Book Review: The Everyday Practice of Valuation and Investment: Political Imaginaries of Shareholder Value by Horacio Ortiz

on the The everyday practice of value and investment: Political concepts of shareholder value, Horacio Ortiz Explores the social institutions and practices that produce and regulate stock prices and values. In addition to its extensive ethnographic detail, this book has something important to teach us about the personal, moral, and political assumptions that underlie the workings of finance. Johannes Lennard.

The everyday practice of value and investment: Political concepts of shareholder value. Horacio Ortiz, Columbia University Press. 2021.

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Understanding taxes, in a different way

‘As a life insurance customer, you absolutely do not need your life insurance premium to increase every week’ (219) … ‘It is true that financial markets have played a role. […] excess[ing] Hardness of benefits but in fact there are conditions for increase (222)

Fernand, an executive at an international investment management firm in Paris, exposes one of the recurring contradictions in the financial system revealed by Horacio Ortiz’s extraordinary book, Daily practice of valuation and investing.

Investment companies, such as banks, hedge funds, asset managers and insurance companies, strive to create value: that is, multiply their financial assets under management. To do this, they engage in the act of value (eg, cash discounting) and produce an efficient market in the process.

But already a look at the different people who perform different jobs in each investment firm – from analyst and salesperson to fund manager – shows how much contradiction there is in this perpetual process of (re)creating an (efficient) market. have . While reports and accounting must ‘justify judgments of true value’, salespeople form ‘individual opinions’ and use ‘personal relationships’, including through non-professional travel (121ff), to allocate funds. influence the decision to do so.

Ortiz expertly renders visible the fundamental multiplicity of ethical codes, narratives, beliefs, goals, and methods that collectively constitute the financial industry (238). In this reproduction, Ortiz engages not only with “pure accounting reason,” but also with (social) power relations and politics that we should pay more attention to. However, abstractions such as ‘markets’ are also made up of complex people. This is where Ortiz’s attention to sociology and anthropology comes to the fore and hopefully shows us the alternative, dangerously unsophisticated side of finance.

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A person tracks shares on a tablet in front of a desktop

Photo by Vance Paley on Unsplash

While some of Ortiz’s language is loose and the writing is wide-ranging, he does what few others have done before: describe and conceptualize financial institutions from the inside. Most notably, Ortiz had long-term access to many leading investment organizations—from a major asset manager to a brokerage firm and a hedge fund—and was able to collect incredibly complex ethnographic data. Along with Caitlin Zaloom’s debut Out of the pit and Stephen Lenz more recently Tales of capitalism, Ortiz is the only anthropologist who was allowed where ‘high finance’ is created: the practices of investors. What he found and was able to explain in a skillful and interesting way should inform how the future study of finance is conducted.

The first three chapters of the book, originally published in French eight years ago, go over what Ortiz understands as the building blocks of finance: the standard approach to valuing financial assets (chapter 1) as ultimately Influenced by the opinions of individual investors. (Chapter 2) and the belief in the “Efficient Market Hypothesis” (Chapter 3).

While financial assets are evaluated to establish their value using a mathematical discounted cash flow analysis (DCF, 56), the underlying value assumptions referred to in these analyzes vary (from real to speculative , 67). The (theoretical) optimal allocation of resources (implicit in the ‘efficient market hypothesis’) is derived based on different combinations of three types of values ​​sold in persuasive (and personalized) value statements (88,95) based on the relationship to the network. (177).

While these actions are based on the understanding that the market is (temporarily) no Effectively (and not all information is ‘in the price’), the outcome of different valuations (and the resulting investment decisions) will again produce an efficient market (155f). What Ortiz shows with detailed and diverse ethnographic and interview data is how assets are produced and priced locally, sold globally, shared and reproduced but how they are largely fragmented, contradictory and sufferings included (207).

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The last part of the book, after Chapter 4, clearly presents an observation that is often omitted from any analysis of business: how political perceptions influence these values ​​and investment practices (or business practices in general). does Ortiz describes his book as a “financial political anthropology” (5, 18f) and shows how political and moral narratives and imaginations actually produce ‘financial value’ (rather than it being a representation of real value reflected in prices). becomes, 34).

But the political imagination does not end there – the kinds of financial decisions that have been described have concrete effects. The financial industry functions ‘to collect, produce and distribute money, contributing to the production of social hierarchies around the world’ (76). Decisions result in what (and who) is valued in the economy (22, 72), so who is included or excluded and who can have money to build or grow (8).

Ortiz also highlights the involvement of political actors in the financial industry, arguing that the financial industry has been overtly enabled by financial regulation over the past decade. While there is much to be said here, the overall bottom line is clear: not only is finance influenced by political narratives (and ethos) and produces political outcomes, but it is also hostile to political actors.

Ortiz’s book brings together many strands of the latest wave of anthropology of finance. He draws on earlier analyzes of risk, performance and narrative (see, for example, Zalom, 2004; Donald McKenzie et al, 2007; Douglas Holmes, 2013; and Kimberly Chong, 2018). Without mentioning the word, I would claim that he also works a lot for people who connect contemporary tax analysis with ethics (see Sean Field, 2021; Lenz, 2020; Giulia Dal Maso et al, 2022). What Ortiz adds is an extraordinary amount of ethnographic detail to bring concepts like ‘investor’ and ‘market’ to life and challenge our understanding of these analyses.

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What commentators, especially from the political economy side of things, may be missing is a more direct engagement with the people and institutions that Ortiz has studied for so long. What should be done differently? Can we “work” the politics of the financial system (eg, its effect on increasing inequality)? Ortiz may excuse himself from this task altogether—that is, after all, the role of policymakers. But this line of criticism brings up another methodological issue: Does the long-term engagement that is both practical (Ortiz has also worked in finance) and academically analytical make it too complicated to be critical? I run into similar issues with my recent work on venture capitalists where criticism may prevent access. It’s hard to maintain balance – especially to please everyone.

While Ortiz’s fieldwork was nearly two decades ago, his findings are still very important. In fact, he acknowledges the growing influence of indexing (180f) and automated decision-making (which I discuss in a 2021 article). It moves the influence of personal opinions from the sales floor to the coding floor, where the algorithms are written. Apparently, some of the recent developments in the financial industry, such as the integration of ESG principles (and then the reaction), Ortiz did not foresee. However, this book still has something important to teach us. Personal, moral and political assumptions are at the core of how finance works – we must take them seriously to understand, criticize and influence the financial system.


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