Abstract
If homo economicus exists anywhere, surely he must be found among financial traders. Amid the shouting and shoving of trading pits and the manic clicking and phone slamming of electronic trading desks, the atomized, rational, self-interested agency of neoclassical economic theory appears to emerge. Ethnographers of traders have refuted atomism and instead proposed a socially embedded but still rational and self-interested agent: an embedded homo economicus. I take this critique a step further and argue that traders are neither rational nor self-interested. Certainly, traders present themselves as rational and self-interested, but a ‘thick’ understanding of their social performances and cultural forms proves otherwise. My analysis focuses on the practice of friendly betting among Chicago traders. Despite its competitive appearances, friendly betting constitutes a non-rational, non-self-interested system of gift exchange and evinces why the myth of embedded homo economicus is both beguiling and false. This conclusion cuts to fundamental issues of agency and practice, and calls for widespread scepticism of theories of rational self-interest. As neoclassical economic theory and market ideology spread around the globe and rational self-interest becomes increasingly normalized, we must be wary of confirmation bias and remember the old ethnographic principle that people aren’t always what they say they are.
Introduction
In the social sciences and beyond, the dominant paradigm of human agency is homo economicus. He—and it is surely a he (Ferber and Nelson, 1993; Nelson, 1998)—appears widely in Western thought and popular culture, but most importantly he is the protagonist of neoclassical economics, the basis of mainstream economic thought today. Various characterizations abound, but the classic homo economicus has three essential attributes: he is an atomized, rational, self-interested agent. For decades anthropologists, sociologists, and even economists have assailed the atomism of homo economicus with much success. I take this critique a step further. Drawing upon my ethnographic work with financial traders—an instructive case, if ever there were one—I refute the rationality and self-interest of homo economicus. I use the example of friendly betting among traders to show that much behaviour that appears rational and self-interested is not so, and the persistence of theories of rational self-interest is largely due to a shallow interpretation of identity performances and other cultural forms.
Since at least as far back as Mauss’s The Gift (1990 [1925]), it has been clear that neoclassical theory fails to explain all economic activity. Saliently, the methodological individualism of neoclassical economics ignores the fact that economic activity is embedded in systems of social relations and institutions. An avalanche of subsequent work (e.g. Gregory, 1982; Polanyi, 1944; Sahlins, 1972) repeatedly exposed this defect. Bluntly, ‘every ethnographic observation seems to refute the neoclassical market model’ (Preda 2001: 16) In response, economic formalists argued that this substantivist critique applied only to ‘primitive’ economies, which were quickly disappearing, gobbled up by the voracious maw of market capitalism. Market capitalist economies, however, were dis-embedded and therefore amenable to formal neoclassical analysis (Isaac, 2012). Regardless of its veracity, this argument succeeded. Today, neoclassical economics maintains a stranglehold on the study of market capitalist economies.
At the heart of this neoclassical domain, at the epicentre of the market capitalist system: traders. Depicted as paragons of homo economicus, they are the modern mascots of neoclassical theory. The financial markets in which they operate are explicitly constructed to be neutral, anonymous, ahistorical frames in which atomized, rational, self-interested agency can flourish in its purest form. Traders proudly flaunt behaviour that is ‘asocial’, ‘anomic’, ‘aggressive’, ‘hypercompetitive’, and ‘antagonistic’, with ‘dispositions based on self-interest and mutual exploitation’ (Zaloom, 2006). If homo economicus exists anywhere, surely he must be found among traders.
Rather than atomized agents in a neutral vacuum, ethnographers have found traders entangled in rich systems of social relations and markets embedded within powerful social structures (e.g. Abolafia, 1996, Baker 1984a, 1984b; Godechot 2016; Hassoun, 2000; Knorr Cetina, 2012; Knorr Cetina and Bruegger, 2002; MacKenzie, 2004; Preda, 2009; Sassen, 2005, Widick, 2003, Zaloom, 2006). Embeddedness obtains whether trading occurs in pits, on the screen, over the phone, or via instant message. Indeed, embeddedness is inevitable, and efforts to mitigate it necessarily produce new forms of embeddedness as a by-product (Callon, 1998a, 1998b; Granovetter, 1985). To enable atomized exchanges in which objects are alienable and both parties leave as strangers involves extensive framing and ‘a long process of networking’ (Callon, 1998a: 43). ‘Any framing produces overflowing, and any procedure of disentanglement produces new attachments’ (Callon, 1998a: 38). Even a priori, the neoclassical conception of the atomized individual flirts with ontological incoherence (Davis, 2003, 2011). Atomism is exposed as a fantasy.
In a way, homo economicus has been handily debunked. The simplistic atomism of neoclassical theory crumbles under even the slightest empirical scrutiny. But atomism is an easy punching bag for anthropologists and sociologists. And even after its defeat, one feels homo economicus lurking, wounded but undeterred. He is embedded in social systems, but he remains a fundamentally rational, self-interested agent who ruthlessly optimizes his own utility. He is playing a different game with different rules than once thought, but he still plays to win. Anthropologists and sociologists have rightly condemned homo economicus, but only by refuting atomism. Tacitly, we seem to have granted everything else about him. The embedded homo economicus that remains is alive and kicking, and continues to present a problematic view of human agency. I will henceforth refer to this embedded figure simply as homo economicus.
To their credit, many have enriched homo economicus beyond concerns of capital accumulation. Behavioural economists have introduced utility functions that allow for diverse preferences including altruism, and ethnographers have shown that traders compete for status and prestige, similar to ‘tournaments of value’ (Appadurai, 2013a) and ‘deep play’ (Abolafia, 1996; Zaloom, 2006), relish the thrill of risk-taking and the joy of victory (Abolafia, 1996), and pursue social desires like approval and sociability (Godechot, 2016; Granovetter, 1985; Preda, 2012). But even with these enrichments, we still have a rational, self-interested agent—homo economicus. He has a wider range of desires, but he still operates with his utility curve at the front of his mind, calculating its first and second derivatives between sips of coffee, optimizing at every turn. This is the agent found in Becker’s (e.g. 1976) notoriously reductive economic models (Fine, 1998). The atomism of such models has been roundly refuted, but the neoclassical premise of rational, self-interested agency remains.
But does this comport with reality? And more to the point: what is the alternative? Even as anthropologists and sociologists assail the socially impoverished theories of economics, we seem trapped by the neoclassical notion of rational, self-interested agency. This impasse evinces just how vexed the issue of homo economicus has become. The trouble is a semantic sleight that has drained rationality and self-interest of their substance. As they are often used, neither concept means much at all.
First, self-interest. Neoclassical economics asserts that all action is self-interested. Originally, self-interest designated only the pursuit of private wealth, but its meaning later expanded to encompass the entire scope of human desire. In this new formulation, all action is necessarily motivated by self-interest. But this is a meaningless tautology. If all action is necessarily motivated by self-interest, then all motives are self-interested by virtue of having motivated action. This precludes any state of affairs in which an action could be anything other than self-interested. Cramming an ever-wider range of motives into the concept of self-interest only perpetuates the problem (Hirschman, 1986; see also Prattis, 1982).
