Edward LiPuma and Benjamin Lee A Social Approach to the Financial Derivatives Markets

True vision is the art of seeing the invisible. Jonathan Swift

Few phenomena have visibly destabilized the US

economy like the 2008 credit crisis, which threatened a battery of economic agentsfrom banks such as the late Bear Stearns to individual mortgage borrowers. As Ben Bernanke, chair of the US Federal Reserve, has observed, the circulatory processes that motivate the credit markets had become paralyzed due to the evaporation of what the financial community refers to as liquidity.1 Liquidity is more than a memorable metaphor for the fluidity of capital. It is financial shorthand for assessing the markets capacity to circulate capitalthis circulatory pump being a distinguishing feature of capitalism and also its lifeblood. The stilled heart of the liquidity crisis was that financial institutions, fearing their counterparties might be covertly insolvent, were hoarding rather than circulating capital, even as the accumulation of delinquent loans eroded their capital positions. The result was a pernicious cycle that erased virtually all available credit. The disappearance of liquidity determined that the buying and selling of the assortment of securities that animates the
The South Atlantic Quarterly 111:2, Spring 2012 DOI 10.1215/00382876-1548221 2012 Duke University Press

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flows of capital through the economy had ground to a halt. The systemic peril was that the Euro- American financial system would collapse, threatening a global depression, which in turn would almost certainly foment political unrest. The situation was so grave that the Federal Reserve and the US Treasury, in an uneasy alliance with European monetary authorities, began to implement what would turn out to be a succession of rescue plans and bailouts in an effort to avert economic cataclysm. The seemingly impossible volatility of the financial markets and their near implosion resonated across the complicated space where the science of the market and the markets use of science cohabit. The crisis laid bare the underlying and underappreciated foundations of the financial field, calling into question the formal model of markets that many academics had canonized as settled science and most practitioners had taken to be the only approved operational paradigm. The history of science reports that this is not the first time that impossible events have undermined an established paradigm, even as that history confirms that adherents never see, let alone anticipate, the gathering storm. Systemic crises have their own logic: they allow theorizations once excluded from the main conversation to enter the common roomin this case, a kind of collective permission to entertain a more social approach. Especially as neoclassical economics and Marxism have usually elided the field of finance and the sphere of circulation, the critical question is, what would a social approach to finance look like? With this objective in mind, our aim is twofold: to lay out the topography of what we see as the embedded problems that underlie an attempt to theorize and thematize the global financial markets, and to suggest a course of understanding nurtured by theoretical traditions usually excluded from the discussion, let alone commingled in ways that disregard disciplinary borders. This requires that we animate a conversation among theorists, such as Pierre Bourdieu, Frank Knight, Max Weber, John von Neumann, Andrei Kolmogorov, and others who have resided on isolated islands of social science. Similarly, we seek to deanalytify the space of understanding by aggregating phenomena, exemplified by ritual, play, and work, whose analysis has been predicated on their separation. Our hope is that outlining such an approach will serve as a catalyst in the development of an analysis of finance that honors the complex socialities inherent in the ascent of circulatory capitalism.

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The Financial Crisis The crisis part of the narrative is as clear and as brutal as the foreclosure signs on neighborhood homes, the ascending unemployment rate led by layoffs in the housing and financial sectors, and the governments costly rescue of finance institutions, government- sponsored agencies (i.e., the Federal Home Loan Corporation), and automotive companies.2 Many in the financial community are educated and literate, and as the threat of systemic implosion subsided, there appeared a stream of news articles, television shows, and books seeking to autopsy the crisis. These first responders probed the genesis of the troubled instruments, especially collateralized debt obligations (CDO)3 and credit default swaps (CDS). Analysts examined the governments role in first assuming a laissez- faire regulatory posture and then stepping in with a gargantuan bailout.4 The accommodative monetary policies of the Federal Reserve during Alan Greenspans regime and the economic model on which the Fed was based were dissected at length.5 Such narratives were complemented by big- picture accounts of how the events leading up to the TARP (Troubled Asset Relief Program) unfolded6 and by smaller reflections that chronicled the extinction of the legendary institutions of Bear Stearns, Lehman Brothers, and Merrill Lynch.7 On the technical front, there were attempts to discern how the credit markets surrendered their liquidity and why the mathematically delineated econometric models engineered to depict and predict the behavior of these credit markets failed.8 A thematic and theoretic connectivity marks all these accounts. Thematically, the common riff is how greed set loose in an unregulated shadow banking system motivated increasingly by reckless speculation led to the crisis and the bailout. Theoretically, these commentaries presuppose a social they do not account for, framing their accounts as teleologies of the immediate visible present. The narratives relate the immediate presentation of events and personalities, recounting through vignettes how the escalation of greed- driven deals in a permissive environment led us to the precipice. What these and economistic analyses bracket is the invisible sociality that shapes the Euro- American financial system. Against this asocial standpoint, we would submit that it is impossible to grasp the financial system and the crisis it engendered without grasping this sociality. The inverted frame of this query is why we believe that the economic prevails over other venues of sociality to the point of eclipsing them. The dominant understanding here is that what is economic is so godly powerful that it over-

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rides other considerations, so that analysis can theorize and model the economic independent of other dimensions of social life. Family, country, the construction of ones subjectivity, institutional position, and peer group standingall contributors to what we have referred to as the socialare, on this view, exogenous and subordinate to the economic. However natural this may now seem, the eclipse of the social was not always the orthodox economic view, and in calling for a reconsideration of the social we are not alone. Gillian Tett, who covers global markets for the Financial Times, observes in her epilogue to Fools Gold that the finance worlds lack of interest in social matters cuts to the very heart of what has gone wrong and that the path to a deeper understanding entails rethinking the culture of finance.9 Tett concludes that the crisis stemmed not only from technical factors but also from a failure to see that the economic is intrinsically embedded in the social. We concur with her diagnosis and attempt here to thematize and theorize how we might frame an analysis of finance that addresses its sociality. From a social approach, the guiding thesis is that the reality produced by, and productive of, the social constitutes the foundation for the production of financial markets, including the derivatives market. What this means is that the circulation of financial instruments by agents and institutions rests on sociohistorically created concepts, embodied dispositions and classifications, generative schemes, layered motivations, deep- seated compulsions, and strategies of subjectivity: what we call the cultures of circulation. Here we speak of the evolving culture of financial circulation that has taken shape since the early 1970s. This culture is realized in the increasingly global idea of financial markets and financial practices exemplified by and embodied in a regime of workthat define these markets and assign them with specific trajectories. Most remarkably, there is a directional dynamic toward the fabrication of a regime of labor/work founded on the use of derivatives to make increasingly speculative wagers in a relentless quest to generate profits outside the sphere of production. In our view, a social approach would grasp derivatives markets as the product of the interrelationship between three realizations of the trajectory of the post- 1973 financial field: the sociality embodied in the agents that work within that financial field, the sociality embodied in institutions, and the sociality implicit, inherent, and buried in the structure of financial practices. These socialities are inscribed institutionally in competitions for status, conceptions of work and play, secular initiation rites, senses of belonging and self- identity, ideas of fairness and just compensation, quasi-

