勝者
Financial crises are also symbolic and
ritual events. Markets are embedded, among other ways, in the cultural
processes and arrangements that ground them. Financial crises strain the
metaphors that construct the cognitive framing of economic life. Those crises
invalidate the existing “maps of problematic social reality and matrices for
the creation of collective conscience” that guide economic behavior (Geertz
1973: 220). They depress the moods and motivations that economists describe as
“animal spirits” They disorient the social time, space, and identities that
mediate economic action. They undermine social solidarity. They disrupt the
interplay of structure and anti-structure. They blur the classificatory
boundaries believed to protect against the dangers of impurity. They highlight
the dark side of economic life—the corruption and bad faith, the impulsive
gambling, the suffering, the injustice, and the death of corporate actors— that
foregrounds urgent problems of meaning. All these destructive dimensions of
financial crisis involve cultural process, and they elicit
powerful ritual and symbolic responses.
At least in theory, a
serious financial crisis should evoke the “piacular” (atoning) response
Durkheim ([1912] 1995) describes in The Elementary Forms of the Religious Life. Even in modern societies,
organized more around detachment than commitment, where solidarity is based
less on the uniform nature of the conscience collective than on the interdependencies of individuals’
specialized self-interests, serious financial crises should at the least evoke
ritual acknowledgements of accountability by the parties responsible. An
“account,” in the classic definition of Scott and Lyman (1968: 46), is “a
statement made by a social actor to explain unanticipated or untoward
behavior,” which has the “ability to shore up the timbers of fractured
sociation, [the] ability to throw bridges between the promised and the
performed, [the] ability to repair the broken and restore the estranged.”
Accountability, though, is a condition that is increasingly difficult to
achieve in what I call “the no-fault society” (Jacobs 1990, 2005).
FINANCIAL
CRISES AS SYMBOLS AND RITUALS 377
Economic collapse destroys
established understandings and expectations, creating what Clifford Geertz
calls a need “to render otherwise incomprehensible social situations
meaningful, to so construe them as to make it possible to act purposefully
within them" In other words, the uncertainty produced by economic collapse
calls out the search for “maps of problematic social reality and matrices for
the creation of collective conscience” (1973: 220)—one of the
characterizations Geertz offers for the concept of “culture" Crises
occasion change in what Geertz (rather idiosyncratically, and in explicit
opposition to both strain theorists and interest theorists) calls “ideologies
as cultural systems” (1973: 193). Despite the more common usage of “ideology”
as a rigid system of belief that distorts rather than enables perception,
ideology in Geertz’s definition “names the structure of situations in such a
way that the attitudes contained toward them is one of commitment . . . by
objectifying moral sentiment through the same devices that science shuns, it
seeks to motivate action” (1973: 231).
Cognitive frames are both
made of mnemonic stuff and provide the stuff of memory. Just as our economy and
ecology create the limit conditions for our culture (as Marshall Sahlins (1976)
has convincingly argued), our culture provides the very categories for
understanding—and remembering—our economic and ecological choices. These cognitive
frames, as Geertz observes, take the form of metaphor. And as Gerald Suttles
discovers (Suttles with Jacobs 2010), the core metaphors of economic discourse
are changeable in subliminal ways. What do we even mean, for example, when we
speak of “the economy”?1
In comparing newspaper
coverage and more general public understanding of the two greatest crashes of
the last century (in 1929 and 1987), Suttles discovers that the modern usage of
the word “economy” (as a system of production, consumption, and exchange) did
not even exist in 1929. Indeed, according to his revealing linguistic research,
“economy” did not assume its modern usage until Keynes introduced it in 1934.
Discursively, the 1929 crash was a matter not of the “economy,” but only of
“the business.” The social landscape of business was conceived according to the
metaphor of nature—a sphere of activity naturally occurring and naturally
self-correcting. By contrast, by 1987, the social landscape of the “economy”
was conceived largely according to the metaphor of a machine, amenable to
social engineering. But it was a compound metaphor: perhaps as a vestige of the
earlier metaphor grounded in the figuration of nature, the economy was also conceived
to be “sick,” in need of therapeutic intervention.
In 1987, the economy was
viewed as if it were a “marvelous machine,” although a “sick” one. Those images
would have made better sense of the 1929 crisis than the ones available at the
time. But by 1987, the “machine” was no longer “marvelous”: a significant portion
of economic activity was taking the form of “cash for trash,” “daisy-chain land
flips,” and “busting out” banks. The combination of unlawful risk-taking,
collective embezzlement, and cover-up suggested
that a more apt image of the economy was that of the casino (Calavita,
Pontrell, and Tillman 1999). One of the best accounts of the transformation of
the economy over the past quarter-century was given by the deconstructionist
art critic Mark Taylor (2004: 174): “By the 1980s, the combination of
deregulation and privatization as well as new technologies, financial
instruments, and markets had turned Wall Street into a casino"
The “shadow” or “stealth”
banking, financial, or credit systems consist of the complex of unregulated,
secretive institutions—including divisions of certain investment banks, hedge
funds, private equity funds, insurance companies, special purpose vehicles, offshore
banks, and the like—that have engaged in intangible financial speculation
rather than genuine investment. Yet—according to a series of Lexis-Nexis
searches that I conducted in March 2009—it is only since 2008 that The New York Times has called the shadow economy by name, even
though those institutions have been recklessly leveraging risk for decades.
