ASA Globalog

A place for anthropogists to engage in discussion — Current focus: Financial

crisis
Everyday life and business as usual

Everyday life and business as usual

Bob Jessop

In my first blog, I reflected on the return from panic in September-November 2008 to the appearance of
business as usual some 12 months later. Wearing my political economist’s hat, I suggested that this
was related in part to the role of economic crisis in facilitating the concentration of power in the hands of
a few key decision-makers, in this case, the ‘usual suspects’ who knew where the bodies were buried
because they had placed them there. In terms of the classical definition, this could be seen as a
‘dictatorship’ of limited duration, focused on crisis-management, and accountable to normal politics in
due course. I might have added that such exceptional measures in response to an emergency were
possible because the financial crisis had not been accompanied by a crisis in the state and a broader
political crisis. The contrast between Weimar Germany and the United States in the Great Depression is
interesting here. On some counts the economic crisis in the USA was more sudden and severe than in
Germany but ‘normal politics’ prevailed and, eventually, institutional changes introduced through the
New Deal (plus the demand generated by a war-time economy) enabled the US economy to return to
prosperity. In contrast, an interlocking and mutually reinforcing series of crises in the state, political
legitimacy, and class hegemony blocked ‘normal politics’ and created the conditions for a turn to
dictatorship in the modern sense, i.e., a more durable set of political arrangements based on the
suspension of normal democratic politics and a more expansive and extensive coordination of different
institutional orders and social fields. I had intended to expand on these points in my second blog but
have been diverted by a news item and an academic article that I have read in the past two days.
First, the news item: reading The Wall Street Journal on a flight from Manchester to Hong Kong (and,
yes, a propos my last blog, I did manage to get past the temperature monitors in Hong Kong airport after
having signing a form about my incipient recovery from the flu), I learned that a Bank of England survey
has show that: “the financial crisis and the recession that followed appear to have changed Britons’
attitude to debt and spending. … The BOE poll data showed that households increased their saving for
reasons largely connected to concern about the economic outlook. Reasons frequently cited were fear
of losing employment, a desire to reduce debt, additional personal commitments and extra money from
lower mortgage payments or bills, as well as a desire to save for retirement or the future, and having
extra cash from a new job or inheritance” (The Wall Street Journal, 14 December 2009, p 6). Similar
reports could no doubt be found covering other advanced economies in the grip of, or newly emerging
from, recession. And, of course, anthropologists, above all, don’t need to be told about the resilience of
households and social networks in relation to crisis, whether in advanced economies or, even more
importantly, in economies where informal employment and informal work more generally are significant.
Second, the journal article: in the latest issue of Review of Radical Political Economics, there is a fine
piece by three radical political economists, Dick Bryan, Randy Martin, and Mike Rafferty, on the topic:
‘Financialization and Marx: giving labor and capital a financial makeover’. They refer to a recent IMF
paper on the crisis, which describes the household as the “shock absorber of last resort” in the current
economic situation. In one sense, of course, this has always been the case in relation to emergencies,
crises, and other forms of turbulence. But there is also something new in the present situation, which
has been gathering speed for some time: the financialization of everyday life, reflected not only in
changes in the practices of financial institutions but also in the practices of wage earners and
households. The authors suggest that:
In the language of finance, the household is increasingly to be seen as a set of financial exposures to be
strategically self-managed. Calculations and decisions must now be made about a range of issues.
Some such issues have emerged because the management of certain exposures is no longer
undertaken by the state: there is now need for private calculation and decisions about such things as
health insurance, education investment, and investment in an asset portfolio for retirement. There are
also issues that have emerged with increasing competitiveness within the financial sector: decisions
about the proportion of (expected) income to dedicate to home loan interest payments; the time profile
of loans, fixed or floating rate loans, the management of consumer credit options; the preferred pension
scheme. Finally, there is an emerging set of choices to be made in the face of new financial products, in
particular the emergence of derivative products that permit people to hedge exposure to risks relating to
their employment and the value of their home (Shiller 2003). In each one of these calculations there are
(at least retrospectively) right and wrong choices, requiring the household to be financially savvy, not
just in the sense of prudence, but in identifying the range of financial risk exposures and knowing how to
manage them. Hence the new and emphatic push by financial regulators at all levels to generate
programs for financial literacy, so that households can be assumed to have the strategic financial
capacity necessary to understand the financial pressures they now face. The corollary … is that the
(assumed) financially literate worker can morally and legally take responsibility for their own financial
success and failure.
Such observations are commonplace in work on consumption and I cite them here not only because
they were the direct trigger for this blog but also because Bryan, Martin, and Rafferty relate them to a
much more complex set of innovative arguments about financialization and class formation in
contemporary capitalism. I don’t want to take us down this road here, however, but to relate these
remarks to the return to “business as usual”.
In contrast to the 1930s, whether in Germany, the USA, or other developed metropolitan economies,
wage-earning households are far more heavily enmeshed in the circuits of finance capitalism as
consumers of and, indeed, investors in, financial products and services. This is reflected in several
aspects of the financial crisis. First, one significant line of explanation for the financial crisis has been
that it is really the fault of greedy consumers who took out mortgages that they had no realistic
prospects of repaying should the housing bubble burst, used equity in their homes to finance personal
consumption, borrowed too much on their credit cards, and generally consumed as if there would never
be a day of reckoning. Whilst blaming consumers is a useful distraction from other causes and has the
added advantage in the USA that it can be linked, however dishonestly, to claims that state intervention
forced banks to relax loan requirements in order to democratize access to the housing market, there is
also a kernel of truth in this one-sided account of the crisis. This leads to my second observation: that,
insofar as consumers were sucked into debt and now realized that they were ‘suckers’ for being so
seduced, they have accepted some measure of blame for the impact of financial crisis on their present
condition. The household has then kicked in as the shock absorber of last resort, the crisis has been
normalized, accepted as a fact of life, and business as usual has been restored in everyday life.
Moreover, third, because of the opacity of many financial innovations, which exceeded the abilities (one
hesitates to say ‘even’) of financial innovators themselves to fully grasp, it is difficult for ordinary wage-
earners and households to see where else the blame for the crisis might be located. This is reflected in
populist rage against ‘greedy bankers’, mis-selling of financial products, and poor regulation but is not
translated into effective grass-roots resistance to the complex web of financialization that has emerged
in the last twenty years.
In short, if one part of the story of the apparent return of ‘business as usual’ is the capacity of key
financial decision-makers to dominate decisions over the financial rescue-package, another part is the
self-responsibilization of households grounded in their integration into the circuits of financial capital,
leading them to become shock absorbers of last resort in the current crisis. If the former aspect is ripe
for further investigation as part of the political anthropology of the state and elite power, the latter is ripe
for investigation into financial practices of everyday life and new practices of economic governmentality.
None of these remarks imply, of course, that there these are the only two sets of causal factors or sites
for further research.

