Satyajit Das: Animal Crackers – Watching Bankers Watching etc.

By Satyajit Das, a former banker and author of Extreme Money and Traders Guns & Money

Vincent Antonin Lepinay (2011) Codes of Finance: Engineering in a Global Bank; Princeton University Press

Ben Ramalingam (2013) Aid on the Edge of Chaos Oxford University Press

Kate Kelly (2014) The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders; Penguin Portfolio

McKenzie Funk (2014) Windfall: The Booming Business of Global Warming; Penguin Portfolio


Anthropologists study humans. Ethnographers, a related social science, study people and cultures, trying to understand specific human societies through observation and recording. Once, it entailed well-meaning, idealistic, ambitious, shy, lonely or misanthropic [cross out as required] men and women travelling to distant and exotic locations to study less well known tribes and peoples. Like a great deal of social science, the work reveals more about the structure of knowledge, methodology and the researchers than in does about the subject of study. Writing in the 21 July 1988 edition of The Guardian, Nancy Banks-Smith provided an astute assessment of anthropology: “the science which tells us that people are the same the whole world over—except when they are different”.

In recent times, with the increasing scarcity of newly discovered, loin clothed natives, researchers have turned their attention to professional ‘tribes’ within developed societies. In his 1903 work Mankind in the Making H.G. Wells compared Anthropology “to a great region, marked out indeed as within the sphere of influence of science, but unsettled and for the most part unsubdued. Like all such hinterland sciences, it is a happy hunting-ground for adventurers.” The need to find areas for research and dissertations leading to a PhD (also known as ‘permanent head damage’) has encouraged researchers to study financiers.

Academics Karen Ho (Liquidated), Donald McKenzie (An Engine Not a Camera) and Alex Preda (Framing Finance) have published interesting social studies of finance. Journalists Michael Lewis (from Liar’s Poker to Flash Boys) and Gillian Tett (who has a PhD in social anthropology) (Fool’s Gold) have written about the culture of financiers targeting a general audience.

Codes of Finance: Engineering in a Global Bank, Aid on the Edge of Chaos, The Secret Club That Runs The World: Inside the Fraternity of Commodity Traders and Windfall: The Booming Business of Global Warming are all to some extent ethnographic studies of the world of finance. They confirm, to different degrees, popular fears about financiers. They also confirm American anthropologist Clifford Geertz’s concern about the science: “Anthropology never has had a distinct subject matter, and because it doesn’t have a real method, there’s a great deal of anxiety over what it is”.

Recoding the Decoded Code

Codes of Finance by Vincent Antonin Lepinay seeks to provide insight into the equity derivatives business at a French investment bank (despite attempts at disguise the institution is obvious to anyone familiar with the industry). It uses a relatively common product –a capital guaranteed note whose payoffs are linked to a basket of equity indices- to explore the creation, marketing, selling, accounting and management of financial products. Academic social scientists unfamiliar with the working of investment banks may find the book interesting but it is unlikely to appeal to the business or general reader.

The essential content of Codes of Finance can be paraphrased succinctly:

· Part 1 Models to Books – no one really knows what they are doing or talking about, with the ignorance being disguised by complex language and terminology.

· Part 2 Topography of a Secret Experiment – everyone hates everyone and co-operation takes the form of endless guerrilla warfare.

· Part 3 Porous Banking – clients, shareholders, senior managers, risk managers and operations people have little idea of what the product is, what it is supposed to do or what its risks are but they know it is profitable and want a share of the profits.

Among the book’s difficulties is that the basic arguments are familiar to anyone with a modicum of knowledge or experience in banking. Codes of Finance does not add to this sum of knowledge or fears.

The focus on a single transaction gives the book an overly narrow perspective. The excessively detailed almost miniaturist analysis, dictated by the limited scope of the subject, is laboured.

Mr. Lepinay assumes financial engineers (French for ‘quants’) are at the centre of the process, with traders, sales people etc., relying on them. The book’s central premise is dubious, reflecting the authors limited (2 years) experience and role in the bank. In reality, traders and sales people rule the roost. Quants are mere appendages, useful in building models which justify pre-ordained structures and prices for the purposes of risk, compliance and governance. They are also useful for functions essential to the operation of a dealing room – helping run computers, downloading apps for pirating entertainment and pornography as well as subverting controls,. Quants generally want to become traders and sales people not the other way around.

