Sunday, 2 October 2016

The Activist Hedge Fund

TRADERS (photo: Harri Homi)

Note: This essay was commissioned in 2015 by VICE USA, who then neglected to publish it. Apologies to everyone who took the time to give me quotes

Hedge fund traders are financial mercenaries. Like all mercenaries, they are hired by rich and powerful people. Unlike some mercenaries, however, their lives are never in danger. Rather, they settle in upmarket offices with wood-paneled boardrooms and sparkling water, getting extraordinarily wealthy by betting on anything from Apple shares to oil futures to distant coalmines operated out of Indonesia.

This, though, is no normal hedge fund. Robin Hood Coop is an activist hedge fund run by anarchic artists.

And this is no ordinary office. It has no wood panelling and no sparkling water. In fact it barely has running water at all, being a graffiti-strewn ex-slaughterhouse in Milan squatted by a radical arts group called Macao. Below us in the hall is a naked woman painted blue wearing a gas mask, dancing to the sonic violence of industrial death-metal music. Next door is a punk street-theatre collective manufacturing artificial vomit in buckets to throw at a protest. There are empty cartridges of police teargas on our table, now used to hold marker pens.

MACAU, MILAN (photo: Harri Homi)

The term ‘hedge fund’ is used loosely. Strictly speaking, Robin Hood is a Finnish cooperative, and you do not need to be rich to join it. You become a member of the co-op by buying a share for 30 euros. They take that money and use it to bet on the US stock markets. To do so, they use an algorithm called ‘The Parasite’, which sucks in lots of stock market data and uses it to make trading decisions. Any profits they make from this trading are then steered back to their members, but also to a communal fund that supports rebellious projects that mess with the mainstream.

The co-founder is the unassuming Finnish political economist Akseli Virtanen. He opens the meeting up with a playful grin, extending his arms and saying, “Welcome to the wild side of finance.”

Robin Hood came to life in 2012 when Askeli and a team of artists and critical academics joined forces at the University of Aalto outside Helsinki in Finland. The fund was envisaged as a piece of ‘economic performance art’ and the team went out to raise money from scraggly freelance workers and other lowly chancers. They somehow managed to collect over €500 000. By financial sector standards that’s a pretty tiny amount of money – many funds have billions under management – but it was enough to make the university management very nervous. You guys are artists, not financial traders. Management wanted the project to cease.

Rather than conforming, Akseli got rebellious. He stepped down from the university and Robin Hood went independent. Since then they have focused on building up a global support network of counter-cultural weirdos extending from Helsinki to California.

This network grows through the tradition of Robin Hood’s ‘offices’, where the team meets at different locations around the world to hold workshops in conjunction with a local host group. The first of these offices I attended was in late 2014 in Dublin. It took place in an old abandoned bank, hosted by an assortment of Irish open-source culture devotees. Unlike the closed, secretive and exclusive character of normal hedge funds, Robin Hood’s offices are explicitly open and collaborative. It is not like a private company with confidentiality agreements, and guests do not have to be signed in by security personnel.

(photo: Harri Homi)

The collective is trying to meld together the tools of high finance with the underdog culture of the radical activist underground, and that unusual combination has piqued the interest of many. In the background of the Milan squat, propped against the frame of a cracked window, is the legendary Italian ‘autonomist’ Franco ‘Bifo’ Berardi. He’s been a prominent figure in anarchist worker politics from the 1960s, rallying people together to create cooperative enterprises and pirate radio stations outside the market economy. Scattered around the room are philosophers of algorithms, hacker culture and digital technology. They mix with coders, designers and creative types like the exuberant Portuguese artist Ana Fradique, who co-manages the fund.

Ana describes Robin Hood as ‘artivism’ – a mix of arts and activism. Indeed, the meetup feels like a synthesis between an intellectual salon, a practical hackathon and a political campaign meeting. On the whiteboard is a scrawled web of lines drawn in marker pen, sketches of company structures and money flows. The team is attempting to explain the outlines of the Robin Hood fund to local Milan activists who are curious about how it works.


Akseli takes the lead. “We have, on the one hand, a financialized economy in which the financial sector parasites off almost everything. On the other hand, we have increasing precariousness of labour, an erosion of worker protections. People who sweat in mines or care for the sick get paid almost nothing and live in anxiety, whilst traders who push money around earn enormous sums. In their search for returns big investors seek to enclose and commoditise whatever remaining public commons exist.”

Financial funds often name themselves after mythological figures – like the colossal Cerberus Capital Management styling itself after the three-headed hellhound of the underworld – but the mythic figure of Robin Hood doesn’t fit comfortably within normal financial culture. In one version of the legend he’s a guy who steals from the rich to give to the poor, a champion of economic redistribution. In another, he’s a guy who dares to poach deer in the king’s private forests, a rebel against privatisation of common land. Redistribution, equality and protection of public commons? These are not things that financial institutions normally specialise in.

“Our fund delves into the heartlands of Big Finance and makes money using their own rules,” says Akseli, “and then we distribute the returns back to precarious, insecure workers.”

That sound nice on paper, but does this algorithmic trading actually work? The Parasite algorithm consists of nothing but lines of code, but it is a core member of the team. They feed it with a $15 000-per-year data stream from the New York Stock Exchange and NASDAQ. In financial jargon, it is a ‘trend-followingalgorithm, which means the Parasite digests the data and seeks to identify herding behaviour among big players in the stock-market, and then makes trades to try profit from that. Robin Hood has achieved double-digit returns with this strategy in both 2013 and 2014. It’s too early to tell if this performance will continue – and 2015 looks to be a leaner year – but it doesn’t seem too bad for a group of relative financial amateurs.

(photo: Harri Homi)

Serbian activist Branko Popovic is sceptical. He’s in Milan to take part in Mayday protests, and has ambled into the room by chance. His day-to-day life involves fighting housing evictions and squatting public theatres due to be turned into luxury apartments. In comparison to such concrete actions, Robin Hood’s financial trickery seems abstract. “I understand you’re trying to be like a vampire on the market”, he says, “but why be a vampire on vampires? They have nothing to give us.”

Branko’s sentiment echoes an age-old tension within radical movements. Do you attempt to work within mainstream structures, or do you attempt to completely bypass them? Robin Hood takes a lot of flak from activists who find the idea of taking an active part in the financial system repugnant. Radical movements often start by imagining the current world as not being the way it should be, and then adopt a stance of defiant rejection, trying to live as if it wasn’t there, avoiding contact with it and seeking purity in small communities of like-minded people.

We saw this during the Occupy Movement. Idealists took to the streets in an attempt to reclaim some public commons, but never attempted to actually occupy the financial institutions themselves. The insults they threw at the banksters did nothing to break down the insider-versus-outsider barrier that financial workers actually rely upon to maintain their powerful mystique. Now it is five years later and the sector has drifted out of the public eye, back to business-as-usual.

Under Akseli’s patient response to Branko there is frustration. “There are no financial virgins. Everyone is implicated in the system in some way or another, and we embrace that. We believe in this world and not in some other. In this world the high priests of finance tell you that you cannot touch their temples. But if something is sacred you must profanate it to bring it back down to earth. The best way to do that is to reach out and touch it, to make it dirty. We want to be irreverent and scandalous.”

BOARD MEETING (photo: Harri Homi)
This is not the first time I’ve heard the group being criticised. The project came up as a topic of discussion at a Berlin technology activism meetup that I attended. Robin Hood was treated with a mix of bemusement and scepticism, and a prominent member of the group was dismissive. “It has an element of fun, but let’s face it, it’s just a normal financial fund trading like any other. It’s not an emancipatory project to help workers. It’s just a kind of joke.”

Perhaps being a joke is part of the point. Pekko Koskinen is another member of the Robin Hood collective. In Finland he is part of the Reality Research Center, where he designs ‘reality games’ – games situated in real world settings with hidden rules known only to participants. He views Robin Hood as a type of mischievous game to explore the markets. “People often want clear boundaries between good and evil, professional and amateur, Right and Left, but Robin Hood breaks those binaries. We’re creating a Trojan horse to warp the​ rules of the market. Activists making a hedge fund is a bit like building a home-made surfboard to ride monster waves with professional surfers who say you can't paddle out with them. Sorry, but we’re going to ride.”