Rationality is a similarly slippery concept. Traditionally, neoclassical models posited perfectly rational agents that always optimize utility. But human cognitive capabilities are neither infinite nor infallible, and agents often fail to calculate optimal decisions. To accommodate this pesky piece of reality, economists now admit that agents have ‘bounded rationality’ (e.g. Thaler, 2015). When agents deviate from the optimal behaviour predicted by economic models, economists attribute it to failures of calculation. In other words: agents optimize, except when they can’t. This vacates the content of the original premise of rationality. To salvage the situation, many economists have retreated to a toothless formulation of rationality as consistency, using the idea of ‘revealed preference’ (Giocoli, 2003; Hammond, 1997; Sen, 1977). On this view, choosing to bang one’s head against the wall is rational as long as one chooses to bang one’s head against the wall consistently. Such theoretical contortions may be useful for the production of formal mathematical models, but on the issue of agency they offer only the quite underwhelming assertion that agents pursue the things they desire, and desire the things they pursue.
At best, the premise of rationality makes a qualitative claim about intent. It says that agents intentionally pursue ends that they have consciously decided are optimal. At worst, the premise of rationality claims that all action is necessarily an agent’s best attempt to optimize. However an agent acts, it is always possible to say, post hoc, that her actions were an attempt to optimize. By definition, her actions express her preferences and represent an attempt to optimize those preferences, whether she is aware of it or not. This claim is unfalsifiable and crosses into tautology.
Clearly, there are ways to formulate homo economicus that preclude debate. If tautological forms of rationality and self-interest are used, then homo economicus exists a priori and we can all quit and go home. However, as they are commonly used, the concepts of rationality and self-interest are expected to carry meaningful rhetorical weight. 1 They fail to provide rigorous accounts of agency, but instead signify styles of conduct (Hirschman, 1986). Rational agents are vigilant optimizers who consciously choose their objectives, calculate the optimal strategy to achieve those objectives, and pursue them with cold determination. Self-interested agents are competitive, hedonistic, self-aggrandizing, and put themselves before others. Together, rationality and self-interest paint the figure of homo economicus as a ruthless, Machiavellian egoist who is constantly calculating and strategizing to exploit his circumstances for personal gain. Ultimately, homo economicus is an emotional appeal to one’s cynicism and masculinism. It presents itself as an unsentimental, realist view of humanity. To believe otherwise is to be naïvely saccharine and ‘soft’—the stance of a ‘sissy’ (Nelson, 1998: 88). It is in this way that we can understand the notion of rational, self-interested agency and the figure of homo economicus.
To refute homo economicus, one would have to show that traders are non-rational, non-self-interested agents. A non-rational agent acts without conscious objectives and calculated strategies. In contrast to an agent with bounded rationality who attempts to optimize and falls short, a non-rational agent doesn’t attempt to optimize in the first place. A non-self-interested agent acts independently of preferences and utility, driven by what Sen (1977) calls ‘commitments’: motives that ‘[drive] a wedge between personal choice and personal welfare’ (329) and create the potential for ‘counterpreferential choice’ (328). In short, the concept of self-interest I use will be one in which a soldier falling on a grenade is not self-interested behaviour.
It is important to note that the question of homo economicus is not a matter of individual agency versus social structure. The idea of homo economicus says nothing about the extent to which his actions are determined externally by social structure or internally by independent agency. The existence of homo economicus can be attributed purely to individual agency (essentialist homo economicus), purely to social structure (performative homo economicus), or anything in-between. 2
Regardless of whether homo economicus might exist despite social structure or because of it, the question is: does homo economicus exist at all? Miller (1998, 2002) emphatically says no. He (2002: 230) says homo economicus is a ‘beguiling myth’ and argues that economics has produced the illusion of homo economicus rather than his substance. Neoclassical economic ideology shapes representations and perceptions of reality, and dismisses incongruous data as distortions. As a result, ethnographers have been blinded by confirmation bias, seduced by the same ideology as their subjects.
The gap between ideology and practice—‘the ethnographic illusion’ (Van Maanen, 1979)—is a perennial problem for ethnographers. Often the self-presentations of informants contradict their actual behaviour. In the case of traders, obviously they present themselves as rationally self-interested agents and financial markets are represented as arenas in which such agency abounds, but it does not follow that traders instantiate homo economicus. On Miller’s view, the semblance of homo economicus is everywhere, but his substance is nowhere to be found.
This is where I enter the fray. I agree with Miller that previous ethnographic accounts have been all too willing to take traders at face value. This has left us with an interpretively shallow understanding of traders. What we need is a ‘thick’ account of traders that is, to use Geertz’s (1973a) analogy, able to distinguish a wink from an involuntary twitch of one eye; one that uncovers the deeper semiotic content of traders’ actions. Only with this can we understand traders’ agency and answer the question of homo economicus. To accomplish this, I approach the observational facts of traders from a new angle.
My argument focuses on the practice of friendly betting among Chicago traders. Despite its antagonistic appearances, friendly betting constitutes a system of gift exchange. And although gift exchange is not necessarily out of character for homo economicus—many systems of gift exchange can be quite competitive, rational, and self-interested (e.g. Gregory, 1982; Malinowski, 1922; Mauss,1990 [1925])—the system of gift exchange constituted by friendly betting is fundamentally non-competitive, non-rational, and non-self-interested by design. Friendly betting demonstrates traders’ non-rational, non-self-interested agency and reveals why the myth of homo economicus is both beguiling and false.
But first, a detour. Before I analyse friendly betting, I need to address the context in which it occurs. I begin with an explanation of market ideology and its manifestations among traders. Next, I argue that trading does not occur in a play frame, as many have claimed. Trading is continuous with ordinary life, and therefore economic agency is coextensive with ordinary agency. This will equip us to understand the practice of friendly betting and what it reveals about traders and their agency.
Market ideology
I entered the world of trading in the summer of 2013, when I started as an apprentice trader in the options pits at the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT). I traded at two large derivatives trading firms before founding an independent firm in Chicago, where I continue to trade actively. Over the years, I’ve traded down in the pits, upstairs on the screen, through call-around markets, and over instant message chats. The strategies I’ve used range from manual discretionary trading to automated high-frequency trading.
Along the way, I met and observed traders from a wide variety of markets and trading styles. My informants were co-workers and competitors, some from huge international trading firms, some from small firms, some who traded independently for themselves. Collectively, they have traded every major derivatives product on every major derivatives exchange in the USA, and many in Europe and Asia. Their ages ranged from 22 to 70 and their trading experience spanned five decades. Typical of the industry, they were entirely male. The large majority of my informants were options traders, but I also interviewed stock and futures traders. 3
In previous decades, floor trading dominated the trading world and most ethnographic work on traders focused on floor traders in open-outcry pits. However, in recent years electronic trading has exploded in popularity while floor trading has steadily declined. Today, over 90% of derivatives contracts on Chicago derivatives exchanges (CME, CBOT, and Chicago Board Options Exchange (CBOE)) trade electronically. Accordingly, the majority of my informants were screen traders and I focused my attention on this group in order to update the literature for a new era. The primary ethnographic setting for the reader to imagine is not floor traders standing shoulder-to-shoulder in a pit, but electronic traders sitting before dozens of high-tech screens in an office.
In comparing floor traders and screen traders, I find that the fundamental cultural beliefs and practices of traders—what I call ‘market ideology’—has migrated smoothly from the pits up to electronic trading offices, and remains consistent between the two. This makes sense because the pit and the screen are intimately connected. Many electronic traders are former pit traders who have brought the culture of the pit up to the office with them. Even those who have never spent time in the pit were mentored and managed by older traders, most of whom are former pit traders. And further, because trades in the pit affect the entire market, many screen traders are connected to the pits by phone and interact with pit traders every day. This constant interaction keeps market ideology and friendly betting practices consistent between floor traders and screen traders.
