{"id":550,"date":"2012-02-19T16:25:23","date_gmt":"2012-02-19T16:25:23","guid":{"rendered":"https:\/\/charisma.local\/charisma2023\/char1smaSSL\/char1smaSSL\/?post_type=markets&p=550"},"modified":"2013-10-02T16:21:42","modified_gmt":"2013-10-02T15:21:42","slug":"making-a-buck-in-a-blind-mans-world","status":"publish","type":"markets","link":"https:\/\/www.journalofculturaleconomy.org\/charisma\/markets\/making-a-buck-in-a-blind-mans-world","title":{"rendered":"\u2018Making a buck in a blind man\u2019s world\u2019"},"content":{"rendered":"

Was there a time when dancers with their fiddles<\/em>
\nIn children’s circuses could stay their troubles?<\/em>
\nThere was a time they could cry over books,<\/em>
\nBut time has sent its maggot on their track.<\/em>
\nUnder the arc of the sky they are unsafe.<\/em>
\nWhat’s never known is safest in this life.<\/em>
\nUnder the skysigns they who have no arms<\/em>
\nhave cleanest hands, and, as the heartless ghost<\/em>
\nAlone’s unhurt, so the blind man sees best.<\/em><\/p>\n

The poem above, from Dylan Thomas, is a fitting epitaph for the 2008 financial crisis. At the height of the crisis, pundits praised the perceptiveness of Queen Elizabeth\u2019s question while visiting the London School of Economics, \u2018Why did nobody notice?\u2019 Since then, scholars have vigorously explored the roots of the crisis. Most agree that the main culprit was a lack of information: the rating agencies lacked knowledge of the increased sophistication of financial derivatives; traders lacked the skills to interpret complex algorithms; regulators lacked awareness of the risks banks were taking with their capital reserves.<\/p>\n

The assumption that the crisis was rooted in a lack of information is fed by a parallel assumption: the belief that ours is a \u2018knowledge economy.\u2019 Homo economicus, so the popular myth goes, is an entity that thrives on new information. Improve access to information and individuals will act more rationally. This assumption seems remarkably adept at withstanding evidence of its inaccuracy in practice.<\/p>\n

Far fewer analyses have explored an opposite perspective, one touched on by Gillian Tett in her discussion of the \u2018social silence\u2019 that pervaded the growing awareness of the risks of credit default swaps and others financial instruments (Tett 2009). Strategic forms of ignorance, and not knowledge, were often mobilized in order to avoid liability for earlier actions. As William Davies and I discuss in a recent article, ignorance carried a double value. First, social silence surrounding unsettling knowledge enabled profitable activities to endure despite concern about their implications. Second, earlier silences were then harnessed in order to avoid liability for questionable decisions; individuals pointed to their own purported ignorance to excuse earlier missteps. Throughout the crisis, willful blindness was integral to the profitability of individuals who had something to gain from purporting that risks were difficult to detect or to act on (Davies and McGoey 2012).<\/p>\n

The article is from a special volume of Economy and Society titled \u2018Strategic Unknowns: towards a sociology of ignorance,\u2019 published this month. Articles in the special issue develop new perspectives on the political and economic value of ignorance, shedding light on the ways that deliberate forms of not-knowing are often deliberately harnessed in order to meet financial targets, to avoid legal penalty, or to justify personal consumption choices in the face of environmental externalities.<\/p>\n

On the one hand, attention to tacit forms of knowledge has been a central preoccupation of social scientists. On the other hand, the import of ignorance to social and economic life has often, somewhat ironically, been ignored by social scientists for a host of reasons. The deliberate harnessing of ignorance \u2013 something that I and others have termed \u2018strategic ignorance\u2019 (2007) \u2013 is difficult to measure or to prove. To demonstrate the pervasiveness and social usefulness of ignorance is to imply that ignorance, like knowledge, has a tangible value. It is to claim that ignorance has a degree of concreteness, a claim that undermines the very conception of what ignorance is. Ironically, once ignorance is identified, it loses its own definition.<\/p>\n

