The Phantom Economy   /   Summer 2010   /    The Phantom Economy

The Derivative World

Caitlin Zaloom

Wall Street is often compared to a casino. But what exactly does this mean? The popular press uses the association to tar the statistical whizzes and raucous traders of the financial world with the brush of illegitimate gains. The image also conjures a closed system in which each trade represents a zero sum game. The house collects what the rubes ante up. In the years leading up to the financial crisis, this line of thinking proceeds, we were all suckers at the Manhattan table of Caesar’s Palace.

As an anthropologist who studies the daily work and global technologies of financial traders, I have always resisted this comparison. Thousands of dealers trade in capital markets, each with their own strategies and time frames in mind. The system does not necessarily set their interests against each other directly. More importantly, moralizing often obstructs analysis. If we are to understand the Street’s working beliefs about risk and markets, we should hold our own judgments in abeyance—at least until we learn how financial trading works. Those interested in political engagement will be far more effective once they develop an accurate picture of what Wall Streeters think they are doing.

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