Brett Scott: Economic explorer

Brett explored the inner workings of the financial sector from the trading room floor, before leaving the finance sector and returning to his activist activities. Here he describes how, despite its complexity, we shouldn't think of financial systems as a 'black box'. Instead, activists can learn intuitively about it as an ecosystem, then work with others to create a disruptive vision of the finance world.

Brett explored the inner workings of the financial sector from the trading room floor, before leaving the finance sector and returning to his activist activities. Here he describes how, despite its complexity, we shouldn't think of financial systems as a 'black box'. Instead, activists can learn intuitively about it as an ecosystem, then work with others to create a disruptive vision of the finance world.

He also discusses his book 'The Heretics's Guide to Global Finance', featured on our Resources pages.

How would you describe yourself?

I'm an economic explorer.  I try to explore various economic systems, mostly with the intent of trying to discover the hidden connections of the system, where the power lies, and how you can play around with that.  And then, more generally about how these systems connect to ecological systems.

How did you become a writer?

When I left the financial sector I didn't really know what I wanted to do.  I knew it would be  something around ecological justice and economic justice. I started going to a café, and I would just sit there and think about what I was going to do, and I starting writing up about my experiences. Several months later I'd actually written a book.  So, it was kind of by mistake.

It was an interesting process . Actually a lot of stuff I do is always a bit like throwing myself into a river to learn how to swim.  And if I throw myself into something, when I'm in a position where I'm forced to learn...well, I actually forced myself to learn how to write.

What were you doing before you decided to go to financial sector and who were you working for?

Before I joined the financial system you might have defined me as an activist interested in issues of economic justice.  I was working at a think tank concerned with healthcare systems and peoples' justice within those systems. You would have called me an academic. But I was also a musician and involved in a lot of alternative and activist scenes.  

What I found in activist movements, when it came to issues of economic justice, was that I had very little understanding of the actual mechanisms by which economic systems worked. This was a constant frustration for me because I wanted to know how capital actually flows in those systems.  There was a disconnection between the radical theory I was discussing one the one hand, and an intuitive understanding of the economic systems those theories were about on the other. So I started on an adventure of sorts, to obtain that intuitive knowledge. To cut a long story short I decided to infiltrate the financial sector and explore the very place I found counter-intuitive. 

I went to London.  It took me about three or four months to actually land a job because it was right at as the financial crisis was taking off.  I had a few interviews with the Lehman Brothers just before they collapsed.  I ended up getting hired by a startup derivatives brokerage, which is basically a company where you help people enter into gigantic trades, or gigantic bets, with each other. Those trades are called derivatives, and I worked on the front end as a broker.

For many people the financial system is a black box. Can you describe why it's a black box?

The financial sector tends to be a black box for a variety of reasons. For a start, it is authentically complex or at least has lots of different parts working together and is inherently difficult for the human mind to grapple with. That's typical of any economic system. Secondly, there are a lot of psychological barriers people have when they think about the financial sector. There's an assumption that it's all based on mathematics, which it isn't, but for a lot of people that assumption repels them. A bit like you might be repelled from rocket science, because there's a complicated technical element.

Also, and this is slightly harder to describe, there's an assumption that the system has a lot of power. That there are people in it who are somehow controlling that power, and that you as an ordinary little person would never be able to access that. So the actual complexity and the perceived complexity work together to  stop people believing that they can access the system .

Just as when people look at a computer and  see a black box, similarly the way they've been looking at finance, they see a black box that they interact with.  If you're a hacker of technology, you would never see a computer as a black box, you would see it as a system you can interact with and find ways of exploring.  So I use that as an analogy for the financial system. Those who are able to see the interconnections actually can have a lot of power in that system and those who cannot are disenfranchised from it.

There is a tendency of to think that people in the financial sector are super expert, that not only do they know about the specifics of what they engage in, but that they have a broad knowledge of the entire sector. Yet is that broader knowledge often absent?

