With Banking on Words: The Failure of Language in the Age of Derivative Finance (University of Chicago Press), Arjun Appadurai, the Paulette Goddard Professor of Media, Culture, and Communication, delves into the culture of derivative finance and argues that the 2008 market collapse should be viewed ultimately as a failure of language. Long interested in “the sociology of economic action,” Appadurai’s latest project offers a probing cultural analysis of the global economic sphere. Professor Appadurai speaks to some of the book’s central themes in the following Q&A:
You conceive of the market collapse as a failure of language, more specifically the dissolution of the "promise" as a performative speech act. What distinguishes the promises of derivative finance (or architecture of promises, as you refer to it) from prior capitalistic traditions?
The primary difference between this architecture and previous similar ones is that it involves a contradiction between kept promises (those between derivative traders when they buy and sell "promises" to one another) and broken promises, such as in credit default swaps where derivatives make or lose on money based on the likelihood of broken promises in deals between others.
You depict derivative finance as a technique for slicing and dicing the individual and then "reassembling these divided bits of the person" into a subject for financial gain. You liken this to the state of the "dividual," an erosion of the western idea of the individual. Yet in this concept of the dividual, you also identify a radical form of politics to counteract the financial market's "predatory dividualism." Can you outline this new form of politics and articulate the source of your optimism?
This potentially progressive way of bringing together "dividuals" in new ways to challenge the domination of banks, corporations and finance professionals, can already be seen in the effort of various unions and pension funds to take charge of their own investments, the various student movements to re-structure student debt and the efforts of progressive hedge funds to distribute their profits to their stakeholders in a just manner.
In all these cases, that part of ourselves which is "chopped up" into our profiles as students, workers, debtors, homeowners etc. can be re-possessed and mobilized in a manner which challenges the domination of predatory financial elites.
Throughout the book you note with regret the limited engagement between the fields of economics, anthropology, sociology. Indeed you extend "an open invitation" to develop a new field of inquiry, one in which culture and finance are not divorced from each other. Which questions might benefit most from such interdisciplinary dialogue?
There are many topics which would benefit from this engagement and some of them are already being discussed by economists, anthropologists and others. Examples include: the question of the meaning of money and why money seems always to produce desire for more money, even apart from what money can buy; the issue of the cultural horizon of aspirations and how aspirations for a better life can come out of very different approaches to increasing one's wealth; the problem of risk and of how different classes, cultures and countries present highly different levels of tolerance towards economic risk; the study of innovation and the extent to which innovation is a product of history, culture and public support of innovative thinking.
You mention that your fascination with the sociology of economics began in graduate school and has informed much of your subsequent research and scholarship. Can you describe some of the intellectual pathways this involvement has taken over the decades?
I was introduced to the work of Max Weber in my first year of graduate school at The University of Chicago and he has been my model of how not to recognize boundaries between sociology, politics, economics and world history. Equally, I have been greatly influenced by Clifford Geertz's work on the economies of Indonesia and Morocco in his great studies of agriculture and bazaars in the 1960's, which showed how economic decisions are always shot through with cultural assumptions, styles and values. Lastly, Albert Hirschman's way of thinking about the passions and the interests in his studies of markets, parties and politics remain a model of economics with a human face.
In my own work, I have pursued the relationship between culture and economy starting in the early 1980’s in a series of articles on the culture of agriculture in India, in my work on “the social life of things,” in dialogues with development economists about the “capacity to aspire,” culminating in this most recent book on the logic of derivative finance.