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formed schemes for balancing ones life plan based on a career in finance with familial attachments, notions of public/government service and philanthropy, and schemes for the construction of agents subjectivity based on monetary acquisitiveness. Paradoxically, for financial agents and institutions, the more successful the inculcation of the financial habitus and the more those agents share a common ensemble of standpoints, generative schemes, and dispositions, the more the social is obscured from their field of vision. Thus our intention is to clarify why the more socially embedded a financial practice is, the less social it appears for those invested in it. At issue is what kind of social is it that does not appear as such from an insiders perspective? Sciencemore precisely, the scientization of modern financeis implicated in the process of rendering the social invisible in a specific self- valorizing manner.10 Finances creation of a financial field that does not appear to be social begins unexpectedly, with the axiomization of expected utility in John von Neumann and Oskar Morgensterns Theory of Games and Economic Behavior.11 Casting aside its social limitations, which von Neumann and Morgenstern underline in passages bracketed in the subsequent canonization of expected utility, a succession of finance economists have used von Neumann and Morgensterns treatise as the foundation for portfolio theory, which assumes that we can analyze the behavior of any ensemble of assets (say, a portfolio composed of credit default swaps, debt obligations, and gold) independent of the social.12 To override the possibility of social differenceagents might value/price the same asset(s) differently based on social considerations, especially the trustworthiness of their counterpartyportfolio theory universalized the expected utility- driven market through the installation of a formal supposition of arbitrage, which decreed that no asset can simultaneously have two prices/ values. The price of any asset and therefore of any ensemble (portfolio) of assets exists independent of the counterparties, of a markets embeddedness in the global political economy, or even of vacillations of supply and demand meaning that markets are inherently liquid and thus immune to systemic risk. Finances most cherished constructsfrom the efficient market thesis and the methodology for calculating portfolio risk to the pricing of assets (capital asset pricing model) and derivatives (a BlackScholesbased pricing formula)so deeply rely on the nonarbitrage stipulation that textbooks in finance refer to it as the fundamental theorem of finance.13 Grasping the markets sociality is sufficiently complicated that eco-

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nomic and financial accounts have ignored the issue, offering instead a formula that conceals a supposition of asociality under the apparent neutrality of a straightforward empirical definition. The standard narrative defines the market by what it does: it is an institution in which some aggregation of rational agents engages in transactions that define an assets price.14 The formulation, which simply means that buying and selling a thing sets its price, depicts one effect of peoples action when they make a market. However, behind the curtain of what can be expressed in the object language of ordinary experience lie several theoretical problems that the empirically defined, descriptivist formulation cannot begin to address. The problems are so difficult and multidimensional that the path of least resistance is to ignore them, leading to the observation by Douglas North that economic journals are replete with analyses of market behavior, but not of the market itself: the construct these analyses presuppose. North says this omission is peculiar; we think it is necessary and motivatedas is the literatures omission of any analysis of the work that makes markets happen.15 But first we take the problems generated by the inevitable, unavoidable tensions and friction that characterize the production of complex social entities such as the marketentities that seek to integrate different forms of sociality, originating at different levels of abstraction. The assumption that the problems do not exist or cannot be addressed because they are mathematically intractable will no longer holdthat is the price for conceptualizing the market. So, where does a market come from? How is it produced and reproduced? Answering these questions is essential because markets are social inventions and because financial actions take place within a frame of their own design. The speculative wagers that roiled the financial markets could never have been created, consecrated, and circulated without a specialized structurethat is, a real social entity that enframes the actions of those who participate. But how does a field produce and reproduce collective agents such as credit derivative, mortgage, or merger acquisition markets? We have deliberately called this space a social totality: the name intended to capture the reality of a system of relations and properties sustained by the collective genesis and implications of the actions of individuals. These individuals, importantly, produce totalitieshere, a financial field comprised of specific markets. The Callon group has described this production of a quasibounded economic space through a notion of framing, which emphasizes the necessity of identifying the totalities that enframe the production of social practices.16 Certainly the most problematic aspect of the founda-

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tion of markets is the embedded processes by which agents objectify, by virtue of their participation, the totalities or frames in which they participate. What invisible aspect of work produces the whole? At issue is how participants objectify themselves collectively through the reproduction of an imaginary frame/object that then appears to these agents as an independent reality that stands apart from them and exerts an impersonal determination over them. What renders totalities such as the market particularly remarkable is that the participants need not know one another personally; instead, their relationship is technologically mediated, which has the effect of masking the underlying sociality of their production and of amplifying agents sense that the market exercises an objective, quantifiable determination over what they can and cannot do. This machinery has itself become part of the markets sociality. It not only interconnects agents; it mediates their sociality in a historically specific and novel way. As the social comes into focus, we see that an underlying social aspect of securitization is the realization of what we call anonymous sociality. This is the attribution of a culturally specific socialitya mutually expected repertoire of beliefs, desires, and strategic judgments about the markets behaviorto an anonymous counterparty whose only self- presentation need be the electronic trace of anothers trade on a screen. This anonymous, faceless counterparty is the counterpart to other agents sensibility that the market exercises an impersonal and objective determination over their behavior. Socially, the view that the market imposes its determinations on individual agents is the agents unwitting recognition that they produce a market as a totality. This totality is necessarily more than and different from the sum of its parts because markets possess systemic properties. The supposition that a market is collective and social means that we cannot grasp its systemic properties by tallying up the actions of those who inhabit it. Individuals actions are important, but they define a different register of social reality. What this underscores is that any adequate theorization would need to grasp the systemic properties of a totality such as a market on its own termsit is never reducible to nor the aggregation of anything smaller. This is important now because a markets systemic properties are what define the conditions for its systemic failurewhich is nothing less than failure of the totality. The breakdown of totality begins to explain why the seizing up of the credit markets provoked a turn to the social by a financial community that normally shuns any reference to the social. Consider the reported causes and conditions of the extraordinary contraction in

