Andrew Leyshon

Financializing space, spacing financialization:

The paper develops a sympathetic geographical critique of the concept of financialization which seeks to account for the growing influence of financial markets over the unfolding of economy, polity and society. Processes of financialization are claimed to be manifest at a number of scales, from higher levels of instability within the economy as a whole, through pressure exerted on corporations by capital markets, to the equity effects of the financial system on individuals and households. In seeking to explain change within contemporary society, financialization has circulated less widely than similar and related concepts such as neoliberalization. While financialization has the potential to unite researchers across cognate social science fields, thereby building critical mass and recognition within social studies of money and finance, we argue that research has been insufficiently attentive to space and place, both in terms of processes and effects. Financialization is a profoundly spatial phenomenon, representing as it does the search for a spatial-temporal fix, or quasi-resolution of the crisis tendencies of contemporary capitalism. The paper explores a number of possibly fruitful directions for work on financialization, focusing in particular on the idea of financial ecologies.

Lists come alive: electronic systems of knowledge and the rise of credit-scoring in retail banking

This paper foucuses upon a change in the type of market knowledge provileged by ratail banks as a result of the rise of a new implementation of information technology. In traditional retail banks market knolwedge was embodied in the local manager and his/her staff in braches. Over the last decade or so, such embodied knowledge has been downgraded and greater embhasis has been placed on the moresystematic use of empirrical information on customers derived from other sources, maded possile by the rise of computer,s software and databses. The most significant developement in this regard has been the now routine useof credit-scoring systems, which are designed to voer come the chronic problems of information asymmetries in crdit-scoring systems and the rise of a marketing discourse within the industry represents a major transformation in the knoledge base of the industry. The paper critically evaluates ways in which this transformation has been brought about and considers the likely shape of the new systems o...

Time - space (and digital) compression: software formats, musical networks, and the reorganisation of the music industry

In this paper I examine the geographical and organisational consequences of the emergence of a new technological assemblage within the music industry. This technological assemblage is organised around software formats and Internet distribution systems. The paper is concerned with the relationship between technological innovation, economic competition, and the contestability of markets for goods and services within an era of digital content. I begin by setting out two opposing discourses currently circulating within the music industry: one that denigrates the emergence of software formats, and another that celebrates it. Both discourses concur that this new technological assemblage will fundamentally reorganise the music industry as it is currently configured, with some doubt being cast over the long-term viability of the industry owing to the problems of protecting the intellectual property rights of music contained within open software formats. I provide a critical analysis of electronic markets and their impact upon economic organisation, and examine the impacts of digital content and electronic markets within the music industry through the concept of the musical network. Four networks with distinctive organisational and spatial characteristics are identified within the musical economy: networks of creativity, of reproduction, of distribution, and of consumption. I argue that all four networks are being reshaped as a result of the impact of software formats and Internet distribution systems. These developments are found to threaten the short-term profitability of some established firms within the industry, but I argue that the industry is already beginning to restabilise around a new technological and regulatory regime designed to protect copyrights in music in software formats.

On the reproduction of the musical economy after the Internet

The focus of this article is a crisis of reproduction that beset the contemporary popular music industry from the late 1990s onwards. In the early 21st century the music industry began to suffer from declining sales, negative growth and financial losses. Explanations internal to the music industry identified the cause of the crisis as the rise of Internet piracy, although the emergence of software formats, such as MP3, and Internet distribution systems is more accurately described as a ‘tipping point’ that brought into focus a set of deeper structural problems for the industry related to changing forms of popular music consumption. Drawing on research undertaken by the authors within US music companies, the article examines responses to the crisis in the form of three distinctive business models that represent different strategies in the face of the contemporary crisis of the musical economy, an arena within which a range of experiments are being undertaken in an effort to develop new ways of generating income. Nevertheless, there is reluctance within the industry to embrace the more radical organizational changes that might allow it to fully accommodate the impact of software formats and Internet distribution systems. A key reason for this, we argue, is the stakes that the leaders of the major record companies have in the preservation of the current social order of the musical economy.

