Euro Money as Euro Language

This is the first of a series of reflections on the social meaning of the Euro.

Investigations of the social character of money often feature an analogy to language. Like words, money forms intelligible signs. Money, like language, is a critical medium of social exchange. Money, like language, is constitutive of identity: the particular kind of money we use, in part, makes us who we are. And money, like language, is both stable and unstable over space and time.

The architects of the European Monetary System (EMS) anticipated that the Euro would serve as an institution around which a European consciousness could be built. The Euro (at least in its material forms) functions like the EU flag or the EU passport to construct a new identity that plays on commonplace nationalist expectations. That is, when we see flags or passports or money, we have been acculturated to expect national sponsorship. The European Union thus displaces the traditional state in presenting itself through these institutions; if not precisely declaring itself to be a state, the European Union is, at a minimum, asserting that it is like a state for various intents and purposes.

But notice the peculiarly assertive case of the Euro. The EU flag often flies alongside the traditional flags of the EU Member States. The EU passport is formally issued by the respective member states: while it prominently features “European Union” on its harmonized cover, it also bears the name of the relevant member state. The EU passport in fact overstates the EU nature of the document. A passport begs the admission of a members state’s nationals into another state’s territory; it is only secondarily evidence of nationality (and in the case of EU passports, evidence of the bearer’s status as an EU citizen). Through flags and passports, the EU and the relevant EU member state co-occupy a space in the EU citizen’s imagination that had been occupied by the state alone.

Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan and Eldar Shafir

In Scarcity, economist Sendhil Mullainathan and social psychologist Eldar Shafir introduce the study of scarcity as a ‘science in the making.’ One of their colleagues, perhaps a sceptic and certainly a joker, gibes: “There is already a science of scarcity. It’s called economics.” But the science of scarcity Mullainathan and Shafir have in mind is not familiar economics. Scarcity is much more the subjective experience (and hence a psychological phenomenon) occasioned by want. Scarcity, say Mullainathan and Shafir, ‘captures the mind.’

Scarcity is a condition that the authors easily recognize. They suffer the curse of the hyper-successful: they have insufficient time at hand to accomplish all they have committed to do. The lack of time preys on their minds (and promotes them to waste more time worrying and complaining about their lack of time) and sets off a cascade of real-life consequences: missed appointments, neglected family, unpaid bills. And perhaps more: a sense of helplessness, depression, despair. We wrote this book, the authors declare. "We were too busy not to."

And so the first scarcity -- the scarcity the authors experience -- is the shortage of time. But their field immediately widens to include debt and poverty, hunger and the dieter’s calorie-count, and loneliness. Scarcity collects these conditions and explores their dilemmas. While many will escape a particular form of scarcity (we are not all poor), all may experience some form of scarcity (as might a recipient of a MacArthur ‘genius grant,’ such as time-pressed Mullainathan). The authors assert the existence of essential commonalities across these states.

The Org: The Underlying Logic of the Office by Ray Fisman and Tim Sullivan

It feels odd to be composing this review of Ray Fisman and Tim Sullivan’s The Org in the days following Ronald Coase’s passing. Coase was an unusually creative and influential thinker - one who identified some basic truths of organizational life that had not been generally recognized: the kind of simple things that, once pointed out, cannot fail to be seen.

Coase and the work that followed Coase form much of the subject matter of The Org, a book-length meditation by Ray Fisman and Tim Sullivan on the science of the organization. Indeed, Fisman and Sullivan launch the book with the story behind Coase’s posing of the grand question: “Why orgs?” Young Coase travels to Chicago, meets with managers, and reads the Chicago phone book. He is struck by the range of scale and activities pursued by the firms he finds. Why then, asks Coase (and ask Fisman and Sullivan), are some activities conducted within firms and others between firms (that is, via the market)? Coase’s answer (transaction costs) may or may not be correct (‘transaction costs’ always seemed to me to be a convenient label for a still elusive explanation, almost a tautology); what is important is the question.

Organizations are mysterious. We fit them on like suits of clothing - and instinctively know how to push and pull their levers. Fisman and Sullivan focus on what happens within the firm - how organizations compel human agents (because that’s what we are) to pursue organizational goals. The resort to organization is by and large a given. At this point, they collect the principal/agent mysteries that form much of the challenge to understanding how firms work. Fisman and Sullivan do not confine themselves to business organizations in The Org - indeed their best coverage involves organizations that are not business firms: the Baltimore police department, Methodist churches and the military.

