Upcoming OAC online seminar: Finance, Value, and Inequality (April 15-22, 2016)

When you think about capitalism, globalization, or neoliberalism, does your thinking stop with conventional stereotypes of greedy corporations exploiting the weak or unwary? If someone asked you how private equity investors, venture capitalists, commodity traders, and hedge fund or family office managers differ in how they conceive of markets, their investing styles and personal habits—could you answer their question? Have you thought about financialization--the process of shifting financial transactions from material goods and processes to abstractions traded and managed as if they had value in their own right? Can you imagine anthropology and archeology having important things to say about this process and the way its different forms shape social inequality?

If any of these questions interest you, the Open Anthropology Cooperative (OAC) invites you to join a seminar on Finance, Value, and Inequality: Towards a comparative anthropology of wealth and poverty, a paper by Brandeis University anthropologist Daniel Souleles. The paper can be downloaded here:

http://openanthcoop.net/press/2016/03/28/finance-value-and-inequality/

The seminar is NOW CLOSED! Thanks everyone for taking part!!!

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Hi John,

Thank you! If you send me your address I'll send you a thank you card. This is exactly the point of the paper and the project--different financiers do different things. You can't say wall street does X. You will be wrong wrong wrong if you take that type of reasoning and try to explain how particular financial transactions happen and why money goes where it does. Of all the popular accounts of finance, Joris Luyendijk's Swimming With Sharks captures some of this diversity. And this is exactly what I'm trying to capture in the manuscript and in this paper.

And to your earlier point, this sort of analysis allows you, too, to imagine different political futures. OK venture capitalists are good at doing x sort of thing with other people's money that hedge fund guys just are not. Politically how do help one and diminish the other? This gets things away from "finance bad" as the alpha and omega.

As an aside, that's a great you tube clip.


John McCreery said: 

Lee,

I can't speak for Daniel and I certainly agree that popular culture representations of Wall Street are a fascinating topic in itself. One of the most interesting video clips appearing repeatedly on Facebook these days concerns a corporate raider asked which presidential candidate would be best....

That said, the terms in which this proposal is offered seem to me to miss the most important feature of what Daniel has done,  break through homogenous "Wall Street" stereotypes to begin describing different types of finance and the people who engage in them, describing a series of overlapping but distinct "subcultures," that range from risk-aversive family office managers whose prime directive is to preserve wealth to risk-embracing venture capitalists looking for "the next big thing." His primary focus is private-equity investors who spend a year or more on due diligence before buying companies that will then be turned around or dismantled in an effort to extract unrealized value from them. To me that suggests an interesting question: What, if any, cultural differences are there between private equity investors who specialize in turn-arounds and corporate raiders engaged in asset stripping? This is not, I suspect, a subject we will learn much about by looking at movies that focus almost exclusively on financial villainy.

Hi Keith,

Bringing things back into the orbit of private equity, and reflecting on fraud, I figured you might find a few recent news events of interest.

The first is of a fraud: an impeccably credentialed wall street guy (groton, princeton, harvard, blackrock) convinced investors to give him millions of dollars, claiming to represent a private equity fund. He made no such representation and was just stealing.

The second is of an SEC settlement: Private equity firms have managing control over their companies and as such can compel them to pay all manner of service fees, consulting fees, and so on. This is perfectly legitimate, however they can run into trouble if they don't share and don't disclose with their limited partners. Increasingly the SEC is investigating these sorts of things.

The third is of a play: Claire Danes and Hank Azaria are acting out the dilemma of cashing out versus growing up a PE investment company. The play is called Dry Powder and a friend who saw is said it's a bit heavy handed. But it's out there!

Keith Hart said:

Hi Lee,

I leave for now your well-argued case for anthropologists to engage with popular culture when studying high finance. I just want to make a point about Peter Wogan's blog post on the movie, The Big Short. I should make it to him, but it is now embedded in this conversation. His main complaint is that the movie soft-pedals on bank fraud. This is certainly true. But he misses the main story line which is that a few marginal players commit huge sums to bet that the boom in subprime mortgage bonds will inevitably go bust and soon. This should be obvious, but the whole of Wall Street is still selling these bonds like they are hot. And that makes the odds longer and the potential win greater. Anyone who has made a big bet knows that this is squeaky bum time and it adds to the drama.