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liquidity. According to the finance sectors own assessment, the breakdown in liquidity turned on systemic properties, principally the relative interconnectivity of the counterparties, the overall nontransparency of their balance sheets, and high multiples of leverage across the market.17 No solitary instance of interconnectivity, nontransparency, or excessive leverage motivated a near- universal withdrawal of participants faith in the credit markets; rather, as our interviews repeatedly demonstrated, it was their native intuition about their overall cumulative effect, amplified by their complexity and technologically mediated character. It is difficult for participants to discern the systemic properties of social totalities. The financial markets, especially, are produced in ways that naturalize and normalize these properties. This would not make a difference except that the creators of the efficient market thesis see it as a scientific description of reality. However, a scientific perspective that excludes the production process of totalities, like the market, cannot begin to take account of their systemic social properties, including the potential and conditions for systemic risk and failure. At best, this perspective can recognize systemic implosions as unfortunate and unexpected outcomes, as the noise in the system that somehow became a deafening roar. No less an authority than Alan Greenspan confirmed this point, when in testimony before Congress, he expressed shocked disbelief that there was a flaw in the invisible- hand thesis that markets are constitutionally efficient and self- correcting, and therefore immune to systemic failure of the kind that had propelled the economy into a tailspin.18 Some say the visible boot of what most of us know as economic reality had left its imprint on the maestro. There is a second problem the descriptivist definition of the market obscures: the dynamic relationship between the types of financial instruments and agents acts of classification. The issue is how the financial field evolves generative schemes that agents intuitively access to typify what are often singular, one- of- a- kind, situationally tailored derivatives. How do agents collectively accept the typification of such a product? This is of more than scholastic interest: recall that a genesis of the credit implosion was that the financial field securitized mortgage and credit obligations as though their primary differences were immaterial. So it is a touch ironic that mainstream financial institutions skip the assignment of singular derivatives to specific general categories as a transparent and unproblematic exercise. The social, sometimes contentious and negotiated act of classifying a tranche of CDOs appears, especially retrospectively, to be nothing more than a technical exercise. This conflation of type and token obscures

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the social act of classification and renders it impossible to explain the dialectical, often contested processes by which agents create new derivative deals on the model of past productions even as they fit singular derivatives to established types in order to price and sell them. From another angle, markets will appear efficient and the social can remain invisible when financial agents believe as an article of unconsidered faith that totality, types, and tokens are harmoniously and unquestionably aligned (i.e., agents collectively understand this singular derivativehere, nowas a type of derivative that, in concert with other such derivatives, is constitutive of the market as a totality). Alternatively, as the crisis illustrated, markets become inefficient and the social miraculously visible when a faith that was once taken for granted evaporates, and with it the liquidity on which the markets depend. The final problem is how can we grasp the perpetual framing and reframing of a totalitythe social practices that produce and reproduce the objectification of the marketwhen the same sentient subjects simultaneously and intimately inhabit, create, and analyze that totality? The same knowing subjects surrender themselves to financial markets, which they actively produce and reproduce through generative schemes. This is important because these schemes, especially those animating the work of speculation, are comprised of economically rational calculations, other modes of rationality (that center on competition and ones social persona, for example), and also a structure of desire bordering onsometimes crossing over intodrives for self- fulfillment, self- worth, and identity. What makes this all the more important is that one of the most normalized schemes is agents own market analysis. The agents themselves produce constant streams of analysis (fundamental and technical) about how markets workwhich, among other things, hides the social. What these mechanisms of invisibility suggest is that an understanding of the financial markets entails an understanding of this underlying ideology: that is, the complex economic ideology that has evolved to conceal the social through a common faith in presuppositions that, much like the silencer on a gun, dispose agents to ignore the social or mistake it for something else. A social analysis would seek to trace this concealment to the presuppositions about the sociality of communication that underwrite agents interpretations of economically meaningful events and information, and to the type of discourses they construct (retrospectively) to explain financial outcomes. We see such an explanation as part of the foundation of the analysis because these ideologies are the cornerstones of what we call

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the illusio: that is, the forms of misrecognition of the social that are components of the real relations of the production of high finance. Adherence to this illusio is, and has been, an imperative of the financial field. Talk of the social was redacted from discussion (at least by the ratified members of the field) until the present systemic crisis opened a crack in its defense mechanismsfor example, business school textbooks that present the efficient market thesis as settled science. Years into the crisis (2010 to 2011), interviews with business school professors indicated an unwavering allegiance to the efficient market thesis. Here we lay out a complicated agenda for making the social visible. On another level, however, the issues are straightforward. Mainstream accounts of the financial markets presuppose and rest on a sociality they cannot account for. They cannot and do not account for the production and the reproduction of a derivatives market or the character of a regime of work oxygenated by what is, historically speaking, a newly minted ethos of speculation. These omissions of the social are compensated for by the illusio of an efficient market, composed of rational actors who communicate perfectly and bolstered by the symbolic capital gleaned from using mathematical models derived from the truly scientific natural sciences. Then along comes a systemic crisis that emphasizes the failures of this thesis, demonstrating the constitutive power of the social and the argument for laying out a more socially informed account. Theorizing the Economic Socially The reading of the economic and of finance presented here grows out of an attempt to grasp the encounter between the global financial markets and community- based, production- centered economic enclaves on the margins of circulatory capitalismin places such as the former Bantustans of South Africa or in the southern areas of the Philippines. About this encounter, there had long been an informal division of intellectual labor. Anthropologists and sociologists worried about the non- Western, marginally and partially capitalist, frequently struggling postcolonial economies, whereas economists focused on market- driven, capital- intensive, globally integrated economic sectors wherever they appeared. So anthropologists and rural sociologists studied the Amazonian Indian populations working on rubber and coffee plantations in Brazils interior, while economists studied Brazils burgeoning finance and petroleum sectors. There are no disciplinary rules about economic subjects, but in general the division

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held, with only a few scholars camping consistently on the others terrain. Importantly, this division of intellectual labor corresponds to a theoretical vision of the social. The idea is that sociality underlies the economies that anthropologists and sociologists study; gift- based economies especially are so intrinsically social that it is pointless to use the concepts and tools developed for large- scale capitalist markets. The countervailing idea is that where capitalist markets are concerned, the economic is an independent domain, which renders it possible to craft methods and models that fixate on the economic. The focus of formal economic analysis is production, whereas anthropologists foreground the sociology of exchange.19 An accepted distinction between formal and substantive economics enshrined this vision and division of the world, which corresponded to two nonconversant literatures. A genuinely social approach would reject this theoretical division in favor of the argument that all economies are substantive. It is important to be clear about this. The critical argument is that although capitalism, now exemplified by the markets for financial derivatives, is qualitatively different from any other economic regime, it is nonetheless fundamentally social. Significantly, the economic aspects of the social are fundamentally different, but no less social for being so. Nothing illustrates this more clearly than the social processes required to sanction agents to isolate the economic by placing themselves in contexts that valorize those dispositions that sublimate or eclipse their investments in the social. However natural it now seems to those who watch CNBC, who pour over the Wall Street Journal, or who have an MBA, it requires a tremendous amount of social labor to produce people (such as those we interviewed), who, enframed within the market, voluntarily sacrifice their relationship with their spouses and their children to earn money speculatively on bets that, on account of their enormous sequestered wealth, have little marginal value for them. As history and anthropology have demonstrated, for most of the history of humankind and across the entire wealth of cultures, this design of behavior was unimaginable. While financial markets are powerfully economic in the most robust sense of the term, they also involve questions concerning the (re)production of the market, the creation of agents subjectivities, agents senses of belonging and fairness, an ethos of speculation, notions of anonymous sociality, and much more that is intrinsic to financial markets but goes far beyond the economic realm. From the perspective of theoretical practice, the social became invisible because it was exiled and excommunicated from the kingdom of