Yes, there is a pervasive perception that financial professionals somehow understand the whole of the financial sector they work in. Actually, that's completely untrue. A lot of financial professionals are highly specialised. They will understand their roles but they don't understand the overall system in a holistic sense.  In one way this is quite heartening for ordinary people to know, because we realise that= financial professionals are also ordinary people and have limits to knowledge. If we assume that even professionals are in a similar position to us, we can use this as a basis to realise we actually have more access than we imagine.

Can you tell me more about the importance of the physical and geographic in terms of how they're related to finance?

The importance of geography to finance is crucial. When you disconnect finance from an idea of geography and history, you forget about people. The financial system is driven by people, and those people live in places and have a history, which is a very, very different concept of a notional abstract system which is supposed to  work according to economic laws. If I was teaching finance, the first thing I'd want to do is point out the physical location of each financial system. Like the City of London. These people in this bar are working on this particular deal and that is the reality of the financial sector... You can use that as a basis for a theory about the financial sector. The reality of the City of London financial system is physical people doing deals. That sounds very obvious but a lot of people don't think about finance like that. They keep on thinking about it in very macro abstract way. I like to bring it back down to a human level. 

It's also important to look at history, because with history you can see how human interaction has changed. If you look at a finance textbook from a hundred years ago, as though it were a historical document, it would describe interactions that were completely different to those now. And you would see that these interactions are a changing art form.

So why is it important to understand what this ecosystem is?

Getting to grips with the is important because it involves every person in society. This ecosystem is not just the financial sector, which includes the professionals who work in it moving money around. It also includes all the people who actually contribute their money to this sector. So, like the study of any ecosystem or ecology, you look at how all the parts interact and are part of the system. The financial ecosystem is exactly like that. It's holistic in a sense, so if you want really understand it you have to see how each individual in society interacts with it.

And why is it important for activists to understand this ecosystem?

Let me go back a step. There are a lot of complex systems in the world. Engineering, for example, is complex. But not understanding engineering doesn't have the same impact on my life as not understanding the economic systems around me.  I'm easy when people say - “I don't understand how this bridge works” - and so on. But when they say - “I have no idea how my money works” - it's a lot more personally disempowering.  So on one level, people and activists need to grapple with finance simply because on a personal level it leads to being less alienated from their surroundings. But secondly this understanding can be used for practical campaign purposes.  We can start to look at how to subvert finance in various ways for social environmental causes. A lot of activists have always shied away from that. A traditional activist will target public opinion, for example, and launch campaigns to influence politicians to vote differently or to get people to stop buying something. But they become very reticent and nervous about talking to a fund manager, say, about a particular issue. So there's a whole world waiting to be explored with these sorts of campaign techniques.

What might an example of that kind of activism be?

Well, imagine I want to run a campaign on a company. Let's think, for example, of BP.  When most people think about BP they think about the CEO, the company logo, the sort of frontage of the entity. But if you look at the real structure of what BP actually is, the frontage is just that - it's one part of a much larger whole. A large part of what BP actually is are all the big investors behind it. BP is basically a conduit via which investors can access oil and then sell it. If we only think about the frontage, we miss out all the other stuff.  So, I guess what a lot of us are trying to do as activists is first of all learn who the investors behind companies are, and then think about how we can target them. There are limits to what you can do but at the moment it is really not used very often as a campaign strategy.  Mostly campaigns are targeted towards the frontage, as it were. This is a bit like targeting the upper mushroom without looking at the underlying larger structure below it.

As well as proposing activism that works on exploring and understanding the financial system, and that targets the investor in order to change the underlying structure of the system, you also spend a lot of time writing about your experiences. Can you give an overview of what your book covers.

The approach to changes I'm sketching out in the book has a few different elements.  I'm advocating for people to explore systems as I think there's a lot of subversive potential in that; it gives you the ability to intuitively feel where you can make changes. Then there's a lot of stuff around how to tinker with an existing system. How do you use financial instruments that currently exist? How do you then jam the system?  How do you take existing financial instruments and try to bend them in different ways?