Towards an Ecology of Retail Financial Services: Understanding the Persistence of Door-to-Door Credit and Insurance Providers

In this paper we explore the relationship between knowledge, trust, and space in the production and consumption of retail financial services as part of a wider enquiry into processes of financial exclusion. We argue that the relationship between knowledge and trust helps to explain the evolution of financial services and the production over time of distinctive ecologies of financial service production and use. We discuss the changing scales of financial knowledge and trust in relation to the evolution of the UK financial services industry. We identify two idealised ecologies and networks of retail financial services. The middle-class suburb represents an ecology and network of privilege within the contemporary retail financial services market. It displays relatively high levels of aggregate knowledge about the financial system and constitutes an important part of the retail financial services network, with strong and frequent connections to the financial services industry as a whole. Poor inner-city areas and peripheral local authority housing estates, meanwhile, have very different financial ecologies. Areas of relative deprivation and poverty, they constitute ‘relic’ financial ecologies that have been bypassed and mostly ignored by the mainstream financial services industry. They are colonised by a distinctive set of financial institutions that include firms that operate door-to-door. We look at the formation and evolution of these ecologies over time and discuss the potential of enriching the ecology of the poor inner-city and peripheral local authority housing estate through public policy.

Reading Financial Services: Texts, Consumers, and Financial Literacy

The authors focus upon the changing nature of production and consumption within the retail financial services industry. The perennial problem which faces all producers of financial services is information asymmetry; that is, providers and consumers of financial products have unequal amounts of information about whether or not customers have the wherewithal to make them ‘capable’ purchasers. Thus, the problem of information asymmetry is usually manifested in a priori decisionmaking about the suitability of customers. This problem has traditionally been overcome by forging interpersonal relationships of trust with consumers through copresence. Increasingly, however, trust in consumers is being forged through technologically mediated means of information collection functioning ‘at a distance’ so that financial services producers are coming to ‘read’ consumers as ‘texts’, through the medium of databases. These developments have had a number of effects, such as increased competition in retail financial markets, while branch networks, which acted as durable barriers to entry to the market, have become less important as sites of market intelligence and knowledge. Consumers have also been forced to forge new relations of trust with retail financial service providers. This is increasingly being achieved through the use of various media and through identification with brands. Such developments have served to create social and spatial divisions of financial inclusion and exclusion, as producers use at-a-distance information to discriminate between ‘good’ and ‘bad’ customers. Those ‘inside’ the financial system are able to use their financial knowledge to take advantage of increased levels of competition between financial service providers. However, those excluded from the financial system are doubly handicapped as they live in both a financial and an information shadow. Such individuals are likely to pay an increasingly heavy price for their exclusion, particularly given the collapse of universal welfare provision and the allied growth of private welfare-related financial products. In recognition of this, in the final part of the paper we consider ways of countering problems of financial exclusion and low levels of financial literacy.

The new, new financial system? Towards a conceptualization of financial reintermediation

This paper attempts to develop a conceptual framework for analysing the impacts of the Internet and e-commerce upon industrial sectors. While a great deal has been written about the so-called ‘new economy’ much of it has been either speculative and hyperbolic, as in the ‘boom’ years of the late 1990s, or cynical and dismissive, as in the period since the collapse of ‘dot.com’ stocks in Spring 2000. We seek to move beyond and between these positions by providing a means to determine what difference the Internet and e-commerce might make to industrial organization through a consideration of the retail financial services industry. We do this through a critical evaluation of the concept of disintermediation that, as we argue in the paper, is better understood as reintermediation. We argue that the potential impacts of the Internet and e-commerce upon retail financial services are non-trivial, and they are consistent with the individualization of risk and reward that have characterized wider processes of financial inclusion and exclusion over the past decade or so.