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finance by the scientization of economics. The premise was that markets are, for all theoretical purposes, efficient, closed, and complete. They operated systemically according to purely economic principles and rational decision making under uncertainty. Certainly those in the financial workplace were aware of many instances when market prices, like circus animals who had forgotten their manners, seemed to veer (sometimes wildly) off course, but they assumed and economics affirmed that these gyrations were temporary, episodic, and too small to spawn earth- rattling crises. In fact, their resolution (through arbitrage) proved that markets were systemically efficient, inherently rational, and therefore asocial. Many in finance proclaimed the triumph of the efficient market thesis, moving them to brush off data that did not affirm the model. After the 2008 financial meltdown, there arose a realization that the behavior of financial markets rested on modes of unacknowledged sociality. Some commentators observed that liquidity is a religion; it depends on faith and trust, on a collective belief in the markets. To right things, we (used in its collective sense) need to restore peoples faith in the markets, redeem their broken trust, and purify the markets by exorcising greed. Disseminated across the electronic media, these unalloyed references to religion, faith, redemption, shaping a collectivity that transcends the individual, and everything the financial community conceptualizes as the inverse of all that is economic add up to a tacit admission that the social does, indeed, have constitutive power. Now it turns out that religion is an unexpectedly apt metaphor: the modern American circulation of faith is an unregulated market where all commitments are over- the- counter bets on salvation. It declares what anthropologists steeped in gift- based exchange have known since the work of pioneers in their field (especially Marcel Mauss and Claude Lvi- Strauss): totalities, like markets, are social fictions made real by the magic of belief and sustained through the name we have canonized for the power of belieffaith. From our standpoint, it is neither an accident nor a metaphor that a crisis- torn market began to speak in prayers, its commentators drawn to formulations that suture the health of the market to expressions of faith and belief. Even more, in calling for the restoration of faith and belief, these commentators, without intending to, invoke a performativity that attends religions frequent accompanist: ritual. We take the financial communitys self- assessment as a sign of where to look analytically. If we pose the question what is a market?, the answer is neither simple nor obvious. The market as a social totality or frame is simultaneously a practical construct, a site of work, and a particular kind of object

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constructed by economic theory. This complex, multifaceted conception of the market frames the actions of financial firms and individual participants, of the regulatory policies crafted by the Federal Reserve and the Treasury, of the picture drawn by the media, and of finance economics scientization of the market. The players share this image of the market, unconditionally; they circulate this image without thinking they are circulating an image, switching fluidly among the various facets, their collective belief influencing their market behavior even as it underwrites their confidence in their interpretations of the behavior of anonymous coparticipants. Circulation and syncopation of belief are essential: indeed, the theorization that underpins a genuinely social approach is that markets as totalities are ontologically real social fictions that agents quasiautomatically produce through collective belief. The centrality of belief is the underlying, unacknowledged theme that runs throughout US Treasury secretary Henry Paulsons account of the struggle to restore faith in troubled credit markets.20 The supposition guiding his actions is that agents decisions to restart making a market under uncertainty turn on the revival of their collective faith in a markets integrityor, more socially, totality. The confluence of the real and the fictional through the power of collective beliefs, as well as agents faith in the totality they have instantiated, indicates that markets have a performative aspect. They are defined by a dialectic between rites of self- objectification, large and small and most of all continuous, and the production of a financial habitus that encourages agents to have faith in a markets integrity. That agents objectify liquidity as the normal state of financial markets goes hand in hand with concepts, dispositions, and positions that normalize their collective faith in the totality or frame. Liquidity is the finance fields representation of sociality, objectified in the notion of the counterparty and the risks posed by those on the other side of a trade (i.e., counterparty risk). The ethnography reveals a constant interplay between the objectification of abstract risk21 by way of mathematical modeling and through agents attempts to discern what others with similar models are doing. The totality constructs itself out of the interplay between overlapping models and the iteration of the models that agents share and attribute to others or to counterparties that comprise the market. There is every reason to believe that the market as a totality lies at the intersection of specific real- time trades and the imaginary community constructed out of everyones beliefs about, and faith in, what others (counterparties) are doing with respect to similar trades and deals. This intersection is technically mediated by, for example, Bloomberg machines,

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which everyone knows everyone else has. What is so intriguing and unexplored is how the syncopated objectification of the local and the totality performatively produces the market. The market appears as the aggregation of individual trades, even though agents ability to consummate these individual trades presupposes and turns on a faith- based liquidity whose social properties are effaced by the objectification. The most ironic and paradoxical aspect of market- centric views of the market is that they lack an account of the markets production, insofar as they reduce it to a naturally occurring result of the sum of individual acts of buying and selling. A better argument is that totalities are created performatively, either by what we normally think of as ritualthat is, practices that link existential events to the cosmologicalor by what amounts to a secular ritualization of the everyday that links existential events (like executing a trade) to science. We must first understand that ritual is not synonymous with religion. Religions foreground the use of ritualoften molding it into a named eventbut they do not possess a monopoly on ritual or an exclusivity agreement on its functionality. We must also recognize that events can possess the properties and produce the effects of ritual, without being expressly defined as ritual. Thus understood, rituals are enhanced, transparent versions of a more general, event quality of ritualization or, more precisely, rituality, present in any social practice. This turns out to be important because if there is one lesson that can be drawn from the analysis of ritual,22 it is that rituality allows social practices to posit what they effectuate. In this way, rituality creates a performative impulse in which the participants in an event presuppose the reality of the social totality that the event helps create or effectuate, by assuming that the eventhere, nowis simply a replica of previous performances. The performative aspect of the practice is central because it shapes the illusion that the totality created socially (e.g., the market) occurs naturally. The event summons the participants to believe, to have faith that the totality indexically presupposed by this specific event is as real as the existential, lived event itself. There is a cognitive and dispositional obligation to assume that the efficient market is as real as the trade I have just efficiently made. By this means, the specific trade figures what it and all the trades (classified as) like it collectively effectuate. The capacities and dispositions of agents collectively to subscribe to the same understanding (e.g., of the market) without any collective intention depends on the socialization of agents through their immersion in the distinctive habitus of the financial field and the hard work of its institutions (exemplified by the full- bore training of recruits). Note that the economistic account of the