This ontological problem has plagued efforts to draw more attention to the strategic usefulness of ignorance. Writing in 1949, Moore and Tumin were among the first sociologists to make a strong case for explicitly exploring the functionality of ignorance. They suggested that the deployment of ignorance can serve the following social functions: 1) preserving privilege; 2) reinforcing traditional values; 3) preserving fair competition (justice and equal opportunity should be blind to social or economic circumstance); 4) preserving stereotypes; and 5) incentivizing hard work (ignorance of outcomes incentivizes more energetic outputs) (Moore & Tumin 1949).<\/p>\n

The richness of their analysis failed to spur a watershed of sociological work on ignorance. Only a handful of isolated analysis have emerged since, including a sadly neglected 1962 article by Louis Schneider who argues that ignorance is central to much social theory, such as Marx\u2019s conception of commodity fetishism, which only \u2018makes sense\u2019 as long as workers are willing to ignore that commodities are inextricably linked to the social relations of their production.<\/p>\n

Attention to the usefulness of ignorance during the financial crisis could help to remedy this dearth of attention. The most interesting question is not \u2018why did nobody notice it?\u2019 The most interesting question is, \u2018why would they want to notice it?\u2019 Failing to acknowledge risks, failing to act on available warning signs, failing to alert regulatory authorities have been instrumental to the success of financial actors who had notably \u2018good crises\u2019. \u2018Knowing what not to know,\u2019 as Michael Taussig once put it, was crucial to the ability to maintain convincing plausible deniability surrounding one\u2019s own lack of knowledge of the economic dangers of increased financial risk-taking. Even those who did perceive risks had little incentive for disclosing their knowledge; for breaching institutional codes of strategic ignorance. \u2018It is difficult to get a man to understand something,\u2019 the American author Upton Sinclair is known to have regularly quipped, \u2018when his salary depends upon his not understanding it.\u2019<\/p>\n

This comment, one that is at once obvious and underappreciated, is at the heart of a range of recent political and economic crisis; from the financial crisis; to efforts to determine the scale of liability for environmental disasters (see Fourcade 2011); to Murdochgate (see, for example, this recent post<\/a> on Lynne Pettinger and Dawn Lyon\u2019s No Way to Make a Living).<\/p>\n

The recent issue of Economy and Society<\/a> on \u2018strategic unknowns\u2019 aims to chart new directions for a revived sociology of ignorance. But the challenge of studying the unspeakable will continue to haunt disciplines that, by virtue of their epistemological commitments to produce greater knowledge of social and economic life, tend to neglect Thomas\u2019s obvious line above. What\u2019s never known is safest in this life.<\/p>\n

References<\/h4>\n
    \n
  1. Davies, W and McGoey, L. 2012. Rationalities of ignorance: On financial crisis and the ambivalence of neo-liberal epistemology. Economy and Society<\/em>, 41(1) 64-83.<\/li>\n
  2. Fourcade, M. 2011. “Cents and Sensibility: Economic Valuation and the Nature of ‘Nature’.” American Journal of Sociology<\/em> 116(6): 1721-1777.<\/li>\n
  3. McGoey L. 2007. On the will to ignorance in bureaucracy. Economy and Society<\/em> 36:212-35.<\/li>\n
  4. Moore WE, Tumin MM. 1949. Some Social Functions of Ignorance. American Sociological Review<\/em> 14:787-95<\/li>\n
  5. Schneider L. 1962. The role of the category of ignorance in sociological theory. American Sociological Review<\/em> 27:492-508.<\/li>\n
  6. Taussig M. 1999. Defacement: Public Secrecy and the Labor of the Negative<\/em>. Stanford: Stanford University Press.<\/li>\n
  7. Tett G. 2009. Fool’s Gold: how unrestrained greed corrupted a dream, shattered global markets and unleashed a catastrophe<\/em>: Little, Brown<\/li>\n<\/ol>\n

    Acknowledgements<\/h4>\n