The Anthropology of the Credit Crisis: Magical Thinking, Irrationality & the Role of Inequality

June 13, 2021
The Anthropology of the Credit Crisis: Magical Thinking, Irrationality & the Role of Inequality

ASIN B00AQBHDI0In 2005 I wrote a letter to the Financial Times describing theunsustainable nature of the financial instruments (derivatives)then being sold as insurance to protect investors from losses inother assets, failure of institutions and other untoward events.The complexity of these instruments and the magical nature of theiracceptance by investors led me to an examination of modern economicpractice from an anthropological perspective.The flight from risk that derivatives represent is an ancientcomponent of vertebrate life and is embedded in the caching of manyanimals. Other aspects of modern economics are residues of thehistory of human survival in simple exploitation of resources. Theproblem with the financial foundations of modern capitalism is thatthey are rooted in trends of social ideology that have come to be astructural component of economic and political entities since thedevelopment of economic systems in the late Neolithic. We have beena genus, that of Homo, for about 2.5 million years, and a species,that of sapiens, for perhaps as much as 200,000 years, but overeither period, the type of means by which we made a living washunting and gathering. This strategy required continuous mobilityand cooperation between band members.The nature of our current survival strategy, that of complexsociety only began about 10,000 years ago in the earliest sedentarycommunities. So one might say that our current life style is new,adapting and tenuous. I described the central aspects of thisideology in my 2004 book, Sustainability, Human Ecologyand the Collapse of Complex Societies, published by theEdwin Mellen Press.The purpose of this present book is to clarify the mechanisms bywhich this ideology has come to permeate most all religious as wellas political belief systems and create conditions for financialbooms, busts and economic hardship.