- In the Money:Finance, Freedom, and American Capitalism
Wall Street invents again: since the mortgage meltdown, both banks and investors have been experimenting with securitizing “life settlements.” A life settlement involves the transfer of a life insurance policy from one holder to another. The buyer continues to pay the premiums on a policy for individuals who no longer want (or can no longer afford) their insurance. In return, the seller receives an up-front lump sum and the buyer receives the benefit after the seller’s death. The elderly and the terminally ill are ideal sellers: they often need cash, and buyers usually do not have to wait long for a payout. In 2009 investment banks looking for new places to park their money saw an opportunity to slice, dice, and repackage these settlements into bonds for sale to investors. With the right financial maneuvers, betting on subprime lives could be just as easy as betting on subprime mortgages.
Though the movement to securitize life settlements is relatively new, the practice of reselling life insurance has a long history. As Jonathan Levy writes in Freaks of Fortune, in the 1840s the American abolitionist and mathematician [End Page 161] Elizur Wright traveled to England, where he watched financial history unfold in a London alley. Men no longer able to pay their insurance premiums stepped onto an auction block to sell their policies, inviting other men to bet on their lives—or more precisely, on their deaths. Wright had witnessed strikingly similar scenes at home in America, where men stood on the far crueler auction blocks of Southern slave markets. There, slave traders and capitalist planters bid to own not just the insurance risks on men but the men themselves. Though the consequences of the two practices were worlds apart, to Wright they appeared to be founded on the same principle: that one person’s life could be bought and sold by another. He later reflected that he could “hardly see more justice in this British practice than in American slavery” (60). When he returned home, he launched a crusade to shape the way life insurance operated in America. He saw the architecture of insurance in moral terms and sought to help men redeem the value of their policies without the need to sell themselves.
Levy’s history is only one of several new works that use humanistic methods to understand economics. This essay considers four diverse texts to explore a larger question: what can (and should) scholars in the humanities have to say about finance? Freaks of Fortune offers a history of risk management, though not as Wall Street defines it today. Rather than focus on the growth of banking, mortgages, and insurance (though he touches on these topics), Levy explores how finance reshaped American culture. Next, Show Me the Money—an online, brick-and-mortar, and print exhibition curated by a team of British scholars and artists—analyzes images ranging from paintings to price currents to understand the role of culture in economic change. Third, Leigh Claire La Berge’s Scandals and Abstraction looks to literature and journalism for theories and critiques of finance absent from more traditional strains of political economy. And finally, Dan Bouk’s excellent How Our Days Became Numbered takes us back to the terrain of insurance, where he explores the technologies and calculations that actuaries, executives, and doctors used to transform individuals into “risks.”
These diverse texts are more than distantly related. All in some way probe two interlocking themes. First, they explore...