Establishing “Value” Across the Chinese Border: Some Questions about the Relation Between Fieldwork, History and the Transformations of Global Finance

Friday, 3 July 2015: 4:00 PM-5:30 PM
TW2.2.03 (Tower Two)
Horacio Ortiz, Research Institute of Anthropology, East China Normal University, Shanghai, China; CNRS, IRISSO, Université Paris Dauphine, UMR 7170, Paris, France
This paper is based on interviews and observations carried out with employees working in the financial industry in Shanghai, Beijing and Hong Kong. The paper concentrates on employees working for companies buying small and medium enterprises (SMEs) in China, partly or wholly, in particular people working in Mergers and Acquisitions, Private Equity and Venture Capital. This constitutes the main channel of foreign financial investment in China, given the regulations about listed stocks and bonds. The research follows previous research carried out by the author with stock brokers, hedge funds and fund managers in New York and Paris.

The paper shows that there is a widespread conflict concerning the method of valuation of SMEs, foreign investment employees (whether Chinese of foreign nationals) tending to use discounted cash flows, and local sellers tending to use asset prices or comparable variables. These controversies concern the definition of what is being purchased, as well as the kind of financial interests and rationales that are supposed to justify the transactions and their price. These conflicts are made sense of by linking financial identities to social identities, defined by nationalities, cultures and age, among others. This sense making renders possible the financial relation of power that determines prices, and it is linked to the institutional setting in which actors operate: the role of the Communist Party, of the State-Owned Assets Administration and Supervision Committee, and the laws and regulations of financial practice in Europe and the United States. Mainstream financial theory, from which financial methodologies are derived, is embedded in the presupposition of neo-classical economics and the liberal account of the role of markets and investors in an optimal allocation of social resources. In order to stabilize their personal careers and the organizational rules of profit seeking and commercial positioning, employees situate these identities, conflicting methodologies and institutional settings within accounts of the world and the possible roles that China would play in it, in particular, its ambivalent position within a teleological discourse about the universalization of global finance.

The paper thus allows for a critique of the descriptive limits of the figure of a single-minded maximizing investor, which mainstream financial theory describes as a calculating unit who would only use the methods established by financial theory itself. This has implications for regulation, as it questions not only some of its micro-economic presuppositions, but also as it shows that financial standards are not necessarily the result of procedural calculation of opportunities, but that they are also shaped by the definition of other social identities, such as national or generational identities, and also by the circumstantial consensus, from central government to single employees, about the prospects for the future. Finally, these issues are central to understand the drivers and the concrete methods whereby global finance is transformed with cross-border investment in China.

This case study allows for exploring theoretical issues raised in the study of money and finance. Two main issues are addressed. The first concerns the connection between the specific kind of knowledge produced by fieldwork-based and interview-based research, and global processes of which financial practices are part. The latter is attentive to contradictions, fragmented meanings and ambivalences, while global processes are usually apprehended through macro-economic categories (be them neo-classic, Keynesian or Marxian) that often appear simplistic and irrelevant in the complexity of everyday life. Yet, these broader frames often inform the kinds of questions that we ask in research, about agency and the politics of monetary distribution. The paper explores the possibility of linking several entries of research: the minutiae of financial operations by financial professionals, career trajectories, organizational and commercial issues for the companies in which the people observed work, financial regulation and global financial flows.

The second question concerns the integration of the financial practices under analysis in global history. The localized meanings of financial practices often connect with long-term imaginaries about money, society, power and justice. This is so in the case studied here, where the constitution of the Chinese nation-state in the last 150 years has been intimately and ambivalently interwoven with global finance. In this light, the constitution of the Chinese nation-state is itself part of broader phenomena that have been unfolding with the constitution and the break-up of the global colonial powers of the 19th century. Current financial imagination is part of this process, and the center-stage that multiple processes subsumed under the concept of “China” have come to occupy in global monetary flows, make the study of cross-border investment within Chinese state borders a very interesting entry to study the transformations of global monetary relations of power in historical perspective.

The presentation therefore proposes to be reflexive about concepts such as “value”, “investor”, “market”, “state” and the “global”, exploring how these categories are used in multiple and complex was by employees of the financial industry in their everyday practice. The aim of the ongoing research of which this paper presents a preliminary step, is to explore new ways to analyze monetary practices that allow for addressing global inequalities going beyond neo-liberal discourses and their classic Marxian and Keynesian critiques, as well as beyond the distinction between the “West” and “the Rest” or “North” and “South”. To do so, the research uses pragmatist approaches of money and finance such as those developed in different directions by Jane Guyer, Keith Hart, Viviana Zelizer and Bill Maurer.