2009 12 18

Financial crisis

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A Return to “Business as Usual”?

A Return to “Business as Usual”?

Unlike other contributors, I have no training in anthropology – unless one counts a first-year course
taken 45 years ago, when I was introduced to the debate between, among others, Raymond Firth and
Karl Polanyi, on formal versus substantive economics. My background is in sociology and political
science and I am an autodidact in the critique of political economy – albeit not through first hand
experience accumulated by Keith Hart in currency speculation or high tech bubbles of the kind. I will use
my blogs to supplement the interpretations already aired by cultural, economic, and social
anthropologists. In particular, I want to introduce some further dimensions and considerations that might
help us to better understand the nature and dynamics of the crisis and some of its consequences.
Before proceeding, let me apologise for the break in blogs – I have been suffering in the last few days
from another aspect of globalization, a mild bout of swine flu and am now recovering.

Over the last month or so I have attended four events on the crisis – at an elite German research
institute, a United Nations agency in Geneva, a global gathering of radical scholars in London, and an
activist evening workshop in Amsterdam. What has impressed me most from these events is the broad
consensus. Specifically, following the initial shock of the crisis and the fears, hopes, or blind panic that
followed the collapse of Lehman Brothers and characterized the “exciting times” of September-
November 2008, there has been a return to “business as usual”, which is a delightfully polyvalent term.
Some of those who share this reading consider it as a sign of the flexibility of capitalism, some that it is
a serious blow to the Global South, others that it is a sign of the failure of the left to prepare for crisis
and to take advantage of the crisis – leaving the space open for recuperation by capital and its
representatives, and yet others that the form of the recovery reinforces the need for a Green New Deal
to be developed, ideally, from the bottom up rather than through securitized markets in carbon credits. It
is also worth noting that discussions were courteous but heated: the nature of the crisis and its solutions
were clearly politically contentious and not just matters of academic debate.
This small personal example illustrates the complexity of crises and the problems of interpreting them. I
am sure that Gillian Tett must have experienced this many times over, even at banking conferences.
This complexity has been evident from the initial signs of crisis in the first quarter of 2007 onwards and
poses interesting questions of a more general nature about how complex events come to be interpreted.

Crises of the kind experienced in the last couple of years are hypercomplex. They are overdetermined
moments of indeterminacy, providing historically conditioned challenges and opportunities for decisive
intervention. Crises typically provoke profound theoretical, paradigmatic, policy and practical
disorientation insofar as they disrupt actors’ previously taken-for-granted understandings of the world
and how to “go on” within that world. This opens space for strategic interventions to redirect the course
of events rather than ‘muddle through’ in the hope that the situation will eventually resolve itself. Crises
never produce a particular response or outcome on their own. Responses are mediated through
debates and struggles to define the nature of this crisis (and its uneven spatio-temporal incidence), to
ascribe (rightly or wrongly) material, institutional, organizational, and personal responsibilities for the
crisis, to assess whether it is a crisis ‘in’ or ‘of’ the relevant system(s), to chart alternative futures, and to
promote specific lines of action for particular forces over different horizons of action.

Thus the forms and purposes of responses and their relative success or failure depend not only on the
(typically contested) objective nature of the crisis but also on capacities to define its nature. Included
here is the question of whether the crisis is one in or of a given structural or strategic context. Where a
crisis is successfully defined as one within a system, it is likely to lead to a more reformist approach as
compared to when it is defined as a systemic crisis, i.e., one that affects the survival of the system. Yet,
if the crisis is systemic and the crisis is interpreted in reformist terms, the resulting measures will be
insufficient to deal with the full depth and breadth of the economic, political and social repercussions of
the crisis. Systemic crises of the global economy – especially when coupled with failures of governance
on a global scale – are particularly likely to impact developing countries and/or the weakest and most
vulnerable groups in all societies. Indeed, a useful definition of power, proposed by Karl Deutsch, is the
ability not to have to learn from one’s mistakes – because their costs can be displaced or deferred
elsewhere unless some form of de-coupling is possible.

