Financialization, Space and Place

Financialization, Space and Place

The 3rd Annual Meeting of the International Working Group on Financialization, Thursday 23^rd April 2009.

Sponsored by the Economic Geography Research Group of the Royal Geographical Society.

Venue: University of Nottingham’s London Office, 41-42 Berners Street, London, W1T 3NB[1].

Capacity at this venue is strictly limited and the event is almost full.  If you wish to register, then e-mail Louise McIntyre ([email protected]).  The registration fee is £25, which includes a buffet lunch, payable in advance.

Background and aims

The concept of financialization seeks to account for the empowering of financial markets and their influence over the unfolding of economy, polity and society. Processes of financialization are manifest at a number of scales, ranging 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. To date, the growing body of work on financialization has only fitfully addressed its relationship to the geographies of money and finance. The workshop aims to provide an opportunity for the connections between financialization, space and place to be explored within an inter-disciplinary context, with contributions from geographers and non-geographers alike.

Schedule:

10:15-10.50 Registration

10:50-11:00 Introduction

11:00-12.30 Session 1

Gary Dymski (UC Riverside/Sacramento): What’s left of banking after the subprime crisis? spatial implications and policy directions.

Abstract: The subprime crisis arose in large part because of the intersection between four elements: changes in banking retail strategy, housing bubbles in key locations, historical patterns of financial exclusion and discrimination, and the emergence of an integrated set of liquid secondary/reinsurance markets. The unsustainable surge of fee-taking and loan-making in the subprime-driven phase of the housing bubble has compromised the entire edifice of banking and financial institutions and markets that had been built up during the 20-plus years of global neoliberal experience. That neoliberal institutional edifice was not completely functional in either social or economic terms – its dynamics gave rise to the problematic of financial exclusion, for example – but it had a certain logic. The utter desolation wrought by the banking/financial crisis of 2007-08 now raises the question, what remains of banking and finance after the subprime crisis? What will be the elements, how will they work in the context of the larger economy? This paper explores some possible futures for the banking and financial system, with special attention to the impact of this system on the distribution of economic activity and inequality in space. The paper concludes by exploring the implications of these possible futures for pro-growth, egalitarian policies vis-à-vis banking and finance.

Shaun French (Nottingham), Andrew Leyshon (Nottingham) and Nigel Thrift (Warwick): A very geographical crisis: the making and breaking of the sub-prime crisis.

Abstract: In this paper we argue that an understanding of the historical geography of money and finance is essential for apprehending the catastrophic collapse of sub-prime, both as market and as securitized income stream, and of the ensuing financial crisis. The paper argues that the origins of the crisis can be located in four spaces. First, in the international financial centres of London and New York and, in particular, in the longstanding competition that has existed between the two for the title of pre-eminent international financial centre. Second, in the insularity of the everyday geographies of money that have emerged in such centres in the wake of the apparent hegemony of financialization. Third, in the geographical recycling of surpluses and deficits and more particularly the structural dependency that has grown up between China and the United States. Fourth and finally, the growing power of the financial media, centred in international financial centres and an increasingly significant agent in performing money and the economy in general, and in engendering mimetic forms of rationality. As a result, the current crisis is one that has been founded in an active use of financial space.

12.30-13:30 Lunch

13.30-15:00 Session 2

Anastasia Nesvetailova (City): The end of a great  illusion: the global credit crunch and liquidity meltdown.

Abstract: This paper argues that the credit crunch is the result of a particular problem in the world financial system, that is, of the phenomenon of ‘liquidity illusion.’ At the heart of this still poorly understood phenomenon lies the spiral of financial innovation and its effects on systemic liquidity. I examine the political-economic mechanisms that had sustained the illusion of liquidity during the boom years, and the mechanisms which contributed to its evaporation during the ongoing crisis. My analysis demonstrates that that while increased investment inflows have been one of the factors behind the North Atlantic credit boom of 2003-2007, the boom – including housing and securitization bubbles – has disguised the fact that the financial system in Anglo-Saxon economies has become progressively illiquid. Drawing on the scholarship of Hyman Minsky, I identify three pillars of the liquidity illusion – Ponzi finance; collective thinking by investors; and the credibility function performed by the credit rating agencies – and examine their role in the unravelling of the global liquidly illusion.

Sarah Hall (Nottingham): Financialized elites and the changing nature of finance capitalism: investment bankers in London’s financial district

Abstract: This paper uses the ongoing financial crisis to develop understandings of financial elites in London’s international financial district. In particular, I focus on the different modalities of power associated with the changing nature of ‘financialized elites’. I argue that in contrast to earlier generations of financiers, the power of contemporary investment bankers emerges through their role choreographing transnational networks of financial actors associated with securitised and structured products rather than being purely read off their social or educational background. I suggest that these networked forms of power relation are significant because, on the one hand, they have prevented investment bankers distancing themselves from the ongoing turbulence and uncertainty within the international financial system. Meanwhile, on the other hand, the ability of investment bankers to (re)produce such networks indicates that suggestions of the demise of ‘financialized elites’ in the wake of the ‘global credit crunch’ may be too hasty as previous financial crises demonstrate the considerable ability of ‘financialized elites’ to seize moments of conjunctural opportunity to reinvent themselves through new financial products and organizations.