Mr. Lepinay also misses the opportunity to address the complex power relationships within a financial trading and sales organisation. Traders’ power derives from their control of profits. Sales’ power derives from control of the client. The power of risk and operation is negative; the ability to deny traders and sales the scope for entering into transaction. Senior managers have power as they receive the bulk of bonuses and also determine everybody else’s share of the pool.

Mr. Lepinay’s does not cover the clients’ perspective in using the product. He does not differentiate between Institutional and retail investors as well as their motivations. The decision to enter into a transaction is the result of the complex balancing of capital protection, income, risk and the need to meet certain hurdle returns. The risk and return benchmark is also relevant. Periodic rumblings about solving epistemic problems and the difficulty of addressing value are unhelpful.

Codes of Finance suffers from the fact that it is based on Mr. Lepinay’s academic dissertation, for his PhD, apparently undertaken under the supervision of two leading lights in the field – Michel Callon and Bruno Latour. The combination of the academic and the influence of French structuralism (think Jacques Derrida, Michel Foucault etc.) are fatal. The text achieves a level of incomprehensibility which is ‘hermetic’ (i.e. relating to an ancient occult tradition encompassing alchemy, astrology and theosophy). The following sentence provides a guide to the style: “The notion of centres of calculation describes a world in which scientific facts are agreed-upon through the stabilization of chains of reference and from the circulation of immutable inscriptions”.

The book has unintended humour and irony. The author seems unaware of the contradictions of recoding the ‘codes of finance’ into the ‘codes’ of semiotics or sociology.

In seeking to observe financiers, Codes of Finance provides greater insights into the evolving Sociology of Finance and ethnography generally. Knowledge is increasingly not about actually knowing or understanding than appearing clever and developing new ontological frameworks. In order to differentiate themselves, academics labour on obscure research which is read by a few like-minded individuals who comment on and elaborate each other work. Soon, an entirely new discipline or area of study with courses, students, research as well as funding grants and conferences evolves.

Steely Dan’s Donald Fagen may have been correct when in Reeling in the Years he observed: “The things that pass for knowledge, I can’t understand”.

Helping Themselves

In Aid on the Edge, Ben Ramalingam, an independent researcher and consultant, focuses on a bigger: foreign aid. The book provides an interesting overview of current issues, for both aid professionals and interested observers.

Mr. Ramalingam identifies fundamental deficiencies in the formulaic process by which aid is structured and delivered. He is critical of the bureaucratic process and conveyor belt approach to problems. While the insights are not new, he identifies the proliferation of the largely meaningless language of ‘best practice’, ‘results’, ‘time frames’, ‘accountability’, ‘governance’ etc. which now dominate the industry.

Informed by his field knowledge and engaging writing style, the book is highly readable. Unusually for a professional work, the writing contains humour, well-crafted language, apt quotations and dashes of dry humour – “some problems are so complex that you have to be highly intelligent and well informed just to be undecided about them”.

The book is split into three parts – a critique of the current approach to aid, an introduction to complexity theory and the reform of the system.

The first part is by far the most interesting and successful. Using selected examples, Mr. Ramalingam exposes the problems of a static system populated by well-meaning but narrowly focused workers who are supremely confident in their world view and have tin ears. The industry’s central belief is that poverty or lack of development is a technical problem. These can be solved by neat technocratic solutions which typically Western experts can deliver. For example, diseases are dealt with by vaccinations programs, irrigation, fertilisers and improved genetically modified seeds improve crop yield etc. In The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor, William Easterly made similar arguments, attacking accepted wisdom about aid.

Amusingly, one reviewer questioned the need for this criticism in Aid on the Edge as it could alienate aid workers, who might otherwise be interested in reading the book.