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market is an empirically robust illusion: insofar as the rituality of practice engenders a succession of events that successfully instantiates the market (it remains liquid), its social foundations can remain concealed. Until, as witnessed, a crisis of faith in the market ensues, at which time the constitutive power of the social seems to appear from nowhere and remains until the state of emergency subsides. Thematizing the Financial Field Understanding the credit crisis begins with a look at the financial tools that agents devised. Technically, the liquidity crisis in the credit markets stems from the collapse of CDOs and others forms of structured debt. The CDOs were not created or traded on a regulated exchange such as the Chicago Mercantile Exchange; rather, they were over- the- counter market products. This means that they were neither standardized instruments nor subject to regulation. In the straightforward version, a mortgage lender would originate a portfolio of mortgages of whatever quality and duration, an investment bank (the now- defunct Bear Stearns specialized in such loans) would bundle these loans into a package, and the credit quality of the loan portfolio would be evened out and upgraded by purchasing insurance (e.g., from Ambac Financial Group), thus securing a AAA rating, after which the investment bank peddled the CDO to buyers, warehoused it until a buyer was found, or retained it for the banks own account. In this manner, somewhere in the neighborhood of $1 trillion of suspect loans circulated through the financial system. The key problem is that circulatory capital is subject to a treadmill effect.23 One property of this effect is that what seems rational in the short term for individual actors is systemically irrationalalthough invisibly so. In the CDO market, the treadmill took the following form. On account of their outsized returnson what appeared to be AAA instruments the overall demand for CDOs increased exponentially. Demand increased because the CDOs had a healthy risk premium for AAA- rated bonds the risk premium being the difference between the CDOs interest rate and the rate of a risk- free Treasury bond. Increasing demand depresses buyers rates of return (as more participants bid for the same securities), which should lead to a decline in profitability: lower interest rates, lower return. Many participants refused to acquiesce to the lower returns dictated by a systemwide decline in risk premiums,24 objectively because their incomes and positions depended on earning outsized profits and subjec-

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tively because they were immersed in the speculative habitus permeating the financial sector. Given the enormous quantities of available capital at that time, one alluring strategy to sustain profitability was to employ leverage. Leverage consisted of borrowing less costly short- term money in order to purchase longer- term CDOs. By borrowing capital, investors could put more money to work in what they considered to be their best investment strategy. This strategy was successful so long as the return on the CDOs was greater than the cost for the borrowed capital. But the strategy had an enormous systemic flaw: because it was undertaken by many institutions simultaneously, it only augmented the demand for CDOs, which pushed rates even higher, which in turn motivated an acceleration in the supply of mortgages being fabricated and circulated, leading to an ever- increasing demand to initiate new mortgages no matter the solvency of the borrowers. The added supply of mortgages served to further depress risk premiums. Worse, the decline in premiums and therefore profitability encouraged the addition of even more leverage, perpetuating the treadmill until many firms were leveraged at ratios they can, to this day, barely acknowledge. In effect, speculators offset the risk of declining profits by taking actions that amplified the risk of systemic failure. And that is precisely what happened; that is the technical view of the financial iceberg visible above water. Below the waterline lies a more complex social reality. One way to deconstruct this reality in order to visualize its character is to emphasize critical dimensions of the production of the social. A good way to begin making the social visible is to foreground the character of the speculative ethic that drives the culture of financial circulation. This ethic has emerged as a critical, cutting, and capricious edge of Euro- American capitalism. In a 2004 work, Financial Derivatives and the Globalization of Risk, we illustrated that the events of 1973 began to tilt financial power and profit toward circulations of speculative capital.25 From 1973 on, this speculative ethicwhich has long been one strand of Euro- American culturehas become something more powerful: a culturally valorized ethos instrumental in structuring the design and practices of the financial field. The obvious manifestation of this speculative ethic/ethos is the willingness with which so many banks and hedge funds made enormous, precipitously leveraged bets. Complementing the rise and valorization of this ethos has been the creation of speculative capital: large pools of mobile, nomadic, opportunistic capital whose sole purpose is to underwrite wagers on market volatility. The result is a financial field that has redirected its energy toward fabricating platforms (i.e., the leveraged derivative deal) that motivate the pro-

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duction of risk- driven instruments (e.g., CDOs), which agents then use to speculate with but also on. Speculation has now, accordingly, assumed a life of its own. The second dimension of our interpretation is workin the extended socially infused sense of the term. We foreground work on the understanding that work imbricates cultural notions of a life plan, the structuring of the financial field, the production and reproduction of finance through the real- life actions of its participants, and the dispositions that define and motivate subjects. For those in finance, work is often the ensemble of practices around which they arrange and invest in their lives and life plans. But what kind of work is it whose purpose is to assemble and allocate capital in order to make enormous speculative bets on market volatility through the fabrication and circulation of risk- driven derivatives? More, what kind of work product is it in which the object produced is a contractual relation about the relative volatility of another relation, such that profits are nothing more than others losses? Put historically, why is trading derivatives displacing banking in terms of compensation and prestige? The third dimension is the fields representation of the economic that agents and institutions understand, respect, and valorize. This socially exclusive representation or paradigm is the fields illusio. By this, we mean the entwining and coevolution of an ensemble of ideologies that misrecognize the social and legitimate an asocial conception of work, speculation, and more generally the practice of the agents who inhabit financial markets. The field assembles three ideologies into a notion of an efficient market. It is no accident that the crystallization of the thesis corresponds with the formation of derivatives markets in the 1970s or that its ascension to power mirrors their explosive growth. The first moment is the ideology that the market is essentially a closed, complete, and self- regulating economic space. Everything social lies beyond the fields perimeter, meaning that the social has no constitutive power in the formation or behavior of the market. The second layer of ideology says that investors are rational; their decision making under uncertainty proceeds cognitively, one might say almost scholastically, guided by the laser of utility maximization. Analysis can thus grasp market behavior by reference to the positing of an abstract actor: a transhistorical and transcultural agent whose actions are an objective reflection of the markets objective economics. What is remarkable about the positing of such an abstract agent is that its imagination is not only specific to capitalism but also one of capitalisms deep performative subjects.26 A closed complete system requires economically

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rational actors, just as it would take the aggregation of economically rational acts to produce a closed space. The illusios final layer is a communication ideology that maintains its messages are transparent. Information and knowledge are precisely the same; accordingly, market prices always reflect all available useful information. The illusio arises from the concatenation and coproduction of these ideological streams. It moves financial agents to believe, or at the least to accept as an article of faith that a market is a bounded, complete economic space in which prices are always the outcome of transparent, perfectly liquid communication among rational decision makers. For those in finance and beyond, a quasimagical reverence for the revelatory power of mathematical statistics amplifies their faith in this worldview. John Cassidy, writing about how markets fail, says that adherents canonical commitment to the efficient market doctrine elevates the doctrine to a secular faith.27 So the illusio is not a misreading of the social bases of the financial field and its agents, but a real relation of its production. It is part of the fields DNA. Lest anyone think we are dancing on the bones of the dead, the efficient market thesis put to rest by the inefficiency of the credit and housing markets, the reality is that finance economics goes on as if nothing material has happened. Numerous essays continue to assume as an article of scripture that markets are efficient. There is, in this, a suspension of disbelief. For the real signature of the illusio is that those who are caught up in it, who are deeply invested in its authenticity and authority, cannot think the world in other terms. They proceed as they have always done; the beauty of the efficient market doctrine is that those enmeshed in its web are endowed with transscientific certainty that they do not have to take the credit markets disintegration into consideration because it was a one- off event. Developing These Themes We have argued that the denial of the social is a necessary feature of the culture of financial circulation. Nothing exemplifies this more than the denial of the performativity that is constitutive of the markets (totalities), in which the practices of speculation unfold as the artistry of the deal. Each act of buying and selling a financial instrument performatively objectifies that instrument through the typification of the token. The act of classification defines this specific singularity as a type. The classification predisposes those with a sense of a given market to adjust their expectations to the probabilistic assessments of that instrument. The elision of performativity