LUXURY APARTMENT (photo: Harri Homi)

Reading through Robin Hood’s official documents, one begins to feel that they’ve got the spirit of a joker making fun of the pretences of high finance. They mimic and mock the language to create a deviant dialect. Their May 2015 ‘Grey Paper’ reads like something produced in collaboration between Goldman Sachs and Occupy Wall Street:
"Robin Hood will issue €20 million of collateralized equity notes, called ‘Hood notes’. All investment monies from note issuance will be turned over to the Parasite for investment… Note holders, as denizens of Robin Hood, will continue to design, propose, vote-on, and execute mutual equity programs with all shared proceeds."

Geert Lovink of the Institute of Network Cultures in Amsterdam is a keen observer of the team. “Robin Hood is a financial hack, a subversive installation that takes the standard conventions set by the big financial institutions and bends them.” It’s a tradition in radical activism that can be traced back to movements like the Situationist International, or the absurdist clowns of the Dada movement. The Dada artist Marcel Duchamp took a urinal and called it Fountain. Robin Hood takes a hedge fund and calls it a liberator of precarious workers.

For Geert, though, the tantalizing element of the fund is that it can actually make money to help other radical projects. “In a world of austerity, the funding for arts, culture and political activism is being cut. Robin Hood offers us a new source of funds, and it does so by using the vehicles of the very financial institutions that caused the austerity in the first place”.

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For a group to apply for a share of the profits made by Robin Hood, though, it must operate outside the ‘work-yourself-to-death-so-you-can-consume-yourself-to-death’ logic of the mainstream economy. And Robin Hood has just announced their first round of distributions. They’ve given €5000 to the autonomous arts space Casa Nuvem in Rio de Janeiro, €6000 to the activist broadcaster Radio Schizoanalytique in Greece, and €4000 to the Commons Transition project run by the P2P Foundation alongside the Catalan Integral Cooperative (CIC).

The CIC is a network of Catalonian cooperatives that was co-founded by bad-boy Spanish bank-activist Enric Duran. €4000 is not massive money, but it’s a welcome boost for a project normally excluded from mainstream funding. "The CIC is a very inspirational commons-based economic network”, says Stacco Troncoso of the P2P Foundation. “We want other community groups around the world to learn from it, so we’re using the funding from Robin Hood to build training materials based on the CIC’s experience for widespread distribution."

Akseli is impatient though. Giving away €15000 in trading profits to rebel economic groups is cool, but it is still too small. A key purpose of the Milan workshop, therefore, is to introduce a work-in-progress that the team refers to as ‘Robin Hood 2.0’. According to Akseli, 2.0 will be “even more monstrous” than the first incarnation. Rather than being based out of Finland, he wants to transform Robin Hood into a decentralized global crypto-fund, built using the underlying blockchain technology of the cryptocurrency Bitcoin.

Bitcoin uses a public database – called a blockchain – to record the creation and movement of digital tokens between participants in the Bitcoin network, and thereby keep track of those participants’ token balances. Unlike a bank that keeps a centralised private database to keep score of your money, the Bitcoin blockchain is collectively maintained by a decentralized network of peers. Such a blockchain, though, needn’t only be used to record the existence and movement of digital currency tokens. It could also be used to record the existence and movement of shares… like shares in an activist hedge fund.

Akseli has roots in the radical tradition of worker cooperatives, but he believes that the old-school cooperative is “a form that belongs to the last century”. He believes they can be updated to the current century by using blockchain-based ‘crypto-equity’.


Dan Hassan is a software engineer who has joined the team to test out the feasibility of Robin Hood using blockchain technology. “Old co-ops allowed co-operation between small groups of people, but with crypto-equity we can scale that up” he says. He is part of the burgeoning blockchain community that includes groups like Ethereum, and he has come to Milan to run a session explaining blockchain basics. “A blockchain is a collectively maintained database controlled by no one person. You bring it to life by getting a network of people to all run the same software, and that software has rules for creating a shared account of reality between those people. The more people involved the stronger it is. Imagine a global network of people using this technology to organise themselves into huge digital co-operatives that facilitate mass collaboration.”

So, shares in an activist hedge fund could be created and moved around using such a system, but building a next-generation anarchic crypto-entity to take on Wall Street still seems like a pretty tall order. The team has done most work thus far as unpaid volunteers, but to create this ‘Robin Hood 2.0’ will be a full-time job. And that requires an injection of capital to pay proper salaries.

So what do you do when you need to kickstart a new, risky company? You get venture capitalists involved, of course. The team is on the prowl for a couple million dollars in seed funding so they can start developing 2.0.

But there are reservations. Getting slick venture capitalists on board potentially brings a different political dynamic. VC investors want to see big returns, and how will that jell with the original intent of giving away the profits to countercultural groups? I ask Akseli, but his hacker mentality is already fired up with the idea of messing with something new. “Robin Hood 1.0 was able to assimilate the hedge fund structure, so why not also do it for the venture-funded start-up structure. It’s too good not to try. We do mimicry of Wall Street hedge funds and mimicry of Silicon Valley start-ups”.

Underlying this is a realisation that the power dynamics of Big Finance are shifting. In the US, it is not just the banks and funds of Wall Street in the finance game. There are also the West Coast digital tech gods, waging a new cold war on the traditional financial markets, armed with apps, payment gadgets and internet monopolies. If the waves of power are changing, a subversive surfer might reposition themselves, and that is what Robin Hood is doing.

The team still has the feel of innocents, though, feeling out the contours of the dark side of money. The nervous energy is tangible, and each night in Milan they try to bring it back down to earth, standing on the balcony of the Macao squat, drinking beers, smoking cigarettes. Pekko methodically describes how to make whisky. Finns enjoy such practical matters. They are notoriously quiet, but underneath it lies a self-contained disdain for information that is unnecessary. As core team member Harri Homi wryly confides, “It’s great to break open the black box of finance. But my life I like to just live and leave it as a black box. I do not understand why I do things.”

Long Term Capital Management was an enormous hedge fund that famously went bust in 1998 after the advanced financial theories they based their trading on ended up being out of sync with the reality of the world. Robin Hood faces a similar dynamic. Their radical financial theories could either be complete revelation, or complete hocus-pocus, and there’s no guarantee that their Parasite algorithm carries on working. In this gambit to fuse together algorithmic trading, blockchain technology, Silicon Valley and artistic activism into one epic hack of the financial system, the team in in unchartered waters.

LATE NIGHT AT THE OFFICE (photo: Harri Homi)

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Sunday, 27 March 2016

The dark side of digital finance: On financial machines, financial robots & financial AI

Note: I published a shorter version of this in Nesta's magazine The Long+Short as You Are the Robots. This is a modified and extended version, published under Creative Commons

A banker in 1716 had two main tools: a ledger book and a quill pen. A customer – perhaps a prominent carpenter – would enter a branch, request a withdrawal or make a deposit, and the banker would make a careful note of it within the ledger, editing the customer's previous entry to keep authoritative score of exactly what the bank promised to them.


Fast-forward to 2016 and we’ve entered into a world no longer dominated by tools, but by machines. The crucial difference between a tool and a machine is that the former relies on human energy, while and the latter relies on non-human energy channelled via a system that replicates - and accentuates - the action of a human using a tool. The carpenter is now a furniture corporation using computer-programmed CNC cutters. Likewise, the bank that keeps score of that company’s money runs humming datacentres with vast account databases. These are digital equivalents of the old ledger books, drawing upon fossil-fuel generated electricity to write and hold information as magnetised atoms on hard-drives.


We call the process of moving from manual tools to machines automation, and it appears in various forms within everyday financial life. The ATM, for instance, is an automated version of the bank teller of old who would have to exert energy to check your account, hand you cash, and alter your accounts. I use an interface to interact with this ATM, which gives me some form of control, but only within the inflexible rules of whatever it will allow me to do. This actually requires energy on my part, so while the machine seems to ‘do things for me’, the process also seems to be ‘self-service’.