The spectral economy has been hiding in plain sight.
The set of metaphors that newspapers used to
describe the present crisis indicate the most recent shift in the figurative
ground of conceiving the economy. The economy is something that crashes when credit freezes, as the virtual or shadow banking system is disabled by a virus spreading in real time along the pathways of global networks. The economy is metaphorically becoming an
information system. Its core is being transformed into the vulnerable, digital
infrastructure of the global trading network. Of course, the economy remains a
compound metaphor, retaining vestiges of previous usages. When we speak of the
“business cycle,” we are alluding to its grounding in the figuration of nature;
when we speak of “jump-starting” the economy, we are alluding to the figuration
of the machine. It was not until the present crisis that we started thinking of
the economy primarily as a computer network. Starting in November 2008, for
example, General Electric’s Jeff Immelt repeatedly declared, “If you think
this is only a cycle you’re just wrong. This is a permanent reset” (e.g.,
Hamilton 2009).
Financial
crisis as symbolic action 金融危機的象徵作用 p.378
These shifts in core
metaphors indicate (in Geertzian usage) ideological shifts. Ideologies “come
most crucially into play in situations where the particular kind of information
they contain is lacking, where institutionalized guides for behavior, thought,
or feeling are weak or absent. It is in country unfamiliar emotionally or
topographically that one needs poems and road maps” (Geertz 1973: 218). They
draw their power “from [their] capacity to grasp, formulate, and communicate
social realities that elude the tempered language of science . . . [and to]
mediate more complex meanings than [their] literal reading suggests” (210). In
this, they draw on the power of metaphor (among other literary tropes) that
“derives precisely from the interplay between the discordant meanings it
symbolically coerces into unitary conceptual framework[s]” (211). Ideologies,
thus, are elements of what Geertz, following Kenneth Burke, calls “symbolic
action” — action that, by “signifying,” itself
generates the “meanings and motivations” at the core of human agency.
p.378
Ideologies — like all cultural systems for Geertz — represent models that are
reflexively at once of and for realities otherwise inchoate and unknowable. Suttles
charts changing “wordscapes” to provide a more programmatic and detailed
description of the Burkean personae, plots, and dramatisms
animating the front-page newspaper coverage of the 1929 and 1987 financial
crises (Suttles with Jacobs 2010).
If today we take for granted
both the logic and the legitimacy of the financial system, that is only because
of a long cyclical historical process, punctuated by crises, of “naturalizing”
a set of institutions that once did not even exist and were initially greeted
with public skepticism. As Mary Poovey (2008) documents, the three “genres of
the credit economy” in Britain—paper currency and other financial instruments,
journalistic and novelistic fiction dealing with financial topics, and
“scientific” theories of the credit economy—were all cultural inventions of the
seventeenth and eighteenth centuries, which developed in symbiotic
contradistinction to one another. It took centuries for each to establish its
validity and value, by overcoming its own “problematic of representation.”
Financial manias and panics played a large role in these inventions and their
development.
Especially before printing
presses were able to produce uniform offset impressions, for example, it was
always doubtful whether paper currency was valid or not. The invention of joint
stock companies at the end of the seventeenth century compounded this
confusion; people’s doubts that paper currency would keep its value were
increased by the issuance of paper stock certificates which were intended to fluctuate in value. The bursting of the
South Sea Bubble in 1720 magnified these doubts to their highest level, in the
context of popular outrage over the trickery involved in that bubble. The
series of frequent financial crises in the nineteenth century (in 1825-6,
1836-7, 1847-8, 1857, 1866, and 1890), all exhibiting the classic pattern of
mania leading to panic, caused people to doubt that the credit economy was
stable, or that the “expertise” of economic theorists was in any respect more
valid than financial fiction. Ironically, it was the fiction of novelists and
investigative journalists that helped create trust in the financial system. The
verisimilitude of their fictionalized accounts of the varieties of financial
fraud reassured the anxious public that normative standards could exist for
financial activity. This type of journalistic fiction, as well as psychological
novels about manias and panics, helped educate people not only about the abuses
of the financial system, but also about its possible benefits and its normative
ideals. Finally, in Poovey’s narrative, it was W. Stanley Jevons who sold the
public in the late nineteenth century on the validity of “expertise” about the
economy. Even though economists were (and largely remain) unable to predict
financial crises, and even though Jevons’ causal logic was spurious, his use of
statistical methods to demonstrate the effect of sunspot activity on manias and
panics finally convinced an anxious public about the scientific legitimacy of
his discipline of economics.
Poovey’s narrative complements that of Alex
Preda (2005, 2009), who tailors what could be described as a multidisciplinary “archeology-of-knowledge”
approach to trace the transmutation of the investor as a “figure.” In the
context of the first wave of globalization, and facilitated by the invention
of the stock ticker and the telegraph, the investor was transfigured from a gambler,
as he was imagined in the eighteenth century, to a scientist, as he became in
the nineteenth. The twentieth-century practice of charting and analyzing stock
price movements became the symbolic foundation of financial “science.” The
twentieth-century invention of investment opportunity as a civil right further
strengthened the public acceptance of financial thought and practice.