Then the facts turn decisively against the mainstream position. More and more documents demonstrate that the subprime market is folding. Our heroes can't wait to collect. But nothing happens. The big banks are still selling subprime bonds as a great investment and the reason they can do that is because the Credit Rating Agencies have not reduced subprime ratings despite all the evidence of a market collapse. The Big Short gamblers are then squeezed in very unpleasant ways. The big banks want time to short subprime themselves -- and European banks are piling in to help them do that. But the rating agencies are in the pocket of the banks, which is the big fraud here, and it turns out they are not easily made accountable for their wrongdoing (then or now). It's a closed circuit and our small group of outsiders, not for the first time, could easily lose their shirts as a result. Eventually, and thanks to good luck more than good management, the Big Short wins, end of movie.

My first observation is that Michael Lewis's great book is different from the movie in important ways. He uses the main actors' real names, the movie uses aliases. Why so? Because a lot more money is involved in the movie. Brad Pitt is a producer and that would be very tempting for a predatory lawyer. This is from a tort class at Yale Law School. Students are presented with a fable. A construction worker drives his machine to the home yard at the end of the day. He reaches a railway crossing, the clutch slips in transit and his machine slams into a telephone booth on the other side, breaking the driver's ankle in the process. Who should he sue? Bell Telephone of course. Not his employer, the machine manufacturer or the railway company -- they have no money.

So Peter's critique misses the mark at two levels. Exposing bank fraud is not the main point of the story which is about little people taking on Wall Street and winning (with some palpitations). And legal/financial considerations must have played a major part in making the movie. This is certainly the best movie on US finance yet. It is not as tough on the banks as say Inside Job (2010) or as satirical as Wolf on Wall Street (2013), but it is a better movie and, I would guess, will have a greater impact on public education. I haven't established Michael Lewis's reasoning when he published his book.

Hi Dan,

Apologies for making a detour there. I am not interested in fraud as such -- indeed I argue that it is marginal to the main narrative of The Big Short. In any case an accusation of fraud in the private equity sector would have to be made through a government department since the stakes of a private challenge would be enormous, given the sums involved.

I want to push you a bit on financialisation, as the term relates to PE/VC. I agree with you that it is pointless to make a narrow identification of the term with contemporary capitalism or neoliberalism. But in the last decade or two some egregious forms of financialization have emerged. The process is linked to informatization, securitization and capitalization. Recent trends in South African banking drew my attention to this development. First, alone among leading economies, South Africa operates with a draconian concept of private property (Roman-Dutch law) and there is no legal protection of debtors. The main banks have eliminated the loan sharks and pawnbrokers from the unsecured small loans market. They have learned from the subprime fiasco that you can make more money from poor people who have no money than from people who do, especially if the legal and political conditions are favourable. The result is mass default on loans that people can't afford.

This could be described as a version of financialization. I know there are various definitions. What interests me is the long historical process whereby economic activities that were not paid for and existed outside the market now become commercial and are subject to manipulation by financial organizations. Thus Viviana Zelizer has written about life insurance: pricing the priceless child. One can find countless examples every day: bundling up student dorm fees into a security that can then be traded.  Student loans in a very short time have become 18% of US banked debt, a bit more than home loans.This adds up to the contemporary obsession with financializing the ordinary business of everyday life, including higher education. The daily activities or just hopes of people everywhere constitute the biggest untapped resource for accumulation, more even than privatised public economies.

It's so enormous that I asked myself where this idea came from. It has to start with the formation of an industrial working class on the basis of peasant migration. In a few decades people who did almost everything for themselves in a subsistence economy now paid for food, housing, clothes, transport etc out of money wages. Marx pointed out that this was why industrial capitalism had such a phenomenal potential for growth. It goes on through the 19th and 20th centuries up to today where it seems to have broken out of previous limits.

So this is my question concerning financialization and PE/VC. I  am sure that it is there in your paper, Daniel. First please outline once more what you mean by financialization. It is definitely on to compare and even dispute different versions. Please summarize for me again how the term is normally applied in PE and whether the broader concept I outlined has any bearing on your account.