Economic and political ideas, models, and paradigms play a key role in reducing complexity as actors
seek to render strategic and policy problems manageable in real time. This matters especially in crisis
periods. In the current period, the crisis has been variously defined as a crisis of global capitalism, a
crisis of globalizing neo-liberalism, a crisis of finance-led capital accumulation, a crisis in the
pathological co-dependence between China and the USA, and so forth. It also has important regional
and local dimensions. Definitions of the crisis also vary in terms of durée (e.g., short-, medium- and
long-term, tied to the temporalities of financial or industrial capital, to the dynamics of political hegemony
on a global scale or electoral cycles), in terms of geographical scope (e.g., global, triadic, city networks,
national, regional, local), and in terms of the principal site of crisis (commerce, industry, finance; politics;
hegemony; legitimacy; representation, and so on). It is particularly important to distinguish different
accounts of “the” crisis because “its” manifestations vary significantly according to the position of
particular economic and political spaces within the overall division of labour at a world scale as well as
in terms of historically specific features of each social formation that is affected by the crisis in its
various manifestations. In short, there is extensive scope for variation in narratives of crisis and, hence,
in the responses to crisis that are likely to follow.
Viewed in these terms, the leading interpretations of the crisis have been scaled down in the past year
compared to the initial period of maximum disorientation and panic. What has emerged and been
consolidated is a reading favoured by the dominant transnational economic forces and superpowers that
this is a crisis in finance-led economic expansion and inadequate regulation. This interpretation is used
in turn to justify modest reforms within the existing neo-liberal order. One of the most surprising features
of this account is the extent to which leading economic and political forces at national, regional, and the
global scales have committed themselves to work against protectionism, to strengthen free trade, and to
scale back the public sector even as the state acquires emergency powers to deal with the financial
crisis. This has marginalized those most badly affected by the crisis, not only in the global north, but
also, more significantly, the ‘global South’. How might we understand this? I sketch one approach below
and will illustrate it in more detail in my second blog.

The first phases of a crisis trigger massive variation in interpretations, which appear in the form of
narratives, arguments, etc. The plausibility of interpretations and their associated strategies and projects
depends on their resonance with the personal (and interpersonal) narratives of significant classes,
strata, social categories, or groups affected by the crisis and hence on their capacity to mobilize these
forces. Much of this variation is arbitrary and short-lived, lacking long-term consequences for overall
social dynamics; but some accounts and their associated practices are selected as the basis for
strategic and policy initiatives in what becomes the second phase of the crisis. Where the latter gets
defined as a crisis in the prevailing system, this sustains an impression of ‘business as usual’,
consistent with routine crisis-management measures or minor reforms – responses that will last only as
long as these measures to work. Otherwise, we have a crisis in crisis- management, which adds
additional complications that need to be integrated into the analysis. If this fails or the crisis is initially
interpreted primarily as a crisis of that order, more radical changes may be explored. In both cases
conflicts are likely over the best policies to resolve the crisis and allocate its costs as different social
forces propose new visions, projects, programmes, and policies and a struggle for hegemony develops.

What seems to have happened – and evidence will be provided in the next blog – is that the extent of
the crisis, once its real magnitude became evident in September 2008, justified exceptional measures
taken in a highly condensed time frame that by-passed normal political routines (including considered
debate in legislatures) and concentrated crisis-management powers in the hands of a few key figures
within a broader context of high-powered lobbying from key financial interests. The speed with which
decisions were made effectively marginalized most social forces – apart from expressions of populist
outrage against greedy “bankers” that were easily finessed in the short-term through rhetoric and
symbolic punitive fiscal measures. Together with the billions of dollars (or their equivalent) invested in
rescue packages and the return to profitability of major financial institutions (thanks in no small measure
to effectively free money released through quantitative easing and the opportunities created by the
crisis) has given the semblance of ‘business as usual’. Another part of the story here is the inability of
forces on the centre and the left to exploit the crisis to provide a powerful alternative account of the
crisis could challenge the progress of financialization and neo-liberalism, propose an effective set of
short-term policy alternatives and a longer-term strategy to address the deeper causes of the crisis, and,
above all, to translate these alternatives into effective policies in a period when power was being
concentrated and centralized. In this sense the crisis can be seen as a crisis of the “left” as much as it is
a crisis in neo-liberalism.
The effective spectrum of debate that has immediate policy relevance in the advanced capitalist
economies is largely confined to six main approaches: (1) a return to a bastardized Keynesianism to
boost demand; (2) recapitalization and re-regulation of banks; (3) calls for a new international financial
architecture; (4) efforts to re-moralize capitalism by a stronger emphasis on responsible lending
practices; and, in the medium term, (5) efforts to roll back public spending, the public sector more
generally, and the roll-back of social rights; and (6) a Green New Deal that will help to resolve the
environmental, food, fuel, and water crises that were temporarily knocked off the global agenda by the
urgency of the financial crisis and its global repercussions. In all of these approaches, including the
Green New Deal in its neo-liberal variant (oriented to market solutions to environmental crisis), the
interests and views of the “global South” have been largely marginalized as have the views of social
forces around the globe that question whether further economic growth can ever be the solution to
current global challenges. Addressing such issues requires us to go beyond multi-site ethnographies of
economic and political practices to consider bigger questions of economic, political, and social
domination – to understand why, in short, some are better placed than others to ignore the lessons of
their mistakes.

2009 12 14

Financial crisis

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Why don’t more people make their own money?

Keith Hart Open Anthropology Cooperative

What can anthropology offer someone who wants to understand money better? Most anthropologists
don’t like money and they don’t have much of it. It symbolizes the world they have rejected for
something more authentic elsewhere. This lines them up with the have-nots and against the erosion of
cultural diversity by globalization. Accordingly, what they had to say about money until recently was the
same old story. Bill Maurer, in our conversation on the politics, pragmatics and promise of money, sums
up the story as follows:

“Capitalism comes to town and suddenly all that is solid melts into air. Things fall apart. It’s the end of
the world. And we already know what happens next: dispossession, exploitation, wealth flows up and so
on. Yes, that is what happens. But if we say it is all there is to the kind of monetization or
commoditization associated with ‘capitalism’, we’ll never see its other effects, when they are right in
front of our noses.”