Animal spirits as moods and motivations 動物精神作為情緒和動機 p.380
Both Poovey and Preda, then,
explain the genesis and legitimation of the developing ideology (in Geertz’s
sense) of finance. Preda conceives “the finance-centered worldview” a中界s
“something that works, in part, as a definitional and classificatory system
allowing the representation of the social world as orderly” (2009: 202). His Framing Finance in effect instantiates Geertz’s concept of
ideology in another respect as well, by detailing what Geertz alternately calls
the “moods and motivations” and “meanings and motivations” embodied by this
ideology. Through its effect on these moods and motivations, the variable
legitimacy of financial ideology is even more fundamental to the health of a
financial system than margins of solvency and liquidity, as John Maynard Keynes
and his followers recognize in their discussion of “animal spirits.”
As Preda describes it, the “generative
principle” of the “finance-centered worldview”
is that of a tension between financial activities as
grounded by knowledge and observation, on the one hand, and the very same
activities as being driven by a vital force, irreducible to knowledge, on the
other. Financial speculation requires knowledge, diligence, skill, and
calculation; at the same time, it embodies a force one is born with or not.
(Preda 2009: 202)
Preda (2009: 227) finds that
“general conceptualizations of panic echo the general theme of a loss of vital
force.” This “vital force” is a type of charisma. It is akin to the Keynesian
notion of “animal spirits,” which figures prominently in Keynes’ analysis of
the cause of the Great Depression.
As Robert Shiller, perhaps the foremost
contemporary Keynesian, defines it:
The term “animal spirits,” popularized by John Maynard
Keynes in his 1936 book “The General Theory of Employment, Interest, and
Money,” is related to consumer or business confidence, but it means more than
that. It refers also to the sense of trust we have in each other, our sense of
fairness in economic dealings, and our sense of the extent of corruption and
bad faith. (Shiller 2009: A15)
With his colleague George
Akerlof, Shiller (Akerlof and Shiller 2009) adopts the spirit of Keynes in
identifying the existence of a “confidence multiplier,” analogous to the other
“multipliers” (investment, consumption, or government expenditure multipliers)
that economists observe. As with those other multipliers, a single-unit gain or
loss of confidence produces a multiple-unit gain or loss of income.
Liminality 中界 p.381
The power of culture to orient human action extends to its capacity to shape time. The physical properties of time are inviolable. Time as duree, in Bergson’s sense, is an inexorable, indivisible flow. This flow constitutes the “timeworld” that Karin Knorr Cetina (2005) identifies as the organizing focus of global finance. As a matter of physics, time can never be stopped and restarted, or divided into discrete segments. As the Greek philosopher Xeno demonstrated through his famous paradox, if you assume the ability to start and start time in analyzing a race as a series of discrete segments, you can prove the absurd claim that a faster runner can never quite catch up to a slower one. And if—as is of course established practice on Wall Street—you divide time into yearly intervals for accounting purposes, to allocate as bonuses portions of short-term “winnings,” employees can leave before having to reckon with their nearly inevitable and possibly catastrophic longer-term losses. It might even be argued that financial capitalism inevitably fails because it represents the attempt to commodify time in a manner that is logically nonsensical.
The power of culture to orient human action extends to its capacity to shape time. The physical properties of time are inviolable. Time as duree, in Bergson’s sense, is an inexorable, indivisible flow. This flow constitutes the “timeworld” that Karin Knorr Cetina (2005) identifies as the organizing focus of global finance. As a matter of physics, time can never be stopped and restarted, or divided into discrete segments. As the Greek philosopher Xeno demonstrated through his famous paradox, if you assume the ability to start and start time in analyzing a race as a series of discrete segments, you can prove the absurd claim that a faster runner can never quite catch up to a slower one. And if—as is of course established practice on Wall Street—you divide time into yearly intervals for accounting purposes, to allocate as bonuses portions of short-term “winnings,” employees can leave before having to reckon with their nearly inevitable and possibly catastrophic longer-term losses. It might even be argued that financial capitalism inevitably fails because it represents the attempt to commodify time in a manner that is logically nonsensical.
However, as Durkheim would
have us observe, financial crisis as ritual does have the power to shape social time. In periods leading up
to financial crisis—periods of speculative bubbles—there is a sense in which
time does quicken; in the heart of crisis, when credit evaporates and the
market seizes up, there is a sense in which time does stop; as the crisis
lifts, there is a sense in which time does restart, although slowly at first.
In the heart of the crisis, state and market officials have to consider closing
the markets, or deciding not to reopen them; in serious crises, governments
have to bail out financial firms—intervene as lenders of last resort—in order
to avoid those calamitous outcomes.
The ritual process in which the flow of
social time is suspended is one of liminality, to use a concept developed most influentially by
Victor Turner. As Turner characterizes ritualized processes of status
transition in an interregnum:
The first phase, separation, comprises symbolic
behavior signifying the detachment of the individual or the group from either
an earlier fixed point in the social structure or from an established set of
cultural conditions (a “state”). During the intervening liminal period, the
state of the ritual subject . . . becomes ambiguous, neither here nor there,
betwixt and between all fixed points of classification . . . In the third phase
the passage is consummated and the ritual subject . . . reenters the social
structure. (Turner 1974: 232)
Liminality, according to
Turner, is characterized by properties of communitas, a leveling of normally prevailing status distinctions
in a spirit of heightened community; and antistructure, a symbolic inversion of normal structure.
