INFORMAL FINANCIAL SERVICES
Homespun Financial Services Will Never Disappear
by Kim Wilson
“For decades, “formalization” has been the hue and cry of financial inclusionistas. A manifesto has emerged, blending fact, fiction, and wishful thinking into a declaration: formal services, supervised by regulators, are better bets for the world’s poor than informal services. What we should be reviewing is not whether the service is regulated but whether it is safe, legible, useful, fair, dignified, and familiar. Familiarity breeds contentment Let us start with familiarity, an element often under-rated by inclusionistas. As a person, rich or poor, you likely do what your family and friends do when it comes to money services. If they are using Western Union to transfer money, then you will use Western Union. If they are using hawala, so will you. If they are purchasing clothes from the local shop in installments, you will too. You want to make as few financial decisions as possible. Money management is intimidating, and thus fatiguing. You want to turn to sources you can trust, that are there for you when you need them, and that seem familiar. In finance, familiarity breeds contentment.
Speaking of family, let us take a look at Our Family Social Credit Union, with its 511 members in 22 states. If you deposit $5 along with a 25-cent handling fee, you can become a member – with one more condition: You must be part of the Cain family. Manley and Lucy Cain started the credit union in the 1950s. Today, family members find its services crucial and turn to Sue Cain, who manages OFSCU, when they need to borrow for a new car, prepare for a new baby, or fund college expenses. That this pool of family funds is state-regulated seems less important than members’ familiarity with the service and its procedures. We may already know about Rotating Savings and Loan Credit Associations (ROSCAs), distant cousins of the credit union, which are ubiquitous in some parts of the world. For instance, in Egypt, finding an adult who is not part of a gam’iya (the generic name for the local ROSCA) is a challenge. In Syria, I met rural Bedouins routinely saving $1, as well as urbanites saving $5,000 a month. Rich and poor, members in such clubs used the same formula – the rich using the gam’iya to fund purchases of second homes and the poor using it to buy sheep. Every member regularly put in the same amount of money and each meeting a different member took the money home. This went on until everyone had a turn. One paper indicates clear rejection of formal credit on religious grounds in favor of the gam’iya. The rich of course use formal credit and have various savings and investment accounts. These local clubs thrive in the US as well. Harvard Square thrums with the ROSCA system, with money in yellowed envelopes passing in and out of cab windows. Haitian taxi drivers use the Sol to save up for their children’s school or to buy a second cab. Logan airport booms with similar action: Ethiopian taxi drivers depend on their Iqub as a cash-lumping device.
But not all clubs of these kinds work in the same way. For instance, New Jersey, sub-clubs selfunify to form their Tanda, the generic name for a ROSCA in parts of Mexico. In this version, privacy is crucial. No single member of the Tanda knows the identity of all members. He or she only knows sub-club members. The manager works to protect the secrecy of its membership, and even she does not know the identity of many sub-club members. Accumulating savings clubs (ASCAs as we call them), where members borrow from pooled savings, flourish in other parts of the world. In villages in lower Assam, one of India’s northeastern states, individuals take part in multiple ASCAs, with households in one village belonging to an average of four such clubs. The ones I visited had formed as silk-weaving clubs. Members deposited weaving income into their Xonchois (their term for an ASCA). They then borrowed from their Xonchois to purchase musical instruments, each member owning and mastering a different one. Members performed at local ceremonies as a troupe, earning money as they did so. New income was churned back into the ASCA to upgrade musical instruments, to purchase weaving equipment and raw silk, or to fund important family events. The ASCA need not be confined to picturesque scenes of bamboo-rimmed ponds and rice paddies. The concept has gone cyber.
Take Puddle, which functions as an online ASCA. If you are on Facebook, you are eligible to join. Through Paypal or another payment service, you can deposit as little as $10. The rules of your club (who can borrow at what interest rate for which purpose) are determined by the Founder of each Puddle. If you don’t like the rules or the people in your Puddle, feel free to convene a new one. In just two months, Puddle has established 60 financial clubs with 300 members. Thus far, members have used funds to start a coffee business, purchase a bicycle, and buy furniture. But is folk banking – banking with neighbors and co-workers – really enough? Don’t people, however poor, want real bank accounts? Don’t they want to watch their savings grow without their neighbors leaning in and demanding a piece of the action? Don’t they want their interest to compound while they sleep, or to dip into an overdraft facility every now and then? Naturally, they would want a fairly priced home mortgage or a student loan. Yes, of course. Folk banking is not enough. Poor people want more but the More that gets served up to them is typically not better, however formal it may be. The More they get is often fee-laden, unfamiliar, or simply unsafe.