Modern anthropology had its origins in the democratic revolutions of the eighteenth century. Even in the
nineteenth century, anthropologists sometimes studied stateless peoples in search of models for a
better society. We lost sight of that possible application of our knowledge in the last century. Economic
anthropology today should aim, in part, to help people manage their own economic affairs.

We could, for example, show that the numbers on their financial statements, bills, receipts and
transaction records constitute a way of summarizing their relations with society at a given time. (This is
what I mean by calling money a ‘memory bank’ ).The next step would be to show where these numbers
come from and how they might serve in building a viable personal economy. When individuals are able
to take responsibility for their own economic actions, they will understand better the social forces
impinging on their lives. Then it might become more obvious how and why ruling institutions need to be
reformed for all our sakes.

Immanuel Kant produced the first systematic text in our discipline, Anthropology from a Pragmatic Point
of View (1798). Both Kant and his pragmatic perspective have more or less disappeared from
anthropology. What is a ‘pragmatic’ approach? The question is not so much ‘How can our knowledge
provide an adequate representation of the world?’ but rather ‘Can it help us to get something done that
we set out to do?’ Then it would matter less if it is true or not, just whether it works. The closest that my
public research has come to such a pragmatic approach has been through the study of community
currencies, although I have also found many applications for my knowledge in my own financial
practices.

I first heard of LETS, a system for trading with its own money circuit, and its inventor Michael Linton in
the mid-80s and later met him in Manchester. I spent two years around the millennium working with him
and his partner Ernie Yacub on their Open Money project, sometimes physically, but mostly online.
Linton, an engineer, has brought immense creativity and dynamism to developing systems that are
suited to the digital age and are scalable; but he has been less successful in persuading people to adopt
them. I was supposed to disseminate the results as a writer and this made me focus on the
unacknowledged handicaps that people promoting LETS have to overcome. One of these is the
dominance of the nation-state as a stand-alone model for forming a community. Another is the deep
investment people have in a belief that the money they know is eternal.

I was a professional gambler for a number of years, and I sometimes made the mistake of trying to
explain to people how I lived. But all they wanted to know about gambling was that you lose. The only
winner is the bookie or the casino. And even the way they gambled was guaranteed to make sure that
they lost, so that they really had no alternative than to go back to work and accept the system.

When I wrote about money’s persuasive power (for Steve Gudeman’s Economic Persuasions), I was
thinking about LETS. Smith and Keynes changed how we think because they understood that theirs was
a rhetorical exercise before anything else. There was a time when I was more sanguine about the
immediate prospects of a breakthrough with these community currencies. In my lifetime, these
approaches may or may not actually change economic conditions for very many people. But whether
they ‘work’ or not, they are a terrific source of political education.

Just by entering a currency experiment, people get to argue about what form the money should take,
who should be in the circuit, what is its relationship with the national currency? Should the currency be
scrip or something else? But, because these things are usually conceived of as stand-alone and local,
the resulting form of association is some kind of micro nation-state. They end up being like every other
similar organization in which a few people put in a lot of time and argue about the minutes, so that the
whole thing becomes a kind of parish politics and most people get alienated from it. People who entered
these self-generated money circuits with real economic purposes get frustrated and move on. Michael
Linton knows this and for years now he has been developing multiple-currency systems using internet-
based technology. But that is another story.
It is a curious fact that complementary currency schemes seem to flourish more in rich countries than in
the poor countries that would appear to need them most. That may now be changing. Maurer’s Institute
for Money, Technology and Financial Inclusion at UC Irvine has received a grant from the Gates
Foundation to explore, among other things, the impact of mobile telephony on poor people’s access to
and use of money. East Africa, and Kenya in particular, has recently emerged as the world’s leading
innovator in this area. Africans largely missed out on the infrastructure associated with the development
of electricity grids, but they have leaped to grasp the opportunities offered by mobile phones. These,
unlike the World Wide Web and other aspects of the digital revolution, have a built-in payment system
whose potential has been blocked in more advanced economies by entrenched financial interests.

At a time when the hardware manufacturers in the rich countries are wondering how to sell more and
fancier computers in a sated market, Kenyans have taken the lead in adapting cheap old machines for
use by the world’s poor masses. Nowhere else has the use of mobile phones for banking, commercial
and administrative purposes been taken further than here. M-PESA (short for mobile money in Swahili)
was first launched by the Kenyan affiliate of Vodafone in March 2007. It quickly captured a share of the
market for cash transfers and grew rapidly, with 6.5 million subscribers by May 2009 and 2 million daily
transactions in Kenya alone. In December 2008, a group of banks successfully lobbied for an audit of M-
PESA, in an attempt to slow down its growth; but the audit found that the service was robust.

There is a lot more to this revolution than just banking. Instead of walking to a distant town and queuing
to pay taxes and fees, often unsuccessfully, people can now pay them instantly with their mobile
phones. Relatives of the victims of road accidents in remote areas can buy blood to be sent from a
regional hospital in time to save lives. Farmers can check market prices around the country before
deciding when and where to send their produce for sale. Families dispersed by migration can keep in
touch by phone, using highly sophisticated methods at little or no cost. Now this is a financial revolution
that anthropologists ought to have plenty to say about. And not just because it is in an exotic part of the
world.

That’s all folks. It’s been a pleasure.

2009 11 21

Financial crisis

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Surfing the credit crunch with Abdul Aziz

Keith Hart www.thememorybank.co.uk

The fall of the Berlin Wall was famously heralded as ‘the end of history’, but in fact it restored a sense of
history for many of us by catapulting us back to before the Cold War and even to the origins of the
USSR in the Russian revolution. Questions that had been frozen for decades reappeared, such as
‘What will be the glue of the new Russian Federation?’, ‘Will Germany resume its dominance of Central
Europe?’, ‘What should be the boundaries of the European Union?’ and so on. The war in former
Yugoslavia reopened the history of genocide in Europe and Serbian nationalism confronted the
complacent powers of Western Europe with an ugly reminder of their own history.