The second part is an explanation of complexity theory, and littered with the potpourri of complex systems, chaos, network theory, agent-based modelling, fitness landscapes, power laws and ‘sand pile thinking’. Some of this is indigestible and reads like an undergraduate literature review.

The third part argues that many development problems are found on the edge of chaos, i.e. between simple causal relationships and complete disorder, necessitating use of complexity theory and networks to better achieve its objectives. Aid must recognise the numerous interlocking complex, non-linear systems and develop ‘organic’ processes supported by aid rather than seeking to provide ready-made solutions. This entails adjusting to the ‘development ecosystem’ which involves complex interactions between social, political, economic and environmental systems.

The second and third parts of Aid on the Edge are problematic. While cases of ‘positive deviance’ (cases where aid programs have been successful through breaking not following standard approaches) are interesting, the author does not entirely convince that operating on the edge of chaos is actually a viable strategy which will always deliver favourable outcomes. The new and exotic terms and labels cannot mask a fundamental contradiction- the proposal of a new model which is likely to be as inflexible and practically troublesome as existing approaches, perhaps more so because of its ambiguous and ill-defined nature. For a writer of Mr. Ramalingam’s obvious erudition and knowledge, acceptance and promotion of a manageable theory of chaos is interesting.

Mr. Ramalingam’s claims of a better system are inconsistent with the examples cited in the book. Instead, they confirm simpler truths. Context is vitally important. Common sense and luck in equal doses is needed. Smaller focused action rather than major programs maximise the chances of success. Asking the recipients what they want or need is probably a useful starting point. Standardised approaches to problems are best avoided. Aid can only provide a catalyst for internal development.

However, the development process and agencies are unlikely to be swayed. They will continue to favour fatuous broad objectives, such as the ill-conceived Millennium Development Goals, pat programs, fat reports to meet governance and compliance goals. This will require ultimately manipulating the evidence to support claims of big ‘victories’, which belie the truth on the ground.

Like Codes of Finance, Aid on the Edge is unintentionally revealing. Aid is an industry, captured by a select group of aid experts, professionals, academics and consultants, many of whom make a good living from their work. Donors do not give aid, for the most part, other than to maximise their own benefit, either in terms of selling their own products or employing their own population. Aid is rarely designed to solve problems, merely to prevent them from spreading and affecting the interests of the donor countries. A good chunk of the money does not actually make it to the intended recipients. The cost of sustaining aid workers in difficult environments is considerable, especially once the cunning rent seeking of local interests, such as hoteliers and other providers, is taken into account.

The ultimate problem is a simple conflict of interest. The problems of poverty and development cannot be solved by an industry whose essential interest calls for the perpetuation of a state which ensures funding for its programs and employment as well as advancement of its members.

Not So Secret

Journalists should make excellent ethnographers. They are supposed to be neutral and impartial. They should establish and verify the facts obtained from the relevant parties. Their job is to observe and report the truth accurately and fairly. That’s the theory, at least. The Secret Club and Windfall, both written by journalists, provide insight into the failure and success of this endeavour.

The Secret Club lacks a real narrative, consisting as a mish-mash of portraits of some traders and a series of naïve assertions about the working of the commodity market. Kate Kelly covers Wall Street for CNBC and has previously worked for the Wall Street Journal. Unsurprisingly, the book features the breathless manner of financial news TV, where a move in the Dow Jones from 20,000 to 20,001 is an event on a par with Neil Armstrong landing on the moon.

The characters featured include Pierre Andurand and Jennifer Fan (both hedge fund managers, Jon Ruggles (an energy trader hired by Delta to hedge its fuel price risk), Alex Beard (global head of oil at Glencore, the commodities trading house), Ivan Glasenberg (the head of Glencore) and Gary Cohn (Goldman Sachs’ President). They also include regulators such as the colourful Bart Chilton and the less colourful Gary Gensler. The character sketches are mostly blindly admiring and border on caricatures. There is also a grating false familiarity with the principals.

Jorge Luis Borges once experimented with an adjective-less prose. Ms Kelly cannot get enough of adjectives, adverbs and overstatement.

