Financialisation as Monopoly Profit: The Case of US Banking

Different economic measures afford different ways of seeing processes of financialisation. In the prototypical case of the US economy, the most compelling evidence of post‐1970s financialisation is found in corporate profits measures. This much has been clear for at least a decade. What remains much less clear, however, is the explanation for the long‐term maintenance and amplification of extreme financial‐sector profitability that financialisation in the United States has and continues to entail. With a specific focus on banking, this article turns to post‐Marxian scholarship on profit rate trends to explain this phenomenon. It argues that limited and declining levels of competition within the US banking sector during recent decades—rooted in high levels of industry concentration, collusive behaviour, and substantial entry barriers—have contributed to sustaining and boosting abnormal sectoral profitability. In doing so, the article theorises financialisation in the United States explicitly in terms of monopoly profit.     

Introduction: Financialisation and Development in Asia under Late Capitalism

Abstract

Multilateral development agencies have increasingly focused attention on underdeveloped countries in Asia as potential new sites for financial capital. Often referred to as “emerging markets”, these economies are seen as ripe for private sector investment and, at the same time, in need of foreign capital to support rapid industrialisation, modernisation and poverty reduction. For development agencies, this confluence of interests suggests a means for quickly closing the “development gap”, primarily through mobilising techno-managerial modalities designed to reduce barriers to capital entry and other institutional inefficiencies seen as inimical to investment. Thus development agencies now encourage the construction of “enabling environments” to support “market driven development” through processes of “financialisation”. Development, in this sense, is no longer state-led or state-centred, but rather financially driven and privately procured.

As we highlight in this special issue, however, financialised modes of development are highly contested and problematic. Indeed, the diffusion into the underdeveloped world of essentially developed world financialisation agendas that seek to instil a broad-based market rationalism that downloads new costs and risks to populations is of significant concern. This Introduction sets in context and introduces a much needed set of articles that bring clarity to financialisation in developing Asia and its implications for development as a process of substantively improving material conditions.     

Urbanisation and Financialisation in the Context of a Rescaling State: The Case of Spain

The secondary circuit is a central element in the processes of capital accumulation, and its relevance has become more acute in recent years as urban planning, housing, and real estate have become privileged arenas of the territoriality “variegated” processes of neoliberalisation. This paper explores three theoretical concepts, all closely associated with neoliberalisation: the rescaling of the state, urban entrepreneurialism and financialisation. The paper uses these three theoretical concepts to explain, on the one hand, the increasing relevance of housing and real estate and, on the other hand, their connection with two of the major manifestations of the current financial crisis: excessive private indebtedness and the credit crunch. Analysing the Spanish case is particularly revealing because of the intensity of construction work until 2007, the severity of the subsequent economic crisis, and the wide range of agents involved in the growth of a neoliberalised and financialised secondary circuit of capital in Spain.     

Private rental investment and socio-spatial disadvantage in Sydney,Australia

This article unpacks the connection between a growing cohort of small-scale but purposive property investors and urban socio-spatial restructuring. We analyse private rental housing as a tenure share to demonstrate its spatial correlation with the suburbanisation of socio-economic disadvantage in Sydney, Australia, between 1991 and 2016. Then, we show how investors drive this emerging pattern by reference to the geography of property owners’ stated investment objectives—low capital outlay, rental yields, and capital growth prospects. We contend that the link between their small-scale activities and the city’s changing socio-spatial structure is an overlooked consequence of private rental sector (PRS) housing financialisation. Importantly, our focus on behaviours exhibited by small-scale rental property owners in PRS financialisation transcends existing analyses that have concentrated on corporate entity activity in this space. That focus also contrasts with framings of private rental growth as a residual outcome of developments elsewhere in the housing market. Such work is significant because it demonstrates the impacts of real estate investment on urban form.     

The Politics of Crisis: Deconstructing the Dominant Narratives of the Housing Crisis

This paper considers how dominant narratives of the housing crisis, since the 2008 banking crisis in England, have been created and what actions taken in its name. The paper deconstructs the term “crisis”, highlighting that its meaning has evolved from a critical moment to a protracted narrative which must be understood historically. Through discourse analysis into housing and party political policy, media and think tank reports, we argue that the employment of housing crisis by the government and others perceives it as an outcome of housing supply constraints and over-regulation—narratives that have justified subsequent policy actions aimed at propping up the housing and financial systems, opening new avenues for housing commodification, deregulation and financialisation and reproducing crisis anew. However, we note that these narratives can also break down and space can be created for the articulation of new narratives which refocus housing crises as emerging from inequality and class divisions.     

