Contemporary research on the anthropology of money and finance
Since the 1980s, anthropologists have once more begun to investigate the specific roles that money can play in different social settings. Research on the everyday uses of money in traditional “exotic” fields, but also at “home”, has vividly exposed the limitations of mainstream economics’ theoretical models. Yet, although these studies usually represent their efforts as a critique of neo-liberalism, the horizon of their investigations is still framed by the ethnographic approach. Because ethnographers are still restricted to a local or regional level, they have little to say about the global context of their particular observations. In the last decade, younger anthropologists have flocked to do fieldwork on finance. They have highlighted the importance of religious and moral ideas for financial models and narratives, and how relations in the workplace are linked to the distributive effects of the financial system. Yet these studies still fall short of engaging with money as a fundamental element in the constitution of world society.
The anthropology of money since the 1980s
Anthropologists have lately become less willing to inhabit one half of the divide between modern and traditional economies. Moreover, influenced perhaps by the dominant ethos of the times, their traditional aversion to money has shifted towards recognizing some of its positive features for ordinary people. Anthropologists and sociologists have long rejected the impersonal approach to money and markets offered by mainstream economics. Normal people refuse to treat the cash in their possession as an undifferentiated thing, choosing rather to “earmark” it – reserving some for food bills, some as holiday savings and so on (Zelizer 1994). This is particularly the case in areas that remain largely invisible to the economists’ gaze, especially domestic life. People everywhere personalize money, bending it to their own purposes through a variety of social instruments. This was the message too of Parry and Bloch’s influential Money and the Morality of Exchange (1989).
The contributors to this collection shared the view that indigenous societies take modern money in their stride rather than being subject to its impersonal logic. The underlying theory is familiar from Durkheim (1912). There are two circuits of social life: one, the everyday, is short-term, individuated and materialistic; the other is long-term, collective and idealized, even spiritual. Market transactions fall into the first category, but all societies seek to subordinate them to the conditions of their own reproduction. For some reason, which they do not investigate, money has acquired in Western economies a social force all of its own, whereas the rest of the world retains the ability to keep it in its place. So here too we have a hierarchy of value where modern money comes second to the institutions that secure society’s continuity.
When money and markets are understood exclusively through impersonal and asocial models, awareness of this neglected dimension is surely significant. But the economy exists at more inclusive levels than the person, the family or local groups, and this would not be possible without the impersonality of money and markets. Money, much as Durkheim (1912) argued for religion, is the principal means for us all to bridge the gap between everyday personal experience and a society whose wider reaches are impersonal (Hart 2011a). Money, as a token of society, must be impersonal in order to connect individuals to the universe of relations to which they belong. But people make everything personal, including their relations with society. This two-sided relationship is universal, but its incidence is highly variable. That is why money must be central to any attempt to humanize society. It is both the principal source of our vulnerability in society and the main practical symbol allowing each of us to make an impersonal world meaningful.
In recent years there has been a veritable deluge of anthropological work on money, including a spate of studies of finance. This work aims to humanize the anonymous institutions that govern our lives; and some of it does begin to bridge the gap between readers’ everyday experience and the global economy. Jane Guyer’s extensive research on money has culminated in Marginal Gains: Monetary Transactions in Atlantic Africa (2004). Starting from a foundation of prolonged ethnographic research in Cameroon and Nigeria, she identifies here an indigenous commercial civilization in the West/Central African region that is at least three centuries old. It is based on manipulation of multiple ordinal scales according to status differences. This distinctive approach to commerce has eluded not only the historians of European mercantilist expansion, but also the ethnographers whose narrow particularism and lack of historical depth made them as ignorant as foreign traders of the regional economic system they were encountering. Guyer rejects Bohannan’s discourse of “spheres of exchange” and has subsequently taken her African discoveries to a wide-ranging analysis of economic institutions in the United States and Britain.