In this section I sketch the core elements of market ideology. I divide market ideology into two parts: self-interest and discipline. Much of this analysis supports Zaloom’s (2006) excellent ethnography of Chicago floor traders, while updating it for a new generation of Chicago screen traders with shifting ideals. I also expand upon key points that will be important for the subsequent analysis of friendly betting, a practice that Zaloom does not discuss. While the present ethnography can only address the specific case of Chicago traders, one should note that similar versions of market ideology have been observed from San Francisco (Widick, 2003) to New York (Abolafia, 1996) to London (Zaloom, 2006) to Tokyo (Miyazaki, 2013).
Keep in mind that although market ideology and neoclassical economics inform each other and there is overlap between the two, they are separate entities. Neoclassical economics makes a set of descriptive claims about economic behaviour. Market ideology makes wide-reaching claims about the universe that are imbued with normative content. It is a set of beliefs, symbols, values and practices that inform traders and govern their daily lives. Though these sometimes resemble aspects of homo economicus, it is important to distinguish market ideology from neoclassical theory and the normative from the descriptive.
Self-interest
Market ideology normalizes the ruthless, rational pursuit of self-interest. This notion has roots in the spirit of capitalism described by Weber (2001 [1905])—for example, traders see money as an end in itself and regard self-reliance and independence as key virtues—but the spirit of Weber’s time has evolved markedly since. The work ethic and associated Protestant virtues underlying the spirit of capitalism fell out of favour as the twentieth century wore on, and the transcendental ethic of self-improvement was replaced by an attitude of self-preservation. Lasch (1978) identifies this ideological shift as part of a wider normalization of asociality and pathological narcissism in 20th century American culture.
Ayn Rand was an influential figure during this period. Her books and ideas remain enormously popular in finance and business circles and among the American political right (Burns, 2009; Rubin, 2007). Her novel Atlas Shrugged (1957) has been ranked as the second most influential book in the USA behind the Bible (Fein, 1991). In my experience, traders mentioned Ayn Rand more than any other writer. Her philosophy of ‘Objectivism’ epitomizes a strain of thought that is fundamental to market ideology. In her own words: The basic social principle of the Objectivist ethics is that just as life is an end in itself, so every living human being is an end in himself, not the means to the ends or the welfare of others—and, therefore, that man must live for his own sake, neither sacrificing himself to others nor sacrificing others to himself. To live for his own sake means that the achievement of his own happiness is man’s highest moral purpose. (1964: 23)
Rand’s ideas have their roots, of course. Long before Atlas Shrugged, civil unrest across Renaissance Europe convinced political philosophers that religion and moral reasoning were impotent to restrain the wild, destructive passions of men. Previously, avarice had been known as the ‘deadliest Deadly Sin’, ‘the foulest of them all’, but in this period, political philosophers rebranded avarice as ‘interest’ and proposed it as a force that could countervail the passions. Interest was a harmless vice; though its pursuit lacked honour, it made men gentle and predictable and engaged them in calm calculation—preferable to the chaos of the passions. Thus, the doctrine of self-interest emerged as a way to ‘avoid society’s ruin’ by ‘[activating] some benign human proclivities at the expense of some malignant ones’ (Hirschman, 1977).
In the 18th century, Adam Smith argued that the individual pursuit of economic interests is not only benign but actually contributes to the public good. His theory of the invisible hand provided ‘the capstone of the doctrine of self-interest’ (Hirschman, 1986: 44) and showed flashes of Rand’s cynicism: ‘By pursuing his own interest [an individual] frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good’ (Smith,2000 [1776]: 485). 4 Smith’s notion of self-interest as a force of good spread across Europe and over the Atlantic, where it became ‘a principle of American political thought older than the Republic and just as sacred.’ (Harmon, 2003: 109-110) ‘Selfishness’, US Senator Henry Dawes declared in 1885, ‘is at the bottom of civilization’ (Harmon, 2003: 106) This ideological movement produced the spirit of capitalism identified by Weber, and later culminated in Rand’s formulation that self-interest is not merely a useful vice but the ultimate virtue.
Market ideology not only normalizes rational self-interest, but also naturalizes it. (Mis)informed by Darwinian ideas of natural selection (e.g. Dawkins 1976; cf. Sober and Wilson, 1998; cf. Wilson, 2012) and Hobbesian notions of the natural state of humanity as a ‘war of all against all’, market ideology asserts that humans are inherently self-interested, locked in perpetual competition. On this view, everyday human life is governed by the same principles as lions chasing wildebeests across the savannah and elephant seals battling for mating rights. The decorum of modern society is nothing but a pretext for covert cannibalism.
Traders take these beliefs to the extreme in their performances. Their behaviour is ‘antagonistic, brash, and frequently outrageous’ and ‘[inverts] the styles of dress and the language of formal business, professional codes of respect and decorum, and standards of constraint–in short, the norms of civility’ (Zaloom 2006: 111). Their outfits are often messy and intentionally unstylish. Their speech is exaggeratedly obscene, offensive and ‘politically incorrect’, making frequent use of sexual and violent metaphors. They relish farts, burps, feats of gluttony and other bodily functions. All of this is a systematic rejection of what traders believe to be the fraudulent and repressive pretences of society. Traders see their behaviour as righteously honest, cleansed of the parasitic elements that Rand ascribed to altruism. This is why informants are keen to flaunt and describe behaviour that ethnographers often find repulsive: they are proud of it. Their performances are normalized expressions of virtue, belief and identity. They are also a means of legitimation: by instantiating the world of market ideology, traders simultaneously assert and prove its truth.
Often there is no practical reason for traders’ performances, as Zaloom (2006: 121–122) observes: One of the funniest sights in the grain room was a “fast market” in oats, when the five men—who could easily have made their transactions quietly—began screaming at the top of their lungs at each other to get a trade.
Discipline
The principles of market ideology form a comprehensive ‘theology of The Market’ (Cox, 2016), from origin myths to eschatology. At the apex of this theological system is the deified, omnipotent market. Traders describe the market as ‘a jealous God’ (Zaloom, 2010: 26) who hands down infallible moral judgments: ‘You test yourself every single day. You either made money or you lost money. I’m a good person or I’m a bad person.’ And ‘[t]he market is always right’ (Zaloom, 2006: 127) Traders submit to this god and strive to earn its blessings by observing a set of ascetic practices known as discipline. The goal is to become a ‘human machine’ (Ibid.: 137) of pure calculation and rational judgment. The market rewards disciplined behaviour and punishes any lapses. Because the market is always right, this creates a simple theodicy: everyone gets what they deserve (economically, at least).
This theodicy is made possible by a cosmology that excludes luck and affords total agency to the individual. Lears (2003: 85) traces this back to ‘a fundamental impulse of Enlightenment rationalism: to see the universe as an orderly and predictable mechanism, wherein chance was a mere illusion and human intelligence conquered the accidents of fate.’ This ‘culture of control’ abhorred luck and sought to eliminate all forms of chance. Yet randomness and uncertainty abound, making positivist determinism untenable. Recognizing this, probability theorists attempted to reconcile ideology with reality by reducing chance to ‘predictable unpredictability’ (Lears, 2003: 212; see also Hacking 1975, 1990). This mission to tame chance lives on in the array of stochastic financial models that dominate and drive the market today. These techniques of control removed chance from the cosmos and returned total agency to the individual.