Financialisation through Microfinance: Civil Society and Market-Building in India

Abstract

Microfinance does not reduce poverty, but it does successfully construct economic relations between owners of capital and borrowers of capital, allowing surpluses to accumulate through finance. It does so by drawing on the agency of financialised civil society actors who facilitate financialisation by working around the state to build new markets in finance and other goods. This article understands financialisation as the expansion of the frontier of financial accumulation. Microfinance is shown to achieve this expansion by establishing credit-based linkages between owners and borrowers of capital, allowing surplus accumulation to take place via the credit relation. Underlying this material relationship, there is also a level at which financialisation motivates and pressures civil society actors to bring microfinance to the poor. By becoming financialised agents themselves, civil society organisations act as conduits for an expansion of financial markets and the construction of new market relations for other goods. A case study of microfinance for water and sanitation in India shows in detail how this construction of markets via civil society works in practice, highlighting the pressures and opportunities presented by microfinance as a vehicle for building markets.     

Neoliberalisation from the Ground Up: Insurgent Capital,Regional Struggle,and the Assetisation of Land

In this paper we argue that “assetisation” has been a central axis through which both neoliberalisation and financialisation have encroached in the post‐Fordist era. We focus on the mobilisation of land as a financial asset in northwest England's former industrial heartlands, offering an account of how property developer the Peel Group came to dominate the land and port infrastructure of the region through aggressive debt‐led expansion and, in particular, a hostile takeover of the Manchester Ship Canal for its land‐bank. In doing so, we illustrate how the capture of resources, especially land, by private corporations has shaped both substance and process of neoliberalisation from the ground up. By focusing on transformative struggles over land we contribute to research agendas attempting to understand the systemically dispossessive nature of assetisation, its relationship to fictitious capital formation, and the way such neoliberalising transformations are produced through grounded and situated socio‐spatial struggles.     

The Financialisation of Rental Housing 2.0: Releasing Housing into the Privatised Mainstream of Capital Accumulation

This article presents two cases of listed real estate companies that operate in the Ruhr metropolitan region of Germany. The first is Immeo Wohnen, a subsidiary of the French real estate investment trust (REIT) Foncière des Régions that was previously owned by a US hedge fund. The second is Vonovia, Germany's largest real estate company, originally a subsidiary of a British private equity firm. Both examples embody what we call the shift from financialisation 1.0 to financialisation 2.0, i.e. the transition from pure speculation to long‐term investment. We show that long‐term investment strategies are used by REITs and listed funds in order to release housing into the privatised mainstream of capital accumulation. With the advent of the financialisation of rental housing 2.0, the long‐term investment focus of these funds paradoxically enables a short‐term investment focus by buying and selling shares in these funds on the stock exchange.     

Banking Nature? The Spectacular Financialisation of Environmental Conservation

Abstract: In this paper I emphasise the financialisation of environmental conservation as 1. the turning of financiers to conservation parameters as a new frontier for investment, and 2. the rewriting of conservation practice and nonhuman worlds in terms of banking and financial categories. I introduce financialisation as a broadly controlling impetus with relevance for environmental conservation. I then note ways in which a spectacular investment frontier in conservation is being opened. I highlight the draw of assertions of lucrative gains, combined with notions of geographical substitutability, in creating tradable indicators of environmental health and harm. I disaggregate financialisation strategies into four categories—nature finance, nature work, nature banking and nature derivatives—and assess their implications. The concluding section embraces Marx and Foucault as complementary thinkers in understanding the transforming intensifications of late capitalism in environmental conservation, and diagnosing their associated effects and costs.     

New rent seeking strategies in housing in Spain after the bubble burst

This paper analyses the new rent seeking strategies in housing implemented during Spain’s financial crisis. The Spanish Model presents a paradigmatic case of the need for capital to reinvent itself through the articulation of new mechanisms for the production and appropriation of urban rent, as the crisis revealed the limits of strategies that were implemented during the bubble period. Amongst these new strategies, the paper analyses the rescue of financial entities, the creation of a ‘bad bank’ and the establishment of Spanish REITs. These mechanisms are leading to financialisation of rental housing and the emergence of vulture funds as new transnational owners of housing.     

Precarious Debt: Microfinance Subjects and Intergenerational Dependency in Cambodia

This paper tells a story of debt within a rural Cambodian family in order to understand how microfinance produces more‐than‐individual financial subjects that are entangled in changing social relations of dependency. We draw upon 20 months of joint ethnographic research in Cambodia, where the microfinance industry is one of the largest per capita in the world. Informed by Judith Butler's notions of precariousness and precarity, we argue that even in the context of deepening financialisation, people's lives remain dependent upon others, especially within families. We analyse how these family relations of dependency are reworked along generational lines and spatially stretched due to precarious economic conditions of indebtedness, household migration, and distant labour markets. We conclude that reframing financial subjectivity in terms of precariousness helps us to analyse the relationship between households and financial markets, as well as inform a critical politics of finance.     