The commodity boom “created kings in the trading world’s empowered class and drove other people and companies into financial ruin”. She presents everything her characters say as biblical truths: “Where demand is flat and supply is going up 1.5 to 2 million barrels per day, and Iran is threatening to blow up the world, you need to cut production. You should only get excited [meaning getting ready for a rise in crude prices] if you’re going to have a long, ongoing war.” Every trade is “massive” or “enormous”. Traders are “shrewd and indomitable”. They belong to “a relatively small circle of powerful players take enormous risks”. Businesses are “paralysing dependent” on the prices of commodities.

An overweening interest in her subject personal lives is evident. Attention to trophy Russian model wives, extravagant weddings, summer holiday houses in Provence or Nantucket, live-in nannies, expensive designer clothes and grouse hunting is largely gratuitous.

The style is compounded by arguments which do not withstand close analysis. Ms Kelly asserts that that commodities, by virtue of being “commodities” are “easily found and not overly valuable”. This begs the question why there is such a battle to control commodity markets and concerns about non-renewable sources of energy such as oil. It also is inconsistent with her focus on a boom in prices.

Ms Kelly’s explanation of the rise in commodity prices is vague. It was a function of “the torrid pace of demand in India and China”. She does not mention other factors such as the under investment in commodity production and refining in the 1990s during a period of low real prices. She does not identify the weakness of the US dollar in which commodities are generally traded. The role of investors, especially institutional funds, in adding commodities to their asset portfolios does not rate serious coverage.

She states early in the book that “the commodities bubble of the 2000s is a snapshot of one of the most extraordinary periods in American finance, providing an object lesson on the role of markets, regulators, and how the money world can sometimes lose its connection to the real one”. Exactly why it is “extraordinary” or the nature of the “lesson” is never really outlined. The effect of what Ms Kelly identifies as speculation-fuelled price spikes and rising commodity costs to businesses and consumers is not detailed. The book offers little proof that end-users are being penalised.

Contradictions abound. On the one hand Goldman Sachs is a major speculator in commodities. On the other hand, Andurand leaves Goldman Sachs to establish a hedge fund because the investment bank was too conservative and employed strict controls on risk taking.

There are real problems in commodities, just not those discussed in The Secret Club. Financial investment and speculative activity has the potential to distort prices of essentials like food and oil. Higher prices can force producers and traders to hoard creating artificial shortages with serious human consequences. Banks and commodity traders have gained significant ability to control markets or prices through operations spanning the entire supply chain: land or resource ownership, trading physical commodities, storage, transportation, refining or processing, sales and derivative trading.

The Secret Club inadvertently reveals one of the problems of journalism as ethnography. The journalist’s reliance on sources and the need for access make them captive to and easily manipulated by those they observe. The need to maintain the relationship may necessitate the journalist altering her conclusion to fit the subject’s world view and how they would like to be portrayed. As Christopher Fildes, an English journalist, once put it: “It’s all very well when anthropologists observe the savages, but all bets are off when the savages start observing the anthropologists”.

In the modern world, a book’s title must mandatorily convey its argument. Perversely The Secret Club contradicts its content. Commodity trading is in reality not a closed private club but rather an arena of competing interests. There is also no sign that the commodity traders run the world.

What a Surprise

Windfall benefits from author McKenzie Funk’s slyly detached approach and Candide like wonder at what he observes. Mr. Funk, a journalist whose work has appeared in Harper’s, Rolling Stone and the New York Times, has crafted a subtle but impressive work on how different people perceive climate change.

He separates the effects into melt, drought and deluge. The book sets out his journey across several countries and his meetings with different individuals who see the changes as opportunities. The result is a plethora of bizarre tales.

The melting ice cap creates opportunities for friendly Canadians to uncharacteristically assert their sovereignty over vast swathes of the Arctic by shooting wildly at nothing. It gives Greenland the potential to exploit mineral wealth that would be impossible normally. Israeli snow making equipment finds markets in of all places – the Alpine regions. Drought creates opportunities for private fire fighters and hedge funds investing in farmland in South Sudan. It creates silly responses like the African Union’s 4,000 miles of Great Green Wall of saplings from Senegal to Somalia to control desertification. Rising water levels may require special floating cities or novel hurricane defences. India is building a wall around Bangladesh to control potential refugee fleeing higher water levels.