Automation is creeping into more and more of personal finance. The glossy adverts of the financial marketing industry put an appealing spin on the future world of contactless payment, branchless banking and cashless society. They focus the mind on problems that are apparently being solved through new technology, but they simultaneously divert attention from the dark side of the automated financial regimes that are emerging around us. To get to grips with these processes of automation - and the sub-field of 'digitisation' - we first need to establish some definitions of machines, robots, and algorithms.

Financial machines vs. financial robots

Machines tend to require us to manually activate them towards a singular repeated action that they do no matter what, like the way a kettle always boils water if I manually push the ‘on’ button. The ATM is a multi-function machine that can do different things if I push different buttons on the interface, like ‘give me £30’ or ‘show me my balance’. It doesn’t, however, seem to ‘make decisions’ or have any ability to autonomously react. To make it feel like a robot, it must show some nominal agency to make decisions based on external information.

To understand what a financial robot looks like, we need to sketch some general characteristics of robots more generally. We might think of a traditional robot as a system comprised of four parts:
  1. Body: An assemblage of mechanical parts
  2. Mind: An algorithmic ‘mind’ that can compute or analyse information
  3. Senses: Sensors that can detect external data
  4. Energy source: For example, electricity
The traditional robot might take in data from sensors and compute it through an algorithmic mind that can activate the mechanical body, provided there is electricity. For example, a robot could be a vacuum cleaner (mechanical body) that receives data from photocell sensors (senses) to be processed through an algorithm (mind) to calculate its position, which in turn sends orders for the body to move around the room, thereby 'autonomously' vacuuming your lounge by 'making decisions'.  

Importantly, though, it may not be necessary to include the mechanical ‘body’ part at all. A robot might simply be a software-based algorithmic ‘mind’, taking in data and sending orders to other entities to act out its ‘will’. We might call this an algo-robot.

Let’s consider an Excel spreadsheet model that is used to estimate the fair price of a financial instrument like a share. A person armed with a pen and pad might take hours or even days to go through the relevant data and do the calculation manually. The spreadsheet model on the other hand, directs the electricity coursing through the hardware of a computer to do the same calculation in a fraction of the time. This is a financial machine, automating manual human calculation processes.

To make this into a robotic system, though, we must allow it to receive perceivable external data – such as a price feed from the London Stock Exchange – and allow it to process the data through its ‘mind’ of algorithmic formulas, and then give it the ability to make executive decisions based on its calculations (like the ability to send buy or sell orders back to the stock-market). And, voila, this is precisely what algorithmic automated trading is. The spreadsheet model has turned into a trader algo-robot. From this point the algorithmic coding can be developed into more ‘human’ forms, for example by equipping the robot with machine learning capacities and ‘evolutionary algorithms’ that can adapt to changing circumstances.

The algo-robotic managers of digital finance

‘Algo-robotic’ systems are particularly adept at accumulating power. Unlike the simple machine that offers static options via an interface, an algo-robot - or a series of linked algo-robots - have a greater ability to react in multiple ways in response to multiple data streams, and therefore to organise and co-ordinate. This trait makes senior corporate management warm to them, because, after all, reacting and co-ordinating are core elements of what a manager does.

The old hierarchy within a corporation was one where owners used managers to co-ordinate workers and machines. This gave rise to the traditional battles between owners and managers, managers and workers, and workers and machines. The emergent hierarchy is subtly different. The owners – often a disparate collection of distant shareholders – grant power to high-level management, who increasingly use algorithmic systems as ‘middle management’ to organise their workers and more basic machines.

And this is where we see the changing conception of the robotic system’s ‘body’. Rather than being a mechanical assemblage with an algorithmic ‘mind’, the robot could be an algorithmic mind co-ordinating a ‘body’ constituted out of ordinary employees, who increasingly act like machine parts. Think about the Amazon deliveryman driving the van to act out an order sent to him by an algorithm. This ‘body’ doesn’t even have to be constituted by the company’s own employees, as in the case of self-employed Uber drivers co-ordinated by the Uber algorithms.

These arrangements are often difficult to perceive, but algo-robotic systems have been embedding themselves into everyday forms of finance for decades, not necessarily 'taking over control' but often creating a hybrid structure in which manual human actions interact with automated machine-robot actions. For example, the investment bank trader might negotiate a derivatives deal over the phone and then book it into a partly automated back-office system.

The quintessential example, however, is the retail bank branch. You can talk with employees behind the Barclays counters, but often they are just there to enter data into a centralised system that tells them how to deal with you. To some degree these employees have agency – the ability to make quasi-autonomous decisions – but the dominant trend is for them to become subservient to the machinic system they work with, unable to operate outside the bounds set by their computer. Indeed, many bank employees cannot explain why the computers have made the decisions they have, and thus they appear as the human face put there to break the news of whatever the algorithm has decided. We might even say they are a human interface to an otherwise algo-robotic system that is accountable only to the senior corporate management, who you will never deal with.

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From hybrid systems to self-service digital purity

But, 'human interfaces' like that are actually quite costly to maintain. People are alive, and thus need food, sick leave, maternity leave and education. They also have a troublesome awareness of exploitation and an unpredictable ability to disobey, defraud, make mistakes or go rogue. Thus, over the years corporate managers have tried to push the power balance in this hybrid model towards the machine side. In their ideal world, bank executives would get rid of as many manual human elements as possible and replace them with software systems moving binary code around on hard drives, a process they refer to as 'digitisation'. Corporate management is fond of digitisation – and other forms of automation – because it is a force for scale, standardisation and efficiency – and in turn lowers costs, leading to enhanced profits. 

The process is perhaps most advanced in the realm of electronic payments, where money is shifted with very little human action at all. Despite recent talk of the rise of digital currencies, most money in advanced economies is digital already, and tapping your contactless payment card sets in motion an elaborate automated system of hard-drive editing that 'moves' your money from one bank data-centre to another. This technology underpins talk of a future 'cashless society'. Bouncy startups like Venmo and iZettle have got into the payments game, adding friendly new layers to an underlying digital payments infrastructure that is nonetheless still dominated by the banking industry and credit card networks.

In the case of retail banking, an ideal situation for banks might be to get rid of the branches altogether, and to push for a world of ‘branchless digital banking’. This generally means slowly dismantling, delegitimising and denaturalising branches in the public imagination, while simultaneously getting people accustomed to 'self-service'. Indeed, many banks are cutting branches, and many new forms of financial services are found only online, like digital banks Fidor and Atom. Digital banking startup Kreditech claims that bank branches won't exist 10 years hence, "and neither will cost-intensive, manual banking processes". "We believe algorithms and automated processes are the way to customer-friendly banking," the startup declares confidently. 

Such digital banking is but one strand in the digital trajectory. Digitisation is starting to be applied to more specialist areas of finance, too, such as wealth management. Wealthfront, for example, now offers automated investment advice for wealthy individuals. In their investment white paper they state that sophisticated algorithms can "do a better job of evaluating risk than the average traditional advisor".

Digital systems like Wealthfront are often promoted as cutting out the middleman – assumed to be human, slow, incompetent and corrupt – and therefore as cutting costs in both money and time. Some startups use this to build a narrative of the 'democratisation of finance'. Quantopian, a system for building your own trading algorithms, comes with the tagline: "Levelling Wall Street's playing field". Robinhood draws on the name of the folk hero to pitch their low-fee mobile stock-trading system. 

It seems uncontroversial that these systems may individually lower costs to users in a short-term sense. Nevertheless, while startup culture is fixated upon using digital technology to narrowly improve short-term efficiency in many different business settings, it is woefully inept at analysing what problems this process may accumulate in the long term. Payments startups, for example, see themselves as incrementally working towards a 'cashless society', a futurist buzzword laden with positive connotations of hypermodern efficiency. It describes the downfall of something 'old' and archaic – cash – but doesn't actually describe what rises up in its place. If you like, 'cashless society' could be reframed as 'a society in which every transaction you make will have to be approved by a private intermediary who can watch your actions and exclude you.' It doesn’t roll off the tongue very well, and alarms the critical impulses, but nevertheless, that’s what cashless society would bring.