Andrew Ross Sorkin’s Too Big to Fail, a “behind-the-scenes” journalistic reconstruction
of the critical stage of the current crisis, well illustrates the liminal
nature of the discovery and negotiation process that barely averted the
financial system’s total collapse. Treasury and Fed officers, Wall Street
bankers, their lawyers, and their staffs worked around the clock and through
the weekends to work out the resolution of Lehman Brothers and AIG, among other
firms. When New York Mayor Michael Bloomberg first heard from Treasury
Secretary Hank Paulson about the seriousness of the crisis, for example, he
told his deputy mayor to cancel their planned trip to consult the Governor of
California. As the usually composed Bloomberg explained, “the world is about to
end” (Sorkin 2009: 369).
Liminal rituals (as
suggested by Robin Wagner-Pacifici’s (2005) study of The Art of Surrender) transform and reconstruct individual and
group identities by managing what the linguistic anthropologist Michael
Silverstein terms “deictic deferrals,” the copresence of uncoordinated or contradictory
deictics or “shifters” (pronouns and adverbs of time and space whose referents
are changeable according to context) within a given situation. Where, at this
moment, is “here”? When, in this spot, is “now”? Who, in this spot at this
moment, are “we”?
On the morning that Bank of
America was taking over the distressed Merrill Lynch, for example, when the
used-to-be-Merrill and about-to-be Bank of America executives entered their
headquarters from the street, were they entering the Merrill building or the
Bank of America building? As they crossed the threshold (whose Latin word, as
Turner points out, is limen, the root of “liminal”) with only partial knowledge of the stock buyout
negotiations, was it still their last Merrill work day, or already their first
for Bank of America? Were they already out, or only on their way? This, at it
turned out, was a matter of more than academic interest, since a public scandal
erupted over the precise moment—before or after that temporal threshold—when
those manifestly undeserving executives exercised the authority to treat
themselves to generous bonuses.
Who, in this spot and moment, are “we”?
Sorkin reports an awkward meeting—after preliminary talks had encountered a
hitch—between JP Morgan’s head of investment banking (Douglas Braunstein), who
as assigned by the Fed had been inspecting the books of the distressed AIG to
work out the terms of an anticipated buyout, and two lawyers for AIG (Michael
Wiseman and Jamie Gamble) who had been working closely and cordially with him:
“Listen, we don’t have a lot of time and we
could use your help with some of the numbers,” [Wiseman] told [Braunstein]
angrily after pulling him out of the room. “But we need to know which hat
you’re wearing. Are you working for us, the Fed, or JP Morgan?”
“I don’t think I can answer
that question without talking to my lawyer,” Braunstein said after a pause . .
.
When he emerged a few
moments later, he said stiffly to Wiseman: “I can’t talk.
You should contact Treasury directly.”
“Okay. Thanks,” Wiseman
said, putting out his hand to shake it, but Braunstein only turned around and
returned to his meeting. (Sorkin 2009: 395-6)
Sorkin’s evidence also illustrates communitas. Despite the norms of competition and even
conflict that govern relations within and between groups of investment banks,
central banks, and national and international regulatory agencies, the players
in this financial community not only worked together in a spirit of solidarity
during the crisis, but dramatized ceremonial solidarity. When Jamie Dimon, CEO
of JP Morgan, first informed Braunstein that they were going to work with
Goldman Sachs to attempt to forestall the collapse of AIG,
a look of horror came over Braunstein’s face
as he asked, raising his voice, “Where the hell did Goldman Sachs come from?
Don’t they have a conflict? I mean, look at their exposure to AIG. They’re a
huge counterparty.”
Dimon dismissed his concerns. “The U.S.
government is telling us to do this,” he repeated . . . “We’ve been asked to
help fix this situation.” (Sorkin 2009: 375)
Similarly, even after
Goldman’s CEO had called Dimon to stop spreading false rumors about his firm,
newspapers and television carried shots of the two of them walking side by side
and chatting amiably as they left a special meeting called by President Obama
in the White House. In an informal joint interview outside, they evinced
nothing but a spirit of cooperation.
Communitas spilled over into the popular culture. After a
muckraking journalist wrote that “The world’s most powerful investment bank is
a great vampire squid wrapped around the face of humanity, relentlessly jamming
its blood funnel into anything that smells like money” (Taibbi 2010: 209), the
CEO of Goldman demonstrated his bonhomie by contributing a promotional blurb
for the book featuring that critical essay: “Oddly enough, the Rolling Stone article tapped into something. I saw it as
gonzo, over- the-top writing that some people might find fun to read.”
It is difficult not to find,
in Sorkin’s account of shock followed by a frenzied sequence of multiparty
negotiations, evidence of Fred Block’s classic suggestion that “the ruling
class does not rule” ([1977] 1987), that history (in Marx’s phrase) unfolds
“behind the backs” of the ruling class. Lehman CEO Dick Fuld was caught utterly
unawares of his firm’s dire financial situation. Lurching anxiously from one
financial fire drill to the next, Treasury Secretary Hank Paulson repeatedly
had trouble keeping down his food. Block emphasizes the political imperative
to maintain business confidence, since political action requires increased
revenues in order to keep the working class in check.
Greta Krippner (2011) updates
and elaborates Block’s insight. She sees the current crisis as structural, the
unwitting and unforeseen result of decades of inflation and finan- cialization,
enabled by politicians eager to disguise and defer as long as possible acute
problems of allocating scarce resources among the limitless demands of
competing groups, in the context of fiscal and legitimation crises. Inflation
made it possible to provide mortgages and other benefits to the populace,
while foreign investment relieved the relative failure to increase domestic
capital accumulation. Financialization generated huge new profits—by 2001,
financial profits comprised fully 40 percent of the nation’s total—as
production and service profits stagnated.
