Anthropology and Finance

In the BusinessDay of October 13, 2009
The world recently marked a year after the collapse of Lehman Brothers, an incident that has been described by many as the beginning of the global financial crisis. This seems a decent time to take a look at one anthropologist’s take on the crisis.Gillian Tett, a Ph.D in social anthropology from Cambridge University, has suggested that information flows is one of the factors that contributed to it – because the mainstream media in general, and the business media in particular, paid very little attention to the financial sector. She should know, because she now runs the global markets coverage of Financial Times (FT).

In a recent contribution to Anthropology News (October 2009), she describes how in 2004, her editor asked her to make a list of topics that FT would write about in the Lex column (she was then acting head of the Lex column). She decided to approach the issue as an anthropologist would, and treat bankers and operators in the financial sector as any anthropologist would treat a group of people they are studying. To do this, she considered what an anthropologist would notice if they walked into an ‘average banking village’. She then proceeded to draw an outline of that village.

After drawing up the outline, she compared it with the coverage of the financial sector by the media. She was surprised that a small part of the whole financial sector (equity market, currency and commodity markets) got a lot of coverage, while “other fields of activity, such as the debt, credit and derivatives markets, were barely covered by the mainstream media at all, even though these were large and rapidly growing parts of the system.” If you remember, this latter part of the financial sector was responsible for the enormous wealth that was created during the boom years, and for the eventual collapse of the financial sector. The operations of that part of the financial sector was under-reported in the media.

One of the things she thinks was responsible for this is the nature of journalism. In the world of news reporting and journalism, the easier the information can be packaged and sent to the consumers the better. In the same Anthropology News article: “Twenty-first century journalism tends to assume that newspaper stories can only ‘work’ for readers or viewers if they feature stories about recognized, named individuals who can supply “on the record” quotes, supplemented with verifiable facts and tangible events.” The other point is that the world of debts, credit and derivatives was considered to be very dull. Who wanted to spend time reporting on particularly dull areas when there were more interesting ones to cover?

Gillian Tett, along with her team in FT spent most of 2005 and 2006 peering into that world. “By late 2005, it was clear that activity in the debt and derivatives sphere was so utterly frenetic that it was creating a classic ‘bubble’ that would inevitably burst.” Much of the story of derivatives has been told in a book she published earlier this year (Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets and Unleashed a Catastrophe).

In the book, she acknowledges the part her training as an anthropologist played in spotting what many failed to see. The following quotation from the book captures quite well how a training in anthropology helps one see and understand things in a more profound and much deeper way.

“… I realize that the financial world’s lack of interest in wider social matters cuts to the very heart of what has gone wrong. What social anthropology teaches is that nothing in society ever exists in a vacuum or in isolation. Holistic analysis that tries to link different parts of a social structure is crucial, be that in respect to wedding rituals or trading floors. Anthropology also instils a sense of scepticism about official rhetoric. in most societies, elites try to maintain their power not simply by garnering wealth, but by dominating the mainstream ideologies, both in terms of what is said, and also what is not discussed. Social ’silences’ serve to maintain power structures in ways that participants often barely understand, let alone plan.”

That is one of the reasons I decided to become an anthropologist.

Maybe it is time someone took such a look at the Nigerian financial sector.

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• Anthropologists blog on the financial crisis (loomnie.com)