Banking on Words - by Arjun Appadurai (Paperback)

About the Book

In this short but ambitious book, Arjun Appadurai argues that the failure of the financial system in 2007-08 in the United States was primarily a failure of language. This argument does not deny that greed, ignorance, weak regulation, and irresponsible risk-taking were important factors in the collapse. But the new role of language in the marketplace, for Appadurai, is the condition of possibility for all these more easily identifiable flaws. Attempts to rectify the social pathologies of contemporary finance must address that failure of language. "Banking on Words "focuses on derivatives as the distinctive innovation of our financial era. Derivatives are written promises concerning the uncertain future prices of financial assets and the substance of these contracts is expressed in terms of money. The recent failure of derivatives markets was systematic and should be understood as failed promises. While it is well-known that derivatives pile risk on risk with little basis in real production and trade, Appadurai reveals this process in a fresh light from which some policy conclusions may be drawn. While critical of derivative finance s present social infrastructure and supporting ideology, Appadurai acknowledges its capacity for creating vast new forms of wealth and asks the crucial question: if we want access to that wealth, what kind of social arrangements would we need to make sure that it benefits all of society rather than reinforcing a system that benefits the few who are already well off? His bold answer involves not the repair of the force of promises but rather the repair and reconstruction of the idea of the individual to enable new sorts of solidarity between dividuals, agents whose very partiality may allow for new aggregations of aspiration, interest and affiliation. This amounts to nothing less than a new ideology of sociality."

Book Synopsis

In this provocative look at one of the most important events of our time, renowned scholar Arjun Appadurai argues that the economic collapse of 2008-while indeed spurred on by greed, ignorance, weak regulation, and irresponsible risk-taking-was, ultimately, a failure of language. To prove this sophisticated point, he takes us into the world of derivative finance, which has become the core of contemporary trading and the primary target of blame for the collapse and all our subsequent woes. With incisive argumentation, he analyzes this challengingly technical world, drawing on thinkers such as J. L. Austin, Marcel Mauss, and Max Weber as theoretical guides to showcase the ways language-and particular failures in it-paved the way for ruin.

Appadurai moves in four steps through his analysis. In the first, he highlights the importance of derivatives in contemporary finance, isolating them as the core technical innovation that markets have produced. In the second, he shows that derivatives are essentially written contracts about the future prices of assets-they are, crucially, a promise. Drawing on Mauss's The Gift and Austin's theories on linguistic performatives, Appadurai, in his third step, shows how the derivative exploits the linguistic power of the promise through the special form that money takes in finance as the most abstract form of commodity value. Finally, he pinpoints one crucial feature of derivatives (as seen in the housing market especially): that they can make promises that other promises will be broken. He then details how this feature spread contagiously through the market, snowballing into the systemic liquidity crisis that we are all too familiar with now.

With his characteristic clarity, Appadurai explains one of the most complicated-and yet absolutely central-aspects of our modern economy. He makes the critical link we have long needed to make: between the numerical force of money and the linguistic force of what we say we will do with it.

Review Quotes

"Appadurai has a knack for synthesizing and sparking conversations."-- "American Anthropologist"

"Arjun Appadurai's Banking on Words (2015) analyzes the 'new life' of language in an age of financialization. In examining the 'predatory logics of the derivative, ' Appadurai provides an ambitious, theoretically-driven account of the financial collapse and the new society born in its wake. . . . Arjun Appadurai's Banking on Words is a theoretical tour de force that attempts to develop a new social scientific understanding of financialization."-- "Political and Legal Anthropology Review"

In Banking on Words, Arjun Appadurai sets out his understanding of how anthropology can help analyze the ever-growing importance of the global financial market as an economic system and cultural field... it is a collection of theoretical elaborations that aim to give a genuinely anthropological interpretation of derivatives and the financial crisis that started in 2007... With this book, Appadurai confirms his status as one of the truly original thinkers of our time. His aim to bring the notion of spirit back to anthropological work on the financial markets is spot-on and truly needed.
--Stefan Leins "Anthropos"

About the Author

Arjun Appadurai is the Goddard Professor of Media, Culture, and Communication at New York University and a senior fellow of the Institute for Public Knowledge. A fellow of the American Academy of Arts and Sciences, he is the author of editor of numerous books, including The Social Life of Things, Modernity at Large, Fear of Small Numbers, and The Future as Cultural Fact.