Brian McKenna published an interesting piece in the Society for Applied Anthropology Newsletter, which is reprinted here. He quotes Financial Times Managing Editor Gillian Tett on one underexplored reason for lack of public attention to “financial innovation” pre-2008: “Once something is labeled boring, it’s the easiest way to hide it in plain sight.” He also reproduces a fascinating reflection from Annelise Riles, whose work Collateral Knowledge: Legal Reasoning in the Global Financial Markets will soon be released:
I think Tett’s diagnosis should cause academics to ask some hard questions about why we did not do more to highlight and critique the problems in the financial markets prior to the crash. For myself, for example, fieldwork in the derivatives markets had convinced me long before the crash that all was not well in these markets. My husband (also an ethnographer of finance) and I often joked way back around 2002 that our research had convinced us not to put a penny of our own money in these markets.
But our own disciplinary silo made us feel that it was impossible to counter the enthusiasm for financial models out there in the economics departments, the business schools, the law schools, the corridors of regulatory institutions. There surely was some truth to our sense that no one wanted to hear that markets were not rational in the sense assumed by the firms’ and regulators’ models. But maybe we should have tried a bit harder; it turns out many other people also had doubts and thought they too were alone. What might have happened if we had all found a way to link our skepticisms?
At this point, it may well be the case that most financial economists have so barren a theory of the social purpose of financial markets that they really are only teaching people how to succeed within the current system, rather than improving the system overall. It’s a bit like a divinity school run by “believers,” rather than a religious studies department trying to study the religious (to borrow a distinction from Paul Kahn’s Cultural Study of Law).