Akin and Robbins (1999) provide an excellent collection of ethnographic case studies from contemporary Melanesia, showing how people readily combine use of traditional valuables and modern money. This finding reflects Gregory’s (1982) observations in the same region which nevertheless launched the fashion for treating gifts and commodities as conceptual opposites, a position that Gregory (1997) himself refuted in Savage Money, but to no avail. All of this recent work confirms Mauss’s (1925) claim, in his dispute with Malinowski (1922) that both gift exchange and market contracts are incidences of money’s ability to extend the reach of communities beyond their local boundaries. It is not enough, however, for economic anthropologists to emphasize the controls that people already impose on money and exchange as part of their personal or local practice. That is the everyday world as most of us know it. We also need ways of reaching the parts of the macro economy that we don’t know, if we wish to avert the ruin they could bring down on us.
The ethnography of finance
The doyen of the new field of the anthropology of finance is Bill Maurer (2005b, 2006, 2012) who conducts research on law, property, money and finance, particularly new and experimental financial and currency forms and their legal implications. He is the author of Mutual Life Limited: Islamic Banking, Alternative Currencies, Lateral Reason (2005a). One focus of his research is on the shifting regulatory landscape of the offshore Caribbean; and on the cultural implications of new forms of electronic money and payment systems and regulation of mobile phone-enabled payment systems. Maurer has recently been engaged in a series of collaborations with industrial and design professionals who work on the development of new digital and mobile phone-enabled money transfer and savings systems. This led to the founding of the Institute for Money, Technology and Financial Inclusion which he runs. By exploring people’s creative uses of money beyond its traditional functions, he hopes to provoke deeper reflection on the multiple meanings of money. Maurer recommends a sceptical, pragmatic approach to money (Hart and Maurer 2009) and is thus more interested in what people can do with money than what it means to them. Like Jane Guyer, he believes that anthropologists have too easily bought into the liberal economists’ idea of money as a means of exchange rather than as a means of payment.
It has now become almost commonplace for anthropologists to work in financial centres. Mitchel Abolafia and Ellen Hertz were prescient in carrying out field research on the New York Stock Exchange (Abolafia 1996) and the Shanghai stock market (Hertz 1998). Caitlin Zaloom (2006) focused on how financial traders adjusted to new information technology In Chicago and London. These studies show how the Homo economicus assumed by financial theory and regulation is illusory. Traders and market participants share specific rules of cooperation and competition, where the political imaginaries and strict emotional disciplines at play depart from the assumptions of rational choice made in orthodox economics. These studies, however, are quite traditional in their focus, being concerned with the traders’ local practices and point of view, even if the object of their business is global at another level.
Karen Ho (2009) goes further by linking her ethnography to a broader analysis of political economy. Her book (Liquidated: An Ethnography of Wall Street) is based on interviews with employees of Goldman Sachs, Morgan Stanley and other great finance houses during the long bull stock market of the 90s, also known as the “dot com boom”. Ho explicitly engages with larger distributional questions. Her story that is at once both personal and world-historical. Ho lays out two visions of what corporate capitalism is for: a social rationale based on durable interests linking communities of workers in company towns to loyal customers; and an emphasis on immediate returns to private property owned by a few shareholders. This conflict may be understood as the transition from post-war “social democracy” to “neo-liberalism” or in turn as a history of class struggle, with the concessions made to ordinary citizens after two world wars and depression being rolled back in the name of unrestricted private accumulation. Yet, her analysis remains limited to the United States after the Second World War. She attributes the rise of “shareholder value” to the mergers and acquisitions boom of the 1980s and to the “downsizing” mania unleashed by the break-up of AT&T then, without relating these developments to the global financial upheavals that occurred before that period.
Having earlier produced an exemplary ethnographic study of a multi-national corporation in Northern England (Ouroussoff 1993), Alexandra Ouroussoff (2010) carried out a series of interviews about risk with senior corporate actors and rating agencies’ employees in London, Paris and New York for Wall Street at War. She shows that the analysts of rating agencies, principally Standard and Poor, Moody’s and Fitch, who have been central in the global organization of credit since the 1980s, imagine that they can calculate and minimize future losses by resorting to quantitative analysis. Corporate executives, Ouroussoff found, have an opposed economic philosophy that holds profit and loss to be subject to unpredictable contingency. They have muted their public criticism of the rating agencies because of their need for investment capital; and their reports of company activities have been devious as a result. The resulting capitalist regime, she claims, has both stifled entrepreneurial growth and contributed to a systemic collapse of the economy. Yet academics, politicians and journalists persist in treating the financial crisis as a consequence of personal moral failure rather than of institutional contradictions. By gaining access to the thinking of top executives, Ouroussoff managed to study core global financial institutions and thereby illuminate a central contradiction between contemporary finance and the organization of production.
