LES PÊCHEURS D’HOUAT (1983), 2012 reprint

My first book, Les pêcheurs d’Houat, adapted from my anthropology Ph.D. thesis, had been out of print for many many years. Éditions du croquant have been kind enough to offer a reprint. Monique Woodward has translated here my foreword for the 2012 edition.

I have lived on the Isle of Houat from February 1973 to May 1974. I have returned several times in the following years, the last time in 1978. The time after that was in 2010. Water had flowed under the bridges. A lot of seawater had flowed with the rhythm of the tides between Valuec and Le Grand Coin.

I thought often of Houat. I said to myself: “When I next see Jean-Michel, I must tell him this” or “Hey, I must ask Raphael!”  In August 2011, when Brigitte Chevet was making a short film for FR3 about an anthropologist, who returns to the Isle of Houat forty years later, I spent a lot of time in the small cemetery about which Jean-Michel had said in these exact words: “We can squeeze up a bit for you, if necessary”. I said to him and to Raphael what I wanted to say to them. Yes, I know, it does not serve any purpose to talk to the Dead.

There are also the Living. I could place at last, thirty-eight years later, a kiss on the cheek of a young girl with whom I was very much in love. She was beautiful as can be, but she was only fifteen years old. When we next saw each other, I confided in Jo my secret love in the 70’s. Jo could not help but give the confidence way: “You guessed then?” he asked the lady. “Well, yes” she replied: “He sent me some postcards, which were photos of me”.  Damn, I who imagine myself having been very discreet by holding back.

Houat has changed a lot. I would not upset anyone by saying that the isle in 1973 was not very wealthy. No neat gardens like now in front of the period houses: instead, you will find a yard, a work area where they repaired the nets, where above all they made the pots – the traps – for crabs, lobsters, prawns using laths of pine, hazel stems and cotton net. The prawn pots, once made, were dipped in boiling tar, and the whole isle was then scented by it. Nowadays, all that is made in plastic.

More than half of the houses now in Houat belong to tourists. In my day, with one exception, tourists’ houses were not in the village: they had them built overlooking the main beach, or in the hollows of the well-sheltered coves. Today the tourists live in the village. They are pleasant without question, but that means there are practically empty dwellings all year round, fetching “tourist prices” when they are up for sale. So much better for the people of Houat who can sell theirs at that price. Pity the young couples who cannot afford a “house in a picturesque fishing village only 15 km from Auberon”. A home, one of these things we would have to extract from the claws of speculation.

In 1973, the Isle of Houat was a fishery. Jo from the Hotel and I, the two of us cooked 22 tons of prawns that winter. We took to sea at 1h in the morning, came back about 14h and, when the tourists passed us in the streets of the village at the end of the afternoon, they said to themselves: “They don’t work much those chaps!”  One day, at Vas Pell, with a force 9 gale or something like it, between two white-horses which covered the bridge from one side to the other each time, and which tossed us between the reefs on our nut shell, Jean-Michel managed to shout to me: “A tourist who I took in the month of August said to me: “Ah! What a fine job you do!” The sea, outside the month of August, is a hell of a cow. Very few fishing accidents are not fatal, as in the mines, as in the army.

Fishing has changed as well: species on which we counted have gone north due to the sea getting warmer. The price of the catch has become “objective” meaning: “Only the point of view of the buyer matters”.  “To defend one’s fishing” is no longer possible, as we used to.  One does not stop progress. One does not stop the return in force of the law of the jungle, one has to say.

A red flare goes up and lights up in the sky in the distance. A boat in trouble! Who’s coming? “Me, me!” says a young man from the town. I will always remember those three or four faces of true seamen, who turned towards me, those stares fixing me, weighing me up, evaluating me, leaning their heads a little, one eye closed. And after that, which seemed to me a very long silence:  “Go on! That’s good. Let’s go!” Thank you people of Houat, you have given me the most beautiful present one can give: you have help to develop this 25 year-old young man, whom you fondly called: “Philosopher”.

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And then Paul Jorion created a Theory of Prices

Original Post : And then Paul Jorion created a Theory of Prices.

Translated by Lorna MiskellySee the original article in French
Article also translated in: 

It’s the ‘rentrée littéraire’ in France. Among the 700 books that will be released between now and the end of October -500 of which are written in French- there is one that has grabbed us. “Le Prix” (The Price) written by the economist and blogger Paul Jorion. After having published a essay in 2009 about the invention of truth and reality, he has now formulated his “theory of prices” in this latest opus. Jorion, surprised by the way that prices are determined in the artisinal fishing industry in Brittany and in Africa wanted to get down to the bottom of this problem. Is price established (as we are told) according to the point where supply and demand meet? Or rather a system bringing truth and price together?

