puke out of a glutton.
The corporation developed simultaneously as an instrument of commerce and of government, a political-economic symbiosis essential to the making of modern states in the 19th century and transnational enterprises in the 20th. Today, expanding scale has made corporations the only viable citizens of the wider world – it is almost unimaginably difficult for private individuals to claim justice or even do business at this level. The most recent piece of effrontery is corporate claims to human rights, on the very terms which national and international agencies have sought to devise to protect ordinary people from corporate predations. Commenting on such claims by the cement corporation Lafarge, a Guardian editorial lamented our ‘domination by bodies we created but have lost the means to control’. Perhaps the biggest public cost of all this is the erosion of trust on which human transactions have always been based, and which corporate bureaucracies try to fudge with ramifying contracts, audits, and all the other forest-slaughtering devices.
Corporations spend vast resources and energy combatting the innuendo of Greed. ‘You have a certain amount of money’ said a Bank of America advertisement coyly, in palmier days. ‘You would like more. This is the American way.’ Greed is Good says Gordon Gekko in the 1987 cult movie Wall Street. It’s irresistible because it’s genetic, and it will save us from perdition. ‘Greed, gluttony and over-indulgence,’ purrs an advertisement, ‘Like Ryvita, they’re totally natural’.
Popular understandings, and with them popular resistance, die hard. Ordinary people in Lagos or Dallas know that bureaucracies are not staffed by normatively pure, disembodied spirits, dedicated to grander interests than themselves. They are full of people who eat and shit and fornicate and die like all the rest of us, and when things go seriously wrong, like now, it’s as ordinary, embodied mortals that they are held up to us for inspection. The corporate metaphor of the body is returned to its source, where its ill-health is perceived sensuously. In media coverage, exposed villains like Bernie Madoff and Kenny Lay look physically shabby. Images of public retribution are no less physical. In cartoons they are frequently depicted in medieval terms: on the rack, in the stocks being pelted with garbage, or heading for the noose or the guillotine.
The moral metric of Greed is most commonly defined as ‘wanting more than you need’, and it is this little twist on mind-body dualism that originally drew my attention to the vice. Let us remember that in Cartesian terms the opposition is asymmetrical – an integral, rational mind in cahoots with an immortal soul, transcending an ephemeral, divisible, corruptible body. But the Cartesian dilemma is that the mind had no location, no identity, except in the mortal coordinates of a body. That’s the gleeful premise of an accusation of greed: the supremacy of the mind is subverted, and the body once again sets the moral limits of desire. This is a reminder that dualism is neither technically neutral nor universally natural, it is a moral premise. Anthropologists have been discovering that it is a distinction which should not be imported unthinkingly into the interpretation of other peoples’ epistemologies.
At a European Union symposium, The Economist’s columnist ‘Charlemagne’ was challenged by a speaker who protested that use of the word ‘greed’ was ‘inappropriate at an academic conference’. Like Charlemagne, I disagree. Western scholars have been complicit in the construction not only of the corporation, but in the moral assumptions about the transcendental mind that justify it. It was the merchants who funded the first universities, and their scholarly sons who went on to build up the rationales for private and public enterprise. As Albert Hirschman has famously explained, they elaborated the ideas of rational self-interest, individual freedom, profit, contract and office which have been the making of the modern world. His classic exposition of The Passions and the Interests charts the trajectory towards belief in the Invisible Hand as a dispenser of virtue, a creed which ends up in today’s nauseating lineups of squirming bankers, blathering about ‘excessive risk-taking’ and blaming ‘the bonus culture’. The angry public express these failings more simply as greed and stupidity – to which we, as shareholders, have been as susceptible as any. Mea culpa.
We all know that having an identity that is detachable from your body requires an institutional framework which incorporates enough social power and privilege to keep the profitable political-economic game running long enough, and on a large enough scale. And when things go wrong we revert to much older conceptions of probity. We seek out some body to blame. As Rousseau warned his protegé Emile, ‘Greed considers some things wrong which are not wrong in the eyes of reason’. That’s the great virtue of greed: when the deceits of the mind are exposed, and our balkanised academic disciplines fail to come to terms with global economic collapse, we can always fall back on such juicy old ad hominem epithets to remind us what we really are.