The Financial Times journalist Gillian Tett has a doctorate in social anthropology which she credits with having taught her to examine the economic scene more holistically and critically than most of her journalist colleagues. Her best-seller, Fool’s Gold (2009), is based on long-term exchange with and observations of bankers, to whom she had access as a financial journalist. Following the creation of the first credit derivatives and their spread, Tett uses Pierre Bourdieu to explain how the credit crunch came about, pointing to the veil of silence drawn over so many risky features of the boom and to the non-communicating “technical silos” of expertise that made outside criticism difficult or impossible. The story of the 2008 financial crisis is one not only of hubris, greed and regulatory failure, but also of these deeply troubling problems of social silence and technical silos. If we do not use the crisis as an occasion to tackle these problems seriously, then we may well be doomed to revisit it, albeit in a new form (Tett 2010:xv). If there is to be a new synthesis of anthropology, history and economics, this kind of social realist perspective on finance will be essential.
A number of studies have drawn on the perspective of social studies of science, where the work of Michel Callon has been influential. Callon (1998) famously argued that the economy is essentially produced by the knowledge practices of the economists. Knorr Cetina (2005, 2007) based her account of global financial markets on the immediate cognitive environment of traders, such as their computer screens and software. Annelise Riles (2011) has studied the ontologies implied by the concept of “collateral” used in the back-office of the legal department of a Japanese bank, during its internationalization in the 1990s. Although she did not study this group’s interactions with other sections of the bank, Riles contrasts their forms of reasoning with the extremely rationalized and high-flying world of traders. She focuses on the questions these professionals ask about their integration into global financial flows and, in particular, about their legal liabilities when global standards increasingly apply, focusing in particular on the conceptual assumptions of assertions about truth. She never discusses the amounts that are traded or how the organization of money flows might give another meaning to these contracts. Vincent Lépinay (2011) adopts a similar cognitive approach to studying the controversies surrounding a derivatives product in a French investment bank during the early 2000s. While producing instructive insights into the epistemological conundrums facing financial professionals, these studies do not engage directly with the financial flows that define the central purposes of these businesses. They remain silent about the commercial networks in which the products and contracts they describe make sense as objects of exchange. In short, what we have here is an economy from which economics has been banished.
Several historical studies have raised questions that are fundamental for the anthropology of contemporary finance. They have studied the birth of the notion of an “investor” as a desirable social identity (Zelizer 1979, Preda 2009). They have analysed how mathematics and positivism have been constitutive of today’s financial theory and practice since the 19th century, giving it a discourse that legitimizes its distributive effects (De Goede 2005). And they have studied how today’s financial theory, which is prevalent in financial practice and financial regulation, is the result of a complex social interaction between academics, professionals and regulators, where epistemological and political concerns mix without conforming a coherent theory, but within a consistent social milieu (MacKenzie 2006).
McKenzie later showed how the commercial environment of rating agencies and their divisions is crucial to understand how they manage to establish the mathematical models that helped them to promote asset-backed securities and collateralized debt obligations (2011). This provides a more general framework for understanding the issues raised by Ouroussoff’s ethnography. Studying the everyday operations of fund managers and stock brokers, Horacio Ortiz (Ortiz 2010, 2012, 2013) has shown how the finance industry today uses the concepts of financial theory and regulation, such as “investor”, “efficient markets” and even “crisis”, in a way that is at once technical, moral and political. Building on observation of everyday practice in the offices where he worked, Ortiz shows how the current distribution of global wealth is rationalised and justified by financial professionals who are by no means uncritical of what they do.
All the above provide rich descriptions of everyday life in the financial industry and insights into the conceptual frameworks professionals bring to distributing credit around the globe. Yet this kind of fieldwork-based research, even when it is multi-sited, restricts its anthropological vision to the worldview of a small homogeneous social group, with its own professional tasks and careers. For too long, anthropologists have limited themselves to studying closed social groups conceived of as bounded cultural units. This limits not only the scope of their observations, but also the questions they allow themselves to ask. As a result, financial practitioners’ preoccupation with money is somehow by-passed. It is as if finance were not a branch of the economy. And how world society is constituted through monetary relations never enters the intellectual agenda.