Hi Keith,

Thanks for this. Quick note: the scene you describe in S. Africa sounds awful.

As to financialization, here is the high level definition I'm using in the paper:

  • To do so I will first draw on Krippner (2005, 2011) and suggest that “financialization” has been a coherent domain of human activity, structured by processes of accumulation which are patterned by numerical abstraction, monetary flows and market language.
  • I follow Krippner in ultimately seeing financialization “as a pattern of accumulation in which profits accrue primarily through financial channels [that is via flows of money and market based abstractions] rather than through trade and commodity production” (2005:174-175, 2011)

In turn, Krippner's argument is a historic one. In the United States context she first identifies a trend: gdp from financial activities outstrips gdp from productive activity in an increasing way over the last 40 years. This matches up with a decline in manufacturing (jobs and profit) and an increase in FIRE (finance insurance real estate) and services. She shows this over a series of aggregate national charts (2011: 30-33).

Then, Krippner explains the origin of the possibilities of a financial economy in a eries of ad hoc national policy respsonses that emerge in the late 60s and early 70s. She suggests that as policy makers are increasingly unable to move employment rates or interest rates with the policy tools at hand, deregulation of the financial industry becomes a solution. From these impulses we get the break down in the wall between commercial and investment bank and the removal of controls on things like savings account interest. Cumulatively, these sorts of maneuvers make space for the dramatic rise of financialization. In her telling financialization wasn't so much planned as stumbled into.

I see similar resonances in the rise of private equity. Rule changes about how pensions could invest in the mid to late 70s allowed them to start investing in things like private equity funds. Similarly, rules about corporate consolidation from the 1950s created that era's conglomerates--you couldn't consolidate a monopoly, but you could glom together a bunch of different companies. In turn, these were attacked by the corporate raiders of the 1980s. Similarly, some journalists suggest the rules about the tax deductibility of corporate debt were set around the time the federal government was structuring its first income taxes, far far ahead of the era of financialization Krippner is writing about.

So I see financialization as possible by the cumulative effect of these ad hoc policy decisions. I don't see it planned in any sort nerfarious way, though I do see it having a logic of it's own, finance seems to beget more finance and becomes a way to solve political and social problems in the mind of a technocrat. Market-speak is seductive.

Ethnographically, I think PE folks just see "finance" as the industry they work in, that is concerned with banking, securities, insurance, and more generally moving money around. They're middle-men, and managers, in an idealized telling, giving the life blood to all sorts of productive activity and creating liquidity so that people can lend money and allow capitalism to continue unfolding.

Does this address the question? Does this match up with how you're seeing finance?



Keith Hart said:

Hi Dan,

Apologies for making a detour there. I am not interested in fraud as such -- indeed I argue that it is marginal to the main narrative of The Big Short. In any case an accusation of fraud in the private equity sector would have to be made through a government department since the stakes of a private challenge would be enormous, given the sums involved.

I want to push you a bit on financialisation, as the term relates to PE/VC. I agree with you that it is pointless to make a narrow identification of the term with contemporary capitalism or neoliberalism. But in the last decade or two some egregious forms of financialization have emerged. The process is linked to informatization, securitization and capitalization. Recent trends in South African banking drew my attention to this development. First, alone among leading economies, South Africa operates with a draconian concept of private property (Roman-Dutch law) and there is no legal protection of debtors. The main banks have eliminated the loan sharks and pawnbrokers from the unsecured small loans market. They have learned from the subprime fiasco that you can make more money from poor people who have no money than from people who do, especially if the legal and political conditions are favourable. The result is mass default on loans that people can't afford.

This could be described as a version of financialization. I know there are various definitions. What interests me is the long historical process whereby economic activities that were not paid for and existed outside the market now become commercial and are subject to manipulation by financial organizations. Thus Viviana Zelizer has written about life insurance: pricing the priceless child. One can find countless examples every day: bundling up student dorm fees into a security that can then be traded.  Student loans in a very short time have become 18% of US banked debt, a bit more than home loans.This adds up to the contemporary obsession with financializing the ordinary business of everyday life, including higher education. The daily activities or just hopes of people everywhere constitute the biggest untapped resource for accumulation, more even than privatised public economies.