The 1999 Ugandan banking crisis wiped out smallholder savings. It was a formal system. The successive collapses of the Soviet and Russian banking systems fleeced depositors, leaving them unnerved by the memory and the prospect of vanished savings. Again, they were formal systems. How would you feel if you were a formal, low-income saver today in Ukraine? In Cyprus? A little nervous, I imagine. Even without formal sector collapses, the poor must often choose between high-priced formal credit or none at all. Banco Compartamos, dedicated to serving the poor and a member of the SMART Campaign (in which participating institutions pledge fair pricing), is famous for its APR well above 70%, and above 100% if tax is taken into account. With all its subsidies, Compartamos still does not bother to offer savings services. What kind of inclusion is this? It’s the kind that goes for the Achilles Heel of the poor – debt on your doorstep and in your face, offered at any price. That Compartamos is regulated probably does not matter to the millions of users gathered into its fold. That it seems slightly familiar – local in a groupish way – probably does.
Wild profiteering masked as “inclusion” aside, how does trust evolve within folk banking, mobile money, or regular banking? With savings, transfers and insurance, the user must believe that someone, some institution, or some system is controlling the underlying conditions of trust: Safety, usefulness, legibility, fairness, dignity, and familiarity. In a well-run financial system, these elements can be found 4 outside of the user’s immediate control. And if not found outside the user’s immediate control, the user reels them in closer to home: Into the local hawala, into the folk-banking cash box, or closer still, beneath the mattress. With credit, users are far more elastic in their demands. The service need not be so safe, useful, legible, fair, dignified, or familiar. It only needs to exist, at least up to some undefined threshold of abuse – an abuse of trust – at which point users fight back as they already have in India, Nicaragua and the United States; and as they might still in Chiapas. When faith in formal services crests, users refocus on the familiar safe-havens of the ROSCA, the neighbor with spare cash, and the mattress.”
ceremonial Fijian necklace made of sperm whale teeth
by D. Graham Burnett / 2013
“Sperm whale teeth vary considerably in size and shape, but their characteristic form is a slightly flattened and bow-curved double-tapering cylinder not exceeding thirty centimeters in length—which is to say, they tend to look something like a fat banana. It’s not quite that simple, though, since many of the larger specimens display a thickening at the gum-embedded end that gives them more the appearance of a spade or wedge, and a conical indentation (a pocket known as the “pulp cavity”) is often seen at the base of the root. There are also almost always a few runty little hook teeth in the mouth of these whales (presumably to aid in grappling slippery squid, the primary prey of the world’s largest predator). Between forty and fifty of these sundry choppers are configured, well spaced, in two rows along the narrow lower jaw of a mature Physeter macrocephalus (in a full-grown animal that jaw may push fifteen feet in length). When the maw is closed, each tooth has its own pearly little sheath-pocket in the upper tissue of the mouth. This peculiar anatomical adaptation gives the palate of a gaping sperm whale the appearance of a giant pink cribbage board. The ivory pegs stand at attention in ranks below. We are talking here about actual teeth, composed of tree-like ring layers of the dense, calcareous material known as “dentine,” and then coated outside with a final finish of “cementum”—a hard connective tissue that functions like the enamel on our own pearlies (sperm whale teeth only show a little cap of enamel at the tip, and sometimes not even that). In addition to serving as the raw material for scrimshaw, New England’s most distinctive folk art tradition, sperm whale ivory was not infrequently used in the nineteenth century as a substrate for human dentures.
Elsewhere, however, the teeth of Physeter macrocephalus played other roles. Here is the Pacific adventurer William Lockerby—an intrepid beachcomber and man of fortune on the cannibal island of Fiji—scribbling in his journal on the 16th of May, 1809: “I went about ten miles up the river Embagaba to a village where I was told there was a large lot of Sandlewood [sic]; but the owners wanted a large whale’s tooth for it, and I had not one to give.” Lockerby’s text offers one of the earliest references to the use of sperm whale teeth in Fiji as tabua—valuable exchange items, currency-like in their capacity to store value, secure trade, and symbolize wealth. Were these tabua-teeth money? It turns out to be a philosophical question. But philosophy requires an armchair, and those were in short supply in that particular environment. The undernourished rapacity of tars-on-the-make militated against metaphysics. Even money-metaphysics. A calloused pragmatics of give-me-this (for-that/or-else/just-because) generally sufficed for their purposes. And so the many roughnecks working the archipelagoes of the Pacific in the China trade (pearls, bêche-de-mer, precious woods) and the boatloads of sailors dropping anchor for wood and water (and sometimes women) soon learned that one did well to bring along plenty of sperm whale teeth to Fiji, where, generally strung on a woven fiber strand, they seemed to function as the coin of the realm.