Big Data: A Revolution That Will Transform How We Live, Work, and Think by Viktor Mayer-Schönberger and Kenneth Cukier

So here’s my favorite quote from Big Data - from an interview with Mike Flowers, New York City mayor Michael Bloomberg’s ‘director of analytics’:

You know, we have real problems to solve. I can’t dick around, frankly, thinking about other things like causality right now.

We find ourselves in a new world, argue Viktor Mayer-Schönberger and Kenneth Cukier. No longer need we grapple with the world by spinning theories and using them to make predictions. We now have Big Data and Big Data will speak to us, gifting us with insights that were never before accessible.

By Big Data, Mayer-Schönberger and Cukier refer to the vastly greater amount of collected and stored data around us. Big Data also reflect a new economics - where the costs to acquire, store and manipulate data are increasingly negligible. Big Data is often collected mindlessly and incessantly: our continuous GPS coordinates, our Google searches.

Big Data presents new opportunities for prediction. Old prediction involved the collection of precise sample data, which would then be fitted into a theory. Theory was developed under causal lines - data confirmed theory and reflected a link between cause and result. If we collect data showing a large number of people diagnosed with the flu, we may infer the presence of an epidemic. 

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What it Used to Be by Moisés Naím

Moisés Naím sees the decline of power across many institutions. He is at times wistful, at times celebratory in his reaction to power’s decay. But he isn’t entirely clear why we should care about the passing of power. The powerful do care; Naím has many powerful friends who lament power’s loss of magic. Popes, pols and pundits just don’t get the respect their predecessors received; their authority is more circumscribed, more readily challenged (the same decline is noted by law professors). But for the greater number of us, who are in more settings objects of the power of others than detainers of power, the end of power is not a self-evident cause for concern.

A decline in social organization is a cause for concern – and to the degree the phenomena described in The End of Power signal a loss of capacity for coordination, Naím’s book is more than an indulgence of ambivalent nostalgia. Naím is careful with his definition of power: power is the ability of some few - the powerful - to direct the actions of others. And, he asserts, there are four means by which power is exerted: muscle (force), code (tradition), pitch (persuasion), and reward (incentive).

Naím is a superachiever who has spent his life at or close to the top. He was a prominent politician in Venezuela – and since has become a heralded writer in the United States. As such, his personal prescription, given toward the end of The End of Power, is quite surprising. Get off the elevator, Naím urges. And by this he calls for an abandonment of mindless ambition and more; elevator thinking is the focus on rank and hierarchy, which promotes power as an end in itself.

Noble Savages: My Life Among Two Dangerous Tribes - The Yanomamö and the Anthropologists by Napoleon Chagnon

Napoleon Chagnon's title promises a visit to two dangerous tribes: the Yanomamö and the Anthropologists. He provides a disjointed treatment. The larger part of the book takes the form of memoir, a return by Chagnon to the people he studied over the greater part of his career. The later chapters address the academic scandal surrounding Chagnon's work - and his place within the evolving discipline. Chagnon defends himself here - but he does not 'scientifically' study his anthropologist accusers: their violence (as opposed to that of the Yanomamö) is not explained.

Chagnon made the Yanomamö famous: his monograph (subtitled "The Fierce People') was widely studied (it was a highlight of the undergraduate Cultural Anthropology course I took). And of course the Yanomamö made Chagnon famous.

Chagnon's work was always controversial. He presented the Yanomamö as among the world's few remaining "Stone Age" people, largely isolated in the regions dividing Venezuela and Brazil. From here they subsistence agriculture from ever shifting villages. The Yanomamö were hardly unaffected by encounters with the outside -- they grew plantains and other crops that had been introduced to South America and prefered modern tools (including the machete and shotgun). Chagnon depicted the Yanomamö as a violent society, characterized by treacherous killings, inter-village raids, and systematic abduction of females. The Yanomamö were not Rousseau's noble savages.

Debt: The First 5,000 Years by David Graeber

America is built on debt. Indeed, assuming our fair share of debt can be seen as an American duty. We obtain housing, education, transport and medical services through our use of credit -- and as such we spend most of our lives deeply indebted. The root of our notion of freedom (echoed, as Graeber points out, in religious imagery) is freedom from debt -- and if this is so, then by no means is America the land of the free.

Graeber's overview of 5,000 years of debt demonstrates that debt is not a neutral social instrument. Rather debt is first and foremost an institution allowing for the exercise of power. Debt is the foundation of hierarchy and hence much social structure.

Read my full-length review of David Graeber's Debt in the Los Angeles Review of Books.