But probability theory is a more limited tool than its ubiquitous use would imply. Knight (1921) famously proposed a distinction between risk, which can be measured, and uncertainty, which cannot. Market outcomes depend on a vast array of immeasurable factors, and the use of probability theory to model them is dubious at best. Maurer (2002: 29) says financial models present a moral argument: they are ‘a deontology of the way things “ought” to be, not an ontology of the way things “are”. Appadurai (2013b: 244) says financial modelling is a magical practice: ‘[Financial models] are in reality no different from the charts of astrologers, psychics, or tarot card operators or other diagrammatic forms for prognostication. In short, they are mechanical techniques of prediction with no interest in causal or explanatory principles.’ And yet, these magical models describe pricing behaviour quite well, because a market-wide consensus on their validity leads traders to perform their assumptions (MacKenzie, 2006; MacKenzie et al., 2007).
Ontological difficulties notwithstanding, traders believe they are in control of their financial destiny. My informants insisted that chance played no part in their trading: ‘What we do is not gambling. We use math and statistics to calculate theoretical edge that we take out of the market. If there’s no edge, that’s gambling.’ By applying probabilistic models with proper discipline, they make trades that have a quantifiably positive expectation of profit, known as edge. If a trader consistently trades with edge, she is sure to profit on a long enough time horizon. The ups and downs of trading are only short-term variance that will eventually converge in favour of her calculations. 5 Discipline affords her total control. There is no luck.
Parallel to this, Zaloom (2006), Abolafia (1996), and others have observed a culture of valorised risk-taking among traders, which seems to contradict the hallowed mandates of discipline. This contradiction derives from a clash of ideas about manhood. The rational, disciplined subject of market ideology is first and foremost a manly man (Ferber and Nelson, 1993; Nelson, 1998) and the qualities of a good trader are inseparable from masculinity (Levin, 2001; Widick, 2003; Zaloom, 2006). Traders aspire to masculinity, but find themselves caught between conflicting masculine ideals. The culture of control equates masculinity with asceticism and restraint. To surrender control to outside forces, as in gambling, leaves one ‘unmanned’ (Lears, 2003: 170). However, traditional American masculinity is associated with bravado and courageous risk-taking—the ‘manly gambler’ (Lears, 2003) or ‘Big Swinging Dick’ (Lewis, 1989). This vestigial ideal of the manly risk-taker is responsible for some traders’ undisciplined attitudes toward risk.
Like Zaloom and Abolafia, I observed valorised risk-taking among stock and futures traders. However, the bulk of my work was with options traders, among whom the ideal of control predominated. They acknowledged that risk was a necessary part of trading, but professed a deep aversion to risk for its own sake and regarded ‘swinging dick’-style risk-taking as flagrantly stupid. 6 I attribute this contrast to the disparate character of options trading. Options trading is far more technical than trading stocks or futures, and attracts analytical traders who seek to out-calculate the market and wring out profits with minimal risk. Zaloom and Abolafia met many stock and futures traders from humble backgrounds and without college degrees; the options traders I observed were engineers, physicists, computer scientists, all from elite universities.
These dispositional differences are attended by different value systems and trading strategies. As Godechot (2016) observes, there is no single best way to trade. Rather, traders choose from many viable trading strategies in a ‘bazaar of rationality’. One’s choice of trading strategy is an aesthetic judgment based on the strategy’s perceived value among one’s peers and to oneself. Groups of highly educated traders with ‘scholastic dispositions’ reject intuition and prefer intensely quantitative strategies for their formal purity and mathematical elegance. Less academic traders favour strategies that rely on red-blooded instinct, composed of an unsystematic collection of tips and tricks, more art than science.
My stock and futures traders, as well as those studied by Zaloom and Abolafia, are from this latter group, whereas my options traders were firmly scholastic. Stock and futures traders regarded instinct and ‘feel’ for the market as key attributes for a successful trader and sought to harness their emotions to profitable ends (cf. Hassoun, 2005). Their advice: ‘Don’t think.’ (Zaloom, 2006: 138). My options traders viewed this as mystical nonsense: ‘Anyone who does that kind of trading, that seems like gambling to me. Do they have a fucking crystal ball or something? I don’t know.’ Instead, my traders sought to eliminate emotion and other human elements from their trading. In their view, trust in anything but hard numbers is an ‘intellectual scandal’ (Godechot, 2016: 412). As one informant put it: ‘If you can’t prove it to me logically, mathematically, I don’t want to hear about it. It’s fairy dust.’
So, there are two aesthetic value systems with divergent images of the ideal, disciplined trader. On the one hand is the manly risk-taker, who skilfully harnesses the power of his emotions and instincts. On the other hand is the man in control, a mathematical wizard who vanquishes emotion to attain pure objectivity. Both are valid conceptions of discipline. Despite their differences, traders from both schools of thought—with widely varying ages, educations, class backgrounds, and occupations—participate in systems of friendly betting, and the analysis in this paper applies to them all equally.
On trading and cockfights
Zaloom (2006) and Abolafia (1996) compare trading to ‘deep play’, from Geertz’s (1973b) famous essay on the Balinese cockfight. They argue that traders, like Balinese cockfighters, separate trading from the frame of ordinary social life and put their status on the line when they trade. However, to interpret trading as play, no matter how deep, is to misunderstand it in a crucial way.
In their classic works on play, both Huizinga(1955 [1938]) and Caillois (1961) emphasize that play is explicitly set apart from real life. Play takes place within well-defined limits of space and time, suspends ordinary laws and norms, and replaces them with the rules of the game. The move to a play frame is from reality to make-believe, from literal to metaphorical. Trading is certainly separated from other arenas of ordinary life, but the nature of its separateness has been mistaken. Trading and its associated practices are not make-believe but instead quite literal.
Consider the Balinese cockfight. Balinese society is structured into an intricate and rigid hierarchy. The Balinese are forbidden to seek to improve their status, and they obsessively avoid conflict. In the realm of the cockfight, these customs are violently upended, resulting in ‘a powerful rendering of life as the Balinese most deeply do not want it.’ But in the end it is ‘only a cockfight.’ Geertz is adamant that ‘no one’s status really changes’ (Geertz 1973b: 440-446). Afterwards, reality reasserts itself. The participants return to their previous statuses and their shy demeanours. And although large sums of money are at stake in ‘deep’ matches, this also ends up being inconsequential because the matches and betting are structured so that wins and losses even out in the long term. The function of higher stakes is to heighten the drama in the make-believe world of the cockfight. Thus, the cockfight suspends ordinary life, its rules and consequences, replacing them with a fiction played out in the separate arena of the cockfight. It is proper play.
Trading is no such fiction. Though it takes place within specific arenas like trading pits and electronic exchanges, ordinary life is not suspended and the consequences within these arenas are equivalent to the consequences outside of them. The money and status gained or lost in the world of trading translates directly to money and status gained in ordinary life. 7
Zaloom (2006) argues that traders separate trading from ordinary life by segregating market money from ordinary currency. Zaloom says they do this by speaking in terms of ‘ticks’ rather than dollar amounts (cf. Hassoun, 2005). This is indeed a common practice among traders, but traders do it for ease of calculation. All prices are quoted in ticks, so it’s unnecessary to know the equivalent dollar amounts in order to trade. To constantly convert from ticks to dollars and back again would be a tedious and costly waste of time in markets where speed is essential to profitability. For example, in 10-year Treasury note options each tick is worth $15.625. It is much easier for a trader to remember she is up 25 ticks than to convert this to $390.625. Her next trade will be done in ticks and she can easily make her calculations in these terms. Despite this, traders still obsessively convert ticks into dollars when they get a spare moment: ‘Two ticks on a hundred lot—that was three grand. Nice trade.’ Even when unverbalized, traders are running these calculations in their heads, compulsively checking the screen that shows the day’s profit—in dollars. The primary risk metric for options traders is vega, which is defined as ‘dollars of vega’, not ‘ticks of vega’. This requires extra calculation but gets to the heart of the matter: how many dollars are at risk. Rather than separating market money from ordinary money, traders go out of their way to connect the two.
