Review of Wall Street at War: The Secret Struggle for the Global Economy by Alexandra Ouroussoff

The epigraph to Alexandra Ouroussoff’s slim, revelatory, and important ethnographic study of Wall Street firms comes from an anonymous “Chief Financial Officer of one of the top five commodity extraction companies.”  Identified only as “Ron,” he opens the book with the tough-guy grumble: “I wouldn’t buy a book on risk if it was the last fucking book on the planet.”

I write this review on a scorching summer day, during what may be the hottest year on record, in a still young decade already surpassing the last as the hottest on record.  I awoke to news stories of drought and the decline of the world’s coral reefs, all likely caused by changes to the earth’s climate resulting from human resource extraction and consumption.  The fate of national economies and individual life chances from La Paz to Lusaka are tied to this uncertain business of extracting commodities from the earth and hoping they’ll fetch a good price.  Clearly, Ron’s decisions and those of his colleagues create a bewildering array of risks that they’ll never be aware of, risks flung far into time and space.

The many informants whom Ouroussoff features in this book have a lot to say about risk, but almost nothing to say about this mostly invisible plenitude of risks—a point I’ll return to at the end of this review.  The risks Ouroussoff’s CEOs and financial analysts are concerned with are financial risks to investors and corporations.

Ouroussoff‘s book is an illuminating account of changing conceptions of risk and profit at the upper reaches of capitalist power.  It makes a worthy contribution to the anthropological tradition of empirically-based critiques of popular and professional economic thinking (Mauss 1990 [1923]; Sahlins 1974), a tradition enjoying a much needed contemporary resurgence (Hann and Hart 2011; Ho 2009; Graeber 2011).

Ouroussoff’s provocative key claims are these: since the 1980s, a new conception of risk and profit has taken hold of global capitalism.  This new “rationalist model,” as she calls it, holds that risks can be systematically calculated, minimized, and, controlled—that contingency need not be a requirement of profit.  This idea is imposed by ratings agencies (such as Standard & Poor’s and Moody’s) on corporations (such as that of our dismissive CFO, Ron).  These corporations must acquiesce to the demands of the “rationalist model,” and the credit analysts who impose it, in order to receive the agencies’ imprimatur, and thus, capital.  This conflict between ratings analysts and corporate executives is the “War” of Ouroussoff’s title and has been a major cause of the recent global economic crisis.

The idea that the slide to crisis was greased by hubris about risk will, of course, be familiar to readers.  US homebuyers in the years leading up to 2008 were routinely told that ‘house prices always rise,’ as though this manifest absurdity were some axiom of nature—just one instance of the naïve faith in profit without risk that swept the world’s richer countries over the last few decades.  But Ouroussoff’s claim, based on 6 years of interviews with corporate executives and ratings analysts is different.

Analysts don’t think that all contingency can be controlled and eliminated, just the contingencies that matter.  Through analysis of these interviews, Ouroussoff shares her progressive discovery that the rationalist model is predicated on the notion that contingency can be domesticated and relegated to the lower reaches of the economy.  Analysts believe that the best and most successful capitalists and corporations operate (and have always operated) in a separate, dominant domain in which risk can be known and quantified.  Analysts, she writes:

imagine the global economy in terms of a hierarchy of companies divided into two spheres, separated by their relation to the degree of uncertainty they produce.  At the top of the hierarchy are quality companies generating predictable uncertainty.  At the base are those companies whose future is unknown.  This image of a hierarchy of companies breaks with the conventional image of a multitude of competing companies operating on a level playing field.  In this new image, the essential dynamic is not price competition but strategic activity designed to eliminate chance.  This is a completely new representation of the capitalist economy which cannot be regarded merely as a further development of competitive market capitalism (43)

Analysts in thrall to the rationalist model end up producing something like the very world they imagine already exists, compelling companies to consolidate so that they can write possible contingencies off their business plans and balance sheets (47, 125).  This is an original argument for an imperative to monopoly in contemporary capitalism, very different from familiar neoclassical and Marxist accounts of the tendency to monopoly.

It is also an inversion of an influential account of a cause of the financial crisis in which ratings agencies were pressured to award undeserved investment-grade ratings to the very companies that pay them (see, Krugman 2010).  Ouroussoff dispatches this account too breezily (11), regarding it as less significant than the new conception of risk and profit that dominates credit analysts.  For Ouroussoff, the crucial arrow of cause and corruption doesn’t run from corporations to ratings agencies, but in the other direction.  Corporate executives may rankle against the imperative to eliminate contingency from their business plans, but they do so in silence, because they manipulate their numbers to meet analysts’ requirements (79).  As one “executive in the extractive industries” put it to Ouroussoff, “We used to lie 20 per cent of the time.  Now it’s 80 per cent” (24).  Compromised by their own deceptions, executives don’t publically admit to the fact that the new rationalist model that has taken hold on Wall Street is distinct from historical notions of capitalist profit making, in which risk and competition are necessary for profit.

