Loomnie

From keith Hart:

The anthropology of finance has flourished in the last decade or so. The doyen of this field is Bill Maurer 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. 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. 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 and is thus more interested in what people can do with money than what it means to them. Like Jane Guyer (Marginal Gains: Monetary Transactions in Atlantic Africa), he believes that anthropologists have bought too easily 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. Ellen Hertz (The Trading Crowd: An Ethnography of the Shanghai Stock Market ) was prescient in carrying out field research on the Shanghai stock market. Caitlin Zaloom (Out of the Pits: Traders and Technology from Chicago to London) focused on how financial traders adjusted to new information technology. Both of these studies, however, are quite traditional in their focus, being concerned with the traders’ local practices and point of view, even if their business is global at another level. Karen Ho goes further by linking her ethnography to a broader analysis of political economy. Based on interviews with employees of Goldman Sachs, Morgan Stanley and other great finance houses, Liquidated: An Ethnography of Wall Street explicitly engages with larger distributional questions, such as those involved in the system of granting bank employees large bonuses.

Here is a column I wrote shortly after reading karen Ho’s book.

For the first time in five years, no big US investment bank appears among the top nine sovereign bond bookrunners in Europe, according to Dealogic data compiled for the Guardian. Only Morgan Stanley ranks at number 10.

Goldman Sachs doesn’t make the table. Goldman made it to number five last year and in 2006, and number eight in 2007, the data shows. JP Morgan was in the top ten last year and in 2007 and 2006 but doesn’t appear this year.

“Governments do not have the confidence that the excessive risk-taking culture of the big Wall Street banks has changed and they still cannot be trusted to put the stability of the financial system before profit,” said Arlene McCarthy, vice chair of the European parliament’s economic and monetary affairs committee. “It is no surprise therefore that governments are reluctant to do business with banks that have failed to learn the lesson of the crisis. The banks need to acknowledge the mistakes that were made and behave in an ethical way to regain the trust and confidence of governments.”

A Guardian article.

Stephen Gudeman’s post on the Association of Social Anthropologists’ Globalog series on the financial crisis:

Economists may see economies as flat or smooth plains consisting of markets and market-like behavior that lead to equilibrium situations, but I think they consist of overlapping and conflicting spheres of value and practices. I label these fuzzy-edged spaces House, Community, Commerce, Finance, and Meta-finance. The domains are separate but mingle; individuals and cultures emphasize them differently; their prominence changes over time; and they represent contesting interests and perspectives. The market part of economy, consisting of commerce, finance and meta-finance, often colonizes or cascades into the other two spheres, influencing them to conform to its pattern, although they also help structure market practices. These five domains – from house to meta-finance – exhibit increasing reach in space and inclusiveness of material activities, services, and institutions. They also are increasingly liquid: the speed and number of transactions multiply in the upper domains, especially in meta-finance. This liquidity and ability to shift resources and insert them into different parts of the economy give the upper spheres greater control of the economy and opportunities for sequestering value from elsewhere. Today, in high market economies the financial domains tend to dominate the others for they encompass all value or asset forms, such as land, manufacturing capacity, technology, capitalized human skills and ideas, as well as house production and community sharing.

And

My story is not finished. With other anthropologists, I have recorded how a house and communal economy that partly relied on self-sufficiency was destroyed by market expansion through the arrival of a cash crop, which was an innovation in the service of efficient production. This shift was driven by the search for profit through commercial operations. More recently we have lived through a commercial outsourcing revolution in high market economies, which includes downsizing to core corporate activities that produce a financial profit; it too is a revolution in efficiency and an example of creative destruction with task specialization. Now we are living through a crisis in the financial sector, done again in the name of enhancing efficiency in the use of capital, and fueled by a focus on “alpha.” Sophisticated professionals talk about the “search for alpha,” which was one of the mantras of Goldman Sachs in New York. Alpha is the label for the excess return relative to a benchmark index; or it is the abnormal return above the expected financial return. A calculated return about other returns (meta-finance), the profit of alpha lies at the center of the finance of finance sphere. Securing alpha became the core competence of financial firms. This ultimate profit on profit was the Holy Grail of Wall Street and the City of London. Economists may not speak about economic bubbles, but certainly we experienced one in the mortgage market, in the stock market and even in high-yielding instruments. But I think they were all facilitated by the bubble in meta-finance, which was the innovation or creation of new instruments, one after another, in an uncontrolled, competitive bout to out-do others and soak up finance. That bubble burst. For example, in 2007, Goldman Sachs’ supreme, task specific hedge fund, the Global Alpha Fund, managed12 billion dollars. But with the crisis, by mid 2008, it was worth 2.5 billion dollars, or 20% of that amount. By April 2009, Goldman Sachs had dismissed its founding managers, who had been lauded as the drivers of this “Cadillac of funds.” I think back to Marcel Mauss and his characterization of the Kwakiutl potlatch as the “monster child” of gift-giving. To gain prestige and out-do others, chiefs ultimately would burn blankets and throw pieces of copper into the sea. Was this destruction different from the financial potlatch in our metropoles?

Read it in full here.