Three exceptions to this stand out. The first is Paul Jorion, an economic anthropologist whose conventional ethnographic publications on fishermen in Brittany and Benin were concerned with kinship, price formation and the transmission of traditional knowledge (Delbos and Jorion 1984). But for the last two decades he has worked as a trader and programmer in financial centres such as London, Paris, Amsterdam and Los Angeles. This led to a senior position at Countrywide, one of the leading culprits in the US mortgage-lending bonanza. Jorion published a penetrating critique of fraudulent financial practice at the height of the credit boom, Investing in a Post-Enron World (2003), and astonishingly issued a prediction of the coming global financial collapse, La crise du capitalisme américain (2007), that was published a month before the sub-prime mortgage crisis broke in February 2007. This was followed by a batch of books on the economic crisis of which Le capitalisme à l’agonie (2011) argues that the end predicted by Karl Marx has arrived at last. Jorion’s long-term reflections on his time spent in high finance appeared in Le prix (2010); and this, along with L’argent: mode d’emploi (2009), represents his most general contribution to economic anthropology. Paul Jorion probably achieved the level of insider knowledge and historical insight that he did by being denied a regular university position.
David Graeber’s Debt: The first 5,000 years (2011) is our second exception. Much of the world today revolves round the claims we make on each other and on things: ownership, obligations, contracts and payment of taxes, wages, rents, fees etc. He approaches these questions through considering debt in very wide historical perspective. It is of course a central issue in global politics today. Every day sees another example of a class struggle between debtors and creditors to shape the distribution of costs after the long credit boom went dramatically bust. We might be indebted to God, the sovereign or our parents for the gift of life, but Graeber rightly insists that the social logic of debt is revealed most clearly when money is involved.
He first tackles the origins of money in barter and “primordial debt” respectively, showing how implausible the standard liberal origin myth of money as a medium of exchange is; but he also rejects as a nationalist myth the main opposing theory that traces money’s origins as a means of payment and unit of account to state power. A short chapter shows that money was always both a commodity and a debt-token (“the two sides of the coin”, Hart 1986) thereby giving rise to much political and moral contestation, especially in the ancient world. Graeber locates the roots of human bondage, slavery, tribute and organized violence in debt relations. In opposition to the attempt to construct “the economy” as a sphere separate from society, he identifies three general grounds for economic action: “everyday communism”, hierarchy and reciprocity. The difference between hierarchy and reciprocity is that debt is permanent in the first case, but temporary in the second. All three principles are present everywhere, but their relative emphasis is coloured by dominant economic forms.
Graeber then draws on his theory of money to organize a compendious review of world history in four stages, covering the last five millennia. His periodization relies heavily on historical oscillations between broad types of money which he calls “credit” and “bullion”, that is, money as a virtual measure of personal relations, like IOUs, and as impersonal things made from precious metals for circulation as currency. Money started out as a unit of account, administered by institutions such as temples and banks, as well as states, largely as a way of measuring debt relations between people. Coinage was introduced in the first millennium BC as part of a complex linking warfare, mercenary soldiers, slavery, looting, mines, trade and the provisioning of armies on the move. For most of the medieval period, metal currencies were in short supply and money once again took the dominant form of virtual credit. But then the discovery of the new world opened up the phase we are familiar with from the last half-millennium, when western imperialism revived the earlier tradition of warfare and slavery lubricated by bullion. The last four decades are obviously transitional, but the recent rise of virtual credit money suggests the possibility of another long swing of history away from the principles that underpinned the world the West made.