It's so enormous that I asked myself where this idea came from. It has to start with the formation of an industrial working class on the basis of peasant migration. In a few decades people who did almost everything for themselves in a subsistence economy now paid for food, housing, clothes, transport etc out of money wages. Marx pointed out that this was why industrial capitalism had such a phenomenal potential for growth. It goes on through the 19th and 20th centuries up to today where it seems to have broken out of previous limits.

So this is my question concerning financialization and PE/VC. I  am sure that it is there in your paper, Daniel. First please outline once more what you mean by financialization. It is definitely on to compare and even dispute different versions. Please summarize for me again how the term is normally applied in PE and whether the broader concept I outlined has any bearing on your account.

Thanks, Dan. I have a tendency to go wide and dialectical. My original interest was in commoditization, how activities outside the market enter it. This is a two-way process, activities can leave the market after entering it. Another variant is monetization, how things that are not paid for enter the money circuit. Financialization is more specific. I define finance as firms committed to organizing money in one way or another. I like Krippner's trio of numerical abstraction, monetary flows and market language, although this seems to be a bit general. She relies on accumulation to introduce the dimension of capitalist frms, but in many areas such as the marketization of higher education, the principal agents are public sector organizations and universities. I specify three processes which have sped up financialization since the 80s: informatization (her abstraction, but I am not sure that gets it, eg credit-scoring), securitization (pooling debts and selling them off as cash flows -- maybe her monetary flows) and capitalization (the conversion of monetary assets into capital, money that makes more money -- here we are a long way from market language). There are clues in your paper to how all this plays in private equity, but then there is no reason why you should follow my agenda.

Ah, Keith! I think I understand the question now. Sorry if I was a bit plodding before. I suspect that may be a difference between how we approach financialization--you're coming at it from a wider dialectical point of view, and I, and it seems Krippner to an extent, are trying to build up inductively (as much as you can ever do that). I wonder if this inclination to theorize will change as I shuffle through a career.

Insofar as we start with your idea of financialization as "firms committed to organizing money," private equity fits that very nicely, and is distinct among the financializers for all the reasons I enumerate--their fee structure, their professional and social pedigree, who lends them money, how long they keep it, how they return it, the particular craft they have in organizing money. I also think we can make an argument that the trends you identify certainly have helped private equity in specific ways. One thing, though, that is missing in your account, but present in Krippner's, is the origin of these speed up trends. In her telling they're ad hoc policy decisions, sometimes coming from neoliberal economists, other times coming from administrations and bureacrats with other ideas about how economies are supposed to work.

I think you're right, too, to suggest the ways that financialization has slipped it's narrow, industry-specific bounds. And depending on your theoretical preferences you might explain it in different ways. Perhaps it's the diffusion of technologies of counting and reckoning (PE took the LBO model from the investment bank play book, specifically KKR people took it from their time at Bear, Stearns). On the other hand, many of our colleagues seem to like suggesting a "neoliberal subjectivity" that is highly contagious and brings market logic and financial techniques in its wake. Universities are a pretty good way to think through this. The universities I have known have been American universities, both public and private, that seem to pick up their language of accountability from a relatively new, permanent administrative class that takes guidance and inspiration from the business people, or business people turned legislators that make up the trustees. Ginsberg's book The Fall of the Faculty gives a decent picture of all of this. 

There are clues in your paper to how all this plays in private equity, but then there is no reason why you should follow my agenda.

Keith, you are being very gracious. Please stop and think for a moment.

There are two black and white possibilities here. One approach may be clearly superior to the other. Alternatively, the two approaches may complement each other. There are,of course, also likely to be grey areas in which neither approach accounts properly for important details. But we will never know if we adopt the postmodern view that,"You do your thing. I'll do mine. We're all good here" and stop the discussion just when it's getting interesting.

You say that you are interested in commoditization. I would suggest that what Daniel calls financialization is a specialized form of commoditization applied to "products" abstracted from material things. This is where abstraction, the second dimension in the space I described in an earlier post becomes a vital consideration. But what can we say about it that is more precise and informative than the binary matter/abstraction?

