A cultural political economy of crisis recovery: (trans-)national imaginaries of ‘BRIC’ and subaltern groups in China

Abstract

This paper explores crisis recovery from a cultural political economy (CPE) perspective. It examines the role of (trans-)national forces in constructing BRIC (Brazil, Russia, India, China) as drivers for recovery. First, it comments on some ‘cultural economy’ studies and indicates the value of a CPE approach. Second, it examines the ‘BRIC’ as a symbolic condensation of ‘hope’ knowledge and shows how this signifier evolved in three overlapping moments referring to its role as investor, consumer and lender. Third, it considers the material basis of the appeal of BRIC discourses, especially the credibility acquired through BRIC stimulus packages in the global financial crisis. Fourth, it indicates how China's ‘gold standard’ stimulus package has intensified some deep-rooted political tensions and harmed subaltern groups. Finally, it reflects on how CPE can contribute to studies of crisis and recovery.     

Introduction: The dynamics of ideas

Abstract

Participants in today's financial markets confront a sea of data. While the availability of market data has benefits it also creates problems, notably those relating to questions of meaning, judgement and intervention: how to make sense of these flows – how to see the ‘market’, its futures, and thus act pre-emptively. Over more recent years financial organizations have been turning to new technologies of representation, in particular the design and application of visualization software in an effort to enable better visual imagination of and interaction with markets as they unfold in real time. ‘What you see is what you risk’ in many respects captures the thinking or at least the desire underlying the employment of the latest visualization software. The more powerful one's vision the better able one is to participate in increasingly complex financial markets, at least in theory.

Based on recent interviews with those involved in developing and using the latest visualization software within some of the key markets of global finance, and developing the influential work of Daniel Beunza and David Stark, and Karin Knorr Cetina, in particular, this paper adopts a cultural-economy-of-finance perspective to examine the implications of these new techniques of representation. The paper argues that the latest visual turn within finance should be afforded a more central position in the study of contemporary financial market practices.     

Governing the future: the European Central Bank’s expectation management during the Great Moderation

Abstract

The experience of the global financial crisis has sparked renewed interest in the role of futurity in the capitalist economy in general and in the formation and coordination of expectations under uncertainty in particular. Economic sociologists have carefully studied the ‘defuturizing’ technologies devised by private actors, but have tended to neglect the increasingly pivotal part played by central banks. Political economists have had more to say on central banks, but have focused on institutional issues rather than on the concrete practices of central banking. Making an original contribution to both literatures, this paper traces the construction and subsequent evolution, up to 2007, of the European Central Bank’s communicative apparatus. Drawing on official documents and on interviews with both ECB staff and market participants, the paper shows how this apparatus created the conditions for the formation and coordination of private sector expectations. The insights from this empirical analysis into the performative dimensions of ‘credibility’ and ‘knowledge’ in monetary governance contribute directly to ongoing debates about the recent extension of the ECB’s communicative apparatus through forward guidance and quantitative easing.     

Introduction to Neumann: law and socialist political theory

Abstract

Regulators attempt to understand financial markets and their risks in terms of categories of knowledge and datasets that are defined and produced by the markets. However, regulators cannot adequately interpret or utilize such knowledge, for reasons including their social distance from the sites of knowledge production, the diversity of financial firms’ proprietary risk models, firms’ abilities to game the rules thus rendering the ‘metrics’ meaningless and several backfiring aspects of global regulatory networking and reform. Calls for yet more information about trading, posed in terms of the merits of transparency, result in information swamping of regulators. Meanwhile, while policy-makers tinker with regulatory structures (‘architecture’), political reaction to the crisis de-legitimizes public regulation as a project. Yet there is one positive aspect of the reforms – enhancing powers for ‘resolution’ of financial firms in ways that impact upon investors while minimizing wider destabilization – upon which the regulatory information requirement can and should be refocused. To protect the public interest, legal transparency is required, trading transparency is not. This paper introduces these issues by drawing on critical work on transparency and markets.     

The material production of virtuality: innovation,cultural geography and facticity in derivatives markets

Abstract

In the existing literature, the ‘virtual’ nature of financial derivatives is often commented upon, but how these products are brought into being has seldom been examined in any depth. This article analyses the development since 1970 of organized financial-derivatives trading in the US and UK (in particular, of derivatives exchanges and of the British financial spread-betting industry), with the goal of examining the ‘material production of virtuality’. The article explores the similarities and differences between technological innovation and innovation in derivatives; discusses the role of the ‘internal’ cultures of financial markets and of the wider culture (in particular, the legal traces of hostility to gambling); and analyses the requirement of ‘facticity’ for the measure underlying a cash-settled derivative, focusing in particular on the most important such measure, British Bankers’ Association LIBOR (London interbank offered rate).     