Making Geographies and Histories? Constructing Local Circuits of Value:

Reflecting on findings from research conducted in the United Kingdom, we consider some implications for an understanding of economic geographies of the emergence of local currency systems (LCSs) within developed economies. LCSs are founded on the creation of local currencies and driven by local—but contested—circuits of consumption, exchange, and production. In this paper we are concerned with three interrelated sets of issues: the intersections of social and material relations and practices in the construction of economic geographies; the possibilities—constrained by these intersections—of creating alternative economic geographies; and the consequent possibilities of contributing to economic proliferation. We distinguish between three main forms of LCS—LETSystems, LETS schemes, and Time Dollars—differentiated along a range of institutional, organisational, ethical, and moral dimensions. These LCSs reflect and illustrate the diversity of meanings, understandings, and intentions brought to bear upon economic geographies. The existence—even if only temporary—of LCSs is testament to the (limited) possibilities of local economic self-determination and organisation; but their material ineffectiveness, decline, and uneven geographical spread reflect their formative links with mainstream practices and social relations and their internal contradictions and barriers. These characteristics illustrate the vulnerabilities inherent in all economic geographies and not just in those that are locally constructed.

Making a market: the UK retail financial services industry and the rise of the complex sub-prime credit market

Except as a technical topic within finance or economics, credit is a much-neglected topic in the social sciences. This paper is concerned with a particular growth and development in the field of credit that appears to have intensified over the last couple of decades. Since the introduction of credit scoring, large sections of the population have been deprived of borrowing money from the mainstream institutions and this has led to the growth and differentiation of the sub-prime market. One part of this market concentrates on consumers with comparatively low incomes and offers loans of limited denominations and collects the repayments door-to-door on a weekly basis. This is called the traditional sub-prime market for credit. Here, interest rates are much higher than in the mainstream market, largely to cover the costs of household collections but also to insure against default. A second part of the market is what is termed the complex subprime market, where customers are categorized as ‘non-standard’ because of their financial history, which may or may not include earning very low incomes. The distinction between these two markets coincides with that between the ‘old’ and the ‘new’ economy. The complex sub-prime market largely distributes its service electronically through the Internet and telephone call centres, whereas the traditional sub-prime market is dependent upon a face-to-face delivery system. In place of a standard pricing system, the complex sub-prime companies operate a risk pricing strategy related to the customers repayment history. The paper examines these two sub-prime markets from the point of view of their evolution, their importance to customers, and issues of education and regulation.

Scary monsters? Software formats, peer-to-peer networks, and the spectre of the gift

In this paper I focus upon a sociotechnical network made possible through the combination of software, the Internet, and peer-to-peer computer networks. These sociotechnical networks have destabilised the regime of governance that supports what I describe in the paper as copyright capitalism by creating a series of gift economies where the products of those industries are given away. This development has significance for a wide range of creative industries that are dependent upon copyright protection for their reproduction, including motion pictures, publishing, and software engineering. The main empirical focus of this paper is the music industry because it is there that the challenge to the mode of reproduction of copyright capitalism has been most acute. I look at the origins of these gift economies, which can be traced back to the academic roots of the Internet. A musical gift economy centred upon MP3 (a software format) emerged during the early 1990s, but was only constituted as a problem for the music industry after the commercial invasion of the Internet during the late 1990s. Dot.com start-ups transformed the specialised knowledge that was once the preserve of hackers and hobbyists into generic knowledge through the development of ‘user-friendly’ file-exchange systems, thereby providing mass access to a once underground musical gift economy. Copyright capitalists mobilised the powers of law enforcement to reassert their control over the circulation of recorded music, and have successfully tamed many of the firms that sought to extend this gift economy for commercial gain. However, there has emerged a set of networks that are both ideologically and substantively opposed to the interests of copyright capitalism, and that are more resistant to attempts to reassert the control of the large corporations. In this paper I argue that the continued existence of these networks will undermine the ability of large media companies to control copyright in the way they have in the past. Although the communities that facilitate such economies are themselves unstable and rely, like other ‘alternative’ economic systems, upon a narrow band of active participants, such gift economies may emerge as the most significant and problematic legacy of the ‘new economy’.