Forcing the 'inevitable progress' of digital finance

Part of the reason for the pervasive acceptance of these developments is the deeper ideological narrative underpinning them, one which is found within the tech industry more generally. It is the idea, firstly, that the automation of everything is inevitable; and that, secondly, this is 'progress': a step up from the inefficient, dirty services we have now. In this context, questioning the broader problems that might emerge from narrowly useful automation processes is ridiculed as Luddite, anti-progress or futile.

Of course, ‘progress’ is a contested term. If you’re cynical, you may see it as shorthand for ‘the situation an organised set of commercial interests view as desirable in the short-term’. It doesn’t necessarily mean ‘the thing that would be good for the broader public in the long term’.

Indeed, it is apparent that many people don't respond to 'progress' in the way they're supposed to. We still find people insisting on queueing to use the human cashiers at big supermarkets like Tesco, rather than diligently queueing up for the automated checkout. Likewise, we still find people stubbornly visiting the bank branches, making manual payment requests; even sending cheques.

Perhaps this is because there is something deeply deadening about interacting as a warm-blooded individual with a soulless automaton trying to sound like a human. The hollow fakeness of the cold clinical checkout voice makes you feel more alone than anything else, patronised by a machine clearly put there to cut costs as part of a faceless corporate revenue circuit.

The ongoing challenge for corporate management, therefore, is how to push automation while keeping it palatable. One key technique is to try to build more 'human-like' interfaces, and thus in London we find a hotbed of user-experience (UX) design firms. They are natural partners to the digitisation process, combining everything from ethnographic research to behavioural psychology to try to create banking interfaces that seem warm and inviting.


Another key technique is marketing, because people often have to be 'taught' that they want something. In the case of contactless payment on the London Underground, the Mayor of London, Barclaycard, Visa and the Evening Standard have formed an unholy alliance to promote Penny for London, a thinly veiled front-group to encourage people to use the Barclaycard-run contactless payments system rather than those ancient Oyster cards. Sports stars like Jessica Ennis-Hill and Dan Carter have been co-opted into becoming the champions of automated finance. Signs have been popping up proclaiming 'contactless is here', as if it were something that people were supposed to be waiting for. These subtle hegemonic messages permeate every financial billboard in the city.

The dark side of digital finance

One key to developing a critical consciousness about technology is to realise that for each new innovation a new trade-off is simultaneously created. Think about the wonderful world of digital banking. A low-level bank branch manager might be subservient to the centralised system they work for, but can also deviate subtly from its rules; and can experience empathy that might override strict economic 'rationality'. Imagine you replace such an individual with an online query form. Its dropdown menu is the digital equivalent of George Orwell's Newspeak, forcing your nuanced, specific requests into blunt, standardised and limited options. If your problem is D, a system that only offers you solutions to A, B, or C is fundamentally callous. A carefully constructed user complaints system can build an illusion of accountability, while being coded firmly to bias the interests of the company, not the user.

Indeed, if you ever watch people around automated self-service systems, they often adopt a stance of submissive rule-abiding. The system might appear to be 'helpful', and yet it clearly only allows behaviour that agrees to its own terms. If you fail to interact exactly correctly, you will not make it through the digital gatekeeper, which – unlike the human gatekeeper – has no ability or desire to empathise or make a plan. It just says 'ERROR'.

This turns out to be the perfect accountability and cost cushion for senior corporate management. The responsibility and energy required for dealing with problems gets outsourced to the users themselves. And lost revenue from unhappy customers is more than compensated by cost savings from automation. This is the world of algorithmic regulation, the subtle unaccountable violence of systems that feel no solidarity with the people who have to use it, the foundation for the perfect scaled bureaucracy.

So, in some future world of purely digital banking we find the seeds of a worrying lack of accountability and an enormous amount of user alienation. The loan you applied for online gets rejected, but nobody is there to explain what hidden calculations were done to reach that decision. To the bank management, you are nothing more than an abstract entity represented by machine-readable binary code.

So where is the financial AI?


Of course, the banks don't want you to feel like that. In the absence of employees, they will have to use your data to create the illusion of some type of personally tailored service. Your historical interactions with the system will be sold back to you as a ghostly caricature of yourself, fed through the user-experience filters. And it is here that we find the emergence of new forms of financial artificial intelligence.

Let’s return to the earlier – somewhat blurry – distinction between machines and robots: robots are essentially machines that take in data from sensors and process it through an algorithmic 'mind' in order to react or 'make decisions'. Likewise, there is a blurry line between robots and artificial intelligence. At its most unambitious, AI is just a term for any form of calculation done by robots. It really comes into its own, however, when referring to robots that have adaptation and learning capabilities which allow them to show creativity and unexpected behaviour. Rather than merely responding to your actions or to external stimuli, the system begins to predict things, offer things, make suggestions, and do things without explicitly being asked to do them.

Imagine, for example, an ATM booth that uses facial recognition technology to identify you as you approach and make suggestions to you. Notice how the power dynamic changes? With a normal ATM I am still an active body, choosing to trigger the machine via the interface. In this new scenario, though, I’m a passive body who triggers the machine without any explicit conscious action on my part. It seems to 'take the initiative' and to direct me. It's only when we start to feel this as a power dynamic that we start to get closer to the feel of AI. The more you move towards AI, the more you feel increasingly passive relative to the robot (a passivity that is beautifully captured in this video).

Consider the customised ads Google feeds to us. We don't actively try to make them appear, yet it's still our actions that trigger the system to target us with specific information. That’s more like AI. There are many scenarios where this process could creep into finance, from machine-learning trading algorithms to creepy health insurance contracts that shift their prices according to your mobile payment data. "I see you paid for two chocolates today Brett. I will raise your premium."

But this can go beyond a single machine. Just like a robotic system may actually be constituted by an algorithmic 'mind' that coordinates a 'body' of people – like Uber drivers acting out the will of their invisible algo-boss – so the body of an AI may be fragmented, decentralised and hard to perceive. It could be a network of interacting algo-robotic systems that direct the actions of people who are unaware they are triggering the system. No individual node may be in control, but people may collectively become locked into reliance upon the system, pulled around by forces not immediately apparent to them, being manipulated by their own data. The AI could be a ghost in the collective machine, the manipulative 'invisible hand' in a technologically mediated market.

Don't panic, but don't not panic either

When thinking about the future of digital finance, the issue is not necessarily whether these services are narrowly useful to an individual. Sure, maybe the contactless card is cool if I'm in a hurry and maybe I can get a decent deal from the AI insurance contract. Rather, the issue is whether they collectively imprison people in digital infrastructures that increasingly undermine personal agency and replace it with coded, inflexible bureaucracy; or whether they truly offer forms of 'democratisation'.

It is easy to overhype these scenarios, though, because while it is true that payments, trading and retail banking are increasingly subject to automation, finance as a whole may not be especially amenable to it. Large loan financing decisions, complex multistage project-financing deals, exotic derivatives and other illiquid financial products cannot easily be standardised. They require teams of lawyers and dealmakers hashing out terms, conditions, and contingencies. Finance is an ancient politicised art of using contracts about the future to mobilise current action, and the dealmakers cannot easily be replaced with algos.

Furthermore, attempts to create more advanced and intuitive automated systems frequently fail. Semantic analysis algorithms – designed to read text – are terrible at understanding irony, sarcasm and contextual ambiguity within language. They may create feedbacks that thwart their own purposes, as in when people learn to game a credit-rating algorithm. High frequency trading falls apart under its own excesses and becomes less profitable. And there are customer backlashes: Metro Bank, the first new high-street bank in Britain for 150 years when it launched in 2010, has grown precisely because of its explicit focus on human-centred branch banking.

Nevertheless, it would be unwise to ignore the fact that the corporate trajectory is very much towards trying to automate as much as possible, and people need to come to terms with both the implications of this, and the vested interests behind it. It is not a neutral, 'inevitable' process. There are particular parties who seek it out. Take a moment to investigate who is on the board of Penny for London, that altruistic charity that insists contactless payment is a great way to help those in need. It includes hedge fund mogul Stanley Fink, and previously included the ex-CEO of Barclays, Bob Diamond.

