Adam Tickell. Handbook of Cultural Geography. Editor: Kay Anderson, Mona Domosh, Steve Pile, Nigel Thrift. Sage Publications. 2003.
For a period during the 1980s, the New Republic, an American liberal magazine, ran an occasional series of articles under the collective heading of ‘The Money Culture.’ In an idiosyncratic manner, this column charted the transformation of the imagined financier from the conservative banker in a sober suit to the brash trader wearing red suspenders. This was the era of Ivan Boesky, the market wizard who was subsequently exposed for dealing using privileged inside information, and Gordon Gecko, Boesky’s fictional counterpart in the film Wall Street. It was also an era where governments were sweeping away the regulatory creations forged in the rubble of the 1930s financial catastrophe in the United States and the cosy social environment in the City of London. If finance was reaching a pivotal position in the popular imagination, this reflected both its (re)emergence at the core of the American and British economies and its regulatory transformation. If anything, the money culture has become more pervasive in the interim. As US stock markets powered ahead during the 1990s, television channels proliferated dedicated to charting the minutiae of price changes and giving anodyne stock tips; individual shareholding (both directly and through pension and mutual funds) expansively grew across western countries (Clark, 2000); brokerage firms set up telephone and then internet arms for individuals trading from home; and governments increasingly appeared to take heed more of the reaction of ‘the markets’ to their economic policies than of their electorates.
And yet, for all its pervasive influence on social life in capitalist countries, cultures of money have been of marginal interest to social scientists other than economists. Money and finance are somehow too hard, too boring, too technical for non-economists. Another, contextually richer, vein of writing on money is to be found in the mass of popular accounts of individual financial institutions or events, usually written by journalists and former and current financiers. Not only do such writers enjoy unrivalled access to their research objects (people involved in finance from floor trader to chief executive are far happier talking to the Financial Times or Wall Street Journal than some unknown academic), but they often have developed an intuitive feel for the dynamics of part of the industry. For example, Michael Lewis’ beautifully written recollections of life in Salomon Brothers on Wall Street in the 1980s evoke the culture of the time and do as much to expose the gendered politics of financial traders as theoretically nuanced accounts by social scientists who (inevitably) rely upon ethnographies and interviews (Abolafia, 1996; McDowell, 1997). Similarly, whilst the collapse of Barings Bank was the subject of numerous analyses (Fay, 1996; Leeson, 1996; Tickell, 1996; 2001), the definitive account of the events was written by two Financial Times journalists (Gapper and Denton, 1996) who drew upon the official reports into the affair and extensive discussions with almost all of the principal participants.
All this said, anthropologists, sociologists and geographers have produced a theoretically robust and conceptually rich set of approaches that develop a distinctive cultural economic geography of money and finance. Such an approach rejects the implicit dualism which sees the cultural and the economic as analytically distinct arenas. Instead of focusing on finance as a solely economic entity, a culturally inflected analysis explores the ways that institutions, discourses, representations and symbols interact with more material processes and forms in producing and reproducing money and finance. As Mitchell, whose cultural geography remains heavily materialist, puts it, ‘Cultural geography is precisely the study of how particular social relations intersect with more general processes, a study grounded in the production and reproduction of actual places, spaces and scales and the social structures that give those places, spaces and scales meaning’ (2000: 294). A cultural geography of money, therefore, examines the processes and practices that constitute money and finance and explores the interweaving between narrative and material practice. This chapter explores the culture of finance in three ways: first, how money is culturally and economically constituted; second, how the financial industry is spatially and culturally formed; and third, how finance represents a political, cultural and economic project. In the light of this, the chapter concludes with a reassessment of the potential for recent work from within the regulation school to live up to its earlier promise of integrating economic analysis with a more robust understanding of cultural change.
The Cultural Geography of Money
Although money occupies an unhealthy and pervasive position in western societies, its very nature remains both peculiar and multifaceted. It is at once a container of value; a universal form of measure; a medium of exchange (i.e. it is the commodity by which actors exchange other commodities, obviating the need for barter); and a store of value (that is, it allows actors to retain value created in one time and space indefinitely). It is also variable: there is not one international money but a plethora of national currencies, which means that for all of its absolute qualities, money is relative and the value stored and exchanged can be ‘devalued’ and lost (Harvey, 1982; Swyngedouw, 1996). Further, Altvater (1993) shows that it is only possible to make sense of money when it is in motion, that is, in constant processes of circulation and transformation.
Although Ron Martin (1999) argues that Alfred Weber intended to write a companion to his volume on industrial location, which would have put money on an equal footing to industry, the first serious treatment of money and finance within geography came firmly from the political economic tradition. Marx, after all, had observed that although money was a basic unit in precapitalist societies, the accumulation of value through the money form lay at the heart of capitalism. As Fine and Lapavistas put it in their faithful rendition of Marx’s analysis: ‘Money could penetrate pre-capitalist societies, maintaining a marginal position within them, but could also potentially exercise disruptive and antagonistic influences on the essential relations of capitalist production. In contrast, capitalism is a society premised on the creation of value (and surplus value), rendering the role of markets and money fundamental to capitalist reproduction’ (2000: 367). Therefore, in his substantial re-examination of Marx’s Capital, Harvey (1982) demonstrates the ways that money creates and transforms geographic space. As a commodity, money obscures the social relations that underlie its existence, and allows activities separated by both time and space to be linked together, contributing to the homogenization of economic spaces (Leyshon, 1996).