A thought occurs to me. Let's treat it as an hypothesis. Commoditization emerges from standardization of material things. Next comes standardization of transactions, e.g., a bushel of wheat is worth five fish. Money is a standardized product that, in its developed form, becomes a universal medium of exchange but, here the devil is in the details, then becomes a product in its own right, with a price that fluctuates depending on supply and demand. Financialization in Daniel's sense continues this evolution toward more complex and specialized forms increasingly abstracted from the root form, the exchange of material things regarded as being of equivalent value.

Allow me an ethnographic example. My wife makes marmalade, using whatever citrus fruit is seasonally available and storing it in whatever empty jars and bottles are within easy reach. The product is non-standard, the packaging is non-standard, a jar or bottle may be given to friends or neighbors, but no price is attached to the gift. My mother made jams, using seasonally available berries. But these were grown for this purpose and the jam was made in large quantities, stored in standard size (pint or quart) glass jars. These were proudly displayed as a sign of domestic virtue. But once again, while a jar might be given as a gift, this jam was never sold. No price was attached to it. This second example illustrates how standardization of product may occur independently of standardized forms of exchange.

Turning to the other end of the abstraction dimension, I think of the work of the economic sociologist Donald MacKenzie, especially since I own them both, his An Engine, Not a Camera: How Financial Models Shape Markets (2006) and Material Markets: How Economic Agents are Constructed(2009). MacKenzie is particularly interested in how technologies, broadly construed to include abstract models embodied in software as well as material hardware shape the ways in which markets operate. In one particularly memorable example,he points out how the smallest unit used to price market transactions was once a quarter point. Why? Because on a trading floor filled with jostling human traders, a raised hand represented a bid and there were four fingers on the hand. Computerized trading systems now allow transactions where prices can vary in minute quantities to the right of the decimal point, allowing automated trading systems to literally go where no human has gone before.

But, returning to the original point. I would very much like to see Daniel and Keith thrash out their differences and, best of all worlds, arrive at an approach superior to those with which they have begun, instead of having the debate end with a limp-wristed agreement to amicably go their separate ways.

Hi Keith and Lee,

 Thanks to both of you for taking the time to consider and comment on “The Big Short” and my blog post about it, “3 Ways ‘Big Short’ Movie Downplays Banker Fraud."

 

I just want to say, Keith, that, from what I can see, we actually agree on almost everything about that movie, right down the line. Most importantly, I’m glad to know that you agree with the central point of my post: as you put it, “that the movie soft-pedals on banker fraud. This is certainly true.” Good to hear we agree and are on the same side. Granted, hearing about the proven depths of bank fraud wouldn’t be a surprise to someone as savvy as you about modern finance, but, to be honest, I was writing for a more general reader who doesn’t know much about the causes of the crash. I felt the nature of the fraud was worth stressing for the general public because so many viewers seem to have been suckered in by the movie’s confusion and soft-pedaling on fraud. I wanted them to know it was actually much worse than the movie showed—and it’s been proven over and over again in settlements with the Justice Department.

 

I also agree with you about the ratings agencies and your summary of the movie’s underdog plot. In my post, I mention in passing but don’t stress those points because I thought they were pretty obvious to viewers, so there was more analytical “value added” by focusing on what viewers were less likely to know—the defrauding of investors, etc. As I said at the end, these things would have fit right into the story's underdog structure and moral critique of bankers.

 

And you make a good point about the difference between the movie and the book, and the possible legalistic factors. Good point, and I do believe that fears of legal liability would have likely led to the aliases and some soft-pedaling, though I also think there were other things going on there. Ultimately, though, I’m less interested in the motivations of the movie’s creators than I am in what the audiences make of the movie. And, in this one case, I was interested in getting audiences to see what was left out of the movie. (This sort of “What did they get wrong” approach was totally new for me. Usually, in my posts and publications, I try to link an audience’s responses up with schismogenesis in the culture, following Lee’s lead.)

 

So far I haven’t gotten a huge number of views on that particular post—much more on my essays on big Hollywood movies—but, like you, I do still hold out hopes that the internet will help anthro to open up to a wider public. So thanks for reading my post, and for keeping this website and discussion going!