The theory of value and the value of theory — a reply to Cutler et al.

Abstract

Serving as a pledge against a future promise, collateral has traditionally been understood as a ‘back office’ technicality that reduces the risk of default. Yet in the wake of the 2008 financial crisis and the erosion of faith among market participants in the credit quality of large banks, collateral is playing an increasingly important epistemic role within finance, as an anchor that underpins the valuation of a growing number of financial instruments. This paper explores the increasing importance of collateral to the modelling practices used by ‘quants’ to value ‘over-the-counter’ interest rate derivatives since the 2008 financial crisis, and how the inclusion of collateral expertise into quants’ own modelling practices has affected these markets. This historical episode suggests that while the inclusion of collateral expertise into banks’ front office modelling practices has made banks’ pricing models less abstract and more aligned to the traditionally overlooked legal practices that underpin derivatives trading, it has also led to an explosion of complexity in the valuation of these instruments that now threatens the future existence of these markets.     

Governing Under Pressure: German Policy Making During the Coronavirus Crisis

The global threat of the coronavirus pandemic has forced policy makers to react quickly with totally new policy-making approaches under conditions of uncertainty. This article focuses on such crisis-driven policy learning, examining how the experiences of China and South Korea as early responder states influenced the subsequent coronavirus crisis management in Germany. The first reaction of the German core executive was the quick concentration of decision-making power at the top of the political hierarchy. Asserting the prerogatives of the executive included the radical simplification of the relationship between politics, law and science. State actors took emergency measures by recourse to a single piece of legislation—the ‘infection protection law’ (Infektionsschutzgesetz)—overriding other elements of the legal order. They also limited the government’s use of scientific expertise to a small number of advisors, thereby cutting short debates about the appropriateness or otherwise of the government’s crisis measures. Finally, German actors failed to understand that some of the earlier Chinese and Korean responses required a precondition—namely public willingness to sacrifice privacy for public health—that is absent in the German case.     

The governmentalization of living: calculating global health

Abstract

The contemporary global health agenda has shifted emphasis from mapping disease patterns to calculating disease burden in efforts to gauge ‘the state of world health’. In this paper, we account for this shift by showing how a novel epidemiological style of thought emerged in the closing decades of the twentieth century. As is well known, the compilation and tabulation of vital statistics – death-rates, birth-rates, morbidity rates – contributed to the birth of the ‘population’ in the eighteenth and nineteenth centuries. The population is reformatted from the middle of the twentieth century by ‘modified life tables’ made up of disability weightings, health state valuations, quality of life scores, disease burden estimates, etc. The problem of morbid death gives way to that of morbid living, made calculable through a metrics of ‘severity’, ‘disability’ and ‘impairment’. A series of new indices and scales (e.g. the QALY and DALY) has contributed to a governmentalization of living, in the course of which the social and personal consequences of living with disease come to be an object of political concern, and made knowable, calculable and thereby amenable to various strategies of intervention. We conclude by showing how this style of epidemiological thought has generated a new global visibility for brain disorders as their impact on individuals, health care systems and nations are calculated in novel ways.     

Risk illusion and organized irresponsibility in contemporary finance: rethinking class and risk society

Abstract

This paper analyzes the lead-up to and aftermath of the 2008 financial crisis to show how processes associated with risk society – the social production and distribution of systemic financial risk in a context of organized irresponsibility – are contributing to the intensification of contemporary class-based inequalities. Utilizing a framework based in Bourdieusian class resources, the analysis moves beyond Beck's rejection of the relevance of class relations to systemic risk, and his critics’ denial that risk transforms existing logics of distribution, to identify key shifts in the relation between contemporary financial risk, power and inequality. The conclusions of this study, showing how systemic financial risk in contexts of organized irresponsibility contributes to differential ‘risk-classes’, suggest that risk is a key source of contemporary inequality and that reconstructing the theory of risk society can illuminate these changes.     

Seeking ontological security through the rise of China: New Zealand as a small trading nation

Maintaining global peace as China rises is a key strategic goal of Western liberal democracies. Compared to other western liberal democracies, New Zealand's response to the ‘rise of China’ is notable for its absence of security and political frictions and for the achievement of a series of diplomatic ‘firsts’. Can this be explained only by material concern over the national economic interest as China's role in the global economy increases or do ideational factors also underlay how New Zealand engages China? This paper employs the ontological security framework to demonstrate how New Zealand identity as a ‘small trading nation’ and ‘good international citizen’ has shaped its turn to Asia and response to the ‘rise of China'. It first analyses the origins of New Zealand's outward facing identity and resultant foreign policy positions long before China became an important aspect of New Zealand trade policy. It then shows how New Zealand seeks ontological security as a ‘small trading nation’ and ‘good international citizen’ in its relations with China and how China has responded to this type of engagement. The paper illustrates the importance of ideational factors in Western liberal democracies’ responses to the ‘rise of China’.     

