Futures, Financial Trading and Anthropology

Introduction

Expansive, abstract and originally Euro-American, financial trading practices seem like something anthropology cannot study. But the discipline is no longer about the epistemologically troublesome search to explain and integrate how and why different ‘cultures’ do things differently. It should be about the reflexive hermeneutic task of reassessing the anthropologist’s own socially formed categories through the embodied encountering of other ontological orders (Henare, Holbraad, Wastell, 2006). As such it is crucial for anthropology to grapple with something so seemingly big and premised on the familiar Enlightenment division of the universe into the internal mind and external, mechanised matter. In this essay, I will discuss the light that an ethnographic focus and an anthropological analysis shed on financial trading practices. It is valuable for three main reasons. First, ethnographic research helps to develop an understanding of the economy that goes beyond the inert neoclassical vision of a natural, self-regulating system. Second, focusing on financial trading helps in the hermeneutic project of documenting encounters with different human practices and elucidates generalizing meta-theories of modernity. Third, contrasting ethnography and anthropology helps to develop an understanding of the dynamic between the image of human practices analytically isolated, and the fluxing nature of them in their social contexts. In exploring different analyses of financial trading practices, I will develop an argument, following Ingold (2008), which differentiates ethnography and anthropology. At a time when ethnography no longer sets anthropology apart from other disciplinary studies of human being, it becomes essential to firmly establish the anthropological approach.

Beyond the Neoclassical Image

Economic theory opposes externalities — situations when the utility of an agent depends directly on the actions of another agent- and internalities- situations where people do not consider all of the possible consequences of their actions on themselves due to “bounded rationality, unawareness, and inattention” (Spinnewijn, 2009). These concepts are central to Rational Choice Theory, which is used in finance to mathematically model behaviour based on the assumption that humans always behave rationally and want more, rather than less, of ‘good’. Insights about the complex web of social relationships which make up financial trading as a human practice ultimately discredit these economic concepts.

In Miyazaki’s (2006) depiction of Tada, a Japanese securities trader, he reveals how even when financial traders assume rational choice behaviour in their own lives, there are always inevitable ‘internalities’ and irrationalities that escape modelling. Miyazaki describes powerful change externally imposed: first in 1996 from Japan’s “Big-Bang” neo-liberal financial reforms and the media’s power in diffusing the values of strong individualism, a willingness to take risks, and responsibility; then from the merger of Tada’s company with an American firm and the closing of the derivatives department (150). Miyazaki describes how Tada reacts to these changes with the modelling of his future in a spreadsheet to calculate his future worth — the practice of jibun no nedan- in three different income scenarios, to decide which new job path to take so he might have the best retirement. Miyazaki argues that his should not be read as a Euro-American practice introduced by reform, but rather as the culmination Tada’s own wider pursuit of objectivity (kyakkansei) and logicality (ronrisei) (154). In his work and dreams alike, Tada articulates the present from the perspective of the end: the termination of his agency, the agency of other traders and of the market itself. As such, Tada relied on computer models to make financial decisions before this was common practice, makes decisions in the present based on his retirement, and imagines an automatic trading machine to do away with all market agency. Miyazaki shows how even though Tada attempted to rationally layout his future, inevitably there were internalities, and he was unable to accurately predict what he would actually do.

Zaloom (2006) also discusses the ambiguity of internal and external forces in her analysis of the Chicago Bureau of Trade (CBOT) at the advent of electronic futures trading in the late 1990s. She explores the effects of the introduction of digital trading interfaces, and describes traders encountering the new electronic markets that obscured the human relationships that were central to their social experience. Zaloom shows the struggle people faced negotiating these changes, illustrating the processes undertaken by traders, managers and designers to develop and interpret the digital technologies. In spite of this agency, she describes the traders developed a new perception of their relationship to market based on observation and analysis rather than active participation (6). Social dislocation is echoed by Garsten & Hasselström (2003), who argue that, even before digitization, the neoclassical fetishisation of the market as a natural force disguised the humans central to its emergence. They say it is this fetish that reduces the perception of agency and engenders the evasion of responsibility among financial traders (53).

The anthropological dissolution of classical economic concepts improves understanding of current markets and trading practices. As if foreboded by Tada’s automatic trading machine, Slavin (2013) describes the current prevalence of high-frequency, or black-box, trading. Using specific numerical inputs which logically code for an array of social, economic, political, and natural events, algorithms trade 37 times faster than a mouse-click. Slavin argues that markets are now, “so independent of a vision of collective human consciousness that it’s like a dark version of the Singularity ”. Perhaps after the global financial markets crashed due to human over-speculation in 2008, digital technologies were used to further reduce human agency in hopes of fully realising the fetish of the self-regulating market, to further negate responsibility, and to minimise human errors. Five years on however, and markets now experience microcrashes of mere minutes where algorithms malfunction. The data is so “Big” and the algorithms so lacking in common-sense that it takes mathematicians and computer scientists hours to figure out what’s gone wrong, by which point millions have already been lost and made. As if speaking directly about ‘blackbox’ trading, Latour (1999) describes blackboxing as central to the emergence of scientific and technical ‘objects’ through the simplification of successfully functioning machines to inputs and outputs. Mechanistic efficiency, he reasons, paradoxically makes internal complexity invisible and opaque. This is reiterated by Taleb’s (2007) black swan theory which posits that finance has a tendency to inappropriately rationalise and simplify rare and surprising events in hindsight, as though they had been predictable. It seems markets and trading were heavily blackboxed by a movement towards the Enlightenment ordering of nature- the external naturalisation of markets as integrated matter and the illusion of rational, mechanistic predictability in the minds of traders- even before “blackbox” trading was prevalent. In developing an understanding of the economy that goes beyond the vision of a self-regulating system and the Cartesian divide, anthropological analysis can play an important role in opening up the blackbox to grapple with complexity and place the humans back into the image of their practice.