Our third exception consists largely of work in progress, but its roots lie in seminal contributions to our field carried out separately. Arjun Appadurai and Benjamin Lee have recently come together to form the Cultures of Finance Group at New York University’s Institute for Public Knowledge, along with collaborators such as Edward LiPuma. Much of their writing is unpublished at this time, but it lays the foundation for a project which seems certain to change the landscape of our subject. Sitting in offices just a few blocks from Wall Street, Appadurai and Lee conceive of the aftermath of the financial crisis as an opportunity for social reinvention and not just as an economic disaster ripe for critique. In order to do so they have turned to the founding fathers of modern social theory – Marx, Weber and Durkheim – as sources for their ambitious programme to recast the object and method of social inquiry in the light of what the economy has become. They also build on the explosion of work on contemporary finance which we have drawn on to some extent here.
Arjun Appadurai burst onto the scene with a long introduction to the collection, The Social Life of Things: Commodities in Cultural Perspective (1986). There he sought, following Georg Simmel, to reframe the conception of value as the outcome of exchange rather than its source, coining in the process the splendid idea of economic life as a series of “tournaments of value” in which the objects of exchange crosscut in time the boundaries allegedly separating markets from non-commercial transactions. This essay had a profound impact on the study of material culture, consumption and economic anthropology more generally. But from our point of view, the essay was also the first systematic call for anthropologists to consider economic life in global rather than local or national terms. Appadurai (1996) was subsequently identified with a cosmopolitan anthropology predicated on globalization and the coming demise of the nation-state. Now he has turned, with Benjamin Lee, to the world of finance. Here he draws most explicitly on Emile Durkheim’s Elementary Forms of the Religious Life (1912), which he rightly considers to be the most radical text left by the founders, in juxtaposition with Max Weber’s The Protestant Ethic and the Spirit of Capitalism (1958). On the one hand, he considers the Market as Society in Durkheim’s terms, focusing on its rituals, while on the other he aspires to synthesize the poles of Weber’s project, making “the spirit of calculation” a new object of interdisciplinary inquiry (Appadurai 2012).
Edward LiPuma and Benjamin Lee, in Financial Derivatives and the Globalization of Risk (2004), were the first anthropologists to apply a critical perspective to the study of finance on a truly global scale through an analysis of foreign exchange markets. The kula ring was the obvious place to look if you wanted to understand Melanesian island economy; and the FX market is the world’s biggest in turnover today, a good place to start an investigation of how monetary relations constitute world society. The authors show how the concentrated financial networks that dominate these markets employ exchange processes that directly challenge the notions of sovereignty, citizenship and indeed human sociality with which most anthropologists operate, albeit unconsciously. They did not ask here how we might go beyond the existing framework. Their critique was thus largely negative, being limited by a Marxist emphasis on money as a source of alienation; and their vision of self-identity at this time appeared to be defined by the political body of a state.
Now Lee, with Appadurai, has taken up derivatives again as the principal focus of their Cultures of Finance group, but this time seeing them as a potential source of social wealth and financial inclusion. His inspiration, reasonably enough, lies more with a juxtaposition of Marx and Weber. But both principals have been influenced by the work of the French philosopher and trader, Elie Ayache, whose The Blank Swan: The end of probability (2010) argues that there is no point in seeking to calculate trends in market prices or even hedging against rare events. The swan is neither black nor white, but a blank sheet on which the proactive trader writes his derivative. Ayache follows Quentin Meillassoux (2008) in arguing for the reinstatement of contingency over probability. Appadurai in his turn is able to revisit his 1986 book to consider the nature of the objects exchanged in today’s world of finance. This collective project offers considerable hope for advance in our field.
The work of three decades summarized here has broken the crystal glass that protected the financial industry and the corporate world from the gaze of anthropologists. If Laura Nader advised anthropologists to “study up”, her message has had some impact. By analysing money practices in everyday life and the conceptual frameworks of professionals, anthropologists have helped to demystify a sector that organizes the lion’s share of money today. Unlike the standard models of maximizing agents, market efficiency and optimal allocation of wealth, these professionals seem to be just normal people, struggling for their careers, applying procedures whose logic and politics they do not understand, in networks of exchange whose real extent they will never know. Yet these accounts say little about the broader context in which regulatory, academic and journalistic discourses interact with the finance industry. They say even less about how the latter has arrived at its current position of dominance and why governments collude with finance to undermine the protection of those who voted for them. Fixing financial problems is obviously a global problem, yet ethnographers of finance have no perspective on world history that might allow them to draw lessons for the future.
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