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leads economistic accounts of the market to misrecognize the way in which each transaction instantiates and foregrounds the market(s) that it presupposes. For the transaction to be prosecuted, it must appear as though the markets liquidity was unquestionable and the transactions success preordained. Accounts of the market from within the financial closet have no notion of this performative dimension. They cannot thus entertain the question of discovery: what are the conditions for the inculcation of similar capacities and dispositions, which motivate the collectivitys faith in a real financial market comprised of anonymous agents conditioned to function as reliable and predictable counterparties? So defined, the analytical objective would be to show how existing cultural capacities and dispositions performatively objectify the field of finance, and how through its markets and institutions, the field capitalizes on, and further refines, these capacities and dispositions for those who participate in this regime of work. According to the approach developed here, to begin with an analytical definition of the market annuls the performative objectification of the real, which brings the market as the site of the speculative ethic into existence as a viable entity. It follows from this that a principal aim must be to grasp the sociogenesis of this speculative ethic/ethos, rooted in what is essentially a transcultural problematic of decision making under uncertainty when a value (e.g., money or status) is at stake. When such decisional uncertainty is attached to a context, the result is riskthat is, the chances that the agent(s) involved will suffer some negative outcome. The design of a speculative ethic constitutes a calculus for organizing decisions when uncertainty is present. What is sociologically interesting about the ways in which people deal with the risks attached to circulation/exchange is that they presuppose the preexistence of a totalityfor example, a group, a market, a field that the practices are actually instrumental in valorizing and reproducing. Semiotically, the practices re- create and circulate the token instances of totality as perfect indexical icons of the type. In societies in which there is neither capitalism nor a regulatory state, ritual as exemplified in ritualized exchange is the dominant means by which agents discern and disarm the risks attached to an exchange/circulation. What ritualization does for these exchanges, the scientization of the market attempts to do for derivatives transactions. In a parallel manner within a wholly different framing, a derivative transaction presupposes the integrity (closure and completeness) of a specific market (e.g., credit) as an instance of a totality (i.e., the derivatives

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market) composed from the sum of these specific markets. The parties that execute the trade organize their practice as though the markets efficiency guarantees that there is no other possible outcome: that is, there is always sufficient liquidity and negligible counterparty risk such that wagers can be made and paid. Within the financial field, hard science has become the designated means of discerning and mitigating risk. Statistical models and technical analysis have become the chosen means of dealing with decision making under uncertainty. Several separate strands have come together, creating the space of the culture of financial circulation. Not the least is the progressive harnessing of the mechanics of speculation through the use of a mechanistic model that sacrifices honoring the complexities of financial practices for mathematical tractability. The sociological evolution of this economistic paradigm has been toward a mathematical scientization of finance. On the level of the totality, it sees the social as exogenous to the structures and practices of the market; on the individual level, the social is the source of the irrational, the animal spirits that (under the right conditions) will motivate numerous agents to make similar bad decisions that radically violate the canons of utility maximization. As exemplified by the housing crisis, this behavior may overpower the markets self- regulating tendency, leading to a euphoric bubble followed by a panic- driven crash. The scientization of the market has led to a dominant view, which objectifies it as a purely economically constituted totality, populated by agents endowed with utility- maximizing subjectivities. So conceived, it becomes legitimate to analyze financial practice using formal mathematical equations based on the study of the diffusion of inorganic particles. This extraordinary result has evolved into an equally extraordinary and supporting division of labor in which quants (quantitative analysts) devise mathematical models of the volatility of financial instruments about which they have no market- trading experience; whereas traders having firsthand market experience use models whose mathematics they barely understand. The scientization is complemented by educational processes, which inculcate the speculative ethic in respect to a view of how financial markets function. This view is encapsulated in the message circulated by financial channels, such as CNBC, which laud the desire for profit, inveigh against regulations that would limit speculation, and argue that speculation is inherently good for the markets and thus for the economy and in turn for the nation. The peculiar logic is that the speculative ethic is a national social good, such that its endorsement is patriotic. No less important is the academe where the speculative ethic is being produced and legitimated

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through the reorganization of business school education and curriculum. The cornerstones of business school education have become the notions that the market is the best custodian of the US economy, that financial markets are inherently efficient, that (competitive) markets spur innovation as exemplified by the plethora of new financial instruments, and that speculation is both creative and necessary to promote market efficiency and stimulate innovation. The redirection of business school education is also an instrumental part of the reallocation of intellectual capital away from industrial managerial sectors and toward the financial field. This reformation of the business school was part and product of a Euro- American shift toward the speculative; it assumes that there are agents who construct their subjectivity through arduous work regimes that center on the speculative acquisition of money. This construct has a history. A more social account would reveal that the speculative ethos did not materialize from empty space. We would argue that the ethos derives from and conjoins two narratives that have permeated American culture. The first extols the virtues of taking a chance, especially the willingness to accept risk, to have the fortitude to chance the odds to improve ones lot in life. This narrative implies a social and financial universe in which probabilities matter greatly. The second narrative assumes that agents can master chance and subdue probabilistic outcomes through knowledge, skill, and hard work. These virtues allow agents to arbitrage the future, to turn a risk- free profit by offsetting uncertainty with hard- won knowledge and honed skills so that agents decision making is true. In this mediation, traders are portrayed neither as gamblers nor as traditional bankers (who relied on lending money to long- standing, solvent, socially connected clients); their speculations lie at the intersection of mathematically calculated risks and their willingness to bear the existential burden of an enormous wager. The speculative ethos draws from, and then combines, both of our native narratives in ways that make it appear familiar, burnishing the illusion that there is nothing unusual about the appearance of financial agents who, armed with risk- driven derivatives, use mathematical modeling to leverage large pools of speculative capital in a quest to profit by gaming market volatility. From the outset, there has been a more- than- incidental kinship between financial economics and poker. Many of the influential theorists (e.g., von Neumann) who sought mathematically to tame the markets uncertainty, were avid poker players. The confluence of calculation (pot odds) and speculation (betting rounds) that distinguishes poker served