If money in general allows for the linkage of space and time, within the past 30 years new forms of money have emerged that raise important theoretical and empirical questions about the nature of money itself and have unsettled Marxian analyses. Here, I focus on two, very different, forms of money to illustrate this: internationalized derivatives and localized currency schemes. In each case, it is possible to construct an economic rationality for their existence: financial derivatives give firms a degree of certainty in volatile economic environments, whilst local currency schemes allow individuals to engage in economic transactions while bypassing the formal economy. However, these economic rationalities have a limited purchase on the processes involved. Instead, it is important also to explore how economic relations are formed and transformed by reference to geographical, cultural and political practices, and vice versa. For both internationalized and localized money, then, a culturally sensitive analysis undermines economic determination (however final the instance may be) and illustrates that culture inflects money at all spatial scales, from the most international to the very local.
The early 1970s saw the end of an international regime—known as the Bretton Woods system—where exchange rates were largely fixed against each other and interest rates were relatively stable (Altvater, 1993; Bordo and Eichengreen, 1993; Leyshon and Tickell, 1994; Walter, 1992). Occurring contemporaneously with the collapse of Fordism (Aglietta, 1979), western economies faced significant inflationary pressures and macro-economic instability that created new uncertainties in the business environment for banks and corporations. One response to these monetary pressures was the ‘invention’ of financial derivatives in Chicago in 1972, a moment which heralded a significant shift in the history of financial capitalism (Tickell, 2000b). Derivatives are products that allow firms to manage risk, for example, by fixing interest rates for a given period, or by agreeing a price at which foreign exchange can be bought at a particular point in the future.
Yet, while derivatives may appear simply to be an economic tool that institutions and, indeed, individuals use to manage their financial transactions, the instruments are much more than that. First, although developed as a tool for risk management and diversification on the part of individual actors, their spread and ubiquity mean that they have paradoxically increased risk in the global financial system, as they have coincided with and stimulated a risk-taking culture in financial markets. Although this culture cannot be divorced from broader changes in social attitudes towards risk, derivatives products have changed the attitudes of both financial institutions and regulators towards the nature of money. At the extreme, these changes have led to high-profile disasters such as in the collapse of Barings Bank in 1995 after a trader who bet badly in the markets began fraudulently to misrepresent and hide his losses (Gapper and Denton, 1996; Tickell, 1996). While the loss of Barings was little mourned—because the bank had been given away by the owners to a charitable foundation in the 1960s, it was hard to identify any losers from its collapse—a better indication of the pervasive ways in which the growth of derivatives signalled a broader change in the money culture was to be found in the events in municipalities in London and California. In both Orange County and Hammersmith and Fulham, local authority treasurers disastrously traded derivatives in attempts to overcome revenue shortfalls, leading to bankruptcy in California and a declaration from the courts in the UK that local authority trading for profit was illegal (and therefore that the debts that they incurred were unrecoverable). Yet, while responsibility for the losses remains with the traders concerned, I have argued elsewhere that the risk-taking behaviour reflects broader changes in the discourses and cultures of the financial community (Tickell, 1998).
Second, and more broadly, derivatives change and transform both geography and the nature of money. Leyshon (1996) shows how interest rate swaps, a relatively simple form of derivative, only exist because geographical differences in perceptions of risk exist in different financial markets. More importantly, they allow financial markets to overcome the ‘problem’ of the embedded nature of financial markets, that is, that local knowledges mean that financiers are better able to judge local risk and price it accordingly. This means that derivatives tend to flatten differences in prices in different financial markets. Financial markets are converging in other ways too: mergers and competitive changes mean that a smaller and smaller number of transnational financial institutions are dominating the industry; cooperation agreements between financial markets are reducing the informational and financial costs of dealing overseas; international agreements on the supervision and regulation of financial institutions are leading to an unprecedented harmonization; credit cards are becoming international money equivalents; and accounting standards are regularizing around an (Americanized) international norm (Clark et al., 2001; Previts and Merino, 1999; Tickell, 2000a). Leyshon argues that this means that ‘the distinctiveness of national financial space is being eroded, reflecting the empowering of financial capital over space and the disempowering of other economic actors’ (1996: 77).
Third, Pryke and Allen (2000) have recently argued that derivatives represent a new, self-referential form of money which, following Rotman (1987), has reversed the relationship between trade and finance. In constructing this claim, Pryke and Allen draw upon Simmel’s (1990) account that money is more than a store of value and a means of exchange. It is simultaneously a sociological phenomenon that embodies and entails a belief in the prevailing social order and requires relations of trust rather than simply a set of atomistic market transactions. For Simmel, and perhaps most extensively developed and re-articulated by Dodd, money possesses no intrinsic qualities to determine how and why it is to be used:
Money’s indeterminacy is its sole distinguishing feature … wherever and whenever it is used, [money] is not defined by its properties as a material object but by symbolic qualities generically linked to the ideal of unfettered empowerment. This is an ideational feature of money and monetary transformation which, as Simmel has shown, has far-reaching cultural and economic consequences … The abstract properties of money are defined by its symbolic features. Those properties are not, however, reducible to such features. Implicit in the use of money is a set of assumptions about its re-use elsewhere and in the future. In other words, actions involving the use of money have an implicit spatial and temporal orientation. (Dodd, 1995: 152)
It follows from this that changes in money have the potential to bring about fundamental social transformations: ‘the significance of money in a given period is first of all illustrated by the fact that a change in monetary circumstance brings about a change in the pace of life’ (Simmel, 1990: 498, quoted in Pryke and Allen, 2000: 270). Pryke and Allen argue that, with their capacity to flatten space and compact time, derivatives are symbolic of a monetized world: ‘At the operational heart of this money form, moreover, lies an idea of money that involves the recoding of time—space, the fostering of a new imaginary … Derivatives emerged as a symbol of a new money culture designed to deal with this new risk awareness. Linked to the computer in such a financial world, this money form reenergized the idea of what money could do, rapidly transporting this new money sign into a growing number of everydays’ (2000: 282).