More striking is this: analysts don’t perceive this distinction at all.  “The rationalist framework is so successful in assimilating the conflict,” Ouroussoff writes, “that it begins to look as if points of incompatibility not only do not occur, but cannot occur in principle” (71).  So binding is the epistemological straightjacket of the rationalist model that, “analysts are barred from directing their attention to the foundational premises of their mode of thinking” (75) or to the very possibility that there might be any other mode of thinking.  Here Ouroussoff begins to lose me.  Can the hold that the rationalist model has over analysts really be so total?  Is it really possible that analysts of major ratings agencies and executives of major Wall Street firms have such completely different worldviews about capitalism?  Don’t they golf together and go to business school reunions together?  What do they talk about over cocktails while gawking at Occupy Wall Street protestors from above or while waiting to pick up their rental Bentleys at the airport on their way to Davos and the World Economic Forum?

My suggestions here are flippant, of course, but they have to be, because, despite the obvious quality of Ouroussoff’s long-term research, and the level of trust she clearly developed with her informants, we’re given little ethnographic detail about the world that Ouroussoff’s informants inhabit.  Let me say clearly that Wall Street at War is an extremely important contribution to our understanding of contemporary global capitalism; it deserves to be read widely and its central argument, to be taken very seriously.  But as a work of ethnography, Wall Street at War ought to give the reader more.  Ethnographers of knowledge from Evans-Pritchard (1937) to Latour and Woolgar (1979) have worked to show how worldviews are made up of a tangled network of social, material, and epistemological parts.  But Ouroussoff gives us only a hint of the material and social factors that might help us comprehend the rise and seeming dominance of the rationalist model.  A spare 133 pages, with only 12 citations in the bibliography, the book has ample space for this broader analysis.

Ouroussoff does hint at deeper historical forces in the book’s final sentences, suggesting that the rise of the rational model is caused by a “transformation from one form of capital accumulation and expansion to another:”

From this standpoint the conflict between two concepts of productive capital, and perhaps even the crises we have recently been witnessing, are merely symptoms of a much deeper economic transformation towards a dynamic that privileges capital consolidation over and above market competition.  The fact that investors’ new-found dependency on accurate calculation serves to reorientate the conditions of capitalism’s stability is not a choice of consciousness, but of history.  How this history has come to give greater positive value to capital consolidation is a question we shall have to leave to historians (125).

It is perhaps too early for the historians to weigh in.  But another important recent work of economic anthropology does make some suggestions about the structural changes that may be at work here.  Graeber observes that economic history seems to cycle between periods dominated by bullion and periods dominated by credit money.  Coinciding with the start of the rationalist model’s rise, at the end of the 1970s, the world embarked on a new era of credit money.  Yet Graeber notes that, unlike earlier periods of credit money, which institutionalized protections for debtors, our still young age of credit money “began with the creation of global institutions like the IMF designed to protect not debtors, but creditors” (2011:18).  Reading Ouroussoff through Graeber, we can speculate that contingency has become calculable for large investors only because of the creation of institutions designed to assure that risks are displaced elsewhere, to debtors, national economies, and natural ecologies.  Risk, in this reading, is domesticated only by isolating certain economic actors—like the willfully oblivious Ron—from a world of proliferating risk.

These speculations have now taken me well beyond the scope of this review; I wish that Ouroussoff had taken on these social and historical questions somewhat more boldly in her book.  But in revealing the conflicts and ideas dominating some of the higher reaches of the global economy, Ouroussoff makes a crucial contribution to any critical and informed thinking about the strange, transforming, and risky character of global capitalism.


Works Cited:

Evans-Pritchard, E. E 1937 Witchcraft, Oracles and Magic Among the Azande. Oxford: Clarendon Press.

Graeber, David 2011 Debt: The First 5,000 Years. Brooklyn: Melville House.

Hann, Chris, and Keith Hart 2011 Economic Anthropology. Cambridge, England: Polity.

Ho, Karen 2009 Liquidated: An Ethnography of Wall Street. Durham: Duke University Press.

Krugman, Paul 2010 Berating the Raters. The New York Times, April 26., accessed July 30, 2012.

Latour, Bruno, and Steve Woolgar 1979 Laboratory Life: The Social Construction of Scientific Facts. Beverly Hills: Sage Publications.

Mauss, Marcell 1990 [1923] The Gift: The Form and Reason for Exchange in Archaic Societies. W. D Halls, tran. New York: W.W. Norton.

Sahlins, Marshall 1974 Stone Age Economics. Piscataway: Aldine Transaction.

Sean T. Mitchell is assistant professor of anthropology at Rutgers University, Newark.  His ethnographic work focuses on social inequality, ethnicity, violence, governance, citizenship, and technoscience in contemporary Brazil and the United States.


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2024: Vol. 23, No. 1

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2024: Vol. 23, No. 1