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!

May 16, 2012
by Annelise Riles

Is this capitalism? If not, then what is it?

This post was originally published as part of a “Theorizing the Contemporary – Finance”  forum on the Cultural Anthropology website.


“Business Leaders of Today are Not Capitalists,” shouted the Financial Times headline several weeks ago. The article went on to describe how, inside the largest financial institutions, leaders are today chosen not for their entrepreneurial skills, their instinct for risk, their interest in making money even, but for their ability to schmooze and negotiate with government bureaucrats. Those with connections to governmental elites from their school days who have proven themselves agile at institutional and bureaucratic politics are the new titans of the economy.

Why? The article doesn’t go there, but I think the answer is obvious.  Today, money is made primarily from government give-aways of one kind or another—subsidies, bail-outs, regulatory regimes favorable to industry.  The game is now not about making markets but ensuring you get as much as possible from the state, or at least more than your competitors. Contrary to a decade ago when industry leaders decried the “nanny state,” today they line up to be coddled.

So what should we anthropologists of markets make of this new reality? And what of the fact that it doesn’t take an anthropologist to get this far: the FT, bastion of mainstream opinion in the financial industry, has already done the analytical work. What can we add to the mix?

To my mind, the core question and contribution anthropologists can make at this moment is similar to the contribution that Hayek and the Vienna School made at the close of World War II when, as today, the consensus about markets, states, and their relationships was shattered and the ideological field was wide open.  As Foucault recounts in his lectures on biopolitics, those guys fashioned a new consensus, a set of givens, and worked hard to turn them into the hegemony they became. The results spoke for themselves: until today it was largely impossible to think outside the view that markets were more legitimate than states and that state intervention in markets should be corrective, and hence reactive and limited, but not “dirigiste”.

We could have a vibrant and exciting debate about what the contours of this new consensus should look like, as a descriptive project and as a normative project.
For example, half of me finds myself rooting for the good old Hayekian days when markets were markets, losers lost, and innovation was the way to profit maximization.

So I was excited to see the petition by Public Citizen to the Federal Reserve to break up the banks that are deemed Too Big To Fail.

The occupy wall street folks made a similar proposal.  The argument in a nutshell is, “you told us that the rules were that capitalism produces winners and losers and that tough love toward the losers ultimately raises all boats.  You forced us, the workers, the small businesses, the underemployed, to live by those rules, so the least you should do is live by those rules now.  Allowing firms that are too big to fail to exist is an admission that there are two sets of capitalist rules–rules for the insiders and rules for the rest of us.”

One of the reasons I like this proposal is that, having studied the Too Big to Fail (TBTF) issue quite extensively from the vantage point of fieldwork among government technocrats, I can confidently say that most technocrats agree that this would be the best solution. But they believe that it is politically unpalatable because ultimately those TBTF institutions control the political process and will make sure that legislators do not allow technocrats to stick to market rules.  I bet the Fed was actually really really happy to get this petition in fact.  So here is a kind of political initiative on the part of the citizenry that we anthropologists could champion, in part because it dispenses with the usual divide between technocratic elites and ordinary citizens who are assumed to be well-meaning but know nothing about finance. This initiative potentially gives technocrats the power to do what they “know” to be right (from the vantage point of their Hayekian ideology) and pits technocrats and citizens together against the big banks.

That is one way to go. But my instinct is that as tempting as this may be, we should be doing something even more bold.  My guess is that we should not just hold the Hayekians to their Hayekian bargains but rather recognize that the world is changing and set out to build the new consensus.  And here there are all kinds of other interesting developments we might want to investigate and weave into a new kind of analysis. For example, what do we make of the sudden prominence of religion in debates about capitalism–not only in “alternative” forms of capitalism but right at the heart of North Atlantic economies? And what do we make of the fact that spokespersons for mainstream religion, who, in our social theory since Weber, are imagined as supporters of capitalism, are emerging as powerful critics? I am thinking here of the statements by both the Pope and the Archbishop of Canterbury in support of Occupy Wall Street. In Japan also one hears many allusions to Buddhism, Shinto and other religious traditions in political debate about market regulation. There are many possible understandings of such statements but I wonder if along with the collapse of confidence in rational modes of risk management, prediction and planning we are seeing the beginnings of a new appreciation for the metaphysical and existential issues posed by markets, the kinds of issues anthropologists and sociologists of finance since Weber have eloquently demonstrated. What happens to the ideological consensus of market/state relations when such issues come to the forefront of market participants’ own consciousness?

Another set of issues have to do with the decline of the North Atlantic economies and the rise of Asia in particular.  How does this new reality, accepted as such by all of my informants, and the ensuing debate they are having about multiple forms of capitalism, the relationship between capitalism and culture and so on, reconfigure the possibilities for a new post-Hayekian consensus about what makes markets work and why? These are just two small examples of how and why this is an exciting moment to be an anthropologist of markets.  As one of my informants put it, we are in a counter-cyclical business: when things are really bad for everyone else, our work is full of possibilities.

