March 5, 2013
by Annelise Riles

The Changing Politics of Central Banking

Bank of Japan, Tokyo

Last weekend we convened a quite exciting conference on “The Changing Politics of Central Banks” sponsored by the Cornell International Law Journal (symposium website). The focus on central banks as political actors is clearly timely given the growing awareness of the public of the distributive effects of monetary policy and also the debates taking place in many countries around the world about the proper scope of independence for central banks.  Yet we lack a sufficiently rich vocabulary for talking about this politics. Moreover, this is one of those interesting places where traditional right-left divides do not apply: what do we make of Paul Krugman’s embrace of Abenomics, for example?

The perspectives of the conference participants–academics and central bankers, mainly–varied considerably.  Keynote speaker Dan Tarullo pointed out that while independence make sense in the realm of monetary policy there is no reason for independence with respect to the central bank’s regulatory role, since in that space it acts very much like other kinds of administrative agencies which are subject to various forms of oversight (press coverage of Dan Tarullo’s remark: 1, 2, 3, 4).  Peter Lindseth, an administrative law and EU law specialist, spoke of the need for precisely this form of administrative oversight. Anna Gelpern pointed out that given what she called “the big blur” of monetary and fiscal policy, we need to begin to reeducate the public about what political legitimacy for central banks should look like.  Katharina Pistor argued that the focus on central bank legitimacy was not the entirely right question–that we should be asking “what kind of global financial system do we want”–because as long as we have this system, central banks can do nothing other than what they are currently doing.  Bob Hockett argued for an international central bank that would better address the needs of the global financial system than can a network of national central banks.  I took the opposite approach to Bob to the same problem: I suggested that the field of conflict of laws, with its rules for determining “who is in charge” in any particular situation, could better coordinate regulation transnationally than can global institutions.  Doug Holmes presented the findings of his extensive research on how central banks communicate with their various publics and constituencies in order to demonstrate that central banks are in fact more in touch, and more accountable, than the formal institutional structure would suggest.

What was resolved at the conference? I think we clarified a few points:

  1. Central banks are indeed political institutions that can and should be analyzed as such.
  2. Given that the genie is out of the bottle and there is indeed a “big blur” between monetary and fiscal policy, we need new ways of talking about the political accountability of central banks.
  3. There are nevertheless interesting variations in this politics from one state and market to the next, and even in any one context, the processes of accountability are far more complex and multivocal than they appear at first site.
  4. All of this impacts on the ability of central banks to cooperate in order to forestall future financial crises.


Sounds like a mandate for more research.  Stay tuned!

March 5, 2012
by Annelise Riles
1 Comment

Japan One Year Later: How Can We Bring Closure to Crisis?

This coming weekend, at Cornell, we will be holding a very special conference. The conference marks the one-year anniversary of the earthquake and tsunami and subsequent nuclear crisis in Japan. The title of the conference, which will bring together economists, lawyers,
anthropologists, policymakers, literary theorists, and many others from Japan, the US and Europe, is “How can we bring closure to crisis?”  The program is here:

As many of you know, the events on and since March 11, 2011 have had quite a profound impact on me personally and professionally. It’s no exaggeration to say that my own vision of my scholarly and professional mission, and even of what is important in life, has been transformed by the events of the year ago. This conference will offer a chance to reflect on the enduring policy questions but also the more personal aspects of all of this, and also to consider what we had his academics and professionals can do to address the continuing political, economic, environmental crises of the moment. If you are in the Ithaca area and have an interest in attending part or all the program, please let me know. You would be more than welcome.

May 1, 2011
by Annelise Riles
1 Comment

How can we better harness the insights of different disciplines to address market reform?

Last week we convened another meeting of our working group of economists, anthropologists, lawyers, psychologists and policy makers interested in how our disciplines could work together in new ways to solve market problems.  It is a very smart, high-powered group of creative people who truly have the best interest of the national and global economy at heart.  And the policy makers are brilliant, dedicated individuals who know how things work on the inside, and who think broadly about the issues.  Once again, our meeting was supported by the Tobin Project, as well as by the Clarke Program in East Asian Law and Culture at Cornell Law School.

