LIBOR, MacKenzie and political economy

July 17, 2012

In Monday morning’s edition of the Toronto Star, the most leftwing daily in Canada, Heather Mallick explained LIBOR to her readers. Everything else is inconsequential: the manipulation of LIBOR swamps it all.

It’s not an easy argument to make. Antipoverty activist and trade unionists don’t get it.

““Libor, Libor,” is what I’d like to say to them. But they’d just look at me blankly.”

Mallick had never paid attention to LIBOR until the recent scandal, and then spent hours trying to understand the issues and their implications. She found Donald MacKenzie’s 2008 FT article, and she recognized that the rate setting process he described was not merely dangerous, it was destructive.

“But you don’t care about the Libor scandal because high-finance seems distant and arcane. It’s not. It’s you. Money rules your life, as your resentful emails show, but it’s not the money you’re thinking of… Keep an eye on the Libor scandal and prepare to be very angry indeed.”

Whether it is options pricing or LIBOR setting, the human and social dimensions of financial processes are obscured behind a nearly impenetrable curtain of statistics. Yesterday, in the pages of an ordinary daily newspaper, MacKenzie’s description of LIBOR allowed Mallick’s readers to see behind the curtain. When we describe its social dimensions, we bring finance into civil discourse, no longer outside the realm of political economy.

Where have you seen SSF enter political discourse?

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