Wired for Culture: Origins of the Human Social Mind by Mark Pagel

Mark Pagel addresses the conundrum posed by variegated cultures. Culture -- what we have that monkey's don't (according to a witty formula quoted by Pagel) -- both unites us and divides us. In Wired for Culture, Pagel attempts an evolutionary account for the existence of cultures. His inquiries commence with the mad multiplicity of languages. Language is the prime instrument of cultural transmission and the strongest marker of cultural identity. Yet the intra-group facilitation of communication provided by distinct languages are foreclosed to outsiders. Our languages seal us off from one another.

Human adaptability to the widest range of niches offers only a partial explanation for the multitude of cultures. New Guinea sports more than 800 different languages within a very small territory -- here mutual unintelligibility seems to be the point. Language operates both to permit and prevent understanding; both these characteristics are necessary. The value of a closed system of communication has long been recognized. Tradesmen, criminals and academics use argot to separate themselves and to keep secrets.

Pagel makes an evolutionary case for the multiplicity of languages; language serves as an identifier of group membership. This is culture's darker role: defining group boundaries. Pagel sees language and other cultural institutions functioning to set limits for altruism. Humans are social -- but only to a degree. We are a species that engages in magnificent cooperation -- yet are capable of inflicting harm on a scale not found in any other species.

Collateral Knowledge: Legal Reasoning in the Global Financial Markets by Annelise Riles

I was entranced by the prospect of reading Annelise Riles' Collateral Knowledge, given my eclectic (some would say scattershot) interests. Riles delivers a sophisticated and insightful anthropological treatment of the management of various legal questions facing Japanese banks entering OTC swap transactions. Global finance, ethnography, tasty legal theory: what fun!

And yes, Riles pulls it off. She promises an "ant's-eye view" of these stories, consistent with traditional ethnographic method. While the original intended targets of her observation were Japanese bank regulators, she later realizes the 'back-office' personnel (including the lawyers overseeing the documentation of the transactions) were as central in the process of the law-making.

Riles examines two crucial points of tension in the swap practices of Japanese banks. The first is the utilization (under Japanese law) of the institution of collateral: the posting of property to secure repayment of a debt. The book's title, Collateral Knowledge, plays on this and other meanings of "collateral." All commercial lawyers understand how collateral should work: it should freely pass the pledged assets into the hands of the favored creditor in the event of a debtor's default. And so the mission of a bank lawyer (in this case, one dealing with a Japanese bank) is to assure his principals that these functional expectations are met. This is hardly a simple matter where (in an example given by Riles) the swap is between a Japanese bank and a UK bank, posted to their respective Cayman Island subsidiaries and involving Chinese and Singaporean currencies. The swap raises peculiar difficulties, as neither party knows ex ante whether it will be a net creditor or net debtor of the other -- and so both may need to post, maintain and adjust collateral supporting the transaction. The standard industry forms, drafted by British and American lawyers and routinely used by the Japanese banks, are "literally nonsensical" to the Japanese, according to Riles.

The Hour Between Dog and Wolf by John Coates

What a fun book this is! The Hour Between Dog and Wolf by John Coates mixes pop finance with pop science, sketching some surprising links between them. I will trust Coates to get the science right (he provides citations). His investigation of financial markets is largely anecdotal and so speculative, but all the same it yields tantalizing suggestions.

Coates is a former derivatives trader -- which gives him authority to describe the subjective experiences of winning and losing at a trading desk. He (somehow) becomes hooked on neuroscience research; he describes himself sneaking away from his Wall Street desk to mix with scientists at Rockefeller University. The book seeks to bring these two worlds together. Coates immerses himself in the activation of hormones: testosterone, cortisol and the like. It is these chemical agents that produce the profound effects on the humors of financial traders, and hence overall market behavior.

Coates attacks the mind/body dichotomy: a financial market trader reacts more like an athlete than an analyst in responding to the stimula communication through his screen. Coates employs emerging understandings of mind/body feedbacks to track the play of traders. The traders can react before they 'see', rely on 'gut feelings' and engage in mano-a-mano combats from which they emerge winners or losers. These are quintessentially physical experiences. The markets themselves may then be understood as projections of this human biology.

Trading in financial markets, like war, is a young man's game. It draws on physical resources and reaction times, and a constitutional inability to fully appreciate surrounding dangers. But young soldiers require leaders with a different set of biological characteristics for larger scale success.
Coates develops a human biology account for market cycles. Biofeedback loops reinforce confidence in those traders experiencing winning streaks -- and most traders win in rising markets. The narcotic effect accompanying success then goads these traders to risk again and again, with ever greater stakes. The manic exuberance (a real physical effect produced by past successes) pushes speculators beyond 'rational' limits. Perspective is lost by nearly all at the top of a bubble.