The theme this time was health care insurance reform and we did some hard thinking about what our disciplines could say, practically, about what kind of insurance exchanges might help different kinds of consumers make the best choices possible for them.


But there is another running conversation at these meetings about how the disciplines can be reconfigured to work better together in the future. The disciplinary truce worked out in the early twentieth century was a kind of cold war-like division of the territory: anthropologists study exotic others, sociologists study deviant groups at home, psychologists study individuals, economists study markets, and so on. Thank goodness that along the way we learned that all these elements are inter-related and that each of these disciplines has much to say about every aspect of life. So how else could they work together?


One model that is emerging from our meetings is a kind of production model, beginning with original insights and moving all the way to the incorporation of ideas into policy.  Eric Johnson, a distinguished psychologist teaching at the Columbia Business School, suggested that anthropologists could provide the insight (based on ethnographic research), economists could provide the models, and psychologists could provide the data (based on experiments)–and that we need data and numbers to convince policy makers.


Another model seems to be a model of internal change within fields.  Peter Spiegler, an economist at U Mass Boston and one of the most truly original scholars I have ever encountered, suggested that economics needs to start incorporating ethnography into its own method of research, rather than just taking insights (about trust, or reciprocity or whatever) from anthropology and modeling them in the traditional way.  I argued that anthropologists, conversely, need to learn to value simplicity as well as complexity, and to communicate openly and clearly and generously with people in government and in other fields, as economists and psychologists have learned to do.


There are a lot of things that infuriate me about anthropology and anthropologists.  But at the end of the day, some of our most basic insights are sorely lacking in the policy world and could make an enormous contribution to market reform.  Here are just a few obvious ones:

-Asking about the givens: noticing what is so important that it is just taken for granted by everyone, including perhaps even the researcher.  For example, at our meeting, we were deep into how to structure consumer choices about insurance and one anthropologist asked “why do we value choice so much in the first place?”

-thinking about the global dimensions of even the most domestic policy problems, and thinking comparatively about policy problems. For example, what could we learn about health reform from Japan, or Singapore, or South Africa?

-thinking about the range of actors and interests involved in law reform.  For exaple once a law like the health care act is passed the story is not over–it has to be implemented by armies of regulators, interpreted in practice by physicians, drug companies and insurers, used by consumers…how do all these people come together in practice?

-reflexivity–realizing that academics are part of the picture and bear some responsibility for what we advocate for, and its consequences, intended and unintended.

Insight rather than data–ultimately ethnography gives you a picture, and a story, and helps you to to become aware of the aspects of a problem you may have ignored altogether in constructing your model or your policy proposal.  Private companies have grasped the value of this kind of insight and are employing ethnographers in large numbers to do market research and study organizational culture within their companies but we have a ways to go before it is adopted as broadly in policy circles.


What do you think are the strengths and weaknesses of each discipline in thinking about market reform? How do you think fields like economics, anthropology and law could better work together to address market reform?


November 15, 2010
by Annelise Riles
1 Comment

Upcoming presentations

This week, I will present and discuss some of the findings of my upcoming book Collateral Knowledge: Legal Reasoning in the Global Financial Markets at two separate events.

First at 4:30pm on Monday, November 15, at the Colloquium Series of the Department of Science and Technology Studies at Cornell University:

Title: “Collateral Knowledge: Legal Reasoning in the Global Financial Markets
When: Monday, November 15, 4:30pm
Where: 374 Rockfeller Hall, Cornell University, Ithaca, NY

And on Friday at the Annual Meeting of the American Anthropological Association (New Orleans, LA), in a session entitled “Uncertain Paradigms: Ethnography and Theory“:

Title: “Collateral Knowledge”
When: Friday, November 19, 2:45pm (Session begins at 1:45pm)
Where: Sheraton New Orleans, New Orleans, LA

October 26, 2010
by Annelise Riles
1 Comment

How is Health Care like Financial Derivatives?

