By Jeanne Lazarus, Mariana Luzzi, and José Ossandón
We had the pleasure of co-organizing the mini-conference ‘Domesticizing Financial Economies: Knitting Fibers of Transaction, Algorithm, and Exchange’ which was part of the annual convention of the Society for the Advancement of Socio-Economics held in Chicago last July. We use this post to process some of the many elements discussed during the five sessions of the event. We will not attempt to summarize all the presentations (click here to see the full program), but we will focus instead on two more general issues taken from the papers and discussions that we believe extend the scope of the already rich existing research on social studies of credit and everyday money management.
Studying the relational work of credit evaluations
From geographers’ accounts of contemporary ‘financial ecologies’, sociological studies comparing personalized and quantified credit assessments, and detailed STS’ work on the diffusion of scoring and credit technologies, there is no doubt that the last years we have witnessed a proliferation of social studies of credit and the domestic finance industry.
The papers presented during the mini-conference showed that close detailed analyses of credit evaluations and the controversies concerning them can challenge some of the key dichotomies that have dominated part of the existing literature. For instance, Orsi Husz, in her historical analysis of the controversies surrounding the development of a national identity bank card in Sweden in the 60s, found the co-existence of justifications and dynamics that could be associated with the two epochal moments – “disciplinary” and “control” societies – demarcated in studies on credit identification. Similarly, Barbara Kiviat’s interview based reconstruction of the role of credit reports in hiring decisions of managers in the US showed a much messier picture than what could be expected from existing research that has distinguished between dis-embedded decision making- informed by scorings and credit reports- and embedded – case to case personalized – choice. Finally, Anya Degenshein’s ethnographic account of a pawn shop in Chicago also showed the co-existence of different modes of evaluating and delimiting credit worthiness.
In order to deal with the ambiguity found in their empirical material, most of the presenters referred to notions such as “relational work” and “earmarking” developed by sociologist Viviana Zelizer. In fact, almost all the papers mentioned some of Zelizer’s concepts. We welcome and encourage this, certainly still incipient, Zelizerian turn in the study of credit evaluations, because Zelizer has provided a language to deal with empirical situations where ambiguity and multiple valuation logics coexist. In this context, instead of being forced to use conceptual dichotomies that are too neat in comparison with the empirical material collected, the attention of the researcher can be refocused on identifying the different valuation criteria available in a given credit evaluation and the costly work carried out by the actors in disentangling or earmarking them. But, of course, importing Zelizer’s concepts to the study of credit evaluations is not for free. Notions such as relational work and earmarking were developed to think about actors dealing with different forms of payments and money which is not the same as credit evaluators dealing with different modes of classifying and evaluating consumers and potential debts. Frederick Wherry’s paper made a move in this direction by discussing how to extend Zelizer’s ideas when thinking of relational accounting. It could also be worth initiating (or enriching) a conceptual dialogue between this new research on credit valuations and the existing work carried out in France, which, influenced by Boltanski and Thévenot, has understood credit evaluations as “tests” where different modes of valuing co-exist. The paper of Jeanne Lazarus and Laure Lacan reviewing and introducing non-French readers to the rich recent sociology of credit developed in France could help build this bridge.
Juggling with debts, re-thinking financial inclusion
Papers by Alvarez, Villarreal & Guérin, Niño & Villarreal, Luzzi, González, and Ossandón paid more attention to the other side of credit transactions: consumers. In this context, qualitative empirical material collected from low income families in India, Chile and from the border between Mexico and the US contested the extended view that associates poverty with a lack of financial education and low financial inclusion. Actually, the opposite is true. Low income people around the world seem to live in very complex financial ecologies developing skills way more complicated than those normally associated with financial literacy by policy makers. The challenge is how to research and grasp this complexity.
A very promising concept here is the metaphor of “juggling” discussed by Villarreal and Guérin. As they explained, the main skill and challenge faced by low income families around the world is how to deal with multiple kinds of debt and financial instruments simultaneously. These different financial instruments do not only have different regulations or modes of defining interest rates or instalments (like for instance in credit provided by banks and department stores); but they can also come from domains that simply cannot be reduced to a single unit of account (as Villarreal & Guérin said paraphrasing Callon they belong to different “calculative frames”). In this context, skilful financial agents are not necessarily those that have the mathematical knowledge to translate different sorts of debts into a common metric and hence take informed decisions, but those that can understand the specific situational rules associated with each sort of payment and with the crossings or switching in between them. For instance, immigrants (or trans-border workers) studied by Villarreal and Niño, continuously translate debts not only into different currencies, but also into very different sorts of instruments such as paying personal favors with future social insurance payments. Similarly, Chilean consumers studied by José Ossandón do not only combine several department store credit cards with other financial instruments such as loans provided by credit rotating associations, but they also lend their cards to friends and family, creating a secondary economy where what is exchanged is their cards’ credit limit. Similarly, Argentinians in the period after the 2001 financial crises, studied by Mariana Luzzi, developed complex earmarking techniques that enabled them to deal with co-existing national and federal currencies in their everyday transactions.
Paying more attention to financial practices as those just mentioned can have important theoretical and political consequences. As Guérin explained in her paper reviewing recent literature on ‘financial literacy’; this latter term is based on a limited view of financial actors and their practices. At best, works such as Portfolios of the Poor portray a complex landscape but they still heavily rely on limiting conceptual tools provided by disciplines such as behavioral economics. The challenge is to find ways in which social studies of credit and everyday money management can not only criticize the assumptions normally used in economics and policy making (i.e. isolated economic actor, nudging,…) but help in providing conceptual tools to enable a better understanding of the material collected by research such as Portfolios of the Poor. The notion of “juggling” can be seen as a potentially fruitful step in this direction. But, here there is still some work to do in order to change this metaphor into a strong conceptual apparatus. A potential avenue could be to start building, or reinforcing, bridges that communicate this notion with existing research, like for instance the already mentioned concepts of “earmarking” and “relational work” developed by Zelizer, but also with recent anthropological studies, such as Jane Guyer’s work on scales and multiple ways of ordering and valuing things. We also believe that another potentially productive avenue could be to stop comparing poor financial agents with a non-existing financially savvy middle class, and to study them instead together with those other agents dealing and trading with multiple financial instruments, such as stock exchange traders. Doing this, furthermore, could help broadening discussions with the increasingly rich field of “high” finance studies already initiated in events such as the workshop “Understanding the Knitting: new methods for investigating the interactions of low and high finance” held at the Open University in 2013.
Finally, it is important to mention that attempting to develop a less patronizing way of grasping the complex financial ecologies and practices of those with low income around the world does not need to be blind to existing inequalities. As recent work by Julia Elyachar on micro-finance in the middle-east and Bill Maurer on payment infrastructures in Africa have shown, a complex array of actors- including global governance institutions like the World Bank and the OECD, NGOs, and firms associated to telecommunication and payment infrastructure- is actively re-shaping the financial life at the bottom of the pyramid. In this context, it is important that social studies of credit and domestic money management communicate with existing work that pay more attention to this sort of global developments. It is precisely this sort of bridge, particularly with the literature on everyday financialization and Cultural Political Economy, that Iver Kjar and Felipe González attempted to build in their papers studying credit practices and discourses in Denmark and Chile.
To sum up: very rich and promising papers and discussions we hope to continue seeing in this post and future conferences and publications.
Acknowledgements
As part of our inter-network collaboration, this article is co-posted with Estudios de la Economía. Image used under a Creative Commons License. Original image by epSos.de can be found here.