By Nayanika Mookherjee, Ethics Officer, ASA
The ASA blog’s attempt to discuss the financial crisis currently occurring around us seeks to bring together anthropologists, sociologists, who work on the cultural political economy, anthropology of money, class, labour, industry, economic anthropology, informal economy, wall street as an ethnographic site, micro finance, the nature of capitalism and the modern state so as to comment and examine the current situation. Seemingly an ‘unanthropological’ topic this blog (from mid September 09 to mid December 09) is not about personal opinions of the bloggers only. This discussion would also highlight how ethnographic techniques can be applied to explore such dynamic issues in the modern world. Gillian Tett, an anthropologist who is the Assistant Editor of Financial Times predicted the credit crisis two years ago when she was largely ignored by the banking world. She felt how her training in social anthropology alerted her to the danger and the need to listen to ‘social noise’ as well as ‘social sciences’. To quote Tett (Barton 31st October 2008, The Guardian):
“I happen to think anthropology is a brilliant background for looking at finance,” she reasons. “Firstly, you’re trained to look at how societies or cultures operate holistically, so you look at how all the bits move together. And most people in the City don’t do that. They are so specialised, so busy, that they just look at their own little silos. And one of the reasons we got into the mess we are in is because they were all so busy looking at their own little bit that they totally failed to understand how it interacted with the rest of society.
“But the other thing is, if you come from an anthropology background, you also try and put finance in a cultural context. Bankers like to imagine that money and the profit motive is as universal as gravity. They think it’s basically a given and they think it’s completely apersonal. And it’s not. What they do in finance is all about culture and interaction.”
These and other related issues will be discussed by the following group of bloggers from mid September 09 till mid December 2009:
Mid September – end September: Prof. Alexander F. Robertson, Anthropology, Edinburgh University
Early October – Mid October: Dr. Gillian Tett, Anthropologist and Assistant Editor, Financial Times
Mid October – End October: Prof. Stephen Gudeman, Anthropology, University of Minnesota & Dr. Massimiliano Mollona, Anthropology, Goldsmiths College, London University
End October – Mid November: Prof Karen Z. Ho, Anthropology, University of Minnesota
Mid November – End November: Prof. Keith Hart, Anthropology, Goldsmiths College, London University
Early – mid December: Prof. Bob Jessop, Sociology, Lancaster University
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By Magnus Course
A recent proposal to make a documentary on Shuar head-hunting has a led to a flurry of activity on a variety of lowland South America anthropology lists. The ensuing debate evolved gradually from the airing of concerns about the proposed documentary, to a more reflective discussion about what we as anthropologists want to see in popular ethnographic films. Following Steve Rubenstein’s suggestion that a good place to start is by looking at films we regard as successful and positive, several anthropologists sent lists of their favourite ethnographic films about indigenous South American peoples. Perhaps not surprisingly, the majority cited films made by indigenous peoples themselves. Such films of course bypass (or at least, obscure) several rather sticky problems of the ethics and politics of representation. Furthermore, many of these films are beautiful, evocative, and provocative from an anthropological perspective. The question I want to pose in this post is that of whether such films really offer a solution to the central problem we are addressing in this blog: the nature of representation of indigenous peoples in popular ethnographic television documentaries. I am inclined to say that, despite their undoubted worth, they do not. My reason is that what makes them interesting to anthropologists is precisely what makes them uninteresting to everyone else: their capacity to represent life from a truly indigenous perspective. Put simply, anthropologists are trained (and paid) to understand and appreciate these perspectives, general television audiences are not.
There is of course a much broader debate in public broadcasting, to which Andre referred, about the extent to which progamming should be determined by audience demand. Is television entertainment or education? Of course it is ideally both; simultaneously informative and entertaining. Yet the recent plethora of ‘tribal’ reality shows favours entertainment at the expense of education, while the indigenously-produced films favoured by anthropologists (at least, the ones I have seen) are heavily weighted towards the informative end of the spectrum. I would be very surprised (and very pleased!) if a film made by indigenous peoples about themselves made it onto British television at this particular juncture in time. The issue for anthropologists and broadcasters alike, then, is that of how to educate an audience, how to increase awareness of alternative understandings of the world, in increments small enough to prevent the viewer reaching for the remote, but big enough to lead to significant change. My next post will contain a few ruminations about how this might be achieved.