Yet, this leaves us with something of a paradox. In their trenchant critiques of Richard O’Brien’s (1991) thesis that finance has, at least theoretically, escaped the locational constraints of space, both Clark and O’Connor (1997) and Martin (1994) show that the overwhelming majority of financial trading remains local. Similarly, drawing upon extensive analysis of the ways in which money is actually used, Viviana Zelizer (1994; 2000) has argued that social theory has consistently been wrong in its claims that money flattens and homogenizes space. While money is theoretically impersonal and, once exchanged, the previous owner does not influence its use, Zelizer argues that in fact people inscribe money with values and meanings that vary over time and space. There are qualitative distinctions between different types of ‘special monies’: domestic money, gift money, institutional money and sacred money. For each of these, the different cultural and social settings in which they exist exert controls, restrictions and distinctions in the uses, users, allocation, regulation, sources and meanings of money (Zelizer, 1998). This means that, even as finance internationalizes,
Money has not become the free, neutral, and dangerous destroyer of social relations. As the world becomes more complex, some things do of course standardize and globalize, but as long-distance connections proliferate, for individuals everywhere life and its choices become more, rather than less intricate. As the case of domestic money illustrates, earmarking currencies is one of the ways in which people make sense of their complicated social ties, bringing different meanings to their varied exchanges. (1998: 66)
There are two explanations for this paradox. First, as I show below, social interaction within financial markets gives local traders a greater knowledge base than external ones. Second, while the majority of trading is local, the direction of change is for greater harmonization and the flattening of economic and regulatory space.
If international finance has fostered an understanding of the money form which allows for more complex relationships with the material economy than political economic theories allow for and that change the nature of geographic space, so too does local finance. Local currency systems, initially developed in British Columbia in the early 1980s but which have since become popular across the US, Canada, the UK and Australia, have as their essential aim the development of a unit of exchange that is both generated and spent within a local community in an attempt to ground circuits of economic and social reproduction within a locality (Lee, 2000; Pacione, 1999). In the relatively small number of successful examples, such as in Tomkins County, Ithaca, the schemes have supported the generation of local employment and appear to be a mechanism with which to ground money, to make finance local once again. In some accounts, local currency schemes are seen as a potential force to undermine the effects of global financial flows and economic integration. Pacione, for example (see also Thorne, 1996; Williams, 1996; Williams and Windebank, 1998), has argued that although ‘a local currency cannot insulate the local economy from the negative effects of globalisation … it can afford a degree of protection against the spatially insensitive currents of the international financial system’ (1999: 70). It is important, however, to take such claims with a healthy pinch of salt. Not only do local currencies remain isolated but the most successful examples have been in small, relatively affluent communities.
For Roger Lee (2000), local currencies are less economic interventions than politico-cultural ones; they are profoundly radical acts which challenge naturalized truths about the immutability of global finance. Local currencies challenge alienated, aspatial conceptions of money but they do far more than that: ‘They say, simply, that resistance is possible, that truths may be reconstituted, and that alternatives might not only be envisioned but that they are accessible and may be practised in day-to-day geographies even when they are structurally “impossible” … they are micropolitical practices which cannot be reduced either to [local] geographies or to responses to exclusion from social reproduction. They are, rather, acts of resistance to dominant discourses and relations of force’ (2000: 1006; also Maurer, 2000).
We should, however, resist the temptation to see the effect of new forms of money as being entirely novel. Indeed, the acceptance of paper money had equally transformative impacts upon economic and social life in the emergent states of North America. Emily Gilbert (1998), for example, explores the iconography of nineteenth-century Canadian banknotes in an attempt to reconcile what she identifies as money’s simultaneous existence as both a symbol and a thing (Ganssman, 1988). Gilbert shows how paper money moved from being a distrusted commodity to being a taken-for-granted equivalence, and how the images and symbols chosen underwrote this process:
The iconography of banknotes performs a kind of alchemy, transforming commodities or values into their equivalents, and investing in pieces of paper values that it did not possess of its own accord. Exploring the images of paper money with reference to the social and cultural practices in which these notes are exchanged illustrates the ways in which money involves a displacement of values, not only … of economic values, but of social and cultural values. (1998: 76; see also Helleiner, 1999)
Just as new forms of money in the 1980s and 1990s led to a reconfiguration of space, in Gilbert’s account, so the emergence of paper money in Canada both situated colonists within personal, national and imperial geographies and reflected the economic and cultural practices that specified the colonial space.