Under the proper circumstances, a single tooth could “buy” a canoe, for instance, or a large and tasty pig (welcome fare for scurvy jacks). The same teeth could be used for other purposes as well—as blood money paid in compensation for one of those unfortunate deaths that were all too common on the beaches of the Pacific; as a bride-price for the transactional alliances by intermarriage that often preceded, and sometimes followed, such violence. Given the number of whaling vessels plying the South Pacific for sperm whales in those years, there was no shortage of tabua changing hands across the surf at Rewa or Lakeba—effecting a brisk trade in the sundries of sun-struck life. Back in armchairs at the various colonial metropoleis, trickle-back accounts of the weird exchange systems at the margins of empire (cowrie shells, iron nails, red cloth, sperm whale teeth?) occasioned considerable, and not infrequently troubled, reflection on money—what it was, how it worked, and where it came from. It was one thing to comment condescendingly on the bizarre fact that Fijians seemed to treat a bit of cetaceous fang as more valuable than diamond, but quite another to begin to worry (goaded by the wry defamiliarizations of Karl Marx) that every Englishman was a fetish-worshiping primitive, beguiled by the smoke-and-mirror potency of the shilling, ever only a tinselly reflection/reification of his own sweat. Some distinctions were urgently in order.
The earliest efforts at a proper anthropology of money were born in this context. Some of these were little more than drawing room exercises, concerned primarily with colorful anecdoting as to the myriad exotic tokens of exchange in use among the savages (elk bones! wampum! mill stones!). But others worked hard, sifting experiences at the imperial periphery for clues about the kinds of creatures we are, and about the kinds of evolutionary/civilizational processes that had (presumably) led to the existence of something called an “economy”—a high-visibility and often distressing feature of life in Europe and America in the second half of the nineteenth century. Take, for instance, R. C. Temple’s 1899 lecture to the Anthropological Institute of Great Britain and Ireland, “Beginnings of Currency,” in which the ramrod-backed British superintendent of the Andaman and Nicobar Islands dutifully reported his painstaking fieldwork trying to figure out the value of every domestic artifact in his jurisdiction in terms of coconuts—a project that led to the striking discovery that an eighth-of-a-rupee coin was valued at sixteen nuts, and a one-rupee coin at merely a hundred nuts! But the mutton-chopped colonel did not snicker at his subalterns. He drilled down, asked questions. The origin of the discrepancy lay, he ultimately decided, in the fact that the smaller coins were used in the making of one kind of body adornment, and the larger ones in another—and that the former sort of necklace-thingy was preferred. Nothing irrational there, he decided, and, working from this case study and others, he went on to offer a set of criteria for distinguishing money proper (abstract, metrically divisible, portable, not in itself useful for anything other than serving as a medium of exchange and/or a token of value) from mere “currencies” (like salt or rice or, say, coconuts) that could be used as all-purpose commensurators of value, but were themselves, in situ, actually useful/necessary to life.
These marked, he argued, stages in the great upward marching parade of human development, which proceeded in the direction of greater abstraction. Debate followed (e.g., exactly how useless did something have to be to count as money? What about gold? What about an inedible chicken? etc.). The broad consensus to emerge from this imperial era of money-think affirmed, on the basis of empirical observation, the basic tenet of the early conjectural histories of economic life to be found in the writings of John Locke and others: namely, that money arose out of barter; that it was a technical innovation for streamlining the primordial business of “trade-you-my-fish-for-your-whatever.” Such primitive quid pro quo-ing could become difficult if the parties could not arrive at a workable deal in whole units of their tradables, and so it stood to reason that clever savages might settle on a commensuration of their respective goods in terms of some third good—some token-like doodad of widely recognized, and ideally more-or-less fixed, value. Voilà—the first step on the long march to a truly abstracted unit-value for everything.
