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Derivatives and the Wealth of Societies

Derivatives were responsible for one of the worst financial meltdowns in history, one from which we have not yet fully recovered. However, they are likewise capable of generating some of the most incredible wealth we have ever seen. This book asks how we might ensure the latter while avoiding the former. Looking past the usual arguments for the regulation or abolition of derivative finance, it asks a more probing question: what kinds of social institutions and policies would we need to put in place to both avail ourselves of the derivative’s wealth production and make sure that production benefits all of us?
To answer that question, the contributors to this book draw upon their deep backgrounds in finance, social science, art, and the humanities to create a new way of understanding derivative finance that does justice to its social and cultural dimensions. They offer a two-pronged analysis. First, they develop a social understanding of the derivative that casts it in the light of anthropological concepts such as the gift, ritual, play, dividuality, and performativity. Second, they develop a derivative understanding of the social, using financial concepts such as risk, hedging, optionality, and arbitrage to uncover new dimensions of contemporary social reality. In doing so, they construct a necessary, renewed vision of derivative finance as a deeply embedded aspect not just of our economics but our culture.

312 pages | 19 halftones, 6 line drawings | 6 x 9 | © 2016

Anthropology: Cultural and Social Anthropology

Economics and Business: Economics--General Theory and Principles, Economics--International and Comparative, Economics--Money and Banking


“Derivatives have been a transformative financial innovation but have multiplied risks and complexities. Lee and Martin make an important contribution tracing the history of derivatives, how they work, and why they are important beyond technical finance.”

Craig Calhoun, director, London School of Economics

“The idea that financial derivatives can be used to reveal new ways of framing social wealth and struggles over the distribution of that wealth is as inspired as it will be controversial. This collection of exceptional scholars from diverse disciplines may well be turning the study of finance and social change on its head.”

Dick Bryan, coauthor of Capitalism with Derivatives

“A very ambitious effort to not only understand the derivative logic of financial markets through concepts of anthropology, sociology, and philosophy but also to understand the social through the logic of the derivative. It stands out not only as a truly interdisciplinary engagement with finance but also as a reversal through which derivative logic itself is used as a theory reflecting back on the social, which allows the authors to arrive at new and curious insights into their ‘native’ disciplines. The book strikes a rare balance as a critical engagement with finance and derivatives while at the same time not simply dismissing these as just another element of ‘evil capitalism.’”

Ole Bjerg, author of Making Money and Parallax of Growth

"Eight papers present the case for an integration of the social and technical understanding of derivative finance within a single analytic and interpretive frame and use what was disclosed by the global financial crisis to show how technical knowledge of derivative finance can create a single coherent interpretive and analytic language of human possibility and well-being."

Journal of Economic Literature

Table of Contents

Benjamin Lee and Randy Martin

Part I.
Chapter 1. The Wealth of Dividuals
Arjun Appadurai
Chapter 2. Ritual in Financial Life
Edward LiPuma
Chapter 3. From Primitives to Derivatives
Benjamin Lee

Part II.
Chapter 4. Liquidity
Robert Meister
Chapter 5. From the Critique of Political Economy to the Critique of Finance
Randy Martin

Part III.
Chapter 6. Remarks on Financial Models
Emanuel Derman
Chapter 7. On Black-Scholes
Elie Ayache
Chapter 8. Mapping the Trading Desk: Derivative Value through Market Making
Robert Wosnitzer


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