In the liminal financial
crisis, the world turns upside down. Financial profits vanish or drop
precipitously. The US Congress suspends its oversight powers, passing unpopular
and incompletely specified emergency legislation drafted by the Treasury, when
confronted by the threat of financial apocalypse. The government makes huge
transfer payments to banks, in the name of helping the people. Wall Street
executives, who had justified their exorbitant compensation on the grounds of
exceptional competence and hard work, confess to having been incapable of
foreseeing collapse. Legislators who had dismantled government regulation
hasten to increase and strengthen regulatory regimes—at least initially, with
pledges of cooperation from Wall Street. Famously private investment banks launch public relations campaigns,
claiming to operate in the public interest (“Goldman Sachs
fosters innovation and creates jobs,” proclaimed the firm’s website after the
crash). As a case in point of the symbolic constitution of crises, these
investment banks engage in discursive “code-switching,” emphasizing the set of
performative terms (e.g., open vs. secretive, trusting vs. suspicious,
altruistic vs. greedy, truthful vs. deceptive) that Jeffrey Alexander and
Philip Smith (1993) identify as signifying commitment to “civil” rather than
“anti-civil” relations.
Before the crisis, the US economy was seen
as the pillar of the world. As the crisis broke, it came to be seen instead as
the source of global financial pollution.
The approach taken to remove
“toxic assets” from the portfolios of investment banks is yet further evidence
of the ritual nature of financial crisis. Indeed, the creation of the
Treasury’s “Troubled Asset Relief Program” (TARP) in the fall of 2008 can best
be understood as a case study in Mary Douglas’ anthropological theory of
“purity and danger.” The concluding chapter of her book by that name (1966) is
entitled “The System Shattered and Renewed.” Akin to Victor Turner, Douglas
addresses the core Durkheimian problem of maintaining “classificatory
solidarity.” Adopting Durkheim’s assumption that classification schemes are social facts, Douglas argues that—not just in primitive
religions—”danger” takes the form of pollution: “matter out of place” that disrupts
the coherence and hence purity of cosmologies.
In her most famous
application of this thesis, Douglas analyzes the dietary code prescribed in Leviticus as the expression not of hygienic concerns
but rather of symbolic order. Since each of the biblical dietary injunctions
“is prefaced by the command to be holy, so they must be explained by that
command. There must be contrariness between holiness and abomination which will
make over-all sense of the particular restrictions”
(Douglas 1966: 49).
“Holiness means keeping distinct the categories of creation. It therefore
involves correct definition, discrimination, and order” (53). It was originally
forbidden to eat pigs, for instance, because “as cloven-hoofed but . . . not
ruminant,” they ambiguously straddled two classes of animals that culturally
were supposed to be kept apart. “In general the underlying principle of
cleanness in animals is that they shall conform fully to their class. Those
species are unclean that are imperfect members of their class, or whose class
itself confounds the general scheme of the world” (55). Pollution laws, then,
are essentially expressive rather than instrumental.
The expressive logic of the TARP program
explains its enactment better than its instrumental logic. Confronted with the
imminent danger of a global credit freeze, the Treasury department proposed
this program in the face of such intense political opposition that it failed
Congressional passage on first try, as well as opposition from the banks
themselves which resisted the conditions of government supervision. And when
finally enacted, it did almost nothing to loosen credit. Indeed, the initiative
would have died after its original defeat, had not an adviser to the Treasury
secretary redesigned it—despite its name—as a straightforward capital infusion
to the banks. As it turned out, the concept of “purifying” the bank portfolios
by “separating out” their “toxic assets” was entirely unfeasible. As Treasury
officials later realized, because no one in their right mind would be willing
to buy those assets there was no way to price them. And (although this was not
to my knowledge ever officially acknowledged) it is hard not to imagine that so
much of the financial paper was wrapped around “junk,” that it was impossible
to sift out the assets that were financially sound. Despite the realistic
impossibility of isolating “troubled assets,” the
second draft of the TARP legislation kept its misleading original name for its symbolic promise of warding off the danger of global
financial collapse.
The danger that toxic assets
will contaminate sounder ones represents but one “dark” facet of the market. Akerlof
and Shiller (2009: 26) discern among the animal spirits some sources of the
“economy’s sinister side”: they attribute some economic fluctuations to
“changes over time in . . . outright corruption,” and even more significantly,
in “bad faith—economic activity that, while technically legal, has sinister
motives.” Preda (2009: 200) locates the deep-rooted “dark side of the market”
in the dialectical struggle at the heart of Dostoevsky’s The Gambler between the economic actor as the
disciplined, patient accumulator of capital, on the one hand; and the economic
actor as impulsive gambler, on the other. This dark side is an inevitable
product of capitalism: “the individualization inseparable from the process of
accumulation creates a time horizon which undermines the notion of
multigenerational accumulation.” And in perhaps his best- known essay, Clifford
Geertz explores the dark side of economic life through his “textual”
interpretation of the “Balinese cockfight.”