Financialisation,Climate Finance,and the Calculative Challenges of Managing Environmental Change

This article describes the emergent and unstable dispositif of climate finance that is being built from iterative experiments in climate finance provision. The article provides a periodisation of different phases of climate finance from the 1990s onward using examples from REDD+, ecosystem services, the Green Climate Fund, green bonds, and insurance‐based derivatives, and connects this periodisation to broader processes of financialisation. It analyses how climate finance projects incorporate competing systems of accounting denominated in carbon, natural capital, “green‐ness”, insurance risk and internationally transferred mitigation outcomes. The article argues that many accounting units are evident in current climate finance products, each loosely derived from a different phase in this periodisation. However, experiments in calculating time and value in climate finance continue, and although risk is being increasingly used to correlate different denominators of value, an overall solution for how climate change is to be accounted for in financial interventions remains elusive.     

The chance for change in the Arab world: Egypt's uprising

As the largest Arab country, Egypt has always played a crucial role in the politics of the Arab world; however, the internal political dynamics of Egypt have until the January 2011 uprising hardly attracted a glance from international observers. This article gives an overview of the political arena and the various political forces at play in post‐Mubarak Egypt. With many unpredictable variables currently at play in Egyptian politics, the result of the elections scheduled for November 2011 will likely surprise many, both within the country and beyond. The article also looks at what impact the political changes in Egypt may have had on the relationship between Egypt and Israel. There have been increasingly frequent demands within Egypt to revise the Camp David accords—but not at the expense of war with Israel. While Israel is unlikely to accept any calls to revise the peace treaty, Arab public opinion has become newly relevant for policy‐makers and Israel will have to make corresponding adjustments to its regional security strategy.     

The Rise and Demise of the Middle East Quest for Reforms, 2011–2017

Six years have passed since Arab masses in Tunisia, Egypt, Libya, Syria, Bahrain, and Yemen revolted against oppressive, corrupt, and autocratic regimes. These and lesser revolts in Morocco and Jordan — as well as muted ones in the oil producing Gulf States — shared common goals and themes: justice, dignity, economic, political, and social reforms (el‐Gingihy, 2017 ). The revolutionaries wanted to end government bloating and oppressive bureaucracies; and political and massive public corruption by the ruling classes; and instead, involve citizens in the participation in governance and policymaking. The oil‐rich countries were quick to shower their nationals with salary bonuses and more generous subsidies. The poorer Arab countries were quick to unleash their violent security forces on the masses in order to quell the uprisings using brute military force, including using poison gas in Syria, and operating mass killings of demonstrators at Rab‘a Square in Cairo, Egypt. With the exception of Tunisia, the rest of the Arab countries reverted to oppressive regimes, or civil war chaos, as was the case in Libya and Yemen. The United States, which hailed the Arab uprisings during the reign of the Obama Administration, has changed course under the isolationist Trump Administration, which looks upon all Arabs and Muslim people and nations as potential supporters of what the current administration labels as Muslim terrorism. Along with an analysis of events in the region, this article also reviews the most recent books published which deal with the Arab revolts, and which include what lies ahead for the Arab world under the new rulers who replaced old regimes. It will also analyze the Arab countries’ response to a Trump Administration that seems to adopt political isolationism, while at the same time, showing an obvious inclination for personal and national business involvement in the region, such as the recent opening of a Trump golf course in the United Arab Emirates, and the appointment of former MOBIL CEO Executive Rex Tillerson, who has strong business ties with Russia and the oil‐producing Gulf States.     

Social Media and Social Change

The growing impact of new media around the world has been the subject of study by scores of scientists in multidisciplinary fields. Satellite TV and the Internet have been viewed as instruments of social and political change — connecting communities, educating the youth, and creating social networks previously unaccounted for, like virtual groups. However, in the Arab World and the Middle East, such technological developments have been hailed as tools for the empowerment of marginalized communities such as women and the youth, also brought new opportunities that have resulted in the breaking of the communication monopoly by those in power and the creation of a new communication environment. Such environment has — as part of its manifestations — the current social transformations that the region is witnessing. Drawing on examples from social media networks used in Tunisia and Egypt, this article analyzes the extent to which new technologies have changed the rules of the game regarding public opinion construction and the communication flow traditionally monopolized by the hegemonic power structures in Arab society. This study not only reveals the decisiveness of platforms like Facebook, Twitter, and YouTube in the Arab Spring countries’ revolutions, but also the extent to which their availability served in a complex manner the democratic transition that Tunisia have been undergoing and the political turmoil that Egypt is witnessing. Furthermore this study argues that such online spheres of communication mark the emergence of the virtual yet vibrant space of political campaigning and social empowerment, especially for the youth and marginalized communities.     