What Chinese Want: Culture, Communism and the Modern Chinese Consumer by Tom Doctoroff

In this unabashedly pop business book, Tom Doctoroff, head of the J. Walter Thompson advertising firm in China, tells us What Chinese Want. Yet the implicit question is complex: what do the Chinese want for themselves? For their children? For China? And to answer the question coherently involves considerable psychological framework. Doctoroff is an ad guy -- so the question that lies squarely within his expertise might be: what does the Chinese consumer want to consume? And this question he begins to answer. He is less certain -- and less convincing -- when applying the insights he draws from Chinese consumption habits to the more mysterious nature of Chinese culture, politics and foreign policy.

I suppose we can learn something meaningful about the Chinese from studying their patterns of material consumption -- even using the tools of an advertising executive. In some sense, Doctoroff's inquiry is an exercise in applied cultural anthropology -- though his ends are more instrumental than scientific. So which firms are doing well in China -- and what do their successful adaptations suggest?

Starbucks, Doctoroff tells us, has configured larger stores in China which serve as group meeting places. The Chinese consumer would not pay the equivalent for $4.00 for a cup of coffee for private consumption (this may reveal the inherent cross-elasticity of Starbucks coffee and ubiquitous hot tea). The consumer will do so, however, when observed by others; the Starbucks customer's extravagant expenditure for a latte is justified by a gain in social standing. And so by facilitating the prospect of mutual observation -- by providing large, welcoming meeting spaces -- Starbucks sells coffee in China.

The Starbucks example typifies a more general tendency Doctoroff observes: a uniquely Chinese form of conspicuous consumption. Luxury goods are avidly purchased by Chinese consumers -- from Starbucks coffee to Cartier watches -- if their consumption is observable. But when consumption is hidden -- in the home for example -- the Chinese eschew unneeded expense, preferring cheaper products that are weakly branded and of domestic origin. Doctoroff would likely predict tough going in China for an importer of high thread-count sheets.

So the Chinese are, says Doctoroff, and so they will remain. For one of the keys to Doctoroff's presentation of the Chinese is his sense of their sense of timelessness. The Chinese remain the way they are; new experiences, through consumerism, exposure to technology and increased contact with the outside, will not change them.

Doctoroff has lived in a China for many years. Indeed, he tells us of moving into a picturesque and resolutely Chinese neighborhood in Shanghai -- admirably, he does live in post-colonial isolation. And so, no doubt, there is a significant stock of observation behind his construction of Chinese character. But I remain suspicious of Doctoroff's generalizations. Perhaps this is precisely what an advertising professional is tasked to accomplish -- form generalizations that can serve to inform marketing plans. Yet there is little distance between broad cultural generalizations and misleading stereotypes. I wonder whether this book will embarrass Doctoroff's grandchildren 50 years from now.

Doctoroff teaches us that the Chinese have a notion of 'face' that may not be offended. That they are intrinsically pragmatic. That order is the paramount value. That the Chinese are ambitious in a perversely contained way. That their sense of cyclical history leads them to be fatalistic, yet assured of China's return to glory.

Chinese society is built from the foundation of the family, and not from the individual, Doctoroff observes. As such, it is the social that is essential. Larger and larger social units are built outward from the family -- extending from clan to all China -- with attenuating yet meaningful identification and allegiance. The state, however, is distrusted. The Party's legitimacy depends on a fragile bargain -- its continued exercise of power depends on the maintenance of order and rising material conditions.

Doctoroff argues that the Chinese are afflicted with a weak civil society. This leads to a general insecurity. The Chinese are uncertain about preserving what wealth they may acquire, they fear dependency (beyond the family) and they are haunted by possible breakdown of social order. Doctoroff sources Chinese defensiveness to these anxieties. And he includes, as a characteristic manifestation of Chinese defensiveness, its reactive national alarms to challenges to its sovereign territory. Doctoroff's 'foreign policy' prescriptions are fairly simple. China is not to be feared, as it is not aggressive. But neither is China to be threatened, for it will defend itself.

Doctoroff may be right about all this, but if so, it may be his intuition that correctly guides him and not his deep knowledge of Chinese consumerism.

What Chinese Want is longlisted for the 2012 Financial Times and Goldman Sachs Business Book of the Year Award.