Above all, according to
Geertz, to the Balinese the cocks symbolically express animal- ity, the
antithesis of humanity. “In identifying with his cock, the Balinese man is
identifying not just with his ideal self, or even his penis, but also, and at
the same time, with what he most fears, hates, and ambivalence being what it
is, is fascinated by—‘The Powers of Darkness’ ” (1973: 420). Perhaps for the
same reason that the separate groups of dispossessed South American peasants
forced into wage labor, studied by Michael Taussig (1980), develop devil myths
precisely at the time they become proletarianized, Geertz reports “that in
seeking earthly analogues for heaven and hell the Balinese compare the former
to the mood of a man whose cock has just won, the latter to that of a man whose
cock has just lost” (Geertz 1973: 421).
Cockfights are, of course, highly gendered
and sexualized rituals, and, along with other meanings, cocks symbolize penises
to the Balinese. Genital imagery suffuses trading and investment banking as
well. In the everyday jargon of financiers, “BSD” (for “big swinging dick”) is
the designation (as well as self-designation) for investment bankers. The
ethnographer Caitlin Zaloom (2006: 95) notes that the pits of the Chicago Board
of Trade are the site of a fully routinized cockfight, and that when a trader
describes himself as “big,” he is referring to his phallus. “Men manage their
associations with other men in an idiom of homosexual humor that plays on the
paradigms of masculine domination” (Zaloom 2006: 122). As she goes on to
elaborate:
Bodies dominate the metaphors of economic
competition. Fucking and being fucked are the conventional expressions of
financial dominance and ruin. Traders
use the full range of sexual
words of insult and debasement__ The
swearing focuses
on bodily words, especially
organs that penetrate or can be penetrated___ Traders
describe financial losses in
bodily terms of sex and violence___ The
deeply physical
expression of power and competition makes explicit the
will to dominate through economic competition. Each deal parades the speaker’s
masculine potency in front of other men. (Zaloom 2006: 123)
Many of Geertz’s
observations of gambling patterns surrounding the Balinese cockfight apply as
well to the financial markets of a casino economy. Much betting activity
represents what Geertz (following Jeremy Bentham) terms “deep play”—gambling in
which the costs of possible failure so outweigh the benefits of possible
success that there cannot be a rational motivation to engage in it. Bets tend
to be relatively balanced in the center, relatively unbalanced on the side.
The larger the central bet, the more tempting to bet short. People can borrow
freely to make a bet but cannot borrow once they are in one.
Because modern financiers
can often “rationalize” risk—for example by securitizing risky assets and
selling them off quickly—much of their behavior does not constitute “deep
play.” But why would any financiers engage this form of deep play at all, with
all they stand to lose? Precisely because it is an irrational exercise of their animal spirits. In a similar way to the
Balinese cockfight, Wall Street is (in Geertz’s term, borrowed from Goffman) a
“status bloodbath.” Preda (2009: 206) notes that the rogue trader who cost the
French Bank Societe Generale 7 billion dollars in 2008 (as a harbinger and in
some accounts even a partial trigger of the global financial crisis) was
primarily motivated by “the desire . . . to be acknowledged as equal to the
stars of the trading floor, to overcome his status as a lesser trader, and to
be shown the respect and consideration he thought he had deserved.” It turned
out that in large measure, what had helped make those envied traders “stars”
was a surprisingly common practice of deception enabling them to exceed allowable risk.
Thus the Wall Street ritual
shares at least some motivation with the Balinese one. As Geertz (1973: 444)
says of Bali, “joining pride to sel&ood, sel&ood to cocks, and cocks to
destruction, it brings to an imaginative realization a dimension of . . . experience
normally well-obscured from view.” What the cockfight dramatizes is (in Mary
Douglas’ term) the normalized “abomination” at the heart of capitalism. It is
(in Victor Turner’s term) the “anti-structure” normally hidden, in non-liminal
periods, by its dialectical entwinement with “structure.”
For Geertz, a society contains its own
interpretation. Culture is the assemblage of interpretations, “webs of
significance” that people themselves have spun and in which their lives are
suspended. It is created semiotically and self-reflexively, without any ultimate
ontological grounding. Geertz expresses this condition most graphically by
means of a fable:
There is an Indian story—at least I heard it
as an Indian story—about an Englishman who, having been told that the world
rested on a platform which rested on the back of an elephant which rested in
turn on the back of a turtle, asked (perhaps he was an ethnographer; it is the
way they behave), what did the turtle rest on? Another turtle. And that turtle?
“Ah, Sahib, after that it is turtles all the way down.” (Geertz 1973:
28-9)
But if the everyday action
on the trading floor represents a routinized form of cockfight, what can we say
about the financial crisis, where the “status bloodbath” is extraordinary in its
scale, and revision of the constitutive rules of the financial system itself is
at stake? As Neil Fligstein (2001) explains, serious financial crises present
the only realistic opportunities to revise the rules—of property rights,
governance structures, exchange, and control—that determine the architecture of
markets and stabilize the dominance hierarchy of economic and financial firms.
In asserting that the aim of interpreting culture is to ascertain “its social
ground and import,” Geertz emphasizes the interplay of violence, power, and
economics that at once shapes and reflects culture. Financial crises play out
in institutional contexts that have developed in a cumulative and
path-dependent fashion; a primary outcome of each crisis is revision of that
institutional context, helping to establish the new terms in which the emergent
financial system and its subsequent crises play out in turn. Think, for
example, about the way that the Glass-Steagall Act and the establishment of the
Securities Exchange Commission (SEC) helped shape financial activity for the
first half-century after the Great Depression. Each crisis produces a cultural
legacy for all subsequent ones in the evolving collective memory, even as the
features of the institutional context change; in a very real sense, then, each
financial crisis rests on another financial crisis, “all the way down.”