Health Care and MoneyMost people think about the debate about health care reform and the debate about financial regulation reform as quite separate problems. But are they really? Every first-year derivatives textbook tells the student that derivatives are a form of insurance—a way of hedging against risks that are substantial and yet hard to quantify. From a societal point of view, the risk of illness, and the costs of care in old age are one of the largest such risks to the society and economy as a whole, and so health insurance serves a similar economic function as derivatives in providing a mechanism for society to spread large economic risks. For the average working family, both are part of the package of financial decisions that must be made, and trade-offs have to be made between, for example, purchasing a more expensive health plan with higher premiums but better coverage for high ticket health needs versus putting that money in a 401(k). These are different ways of providing for the uncertainties of the future. But they pose similar challenges to ordinary consumers/investors of evaluating complex products provided by retailers who have more knowledge than consumers about what the statistical odds of a payout in the consumer’s favor might be. Obviously costs in one area impact the other: if consumers find themselves facing catastrophic health care expenditures the first thing they will do is withdraw money from their 401(k) to cover those expenses, and they certainly will not have extra money to invest in financial products. So stability and predictability in the area of consumer health care costs also contributes to consumers’ ability to invest in financial products.

One difference of course is that health insurance is a financial product sold to ordinary retail investors. Derivatives in contrast are for the most part available only to what the law refers to as “sophisticated investors”. The good sense behind the insurance exchanges idea in the health care legislation is that the experience from finance clearly teaches us that retail investors are not in a position to sit across the bargaining table from large institutional market players with substantially greater information about the possible risks and rewards of certain financial transactions. Just as securities sold on an exchange are standardized and hence far easier for ordinary consumers to evaluate from the point of view of publicly accessible information, the same should be true of the investments all but the most sophisticated investors make in health insurance.

Some other lessons from the financial debacle may have implications for the health care issue. One lesson of the financial crisis concerned the sometimes unhealthy role played by investment banks, whose staff was motivated by inappropriate incentives, in the valuation of ordinary companies. We see similar problems in the way insurance companies’ mandates are often creating inappropriate pressures on health care providers.

Recently a conversation has begun between specialists in insurance regulation and specialists in financial regulation around these questions. A conference will be held at the Cornell Law School in April 2011 bringing together behavioral economists and institutional sociologists and anthropologists and also regulators and policy makers working in both fields. The conversation between behavioral economists and sociologists and anthropologists of markets has already yielded important insights about 1) the networks through which prices come to be set in the financial markets, 2) innovations in regulatory form and process that can lead to better compliance and more optimal behavior by market participants, 3) what paradigms might replace the neoclassical model and associated rational actor model of human behavior that has undergirded so much market law and policy over the last two decades. At the next conference, we plan to ask how the insights from this conversation might speak to current problems in health care policy design. Our starting premise is that markets are not rational in the sense assumed by neoclassical economics, but that through clever institutional design and the exploitation of cultural practices and social networks we can make significant progress toward market stability.

But the big picture is this: we have been talking about health care as a kind of welfare/wealth redistribution issue and for many, such issues should take a back seat to the problems relating to getting the economy back on track and especially bringing stability and predictability to the financial system. But maybe we should instead think of health insurance as an integral element of the financial stability package?

January 11, 2010
by Annelise Riles

What can each of us do to stabilize the markets?

An upcoming conference sponsored by the Cornell Law School and the Center for Global Partnership explores the role of professionals and professionalism in bringing about market stability. The idea is to create a “market movement” on par with political and social movements, to bring about market change from the ground up. What role can each of us play? Is there an alternative to waiting for the government to fix our markets on the one hand, or having blind faith in free-market greed on the other? Read more about the conference here and sign up to attend live or on line.

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