So how should one respond? One approach is to ride with the technology, rather than to resist it. In intellectual leftwing circles the accelerationist sect advocates an embrace of automation, standing against sentimental calls for more human, local systems. It's an abstract position, founded on beliefs that automation will create conditions ideal for the downfall of capitalism. At some point it intersects with the cult of the Singularity, popular among evangelical tech entrepreneurs and transhumanists.


The ideological ambiguity is perhaps most acute in the emergent field of blockchain technology. Such systems potentially offer a way for strangers to freely interact with each other without central human intermediaries getting involved in the process. They may use blockchain systems to issue shares, enter into insurance contracts and form digital co-operatives, but the systems are underpinned by an extreme version of automation, one that is essentially autonomous. Indeed, the deep-level mission of projects such as Ethereum, a decentralised platform for 'trustless' transactions, is the replacement of human systems of institutional trust – like the legal and political systems that normally underpin all contracts and markets – with automated ones apparently detached from the human ambitions of those who historically have run such systems ('the politicians', 'the regulators', 'the bankers'). Libertarians long for an automated 'Techno-Leviathan' to replace the human sovereigns we have now, but it is a big question as to whether such automated systems truly provide a more 'democratic' infrastructure for interaction.

More down-to-earth are those who want to allow more creative interaction with the existing digital infrastructure. Take the Open Bank Project, for example, which wants to facilitate third-party customisation of digitised banking processes by opening up bank APIs, in the same way that independent developers might build third-party Twitter apps that draw data from Twitter's API.

And, finally, we have those who authentically seek to harness digital technology to bypass and challenge the standard economic rationality of large scale, short-term profit-seeking financial beasts, taking advantage of the lower startup costs of a digital setting to promote peer-to-peer finance, alternative currencies, crowdfunding platforms and non-monetary sharing platforms.

So, the scene is set. One thing is for sure: if the future of banking is going to be digital, we want it to be populated with those who value the deeper tenets of open source philosophy. Otherwise we could be left with increasingly alienating, exclusive and unaccountable financial surveillance states, presiding over increasingly passive and patronised users.

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Thursday, 10 March 2016

Money is not a store of value. It is a claim upon value

Note: This was originally published as a response to the Aeon Conversations piece 'What is Money'

Money is not a store of value. It is a claim upon value. This might sound like pedantic semantics, but it is crucially important, especially if you’re trying to alter how it works.

Imagine a Coca Cola bottle with Coke in it. That bottle is a store of value. If I open it and drink the Coke, it will kickstart energy processes in my body and help me to carry on surviving. Now imagine a piece of paper next to the bottle that says ‘whoever holds this is entitled to claim this bottle of Coke’. That’s a claim upon value. If a group of people come to believe in the validity of that claim, the note can be passed around as a means to metaphorically ‘transfer’ Coke value, or - more accurately - to transfer access to Coke value. That’s then a form of money.

The fundamental difference between the note and the Coke can be tested by a simple experiment. Burning them. Imagine I drop the Coke into a furnace and it evaporates away. Nobody can ever drink it now, and we have destroyed value. The note is simultaneously rendered meaningless. It’s just a piece of paper saying you can claim a non-existent thing.

Now imagine that instead of incinerating the Coke, I burn the note instead. The Coke remains, and no value is destroyed. All that has happened it that I’ve destroyed my claim to that value.

Let’s scale this vision up now. Imagine a nation of people with energy, intellect and resources to make things. This is real productive capacity, and it a source of real value in the form of real goods and services. Now imagine a piece of paper that says ‘whoever holds this is entitled to claim goods and services from the people of this nation’. That’s a claim upon value. Now imagine that 60 million people believe in that claim. A network like that is so powerful that it’s in nobody’s interest to not believe in the claim.

That’s pretty much like the British Pound, for example.

And if I take my £10 note and burn it, what happens? I’ve destroyed no value. All I’ve done is destroyed some of my personal claim upon the good and services created within the UK.

That’s an act of sacrifice, because the curious thing that occurs as a result of this is that all the remaining claims become worth slightly more. We call that deflation. So, when the Joker in the 2008 Batman film The Dark Knight burns millions of dollar bills, he’s giving up his claim to the underlying value they represent, and transferring it to others.

Of course, it’s a bit more complex than that, because that act of altering the number of claims in the system can induce all manner of economic activity. This is what we sometimes call ‘monetary policy’. Creating new money claims via credit systems is one means of activating and steering real economic activity producing real value.

And the key players in that are not just central banks, but the entire commercial banking sector. Because really, it’s not like most money claims take the form of physical notes any more. Most are data entries, binary code imprints on hard drives of computers within data centres controlled by commercial banks. The act of creating and moving monetary claims around in such a system is the act of editing databases.

And this poses interesting possibilities for designing alternative forms of money. Change the nature of the database, the rules concerning who gets to create claims, and the rules concerning what a valid claim looks like, and you can alter real economic activity in interesting ways.

If you enjoyed this piece...

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Tuesday, 12 January 2016

Peer-to-Peer Review: The State of Academic Bitcoin Research 2015

I've updated my epic BITCOIN ACADEMIC PAPER DATABASE by adding over 280 new papers that were published in 2015. You can download it, and I've also included a link to a separate Google doc where you can make suggestions for papers that might have been missed.

If you'd like to read about how I've built the database and the sources I've used, check out my piece about it from last year. Don't expect it to be perfect - there are omissions and the citations are not always error-free - but it's a pretty comprehensive start for anyone looking to embark on furthering the state of knowledge on Bitcoin, cryptocurrency and blockchain more generally.

The quality of papers is... um... variable and obviously I haven't had a chance to actually read most of them (as there are now over 550 in total), so don't be surprised if some are not as 'academic' or robust as you might like. That said, the quality of papers has - in general - improved over the last year. For the record, the basic definition of 'academic' in this context is: showing signs of a systematic research and analysis process that extends beyond just ranting, idle speculation or marketing. Note, though, that this does not narrow it to bland positivist (social) science. High quality and high effort philosophical, 'non-scientific' and even partisan political explorations are considered valid.


Main themes

As expected, there is still tonnes of technical geekery on the Bitcoin protocol, its flaws, bugs and possible improvements. These are the papers with titles like "Threshold-optimal DSA/ECDSA signatures and an application to Bitcoin wallet security". There is, however, a noticeable uptick in papers that go beyond the technical protocol and into other - still technical, but more political - areas like regulations, taxation and legal frameworks for Bitcoin. This is a natural result of the fact that while the initial interest in Bitcoin concerned the nature of the system, the subsequent usage of bitcoin tokens in the real world opens up practical concerns like 'should it be subject to VAT?'

In the background there is a still a steady stream of papers on questions of Bitcoin economics, the markets, price discovery, and drivers of its perceived value. The philosophy, anthropology, geography, and political dynamics of Bitcoin remain very underrepresented, but there are a nevertheless some great papers in that line (see below for examples).

More papers in big prestige journals

There are definitely a greater number of pieces coming out in some top peer-reviewed journals. These are not necessarily the most interesting papers (and I don't necessarily believe that top journals carry the best research), but it shows the increasing legitimacy of Bitcoin as a mainstream research topic. Examples include:
I've also included the individual chapters from The Handbook of Digital Currency: Bitcoin, Innovation, Financial Instruments, and Big Data. It seems to be a pretty high quality collection of peer-reviewed papers, but it does cost a lot.

Niche papers on niche topics in niche journals

Beyond the explorations of standard Bitcoin themes (the prices, the regulations, the code) there are also some interesting niche research areas coming out. For example:

The 'grey literature' and student theses

There are a lot of self-published research pieces, working papers and research reports from obscure institutes (sometimes this is called 'grey literature'). I am not an academic snob who scoffs at such papers, so take a look at the various SSRN and independent papers out there. There are also a lot more long student thesis papers from university graduates. For example, it's worth taking a look at:

Blockchain 2.0: Fork the database?

There are some cool papers starting to come out on Blockchain 2.0 or distributed database technology. For example, check out:
That said, it has occurred to me that an academic paper database on the topic of 'Bitcoin' might not really capture the topic of 'Blockchain', so I may consider starting a different database for papers that focus exclusively on non-Bitcoin blockchain systems. Or someone else can make that...

Hope you enjoy & please do donate!