Cockfights, purification rituals, and
liminal rites of anti-structural societal transformation are all variants of
the ceremonial acts Durkheim classifies as piacular:
There are sad ceremonies as
well, whose purpose is to meet a calamity or to remember and mourn one I propose to call ceremonies of this type
“piacular.” Any misfortune, anything that is ominous, and anything that
motivates feelings of disquiet or fear requires a piaculum and is therefore
called “piacular.” (Durkheim [1912] 1995:
392-3)
When society is going through events that sadden,
distress, or anger it, it pushes its members to give witness to their sadness,
distress, or anger through expressive actions. It demands crying, lamenting,
and wounding oneself and others as a matter of duty. It does so because those
collective demonstrations, as well as the moral communion they simultaneously
bear witness to and reinforce, restore to the group the energy that the events
threatened to take away, and thus enables it to recover its equilibrium.
(Durkheim [1912] 1995: 415-6)
No less than “positive”
rituals, in Durkheim’s terms, “negative” ones are also necessary to create the
“collective effervescence” that generates communal solidarity.
This Durkheimian insight
helps inspire Jeffrey Alexander’s (2006) more contemporary theory that “the
civil sphere”—the sphere of communal solidarity—resists encroachments by the
state and the market. Alexander’s theory is not only his answer to critical
theory but also a necessary complement to the “institutionalist” theory of
formal organizations, which would emphasize that financial systems need to
fashion their formal structures “isomorphically” with their political, legal,
and economic environments (e.g., Meyer and Rowan 1977) or their organizational
fields (DiMaggio and Powell 1983). Alexander (and I) would insist that public
rituals of accountability are also necessary to restore legitimacy to the
financial system after a financial crisis.
As opposed to Alexander,
however, I do not take it for granted that the civil sphere can be successful
in enforcing (or even appointing or conceiving) accountability for financial crisis.
Indeed, although the outcome of the current financial crisis is not yet known,
there has so far been a striking absence of piacular response, by contrast to
previous crises. In the midst of the Great Depression, for example, the Pecora
Hearings provided a national spectacle that clearly revealed the financial and
political “web of corruption” at fault, and compellingly indicated a course of
legislative reform. By contrast, the legislative commission that bore a
similar charge today—the Financial Crisis Inquiry Commission (FCIC)—attracted
relatively little attention and with good reason, since partisan differences
among the committee members prevented it from even agreeing on a common
report.
As Gerald Suttles
demonstrates in Front Page
Economics
(Suttles with Jacobs 2010), the Pecora Hearings, open Congressional
investigations held from 1932-4, effectively seized public attention and
focused civic outrage by making clear the causes of the Great
Depression. Daily
transcripts appeared on the front page of The New York Times and other newspapers. Pecora’s thorough questioning of
witnesses was unfailingly quiet and gentle; he skillfully elicited
inconsistencies among witnesses but never challenged the frequent memory lapses
or other evasions through which many witnesses impugned themselves. Slow-paced,
unsensational, and nonconfrontational, these hearings nonetheless established
a memorable and persuasive “grammar of motives” to explain the causes of the
1929 crash.
In the end, Pecora encapsulated this
narrative in the metaphor “web of influence,” which he went so far as to
diagram, naming names, in open hearing. But the revelation of systemic
weaknesses that would inevitably lead to political corruption and fraud in the
banking and securities markets dramatized the need for new banking regulations,
and led directly to passage of the Securities Act of 1933, the Securities and
Exchange Act of 1934, and the Glass-Steagall Act of 1934. Not a single individual
was even indicted as a result of these hearings, because the point was to
elucidate and communicate the crisis of capitalism. But the clear appointment
of accountability helped repair the breach that the Depression created in the
civic sphere. The resulting legislation established a regulatory structure
that served to prevent or dampen similar crises for roughly the next halfcentury.
Financial firms could begin to regain lost legitimacy by incorporating into
their formal structures these new “institutional rules which function as myths”
(Meyer and Rowan 1977: 345). And effective mass working-class movements helped
pressure Franklin Delano Roosevelt to institute New Deal social welfare and
insurance measures as extensions of citizenship rights.
The current global financial
crisis has seen no such developments. Congressional hearings have produced
more spectacle than information. Some measures have in fact only increased the
risks of subsequent crises. Unions have been stripped of important rights in a
growing number of states, and no effective mass working-class movement has
arisen. As of the time of this writing in March 2011, no one has been punished
for wrongdoing contributing to the financial collapse. By contrast, in the savings
and loan crisis of the late 1980s, the Department of Justice (with much more
support from the FBI than is available today) won felony convictions against
approximately a thousand officers of failed thrifts (Nocera 2011). Nor have any
Wall Street banks encountered serious sanctions.