 

Peter

 

 

 

Reply by Keith Hart 20 hours ago

Hi Lee,

I leave for now your well-argued case for anthropologists to engage with popular culture when studying high finance. I just want to make a point about Peter Wogan's blog post on the movie, The Big Short. I should make it to him, but it is now embedded in this conversation. His main complaint is that the movie soft-pedals on bank fraud. This is certainly true. But he misses the main story line which is that a few marginal players commit huge sums to bet that the boom in subprime mortgage bonds will inevitably go bust and soon. This should be obvious, but the whole of Wall Street is still selling these bonds like they are hot. And that makes the odds longer and the potential win greater. Anyone who has made a big bet knows that this is squeaky bum time and it adds to the drama.

Then the facts turn decisively against the mainstream position. More and more documents demonstrate that the subprime market is folding. Our heroes can't wait to collect. But nothing happens. The big banks are still selling subprime bonds as a great investment and the reason they can do that is because the Credit Rating Agencies have not reduced subprime ratings despite all the evidence of a market collapse. The Big Short gamblers are then squeezed in very unpleasant ways. The big banks want time to short subprime themselves -- and European banks are piling in to help them do that. But the rating agencies are in the pocket of the banks, which is the big fraud here, and it turns out they are not easily made accountable for their wrongdoing (then or now). It's a closed circuit and our small group of outsiders, not for the first time, could easily lose their shirts as a result. Eventually, and thanks to good luck more than good management, the Big Short wins, end of movie.

My first observation is that Michael Lewis's great book is different from the movie in important ways. He uses the main actors' real names, the movie uses aliases. Why so? Because a lot more money is involved in the movie. Brad Pitt is a producer and that would be very tempting for a predatory lawyer. This is from a tort class at Yale Law School. Students are presented with a fable. A construction worker drives his machine to the home yard at the end of the day. He reaches a railway crossing, the clutch slips in transit and his machine slams into a telephone booth on the other side, breaking the driver's ankle in the process. Who should he sue? Bell Telephone of course. Not his employer, the machine manufacturer or the railway company -- they have no money.

So Peter's critique misses the mark at two levels. Exposing bank fraud is not the main point of the story which is about little people taking on Wall Street and winning (with some palpitations). And legal/financial considerations must have played a major part in making the movie. This is certainly the best movie on US finance yet. It is not as tough on the banks as say Inside Job (2010) or as satirical as Wolf on Wall Street (2013), but it is a better movie and, I would guess, will have a greater impact on public education. I haven't established Michael Lewis's reasoning when he published his book.

 

 

   I agree that the call for a “public anthropology” has a lot not to recommend it.  Its adherents are too much rah-rah, healthy-minded boosters for my taste.  Too often “public” seems to imply “advocacy,” with all its overtones of social work.  For American anthropologists in particular, I doubt that a public persona is achievable or, if it is, comes at a high price.  In recent times the only U. S. cultural anthropologists with mass appeal who come to mind are Castaneda and Chagnon, and their colleagues formed lynch mobs and went after them.  “Public” just may not be in our job description; elsewhere I’ve described cultural anthropologists as a paradoxical “community of outsiders.” 

    That said, I do think our thought and writing can be more or less accessible, and is the better for being more.  From Dan’s account, the early draft of his book was both more accessible and better than the mongrelized dissertation it became.  Now, thankfully, it can be reborn.   

    Related to this issue is the balance we strike between the specific and the general in the social arrangements we describe.  Dan’s project is to describe the inner workings of a stereotypical “Wall Street” whose players are a diverse lot of private equity, venture capitalist, hedge fund, family fund guys, all with different goals, behaviors, motivations.  That’s a worthwhile undertaking, and he seems to be succeeding very well at it.  Having read even his brief paper and, hopefully, later his book, I’m sure I now think of “Wall Street” differently (although the notion of “financialization” is still too slippery for me –and contains too many syllables). 