My latest book, Le prix (The Price, Éditions du Croquant) has just been released. As was the case for Comment la vérité et la réalité furent inventées (How Truth and Reality Were Invented, Gallimard 2009), this is a book that I have worked on for quite some time. It consists of my observations on price determination over a period of thirty-six years in the Breton fish markets, the makeshift markets on the beaches of Africa and the trading rooms of European and American banks.

It is really an anthropologist’s book. I’m used to saying “I am not an economist”. Now, I have gone beyond this negative perception and I have advanced onto economists’ territory and said to them;“You need a theory of prices: here it is!”

Exactly one year ago, at a conference in Arc et Senans, a rather irritated economist stormed up to the blackboard, drew two curves that crossed and turned back towards the room, saying: “Price determination is really very simple; it is the point where supply and demand meet!”

It is so simple that that is not how it works. I wanted to ask him: “Are you absolutely sure? Have you ever confirmed that with the figures?” I didn’t do so for two reasons.

The first reason was due to the fact that he was the type of economist that would have quite simply taken me for a madman. The second reason was that I already knew the answer; I had tried to verify the above supposition with the figures and the verdict was also very simple, it didn’t work.

To get you salivating, I have included the introduction of The Price below:

Truth and Price
I wrote a book about How Truth and Reality Were Invented (Comment la vérité et la réalité furent inventées, Gallimard 2009). This book falls under the realm of epistemology, or the philosophy of science. The book you are holding comes from a politico-economic or anthropological economics perspective. However, the two books are linked due to the fact that I used the same methods for both of them.

What allowed me to do this is the two phenomena -that of truth and price- exhibit an identical structure; the only difference between the two of them is that truth is expressed with words and price with numbers. If we speak about truth, we are talking about the very fact that something functions like a price and if we speak about price, we are talking about the very fact that something functions as the truth. It could be said that price is the truth of human things expressed in numbers and price that of humans things expressed in words.

…/…

A price necessarily involves two people, a buyer and a seller. The truth also calls for two people, the interlocutors, Austin, the philosopher of language wrote one day: “ It takes two to make a truth” (Austin 1970 [1950]:124). In the constitution of truth words are exchanged. If an agreement had been reached about the same sentence, so that each party could separately say “I believe it” and the parties together “we know it” then they would have formed someshared knowledge; and in doing so they would have forged a connection which now means that there is a bit of one person in the other person and vice versa. They could meet several years later without having seen one another since then and would be surprised to realise that in parallel their thoughts had followed the same path over that period, as if they had been continuing to create the truth together. This is what physicists call the principle of non–separability with regards to elementary particles. In the constitution of price, numbers are exchanged and if an agreement is reached on the same number then money is given in exchange for a commodity (material or immaterial), the person who possessed the commodity ends up with money whilst the other person who possessed the money ends up with the commodity. The exchange created a connection between the two parties that decided upon a price and they would be more than willing to do it again.

The system of truth in our culture is called Science while the system of price in our culture is called Economics.
Our modern societies are entirely under the control of the dual action of these two systems. There are very few things in our societies that cannot easily be explained by Science or Economics or by the two in conjunction. The scholar who produces science has replaced what was once the place of the Wise One, the business man who produces prices has replaced the Warrior; as for the place of the Saint, there are not a lot of takers…

Thank you Jan Bruegel for having painted this splendid fish market which gives for a no less splendid book cover. Thank you Alain Oriot for having produced a very beautiful book which you can find here.

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How wars get started

When in 1975 I became a student at Cambridge University my parents visited me there. It was actually their first stay in England. My mother was enchanted with the country. I wanted to know why and she explained that houses were “normal”, people behaved “normally”, everything in England was so essentially “normal”. I pressed her gently about the source of such “normalcy”: “Well”, she said, “houses look like Dutch houses; people respond to you like they would in Holland; you know…”

Adriana’s father is Romanian and he shares with my mother the same sound sense of normalcy based on the national spirit: in his mind being Romanian is not only the ideal but also plainly the “normal” way to be. My mother passed away five years ago, I could still envision a passionate debate between her and Adriana’s father about the very nature of “normalcy” and I immediately got a sense of how wars get started.

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Stock prices and the shape of randomness

I remember an illustration in an article by Heinz von Foerster in the 1960s. In the first picture, a set of tiny cubes were represented, piled up in a random manner. The reader was told that these were steel cubes magnetized on one of their sides. The second picture showed what had happened after the cubes were put in a container that was then thoroughly shaken for a while: the cubes had aligned to create a complex structure with perpendicular ridges shooting out and closing up. There was still some randomness in the arrangement but it was so delicate and apparently purposeful that it was difficult admitting there had been no design of its final appearance. It looked like the structure had, so to say, emerged through the action of an “invisible hand.”