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as an inspiration. In the public culture, pokertraditionally impugned as morally reprehensible because it was gamblinghas now become a legitimate practice and profession on an increasingly cosmopolitan stage. It is worth recalling that in the 1960s and early 1970s congressmen, federal regulators, and moral activists castigated and rebuffed initial attempts to develop a financial futures and options market because they viewed betting on money as tantamount to gambling, which lacked any social merit. In the ensuing years, however, the speculative wager has become not only an acceptable but a morally cleansed activity. Nothing exemplifies this more that the emergence of what its adherents call poker nation: as its citizens only quasimetaphorically referred to a community whose self- defining act and determination is the risk- driven wager. It is reasonable to conceptualize the ascension and valorization of this virtual community as a foregrounding of speculation through a new social imaginary: the poker nation. This community of players has been providing itself with an institutional grounding, but what defines it fundamentally is the circulation of a shared understanding and habitus, a mode of circulation, which the presence of the Internet and its plethora of official sites amplify. What we are suggesting is that there is the imagined community in which each poker game becomes a microcosmic instance of an encompassing poker macrocosm, much in the manner that Benedict Anderson describes acts of reading as engendering the imaginary of a national peoplehood or the way acts of buying and selling aggregate into the market.28 One way of grasping this new imaginary is as an aspect of a postmillennial pop culture. Another way is as an advertising gambit aimed at luring people into indulging in gambling tournaments and online sessionsboth of which are proving rather lucrative for their investment backers. But these observations, however accurate, do little to explain why at this moment gambling and speculation have come out of the back room and assumed such a visible and marketable place in the public sphere. Another, more socially attuned way of appreciating this emergence of the poker nation is as an unveiling, namely, that tipping point at which the emergent habitus of risk- taking and speculation becomes conscious of its own immanence and thus objectifies that habitus in games that reproduce within a fixed finite event, like a poker tournament, a forum for speculating. The suggestion is that the construction of a community founded on a speculative ethos is reflecting and reproducing at the level of entertainment a transformation in the deeper character of capitalism. Understanding the sociogenesis of a speculative ethos feeds into a

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second and complementary aim of grasping the character of the financial field. The goal is to grasp the objectification of relations that incorporate design and dimensions into the field. This entails an account of how the financial field enframes positions (e.g., trader, quant, or risk manager) that embody a specific logic, perspective, necessity, subjectivity (e.g., persons who necessarily produce their subjectivity through the acquisition of money and only contingently through the acquisition of status, power, objects, or social relations). What is interesting about the dimensions of the financial field is that they are elastic, meaning that agents collective objectification depends on the context. Even more important is the performativity that is, the generative schemes for putting a deal togetherthrough which agents objectify the various markets (e.g., credit, mortgage, or currency) as fractional totalities within the larger social imaginary of the market. This objectification leads to the illusio, the prophecy that is self- fulfilling because collectively shared, that a universe of reliable stranger counterparties populates a specific market. So long as the financial agents share and act on this belief, their religion (illusio) will remain intact, that market will stay liquid, and their collective faith will remain invisible. Pricing a portfolio (of CDOs, for example) on a market- to- market basis will, under these social conditions, provide a reasonable assessment of a firms balance sheet. Each successfully executed transaction reaffirms the collective belief in the imagined community of reliable counterparties that it presupposes. Collective belief is the operative concept insofar as it is impossible in the OTC markets to know or verify that the counterparties are reliable or will remain so over the term of the contract. Collective belief is thus reinforced by a speculative ethic that motivates and incentivizes risky wagers that continually engender evolving portfolios of unquantifiable exposure. All this contributes to an understanding of how the speculative ethos becomes embedded in, and an essential part of, a regime of work. The animation of the ethos transpires only through the social practices and generative schemes employed by those in the financial field. It follows that we can understand the speculative ethos only if we elucidate the production and realize the dispositions that are embodied in this work regime. Such theorization accomplishes two things. First, it shows that in the immediate financial field, the way agents deal with decision making under uncertainty, their willingness to take on existentially frightening levels of risk, their capacity to acquire and propensity to use financial information (a mathematical model), and indeed everything connected to the primary directive of making a profit all depend on the sociohistorically specific production of

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the culture of financial circulation. Insofar as agents expressly pursue the objective of maximizing profit, there will be something that they can interpret as economically rational behavior. Second, this theorization leads to an ethnographic account that illustrates the presence and power of other modes of rationality, and beyond that, dispositions and drives that tip decisions inasmuch as every decision about investing retains a degree of uncertainty because there are aspects of the future we cannot predict or hedge against (e.g., a terrorist attack)in one direction or another. There appears to be a broad ensemble of social and psychosocial interests that deeply inflect the practices of those in the financial field. These lead to other forms of rationality and other motivations that insert themselves into practices, sometimes coinciding, sometimes competing, with an agents economic intent. Without such an account, it is all too easy (as the recent literature indicates) to end up trying to explain the collective acts that precipitated the crisis either as the immediate efficacy of a cause (i.e., unbridled greed), or as a consequence of irrationalities that skew economic decision making. A feature of the financial workplace is that work is about much more than making a living. Work provides an organizing purpose and identity for the worker, and charting a career path is an essential element of an individuals life plan. For those in finance, work appears to substitute for the fulfillment once derived from family, friends, community, and churchto the degree that agents depend on their jobs as their principal source of identity and as a mainspring of their self- esteem and self- investment. Within this frame, an agents sense of selfself- worth, self- esteem, and positioning in financial spacebecomes attached to his or her earned compensation, named position (e.g., chief financial officer, hedge fund founder and codirector, or foreign market strategist), and success in climbing the career ladder. This idea of work as a constitutive element of self- construction urges agents, and indeed often drives them, to compulsively invest energy and hours in their work beyond what is necessary to make a comfortable living or support a family. What is at stake for them is more than income, access to worldly amenities, or even status: their work becomes who they are. Their work conjoins with their understanding of who they are. As our and other interviews attest, an identification of work with the self radiates from the statements and actions of those who choose to surf the speculative bubble. But precisely what kind of social and economic work is it whose purpose is to accumulate and allocate speculative capital to make big leveraged bets on market volatility through the fabrication and circulation of risk- driven derivatives? What kind of work produces an object

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that is a contractual relation about the relative volatility (price swings) of another relation, such that one agents profits are nothing more than other agents losses, be they deferred or transferred? Such a job does not easily fit into what historically has been considered work. As the financial economist John Kay concludes, the work that is derivatives creation and trading turns on an ensemble of special behaviours very different from the norms of either everyday business or traditional finance.29 In essence, a Euro- American culture of capitalism in which circulation, especially the traffic in derivatives, has emerged as cutting edge seems to be producing a new regime of work and a new species of worker enframed within a re- formed financial field. A social analysis begins to apprehend what goes into the creation of a novel, complex, and significant work regime founded instrumentally on risk- driven derivatives and socially on a speculative habitus. Conclusion The social approach outlined here seeks to access the forms of sociality that interlink the social imaginary of the market and the instantiation of financial markets with the habitus of work and the production of subjects, and to do so in a manner that captures the imbrication of work, play, and ritual that imbues finance with a character that is simultaneously familiar yet historically its own. It inserts a disruptive voice that reformulates the scale of analysis and restores to the conversation those things social that economistic perspectives must exclude as the condition of their own production. What our preliminary investigation suggests is that an approach that renders the social visible would see a financial (i.e., derivatives) market as a performatively constructed frame for circulation(s) that creates, even as it is created by, a sociospecific habitus of work. This financial habitus is founded subjectively on an embodied speculative ethos and a monetized subjectivity and objectively on speculative capital and risk- driven instruments and their collective institutionalization in the politics of the reproduction of a circulation- centered capitalism.
Notes
1 Ben Bernanke, Troubled Asset Relief Program and the Federal Reserves Liquidity Facilities, US House of Representatives, Committee on Financial Services, November 18, 2008, available at www.federalreserve.gov/newsevents/testimony/bernanke2008 1118a.htm. The present analysis is based on what is now three years of ethnographic research

