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Banking on Words

The Failure of Language in the Age of Derivative Finance

Banking on Words

The Failure of Language in the Age of Derivative Finance

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. 


"Appadurai has a knack for synthesizing and sparking conversations."

American Anthropologist

“It is a disquieting, if gripping pleasure to read Appadurai’s Banking on Words, which engages the current era of global finance through the metaphor of endlessly stacked, promise-like contracts monetized as hedges against contractual failure—without limit. Focused by fundamental insights of classic social and economic analysis and newer contemporary trends, his lens allows us to discern the essentially ritual-like, ‘performative’ character of derivative transactions, deploying the cultural logics of spells and amulets in the face of the uncertainties of an inevitably uncertain—not just risk-filled—universe. In the light of his trenchant critique of the ‘predatory dividualism’ of the few over the many that has qualitatively transformed capitalist enterprise, the author holds open to us the possibility of harnessing the age of derivative finance for democratic ends.”

Michael Silverstein, coauthor of Creatures of Politics

“When Appadurai writes about derivatives, it becomes an exploration of the vast shadow effect of this now-familiar instrument. It also becomes an occasion to enrich our understanding of the derivative’s dangers and value with the ruminations of those whose wisdom predates its existence. The result is a new insight, a wonderful mix of discovery and literature.”

Saskia Sassen, author of Expulsions

“In this remarkable book, Appadurai masterfully draws a set of classic scholarly voices into a debate over the spirit of capitalism today. Revitalizing the canonical insights of such thinkers as Weber, Mauss, and Austin, he builds toward a bold diagnosis of contemporary finance that not only pinpoints its toxic force and ethical failures but, refreshingly, attempts to discern how its workings might be adjusted to less predatory effect. Appadurai’s highly original analysis is sure to galvanize the current conversation around capitalism and its discontents.” 

Natasha Dow Schüll, author of Addiction by Design

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

"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

Table of Contents

Chapter 1.       The Logic of Promissory Finance
Chapter 2.       The Entrepreneurial Ethic and the Spirit of Financialism      
Chapter 3.       The Ghost in the Financial Machine  
Chapter 4.       The Sacred Market     
Chapter 5.       Sociality, Uncertainty, and Ritual     
Chapter 6.       The Charismatic Derivative   
Chapter 7.       The Wealth of Dividuals        
Chapter 8.       The Global Ambitions of Finance      
Chapter 9.       The End of the Contractual Promise 

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