Perhaps. But it was the exchange systems of the island Pacific—like tabua in Fiji and kula in the Trobriand Islands—that occasioned the deepest rethinking of this entrenched just-so story about the origins and nature of money. The Polish-born British-Austrian ethnographer Bronislaw Malinowski, marooned in Melanesia during World War I, studied the circulation of necklaces and armbands among the native populations of a small archipelago northeast of Papua New Guinea. What rules, principles, “prices” governed these exchanges? Nothing that could map comfortably onto the impersonalized abstraction of a “market” for “goods.” There was too much weirdness in it. Not enough tractable quid pro quo. On the contrary, this was an exchange system manifestly preoccupied with persons, status, and obligations. The real coin of the realm was, in a way, invisible—and it was political (and social) power. In the interwar period, the French sociologist Marcel Mauss elaborated a searching account of such “gift economies” in his celebrated 1924 essay The Gift (1924), where he explicitly discussed “Fijian money, cachelot teeth,” and said that this currency, like Trobri and kula items, needed to be understood as inextricably rooted in cultures of endlessly reciprocal giving—a perpetual, precisely judged, community-constituting pageant of respect, deference, ambivalence (and even contempt), all effected by means of thing-gestures.
In light of such ethnographies, a rethink of money itself was in order. Rather than the ur-story lying in truck and haggle, perhaps it lay here, in these tokens of esteem—which had been, over time and across the beach, repurposed as mere units of stuff-exchange. The barter story of the origin of money had met an alternative in the gift story. And there were interesting political implications. After all, the barter version of things implied a primordial state in which you and I had already agreed that this was yours and this was mine. Barter starts there. With things, with private property. Money is simply the symbolization and streamlining of this fact—its efficient and functional elaboration in actual social practices. The gift story, by contrast, starts from relationships—yours to me and mine to you. The things (the tokens, the teeth, the coins) come in as a way of working out and articulating who was who, to whom. It is a fetching notion, sympathetic to the minds of socialists, romantics, and left-leaning social scientists. But it has been a hard sell across most of the last century. Capitalism and its savvy theorists have tended to put the stuff first.
Back to the sperm whale teeth. Were they money or not? They could certainly have that feel to a sandalwood trader trying to acquire a lucrative cargo of the fragrant lumber. But it didn’t take long before even those most nuts-and-bolts anthropologists noticed all kinds of un-money-like attributes of the local currency. You couldn’t quite count on your ivories to do what you thought they would do under all circumstances. That troubling randomizer of human behavior—meaning—seemed to inhere in the teeth, and generate various bizarre misunderstandings and conditions. There seemed surfeits of signification in the things—excess powers and unpredictable deficiencies. For instance, while it was clear that some teeth (the larger, older, amber-hued specimens) received special attention (occupying pride of place in family treasuries and occasioning tenderly solicitous polishing), it did not follow, as one might expect, that such noble tabua traded hands at a consistent premium. Rather, for the preponderance of occasions in which the presentation of a tooth was required by custom (the building of a house, a diplomatic envoy, the death of an elder), it appeared that any tooth would do. Moreover, the “market” in teeth often behaved in what appeared a most irrational fashion. How could it be that a tooth acquired for less than one pound sterling in town could, a short distance away, secure a monster porker that would retail locally for ten? Where were the arbitrageurs?
Wrote one sage old missionary, after a résumé of the un-moneylike attributes of a sperm whale tooth in Fiji: “Thus we must infer that, while it is used as a means of barter or exchange, it is evidently something more.” Indeed. And once one began really paying attention (or perhaps merely lying awake at night), the things began turning up in situations that had about them the air of ritual, of augury, of the sorts of heathenish extravagance (clapping, singing, strangling wives) that trouble missionaries no end. Stories were told of executions and ransoms, of pagan rites and dark deeds. Jesus’s quick wit concerning the legitimacy of Roman taxation—picking up a coin, and indicating the head-side, he encouraged his followers to “render unto Caesar” what was obviously his, since it had his picture on it—had from the outset given Christians a very useful (if not uncontested) way of managing the roiling god-power of money. But a Fijian missionary, confronting a tabua, could hardly brush it off with such a glib injunction. The teeth had no face, for starters. And though they were used in some contractual exchanges with the structures of colonial governance, this fragile Caesarish-ness of the tooth did not really solve the problem, since these were hardly mere taxes or salaries—in the tabua inhered stubbornly an air of paganish meaning, which queerly contaminated each act of payment, whether civil duty or market transaction.
