Finance: One Rule For Us & One Rule For Them



Bureaucratic Complicity: Allusions to Meritocracy

Extract from David Graeber’s Utopia of Rules: On Technology, Stupidity, and the Secret Joys of Bureaucracy


 

This extract is only nineteen pages after the last one, but I find David Graeber’s work is often jam-packed with little nuggets like this, so you may find I quote quite a lot from this book. I would ask though, that if you find what you read here interesting, that you go out and grab yourself a copy of one of his books. I promise that you won’t regret it.

My recommendations would be:
  • ‘Bullsh*t Jobs’ for those who feel frustrated that they might have one and are looking for some kind of catharsis
  • ‘Utopia of Rules’ for anyone who feels frustrated by bureaucracy, whether at work, university or even just dealing with them in life—once again it’s very cathartic
  • ‘Debt: The First 5000 Years’ if you are interested in an anthropological analysis of the history of money, credit & debt (this was a real eye opener for me, it’s not what you might expect and not at all like what we were taught about the history of money, specifically, that it was put in place as a superior form of exchange to barter)
I will place some links to where you can get a copy online, but I would suggest that you support your local book shop. If you are in Hobart (Tasmania, Australia) as I am, I highly recommend Cracked and Spineless New & Used Books (link at the bottom of the page).

 

In my humble opinion if the following quote doesn’t upset you, there’s something wrong with you (or perhaps it’s because you are benefiting in some way from this state of affairs). If it depresses you, that means you’re only human...but I think this is the wrong response.

This should make you angry. It should inspire righteous indignation.

As an emotion anger is often demonised as a “negative” emotion. But so is depression and feeling defeated will get us nowhere. Anger, at least, especially collectivised anger might actually help us get to a place where we expect change...and to fight for it.

This one’s a bit long compared to the last one, but I think you’ll agree, it’s worth the read.

So here we go...David Graeber on finance, law and double standards...
[I added the highlighting in bold myself]

“I once attended a conference on the crisis in the banking system where I was able to have a brief, informal chat with an economist for one of the Bretton Woods institutions (probably best I not say which). I asked him why everyone was still waiting for even one bank official to be brought to trial for any act of fraud leading up to the financial crash of 2008.

OFFICIAL: Well, you have to understand the approach taken by U.S. prosecutors to financial fraud is always to negotiate a settlement. They don’t want to have to go to trial. The upshot is always that the financial institution has to pay a fine, sometimes in the hundreds of millions, but they don’t actually admit to any criminal liability. Their lawyers simply say they are not going to contest the charge, but if they pay, they haven’t technically been found guilty of anything.

ME [David Graeber]: So, you’re saying if the government discovers that Goldman Sachs, for instance, or Bank of America, has committed fraud, they effectively just charge them a penalty fee.

OFFICIAL: That’s right.

ME: So in that case...okay, I guess the real question is this: has there ever been a case where the amount the firm had to pay was more than the amount of money they made from the fraud itself?

OFFICIAL: Oh no, not to my knowledge. Usually it’s substantially less.

ME: So what are we talking here, 50 percent?

OFFICIAL: I’d say more like 20 to 30 percent on average. But it varies considerably case by case.

ME: Which means...correct me if I’m wrong, but doesn’t that effectively mean the government is saying, “you can commit all the fraud you like, but if we catch you, you’re going to have to give us our cut”?

OFFICIAL: Well, obviously I can’t put it that way myself as long as I have this job…

And of coarse, the power of those same banks to charge account-holders eighty bucks for an overdraft is enforced by the same court system content to merely collect a piece of the action when the bank itself commits fraud.



Now, on one level, this might just seem like another example of a familiar story: the rich always play by different rules.

If the children of bankers can regularly get off the hook for carrying quantities of cocaine that would almost certainly have earned them decades in a federal penitentiary if they happened to be poor or Black, why should things be any different when they grow up to become bankers themselves?

But I think there is something deeper going on here, and it turns on the very nature of bureaucratic systems. Such institutions always create a culture of complicity. It’s not just that some people get to break the rules—it’s that loyalty to the organisation is to some degree measured by one’s willingness to pretend this isn’t happening. And insofar as bureaucratic logic is extended to the society as a whole, all of us start playing along.

This point is worth expanding on. What I am saying is that we are not just looking at a double standard, but a particular kind of double standard typical of bureaucratic systems everywhere. All bureaucracies are to a certain degree utopian, in the sense that they propose an abstract ideal that real human beings can never live up to.

Take the initial point about credentialism. Sociologists since Weber [pronounced vay-ber] always note that it is one of the defining features of any bureaucracy that those who staff it are selected by formal, impersonal criteria—most often, some kind of written test. (That is, bureaucrats are not, say, elected like politicians, but neither should they get the job just because they are someone’s cousin.) In theory they are meritocracies.



In fact everyone knows the system is compromised in a thousand different ways. Many of the staff are in fact there just because they are someone’s cousin, and everybody knows it. The first criterion of loyalty to the organisation becomes complicity. Career advancement is not based on merit, and not even based necessarily on being someone’s cousin; above all, it’s based on a willingness to play along with the fiction that career advancement is based on merit, even though everyone knows this not to be true. Or with the fiction that rules and regulations apply to everyone equally, when, in fact, they are often deployed as a means for entirely arbitrary personal power.



This is how bureaucracies have always tended to work. But for most of history, this fact has only been important for those who actually operated within administrative systems: say, aspiring Confucian scholars in Medieval China. Most everyone else didn’t really have to think about organisations very often; typically, they only encountered them every few years when it came time to register their fields and cattle for the local tax authorities.

But as I’ve pointed out, the last two centuries have seen an explosion of bureaucracy, and the last thirty or forty years in particular have seen bureaucratic principles extended to every aspect of our existence.

 

As a result, this culture of complicity has come to spread as well. Many of us actually act as if we believe that the courts really are treating the financial establishment as it should be treated, that they are even dealing with them too harshly; and that ordinary citizens really do deserve to deserve to be penalised a hundred times more harshly for an overdraft.

As whole societies have come to represent themselves as giant credentialised meritocracies, rather than systems of arbitrary extraction, everyone duly scurries about trying to curry favour by pretending they actually believe this is to be true.”
~David Graeber, ‘Utopia of Rules: On Technology, Stupidity, and the Secret Joys of Bureaucracy’


David Graeber is an American anthropologist, activist and author. He is a professor of anthropology at the London School of Economics.

https://en.wikipedia.org/wiki/David_Graeber

Find his books here:
https://www.amazon.com/Bullshit-Jobs-Theory-David-Graeber/dp/1501143336
https://www.amazon.com/Utopia-Rules-David-Graeber/dp/1612195539
https://www.amazon.com/Debt-First-5-000-Years/dp/1612191290

Or if you are in Hobart, you can find Cracked and Spineless on Facebook here:
https://www.facebook.com/CrackedNSpineless/




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