A termites’ mound is a complex structure that can be up to 18 feet tall. Within the shell is a maze of galleries and several “cathedral” type chambers. Building such a structure would – or so it seems – require sophisticated planning. This is however not the case. Worker termites that built the structure were following a very simple pattern: they would discharge the mud pellet they were carrying wherever a heap would already be present (the initial dropping down would take place on pre-existent irregularities). Columns would thus emerge little by little. The lack of precision in letting go the mud pellet would mean that, having reached some height, a column would begin to slant until it is bending so widely that it touches a neighboring column and an arch is therefore created. A “cathedral” chamber would result from multiple similar arches. In retrospect it would very much look like an “invisible hand’ had guided the insects. Nothing of the kind had actually happened: the chambers resulted simply from random variation in building the individual columns.

In both cases, whether the magnetized cubes or the termites’ mound, the end product’s structure has not resulted from goal-oriented organization but from what we call “self-organization,” meaning by that that the structure obtained is nothing more than the “shape” that randomness has taken due to the constraints proper to the building blocks (e.g. the cubes) or to the builders (e.g. the termite workers) in their interactions.

I’ve mentioned the “invisible hand” intentionally as the phrase is apt for describing “self-organization” by contrast with goal-oriented organization. The “invisible hand” was of course mentioned in 1776 by Adam Smith in his “Inquiry into the Nature and Causes of the Wealth of Nations.” In a recent paper of mine (*) I drew the attention on the resemblance between actual price curves, such as for stocks, and the curve obtained through generating a “price” curve through flipping a coin. Here again, the semblance of “organization” amounts essentially to “the “shape” that randomness has taken due to the constraints proper to the building blocks” e.g. that the process is generated by the encounter of two “populations”, one of buyers and one of sellers.

In price formation, such as with the price of a stock, organization is minimal: prices essentially oscillate although not always in a totally foolproof manner as the price may occasionally crash. Back in 1990 when a trader of futures, I had noticed the similarity between price formation and the oscillations in population in a simple predator / prey system. I had built accordingly an automated trading system based on the Lotka-Volterra equations. The similarity between the way a price on the stock market and a two-population predator / prey system evolves undermines the view that the markets are structured because of some of our virtues such as our industry, astuteness, etc. as the same degree of organization can thus be observed in absolutely unfettered natural processes.

In a correspondence, Didier Sornette, the author of Why Stock Markets Crash: Critical Events in Complex Financial Systems, Princeton University Press (2004) called my attention to the fact that when a larger number of species is involved, stability in population can obtain: “One point to make it stronger: in ecology (predator-prey), we find cycles ONLY where there are just one or very few species of predators and preys (a famous example is the Lynx-Caribou system in the North of the Northern American continent). In all other balanced ecological systems, there are several predator species and many prey species and this gives rise to much more smooth dynamics.” And he added: “It is interesting to think that the business cycles and financial cycles could be indeed the result of a poverty of diversity.”

A surprising conclusion I reached when observing the behavior of a multi-agent simulation I made of the stock market (*) was that when the agents (who could alternatively be buyers or sellers) were developing trading strategies in any amount, this would raise the likelihood of a crash. That outcome was actually logical as attaining a perfectly counterbalancing effect between trend-following strategies (positive feedback) and contrarian strategies (negative feedback) was more difficult to obtain than allowing the empirical “law of averages” to operate when the decision to buy or to sell was as if with the toss of a coin. I determined that it is in fact beyond the ability of any buyer or seller to predict correctly whether the market price is about to go up or down. The probability for him or her to be right about the next price move being up or down never departs therefore significantly from 50%, and this ensures that the stock market experiences some degree of stability.

An emergent structure may arise from the spontaneous interaction of multiple agents. We may call that structure “self-organizing.” That “self-organization” is often nothing more than the “shape” randomness takes when a large number of interacting elements are present, i.e. a purely “statistical” outcome – however “organized” the end-product may look like (von Foerster’s magnetized cubes; a termites’ mound). This applies as well to the markets where the action of the “invisible hand” in price formation is no more remarkable than when seen at work in the way termites build their mound.

(*) Adam Smith’s “Invisible Hand” Revisited, Proceedings of the 1st World Conference on Simulation of Social Systems, Kyoto, August 2006, Vol. I, Springer Verlag: 247-254

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Old-style publishing a paper

Now when you want to publish an article, you write it, you put it on your website and within days hundreds if not thousands of people have read it. Sometimes someone will approach you and ask if they can publish it in the old-fashioned way, in a journal, and you’ll say “Why not?” In the old days, you would write your paper, send it to a journal, wait for six months, then at long last you would receive a letter telling you about hundreds of changes readers who have no clue about what you are writing about expect you to make, and finally, another six months later your article would be published and you could expect that dozens or people would read it over a considerable number of years.

This story is about the old days of the printed article.