Bear in mind that I update this database as a piece of service to the Bitcoin community and broader academic community, and I don't get paid, so please do consider making a small donation to either my Bitcoin address, or via Paypal. Really hope you find the database useful!

Friday, 28 August 2015

Dark Side Anthropology & the Art of Financial Culturehacking


Note: This essay originally appeared in the book Supramarkt: How to Frack the Fatal Forces of the Capitalocene. Available for republishing under CreativeCommons

I worked as a financial derivatives broker in London from 2008 to 2010, at a company clinging on for life in the midst of the financial crisis. That is not a particularly long time to work as a broker, but I was never aspiring to it as a career. I was a left-wing activist steeped in the tradition of Marxian political economy and deep-ecology environmentalism, and with a background in anthropology and international development. I was on a quasi-anthropological adventure on the ‘dark side’, immersing myself in the culture of high finance in an act of subversive exploration.


I say ‘quasi-anthropological’ because it is not exactly like I approached it with a formal academic mindset, and I was never attached to an academic institution. There are professional anthropologists like Karen Ho and Caitlin Zaloom who have done robust, ‘proper’ ethnographies of finance. My style was much looser, personal, emotional, and adventurous, a surreal (and even mystical) attempt to bend boundaries. It was perhaps more akin to ‘gonzo’ journalism than a careful application of anthropological technique, albeit I had no explicit objective to write about it.


I learned a lot about arcane financial instruments, financial culture, the politics of money, and the lives of people involved. I made friends with fascinating and unlikely individuals. Over time I built competence and confidence (for example, I wrote one of the first reports on the nascent and obscure 'sub-sector property derivatives' market), but I was never really the world’s best broker. This is partly because I did not especially care about being the world’s best broker. While my boss always yelled “sell the sizzle, not the sausage”–his code for “we are salesmen, not intellectuals”–I was mostly fascinated with how the derivatives actually worked, or why someone would really use them. I loved the weirdness of walking into some fund manager’s banal offices and having a conversation about their investment portfolios whilst being equally interested in the kitsch corporate art in the boardroom, or the view from the 35th floor. I liked to touch things, to feel and experience otherwise abstract concepts.

This somewhat unorthodox outlook gave me an anarchic, even disobedient, edge that frequently brought me into conflict with my boss. The whole experience makes for a very interesting story, with twists and turns and great characters. 

But, it is not a story that I tell very often. For one thing, I do not want to rely on it, like the rogue trader Nick Leeson or the ‘Wolf of Wall Street’ Jordan Belfort doing their sad and tiresome after-dinner speaking tours talking about their ‘bad boy’ glory days.

For another, people find my story hard to understand. They often have discreet silos in their minds to store the concept of ‘activist’ and the concept of ‘financial sector’. When presented with a story involving both, they inevitably settle upon one of three basic strategies to reconcile them. To some, I am the ‘left-wing activist who went undercover in the belly of the beast’. Then there are skeptics who think I originally ‘sold out’, failed as a broker, and then made up the story after the fact. Finally, I am often mistaken for a ‘reformed banker’, a normal financial worker who ‘saw the light’ and left the dark side to do good in the world.

All three of those archetypes–the undercover activist, the sellout, and the reformed banker–maintain the basic distinction between the figure of the activist and that of the financial worker, which is partly why none of them accurately capture my story. The ‘reformed banker’ sits easily within established narratives–the ashamed corporate exploiter changing their path to do good in society–but it is actually the opposite to my story, which involved moving from the moral clarity of do-gooding to murky complicity with corporate power, a dirtying process not a cleaning process. 

The ‘selling out’ narrative is passive and defeatist, presenting the so-called activist revealing their true stripes and drifting into the corporate sector. My experience by contrast was deliberate and aggressive, an active buying in not a wishy-washy selling out. And, finally, the figure of the undercover activist suggests someone who maintains a clear, constant and concealed identity behind ‘enemy lines’. But I was interested in going beyond blunt distinctions between goodies and baddies, and opened myself to shifts in identity.

If I really have to categorise myself, I am a deliberately corrupted–or hybridised–activist. I started from the assumption that spaces like the financial sector were the antithesis of what I stood for. I then opened myself up to that space in a deliberate act of losing myself in the ‘dark side’, or finding it within myself. 


Of course, you might ask why I did this. I perceived it as an experimental form of activism, one that I later came to refer to loosely as ‘culturehacking’. It is a form of deviant anthropological activism. I say ‘deviant’ because it is not ‘straight’ activism, with its insistent focus on good versus evil. Rather, it is bent, ambiguous, dirty, corrupted, dark activism, as much directed at yourself as it is at some external party.

It is not an approach that I advocate for everyone, but it is something to be considered by anyone wishing to get to grips with the structures of power that surround us, and to challenge them. To explain this approach though, takes some steps. It emerges at the intersection of four separate fields: immersive anthropology, activist anthropology, upward anthropology and, for want of a better term, absurdist gonzo reality gaming.

Culturehacking component 1: Immersive anthropology

My aunt Penny Bernard is a somewhat controversial South African anthropologist known for (to use a colonial term) ‘going native’ during her research. She became a sangoma–a Zulu shaman–and started using her dreams and visions to guide her research. When I was in high school I took great interest in Penny’s adventures, accompanying her into some truly unusual situations. I watched her drinking blood out of the neck of a slaughtered cow in an initiation ceremony, and played guitar for her posse of Zulu mystics as they worked themselves into ecstatic trance-states.

Penny’s approach is a fairly extreme form of immersive anthropology, whereby the anthropologist entangles themselves in cultural systems so deeply as to lose objective distance. Penny definitely did lose objective distance, something that my family experiences to this day as she casually gives us white beads to offer to the water spirits after a lunch at the beach. The sheer depth of her immersion in Zulu culture means she has often struggled to get proper recognition from the anthropological mainstream, who have sometimes found her approach too subjective or ‘unscientific’.

Anthropologists often use a methodology called participant observation, in which an ethnographer actively takes part in the day-to-day activities of a studied group whilst also maintaining a degree of distance in an attempt to be both inside and outside of the group in question. You can alter that balance in various ways. Old-school anthropology was very observation-based. In its colonial past, the Eurocentric researcher might land on an island, never talk to the people, and then make sweeping statements to explain the ‘primitive ways of the savage tribes’ without ever getting their hands dirty.

The balance changed around the 70s when a post-modern, reflexive strand in anthropology grew strong. To simplify a complex story, it became more acceptable to engage in more deeply participatory approaches, to lose objective distance to an extent, and to write more about yourself and your emotions in the process. It also became more acceptable to suggest that perhaps there were different truths that operated in different settings. Western rationalism might reject the use of dreams to guide life, but perhaps within Zulu culture dreams are experienced as very real. Maybe there wasn’t a standard universal truth waiting to be uncovered by the objective observer under the layers of culture and ritual.

But let’s face it, academia is still academia and there are limits to how unorthodox and reflexive your research can get. There are peer-review systems and funding bodies that require research to be ‘robust’, which is often a code-word for conformity to methodologies that prioritise observable, verifiable and quantifiable ‘hard’ evidence over intuition and introspective interpretation of personal experiences.

Needless to say, highly immersive anthropology is still controversial. That said, it is undeniable that ‘going native’ gives access to forms of knowledge that–while not being strictly ‘scientific’–are emotionally far closer to the lived experience of people. Penny has an intuitive understanding of Zulu culture that few ‘objective’ researchers will ever be able to gain access to. 

Culturehacking component 2: Activist anthropology

Anthropology started as a discipline of researchers studying ‘down’, looking into the lives of marginalised groups within the political setting of colonialism. Thus the Oxford-educated gentleman found himself in Papua New Guinea considering the religious rituals of the local people, earnestly relaying it back to the institutions and learned salons of powerful London.

As modern anthropologists have tried to shake off this image, the whole political orientation of anthropology has (arguably) shifted leftwards. Anthropology has become associated with international development and liberal humanitarian NGOs that work with indigenous groups, small-scale farmers and slum dwellers brushed aside by the relentless market processes of globalisation.

