Michael Rafferty

Financialization, Risk and Labour

The term ‘financialization’ has acquired significant popularity. This paper evaluates some of the leading applications and identifies the need to link the process of financialization to capitalist class relations. The link we focus on is the way in which financial derivatives impose global competitive calculation on capital, with direct implications for the disciplining of labour. This class dimension becomes the basis of a progressive, transformational politics that focuses not on growing financial fragility in capital markets, but on the ways in which financialization is socializing both accumulation and daily life.

Financial Derivatives as Social Policy beyond Crisis

The period since the global financial crisis has seen financial derivatives not only grow quantitatively in financial markets but also expand socially as a calculative logic, giving increasing precision to the concept of capital and hence class relations. The logic of derivatives involves deconstructing ‘things’ into a spectrum of tradable risks. The article identifies the ways in which this logic is spreading into an increasing range of social, economic and political policy domains. It posits how, through the logic of derivatives, a range of sociological issues can be seen and re-thought through the eyes of financial calculus.

Political Economy and Housing in the Twenty-first Century – From Mobile Homes to Liquid Housing?

Abstract The recent Global Financial Crisis started as a crisis in the US sub-prime mortgage market, and rapidly spread to a wider financial crisis. This article suggests that beyond the crisis, we can now see that households are playing an evolving role as a site of risk absorption. In so doing, households have become a frontier of capital accumulation, not just as producers and consumers, but also as financial traders. Households are increasingly buying financialized products as an ordinary part of daily subsistence – houses, insurance, education, electricity and mobile phones. But at a level beyond the household’s daily reality, these regular purchases are being re-specified as assets, on which asset backed securities are built and then traded. It is in this way that by securitizing mortgage debt, finance has given global liquidity to housing. The size of securitized markets on housing as well as household assets and payment streams now dwarfs stock markets. The requirements of this emergent financial citizenship for the house and households extend beyond just honouring payments on a home purchase, it is requiring a culture of financial calculation that becomes absorbed as part of the daily norms and dispositions of social being. The presumption of rights of access to housing, education and health care are being replaced by the acceptance of individual financial participation and calculation. Here, we argue housing is being reconstructed as both the capital base for, and site of, individualized life course risk management.

Politics, time and space in the era of shadow banking

ABSTRACT In the wake of the Global Financial Crisis, there has been an understandable focus on the financial fragility and contagion aspects of shadow banking. This article argues that shadow banking is important for another set of reasons. It has been well established that shadow banking permits the transformation of assets and financial claims. It has also been established that fiscal and regulatory arbitrage occurs through shadow banking, and associated offshore financial activities. The article develops the argument that together these are transforming the times and spaces of modern finance, and directly challenging earlier spatio-temporal concepts of finance, and the regulatory/jurisdictional order built on them. The article suggests that the longer term significance of shadow banking may not just be its role in financial crisis, or even tax and regulatory arbitrage, but that it was here that innovative forms of capital were produced and generalised which transcended the spaces and times of earlier institutional, transactional and jurisdictional concepts of capital and wealth.

Why We Need to Understand Derivatives in Relation to Money: A Reply to Tony Norfield

Abstract The issue of the relation between financial derivatives, money and crisis remains one of on-going debate within Marxism. This paper takes issue with a recent contribution to this debate by Tony Norfield. We contend that the relationship between financial derivatives and the concept of ‘money’ needs to be framed in the context of a changing understanding of liquidity, and that issues of crisis and renewed accumulation are better understood though this path than via debates about speculative versus real investment and productive versus unproductive capital. Indeed these latter taxonomies are being superseded by current developments within finance, and Marxian analysis needs to be attuned to these current developments.

Banks and Swedish financial crises in the 1920s and 1930s

Financial crises occur at regular and unpredictable moments in capitalist economies. However, an absence of shared theoretical approaches to and even definitions of the subject still plague the analysis of financial crises. This situation makes historical analysis even more important. This article compares two Swedish financial crises, one in the 1920s and the other in the 1930s. The comparison shows that despite their temporal and spatial proximity, the crises seemed to have had quite different underlying causes, links to international circumstances, severity, and government responses. The 1920s crisis in Sweden was for instance much deeper than the crisis in the 1930s, a marked contrast to the experience of most countries during these two periods. In focusing on the driving forces behind the crises, their development and governmental policies, the article also provides an opportunity to reflect on both financial crisis theories, on the current crisis and on recent historical research concerning crises.

The unaccountable risks of LIBOR

One of the on-going consequences of recent financial crises seems to be that the conventional anchor measures of global finance (such as the US dollar, treasury bonds and AAA rated securities) are no longer playing the anchoring role once believed of them. LIBOR now needs to be added to this list and not just because it has been tarnished by illegal practices, but because it is looking increasingly surpassed by financial market practices. LIBOR was believed to provide a risk-free rate of interest, but has been revealed to be risk-laden. Moreover, LIBOR is a measure of the costs of borrowing, whilst market concern is increasingly with measures of interest rate volatility. This paper looks at why, in the context of crisis, financial market focus on interest rates is turning towards other benchmarks, notably the overnight indexed swap (OIS) market, and what this shift might be telling us about the anchoring requirements of global financial markets.