Rethinking calculation: the popularization of financial trading outside the global centres of finance

Abstract

The paper looks at the popularization of financial trading in Israel. It presents a qualitative analysis of the calculative models and techniques that are promoted by financial trading schools, service firms and books. Broadly, the popularization of trading in this field involves a focus on ‘technical analysis’ (TA) and relies upon a socio-psychological reading of financial charts. Incorporating explicitly non-economic ideas into traders’ calculative logic – including an emic notion of ‘performativity’ – popular TA constitutes an attempt to ‘reverse’ the making of markets: to calculatively trace price formations back to the minds, hearts and arrangement from which they had allegedly sprung as a means of foreseeing their future shape before it fully materializes. Tying the psyche and the market in a calculative loop, popular TA transcends existing social theories of financial calculation. The paper discusses this challenge and its implications for our understanding of the expansion of finance.     

Will we work in twenty-first century capitalism? A critique of the fourth industrial revolution literature

Abstract

The fourth industrial revolution has become a prominent concept and imminent technological change a major issue. Facets are everyone’s concern but currently no one’s ultimate responsibility (perhaps a little like financial stability before the global financial crisis). In this paper, we argue that the future is being shaped now by the way the fourth industrial revolution is being positioned. Whilst no one has set out to argue for or defend technological determinism, anxiety combined with passivity and complacency are being produced in the context of a quasi-determinism. The contingent quantification of the future with regard to the potential for job displacement provides an influential source of authority for this position. A background narrative of ‘the future is coming, so you better get used to it’ is being disseminated. This favours a capitalism that may ‘deny work to the many’ perspective rather than a more fundamental rethink that encompasses change that may liberate the many from work. This, in turn, positions workers and responsibility for future employment, reducing the urgency of calls for wider societal preparation. Public understanding and policy are thus affected and along with them the future of work.     

Beyond ‘kawaii’ pop culture: Japan’s normative soft power as global trouble-shooter

Abstract

Many studies of Japan’s soft power are premised on the ‘affective’ dimensions of its kawaii pop culture that generate liking or interest. While entirely warranted, emphasising cultural attraction does not do sufficient justice to the multi-faceted foundations of Japanese soft power. Neither does it recognise other components of Joseph Nye’s soft power framework stressing the ‘normative’ appeal of policies that reflect global norms. This article investigates the ‘normative’ dimensions of Japan’s soft power on climate change, and whether it translates into international influence, as Nye predicted. The first section examines the Cabinet’s 2010 New Growth Strategy, identifying a potential source of ‘normative’ soft power in its self-proclaimed desire to reinvent Japan as a ‘trouble-shooting nation on global issues’, specifically environmental challenges. Next, it analyses how Japanese entities (government, corporations, and NGOs) can transmit ‘normative’ soft power, and obstacles encountered. These transmission mechanisms include ‘Cool Earth Partnership’ programmes, the ‘Future City Initiative’ and the values-based Satoyama Initiative. The final section addresses conceptual implications that arise, and assesses whether Japan’s ‘normative’ soft power has paid dividends. Drawing from literature on pioneer states and external reviews of Japan’s alignment with key climate norms, the paper suggests that Japan’s normative soft power is lacking in driving agendas at global climate forums. At a pragmatic problem-solving level, however, Japan is increasingly perceived as an attractive source of transferable solutions, reflecting climate norms such as developing eco-friendly technologies and providing assistance to help vulnerable countries mitigate climate change     

From developmental to regulatory state? Japan's new financial regulatory system

Abstract

Recent financial reforms in Japan and elsewhere in Asia represent, for various authors, a fundamental shift in financial governance and in state–business relations in the region. The old ‘developmental’ state in East Asia has supposedly made way for a neoliberal ‘regulatory’ state, with its emphases on agency independence and the non-discretionary enforcement of rules. I show in this paper that this interpretation exaggerates the extent of the transformation in the important case of Japan. Although the outward institutional forms of economic governance in Japan, as with many Asian developing countries, has changed dramatically since the mid-1990s, discretion still remains at the core of economic and financial policy. In the area of Japanese banking regulation and supervision, I show how this highly discretionary application and enforcement has been consistent with domestic political pressures. The result is a substantial divergence between superficial convergence upon international regulatory standards and underlying behaviour. I also give reasons why globalization does not mean that this hybrid regulatory model is unsustainable.     