When I was being trained as a junior trader, one of the first things I learned was how to convert theoretical edge into dollar profits. My mentors emphasized that these calculations were essential, and that the dollars in those calculations were the raison d’être of trading. Those were the dollars that made the firm profitable and ultimately arrived in my pay cheque. Implicitly, those were also the dollars I could use to buy cars, clothes, houses, vacations—whatever I wanted. During this period—and this is standard at trading firms—senior traders took me and other junior traders to extravagant restaurants and parties at their grandiose homes, giving us rides to and from in their luxury cars—an organized effort to dangle the carrot of a wealthy lifestyle in front of us. If we traded successfully, this could all be ours. Whatever dissociative quality ticks might have, my mentors made sure I understood that they represented very real money.
Further, Zaloom says that traders segregate market money from ordinary money with mental tricks that downplay the stakes of trading. This is also common. The huge sums of money at risk can be daunting, so traders think about the amounts differently. 8 But these mental tricks are necessary precisely because the consequences of trading are so unflinchingly real. They are used to distract traders from this obvious continuity. And there is no ambiguity about which arena is more important. If a trader earns $10 million trading but gets fired before bonuses come out and takes home none of her profits, it is not the case that she has won in the game of trading but lost in the game of ordinary life. They are the same game, and she has simply lost.
Elsewhere, Zaloom is correct that trading arenas have different norms than other social settings. Traders display loud, aggressive behaviour that would be inappropriate in other contexts. But this shift in norms does not necessarily constitute a shift to a play frame. Every day, people freely move between disparate normative settings at work, at home, in libraries, at sporting events. The shifting norms between these situations do not imply that any of them is an instance of play. That is, unless one entertains the idea that all of civilization takes place in various play frames—an idea that Huizinga (1955 [1938]) flatly rejects. Such a concept of play would be meaninglessly inclusive.
Although trading is limited to the times and places of financial exchange, traders apply market ideology to all aspects of life. Miyazaki observes this among Japanese arbitrage traders, for whom arbitrage is ‘a way of life’ (2003: 261), an ‘epistemological stance, identity and ethical commitment’ (2007: 396) that creates ‘distinctive modalities of knowing, reasoning, and engaging with the world’ (2013: 7). One group of Japanese traders formed a proud ‘cult of logical reasoning’ (Ibid.: 95), vowing to live their lives in accordance with trading principles.
American traders are just as eager to apply market ideology throughout their lives. For them, the ‘logic of trading is really a flexible and transposable frame through which any sphere of life can be projected.’ (Widick, 2003: 703) An entertaining example of this comes from a late-night conversation I had with two fellow traders. One of them, YSJ, 9 was unsure whether he and his long-distance girlfriend should stay together. The three of us talked through all the available choices, estimated the probability and utility of each possible outcome, and then calculated the expected value of each choice. We plugged these numbers into the Black-Scholes model and calculated the implied volatility of each choice. We even calculated the value of hypothetical options strategies on this newly conceived underlying contract—for example, ‘the value of the straddle 10 on YSJ’s utility if he moves to her city’. Our conclusion: there are more fish in the sea. Our calculations were playful, but our analytical approach was serious. A few weeks later, YSJ was single.
Traders are generally wealthy and spend their money freely on expensive cars, boats, clothes, restaurants, and homes. Yet they are radically stingy and ungiving. They will shop around and haggle ruthlessly to get the lowest price on anything. (My heart goes out to salespeople who encounter traders.) Many times I have seen traders argue over a discrepancy of less than a dollar in splitting a bill or cashing out poker chips. They complain endlessly about the indignities of progressive taxation and unfair social welfare programmes. These are manifestations of an ideology with specific ideas about self-interest, fairness and altruism.
Out of curiosity, I posed Singer’s (1972) famous thought experiment of the drowning child to a group of traders. I admit, I knew it would get a rise out of them. Singer argues that one is morally obligated to save a drowning child if it is not at great cost to oneself. In most circles this conclusion is uncontroversial, but my informants were up in arms: ‘This Singer guy’s got his head up his ass.’ Another trader elaborated: ‘Look, I’m not some douchebag who thinks you should let little kids drown, but you can’t force someone to be responsible for someone else’s problems. That’s not fair.’ Further: ‘If someone values their shoes or whatever more than this kid’s life and doesn’t want to save him, that’s their right. I don’t have the right to tell them how to live their life.’ One hears echoes of Rand: never to sacrifice oneself to others, nor others to oneself. The case of the drowning child could not be further from the arena of trading, but market ideology remains at the fore.
Stories like these are the rule rather than the exception. I could list off endless examples to prove the point. In the interest of concision, suffice it to say that it is abundantly clear that market ideology informs the thoughts and actions of traders throughout their lives. This is why interpretations of trading as play are so crucially mistaken. If trading is play, then its ideology is confined to a play frame and has no bearing on ordinary life. But the opposite is true: market ideology resides in the frame of ordinary life and is quite literal. It’s not just a toolkit for navigating the market, but a complete cosmology and theology, a Weltanschauung, a way of being in the world. Traders take it with them everywhere they go.
As a corollary, we must collapse any distinction between ordinary agency and ‘economic agency’ or ‘market agency’. In the market or out of it, traders are the same agents in the same bodies with the same beliefs, values, and identities. The market may have different norms and elicit different behaviour than other settings, but the underlying agency of traders is constant. Therefore, when we talk about rational, self-interested agency and homo economicus we must talk about the whole agent, not one qualified by setting or activity.
‘Where’s the tacos-push-ups spread?’—Trader betting
It was one of those grindingly slow trading days. The kind of day when the phones stop ringing and TVs get switched from CNBC to ESPN. Clerks were unoccupied, so the traders gave them cab fares and sent them to pick up lunch at favourite restaurants in far-flung corners of the city. As Rick Santelli reported from the CME trading floor, anyone watching him on CNBC would have seen clerks shuttling past in the background with giant takeout bags under their arms or pizza boxes stacked high, their heads swivelling to evade floor security officers. 11
During the feast, someone in the soybeans pit told a story about a friend who once ate 24 tacos in one sitting. Other traders were dubious. Soon, the whole pit was debating who could eat 24 tacos. The topic metastasized to other pits and made its way up through the phone lines and instant message chats. By the time it reached my desk (an electronic trading desk specializing in commodity options), the entire market was abuzz with speculation on the 24-taco question. I dove right in: ‘Twenty-four tacos? Easy.’ Fellow traders jumped at this: CJN:
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(into headset) Guys, I got Andre over here saying he can eat twenty-four tacos. FZY: Seller.
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DMP: Where’s the market? Andre: Forty delta bid.
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FZY: At seventy. CJN: (into headset) He’s a big kid. Six-five, maybe two-forty. (to Andre) Hey Andre, what do you weigh? Andre: Two-fifteen. CJN: (into headset) Okay, he’s only two-fifteen. (to Andre) They’re selling you in the pit, Andre. Andre: Where’s the offer? FZY: At seventy. DMP: I’m half bid. (to Andre) You better eat these tacos, dude. Andre: (to DMP) C’mon man, I got this. CJN: Okay, now the pit is making it futures settled.
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It’s going out twenty-one, five.