Finally there's a third section, where I look at what you might call the ultimate of finance, which is basically people building their own versions of the financial sector. It's backed by the DIY ethos and is a realm traditionally associated with entrepreneurs rather than activists. And it can take many different forms. From creating new financial instruments, to experimenting with how money itself actually works, to exploring the psychological way by which people approach the system. 

You also talk about the 'Hacker Ethic'...

The hacker ethic really appeals to me. It blends rebellion and creativity.  If you're trying to change a system, that combination is vital. It's no good having rebellion by itself. You need to be creating something new to replace whatever it is you are fighting.  The hacker ethic is a bit like when you kick down a door and use it to make a table. You use the act of rebellion in a creative way.  One of the problems we have in campaign movements is that there's a lot of really good analysis of what type of problems exist in a system, but not enough experimentation with how to create a new system.  And actually a lot of activists have traditionally been put off by some parts of the business sector, entrepreneurs. The great thing about the hacker ethos is it actually blends that activist impulse with the entrepreneurial impulse. It allows a person to think about themselves as an activist while simultaneously building something as an entrepreneur. 

If you wanted to see this and what this vision might look like with regards to the financial sector, imagine taking the Occupy ethos and blending it with a Silicon Valley-style entrepreneur. What that would give you is an entrepreneur who's driven by a really radical vision as opposed to an entrepreneur who just wants to sell more stuff. A lot of people on the left wing are seeing that this is becoming necessary. We need to find ways to actually become convincing builders of new systems rather than just good critics of old systems.

I think Occupy as a movement was powerful in some ways but ineffective in others. That's pretty well known. It was really good at establishing a symbol of resistance, and even now people still use it as a term to symbolise those who are dissatisfied with the financial sector. At the same time, while the Occupy movement managed to occupy a certain physical space of finance, they never occupied the intellectual space of it, so it didn't really impact the status quo. If you truly want to 'occupy' you have to occupy the intellectual, and also the creative terrain, as it were. You need to take over that system in more than just a physical way.

You use a metaphor from the book “The Life of Pi”. Why?

Life of Pi is an interesting book because these different creatures find themselves in a boat together . The question that's posed is - are those creatures actually separate, or is it just one disjointed creature that is eventually going to eat itself? That's the kind of thing you find in many societies. People see themselves as separate: “I am this thing here and you are that thing there”.  But if you look at it from a holistic, systemic perspective you see the interlocking aspects of a society. As much as Pi wants the tiger to not be there and be a threat to him, the tiger is there. So he has to find a way to interact with the tiger, which is at the core of the story.  For us the financial system is there, we can't push it off the boat.  And actually we don't want to push it off the boat because we rely on each other. 

So if we're trying to think about systemic change, we need to move past the dualism of trying to fight against something.  We need to think about it more subtly, in terms of how we tame the system to be productive and sympathetic.

Can you talk a little about your investigation methods.

First and foremost my primary method of investigation has always been attempting to personally experience something. I think the most powerful form of investigation is always trying to immerse yourself.  When I'm trying to learn about, say, alternative currencies, the first thing I do is I just use them.  What that gives me is a certain kind of personal experience around it which I can then attach intellectual theories to. That's a fairly simple point in a way, but something I think academics don't do it. Academics often spend lot of time thinking about things in from a technical point of view, but don't actually experience them. They therefore have analytical knowledge, but not intuitive knowledge. Similarly if you study a financial course, with someone teaching you, you are learning technical knowledge. But putting on a suit and sitting in a train and reading the Financial Times

• that gives me a sense of what it feels like to be part of that system. I am not necessarily going to understand what I'm doing, but there is something there and a sort of intuitive knowledge I build up.

So one thing I ask people to do is just pick up a Financial Times and read it. They won't understand the words, but will start to see the interconnections after a while. If they spend a few months doing that, they will discover they're suddenly learning this language. It's like learning how to computer code - the best way to learn is not to read a textbook, it's to turn on your computer and start typing code. You'll quickly start to realise how the syntax fits together and what works, and that's a very similar process to learning about economics and the financial system.

