I finished my friend Brett’s book The Heretic’s Guide to Global Finance: Hacking the Future of Money a while back. I wanted to post my observations a back then already, but the big move to the US came in between and I dropped the ball. But Brett’s recent piece in Aeon Magazine was a timely reminder. So herewith, though unfortunately not as fresh as I would like them to be, some reflections.
I know Brett from college. We both studied Development Studies under Ha-Joon Chang in Cambridge back in 2006/07. From what I can recall, the only class we shared was Prof. Chang’s tour de force of development economics, drawing inspiration from his books (Bad Samaritans was just out back then).
Brett’s interest in the financial world arose pretty shortly after graduating from Cambridge. After a year spent in South Africa, he joined Hoare Capital LLC, a small derivatives broker that attempted the improbable: sell exotic derivatives such as longevity swaps to pension funds and other fund managers just as the financial crisis descended upon the City. Those two years provided the gonzo journalism insight Brett was after. Ever since he’s been working on his own, exploring ideas, consulting NGOs and publishing his thoughts widely, e.g. on his blog Suit Possum.
The book is a culmination of these last few years. It’s an activist guide to finance, but also so much more. I was very happy to hold it in my hands, also because I know what great feeling it can be to see one’s work make it into physical form, synthesising years of digital existence. It’s come out with Pluto Press, but annoyingly, it hasn’t received the mainstream attention it deserves (for reasons more to do with the state of the publishing industry rather than Brett’s book, but that’s another post).
The book’s split into three parts – Exloring, Jamming and Building. Exploring is about imbuing the reader with a general understanding of how financial markets operate. Having worked in asset management for a few years, I applaud Brett’s helicopter view. It’s by far the best real-life introduction to the world of high finance that I’ve ever seen. How does an investment bank work? What do hedge funds do?
Minor inconsistencies notwithstanding (a Gazprom bond would not be illiquid, for example), the two chapters are thoroughly researched and breathe real world insights. Given the fact that 90% of people working in these financial institutions do not know the big picture themselves, Brett’s book should be read by insiders and outsiders alike.
The second part, Jamming goes much more into the culture of finance and how the reader can experience it first-hand. Here, Brett draws on his gonzo experience of being inside the system, so to say, and helps tear down some myths.
One thing I thought was strong was the point of alienation: high finance often thrives on the demonisation from activist circles because of the latter’s inaccuracies and ideological bias. This, however, only reinforces the distance between the real world and the City of London. Finance is not an ideology per se. It is a fairly value-free hull that – if infused with better motives – can be a force for good. Plus there are not only demons and devils at work there, it’s people like you and me.
And there’s the absurdities of the system: Investment bankers take huge risks although they may be intrinsically bad it. After all, haven’t they made one of the most risk-free career decisions to work in well-paid City jobs at the outset of their working lives?
Lastly, with the factual and cultural insight in the reader’s bag, Brett moves on to the third and last part of the book, Building. I like many of his ideas here, e.g. the criticism of “reformed bankers”. While their goals may be good, they operate within the confines of the financial system, employ the same language and draw on the same toolkit. A lot of the surge in impact investing should perhaps be seen in this light.
Rather, Brett proposes a re-wiring of the existing institutions. Crowd-funding, alternative currencies, cooperatives are only some of the areas he touches. To get a sense of his thrust, it’s worthwhile reading his article in Aeon Magazine for starters. Brett is no libertarian-anarchist who wants to replace institutions regulated by the government with those bypassing it. But there’s a strong need to reconnect with economic activity in a personal, sensing way.
I don’t agree with some of the judgments Brett makes, e.g. when he talks about vulture funds that buy distressed debt at bargain prices and then let their armies of lawyers extract payment, often from poor countries. I find it is a little too convenient to instinctively label such debt odious. Here, as well as in a few other places, I sense Brett becoming a little ideological himself. However, to be fair, his book is written for an activist audience and some colouring of the manuscript to that extent becomes unavoidable.
I am also not sure whether collectively, Brett’s ideas and suggestions in the last part are grand enough to meaningfully affect the economic activity we have come to know and rely on. I felt that this was almost a bit disappointing after the first two parts set the stage so beautifully.
But then again the book does not promise to hold the blueprint for a radical overhaul of finance. It merely provides the mindset that is needed for exploring in that direction. And it does so beautifully. Go buy the book now!