The failure of the New York investment bank, Lehman Brothers, in September 2008 triggered a financial
collapse whose ramifications are still with us. Predictions of the outcome of the ensuing global economic
crisis vary widely. Following a sustained equities rally in mid-2009, some commentators now argue that
the recession following Lehman’s demise is already over and the free market ready to assume its
inexorable rise, while others talk of a double dip recession, persisting debt deflation and a recovery that
could take 25 years.

From the beginning this crisis has invited speculation about the closest analogy in the twentieth century
to our current experience. Most commentators were sure at first that we were entering a period
unprecedented since the Second World War. Roosevelt, Keynes and the other principals of the Great
Depression became familiar figures on the oped pages. Was 2008 like 1929? No. More likely, 1931 or
1933; some said 1938. Which was the greater threat, inflation or deflation? Cue in the history books
once more, since deflation had been unknown since the 1930s.

These comparisons lacked an overview of what led up to the Great Depression, namely three decades
of financial imperialism that ended in 1913 with what Churchill called ‘The second thirty years war’ as its
aftermath. No, world war was not thought to be likely; but, after three decades of neoliberal
globalization, when the science of free markets ruled for ever, the shock of the ‘credit crunch’ certainly
renewed the interest of the chattering classes in history. Then suddenly the apparent recovery of stock
prices emboldened even bailed out bankers to sing the praises of the market once more.

A break in economic history did occur in 2008. After the fall of the Berlin Wall, it was claimed that the
world had entered a new stage of economic evolution to which all countries would eventually have to
conform, where money flowed without political restriction and the market penetrated everywhere. There
were a few doubters, of course, who identified the shaky foundations of the boom long before it crashed.
But it took courage then to go against the prevailing orthodoxy that all was best in the best of all worlds.
What happened next did change a lot, if not everything.

Economic growth can now be seen to have been sustained by a regime of cheap consumer credit,
especially in the United States; many banks and other financial houses, notably the insurance giant AIG,
exposed themselves to unacceptable levels of risk, particularly in the new market for credit derivatives;
these became ‘toxic assets’ which were bought by taxpayers at huge cost in order to preserve the
banking system as a whole; access to loans dried up overnight, despite these government subsidies;
the leading exporters of manufactures, such as China, Germany and Japan, suffered massive
reductions in demand for their products; the newly ‘liberated’ Eastern Europeans went into free fall, as
did countries like Ireland (hitherto a ‘Celtic tiger’) and Spain; despite governments printing money like
there was no tomorrow, the threat of deflation was real; business bankruptcies and rising unemployment
contributed to the economic malaise in rich and poor countries alike.

The economy, which had been understood as an eternally benevolent machine for growth, was
suddenly pitch-forked into the turmoil of history. The market was now seen to require massive state
intervention if it were to have any chance of surviving. The financial ‘masters of the universe’ quickly
brought out the begging bowl and in some cases had to suffer nationalization. Anglophone governments
who once claimed to be leading the world to a free market future, desperately embraced remedies they
called ‘Keynesian’, incurring the risk of hyperinflation if the bond market collapsed. The French ‘social
model’ suddenly looked a lot better than it had before, not least to its ex-Thatcherite president, Nicolas
Sarkozy. After the dust settled, the so-called ‘emerging markets’, particularly China, India and Brazil,
were seen to be doing not as badly as once feared. The global shift of economic power from the West to
Asia has probably been accelerated by these events. It is all rather murky, but even at the best of times
the present is like that.

Whatever place the ‘credit crunch’ eventually finds in economic history, one certain victim of the crisis
has been free market economics. It is impossible any more to hold that economies will prosper only if
markets are freed from political bondage. Attacks on the economists by politicians and journalists have
become commonplace. Even the Queen of England asked publicly why none of them saw it all coming.
The ideological hegemony of mainstream economics, especially since the 1980s, has been holed below
the water. This is not to say that the free marketers have been silenced, but public acceptance of the
notion that the economy is social, institutional and in need of political guidance is now commonplace.
And Karl Marx, after being sidelined for decades, is once again a best-seller in Germany.

It has long seemed to me a defect of economic anthropology that we don’t engage with historical
questions of the sort triggered by the economic crisis in the real time context of the daily news. Of
course to do so would expose us to the need for continuous revision of our ideas and facts. But suppose
we wanted to, how could it be done? I had been mulling over this question and had some provisional
answers which I rolled out on my website as soon as Lehman folded. Ideas are cheap. Everyone has
ideas. That’s why writers and artists come cheap too. New social and intellectual forms for expressing
our ideas are scarce, however. So I turned to fictional dialogue as a way of engaging with history and
the news. ‘Conversations with Abdul Aziz’ was the result.

I divided myself into someone called Abdul Aziz and an academic called me. I did not advertise the
fictional basis for the exchange, but was prepared to if asked. (No-one did, but several expressed
disappointment to learn the truth later). “Abdul Aziz (not his real name) is a minor Saudi royal with a
degree in economics from a Midwestern university who now lives in London where he manages some of
his immediate family’s wealth.” This allowed me to express both sides of the pressing questions of the
day: Was Obama the world’s saviour or just another failed US politician? Were we on the cusp of a
great depression or world war? Was Britain a basket case or brave beneficiary of an early devaluation?
How long would the recession last? Was it safe to buy assets again or not? And so on.

The online format allowed me to insert links to articles from the newspapers in weekly instalments (like a
serialised Dickens novel!) and many of these came from participating in Twitter, the network that has
been called the first real-time medium for the expression of human consciousness. I enjoyed making
predictions that could be contradicted at the time and revised a week or two later. I realised that a life of
betting had prepared me for a career as a small-time prophet. My two characters began to assume
stable positions on either side of some big questions. But I grew tired of it by the New Year and gave up.
More than anything else, I escaped from academic responsibility for a while. I doubt if I will convince my
anthropologist colleagues that this experiment has anything in it for them. I learned a lot.

