Anthropology, Chicago, Economics, Reviews, Sociology

Review: Zaloom, Out of the Pits

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Caitlin Zaloom’s Out of the Pits: Traders and Technology from Chicago to London was recently given an interesting review in the November 1 London Review of Books. Writing for the LRB, Donald Mackenzie begins with a description of his own experiences on the trading floor of the Chicago Board of Trade in 2000—while they were still bustling with traders, runners, and clerks vying for bids:

At the Board of Trade, orders were still carried to the pits on pieces of paper by runners and clerks, and then shouted out by traders or ‘flashed’ to others in the pit using the hand signal language known as ‘arb’—an abbreviation for arbitrage, the exploitation of discrepancies in prices.…

But as Mackenzie’s article notes, at the turn of the millennium the digital age was already poised to radically transform the way that modern traders conduct business.

Chicago’s open-outcry trading, a way of life stretching back to the grain futures pits of the 19th century, was on the brink of disappearing when I visited the Board of Trade in 1999 and 2000. There were already signs that technology was encroaching: headsets were increasingly used instead of runners to communicate between the pits and the booths where customer orders arrived, and a few traders carried hand-held computers. Since 2000, Chicago’s pits have emptied, and those who still stand in them focus less on the people around them than they do on their computers, which are no longer an adjunct to trading but essential to it. Chicago remains central to the world’s financial markets—its recent merger with the Chicago Mercantile Exchange has made the Board of Trade part of the world’s largest exchange—but as the hub of electronic networks, not as a set of huge rooms crowded with bodies.

Despite the role it has played in shaping today’s world, there are few observational studies of financial trading to compliment the thousands of econometric studies of price fluctuations. Zaloom’s superb book is a double-site ethnography. She first worked as a runner on the Chicago Board of Trade, like any good anthropologist learning the local language — she’s proficient in ‘arb.’ Then she moved to London, where open out-cry trading has now vanished, … and where she was trained in and then practiced the very different skills of an electronic trader.

A first-hand account of the changing face of the contemporary marketplace, Out of the Pits delivers an unprecedented exploration of how the digital age has transformed economic cultures and the craft of speculation.
Read an excerpt.