Collateral Knowledge: Legal Reasoning in the Global Financial Markets by Annelise Riles (review)

Annelise Riles’s Collateral Knowledge: Legal Reasoning in the Global Financial Markets is a fascinating book that deserves a wide readership in STS. As an anthropologist, Riles takes us close to the work of global finance, not, as is often the case, by focusing on the action of stock trading or high-level policy discussions but by concentrating on back-office efforts to keep financial transactions on track. From an ethnographic location within the offices of the Bank of Japan, she demonstrates the centrality of mundane backstage efforts to make the finance machine work. She also shows the mutual entanglements between such work and high-level legal, economic, and political theorizing.

There are several reasons that this book is highly relevant for the EASTS readership. Empirically, along with Hirokazu Miyazaki’s Arbitraging Japan (2012), it offers one of the most nuanced analyses available within the blossoming field of social studies of finance. It adds to this literature by emphasizing the importance of legal reasoning and the complicated relations between global finance and private and public law. Regionally, the study is based in Japan and thus offers a counterpoint to the heavily Western-centric emphasis of most available STS studies of finance. At the same time, it poses questions concerning the analytical usefulness of area demarcations such as East Asia or Europe, in a “global” context. Politically, the book offers suggestions for how to create a more sustainable set of finance practices, an issue of huge importance in these days of market instability. Finally, the book is valuable as an analytical intervention in ongoing STS discussions.

1 A Collateral Entry Point

Collateral Knowledge begins by noting how, in a contemporary context where everyone is “decrying the weak legal, analytical and ethical foundations of the global swap markets” (1), “collateral” has survived intact, as an unproblematic, private technique of regulation. In abstract form, it may appear as if only two general options are available when it comes managing global finance: the path of privatization or the path of government regulation. Yet, these options “largely miss the mark” (9). And to see how they do so, it is crucial to look to the “set of routinized but highly compartmentalized knowledge practices” (10) through which global finance operates. The term collateral is used in two complementary ways in this argument. Technically, collateral refers to what is pledged as security for repayment of a loan. However, Riles also talks of collateral knowledge, knowledge that practitioners of global finance themselves view “as of no particular consequence or worry” (20). Such collateral knowledge and the practices that go with it sustain markets from the margins and, in doing so, bring new forms of governance into being.

2 Documents and Forms

Riles zooms in on the “documentation people” of the Bank of Tokyo, who in the late 1990s spent significant effort dealing with documents for the International Swaps and Derivatives Association (ISDA). The ISDA is a “powerful global private organization” (42). And when its work is criticized, it is usually because it is seen to embed certain “norms” for conduct, shared and propagated by powerful groups. But this leaves unaccounted for the practices of tailoring ISDA agreements to make them “fit” with the state laws of Japan. If one looks at the “touchdown points,” where private and public law meets, Riles demonstrates, what is found is not shared norms but rather projects that “demand creative work,” work instantiated in material practices of documentation.

Riles emphasizes again and again that what is central about these documents is not their meaning: they are never read but simply “completed” (50). It is misguided to look for shared norms embedded in documents, for what matters are the aesthetic criteria that guide the completion of forms. Indeed, insofar as these forms determine what must be filled in and obviates the need to take anything else into account, “collateral is the precise opposite of social norms, what makes norms superfluous” (55).

3 Technocracy in...