It’s not like the international development industry is without its own problematic power dynamics, but many young anthropology students envision themselves in such a setting working to create intercultural understanding and progressive change. One of my first anthropology professors was Chris de Wet, who specialised in designing resettlement strategies to help refugees and people forcibly displaced by large infrastructure projects like epic dams.

Alongside this broad humanitarian tradition there has also emerged a distinct strand of overtly ‘activist’ or radical anthropology. The first self-described anarchist that I met was the Serbian anthropologist Aleksandar Bošković, who taught me political anthropology in South Africa. He had a distinct dislike of nationalism and the petty bigotries it feeds on, and this impulse lay behind much of his academic work. Later I became familiar with the anarchism-inspired anthropologist David Graeber, well known for working in solidarity with Occupy Wall Street activists and others like revolutionary Kurds. 

Figures like Graeber are overtly political–something that does not always sit well in austere academic institutions–and have inspired some young anthropologists to use their skills to contest power structures. This form of ‘activist anthropology’ normally involves an anthropologist from a relatively powerful part of society using their position to stand up for the rights of those in less powerful situations. The aim is to provide a voice for the voiceless, or showcase the struggles of those trampled by the invisible and unaccountable forces of the global economy, from artisan mine workers in the DRC to Bangladeshi ship-breakers. 

Such an activist orientation might not be deliberate. It might come purely from the fact that a researcher find themselves in situations of injustice that they cannot ignore, and in which it becomes futile or callous to pretend to be engaging in some abstract exercise in academic objectivity. Revolutionary Kurds don’t give a shit about your peer-review process. They need resources, contacts, media coverage, money.

My Aunt Penny’s explorations were not overtly politicised, but always carried an underlying belief in the validity of traditional practices otherwise marginalised by the cold rationalism of industrial society. Her position of power, and the fact that she took Zulu beliefs seriously, meant other Zulu diviners began to turn to her for help. By default she would find herself standing up for their rights to maintain sacred water spaces over the rights of, for example, property developers. These are the seeds of activist anthropology.

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Culturehacking component 3: Upward anthropology

In 1969, Laura Nader wrote an article called "Up the Anthropologist: Perspectives Gained From Studying Up". In it, Nader asked the following question: “What if, in reinventing anthropology, anthropologists were to study the colonizers rather than the colonized, the culture of power rather than the culture of the powerless, the culture of affluence rather than the culture of poverty”. 

It was a call to action that inspired some anthropologists to turn their attention towards the upper echelons of their own societies, rather than the disempowered Amazonian farmer. The power dynamic was very different. The idealistic young Harvard graduate walking into the Sudanese village would awkwardly stand out like a beacon, but that same person might blend inconspicuously into the corporate deco of an oil trading firm or bank. You might feel different to the oil traders, but you have enough cultural similarity as to not appear entirely alien and strange.

There are now many very interesting examples of upward anthropology, whether it be Hannah Appel of UCLA studying the offshore oil sector, or Bill Maurer of UC Irvine studying the global electronic payments system. Fascinating opportunities exist for ethnographic explorations into the realms of mining, weapons firms, advertising agencies, surveillance states, and the rising technological stars of Silicon Valley. And, of course, we can apply upward anthropology to the financial sector.

The covert anthropologist going into the halls of Goldman Sachs finds themselves in an interesting situation. The key feature of banking environments is not necessarily that everyone there is born an ‘elite’ of society–actually there is a great diversity of people from different backgrounds involved in finance–but rather that the roles available are structurally elite positions that hover above the rest of the economy. It does not really matter who in particular fills those positions, but whoever ends up there finds themselves in the shoes of an elite, channelling elite power. They become de facto more powerful as an individual, and begin to get access to things previously never thought accessible.

Culturehacking component 4: Gonzo reality gaming

If you take the three anthropological traditions described above and blend them together, you get immersive activist upward anthropology. Sounds fun?

The problem with anthropology, though, is that it is still Anthropology. It is an official academic discipline with self-conscious methodologies and norms and it is subject to the institutional constraints of academia: the need to produce formal articles, attend conferences and direct your work to peers rather than the public. Anthropology is a career, and it is a career within precarious institutions that have funding and reputation to protect. There are limits on how politically engaged and personal your research can get within such a setting.

Furthermore, as an official anthropologist, you perhaps only get access to powerful institutions at the goodwill of the institution letting you in. The hedge fund might allow you to sit around in the office and watch the action provided you do not go bad-mouthing them or interfering too much. Studies of finance can thus pick up a restrained, academic, and conflicted feel.

In my view, upward-activist-immersive anthropology can become the less defined field of ‘culturehacking’ by dropping strictly formal anthropological practice and rather adopting an informal ‘anthropologically inspired’ orientation. Culturehacking might involve adopting an outlook that blends an anthropological impulse or ethic with a spirit of subversion and deviance.

In my own case within the financial sector, I was not a self-conscious ethnographer. I did not take notes whilst mimicking the process of phoning up finance directors to try sell them derivatives. No, I was really phoning finance directors and really trying to sell them derivatives and becoming really implicated in the politics of finance in the process. I cultivated a ‘going with the flow’ acceptance of the process, never explicitly attempting to break the illusion. 

During my two years of immersion I only wrote reflective notes twice, and even then it was not in an academic form, but rather in a form resembling stream-of-consciousness ‘gonzo’ journalism, emotionally charged writing about the turmoil and exhilaration of the lived experience, with little attempt at cool objectivity. 

People fight over the meaning of Gonzo, but one thing that appears clear is that it can be as much a way of living as it is a formal style. It is a practice in which you maintain a loose awareness that you are reporting on something, but always subordinate that awareness to the process of experiencing the thing in question: experience first, then (maybe) story later. The emphasis is very heavily on authentic participation and not that much on explicit observation, and when the observation comes in, it is as much observation of yourself as it is of others.

This is a fine line to walk, because gonzo-style mindsets can put you in positions where you become implicated in things, and one mark of ‘reality’–as opposed to simulations or virtual reality–are situations where your actions have concrete material impacts on others. When combined with a subtle awareness that you are in fact to some extent also playing games, it creates a feeling of surrealism or even absurdism. You walk into a meeting with an earnest trader and he totally thinks you are having a deadly serious conversation about derivatives, but in your mind you are also giggling, thinking “This is ridiculous. Why are you talking to me?” 

Pekko Koskinen of the Reality Research Center in Finland specialises in designing ‘live action’ games, sending people off on obscure missions in cities. He recently described to me the obscure practice of reality gaming. Unlike ‘alternative reality games’, which involve explicitly imagining a different world within the setting of the real world–like a child on a train imagining they are a superhero on a mission–reality gaming involves interacting with others in real life settings whilst having a background awareness that you are subject to subtle rules that they are not aware of. The hidden or submerged agenda gives a game-like tone to situations. His description of this gamer sub-culture immediately resonated with experiences I had when immersed in the world of finance. I might be able to have a perfectly normal – even authentic – conversation with a trader, exchange business cards and talk seriously about future plans for collaboration, but in the background have a residual awareness that there is some form of manipulation or play going on. 


And this gets strange. One the one hand, it can be abusive. Very good-natured people can give you time and goodwill whilst you in turn mess with them. It is worth looking into the real-life case of the undercover FBI agent 'Donnie Brasco', who got himself so deep into the mafia that he found himself emotionally tied up in the lives of gangsters who would subsequently suffer real consequences of his actions. 

On the other hand, when you engage in these forms of extreme mimicry (or perhaps extreme method acting like that pioneered by Nellie Bly) and get emotionally tied into the lives and thought processes of others, the boundaries between games and reality become blurry. This is where the danger of capture comes in. You can start to lose yourself, or feel your identity literally bending, splitting or reconfiguring as your mind seeks to reconcile your original sense of identity with the cultural world you find yourself in. Old certainties about right and wrong can warp or implode as the social support for them is removed. In the case of Donnie Brasco, he did lose himself, beginning to feel like he belonged in the mafia and that he was responsible to friends within their ranks. 

Activists get worried about this breakdown of the self-other divide: ‘Get the information behind enemy lines’, they say, ‘but dammit don’t lose yourself!’ 

But this is where they miss the point. Because part of the very point is to lose yourself.