If you look at anthropologists, a lot of the work they do is gaining access to systems by being open to the people in those systems. They might see an alternative culture and go and experience it. There's a real activist element to that which breaks an implicit cultural boundary. And in breaking it anthropologists demonstrate that the boundary needn't exist.

For activists, I believe that to to weaken a system you have to diminish the difference between yourself and it.

You make a point about art...

Often I like to think about building alternatives as an artistic project rather than a business project; often what artists are trying to do is create a disruptive vision in a very practical way. They set up real structures, installations, and so on.  So it might be useful, when building an economic structure, to think like an artist, with a disruptive vision. How can I use contracts and legal codes to create this disruptive vision...?

Let's talk about some of the other concepts you discuss in your book, starting with 'circuit bending'...

Circuit bending in hacker culture is a concept where you take a piece of technology and you tinker with it so that it ends up creating some weird sound or does something different to what it was intended to do. You can apply the concept to financial technologies as well, as most financial instruments are effectively technology. Financial circuit bending might be something like shareholder activism. I take the technology of a share to gain access to a company, and then I use it to achieve something an ordinary shareholder wouldn't try to achieve. So for example, I try to influence the company management to do something different. I've used a traditional financial technology in a way it's not technically supposed to be used.

That can apply to other instruments as well.  For example, I can take the structure of a hedge fund and think about how to alter its DNA in such a way that it becomes a subversive tool - an activist hedge fund, that looks just like a hedge fund, but which does something ordinary hedge funds don't do. I talk about having an Amnesty International LLP, a kind of hedge fund which attempts to achieve Amnesty International's aims but via a hedge fund structure.  I call these Drag Queen Hedge Funds as drag queens take on the appearance of a gender code, but have a subversive intent behind it.

Can you talk about some of the ideas you have around creating alternative systems?

One concept I often use is the idea of seed bombing (Seed bombing is a movement where people take 'bombs' of seeds and throw them into public gardens in the hope that some will grow). There's a strong creative intent behind it. When I think about economic systems, what I think would be ideal would be lots of people going out and trying slightly outrageous experiments, throwing seed bombs and seeing which ones actually grow. 

The importance of doing this is that it creates a feedback mechanism. You can see which seeds are succeeding and which ones aren't and how people should change their tack.  It becomes an intuitive evolutionary process that is quite different to imagining a future alternative to build towards. With complex economic systems, you can't really do that. You can at most have a basic idea of where you want to get to and take small steps towards that. Seed bombing is quite an empowering vision therefore, and is also quite fun. If you fail at something, you needn't feel bad. You've learnt something from that process.

How important do you consider physical networks?

An important concept is the network effect. If you think about platforms like Facebook, they only work if there are enough people using them. A problem with alternatives is that, even if they're good ideas, they'll need to get a critical mass of users to take hold, to sort of feed on themselves. 

One cool analogy is to think about how the internet itself has the potential to be a highly empowering network for people and spread power outwards in a decentralised way. But how it also has the power to be co-opted by single bodies. If you think about platforms like Google, there's a lot of tension because of the sense that they have undue power over the entire ecosystem. The financial system is very similar. A lot of the financial intermediaries, like Goldman-Sachs, have a lot of power in the overall network. So the job of a financial activist, much like the job of an open source activist on the internet, is to think about how to disperse the power more equally around the overall system. Creating an open source finance in a sense, where each individual person has more individual power in the system rather than relying on those intermediaries.

So finally, why should people read your book?

I think what  tries to do is give a mental framework through which to explore the financial system. It doesn't tell you what's wrong exactly or give you exact solutions. It instead suggests tools you might use to figure that out. I want somebody to read my book and then feel like they have the ability to explore the economic system themselves. I hope it helps people feel more personally empowered. I also hope it makes the whole economic system seem like more fun and helps people realise that there's a whole lot you can do with it.