It is clear, then, that an understanding of the geography of money is transformed with a sensitivity to its cultural constitution. At all spatial scales, the interplay between cultural and economic processes problematizes accounts that simply see money as a unit of exchange. However, culturally sensitive accounts have had a greater impact on recent analyses of the financial sector, and it is to this that I now turn.
The Cultural Economy of Finance
At one level, as Clark (1998) argues, financial markets are rational, functional networks of relationships and transactions that are integrated by information channels. In other words, financial markets correspond with the entities beloved of neoclassical economists that reflect and show rationally derived prices for commodities. While it has been the dominant academic discourse on finance, mainstream economics has been reluctant to discard models based on rational economic actors in order to understand the dynamics of financial markets. Yet, as financial markets are networks of real people in real places, they are as subject to the vicissitudes of human behaviour as any other sphere. Consider the example of small speculators who routinely and annually lose approximately 20 per cent of their stake in futures market trading but who continue to trade (Zeckhauser et al., 1991). In attempting to explain the dynamics of financial markets more effectively than utility maximizing models, behavioural economists (Thaler, 1993; Tversky and Kahneman, 1981) argue that a marriage between economics and psychology is necessary: ‘research on individual decision-making is highly relevant to economics whenever predicting (rather than proscribing) behavior is the goal. The notion that individual irrationalities will disappear in the aggregate must be rejected’ (Russell and Thaler, 1985: 1080-1). Empirically, behavioural economists have shown how even the most sophisticated and professional financial traders make illusory correlations, believe that unusual and unsustainable trends are likely to last indefinitely, and place too much emphasis on recent events. Similarly, O’Barr and Conley’s (1992) analysis of pension fund managers concluded that each pension fund has a unique culture and argued that the stories told by the managers are akin to creation myths identified by classical anthropology. This culture creates common understandings of how financial markets work, and of how economic data should be interpreted which, in turn, drives investment decisions. Furthermore, even if financial professionals believe that, for example, the stock prices are unsustainably high, financial market dynamics may exert powerful disciplinary pressure.
One of the few mainstream economists to take ideas of behaviour and culture seriously is Robert Shiller, whose Irrational Exuberance (2000) powerfully demonstrated that stock values during the late 1990s relied as much on investor sentiment and herding behaviour as they did on any ‘objective’ analysis of underlying market value:
The market is high because of the combined effects of indifferent thinking by millions of people, very few of whom felt the need to perform careful research on the long term investment value of the aggregate stock market, and who are motivated substantially by their own emotions, random attentions and precepts of conventional wisdom. (2000: 203; see also Shiller, 1997)
While the subsequent collapse of the dot com boom may retrospectively undermine the prescience of Shiller’s analysis, mainstream economists had completely forgotten the lessons learnt during the decade following the 1929 Wall Street Crash (Galbraith, 1975; Kindleberger, 1978) and were confidently predicting that US stock prices could yet triple beyond their historic highs (for example, Glassman and Hassett, 1999). Even though behavioural finance remains on the relative margins of financial economics -hostility to theories of finance that are not easily quantifiable or do not fit into conventional utility models of human behaviour continues (for example, Rubinstein, 2001)—it nevertheless remains significant that economists are taking seriously the idea that humans may behave in economically irrational ways. However, as Froud et al. argue, these gains are still modest in that they represent ‘only the substitution of one scientism for another within a sub-discipline which continues to be narrowly preoccupied with explaining stock prices and remains largely indifferent to social and economic context’ (2000: 69).
An alternative response to neoclassical approaches is to understand financial markets as embedded, as spatially bounded entities (Fligstein, 1990; 1996; 2001). As Mitchel Abolafia argues, finance, ‘is not a world that can be explained in terms of individual homines economic, independently maximizing their utility. It is also not a world of unbridled competitive abandon, but rather a world in which powerful actors create systems to restrain themselves and others’ (1996: 12). In a careful ethnography of some of the different markets collectively known as Wall Street, including bond markets, futures markets and the New York Stock Exchange, Abolafia argues that the nature of financial markets creates particular cultures which inscribe and delimit the strategies of market actors. In the bond markets, for example, Abolafia identifies deceptive and opportunistic traits which are a broadly accepted feature, exacerbated by information overload, unrestrained as a consequence of regulatory liberalism and underwritten by employing institutions which expect traders to be self-reliant, calculated risk-takers who value, above all else, money:
Money is more than just the medium of exchange; it is a measure of one’s ‘winnings.’ It provides an identity that prevails over charisma, physical attractiveness, or sociability as the arbiter of success and power on the bond-trading floor. The top earning trader is king of the mountain. (1996: 30)
Yet, financial markets are not anarchic and uncontrolled: they are frequently high-trust environments with mechanisms of self-regulation that can, but do not necessarily, underwrite probity. Simply speaking, the long-term viability of financial markets requires that behaviour which undermines market integrity (whether this is legal or not) must be restrained. Some of this restraint will be provided by formal state regulation but, as Abolafia (1996) stresses, trader behaviour is also controlled by internal self-interest (while opportunistic behaviour may be acceptable, in markets where such opportunism is not culturally approved it is likely to be a self-limiting activity). Such internal controls exist within a set of formal and informal ritualized social arrangements, such as the setting of standards or the monitoring of aberrant behaviours.
