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Annelise Riles

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Shadow Elite: Move Your Money and Beyond -- Reforming Market Culture From the Bottom Up

Posted: 01/27/11 09:04 AM ET

Ahead of the annual Davos gathering of the global economic elite, Arianna Huffington noted Monday that one of the main themes this year will be the importance of "common norms" and "shared sacrifice." The inclusion of cultural imperatives is a welcome one. This week anthropologist and Cornell Law Professor Annelise Riles argues that regulations can only do so much in preventing the next financial crisis. We need a revolution in market culture, she says, and all of us can play a part. ~ Janine R. Wedel & Linda Keenan

There's a glaring omission in all the talk over financial reform, the question of whether legislation goes far enough to rein in the bad behavior that led the economy off the precipice.

As an anthropologist who has spent ten years studying financial markets from the inside, I have learned that reforming market culture is as crucial as any regulation. And we all have a duty to change the culture. "Move Your Money" may be your first effort, but it shouldn't be your last.

What we found during the financial crisis is that the most agile players (like those of Janine Wedel's Shadow Elite) can get around regulations and legislation, in part, by influencing the culture. They encourage deference to anonymous expert opinion--a sense that markets are something far away from the ordinary person's experience or ability to understand, and hence are best left to the shadow elite themselves. And they help normalize shady activities, like, say, so-called "liar loans", things banned on the books, and even actively enforced as illegal, but not considered entirely wrong by ordinary people. The result is that the government can't prosecute violations fast enough and illegal behavior nevertheless continues.

Thus, changing policies or even laws has an impact, but they won't do the job alone. Reforming culture is what's needed, and that is best supported by social movements made up of people of all types -- ordinary citizens, market professionals, people inside government who believe in the cause and are not just pursuing the policy because it is their job.

So what should we do?

If you are an ordinary investor, someone who has a 401k, or a bank account, or a loan, or a credit card, you should consider, as Arianna Huffington has suggested, moving your money out of big banks whose policies you do not support. You also have a responsibility, as a citizen, to educate yourself about how the economy works, who are the players, what are the policy proposals.

If you are a regulator, or in a position to influence a regulator, don't be afraid to listen to voices, opinions or suggestions that have not been historically at the table. Former Commodity Futures Trading Commission chair Brooksley Born or FDIC Chair Sheila Bair were considered out of touch when they engaged in aggressive regulation efforts. Had we acted on their warnings, the financial crisis might well have been greatly mitigated.

If you are a stock broker, lawyer, banker, analyst, a paralegal, or bank clerk, you have a special role to play in changing market culture. In my experience such people from the bottom to the very top often claim that they are just cogs in the wheel, and yet they have tremendous latitude to make very small changes--to push for option A over option B, both of which are plausible alternatives for their organization but one of which might steer a slightly better course for the economy as a whole. These are the changes that matter. If each person in such a position resolved to take small steps we would see dramatic change. These need not be altruistic steps; they need only be wiser actions that reflect a sense that, in the case of a bank loan administrator, for example, choosing not to foreclose immediately on a loan but to put in the extra hours on a Friday night to see if a solution can be worked out, takes commitment but might be good for the distressed homeowner, the bottom line and the economy as a whole.

If you are a neighbor, friend, or relative of one of these market professionals, you can let them know what you expect of them, let them know that you view them as stewards of a very important public good, our economy, and share with them why this matters to you personally. My research shows again and again that market players are motivated not only by money but also by what other people -- their spouses, their children, their friends, their colleagues, their former classmates -- think of them. They don't want to be bad actors. They want to be respected and appreciated. Use your social influence to change market culture.

If you are part of the media, or in the education professions, you have an obligation to make the market understandable and accessible to citizens and not just to pander to insiders. You should encourage a conversation about the common good in markets.

And there are also some things that all of us can do, no matter who we are. No one is wholly disconnected from the market. You can behave in a responsible, ethical, constructive way -- whether it is paying your babysitter fairly or living by your own obligations in your workplace or bringing your own spending under control. Every time we act based on an appreciation that our own long-term self-interest is tied up with the self-interest of others, we change our own corner of market culture.

All of this involves taking risks and making hard choices. If everyone in your company talks as if ordinary investors are bumbling fools who exist only to be taken advantage of, it is hard to begin to articulate the view that the firm also has a social obligation towards average investors. If all your friends are running up large credit card bills, it is hard to live within your means. If you are a bureaucrat who has qualms about dominant paradigms, it is hard to go against the group think and risk looking silly or ignorant. Moving your money might not be costly, but moving your talent to a company that upholds the common good could be a gamble.

So changing market culture takes courage. But my research convinces me that it is the only way forward. I liken it to efforts by citizens to clean up a decrepit park frequented by drug dealers. It's time to pick up the trash left by the financial destruction, and challenge each other to clean up our acts.