The FCIC, created by an act
of crisis to investigate and report the causes of the crisis, was unable to
issue a report acceptable to members of both parties. Indeed, not only were the
Republican members of the Commission unwilling to agree with the Democrats,
they were not even willing to agree among themselves. The five Democratic
members of the Commission issued the majority report; three Republican members
issued one dissenting report, while another Republican member issued a separate
dissent. The Democrats’ major claim was that “this crisis was avoidable” (FCIC
2011: xvii). The three Republicans’ major claim was, in effect, that bubbles
happen: “a credit bubble appeared in both the United States and Europe” (FCIC
2011: 414). In terms of literary genres, the Democrats narrate the creation of
the crisis as a comedy, the work of villains; the Republicans, as a tragedy,
largely exculpating the financiers, policymakers, and regulators involved.
Instead of engaging public attention and focusing public anger, as the Pecora
Commission had done, the FCIC diffused interest and focus. The disagreement
among Commission members delayed the release of any findings until it was too
late to affect the drafting of the Dodd-Frank Reform Act, and indeed even until
after the Commission’s mandated formal deadline.
The effectiveness of the
omnibus provisions of the Dodd-Frank Act remains unclear as of this writing.
The devil will be in the regulatory details, which are not yet known. But it is
hard to imagine that those details will not reflect the intensive lobbying of
Wall Street. It is already clear that the bill does not address many of the
causes of the crisis. It assigns greater oversight responsibilities to the very
agency—the Federal Reserve Board (FRB)—whose lax oversight helped breed the
crisis in the first place. It also assigns increased oversight responsibilities
to an agency—the Security and Exchange Commission (SEC)—whose budget is
already under severe attack. It exempts from transparency requirements
specially tailored derivatives (which can be riskier than standard ones) and
foreign currency derivatives, among the largest class of derivatives.
The current global financial crisis, then,
exemplifies what I have termed the “no-fault society.” Characterized by constrictive individualism, the blurring of public and private, and laxity of the rule of law, the no-fault society
corrodes not just the mechanisms but the very bases of accountability. Parties
to this financial crisis can exploit the fragmented rationality inherent in
their specialized division of labor to disclaim their own responsibility. Real
estate speculators, mortgage brokers, mortgage consolidators, community
bankers, investment bankers, central bankers, rating agents, accountants,
lawyers, analysts, reporters, regulators, politicians—all blame each other in
disavowing their own complicity in the crisis. “Constrictive individualism”
(the belief in which and triumph of which, ironically, result in large part
from institutional practices) is illustrated by the compensation structure of
Wall Street, awarding outsize annual bonuses for taking “tail risks,” with no
penalty for failure. (Even the new “clawback” provisions that some banks are
instituting in their distribution of bonuses are likely to expire before the
failures of most “tail risks” will become apparent.) Constrictive individualism
is illustrated as well by the design of certain financial instruments without
material referents and hence without social value except as chips in the
“casino economy.” It is also illustrated by the practice of prosecuting
individuals instead of clarifying the systemic nature of the crisis. The
“blurring of public and private” is perhaps best illustrated by the
governmental bailouts and access to the 90-day Fed discount window of
financial firms “too big to fail,” as well as the governmental failure even to
place restrictions on compensation packages funded with taxpayers’ money; the
effect is to publicize risk while privatizing profit. Inviting Goldman Sachs
and Morgan Stanley to become bank holding companies—with access to the discount
window, and with even greater implicit government guarantee against possible
failure—only amplifies the “too big to fail” conundrum that played such a significant
part in causing the crisis in the first place. “Laxity of the rule of law” is
illustrated by the period of chronic financial deregulation in the run-up to
collapse, as well as the inability to identify illegal behavior.
The failure (thus far) to
enforce, much less appoint, much less even conceive accountability for the
current global financial crisis is most puzzling and troubling, since accounts
of breaches are essential to the renewal of social order. Geertz’s Aristotelian
analysis of the cockfight applies with equal force to the financial crisis.
“Its function, if you want to call it that, is interpretive: it is a
[community’s] reading of [the community’s] experience, a story [we] tell
[our]selves about [our]selves” (Geertz 1973: 448). Without the ability to
appoint accountability, we cannot finish the story. And if we cannot finish the
story, we cannot achieve closure through performance of the piacular ritual. We
cannot complete the liminal transition to collective renewal; without accounts
of how we became buried in “junk,” we cannot reduce the contamination of
financial assets. We cannot dispel the mood of disquiet that inhabits our
collective consciousness; the animal spirits will remain weak. The civil sphere
cannot regain its integrity. Our collective memory will not equip us to
strengthen the institutions of our financial life or to discern the reasons for
the next crisis. It is in all these senses that the material logic of financial
crisis is embedded in a cultural one, a logic of symbol and ritual.
The general attitude of “no-fault” does not
stop financial actors—to some degree, all of us—from continuing to muddle
along. As Jaeger and Selznick (1964: 658) observed in a seminal but
underappreciated article a half-century ago, “of the lessons of our age not
least important is the truth that society can persist despite the attenuation
of cultural meaning, the emptying-out of symbols, the transformation of
institutions into organizations.” But, as they argue, culture should be conceived
normatively—that is, able to be
critically evaluated according to its purpose, which is “to make the world rich
with personal significance, to place the inner self upon the stage, to
transform narrow instrumental roles into vehicles of psychic fulfillment”
(Jaeger and Selznick 1964: 659). Particular symbols and rituals vary in quality
and effect. We can muddle along, in the spirit of no-fault, without effective
cultural response to this financial crisis—but we do so at a cost to our
vitality, our fulfillment, our very humanity.
1. The following section is largely taken
from my foreword to Suttles and Jacobs 2010.
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