Yet there have, of course, been many cases where systematic and deliberate fraud has undermined the integrity of financial firms and markets and, in extremis, the integrity of the financial system (for example, Tickell, 1996; 1998). When an individual crisis hits prominence, media accounts and official enquiries often foreground the failings of individuals, underestimating the wider causes of failure. As Passos argues, accounts labelled as ‘conspiracy theories’—even if true -are easily discredited in public discourse, become fictionalised in commercial books and thus have no real impact … They [also] imply a bad apple theory, consistent with the … culture of individualism and attribution of both success and failure to particular people -which clouds the systemic risk of similar disasters in future. So if we catch the bad guys the problem is considered solved and structural conflicts are overlooked. (1996: 810)
For Stanley, corrupt financial cultures are not some aberration to be explained by reference to the failings of individuals or firms, they are written into the code of the new financial model. In the case of fraudulent activity on the part of a British investment bank, it was not only that investment bankers broke the law, or that their managers did not understand the new environment in which they were working. More significantly, the regulatory authorities’ behaviour gave ‘rise to a suspicion of collusion: not so much a design weakness but a weakness by design … The erosion of the boundaries between legality and illegality in terms of financial transactions [is related] to the economic aspirations of neo-liberalism and the imperative of deregulation within a strong state’ (1996: 93; see also Tickell, 1996; 2001).
Making the transition from showing that financial markets are culturally constituted to demonstrating that this makes a difference to, for example, the price and efficiency of these financial markets is a complex and underdeveloped task. As Muniesa puts it: ‘contemporary financial markets appear to be … the best place to try to discuss the relevance of a sociological analysis. How [then] to deal with the hard content of those markets without doing economics?’ Furthermore, theories of financial market cultures overwhelmingly explore the ways in which cultures develop in face-to-face environments. The mediating role of traders is, however, under pressure from the technological transformations sweeping the sector, and floor traders are a historical institution in most of the main financial markets in Europe and increasingly too in North America. For economists, this means that markets are becoming more efficient and more rational without intermediaries to provide distortions (for example, McAndrews and Stefanadis, 2000).
On closer inspection, however, although automated exchanges do change the forms of interaction in financial markets, Fabian Muniesa’s (2001) careful examination of trading algorithms shows that they are negotiated between market administrators, traders and firms in the light of their pre-existing views of the world and computational constraints, economists’ theoretical models and statistical evidence. As such, Muniesa argues that even this most transparent and efficient of all economic markets is performed and, following Callon (1998), framed. Muniesa’s analysis of finance here is an important contribution because he shows that the market is transformed by these frames. Apparently neutral algorithms—which are the outcomes of negotiations between key actors—are used by traders seeking the ‘best price’ in order to inform their decisions. These decisions in turn play a part in reconstituting the frame. The prices of financial products are the outcome not only of the processes of supply and demand but also of the parameters built into the frame. Economic rationality and even the transparency of financial markets, then, are attributes of rules, protocols and frames rather than reflecting relatively simple economic ‘laws.’ Therefore, The complexity and heterogeneity of trading architectures show how ‘market behaviour’ cannot be reduced to a schematised version of what traders have got in their heads. It has to deal also with engineering, knowledge and architectural frameworks … Prices are then ‘performed’ within this frame: they are the result of translations, negotiations and efforts of all kinds that give them their specific form … Trading architectures perform economic categories. (Muniesa, 2001: 290)
Paradoxically, however, given the emphasis in sociological and anthropological research on overcoming the shortcomings of neoclassicist approaches to finance, Preda claims that the collective impact of emphasizing networks, trading communities and framing means that the ‘human’ aspect of financial markets has been neglected: financial sociologists, lured by the suave, sophisticated smell of the Eau d’ANT [actant network theory] manufactured in Paris … have given plenty of attention to the trading floors’ cognitive processes and epistemic arrangements. But, somehow, miraculously, human actors have been lost on the way. Setting the focus on the implementation and working of exchange algorithms has somehow led to brushing aside the role of gossip, clique-building, asymmetric information and personal connections which, alas are only too human. (2001: 17)
While Preda’s claim is rhetorically strong, it is self-consciously overemphatic (Abolafia, 1996; Boden, 1993; Boden and Molotch, 1993; French, 2000). The geographically constituted nature of financial centres illustrates this. In his various analyses of international financial centres, and in particular the City of London, Nigel Thrift (1987; 1994; 2001; Amin and Thrift, 1992; Leyshon and Thrift, 1997; Thrift and Leyshon, 1992) shows how financial markets have cultures based upon information, expertise and contacts (see Davis and Greve, 1997; Granovetter, 1985). First, international financial centres are centres of representation for the global financial services industry where research, analysis and information processing occur; second, as they occupy a privileged position in the global financial knowledge structure, international financial centres are where new products are created, tested and transmitted; and third, such centres are loci of social interaction, even in a technologically advanced industry, which underscores the dynamism and trust environments necessary for fluid financial markets.