In the 1980s I worked for the Food and Agricultural Organization of the United Nations. I wrote three lengthy reports for the FAO. They published two (*) and turned down one. The story is about the turned down one.

I worked on a fisheries project in Bénin, formerly known as Dahomey, in West Africa. Someone had done a preliminary investigation. He had gone to the beach in remote coastal villages and seen men sitting there. He had asked the first man why he was not fishing and that man had replied that he was not fishing because he was ill. He had gone to the second man, who had told him the same story: that he was ill. Then to the third, and so on. So he wrote in his preliminary report that the beach was littered with slackers and that it would be a smart idea indeed to teach them how to fish. Hence my presence.

When I went to these villages the first thing I did was what I had learned at school: I wrote a questionnaire to be presented to every hut about who was living there, what were the ages and occupations. I had “statisticians” go to beach villages and submit the questionnaire. Once the data collected I started analyzing them. I built what is called “age pyramids”: you put each individual in an age bucket, men on one side and women on the other of a vertical axis. It’s called a pyramid because as you put the kids at the bottom – and there are many – and the old people at the top – and there are very few – it looks very much like a pyramid. But then I was in for a surprise: the women’s side looked like a pyramid all right but the men’s side was hollow: there were no men between the ages of 20 and 40, or I should say, apart from the dozen sitting on the beach.

So I went to the women instead and asked “Where are the boys?” And they replied: “Oh! They’re in Gabon, in Liberia, in the Congo!” “All right, and what are they doing there?” said I. “Well, they’re fishing” said they. – “And why aren’t they fishing here?” – “Because there’s no fish!”

So I said to my bosses in Rome “I need to go see these guys where they really are.” First they sent me to the Congo. On my second day in Pointe-Noire a fisherman approached me: “There’s a woman who wishes to speak to you.” I said fine and she came to see me and she said with much modesty “I think you knew my brother.” And I asked who he was and she gave me his name and I replied “Oh yes, I knew who he was: he drowned, he died in our project in Bénin and I was really mad when that happened.” She added “I know that and that’s why I wanted to see you.” We were several thousands miles away from where the accident had taken place and she had made my day in many more than one way: if anyone would have asked me now “Do you still believe these people migrate?” I knew exactly what to tell.

I went to Liberia, Sierra Leone, Ghana and Togo in addition to Bénin. I wrote up my report about fishermen’s migrations in West Africa but the FAO wouldn’t publish it. I said “But you’ve published the other two about the social organization of fishing villages and self-subsistence in fishing communities, why not this one?” – “Because it’s controversial” was the answer. I said “Fine, can I use it the way I see fit?” They said yes, so I had it published in a maritime anthropology journal (**).

But this is not the end of my story. A few years ago I came across a page-length recommended reading list that the fisheries division of the FAO had put together. My two FAO publications were not part of that list but – yes, of course you’ve guessed it – the turned down report was gloriously there!

(*) The Influence of Socio-Economic and Cultural Structures on Small-Scale Coastal Fisheries Development in Bénin, IDAF/WP4, F.A.O., 1985: 42 pp.
Non-Monetary Distribution of Fish as Food in Béninois Small-Scale Fishing Villages and its Importance for Self-Consumption, PMB/WP4, F.A.O., 1985: 26 pp.

(**) “Going out or staying home: Seasonal movements and migration strategies among Xwla and Anlo-Ewe fishermen”. Maritime Anthropological Studies, 1, 2, 1988: 129-155.

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The un-American solution to the subprime mess

Among the remedies mentioned for the subprime crisis, I haven’t seen listed the system I went through when getting a mortgage in England back in those days. Here is how it worked: the first step would be for you to open an account with a building society; then you would start saving, sending a check whenever you could in whatever amount; one month at a time your account would then accrue interest. Until one day, when the fateful 20% threshold was reached you would receive in the mail a letter saying: “Rejoice: the time has come, and we’re going to lend you the money you need to purchase the house of your dreams!”

This process could take a number of (gasp!) years! Shall I pronounce the P word? Yes: it required patience. But there was something more, something else that made it so… un-American.

You don’t see many comments at the bottom of my blogs but this is for one reason, it is because I carefully weed out most of the candidates. It always looks like this “Hi Paul! Cool site!” followed by a link reflecting one of the people’s most essential preoccupations. Here’s a list of them in ascending order: car dealerships, porn, rock concerts, recipes for weight loss and, outranking them all and by much, state lotteries.

Lotteries! And here lies the answer. At the end of the day, in the humdrum English system, you wouldn’t have made one more red penny than you knew already when you had opened, three years earlier, five years earlier, your building society account. The reason this doesn’t seem a fair proposition to the American mind is that the image of an ideal commercial transaction is based on that of the state lottery. If a deal doesn’t possess that special ingredient that can accidentally make you one day a multi-billionaire, just forget it!

It’s as simple as that!

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