ABSTRACT
There is one key aspect to global finance that generally gets little attention, in spite of its centrality to the topic. And that centres on the people who inhabit the world of finance, their cultural dispositions, and the kinds of knowledge and assumptions that they bring to financial markets. In the light of the GFC, bankers, share dealers, and financial traders are typically seen in terms of stereotypes, as rapacious speculators bloated by multi-million bonuses. Such images are mollified only by the sober faces of ineffectual central bankers and public regulators charged with clearing up the mess, appearing on television or in parliamentary committees to explain why they failed to prevent crisis, and what can be done about it. These stereotypes may reflect public anger, but they are inadequate
in their grasp of the cultural worlds that traders and bankers inhabit. And beyond these prominent occupations lie a more elaborate and significant, yet often neglected, set of actors concerned with finance. These include hedge fund managers, bond dealers, commodity brokers, foreign exchange dealers, actuaries in life insurance, financial analysts and journalists, private sector lawyers and public regulators, economists and statisticians. They inhabit a range of financial worlds rather than a single integrated financial system. These multiple worlds include trading rooms, confidential
client-centred transactions, boardroom decision-making, central bank deliberations, and regulatory engagements with financial corporations. This is a world tied together by interpersonal networks of interaction that link private and public sectors, as well as electronic trading networks which often involve automatic trading programmes. Financial actors certainly deploy evidence-based economic and statistical
analysis. But they also build in a range of experience-based judgements, gut feelings, and, in the case of traders, raw emotions such as fear, uncertainty, confidence, hope, and even euphoria. These may all be found within global finance, though they are not evenly spread among the various financial sectors and occupational communities. They do, nonetheless, have to be taken into account in any analysis of the financial world, rather than being relegated to the status of marginal, ideological or irrational intrusions into essentially rational processes. This applies, as we shall see later in the chapter, whether we are talking about public policy-making, decisions about investment strategy, credit policies, risk management or governance processes. The cultural characteristics of global finance have not generally been of
interest to economists, corporate managers, or policy-makers, nor did early generations of sociologists give much thought to such questions. This neglect arose from one of two reasons. The first of these assumes financial markets are populated by acquisitive
ego-centred economic-rationalists, relentlessly pursuing financial returns through economic self-interest. This approach fitted well with the expansion of global finance in the last quarter of the twentieth century when a more sophisticated and mathematical approach to financial markets led to a greater adoption of financial theory by financial traders. It also fitted well with an epoch of apparent on-going economic success. Periodic crises and panics brought subsidiary views about the world of finance markets into play, notably the presence of psychological traits such as greed and fear. This has generated an interest among behavioural economists in the psychology of market behaviour, including phenomena such as confidence, mimicry, and herding. Yet this tended to focus on sets of individual psychological dispositions, rather than the collective organizational features of market cultures. The second reason for neglect of cultural dimensions to finance, more
prevalent among earlier generations of sociologists, arose from an excessively
structural approach to institutions considered from the top-down. Finance, as analysed by radical political economists, is seen as part of global capitalism, understood as a system founded on capital accumulation in pursuit of private economic advantage operating through markets for land, labour, and capital. Analysts influenced by Marxist political economy have observed both the dynamic and the crisis-ridden features of capitalism for 150 years or so, but have not taken much time to explore how cultures of finance operate, how and why financial innovation takes place, and how different forms of knowledge create new financial products and new risks. Social actors in finance are simply assumed to be driven by the system imperatives of the over-arching economic system. This kind of sociological neglect has been overcome in the last two
decades with the growth of economic sociology and social studies of knowledge. Economic sociology, unlike most of the earlier productioncentred work by political economists, embraced first the sphere of consumption and then finance. Books such as Jocelyn Pixley’s Emotions in Financial Markets: Distrust and Uncertainty in Global Markets (2004) and Donald McKenzie’s An Engine, Not a Camera: How Financial Models Shape Markets (2006) have helped revolutionize the study of financial cultures. Pixley claims that financial worlds have to deal with the consequences of radical uncertainty about the future. This necessarily builds emotional anchorages around trust, reputation, and confidence into the far-from rational worlds of financial transactions and governance. McKenzie, meanwhile, deepens understandings of the discursive contribution of knowledge to economic life, focusing on the ways in which economic and financial thought has constituted new types of financial markets rather than simply observing and describing them. While the theoretical dimensions underlying these trends will be explored
further in Chapter 5, attention here is given to several key elements in the cultures of global finance, dealing first with traders and then with central bankers.