Risk (Revisited)

Anthropological analysis of financial trading also helps to elucidate the theory of risk society put forward by the sociologist Beck (1992), who argued that risk production is central to late-modern society. These risks are universal and globalized, bringing into being transnational hazards which are able affect animals, plants and the Earth alike. Garsten & Hasselström (2003) argue against this notion of universal risk. Through their cross-cultural analysis of trading, they suggest that risk perception is highly influenced by locally embedded beliefs and values. They see the development of the fetish of the market as about the construction of risk by those in power to motivate and communicate an urgent necessity. The local interpretation of global risk is evidenced by the following analyses of trading. Miyazaki (2006) shows how risk was not originally a part of Japanese trading, but was introduced and interpreted in a localised way after neoliberal reforms. Ho (2009) describes the intense process of socialisation new hires must go through when joining investment banks which enforces individuality, superiority, competiveness, and the separation of Main Street and Wall Street. She describes that through this new traders are socialised into understanding what Wall Street financial risk is and how to manage it. In Chicago, Zaloom (2006) shows nuanced versions of the practices of minimizing and maximizing risk central to the CBOT’s social experience of trading. Like in other examples, risk taking is presented as tied to reward and status, but Zaloom sets CBOT apart by arguing that risk is central in the construction of masculine and economic selves, and to the emergence of a chaotic market space. She presents it like a dissident challenging of bureaucracy akin to gambling through an engagement with fate and playing with the uncertainties of the future (93). Anthropological focus on financial trading sheds valuable light on meta-theories of modernity.

Anthropology is not Ethnography

The light shed by an ethnographic focus and an anthropological analysis of financial trading ultimately reflects back onto, and differentiates, these two different approaches. At a time when ethnography no longer sets anthropology apart from other social sciences it becomes essential to establish the anthropological approach. One essential feature of contemporary anthropological analysis is the presentation of coevality. Since Fabian (2002 [1983]) and the reflexive turn, anthropology has moved away from allochronic and stabilized descriptions of the Other. While ‘ethnography’ still designates such descriptive texts, anthropology has become, “an inquisitive mode of inhabiting the world…grounded in participatory dialogue”(Ingold, 2008: 87).

In the following example of an ethnographic analysis the researcher is not shown in the process of understanding and analysing, but isolates social phenomena to abstract and categorize them. Abolafia (1996) examines Wall Street bond trading in light of game theory. It is valuable how he opposes the universal notion of rationality and competitiveness proposed by the theory to delineate several rational decision making tools- vigilance, intuition and self reliance- which he argues script trading practices. And while Abolafia does say his empirical division of types is not intended as an ideal and that bond trading is full of paradoxes, he doesn’t show how this is the case. His ethnographic privileging of discourse and reliance on evidence from oral interviews is ethnocentric and biased towards phonocentrism. Perhaps it is because of this reliance on what is said that Abolafia doesn’t consider that aspects of trading may be fundamentally irrational (eg. Taleb, 2007). Anthropology is about thinking through the discrepancy between what people do and what they say.

In contrast, Miyazaki (2006) describes his ten-year relationship with Tada. In doing so he elucidates the risks inherent to being an anthropologist, in acknowledging emotional inter-subjectivity and developing deep relationships. In a quote, Miyazaki reveals Tada’s feelings about anthropology as an escape from objectivity and logicality: “Compared to derivatives, [mergers and acquisitions] are not that difficult. They do not require high intelligence. They are more like human sciences.”(161). In seeing Tada explicitly contrast anthropology and trading, the reader can understand how Tada views Miyazaki and the anthropology he represents as another escape from his market agency. This understanding is strengthened by Miyazaki expressing his conflicted feelings as a friend and as an anthropologist when he learns Tada wishes visit him. Not merely about discourse, Miyazaki’s anthropological analysis is about the social effects of inhabiting the world. He throws the reader into participatory dialogue, taking us with him as he negotiates what anthropology should be. The acknowledgement of total coevalilty is one way of understanding the difference between anthropology and ethnography, and what makes anthropology so difficult to achieve.

Conclusion

In summary, anthropological analysis of financial trading is valuable for three main reasons. It goes beyond classical economic conceptions, it can elucidate the meta-theories of modernity, and it helps to illustrate how anthropology is different from ethnography. Ultimately, traders are not, as Smith (2005) suggests, merely destined to a life floating in a kayak, edging to manage the risks naturally thrown at them by changing currents. Like the anthropologist, traders are sentient human beings, full of paradoxes, who do not always say what they do. In challenging its own ontological orders, Anthropology reveals the complexity of building the deep, interpersonal relationships from which societies emerge.

References On Request