January 9, 2012
by Annelise Riles
1 Comment

Broadening the field of financial regulation

Stock DataThis morning I participated in a fantastic panel at the American Association of Law Schools organized by Anna Gelpern and Eric Gerding on the state of legal scholarship about financial institutions. The question the organizers asked is, what is the most pressing focus for the field today?
I argued that we need to significantly broaden the field–its subject, its methods, and the range of debates it is addressing at the moment.


In this post, I will focus on Broadening the Subject:
  • Research needs to become far more seriously comparative. Dodd Frank is not the only thing happening in the world, people!  Elsewhere, very different solutions, different models of market regulation are being developed–and indeed there are different views of what the key problems are.  American scholars pay lip service to the globalization of financial regulation but too often focus only on US and UK law and assume that issues elsewhere are either pretty much the same, or just behind the US and the UK in development. But the days of US and UK dominance are soon over.  The world is far more complicated and more interesting than this.
  • Research needs to become far more focused on international regulatory problems.  Most regulatory problems are now cross-jurisdictional in some sense or another.  This means that new international regulatory projects–from the Financial Stability Board to efforts to coordinate countries excluded from the Basel consensus–are increasingly important.  Yet how much do most scholars in the field of financial regulation know about international law and institutions? Too often we seem to be reinventing the wheel in that field, without taking advantage of the wealth of knowledge about what works and doesn’t work in international institutions in analogous fields. (Stay tuned for my forthcoming paper on this)
  • We need to pay more attention to forms of regulation outside the purview of traditional state institutions.  As I argue in Collateral Knowledge, most market governance is not state-based. It is initiated and conducted by private parties.  How does this work? When does it work and when does it not? How does it interact with state regulation?
  • We need to focus much more on the politics of market regulation–on the changing political climate in which financial regulation is being produced, the differences in this climate in different jurisdictions, and its impact on the policy options available to regulators, the culture/esprit de corps among regulators, the ability to recruit top talent to the bureaucracy, and indeed the zone of what regulators imagine as possible.  Just as internationalizing the field demands reaching out to international law scholars, politicizing the field means reaching out to political scientists and scholars of law and politics working in other domains of law.
  • We need to pay attention to the ways in which the field of finance is always expanding to include other subjects. For example, markets in energy products bring finance into conversation with environmental law and politics, and financial crises and environmental crises mutually influence each other in many ways.
Tomorrow I will take up how we might broaden the methods we use to study financial regulation and what debates deserve our central attention.

July 7, 2011
by Annelise Riles

Learning from Regulatory Diversity

As we look ahead toward how we can do a better job of preventing, or at least lessening the effects of the next financial crisis, I think we can all agree that the more information regulators have about the real world conditions in the market–the nature of the products, the institutional contexts in which business decisions are being made, and the character of the risks–the better.  The question is, what is the best way for regulators to get such information?

One of the big Ahas of my current research at the Bank of Japan is that different regulatory systems, or cultures, may have different approaches to getting such information.  In the United States and in the UK, there is a big emphasis on hiring regulators with practical market experience.  US and UK regulators know that such individuals can be invaluable because they understand the thinking of market insiders.  Ironically, such individuals often turn out to be the toughest regulators of all as they are least likely to be snowed by bogus excuses about the impossibility of implementation of a certain reform, or the unavailability of a certain kind of information.  Think Gary Gensler, former Goldman Sachs executive now head of the Commodity Futures Trading Commission for example.

There is no doubt that this kind of talent is one important route to information.  Japanese regulatory institutions have relatively few such people, and in my interviews some Japanese regulators have suggested that it would be helpful to have more.

But Japanese regulators have a different approach: they maintain much more intensive, almost real-time contacts with their counterparts in the industry.  For example, a junior regulator may have his counterpart in a given bank on the phone two or three times a day.  In addition there are yearly on-site inspections that last several weeks and provide mini “fieldwork” opportunities for regulators to sit on the inside, as well as multiple “targeted inspections” also on-site.  There are daily or weekly contacts at every level of the bank and government, too, from the most junior to the most senior, since one gets a different picture of what is going on inside a financial institution depending on who one talks to.

One advantage of this approach is that in a world in which market realities change very quickly the regulator’s information is very current.  In contrast one problem with the US-UK approach is that after only a few years in government, a former banker’s experience quickly becomes relatively obsolete.

Perhaps here regulatory theory could benefit from the insights of the field of comparative law. Comparative lawyers know that it is pointless to argue about which system in the world is “best” in some absolute sense. French law and American law each have their relative strengths and weaknesses, but more importantly reflect an adaptation to the wider culture and values of the societies out of which they emerge.  Studying these differences can sometimes provide insights for reform (a French court may wish to borrow some precedent from an American court or vice versa) and can also help sharpen, through the contrast, each side’s appreciation of what they value the most. In much the same way, regulatory cultures are different, and interesting in their differences.  Perhaps rather than throw all our energies into defining one global regulatory approach or standard, we could start by noticing these differences, describing them, and analyzing their relative strengths and weaknesses as well as their cultural sources and purposes within each institutional and economic context.

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