The French Radical Right: From Anti-Semitic Zionism to Anti-Semitic Anti-Zionism

This article highlights the deep ambiguities of the French radical right's vision of the future of the Jews. While being hostile to the Jews' integration into the French nation—whose Catholic nature they are alleged to corrupt by promoting Anglo-Saxon liberal and cosmopolitan values—the far right at first manifested sympathy for Zionism, the perfect solution for expelling the Jews. At the same time, although it despised Arab immigrants in France, it nonetheless had a positive view of the values of the Arab world, seen as being hostile to money. Subsequently, except for the period of the Algerian War, when its interests seemed to coincide with those of Israel, the far right became fervently anti-Zionist. Today it rushes to the aid of the Arab world (from Palestine to Iraq), which is seen as dominated by the State of Israel, an instrument of international capitalism.     

阿以冲突的现状、成因及出路

巴勒斯坦地区的阿以冲突历久不息,加剧了世界政治与民族关系危机,因此认识其冲突的根源和解决的途径,已成为世人关注的问题,成为研究阿拉伯和以色列问题的认识前提。鉴于出自实际考察的研究不是很多,即便有一定论著也多从官方视角出发,难以触及当地社会现实的底层,所以本文试图在这方面做一补充,从长期的社会底层观察和思考中总结阿以冲突的症结所在,以裨读者对这一国际政治焦点问题的具体形势获得正确理解。     

Storm Drains as Assemblages: The Political Ecology of Flood Risk in Post‐Colonial Bangalore

Cities around the world are increasingly prone to unequal flood risk. In this paper, I “materialize” the political ecology of urban flood risk by casting stormwater drains—a key artifact implicated in flooding—as recombinant socionatural assemblages. I examine the production of flood risk in the city of Bangalore, India, focusing on the city's informal outskirts where wetlands and circulations of global capital intermingle. Staging a conversation between Marxian and Deleuzian positions, I argue, first, that the dialectics of “flow” and “fixity” are useful in historicizing the relational politics of storm drains from the colonial to the neoliberal era. Second, flood risk has been heightened in the contemporary moment because of an intensified alignment between the flow/fixity of capital and storm drains. Storm drains—and the larger wetlands that they traverse—possess a force‐giving materiality that fuels urban capitalism's risky “becoming‐being”. This argument raises the need for supplementing political‐economic critiques of the city with sociomaterialist understandings of capitalism and risk in the post‐colonial city. The paper concludes with reflections on how assemblage thinking opens up a more distributed notion of agency and a more relational urban political ecology.     

The Political Economy of Housing Investment in the Short-Term Rental Market: Insights from Urban Portugal

Short-term rentals (STRs) emerged as holiday accommodations, disrupting the hospitality industry in the decade before COVID-19. Mainstream explanations for their growth revolved around digital tourism platforms like Airbnb as market disruptors and the sharing economy rationale. At the same time, critical scholars explored the capitalisation of greater rent gaps in urban central locations. However, these explanations are insufficient to explain the growth of STRs. We supplement them by building bridges between the urban political economy and the geographies of financialisation through the cases of Lisbon and Porto before the pandemic. The paper focuses on tourism-induced housing investment, taking a closer look at the profile of investors in association with STR property managers in the context of the late-entrepreneurial urban regime. We conclude that tourism development has allowed opportunities for housing financialisation through STR professionalisation, enhancing the allocation of interest-bearing capital in tourism-oriented real estate.     

Making Real Estate Markets: The Co-Production of Race and Property Value in Early 20th Century Appraisal Science

Analysing the standardisation of appraisal alongside the development of modern real estate markets in the early 20^th century, this article demonstrates that the construction of a racialised proper(tied) economic subjectivity was pivotal for realtors’ ability to secure legitimacy and profit as a burgeoning profession. Appraisal embedded racial logics within real estate markets such that their routine functioning could generate the submarket differentiation necessary for the realisation of class-monopoly rent. This study’s focus on appraisal before federal redlining addresses key lacunae in the historiography of segregation by foregrounding markets’ historical function as infrastructures that produce and spatialise the social difference crucial for profit in real estate. This article also seeks to inform engagements with contemporary processes of land speculation, commodification, and financialisation shaping US cities by advocating attention to the specific mechanisms that constitute race as a modality for the appropriation of surplus by real estate capital.