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(to Andre) Andre, you gonna lift these?
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Andre: I’m squeezin’ it.
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FZY: Oh, come on … DMP: Three bid. CJN: (into headset) Got a three bid up here. (pause, listening) Yeah, offer in the pit is firm. DMP: Liquidity my ass. CJN: Hey Fuzzy, you can sell fifty delta and hedge with quarters. FZY: Nah, there’s no edge there. (Earlier in the day, FZY had claimed he could do forty push-ups, which resulted in a similar flurry of speculation.) DMP: Okay, now: where’s the market on the Fuzzy push-ups-Andre tacos spread?
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Andre: I think it died thirty-five, forty-one. So, synthetically … ten, eighteen? FZY: Any tighter? CJN: (into headset) They’re checking up the tacos as a spread against Fuzzy’s push-ups. DMP: Thirty-seven bid on the outright. Andre: Got a five lot at eight for ya. DMP: Sold!
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Trader betting occurs along a spectrum. At one extreme, the betting can be quite competitive. Major events like the NCAA basketball tournament tend to elicit competitive betting in which both parties are trying to profit. The stakes can get quite high—over $100,000 in some cases. This betting is not friendly, and traders strictly avoid betting competitively against anyone with whom they have a positive relationship. They refuse to bet competitively with friends. Instead, they seek counterparties with whom they have no relationship (e.g. on anonymous gambling websites or with unknown traders in other markets) or a negative relationship (e.g. a bitter rival).
At the other extreme is friendly betting, exemplified in the conversation above. Friendly betting is practiced between friends, co-workers, and other associates. It is much more common than competitive betting and takes place not only in person but over the phone, instant message and personal text. Although its market-style structure may seem to indicate otherwise, friendly betting is rigorously non-competitive. Traders do not seek to gain money or prestige by winning friendly bets. My informants stressed that friendly betting was ‘just for fun’, and vehemently denied using it for personal gain.
The juxtaposition of market-style interaction with the non-competitiveness of friendly betting creates a comic irony that is a source of endless amusement for traders. My comment about squeezing the order poked fun at this: to use a competitive tactic like squeezing would be preposterous in such a non-competitive situation. CJN’s remark that FZY should sell one contract and hedge with the other teased in the same way: such a calculated strategy would be absurd. Instead, traders often make a show of betting in comically unstrategic ways. For example, they sometimes make ‘choice’ betting markets, meaning they are willing to both buy and sell at a given price. This is by definition a losing proposition—the opposite of a competitive tactic—but it’s all part of the fun.
The stakes of friendly betting are low—usually less than a hundred dollars. These stakes are especially trivial to traders, who tend to be wealthy. As a result, there are no monetary incentives to spark competition. If the stakes of a bet are significant to either party, the bet is no longer friendly. Consider the following aberration. Two co-workers, MAG and KXE were debating whether CME would change its dress code to allow casual clothing on the trading floor. MAG believed a rule change was imminent, but KXE was sceptical. In general, MAG’s personality was quarrelsome and petulant, and he was not well liked in the group. His relationship with KXE was especially prickly. However, they had to maintain a façade of goodwill in order to trade together, and their betting behaviour was typically friendly. The debate started amicably enough, but MAG grew increasingly combative. KXE might have resolved the dispute by making a small bet, but the light-hearted mood for friendly betting had left the room. Also, I suspect KXE did not want to reward MAG’s belligerence with a friendly gesture. So the argument continued and MAG grew more aggressive. In an outburst, MAG challenged KXE to a bet of $10,000. The whole desk went silent. MAG’s bet was hostile and the stakes were too high to be friendly. It was a flagrant insult to KXE. But, with everyone watching, KXE accepted the bet—quietly and reluctantly. In the appalled silence that followed, MAG realized he had made a mistake. KXE later told me that MAG sheepishly approached him after work and offered to reduce the bet to $1000. KXE accepted. Months later, the CME changed its dress code but MAG declined to collect his winnings, still embarrassed by his blunder.
For a bet to be friendly, it is also important that neither person has edge. This is usually achieved by betting on obscure subjects. The number of tacos someone can eat, what time a friend will return from the bathroom, how many kids Jay-Z and Beyoncé will have—these things can’t be analysed beyond a guess, so neither person can have mathematical edge. Acknowledging this, FZY’s comment that ‘there’s no edge there’ joked about how no one could possibly discern edge in such a scenario. The more obscure, the more bizarre, the more inscrutable the subject of betting, the less opportunity for edge and the friendlier the bet.
Sometimes traders bet on familiar subjects that are amenable to serious analysis, like elections and sporting events. Before these friendly bets can occur, both traders must display ignorance of the subject at hand. The bet involves an implicit pledge: ‘I have no edge.’ If it comes to light that someone knew more than they let on, the bet is poisoned by competition and the edge-seeker is shamed. An informant told me a story about a newly hired junior trader who was eager to bet on NBA games. None of the other traders on the desk knew much about the NBA, so they played along and made friendly bets with him. (This is a common way of welcoming new traders into the group and building rapport.) One day, they found the new trader working on a spreadsheet with detailed calculations and analysis of every NBA team. The kid was running a racket. The other traders never bet with him again, and he was soon transferred to a different desk. ‘A total sociopath’, my informant averred. The other traders’ outrage had nothing to do with money; the stakes were utterly insignificant to them. Rather, they were insulted by the young trader’s competitiveness and use of calculation to gain edge.
Edge is banished from friendly betting to uphold its non-competitiveness. If there is no edge, then neither person has an expectation of profit. Further, the result of the bet cannot reflect on either person’s knowledge or skill because the conditions of the bet preclude both knowledge and skill. Therefore, friendly betting does not affect status or prestige. An informant explained, ‘If no one has edge, then it’s just random. If I told you to guess a random number pulled out of a hat, how could anyone judge you based on whether you guessed it right? That’s ridiculous.’ As a result, ‘No one cares who wins. The outcome is basically irrelevant.’ Everything’s made up and the points don’t matter.
Trivial stakes and the exclusion of edge prevent both profit-seeking and status-seeking. In the absence of either motive, one might argue that friendly betting manifests an occupational addiction to risk, but this is plainly not the case. An informant said: ‘With the click of a button I can risk millions of dollars, any second I want.’ He pointed to his fellow traders. ‘You think I’d rather get my kicks betting ten bucks a pop with these assholes?’ His point is well taken. With an endless supply of risk at their fingertips, why would traders go through the elaborate ritual of friendly betting to risk so little? The stakes of friendly betting are intentionally trivial, so risk-seeking is antithetical to its design. A bet is friendly only if the stakes are insignificant to both parties. (Recall: ‘No one cares who wins. The outcome is basically irrelevant.’) Therefore, insofar as traders genuinely do not care about the amounts at stake in friendly betting—which, by definition, they do not—friendly betting can be said not to involve risk at all. Certainly, friendly betting is not motivated by risk-seeking.
The duality of the gift
Affirming the theme of non-competitiveness, my informants said it was gauche to win too many bets. ‘If I won ten bets in a row from RLO, I’d give him an easy shot on the next one.’ When someone has won repeatedly, there is an implicit obligation for her to take unfavourable bets, effectively trying to lose to even the score. A common way to do this is by offering ‘choice’ betting markets to a friend, which is inherently a losing strategy. This resembles the culture of 19th- and 20th-century American gamblers in which winners were expected to gamble their winnings ‘back into circulation’ (Lears, 2003: 267). Likewise, friendly betting is structured so that everyone will tend to break even in the long term.