    But, and here’s the “but”:  What happens to that hoary stereotype, “Wall Street”?  Do we say it is just that, a hopeless, misleading stereotype to be cast aside in favor of a more precise understanding of what goes on in lower Manhattan?  Especially now that the presidential campaign has been waging hot and heavy for months, the word-idea of “Wall Street” is on the lips and in the minds of millions of Americans who, while not very scholarly, are not (or not all) stupid.  Those folks believe there is an all-too-real “Wall Street” out there, and frame their thoughts and actions around that belief.  What should the conscientious anthropologist do here?  Round up Bernie supporters ten or fifteen at a time, have them read Dan’s paper, then conduct a seminar so that they come to realize that the monolith they believed in consists of highly discrepant parts, that there is, in fact, no “Wall Street”?  No, I think that genie is out of the bottle.  For better or worse, someone conducting a cultural analysis of American society has to acknowledge that “Wall Street,” whatever its inner-workings, is a prominent cultural construct that galvanizes thought and behavior. 

    Let me float a perhaps unlikely analogy.  In a football game the nose guard and the quarterback have very different perspectives on the action on the field.  High-powered technical knowledge here resides with the coach and his bevy of assistants; their perspectives differ in significant ways from those of the players on the field.  For all of these guys things are fractionated, specific, sometimes technical.  But the forty thousand people in the stands and the millions at home in front of their flat screens, chomping on weenies and sucking down brewskis, are convinced they are watching the game.  And the game is a whole, unfolding thing. 

    I think the concept/stereotype of “Wall Street” is like that game.  People watch cable news, perhaps go to political rallies and in the process readily come to accept the reality of the thing.  And not just accept, but act on it.   So as well as delving into the intricacies of what happens on the ground, the cultural analyst must address how that stereotype operates in society, what difference it makes in people’s lives.  Yes, it’s the old myth/reality, Moebius strip thing.  

Lee. I agree that "Wall Street" has become a powerful cultural construct. But let me repeat, I think you misread Daniel's purpose, which is not to explicate the implications of that construct but rather to describe in depth one of several distinct financial games whose differences "Wall Street" and the stereotypes associated with it obscure. You suggest that people see Wall Street as something like American football, a game whose technical nuances are of interest only to experts and players on the field. Daniel is saying, in effect, no, Wall Street and the stereotypes associated with it are  not a single game. A better analogy would be the Olympics, a collection of different athletic events going on at the same time. The gymnasts, the swimmers, the sprinters, the long-distance runners, the archers, the weight-lifters, the wrestlers. etc., etc., are in some broad sense all athletes, but their games are very different. In a similar way, finance is an industry where many games are played, and depending on the game the players are visibly different in their customs and habits. 

Thanks Ryan/Daniel for setting up/providing a textual starting point for this paramount topic of our day, and thanks to the rest of you for feeding the discussion. I'm learning a lot from all of this.

I also think that one of the most exciting contemporary anthro-trends is the return to more ambitious cross-cultural+diachronic comparison to address deeper questions of the human condition. Thus, I principally celebrate Daniel's inclusion of the Inca-case, yet, as several have indicated, it's a parcel which has quite a way to go to level with the finance-case.

My latter question (if the Khipus were explicitly tied to wealth accumulation) was a nudge in this direction. From an external point of view, it seems fair to argue that the Kiphus and their masters carried central functions in aggregate Inca wealth distribution processes. Now, you demonstrate excellently how your finance-informants distinguish by differential categories of value and temporal wealth-realization. The question is if the archaeological record may bring similar data to court for the khipukamayuq. 


You refer to Urton's (the contemporary Khipu-authority) 2007-publication. Superficially scanning his other work, I think there's a lot more to get here. For instance in this report (page 7), he's elucidating how the khipukamayuq-institution was shaped as a complex hierarchic system of higher- and lower level officials, as defined by the number of subjects administered by the respective khipukamayuq. Presumably, just as among the finance-players, time/value-understandings varied among the different khipukamayuq-levels. To pursue this hypothesis, if possible (courtesy Harvard's Khipu Database Project) , I think it would be very interesting to explore differences between khipus as used at the different administrative levels.

Then there is Urton's 1997-book, the Social Life of Numbers, which I think present a more severe challenge to your comparison. Here, as the ultimate argument goes, the practice of khipukamayuq-arithmetic was based on a well-articulated body of philosophical principles and values that reflected a continuous attempt to maintain balance, harmony, and equilibrium in the material, social, and moral spheres of community life. If this holds, then the Khipus constitute a distributive technology that did not carry cultural marks of wealth extraction. Insofar, it contrasts fundamentally to the explicit siphoning logic of most financial technologies.