All of which pressed the core questions: How might this powerful money-meaning-thing be properly de/re-mystified in such a way as to create an appropriate space for both commercial and spiritual development? How to sequester and sublate—relegate to the past—its improper potencies and implications, while preserving the proper measure of its measure-value as a currency? How might that necessary, beloved, civilizing process of abstraction be hastened, such that the natives might come to see their tabua as mere tokens of value, interconvertible with sterling, francs, dollars, and jars of Marmite at fixed rates? For a wonderfully weird period reconnoitering of this difficult territory, one can hardly do better than to pick up a weathered copy of The Strange Adventures of a Whale’s Tooth (1919), authored by the Fijian old hand and Methodist pastor Reverend Wallace Deane, MA, BD. In fourteen lively chapters, the good reverend sketches a fantastic, sentimental, and picaresque Bildungsroman that lovingly details a sperm whale tooth’s gradual achievement of proper self-knowledge across nearly a century of social upheaval and cross-cultural encounter in eastern Melanesia. And this tale unfolds from the point of view of the tooth itself. Call it an anticipatory plagiarism of object-oriented ontology, a kind of Vibrant Matter novelization of savage money. In 1991, the archaeologist and Fijian specialist Nicholas Thomas published an important book entitled Entangled Objects: Exchange, Material Culture, and Colonialism in the Pacific. It deals with tabua at some length. It is a bit dry. If that volume had been rewritten by the addled lovechild of Ian Bogost and Rudyard Kipling, you would haveThe Strange Adventures of a Whale’s Tooth.
We meet our first-person hero in the depths of the cold southern ocean, still in the mouth of his whale, for whom he expresses the greatest admiration and nostalgic affection (“When the whales were splashing, he would splash the farthest; when they were spouting, he would spout the highest. In the races he would invariably be first, and when he dived, he outdistanced all the rest”). This sort of showmanship gets his host killed off the coast of New Zealand, and our tooth is pried from his “warm couch” to enter the human world as the shared property (one is struck by this) of a pair of sailors named Bill and Dan. These gentlemen subsequently pass their prize to a fearsome Fijian in a paradigmatically fraught shipside exchange, receiving two canoes full of yams and some shell trinkets for their sweethearts back in port. Reincarnated as a tabua, our poor tooth (whose native character from the outset displays some of the shine, pride, and winsome naiveté of a gifted English schoolboy) finds himself quite promptly deployed as the purchase price of a cannibal assassination, and must look on as the victims he has unwittingly purchased are grilled up for a satanic feast. (“The new powers vested in me were grievous indeed to be borne. Had I consulted my own wishes, it is certain that I should not have chosen my present existence.”)
Acceptance of a tooth binds a chief to the request being made with the tooth
Over the remaining chapters, the reader threads the overlapping economies of Fiji from the wide-eyed perspective of a circulating unit of cultural/spiritual/material value, even as each of those domains is transformed through colonialism, Christianity, and capitalism. He serves, in turn, as a peace offering, a nuptial consideration, and the touchstone for a religious conversion. He is buried with a chief, and (note the symbolism here) is subsequently brought back to light and life after his time in the sepulcher—whereupon he discovers Christian worship abroad in the land, and charming plantations. He spends some time hanging on the wall of a devoted missionary, where he can enjoy the untroubled status of a curio, deliciously unburdened of his exigent service as a token of extravagant meanings and volatile values. Along the way, changing hands, coming to know himself through the gestures and gymnastics of those among whom he circulates, our tooth develops a strikingly accommodating and capacious worldview. The pluck and jingoism subside, to a substantial degree, and the tooth allows himself some generously cosmopolitan, if still somewhat condescending, reflections on humans and things. He becomes, in effect, a worldly philosopher. (“My readers will pardon me if I indulge in a little dry talk. I must confess to a weakness in that direction, though a whale’s tooth is not supposed to know anything of hard thinking.”)
A member of the Republic of Fiji Military Forces presents a Tabua to Indian Prime Minister Modi during his official welcoming ceremony in November 2014
Tabua still circulate in Fiji. And anthropologists still write about them, tracing how they are regulated by international law bearing on the products of endangered species, or noting how they move across racial and ethnic lines, and stack up in the pawn shops owned by Fijians of South Asian origin. I have one myself, but its strange adventures—what I paid for it, where, and how—belong to another tale. Money, wrote Marx, “makes impossibilities fraternize.” Every money story would bear this out. In this, it has been observed, money resembles nothing so much as language, which is similarly promiscuous, flashing, eclectic, enamored with incongruities. Both pander. Both effect mad juxtapositions. Both string everything together. Both move on suddenly, seemingly without ever having touched that which they momentarily held so tight. Both possess that bewitching capacity to feel at one moment like everything, and at another moment like nothing at all.”
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