However, while financial centres may rely upon trust cultures and embedded knowledges, the overwhelming hallmark of the financial market culture is its dynamism and adaptability. Furthermore, while financial markets may be capable of some limited self-regulation, more than in most other socio-economic formations real government intervention, or the threat of it, is a persistent feature. The recent history of the City of London is instructive. Throughout the nineteenth and most of the twentieth century the City operated as something of a ‘club’ where many of the ‘rules’ of the international financial system were set and policed. This was a community sustained by an unrivalled knowledge structure (Thrift, 1994), and close-knit ties between individuals maintained the City’s coherence (Courtney and Thompson, 1995). Until the internationalization and transformation of finance in the 1970s and, particularly, the 1980s, the City’s community was drawn from a narrow, upper-class social stratum which both ‘strove towards endless expansion … so as to gain competitive advantage over rivals, and … tried to enlist non-economic power to regulate the system and to give monopolistic advantages to members’ (Amin and Thrift, 1992: 581). The regulatory analogue to this community was the Bank of England, a central bank that retained considerable operational autonomy even after it was half-heartedly nationalized in 1946. For the majority of the twentieth century, the Bank of England’s approach reflected its social and cultural affinities with the community it supervised, and, at key moments, it was difficult to determine whether the Bank operated as the government’s enforcer within the City or the City’s representative in government. Certainly, the Bank encouraged informal, uncodified regulation and self-regulation on the part of a coherent group of bankers (Moran, 1991; Tickell, 2001). During this period, the regulation of Britain’s banking community rested upon strong social ties, cultural understandings of acceptable behaviour and the City’s monopolistic and competitive advantages. Critically, this regulatory form was strongly spatially constituted: banks were all headquartered within a tightly defined geographical space in the City proscribed by the Bank of England (Amin and Thrift, 1992; Davis and Greve, 1997).
The City of London today is a very different environment to its nineteenth-century predecessor. The informal, culturally specific regulatory approach of the Bank of England has been replaced by a more codified, rules-based system (Tickell, 2001), traditional social structures have been replaced by more reflexive and culturally diverse groups of professionals, and trust structures have been reconstituted through relationships. As Thrift puts it: ‘The formal gavottes of the Old City have therefore become much more complicated dances: “the first thing is self”’ (1994: 348). Yet, the City remains one of the world’s three most important financial centres (alongside New York and Tokyo) because, as Amin and Thrift (1992; Leyshon and Thrift, 1997; Thrift, 1994) point out, the City has been able to adapt to, and thrive on, change.
For all the theoretical sophistication of recent sociological and anthropological literature on finance, analysis of the cultural constitution of finance remains largely gender blind (exceptions being, for example, Halford and Savage, 1995; Halford et al., 1997). Yet, this is an industry where homosocial trust environments have traditionally been male environments. Indeed, the very language of finance is masculinist: successful traders at Salomon Brothers during the 1980s were given the honorific ‘Big Swinging Dick’ (Lewis, 1989), while the Bank of England’s nickname, ‘The Old Lady of Threadneedle Street,’ invokes not only the antiquity of the institution but also the spinster aunt so beloved and derided by the English upper classes. Nevertheless, as Thrift (1994) points out, it is important to recognize that just as the old homosocial City is being replaced by a newly reflexive managerial and professional cadre, so too are the old proscriptions on women working in senior positions. At one level, the uniquely male financial environments in London, New York, Chicago and so on are being undermined by the twin pressures of meritocracy and litigation. For all of its institutionalized sexism, finance is an intensely competitive business where many of the old ties which bound it are breaking down.
The most substantial geographic treatment of the gendered nature of finance is McDowell’s (1997; 2001; McDowell and Court, 1994a; 1994b; 1994c; see also Jones, 1998) analysis of the City of London. In the City, McDowell argues, women are underrepresented at senior levels, less well paid than men for substantively equivalent jobs, and frequently socially and occupationally excluded. However, this is not the outcome of simple, deliberate sexism where men actively seek to exclude women from the job (although there are vestigial remains of an era where such behaviour was the norm), and our explanations must reflect the complexity of the process. Three sets of literature illuminate the account. First, Butler (1987) elaborates the ways in which constantly repeated acts congeal over time to naturalize and construct a learnt and performed gender (which can, nevertheless, be subverted). Second, accounts of the relationship between masculinity and forms of power (Connell, 1987; Roper, 1994) argue that there are different masculinities which embody relations of domination, alliance and subordination. Finally, there is work on the economic sociology of embeddedness (Granovetter, 1985; Zukin and DiMaggio, 1990). These literatures allow McDowell to theorize gender in the workplace as being a performed activity, within a broader context where investment banking has forms of hegemonic masculinity (including long-standing paternalistic masculinities and aggressive trading cultures which subordinate both femininities and alternative masculinities). This contributes to a situation where women’s bodily appearances clash with the dominant work culture, transgressing accepted organizational norms. Consequently, women’s subordinate position within the City reflects embedded social actions and rationalities, dominant masculinities within specific institutional contexts (different parts of a bank and different banks) and performative actions.