From asset to patrimony: the re-emergence of the housing question

Abstract

The global financial crisis has ushered in a major housing crisis in many European countries. The paper seeks to shed light on why, despite massive housing crises, there are few policy efforts at tackling it. Probing into the policy paradigms that have informed housing policies, the paper demonstrates a shift towards housing as an asset before the crisis. Increasingly, housing policies have become interwoven with financial markets. This has led to a major policy mismatch after the crisis: while the return of the ‘housing question’ would have required renewed efforts at establishing housing as a social right, de facto policy makers sought to stabilise financial markets. The result is a paradoxical outcome, where neoliberal market-driven programmes are embedded in increased dependence on family wealth. The article demonstrates the shift from housing as asset to housing as patrimony in three different varieties of residential regimes, represented by Ireland, Denmark and Hungary.     

Insurgent capitalism: Island,bricolage and the re-making of finance

Abstract

Drawing on recent discussions of the material cultures of markets and of financial innovation as bricolage, this paper explores the development of Island, a new share-trading venue set up in 1995. We examine Island's roots in a very specific conflict in the US financial markets and in the information libertarianism of ‘hacker culture’, and examine the material bricolage involved in Island's construction. The paper also outlines the processes that led to a dramatic ‘Latourian’ change of scale: Island was originally a ‘micro’ development on the fringes of US markets, but within little more than a decade key features of Island became close to compulsory, as the nature of North American and Western European share trading changed utterly.     

Financializing the poor: ‘dead capital’, women’s gold and microfinance in Pakistan

This study examines how Pakistani microfinance banks’ (MFBs) collateralized microcredit arrangements take advantage of the cultural centrality of gold in women’s lives. In so doing, it contributes to the wider debate on financial inclusion and financialization. The product, processes and narratives examined are a local manifestation of global finance’s emphasis on engaging commercially viable means to bring previously ‘unbanked’ populations within its fold. Based on fieldwork in Lahore and Karachi, two of Pakistan’s largest cities, this paper highlights how the ‘financial inclusion’ agenda of microfinance has effectively financialized the lives of poor Pakistani women. Our analysis finds that Pakistani MFBs draw on patriarchy’s hierarchical norms and the precariousness of low-income living in ways which bolster their own financial positions. This is supported by the country’s central bank, which has granted collateralized microfinance products a ‘risk-free’ rating, easing the path to the financialization of jewellery which in a South Asian context is directly associated with women’s social standing and economic security. The outcome is a deepening of deep-seated vulnerabilities.     

Unfree labour and adverse incorporation in the global economy: comparative perspectives on Brazil and India

Abstract

The aim of this paper is to contribute to our understanding of unfree labour in the contemporary global economy, the processes by which it is generated, and its connections with poverty and vulnerability. I challenge dominant ‘residual’ views of unfree labour as either external to global economic activity or occurring solely within small-scale, localized or non-market contexts. Instead, I contend that unfree labour needs to be understood in ‘relational’ terms as a particular form of ‘adverse incorporation’ in the global economy. This form of adverse incorporation is constituted through the circular interaction between, on the one hand, the functioning of the global productive economy and associated labour markets, and, on the other, the social relations of poverty which give rise to vulnerability and to unfree labour. I draw throughout on original empirical research conducted on ‘slave labour’ in Brazilian agriculture and child labour in the Delhi garments sector.     

Peace-building Through Space-making: The Spatializing Effects of the African Union’s Peace and Security Policies

ABSTRACT

This article is discussing how the peace-building practices of the African Union have distinct ordering and space-making effects. Taking a socio-spatial perspective, it is argued that the peace and security projects through which the African Union, as a spatial entrepreneur, is addressing the scourge of ‘terrorism and violent extremism’ are geared towards (re-)establishing sovereignty that member states have lost in the past over their territories. While the African Union is favouring a spatial format that could be called ‘multiple networked regionalism’, the actual socio-spatial orders that are emerging around Africa’s transregional conflicts are far less clear cut.     

Modernity's Failure/Post-modernity's Predicament: The Case of Russia

Abstract

This paper explores the failure of modernisation theory and its more recent offspring as represented by ‘transition to democracy’ and ‘construction of capitalism’ theories to explain the post-communist development of Russia. Some post-modern theories, though, reinterpreted to emphasise the disintegration and fragmentation of the ‘hard core’ of social structures rather than the ‘post-philosophical’ mode of thinking and ‘aestheticised’ styles of consumption, are looked at for a more fruitful conceptual alternative. In the conclusion, the idea of ‘multiple fragile modernities’ is argued for as the most promising starting point for the conceptualisation of post-communism as well as its correlation with global ‘late capitalism’.