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Levels of hacking: Shallow info gathering to deep reality bending

There is no standard definition for the concept of ‘hacking’ and the broader ‘hacker ethic’ (if you're interested in this debate, check out my somewhat controversial recent piece on the 'gentrification of hacking'). This is partly because hacking is not a strict set of activities–like automobile engineering or accounting might be–but rather a certain feel, sensibility or outlook applied to different situations. One attempt to describe this comes from the journalist Steven Levy, who suggested that:
Hackers believe that essential lessons can be learned about the systems–about the world–from taking things apart, seeing how they work, and using this knowledge to create new and more interesting things

Hacking, on the one hand, is the process of seeking access to something that is normally not easily accessible, with the intent to explore and deconstruct its inner workings. This exploration, however, is essentially subversive. It is exploration with intent to deviate from standard paths and bend established boundaries. Hacking in the realm of computers might involve exploring lines of code with intent to bend or exploit that code in unorthodox ways. Hacking in the realm of cities might involve gaining access to underground train tunnels or obscure logistics yards on the outskirts of town, with the intent to see things you are not supposed to be interested in. Hacking in the realm of culture might involve exploring and uncovering layers of cultural code with intent to bend cultural institutions.

There are different depths of culturehacking though. It might take the form of shallow attempts to gain temporary access to closed social spaces, like a con-man getting someone to drop their guard in order to get some information, or an activist hanging out at a financial conference in order to get information on tax avoidance. Or, it can be deep attempts to breach the very structure of the normal binaries that exist between ‘self and other’ and ‘insider and outsider’.

Level 1: Gaining technical knowledge

If you undertake an adventure in the financial sector, whether it be in the form of an undercover activist, an embedded anthropologist, or a surrealist reality gamer, you are probably going to learn a lot of technical stuff that might turn out to be useful. Indeed, it is helpful to understand the difference between different banks, funds, financial instruments, concepts, and techniques, and for this reason alone immersive experiences can be desirable and empowering. Getting into the nitty gritty of finance helps to dispel myths and misconceptions that are not worth getting distracted by, and this knowledge in turn is useful in debates and battles around finance. Having technical knowledge obviously helps activists argue on more level terms with financial professionals who might otherwise wield obscure concepts as a way to baffle opponents.

Level 2: Gaining empathy and emotional knowledge

Technical knowledge on finance, though, is only so useful. Does it really matter whether or not you know the Black-Scholes pricing model for financial options contracts? Probably not. More important than learning such specialist information is the process of getting a feel for the human dynamics and people within the sector. Much energy is wasted within activist circles fetishising individual financial workers as villains rather than seeking to understand the deeper structures underpinning the system. There is a something fundamentally wrong with any analysis that says ‘the financial sector is bad because the people in it are corrupt’. The financial sector is a political and cultural ecosystem and it is far more useful to learn to empathise with those involved than to demonise them.

Indeed, the demonisation of ‘the banker’ figure only helps to reinforce the existing power dynamic that the financial sector thrives on. It continues to buy into the shroud of mystique and conspiracy aesthetics that financial workers themselves like to indulge in. Within the financial sector are internal ideologies that position financial workers as highly talented, driven, quasi-genius jet-setters that everyone else is envious of. Incoming external critiques that characterise financial professionals as ‘Wolves of Wall Street’ are filtered through, neutralised, and then appropriated by such ideologies. A far more damning strategy is to uncover that financial workers are in fact just ‘Average Joes’.

It is only internal to the system that you discover that the public narrative on finance helps maintain the insider vs. outsider divide that financial professionals use to construct their sense of identity. When you are within Goldman Sachs it will not appear to you as The Vampire Squid, but rather as your home, or your domain. You move beyond merely understanding it in the abstract, and begin to feel the internal structures intuitively, emotionally and empathetically.

Level 3: Coming to terms with the unknown and ambiguous

Culturehacking is a way to build knowledge, but more importantly it teaches you what you don’t know. Many activists implicitly believe that financial professionals are in possession of some type of ‘secret knowledge’ unknown to most ordinary people, which they use for personal gain. In reality though, most financial professionals do not fully understand the system they form part of. They may understand how to do a valuation analysis, or account for credit default swaps, but the everyday business of finance involves using partial, imperfect knowledge to respond to particular practical challenges or tasks. The best traders and financiers all know that there is no singular means of ‘doing finance’, and are at ease with that imprecision.

Of course, the public perception that finance is a set body of ‘secret knowledge’–rather than a mutating uncertain practice–forms part of the structure of financial power. Financial professionals rely on that ‘we know something you don’t’ illusion to intimidate the public.

You cannot ‘defeat’ the financial sector by buying into those public terms, trying to counter one apparently fixed model of reality with another fixed model of reality, like a Marxist trying to win an argument against a neoclassical economist. Rather, you refuse to buy into the idea that a singular model exists in the first place, and embrace the ambiguity. Immersive adventures that wreck your pristine preconceptions are one of the quickest ways of building such openness and becoming alive to the contradictory messiness of systems that otherwise appear coherent and all-powerful.


Level 4: Deviant hybridisation (as immunisation)

And this takes us to perhaps the most important point. Hacking is not just about breaking into something to uncover information or mess with it. The true spirit of hacking involves queering, deviating from established paths and making fluid the boundaries that are otherwise viewed as concrete and static.

The traditional activist often seeks to stay away from contradiction, seeking purism and clear narratives. Built into the identity of many radicals is a sense of shock and dismay at how large corporate beasts appear to work. They might feel angry, overawed, powerless and poorly resourced in comparison to them. They do not want to touch such beasts, or be implicated in them.

A lifetime like that can backfire and give rise to the jaded ex-activist who has given up and ‘become realistic’, taking glee in an almost deliberate watering down and rejection of their original position, scoffing at the futile attempts of naïve campaigners to change the real world.

Powerful corporate entities such as huge banks have no problem with this dynamic. Indeed, they rely on civil society being somewhat overawed by them, and it does not really matter whether it be in the form of disgust or of reverence. Furthermore, the binary notion of the idealistic dreamer of a better society versus the hard-nosed pragmatist of the real world works to their advantage. The former is easily brushed off by contrast to the latter.

Perhaps what we really need is to break that binary. We need activists with a critical mindset who are also able to walk freely on the ‘dark side’ without getting distracted, shocked or dismayed, freer to act within situations of contradiction. One reason why you may wish to engage in deep culturehacking expeditions, then, is to hybridise yourself, and therefore immunise yourself against both the shocked naivety of purity and the sneering disdain of cynical ‘hard-nosed’ pragmatism.

To understand this, consider the (admittedly light-hearted) analogy of the film Blade, in which the vampire council is particularly fearful of a ‘daywalking’ human-vampire hybrid called Blade who is able to interact with both humans and vampires. The critical culturehacker might become such a figure, breaching the established boundaries of contestation by hybridising themselves, internalising the DNA of mainstream finance and fusing it to existing activist impulses.

My experiences have enabled me to work on campaigns challenging fund managers who continue to plough money into fossil fuels, commodity traders who disrupt global food markets, corporations that steer money via networks of tax havens, and banks that continue to pay little heed to the environmental destruction they back.

Do you want to challenge financiers who back dictators and surveillance companies? Do you want to be able to enter a corporate general meeting and critically engage with CEOs as a shareholder activist? Do you want to build networks of insider contacts who can give you information? Do you want to blend like a chameleon into the fabric of conferences on arms financing? Do you want to feel fused into the emotional and human foundations of powerful institutions otherwise cloaked in technocratic, economic jargon? If so, perhaps it's time for some culturehacking.

Brave new world

Of course, there is always the chance that you will be captured and will never come out, discovering yourself years later tired and wasted in the M&A division of J.P. Morgan, having forgotten who you are and why you did this. But, maybe it is worth the risk. The alternative may be to end up years later tired and wasted in a backwaters of critical academia, or tired and wasted in a large NGO filling out grant applications. What do we have to lose exactly? The subversive spirit of deviant dark-side anthropology might be a powerful and exciting force in the huge battles for social, ecological and economic justice we have before us.

(P.S. If you'd like to learn more, or bounce ideas, feel free to email me)

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