2009 11 19
 Financial crisis

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The limits of naivety for the anthropology of money

Keith Hart The Memory Bank

What would happen if anthropologists, for some limited purposes, abolished the division between
academic writing and journalism that Mauss himself observed and that has prevented us from grasping
how they fed into each other at a key moment in his life? The dominant presence before the war of his
uncle, Émile Durkheim, obviously contributed to this compartmentalization, as perhaps did Mauss’s
sexuality too. He was, after all, one person not several; and, in The Gift, he lays out a totalizing method
of approaching individuals, groups, institutions and events, so he was certainly aware of the problem.
For us, Mauss himself is a “total social fact” who lights up our own predicament.

My first attempt to approach money as an object of anthropological inquiry was a Malinowski lecture
given at LSE more than two decades ago (‘Heads or tails? Two sides of the coin’, Man 1986).
Malinowski set a trend for anthropologists to dispute economic universals in polarized terms,
juxtaposing exotic facts and western folk theories, without acknowledging the influence of contemporary
history on their own ideas. My lecture had three parts which, taken together, constituted a method.

“First, we should be more explicitly aware of the concrete conditions that stimulate our interest in some
abstract problems rather than others. This means asking what it is in the world as we experience it that
informs our researches, whether directly or indirectly. Second, it is no good taking potshots at vulgar
reductions of economic ideas, when the history of western economic thought is itself extremely plural,
even contradictory. A constructive reading of that intellectual history might have served Malinowski’s
ethnographic analysis better than the straw man he chose to attack. Finally, when historical awareness
and a more sophisticated intellectual apparatus are combined with our discipline’s standby of
ethnographic fieldwork, the resulting anthropological analysis offers a more secure foundation for critical
understanding of the world in which we live.”

So I first located the problem of money in contemporary economic history, arguing that state control of
money was being undermined in the leading capitalist societies. Then I traced two strands of western
monetary theory explaining money as a token of authority issued by states or as a commodity made by
markets. These strands came together in the writings of Keynes. But, rather than acknowledge the
interdependence of top-down and bottom-up social organization (“heads and tails”), economic policy
has swung wildly between the two extremes (“heads or tails?”). Last I showed that the token/commodity
pair could inform a reanalysis of Malinowski’s ethnography.

“Anthropologists have to be capable of comparing their exotica with a more profound picture of ideas
and realities in the industrial world that sustains us. Conventional economic reasoning fails to enlighten
us because it is so unremittingly one-dimensional. The coin has two sides for a good reason – both are
indispensable. Money is at the same time an aspect of relations between persons and a thing detached
from persons….Today’s effort is an act of bricolage rather than brokerage, formed from a vision of the
anthropologist as a handyman who can help repair the damage done by professionals.”
Some anthropologists have drawn on this piece for their own ethnographic purposes, without embracing
world history or the theories of economists. In other words, the academic division of labour still reigns
supreme and most anthropologists prefer to stay on familiar ground rather than risk being exposed as
naive interlopers on territory made familiar through common journalism or already colonized by experts.

In Closed Systems and Open Minds (Max Gluckman editor, 1964), an anthropologist and an economist
explored “the limits of naivety” in social anthropology. They argued that anthropologists, given their
pretension to address humanity as a whole, are obliged to open themselves up to the full complexity of
social reality. At some stage they must seek analytical closure in order to draw simple patterns from
these open-ended inquiries; and these abstractions may often seem to be naive from the perspective of
other disciplines. Gluckman had in mind the rich texture of ethnographic encounters, whereas I was
suggesting that conjectural history, overthrown by fieldwork-based ethnography, should be rehabilitated,
even if specialists can easily show the naivety of anthropologist’s accounts. Specialization can be an
obstacle to the growth of knowledge; for specialists become prisoners of their expertise (Popper).
Anthropologists have long enjoyed a certain intellectual freedom that can be invigorating for the more
conventional sciences. We just have to be more explicit about how this comes about.

Michel Foucault ended his “archaeology of the human sciences” (The Order of Things, 1973, translation
of Les mots et les choses, 1966) with some reflections on why psychoanalysis and social anthropology
(ethnologie) “…occupy a privileged position in our knowledge”:

“…because, on the confines of all the branches of knowledge investigating man, they form a treasure-
hoard of experiences and concepts, and above all a perpetual principle of dissatisfaction, of calling into
question…what may seem, in other respects, to be established.”

“[They] are not so much two human sciences among others, but they span the entire domain of those
sciences, they animate its whole surface…[They] are ‘counter-sciences’; which does not mean that they
are less ‘rational’ or ‘objective’ than the others, but that they flow in the opposite direction, that they lead
them back to their epistemological basis, and that they ceaselessly ‘unmake’ that very man who is
creating and re-creating his positivity in the human sciences.”

Foucault attributed anthropology’s originality to its being both “traditionally the knowledge we have of the
peoples without histories” and “situated in the dimension of historicity”, by which he meant “within the
historical sovereignty of European thought and the relation that can bring it face to face with all other
cultures as well as with itself”. He was sure the human sciences had reached their limit and this was
doubly true of a discipline whose premises were being undermined by the collapse of European empire.

Given the disappearance of the traditional object of social anthropology, “primitive societies”, we have to
find not only a new one, but also a theory and method appropriate to it. This means identifying the
historicity of our own moment, as well as complementing ethnographic fieldwork with world history,
critical philosophy and more besides.