The Discursivity of Finance
Critical to understanding the cultural geographies of finance is a recognition of interpretive power struggles, where different sets of scripts and discourses conjure up different economic worlds. This is clearly evident in social scientific academic accounts of financial phenomena (see Leyshon and Tickell’s 1994 unpacking of alternative historical geographies and political economies of the post-Second World War financial order). It is also apparent in the ways in which economists’ analyses spill over into the object of their study: economists are not some neutral arbiters or dispassionate modellers of the system. Just as economists in general have framed and transformed both the analysis of the economy and its real mechanisms (for example, Callon, 1998; McCloskey, 1985), so too have they altered the terrain of contemporary financial markets. Economic theories and practices have transformed the derivatives markets (Bernstein, 1993), and the events at Long Term Capital Management (LTCM) in 1998 provide a perfect illustration of the interrelationship between the framers of financial architectures and the architecture itself. LTCM was set up as a hedge fund that exploited marginal differences in prices in different financial markets with an aggressive use of leverage (or borrowed money). During August 1998, companies trading with LTCM took fright after Russia announced a partial default of some of its debts, precipitating a run on LTCM and fears that the integrity of the global financial system would be undermined (see, for example, de Goede, 2001; President’s Working Group on Financial Markets, 1999). Much of the mainstream commentary on the collapse of LTCM emphasized that the company had been founded by two of the three Nobel economists who had devised the original pricing model for derivatives, suggesting that economists should refrain from engaging with the practices they describe. However, MacKenzie’s analysis shows that the relationship between finance and finance theory is an evolving and codetermining one:
The dominant tendency, over the last thirty years, of … the ‘financial innovation spiral’ has been to increase the truth of finance theory’s typical assumptions … LTCM’s fate has provoked some anti-intellectual nonsense. Mathematical finance is part of the modern world. The techniques developed out of the research of Black, Scholes and Merton continue to work perfectly well in millions of transactions daily, and their abandonment would be unthinkable folly. Yet we must also remember that finance theory describes not a state of nature but a world of human activity, of beliefs and of institutions. Markets, despite their thing-like character, their global reach, and their huge volumes, remain social constructs, and the feedback loops that constitute them are intricate, knotted and still far from completely understood. (2000: 1, 5)
Finance, then, has the capacity to act upon discursive constructs with a speed and efficacy that academics find it difficult to comprehend.
An intriguing and sophisticated account of the interplay between the cultures, economics and spaces of finance is found in Anna Tsing’s (1999) exploration of the events surrounding Bre-X. This was a Canadian gold mining company that claimed to have found significant deposits of gold in a ‘new’ area of Indonesia. The ‘discovery’ had a series of major impacts: the destruction of protected forests; claims and counterclaims as to whom the land on which the discovery was found actually belonged; corrupt relationships with government officials; and soaring share values for the company (which rose from 51 Canadian cents in 1993 to C$286.5 by May 1996). By early 1997 the company’s geologist had mysteriously fallen from a helicopter (his body was never found, and it was never clear whether the fall was an accident, suicide or murder) and the company’s gold discovery was shown to be illusory. Tsing shows how this story allows us to expose a series of projects embedded within the discourses of global finance (see also de Goede, 2001; Tickell, 2000a). While many understandings of finance are that it has become detached from the material world (money moves instantaneously as bits of information) and from geographic space (finance is globalized, trading occurs ‘around the clock’), Tsing argues that these undervalue the complexity of what is going on. On the one hand, the apparent disjuncture between money as sign and the ‘real’ world of money is a reflection of a ‘conjuring aspect’ of finance, which makes things appear to be real. On the other, finance is both performative and discursive in nature:
The conjuring aspect of finance interrupts our expectations that finance can and has spread everywhere, for it can only spread as far as its own magic. In its dramatic performances, circulating finance reveals itself as both empowered and limited by its cultural specificity. Contemporary masters of finance claim not only universal appeal but also a global scale of deployment. What are we to make of these globalist claims, with their millennial whispers of a more total and hegemonic world-making than we have ever known? Neither false ideology nor obvious truth, it seems to me that the globalist claims of finance are also a kind of conjuring of a dramatic performance. In these times of heightened attention to the space and scale of human undertakings, economic projects cannot limit themselves to conjuring at different scales—they must conjure the scales themselves. In this sense, a project that makes us imagine globality in order to see how it might succeed is one kind of ‘scale-making project’ … By letting the global appear homogeneous, we open the door to its predictability and evolutionary status as the latest stage in macronarratives. (Tsing, 1999: 119)
The appearance of homogeneity is underwritten by the ways in which international investment works, obscuring the ability of ‘investors’ (often simply a synonym for short-term speculators) to distinguish between companies with long-term potential and ‘those that are merely good at being on stage’ (1999: 127). While finance may appear to be global, particular investments embody strategies at the scales of the global (finance capital); the national state (in the case of Bre-X, corruption on the part of both Canadian executives and local officials); and the region (the redefinition of forest lands with an existing population as the frontier, in much the same way as the American west became an unpeopled frontier, in the nineteenth century). These are scalar projects which become tangentially linked at particular moments and whose copresence is strengthening. Yet, each of these projects should be recognized as unpredictable and specific rather than inevitable and ubiquitous: the national specificity of attraction to investments disappears in the excitement of commitments to globalism in the financial world. When one thinks about finance in the Bre-X case, there was nothing worldwide about it at all; it was Canadian and US investment in Indonesia. Yet it is easy to assimilate this specific trajectory of investment to an imagined globalism to the extent that the global is defined as the opening-up process in which remote places submit to foreign finance. Every time finance finds a new site of engagement, we think the world is getting more global. In this act of conjuring, global becomes the process of finding new sites. (1999: 142)
Research on the cultures of money has flowered at precisely the moment when finance has reached supremacy in the material and discursive constitution of Anglo-American capitalisms, and the developing literatures from France and Germany are indicative of the emerging place of finance in those countries too. It has also occurred during a period when the economic as an object of analysis has become subsumed within the majority of the social sciences.