The allocation of betting winnings is an instance of earmarking. Simmel (2004 [1907]) and Marx (1992 [1867]) previously argued that money is fungible, impersonal, and meaningless, but Zelizer (1994) shows how meaning can be attached to money by earmarking it for particular methods of allocation and objects of expenditure. Among traders, friendly betting winnings are earmarked for betting with specific individuals. The money exchanged is inalienable and connects both parties in a relationship of reciprocal dependence. Though the amounts won or lost are immediately quantifiable, debts are settled regularly so the exact amounts are soon forgotten and all that remains is a sense of obligation. Thus, through earmarking, friendly betting creates a system of gift exchange among traders, following Gregory’s (1982: 101) canonical definition: ‘Gift exchange is an exchange of inalienable objects between people who are in a state of reciprocal dependence that establishes a qualitative relationship between the transactors.’
Trader betting accords with Appadurai’s (2013a) observation that exchange practices often slide on a scale from gift exchange to commodity exchange based on social distance. The stronger the social ties between transactors, the more gift-like exchanges tend to be. Likewise, trader betting slides on a scale from competitive betting, which is commodity-like (impersonal, alienable, independent), to friendly betting, which is gift-like (personal, inalienable, dependent). The frequency and friendliness of betting between two traders is a precise indicator of their rapport. The greater the affinity between them, the more often they will bet with each other and the friendlier the bets will be. Close friends sometimes have a running daily bet: Will the high temperature today be even or odd? How many cups of coffee will TGL drink before lunch? At its most friendly, this betting can be almost embarrassingly affectionate. Traders may make these bets discreetly to avoid the jealousy of others. It’s analogous to giving a present to one favoured friend but not others: one might feel compelled to give the gift in private.
One might ask whether friendly betting is merely play—a silly activity that traders do for fun—and whether this would be inconsistent with gift exchange. Friendly betting has many characteristics of play and may be considered as such, but the issue does not merit attention here because play is perfectly consistent with gift exchange. An example is Trobriand cricket, wherein cricket matches are played as part of kayasa, a system of ceremonial gift exchange (Leach, 1976; cf. Malinowski, 1935). Though the game occurs in a play frame, the resultant exchange is literal and occurs in an ordinary frame. The exchange is a product of ordinary agency and its effects on social relations are quite real.
The relationships built by friendly betting are on display when traders settle up their debts. Both parties grin and laugh, tossing playful insults back and forth. The amount won or lost is trivial and no cause for acrimony. The loser is allowed to take a few extra jabs, perhaps about the winner’s dumb luck, perhaps vowing to win next time. The winner may show a tinge of embarrassment for taking money from a friend—though this gift will be returned in due time. An overriding atmosphere of camaraderie surrounds the exchange, and both parties will look forward to betting again. The pair may continue to prod and taunt each other about the result long after the bet is settled. This continued interaction reinforces their relationship and affirms their shared history. Years on, two traders may recount a particularly entertaining bet they made together and share another laugh. The bets are not something that simply happened to them but something they created together. A timeline of the bets between two traders might tell the story of their friendship as well as anything else.
An essential feature of gift exchange is the interval of time between gifts (Bourdieu, 1977; Gregory, 1982). The purpose of this interval is to show that each gift is an independent act of generosity done without calculation. If a reciprocal gift is given right away, the exchange collapses into a commodity transaction or a refusal of the original gift. However, despite the appearance of uncalculated generosity, many systems of gift exchange are competitive (e.g. Gregory, 1982; Malinowski, 1922; Mauss, 1990 [1925]).
Friendly betting enacts time intervals as well. Reciprocal bets occur days, weeks, or even months apart. But it has no such façade of uncalculated generosity. In fact, every aspect of friendly betting is designed to give the appearance of competitive commodity exchange. Betting is structured to mirror the antagonistic bidding and offering of market exchange, which implies competitive interactions between independent agents. Traders then exchange money, which ‘signifies a sphere of “economic” relationships which are inherently impersonal, transitory, amoral, and calculating’ (Bloch and Parry, 1989: 9). Unlike classic systems of gift exchange in which calculation is ostensibly prohibited but tacitly practiced (cf. Latour and Callon, 1997), friendly betting ostensibly encourages calculation but prohibits it in practice.
So, while many systems of gift exchange manifest a duality between an appearance of uncalculated generosity and an underlying reality of strategic competition, friendly betting manifests the opposite: an appearance of strategic competition and an underlying reality of non-competitive gift exchange. By this, friendly betting seems to undermine the primary purpose of gift exchange, which is to build and reproduce social relations (e.g. Bourdieu, 1977; Weiner, 1980; Gregory, 1982). The fundamental principle of gift exchange is that it establishes a relationship between the transactors rather than the objects exchanged, and yet the competitive façade of friendly betting seems to repudiate the same relationships it builds. So, what’s the point? Why this inverse duality?
The concealed gift
If we consider market ideology’s Randian ideals of rational self-interest and independence, it becomes apparent why traders cannot participate in a typical system of gift exchange with ostensibly generous gifts. On Rand’s view, generosity is an immoral and degrading act of self-sacrifice. Would-be gift-givers avoid flaunting such ignobility. From the recipient’s perspective, the gift enslaves her with a cannibalistic obligation to reciprocate. If there is no expectation of reciprocity, then the gift must carry some kind of ‘poison’ (Parry, 1989). It is unsurprising that neither party is interested in such a fraught and self-defeating exchange.
Gifts are also an affront to traders’ cosmology. Market ideology posits a world where everyone gets what they deserve, granting each individual total control of her economic fate. This is why luck and gambling are abhorrent: win or lose, the outcome is unearned. Unearned outcomes contradict the theodicy of discipline, undermine individual agency, and offend the moral order of the cosmos. Gifts, also unearned, are objectionable for the same reasons. They must be concealed.
In other systems of gift exchange, gifts are presented as acts of uncalculated generosity because overt competition is seen as antithetical to harmonious, interdependent social relations. But among traders, interdependent social relations are seen as antithetical to rational, independent—and therefore virtuous—life. Interdependence is the purview of parasites, leeches and cannibals. In this context, overt gift-giving would be not only counterproductive but odious. To make gift exchange palatable for both parties, traders mask it as a competitive commodity transaction. Put another way, market ideology’s ‘aesthetic constraints’ (Strathern, 1988) and ‘limits of invention’ (Bourdieu, 1977) require that gift exchange be concealed and that its concealments take on forms dictated by market ideology.
But what about the other side of the duality? Why is there anything to conceal in the first place? Why is there a system of gift exchange at all? Friendly betting has the same purpose as other systems of gift exchange: to build and reproduce social relations. This kind of self-reproductive practice is a necessary element of any lasting social system: to survive, it must reproduce itself (Bourdieu, 1977; Weiner, 1980).
The duality of friendly betting actually affirms its prosocial character. Traders’ efforts to give friendly betting the appearance of competitive commodity exchange show their commitment to the group’s shared ideology. Bourdieu (1998: 141) says these kinds of ‘pious hypocrisies’ are the apogee of community-oriented behaviour: From the group’s point of view, there cannot be a more dutiful act than so-called ‘white lies’ or ‘pious hypocrisies’ … . They contain an undeniable declaration of respect for the group’s rule … a public declaration of reverence for the group and for the self-representation it presents to others and to itself.
The group dynamic, however, is different for traders. Under market ideology, reverence for the group is oxymoronic. To show reverence for the group’s principles requires traders to deny the existence of any such group. To build and reproduce social relations requires traders to deny the existence of any such relations. These contradictory tasks evince a paradox at the heart of market ideology: it creates communities of people in interdependent relationships, all united under the idea that such communities are impossible or immoral.