Now, if time/value-considerations are meant to serve as a higher-order comparative device (as I think you intend), this contrast begs for an analytic synthesis, which to my mind should include a discussion of their respective social consequences (i.e. what characteristic de facto forms/patterns of inequality did/does each paradigm create?).

 

John,

This is the end of an extended sequence, not the beginnning. In the course of it, I often failed to engage directly with the paper and Daniel sometimes missed my point. He has brought an extraordinary degree of politeness to his answers and that rubbed off on me. These are huge questions and I doubt if we will soon reach accurate and agreed terms of debate that might allow us to slug it out, as you wish. Our seminar is of limited duration and I would not want to outstay my welcome. I thought we made a lot of progress without beinng confrontational and perhaps others would want to take up the thread, which you did.  Incidentally I think I said that fnancialization is a specialist component of commoditization. But I see benefit in both broadening the inquiry historically and keeping it narrowly contemporary. This contrast might describe my and Daniel's approaches and it suggests why we might find it hard to have a focused argument. To call the affair postmodern is to express dissent wthout precision.

John McCre to his answersery said:

There are clues in your paper to how all this plays in private equity, but then there is no reason why you should follow my agenda.

Keith, you are being very gracious. Please stop and think for a moment.

There are two black and white possibilities here. One approach may be clearly superior to the other. Alternatively, the two approaches may complement each other. There are,of course, also likely to be grey areas in which neither approach accounts properly for important details. But we will never know if we adopt the postmodern view that,"You do your thing. I'll do mine. We're all good here" and stop the discussion just when it's getting interesting.

You say that you are interested in commoditization. I would suggest that what Daniel calls financialization is a specialized form of commoditization applied to "products" abstracted from material things. This is where abstraction, the second dimension in the space I described in an earlier post becomes a vital consideration. But what can we say about it that is more precise and informative than the binary matter/abstraction?

A thought occurs to me. Let's treat it as an hypothesis. Commoditization emerges from standardization of material things. Next comes standardization of transactions, e.g., a bushel of wheat is worth five fish. Money is a standardized product that, in its developed form, becomes a universal medium of exchange but, here the devil is in the details, then becomes a product in its own right, with a price that fluctuates depending on supply and demand. Financialization in Daniel's sense continues this evolution toward more complex and specialized forms increasingly abstracted from the root form, the exchange of material things regarded as being of equivalent value.

Allow me an ethnographic example. My wife makes marmalade, using whatever citrus fruit is seasonally available and storing it in whatever empty jars and bottles are within easy reach. The product is non-standard, the packaging is non-standard, a jar or bottle may be given to friends or neighbors, but no price is attached to the gift. My mother made jams, using seasonally available berries. But these were grown for this purpose and the jam was made in large quantities, stored in standard size (pint or quart) glass jars. These were proudly displayed as a sign of domestic virtue. But once again, while a jar might be given as a gift, this jam was never sold. No price was attached to it. This second example illustrates how standardization of product may occur independently of standardized forms of exchange.

Turning to the other end of the abstraction dimension, I think of the work of the economic sociologist Donald MacKenzie, especially since I own them both, his An Engine, Not a Camera: How Financial Models Shape Markets (2006) and Material Markets: How Economic Agents are Constructed(2009). MacKenzie is particularly interested in how technologies, broadly construed to include abstract models embodied in software as well as material hardware shape the ways in which markets operate. In one particularly memorable example,he points out how the smallest unit used to price market transactions was once a quarter point. Why? Because on a trading floor filled with jostling human traders, a raised hand represented a bid and there were four fingers on the hand. Computerized trading systems now allow transactions where prices can vary in minute quantities to the right of the decimal point, allowing automated trading systems to literally go where no human has gone before.

But, returning to the original point. I would very much like to see Daniel and Keith thrash out their differences and, best of all worlds, arrive at an approach superior to those with which they have begun, instead of having the debate end with a limp-wristed agreement to amicably go their separate ways.

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