Explanations for this are not hard to find: much orthodox economics and Marxism treated culture as an irrelevance; economic rationalities do not approach an adequate understanding of lives and economic practices which are socially and culturally constituted and embedded; left social scientific enquiry falls on stony ground in a world where economic theories remain dominated by liberalism; ‘the study of economics has become devalued in the sense that moral values have been expelled from consideration’ (Sayer, 1999: 54); and so on. The result, however, is that something of an imbalance has arisen, somewhat acer-bically summed up by Thrift’s claim that, ‘“Cultural” analysis has become more and more sophisticated but it is mixed in with a level of “economic” analysis which rarely rises above that of anyone who can read a newspaper’ (1999: 35). And yet money is not just another commodity to be analysed, it is the essence of contemporary capitalism. It is, as Swyngedouw polemicizes, one of the most powerful signs in a world of almost complete commodification … But surely, it is not just a sign and a metaphor ready for deconstructive enquiry. Money incorporates also, and arguably foremost, direct bodily power. Starvation in Sudan or in the homeless shelter of London’s South Bank, the plight of the unemployed or the summits of economic and political power show the powers of money in their most repressive, violent, subordinating or, as the case may be, empowering and emancipatory capabilities. (1996: 138; see also McMurtry, 1999)
This means that the most effective cultural geographies of money need to jettison unhelpful distinctions between the separate spheres of economy and culture, and develop a more sophisticated approach to the integration of cultural and economic explanations. One possible avenue is to develop the research project of the regulation school of economists. Regulation theory now occupies a footnote in the recent history of geography but was originally developed by formerly Althusserian economists (notably, Aglietta, 1979; Lipietz, 1983) as a means of integrating macro-economic analysis and a sensitivity to macro-social and macro-cultural forms in order to explain the medium-run stability of capitalism in the light of the mode’s severe tendencies towards crisis and instability. The paradigmatic example of regulation school analysis was of the period after 1945 when mass production, mass consumption, largely nationally oriented economic systems, the emergence of mass consumer finance, household structures, Taylorism, the gender division of labour and a (limited) welfare safety net coalesced in the form of the long Fordist—Keynesian boom (Aglietta, 1979; Jessop, 1995; Tickell and Peck, 1992). In its most sophisticated variants, then, regulation theory was always sensitive to society and culture.
As regulation theory was adopted and developed by social scientists beyond the original group, it tended to focus on the state, the spatialization of the economic and—in cruder variants which did much to discredit the approach—the supposed ‘post-Fordist’ mode of growth. A re-engagement of culturally sensitive analysis with regulation theory would build upon a dialogue that Michel Aglietta has been engaged in with anthropologists since the early 1980s (Aglietta and Orléan, 1982; 1998; see Grahl, 2000, for an English language review). Aglietta’s account is distinctive because not only is it economically literate and resistant to liberal fallacies, but he embeds his theories within the political, social and cultural and vice versa: ‘Far from being an appendix of the real economy, finance is the nervous system of the economy as a whole’ (1988: 113; quoted in Grahl, 2000). In recognition of this, some of the original architects of regulation theory have begun to explore the capacity for a new economic-social model to coalesce and cohere: that of a financialized mode of capitalism (for example, Aglietta, 1998; Boyer, 2000a; 2000b; see also Froud et al., 2000). This entails subjecting to critical enquiry the micro-, meso-and macro-economic and cultural changes where finance has appeared to impose its logic. Can we, for example, talk of a financialized mode of growth? Is such a mode economically and/or politically sustainable? How do imperious cultural norms stabilize and transform finance?
Such a venture is not unproblematic. While regulation theory has frequently been misread as both crudely economically determinist and simply a theory of Fordism, it is true that most regulationists implicitly adhered to a belief that economic processes should ultimately subordinate others (Gibson-Graham, 1996). Furthermore, analyses based upon identifying coherence over years and decades run the risk of crudely imposing form where there is none and emphasizing difference rather than continuity (Thrift, 1989). And yet, just because a venture is risky and potentially problematic does not mean that it should not be attempted. While ultimately extant regulationist accounts of financialization are partial, as with their earlier accounts of Fordism they do provide a useful reminder that the economic, the social and the cultural are intertwined. For example, a regulationist approach may note the widespread and growing tendency in western capitalist countries for the logics of finance to penetrate social life and subject it to critical interrogation as to the economic sustainability of the process. Yet, for this to develop force, it would also need to explore the cultural specificity of the process (the form of financialization is different in different geographical contexts, and there are varying degrees of resistance to the supremacy of finance); the ways in which the framing of the rules at the micro level cascades through the economy; and the ways that narratives construct and naturalize the place of finance. Therefore, this should not simply be a regulation theory which visits the twenty-first century through the lens of Fordism, but one which attempts a coherent integration of cultural and economic analysis, drawing upon Boltanski and Chiapello (1999) whose explanation of cultural and economic change argues that inherent in the creative, Schumpeterian, nature of capitalism is a capacity to feed off its critics: ‘The main agent in the creation and transformation of the spirit of capitalism is its critique’ (1999: 555; see also Guilhot, 2000; and Tilly, 1999).