2009 11 17

Financial crisis

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“The great economic revolutions are monetary in nature” (Mauss)

Keith Hart Open Anthropology Cooperative

For Marcel Mauss, the years 1920-25 were packed and fruitful. His political party and the Left in general
had a real shot at winning power in France and did so in 1924. Two-thirds of his occasional political
pieces (Écrits politiques) were written in this period. He was able to relaunch his group’s journal, Année
sociologique, by the period’s end, contributing to it his most famous essay, on The Gift. He suffered
some reverses at this time, including a serious illness, but remained optimistic for both political and
intellectual regeneration on a social scale that was increasingly international in scope.

He began serious work on a book dealing with the main political currents of the day, nationalism and
socialism. His interest in the American “potlatch” was expanded by the publication of Malinowski’s
Argonauts of the Western Pacific in 1922, confirming his belief that competitive gift-exchange was
endemic in Melanesia and Polynesia, as well as elsewhere. And the Institut d’ethnologie was formed in
1925 with Rivet, Lévy-Bruhl and Mauss himself in charge.

In the late 1920s, things began to unravel on all fronts. Mauss’s personal standing as a savant grew
inexorably; but his party suffered political reverses, its newspaper and journal folded, the cooperative
movement foundered and the Année sociologique could not continue. Mussolini’s version of the
“nationalization of socialism” must have raised doubts about Mauss’s own political programme. His
closest friend, Henri Hubert, died in 1927, compounding Mauss’s loss of family and colleagues during
the war.

The years 1920-25 stand apart for the energy and fulfillment they brought. Mauss himself kept a sort of
Chinese wall between his academic and political interests; so it is not so surprising that the two have
been kept apart, especially in the Anglophone world, where his political writings are virtually unknown.
He allowed himself one public attempt to bridge them, the concluding chapter of The Gift. Even so, the
essay itself does not provide an effective intellectual link between the two compartments of Mauss’s life.

When Malinowski produced his account of native adventurers in the Western Pacific, latter-day heirs to
the archaic tradition of noble heroes, his story found a receptive audience. The kula ring of the
Trobriand Islanders and their Melanesian neighbours provided an allegory of the world economy. Here
was a civilization spread across many small islands, each incapable of providing a decent livelihood by
itself, that relied on foreign trade mediated by the exchange of precious ornaments. There were no
states, money or capitalists and, instead of buying cheap and selling dear, the trade was sustained by
an ethic of generosity. Homo economicus was not only absent, but revealed as a shabby and narrow-
minded successor to a world the West had lost.

Marcel Mauss was excited by all this, but he felt Malinowski had gone too far. One of his key
modifications to Émile Durkheim’s legacy was to conceive of society as a historical project of humanity
whose limits were extended to become ever more inclusive. The point of The Gift is that society cannot
be taken for granted as a pre-existent form. It must be made and remade, sometimes from scratch. How
do we behave on a first date or on a diplomatic mission? We make gifts. Heroic gift-exchange is
designed to push the limits of society outwards. It is ‘liberal’ in a similar sense to the ‘free market’,
except that generosity powers the exchange, self-interested for sure, but not in the way postulated by
economists.

Malinowski’s account of the kula ring is the contested origin for Mauss’s discussion. “The whole
intertribal kula is merely the extreme case…of a more general system. This takes the tribe itself, in its
entirety, out of the narrow sphere of its physical boundaries and even of its interests and rights.” No
society is ever economically self-sufficient, least of all these Melanesian islands. So to the need for
establishing local limits on social action must always be added the means of extending a community’s
reach abroad. This is why markets and money in some form are universal, and why any attempt to
abolish them must end in catastrophe.

For this reason Mauss argued, against Malinowski in a long footnote, that the kula valuables were
money, if not the impersonal kind with which we are familiar. His famous essay needs to be juxtaposed
to his political journalism of the same period and in particular to a series of articles he wrote for his
party’s newspaper, Populaire, on the exchange rate crisis of 1922-24. These have generally been
treated as being lightweight, even boring, unconnected to his academic work; but they do offer insight
into his economic ideas and hence into his arguments in The Gift, both analytical and programmatic.

The financial turmoil that Keynes predicted would be the consequence of the Versailles treaty was soon
realized. The stability of the franc was a matter of acute public concern, since it was taken to be a
measure of France’s international standing; and political panic when the franc dropped was
commonplace. The Left blamed it all on a few rich families. Mauss wrote about the exchange rate crisis
from December 1922 and returned to the issue a year later. Taken together, these articles constitute
150 out of the 700 pages assembled in Écrits politiques.

This financial journalism is notable on several counts. Mauss sets out in alarmist fashion, but soon
settles down into a voice of reason, seeking to steer a pragmatic course of stabilization in the national
interest. Being able to take a position on the economy was vital to political engagement: “Every socialist
is obliged to have a few notions about political economy, or economic sociology as we now say”. The
problems were both urgent and complex. More striking still is the tone Mauss adopts when discussing
what we would call “the markets”, as if he were himself an expert player. After studying the price curves,
exchange rates and money supply since the end of the war, he makes the “bold assertion, which
militants and scientists must venture only very scrupulously” that “the dollar will float between 20 and 25
francs, but will not go much higher than that”. The dollar exchange rate had been 11 francs in 1921.

Mauss concluded that panic in the markets, not fiduciary inflation, was the cause of exchange rate
depreciation. Storms were brewing from every direction: “These are human phenomena at work:
collective psychology, imponderables, beliefs, credulity, confidence, all swirling about”. Another striking
feature of these articles is personal attacks. Mauss insisted on pointing the finger at real persons,
especially right-wing political leaders such as Clemenceau, rather than indulge the convenient
abstractions beloved by left-wing conspiracy theorists.