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3 4

6 7

9 10 11 12

13 14

15 16

among derivatives traders, the documentation and analysis of the public culture of finance, a deconstruction of the mathematical statistics used by finance economics (e.g., Black-Scholes equations), a review of secondary sources on the financial markets and the credit crisis, and the fact that we trade financial derivatives for our own accounts. Gillian Tett, Fools Gold: How the Bold Dream of a Small Tribe at J. P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe (New York: Free Press, 2009). Charles Gasparino, The Sellout: How Three Decades of Wall Street Greed and Government Mismanagement Destroyed the Global Financial System (New York: Harper Business, 2009). William Fleckenstein and Frederick Sheehan, Greenspans Bubbles: The Age of Ignorance at the Federal Reserve (New York: McGraw- Hill, 2008); and David Wessel, In Fed We Trust: Ben Bernankes War on the Great Panic (New York: Crown Business, 2009). Andrew Ross Sorkin, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial Systemand Themselves (New York: Viking, 2009). Kate Kelly, Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street (New York: Portfolio, 2009); and Lawrence McDonald, A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers (New York: Random House, 2009). John Cassidy, How Markets Fail: The Logic of Economic Calamities (New York: Farrar, Strauss and Giroux, 2009); David Leinweber, Nerds on Wall Street: Math, Machines, and Wired Markets (New York: John Wiley, 2009); Pablo Triana, Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets? (New York: John Wiley, 2009); Justin Fox, The Myth of the Rational Market: A History of Risk, Reward, and Delusion on Wall Street (New York: Harper Business, 2009); and Nassim Taleb, Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (New York: Random House, 2004). Tett, Fools Gold, 25254. Philip Mirowski, Machine Dreams: Economics Becomes a Cyborg Science (Cambridge: Cambridge University Press, 2002). John von Neumann and Oskar Morgenstern, Theory of Games and Economic Behavior (Princeton, NJ: Princeton University Press, 1966). This originates with Harry Markowitz, Portfolio Selection: Efficient Diversification of Investments (New Haven, CT: Yale University Press, 1959); and William Sharpe, Capital Asset Prices: A Theory of Market Equilibrium under Conditions of Risk, Journal of Finance 19, no. 3 (1964): 42542. See, for example, Frank K. Reilly and Keith C. Brown, Investment Analysis and Portfolio Management, 9th ed. (Austin, TX: South- Western Cencage Learning, 2009), 77. Eugene Fama provides the classic statement and Arthur OSullivan and Steven Sheffrin a similar treatment. See Eugene F. Fama, Foundations of Finance: Portfolio Decisions and Securities Prices (New York: Basic Books, 1976); and Arthur OSullivan and Steven Sheffrin, Economics: Principles and Tools, 3rd ed. (Upper Saddle River, NJ: Prentice Hall, 2003). Douglas North, Economic Growth: What Have We Learned from the Past?, Carnegie- Rochester Conference Series on Public Policy 6, no. 1 (1977): 4. The Callon group is a group of sociologists of finance working out of the Paris- based

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17 18

19

20 21

22

23 24 25

school founded by Michel Callon. Michel Callon, ed. The Laws of the Markets (London: Blackwell, 1998); Bruno Latour, Reassembling the Social: An Introduction to Actor- Network- Theory (Oxford: Oxford University Press, 2007); and Donald A. MacKenzie, An Engine, Not a Camera: How Financial Models Shape Markets (Cambridge, MA: MIT Press, 2006). See The Financial Crisis Inquiry Report 2011 (New York: Public Affairs, 2011). US House of Representatives Committee on Oversight and Government Reform, The Financial Crisis and the Role of Federal Regulators, 110th Cong. (2008) (statement of Alan Greenspan, chair of the Federal Reserve), available at http://democrats .oversight.house.gov/index.php?option=com_content&task=view&id=3470&Itemid=2 (accessed December 1, 2011). Marshall David Sahlins, Stone Age Economics (Chicago: Aldine- Atherton, 1972); and Sahlins, How Natives Think: About Captain Cook, for Example (Chicago: University of Chicago Press, 1995). Henry Paulson, On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (New York: Business Plus, 2010). Since risk is a relation that objectifies itself in other relations, notably the wager internal to financial derivatives, its function in defining and stimulating liquidity is inseparable from the moment of objectification. Thus the production of derivatives, by amalgamating context- specific risks in order to model and price them, objectifies risk in an abstract form. Even the notion of counterparty risk is inherently plural and frequently social, inasmuch as it may encompass an open- ended ensemble of otherwise incommensurable risks, from a run- of- the- mill bankruptcy to a governments seizure of a counterpartys assets to a terrorist attack. See, for example, Stanley Tambiah, The Magical Power of Words, Man 3, no. 2 (1968): 175208; Stanley Tambiah, Form and Meaning of Magical Acts, in Modes of Thought: Essays on Thinking in Western and Non- western Societies, ed. Robin Horton and Ruth H. Finnegan (London: Faber, 1973), 199229; Stanley Jeyaraja Tambiah, A Performative Approach to Ritual, in Culture, Thought, and Action: An Anthropological Perspective (Cambridge, MA: Harvard University Press, 1985); Victor Turner, The Forest of Symbols: Aspects of Ndembu Ritual (Ithaca, NY: Cornell University Press, 1967); Victor Turner, The Ritual Process: Structure and Anti- structure (Chicago: Aldine, 1969); Roy Rappaport, Ritual and Religion in the Making of Humanity (Cambridge, UK: Cambridge University Press, 1999); Michael Silverstein, Metapragmatic Discourse and Metapragmatic Function, in Reflexive Language: Reported Speech and Metapragmatics, ed. John Lucy (Cambridge: Cambridge University Press, 1993), 3358; Joel Robbins, Ritual Communication and Linguistic Ideology: A Reading and Partial Reformulation of Rappaports Theory of Ritual, Current Anthropology, 42, no. 5 (2001): 591614; and Michael Silverstein, Private Ritual Encounters, Public Ritual Indexes, in Ritual Communication, ed. Gunter Senft and Ellen B. Basso (Oxford, England: Berg, 2009), 27191. Benjamin Lee and Edward LiPuma, Cultures of Circulation: The Imaginations of Modernity, Public Culture 14, no. 1 (2002): 191213. Mohamed El- Erian, When Markets Collide (New York: McGraw- Hill, 2008), 2021. Edward LiPuma and Benjamin Lee, Financial Derivatives and the Globalization of Risk (Durham, NC: Duke University Press, 2004).

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Lee and LiPuma, Cultures of Circulation. Cassidy, How Markets Fail, 33. Benedict Anderson, Imagined Communities: Reflections on the Origin and Spread of Nationalism (Durham, NC: Duke University Press, 2000). John Kay, What a Carve Up (book review), Financial Times, July 31, 2009.