The result is friendly betting. By mimicking competitive market interactions between rational, self-interested agents, the appearance of friendly betting follows and reproduces market ideology’s ideals of self-interest and discipline. In this guise, traders are able to build and reproduce a system of interdependent social relationships through concealed gift exchange. Thus, traders reproduce market ideology and the social relations that both contradict and sustain it. It’s an ingenious response to the paradox of market ideology.
Homo economicus revisited
One night at a traders-only poker game I brought up the topic of friendly betting. Everyone acknowledged friendly betting as a common practice separate from competitive betting, but when asked to account for it they struggled to maintain both sides of the underlying paradox. First, they all agreed that friendly betting was rigorously non-competitive. Tacitly, this was because competition would undercut the relationships they had built through friendly betting. But when I asked them why they bet specifically with friends, they scrambled desperately to attribute their actions to rational self-interest. Convenience, no fees, customized liquidity—each of these was suggested and rejected by the group in turn. The only suggestion that garnered any approval was that betting with friends was more fun. This explanation was properly self-interested, but the group still found it unsatisfying. At this impasse, the group faltered. One trader offhandedly suggested that the reason might be ‘something social’. When I asked him to expand on this idea, he grew uncomfortable and was loath to elaborate. A pensive silence fell over the table. I let the topic fall away and we returned to the poker game.
Are these vigilant optimizers acting with conscious objectives and calculated strategies? Are these ruthless Machiavellian egoists exploiting each other for personal gain? I submit that they are not. A true homo economicus would only invest his time and energy in friendly betting if he had calculated it to be the course of action best suited to optimize his self-interest. The object of his actions would be his self-interest, and he would be conscious of both his objective and the strategy he was using to pursue it. Conversely, not a single one of my informants could articulate the purpose of friendly betting. In group discussions and individual interviews, they were also unable to account for basic features of friendly betting like why they bet specifically with friends or why they sometimes took unfavourable bets. Over and over again, traders dismissed my questions with a shrug and told me friendly betting was just for fun. Most were dimly aware that friendly betting was ‘something social’, but acknowledging this made them uncomfortable and they nudged me toward different lines of questioning. Their evasions gave the impression of genuine perplexity. These were not informants hiding knowledge from a nosy ethnographer; they were simply at a loss.
My informants’ comments about friendly betting consistently betrayed a lack of conscious objectives and calculated strategies—especially self-interested ones. It can be said that traders benefit from friendly betting in the form of professional connections and enjoyable sociability, but this is beside the point. Whether friendly betting is in their self-interest, it is not done out of self-interest. It may be optimal behaviour, but it is not optimizing behaviour. Any self-interested benefits that traders might derive from it are incidental. Any resemblance it might bear to rational action is deceptive. With this understanding of friendly betting as a non-rational, non-self-interested system of concealed gift exchange, we move toward a ‘thick’ account of traders. The observational facts of friendly betting resemble competitive commodity exchange, but the semiotic contents of these actions are worlds apart. One is Geertz’s wink; the other is a blink.
It bears repeating that the mere fact of traders’ participation in a system of gift exchange does not necessarily prove them to be rationally self-interested or not. Some competitive systems of gift exchange can be rational and self-interested. It just so happens that the specific system of gift exchange practiced by traders (friendly betting) is non-rational and non-self-interested. Its deceptive form exemplifies why traders’ non-rationality and non-self-interest have gone undetected for so long.
Friendly betting shows that traders are more concerned to present the appearance of rational self-interest than to embody these attributes. The appearance of rational self-interest is rigorously maintained; the substance of it comes and goes. Previous ethnographic accounts have assumed that traders’ self-presentations are a straightforward indication of genuine rationality and self-interest. However, as I have shown, traders present the appearance of rational self-interest to serve a set of social functions. Through their performances, traders express identity, uphold and legitimate market ideology, and build and reproduce social relations. These performances are non-rational; traders are not consciously aware of the functions they serve. Ironically, traders’ performances of rational self-interest are often thoroughly non-rational and non-self-interested.
And so we return to the question posed at the beginning of this paper: do traders instantiate homo economicus? By now it should be clear that the answer is no. Traders proclaim themselves to be rationally self-interested and behave in ways that appear so, but their proclamations and appearances are often contradicted by the substance of their actions. Even among traders, who normalize radically rational, self-interested behaviour, homo economicus does not exist. At the outset of this paper, I said that if homo economicus is not found among traders then he does not exist at all. I now aver that this is the case. Instead of homo economicus, we find non-rational, non-self-interested agents driven by commitments. The object of their performances is not simply money or status but identity, ideology, values and social relations—a way of life. One can account for their behaviour as normative rule-following, essential prosocial agency, or a mix of both. 22
Of course, traders aren’t purely non-rational and purely non-self-interested. Neither are the Kabyle or Balinese. I won’t speculate on what exact proportion of traders’ agency is rationally self-interested, but I submit that it is far less than it seems. Ultimately, my findings call for scepticism—and not just among ethnographers of traders. Anywhere rational self-interest is normalized, one should expect to find semblances of rational self-interest that are not so—just as in avowedly chaste societies, one should not be shocked to find promiscuity. These semblances may be in the form of gift-giving that is presented as self-interested and transactional—concealed gift exchange—or other cultural practices that serve similar purposes. 23 This is merely a new manifestation of an old ethnographic problem: people aren’t always what they say they are. What makes the present case especially vexed is that many ethnographers subscribe to the same myth of rational, self-interested agency that their subjects do, blinding them with confirmation bias. As market ideology and neoclassical economic theory spread around the globe, they conspire to grow the ‘beguiling myth’ (Miller, 2002: 230) of homo economicus, and scepticism of his appearances becomes increasingly necessary. If we look closer, or perhaps through a new lens, we find a different story—a better one, I might add.
A final note. In recent decades, the rise of neoliberal capitalism has produced numerous ills—among them, violence and injustice. The financial system has amassed alarming amounts of power and would seem to be the head of the snake, so to speak (e.g. Ho, 2009). Much of the ethnographic interest in finance is animated by the hope that a better understanding of the actors constituting the financial system might show the way toward reform. I share this hope. However, if we are to fulfil this hope we must [refuse] to be seduced into treating the ideological tropes and surface forms of the culture of neoliberalism–its self-representations and subjective practices, identities and utilities–as analytic constructs. Life, under millennial capitalism, is neither a game nor a repertoire of rational choices. It is irreducible to the utilitarian pragmatics of law and economy or to methodological individualisms of one kind or another. Indeed, these and other theoretical discourses are part of the problem. Critical disbelief, in pursuit of a reinvigorated praxis, is the beginning of a solution. (Comaroff and Comaroff, 2000: 335)
Footnotes
Acknowledgements
For their helpful comments on earlier drafts of this manuscript, I thank Cynthia Mahmood, Susan Gal, Tommy Maranges, the editors of Anthropological Theory, and the two anonymous reviewers. For welcoming and challenging me, I thank my friends in the Department of Anthropology at the University of Chicago. For their honesty and humour, I thank my informants and fellow traders, especially John Fletcher. Above all, I am deeply grateful to my mom and dad, my sisters Christina and Paulina, and Katie ‘Tater’ Feeney for their love, support, and tremendous cooking. I offer this work in memory of my γιαγιά, who taught me to love ideas, and taught me what love is too.
Declaration of conflicting interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.