An unpublished paper, “A means of overhauling society: the manipulation of currencies”, provides a link
between these reflections on national political economy and The Gift. Here Mauss claims, following his
colleague, François Simiand and anticipating Maynard Keynes, that the great economic revolutions are
“monetary in nature” and that the manipulation of currencies and credit could be a “method of social
revolution…without pain or suffering”. Mauss wished to give an economic content to juridical socialism.
“It suffices to create new monetary methods within the firmest, the narrowest bounds of prudence. It will
then suffice to manage them with the most cautious rules of economics to make them bear fruit among
the new entitled beneficiaries. And that is revolution. In this way the common people of different nations
would be allowed to know how they can have control over themselves—without the use of words,
formulas or myths”.

2009 11 15

Financial crisis

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“In the long run we’re all dead” (Keynes)

Keith Hart Open Anthropology Cooperative

Maynard Keynes stormed out of the Versailles treaty negotiations after his advice not to pulverize the
German economy was rejected by Lloyd-George and Clemenceau. He published a book about it in
1919, The Economic Consequences of the Peace, in which he predicted the depression that his own
theories later helped to correct. But he also made heavy bets against the German economy, selling the
deutschmark short in anticipation of its fall. Unfortunately for him, the German banks maintained an
irrational attachment to their currency throughout 1920 and he was almost bankrupted. His father,
professor of political economy at Cambridge, bailed him out by remortgaging the family home. In the
markets, as in life, timing is everything and that is the meaning of his remark about the long run. He
never speculated with his own money again (but he made King’s College, Cambridge rich in the bear
market of the 1930s).

I sold two houses in 2004-5, my own and my father’s. I was convinced that asset markets were over-
priced and heading for a bust, so I kept the money as cash and refused to invest in the speculative
instruments and mutual funds my bankers were peddling. I chose to rent rather than buy property.
Whenever the deflation came, my money would be worth a lot more. Then I watched the markets roar
ahead. Doubt crept in. What if the masters of the universe actually had found a way of transcending the
iron law, “what goes up comes down”? Didn’t I owe it to my young daughter to put at least some of the
money into medium- and long-term investments? So I caved in and bought a chunk of mutual funds.
The timing was brilliant, February 2007, just before the sub-prime mortgage crisis broke. I lost half of
what I invested in the next two years. Now I am a currency trader, switching cash between euros,
dollars, yen, sterling, Swiss francs, Norwegian krone and South African rands in moves that I hope take
advantage of the huge instability in foreign exchange markets. As the optimist who fell off a skyscraper
was heard saying, when he passed the 35th floor on the way down, “So far so good”.

I was asked at a conference not long ago why I am an economic anthropologist. I answered that, like
most people, I care passionately about my own economic circumstances and prospects. I study the
economy because I want to understand better my own situation in the world. I would like to be able to
protect my family from the disasters unfolding around us all. Maybe I will do no better than Keynes in
that early foray into the markets, but I can try. When I was 12 years old, I looked at my dad and thought
I didn’t want to be what he was when I grew up, a wage slave in a bureaucracy. I was committed to
entering the free professions through passing examinations, but what if I failed the exams? The only
alternative I could think of was betting on the horses, making money with money. So I became in time a
scientific gambler. It worked. I financed my higher education and two periods of unemployment that way.
But it is indescribably boring and, when given the chance, I always took an academic job, much more
interesting. Now I would rather learn and write about money than make it. But I haven’t lost the same
pragmatic impulse that prompted me once to learn statistics: there ought to be some application of my
knowledge to everyday concerns.

Rational models don’t usually serve us well in the real world. It is worth recalling that, whereas classical
political economy embraced an objective theory of value driven by class struggle in the long run, the
marginalist revolution of the 1870s saw value as the outcome of subjective decisions made by many
actors in the short run, whatever the economists did with the idea next. Weber, Simmel and Mead took
their lead from this modernist move to launch 20th century sociology and social psychology as a project
that aimed to be grounded in what ordinary people think and do. Rationality is calculation framed as a
means-end relationship, a projection into the future based on knowledge of the past. I always thought
that it works best backwards, as rationalization, not forwards as prediction. In any case it is too laborious
for most practical purposes and useless for everyday decisions, where habit or magic in most cases just
have to do the job. We muddle through. So do the masters of the universe, as it turns out, except when
they fall flat on their ass and ask us to pick them up.

This series of blog posts is supposed to be about how anthropologists can throw light on what used to
be called the “financial crisis”. But now that Goldman Sachs is raking it in again and Lula is riding high
on Brazil’s booming economy, we are not sure whose crisis it is or even whether there is one. I have
been struck by how many of the really original analyses relevant to the ‘crisis’ are by anthropologists:
Gillian Tett’s Fool’s Gold, Karen Ho’s Liquidated, Alexandra Ouroussoff’s War on Wall Street (under
review by publishers), Horacio Ortiz’s The Political Anthropology of Contemporary Finance (a doctoral
thesis in French, but now coming out as articles in English). John Kay, reviewing ten books in the
Financial Times not long ago, wondered if we might be on the verge of a new synthesis involving
anthropology, history and economics.

Exciting times indeed. So why does this series of blog posts come across as dead as a dodo? I won’t try
to answer that here (again). But I will post several items over the coming two weeks, maybe as often as
every 2-3 days. We need to be attuned to life, as most ethnographers are at least when they are in the
field, but our writing should reach out to more people than just other anthropologists. That means
engaging with long-run historical questions like what this crisis is, with the news as it unfolds in real time
and with issues that matter practically to people who don’t have to be reminded that “It’s the economy,
stupid!”

2009 11 13

Financial crisis

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Capitalising on 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.

2009 11 12

Financial crisis

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Banking conferences

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.

2009 11 05

Financial crisis

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Anthropology News: an article by our blogger

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.

2009 11 05

Financial crisis

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