15:00-15:30 Tea/Coffee

15:30-17:00 Session 3

Ewald Engelen and Anna Glasmacher (Amsterdam): Self-representations of financialization: international financial centres on the internet.

Abstract: The 1990s has spawned a large number of initiatives to present national financial centres as hot spots for international financial activities. While the competition for the footloose agents that dominate the financial markets plays itself out along multiple dimensions – regulation, taxation, human capital, infrastructure and lifestyle – it is striking that each and every would be financial centre has crafted an image of financialization and its unique place within it on the internet. In this paper we present a critical cultural geographical analysis of the images that are constructed of International Financial Centres on the worldwide web. Questions addressed in the paper are: Which identities are being promulgated? What kind of mixtures of contextual uniqueness and global similarity are used in the construction of the images of different financial centres? To what extent are these images gendered? Are the website mainly serving marketing functions or do they serve other, more substantial functions? Can we perceive differences between European, American and Asian financial centres? How to account for these differences? What role does history and its cultural reflection play in the representation? And finally, do we see reflections of the credit crisis that is currently playing itself out in the self-representations presented on the internet?

Julie Froud, Alan Harding, Sukhdev Johal, Adam Leaver, Karel Williams (CRESC/Manchester): Does the UK have a sustainable business model?

Abstract: Questions about the sustainability of the national business model are back on the agenda as Peter Mandelson discovers “Britain needs an economy with less financial engineering and more real engineering”. The paper divides into three sections. The first section considers successive dystopias or grounded fears about a future that does not work, starting with 1980s deindustrialisation fears about whether manufacturing could generate a suitable quantum of exports and employment. The second section, on the UK economy since the mid 1990s considers the contribution of finance as leading sector, the North’s dependence on New Labour reflation and the national ecology of islands of affluence adjacent to deprivation. The third sector considers what is to be done when our anaemic private sector has created no net new jobs since the mid 1990s and the imploding financial sector requires hugely expensive bail outs.

17:00-17:30 Discussant and open discussion session

Paul Langley (Northumbria)

Andrew Leyshon, Jon Beaverstock, Shaun French and Sarah Hall, School of Geography, University of Nottingham ().

Neoliberalization, financialization and economic citizenship workshop

Neoliberalization, financialization and economic citizenship: one-day workshop

10^th October 2007, University of Nottingham

Organized by the School of Geography’s New Economic Geographies Research Theme, this one-day workshop addressed the relationship between processes of neoliberalization, financialization and economic citizenship. The motivation for the workshop was to discuss the implications of the remaking of the contract between individuals and the state in many Euro-American countries, with personal responsibility and markets increasingly becoming the default mode for processes such as welfare provision, short-term income smoothing and long-term financial security. At the same time, there have been increases in economic polarisation, raising concerns about social and financial exclusion. Various concepts have been deployed to help explain such a transformation. This workshop focused upon neo-liberalization and financialization, concepts which share many potential points of contact but which hitherto have tended to run in parallel to one another. Studies of neo-liberalization have proved effective in disciplines such as economic geography where it has informed analyses of welfare reform, the reorganization of labour markets, local government, nature-society relations, etc. Financialisation, which focuses on the growing power and systemic influence of money and finance within contemporary life, has become increasingly significant in fields such as economic sociology and critical management studies. The workshop provided an opportunity to explore the relationship between processes of neoliberalization and financialization, with speakers working in both traditions, and explored the consequences of both for economic citizenship, a contested concept which denotes the ability of individuals and households to participate fully in the economy and produce economic security.

The day was characterised by a series of rich presentations and some fascinating and informative debate.

The workshop’s programme was as follows:

Session 1. Chair: Sarah Hall (University of Nottingham)

Jamie Peck (University of Wisconsin-Madison): ‘Finding the Chicago School’

Shaun French, Andrew Leyshon and Thomas Wainwright (University of Nottingham): ‘Financializing space’

Session 2. Chair: Shaun French (University of Nottingham)

Wendy Larner (University of Bristol): ‘Situating neoliberalism’

Sue Smith (University of Durham): ‘Home ownership: managing a risky business?’

Session 3. Chair: Andrew Leyshon (University of Nottingham)

Paul Langley (University of Northumberland): ‘Neo-liberal financialised subjects’

Adam Swain (University of Nottingham): ‘Neo-liberalizing post-soviet space’

Discussant: Noel Castree (University of Manchester).

The other participants in the workshop were:

Jon Beaverstock (University of Nottingham), Angus Cameron (University of Leicester), James Corah (University of Nottingham), Louise Crewe (University of Nottingham), Gwamaka Kifukwe (University of Nottingham), Karen Lai (University of Nottingham), Roger Lee (Queen Mary University of London), Yajing Li (Queen Mary University of London), Steve Musson (University of Reading), Jane Pollard (Newcastle University), Alison Stenning (Newcastle University), Kendra Strauss (University of Oxford), Adam Swain (University of Nottingham), Thomas Wainwright (University of Nottingham) and Kevin Ward (University of Manchester).

Many thanks to all speakers and participants for contributing to a successful and rewarding day, and to Karen Lai for her invaluable organizational skills!

Andrew Leyshon