February 12, 2009
Transparency, transparency, transparency: Obama wants it in government (he says), mortgage back securities didn’t seems to have enough of it, and many are yet to be convinced that the various bailouts will deliver it. As one recent sociological text on the subject puts it (in what, in light of the current context, now reads as something of an understatement), transparency is: ‘a concept that has gained increasing currency and favour as an organising principle and administrative goal’  (you can also download a version of Fabian Muniesa, Emiliano Grossman and Emilio Luque’s excellent paper on the topic from the same book here).
In relation to my own research into consumer credit, the attempts to perform transparency (as with many other financial products) have to somehow manage and contain the inherent uncertainty and opacity of the unknowable future. In other words, consumer credit has to contain mechanisms that in some way render the future a little less opaque, even if achieving complete transparency is, by definition, impossible.
In the UK, part of this task has been recently undertaken by an ongoing review of the regulatory framework in relation to which consumer credit sits, principally oriented around an updating of the Consumer Credit Act (first drafted in 1974). This review has a stated aim of achieving a ‘fair, clear and competitive’ consumer credit industry; in other words, transparency (clarity) sits in relation to two perhaps conflicting requirements: ethical (fairness) and market openness (competition). Part of my research examines how these categories are performed in and through the operations of consumer credit in the UK. Just to give an idea of how achieving these aims are attempted, requirements on regularity of credit statements have recently been strengthened and, within those statements themselves, there are precise requirements for the ways in which the balance, interest payments, and default charges are displayed (this includes a requirement to provide a clear ‘Summary Box’ detailing the particular product’s key features, both pre- and post-contract – a similar scheme operates in the US, I understand).
I’m not going to focus here in detail on the role such ‘market devices’ play in relation to contemporary consumer credit. Instead, I want to sit these attempts to devise a contemporary regulatory framework in something of a long historical context. For, it was in a period when I was actively considering some of the issues that I have sketched above, that I visited Salisbury Cathedral in the UK and encountered one of their venerable ancestors: the Magna Carta, the document that is widely held to provide many of the founding principles for British jurisprudence, written in 1215. This is what (in translated form), it states in the ninth of sixty-three points:
‘9. Neither we [the King] nor our officials [in some versions ‘bailiffs’] will seize any land or rent in payment of a debt, so long as the debtor has movable goods sufficient to discharge the debt. A debtor’s sureties [guarantees] shall not be distrained upon [seized] so long as the debtor himself can discharge the debt. If, for lack of means, the debtor is unable to discharge his debt, his sureties shall be answerable for it. If they so desire, they may have the debtor’s lands and rents until they have received satisfaction for the debt that they have paid for him unless the debtor can show that he has settled his obligations to them.’
It then continues, in points ten and eleven, to lay out further attempts at establishing what are clearly intended to be the ‘reasonable’ responsibilities that should be held by others (in particular heirs and wives) towards the repayment of any debts owed to moneylenders should a debtor die. The Magna Carta is then, not only the first (well, to my knowledge – perhaps a legal scholar will correct me if not) attempt at a credit act, but also the first attempt at achieving ‘fairness’ and ‘clarity’ in relation to borrowed sums and to bring some measure of ‘transparency’ towards a financial instrument that depends on an inevitably opaque future. Unsurprisingly, the desire to couple these two aims with achieving market ‘competitiveness’ is absent – although, that being said, the document as a whole was produced in a context where a group of barons were attempting to circumscribe King John’s (seemingly unfettered) power, deemed to be a threat to the pursuit of their livelihood. So perhaps a proto-market imperative is there after all.
Apart from wanting to simply draw attention to this, to my eyes anyway, compelling historical artefact, one perhaps quite simple point here (and this relates to previous posts here and here), is the historical persistence of controversy around forms of borrowing, as well as the need for material devices that attempt to contain these controversies. Forms of lending, in their need to stretch an economic transaction across time, and in their ability for debts be transferred from one party to another, tie together actors often wholly disconnected from the original moment of exchange: in this example, there are not only borrowers and lenders, but also potentially bailiffs, wives, heirs, barons, Kings, and their various assets. The Magna Carta is an attempt to ‘frame’ or stabilise the potentially unpredictable and variable interactions that could occur between these parties. Performing transparency in relation to financial instruments is thus not solely a contemporary phenomenon, but as old the legal system itself.
But more than that, it is often too easy to forget the material labour that goes into establishing these ‘transparency enacting’ framing devices: in that respect, the Magna Carta serves as a good reminder. Painstakingly etched, in tiny script, into durable vellum, the Magna Carta is a device that was written so as to both endure and to be (to again recall a Latourian concept) an ‘immutable mobile’, to travel both across time and space, without losing its agential potential, its ability to ‘act’ and be mobilised when, and where needed. Achieving transparency through the regulation of contemporary financial instruments may well be dependent on a far greater range of material processes, however this greater complexity should only increase our attention to the way they combine with people and other material processes across a varied range of highly situated social settings.
 Garsten, C., de Montoya, L. (Eds.) (2008), Transparency In A New Global Order: Unveiling Organizational Visions, Cheltenham, UK: Edward Elgar, p. 1.