Eschewing Al Gore’s moral sanctimony and PowerPoint slide evangelism, Mr Funk portrays a strange world where entrepreneurs seek to benefit from the misery of much of the planet.

Mr. Funk identifies the possible responses to climate change. Denial is increasingly difficult in view of mounting evidence, although not impossible as several groups have demonstrated. The alternative is to profit from changes in environment. Believers in markets argue that businesses and capital will find ways to adapt to a hotter and more unstable climate. In the absence of political action and policy, this is the default position.

In this respect, there are similarities between the global financial crisis and the problems of climate change. Those responsible are now likely to benefit from it. The wealthy may be able to buy protection from its worst effect but the poor, the vulnerable and nature itself will pay the price. As Mr. Funk writes: “The hardest truth about climate change is that it is not equally bad for everyone”.


If ethnography is intended to provide understanding of specific groups of people, then Windfall provides a disturbing picture of finance and financiers. The worst aspect is not the obsession with money (where no amount of wealth is seemingly enough), their ineffectiveness, the dubious value of their work or their sometime psychopathic tendencies, where they are willing to exploit other human beings cruelly. In reality, there most damaging aspect is their ignorance, absurd hubris and their lack of enlightened self-interest. The characters in Windfall are willing to risk the destruction of the planet and environment and everything that makes life worthwhile for a few dollars, all the while refusing to face the reality of the true cost of climate change. That in itself is a phenomenon worthy of careful study.

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  1. not_me

    The worst aspect is not the obsession with money (where no amount of wealth is seemingly enough), their ineffectiveness, the dubious value of their work or their sometime psychopathic tendencies, where they are willing to exploit other human beings cruelly. In reality, there most damaging aspect is their ignorance, absurd hubris and their lack of enlightened self-interest. Satyajit Das

    Yet, in the US, Progressives chose to give these guys a lender of last resort and later government deposit insurance instead of a Postal Savings Service for all citizens and tried to regulate them so their thievery would not be unstable (yet Watts and other urban areas burned in the 1960’s – so much for “prudent” theft.)

    And what have Progressives learned? That the “Ring of Power”, government privileges for private credit creation, inevitably corrupts those who use it? No! Instead it is ONLY the private sector that creates such psychopaths and we’ll be safe with government deciding who is and who is not so-called “creditworthy”!?

    Progressives inevitably think they are the good guys yet they supported the creation of the Fed, the Fed caused the Great Depression (so Ben Bernanke admits) and the Great Depression was a (the?) major cause of World War II which killed 50-65 million people, not to mention large amounts of CO2 as European cities burned.

  2. susan the other

    Das is such a clever ethnographer! All is Vanity is always a great topic. Except for now. I appreciate him when he points out how dangerous it is to ignore our responsibility to each other and the planet. And to that end he points out how dangerous it is that we have a talent for rationalizing our irrationality (recoding ourselves no less) until we lose the opportunity to do anything to fix things. The art of procrastination. But imo we have really come to the end of the road with all our fatuous nonsense. You can almost feel it. We certainly do not need more books analyzing the derivatives of money and social theory. We need some action.

  3. rur42

    Add Naomi Klein to the mix: The Shock Doctrine: The rise of disaster capitalism. & This Changes Everything: Capitalism vs the Climate.

  4. Newtownian

    Excellent essay worthy of the NY Review of Books.

    Though I understand he does not plan any further works I would love to see a fuller response to the topics covered by these books from Satjayat in a work of his own along the lines of “Wall St v. the World” or “Economics v. Ecology”.

    Naomi Klein has of course produced such a work, but Das is far more the informed skeptical insider who because he has been there and understands the numbers and psychology of finance while developing his own personal recognition of the ecological devastation that modern capitalism is unleashing on us.

    Such a work might help address a continuing regret of mine, that for the most part economics practitioners, even progressives like Piketty, Steve Keen and the World Economics Forum people still dont have the insights into their impact on the real world that I see with Das’s work.

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