It’s not every day one is quoted – not just mentioned but quoted! – in a publication as eminent as The New Yorker, so you will forgive me for adding it to the scrapbook. The article, a review of Elizabeth Popp Berman’s new book ‘Thinking Like an Economist: How Efficiency Replaced Equality in US Public Policy‘ has me mentioned next to the late great David Graeber. We are the obligatory econ-hating-lefties in Idrees Kahloon’s ‘war on economics’ (see left) but still. I’m very glad to be in Graeber’s company, too.
And here we are – the evidence. I’ll lay my hands on a paper copy soon!
The line itself comes from a blog I wrote for the LSE back in 2014, following the publication of my book I Spend therefore I Am (Viking, 2014, republished by Penguin as A Richer Life, 2015, and now available for less than a fiver, so knock yourself out). The book ruffled a few feathers among reviewers, just as Elizabeth Popp Berman seems to have done, and the blog was something of a reply to critics. Here it is:
I teach fourth year undergraduates a module called ‘sociology of finance’. It’s a kind of mash-up of the ‘social studies of finance’, economic sociology and a little critical political economy. This semester, I had to explain to students why I was taking part in industrial action over cuts to our pension, and I tried to do using the ideas we worked with in class. If social theories are tools for thinking, as I always tell the students, we should try to use them when we can. That converstion continued on the picket line and grew into a seminar for colleagues. They liked it, and so I recorded a verson to share. The central argument is that the tools of valuation – all those ‘gilts plus’, ‘discount rates’, and ‘prudence’ – offer a space where things happen and political contestations are worked out. In every financial valuation, paraphrasing Greta Krippner, lies a history of contestation and struggle. To move towards an outcome that is satisfactory for everyone, I believe this is where we need to focus our attention; our dispute as as much about the sociology of knowledge as it is old-fashined industrial relations.
Here it is. I hope you find it helpful, informative, and not too partisan. I hope you like it too, and if you do, please pass it on.
In January 2019 I decided it might be interesting to have a go at doing a podcast. There’s something enticing about jumping into the podcast space, crowded though it might be, the thought that you can record a few words and the next thing find yourself available on iTunes, Spotify, and other such platforms. So I bought myself a microphone, read up on the necessary infrastructure, drew a logo, sketched out a plan of what I might say. I’ll have it all wrapped up by the autumn, I thought.
Jobbers in the LSE’s ‘Gorgonzola Hall’
Everything always takes longer than you think. Nearly two years later, I have finally published the concluding episode of ‘How to build a stock exchange’. Over 18 episodes, the podcast has offered a social history of finance as we know it today, exploring the sociology and materiality of financial markets, and showing how contemporary exchanges have evolved from local concerns to global data infrastructures. The narrative features much of my original research on the markets of London throughout the twentieth century, and a smattering of anecdotes from my own youthful experience, in the days before I realised that writing about finance was far more interesting than trying to do it.
More importantly, the podcast is an attempt to find new voices for research and to disseminate more widely the intellectual concerns of a critically-inclined management scholar. In the final episode I invoke Hunter S Thompson and the spirit of gonzo: aiming for an intimate, first person take that emphasises spontaneity and raw authenticity over form and polish, where ‘deliberate derangement of the senses… de-familiarises reality, opening the door to paradoxically clearer perceptions, a twisted perspective..’ (I borrow the words of literary scholar Jason Mosser). An honest telling of our own stories, I suggest, is the best way we have of finding our moral compass in this complicated world; it certainly seems to have more integrity than writing critical articles about four-star journals in those same four-star journals. It is, says José Ossandón of Copenhagen Business School, a ‘genre-widening event’:
Listened final episode of @Philip_Roscoe's podcast. Lot to think, this I can say for now. It is a genre widening event. Not only does it challenge the understanding of stories in finance, but also how we in the social sciences tell stories about finance @JCultEcon@Val_Studies
Dotcom London, the fringes thereof (as seen in ‘Lock Stock’)
So the podcast zoomed between my own research, the rich offerings of the field of the social studies of finance, and a curious selection of anecdotes from the field: breakfast with some global heavies in the Cadogan Hotel (episode 15), malicious croquet and business angels (episode 4), surfing the fringes of dotcom London (episode 13) from stuffy offices behind the sooty Victorian ironwork of the still functioning Borough Market, all rats and squashed vegetables. London in the 1990s seems a world away, containing both the promise of a unbounded global world and the seeds of the present globalised mess that we find ourselves in. Along the way it explored themes such as gender inequality in financial markets (episode 10) and the murky history of finance and slavery (episode 17). The latter topic, written in response to the Black Lives Matter movement, explored Liverpool’s burgeoning financial sector and the narrator’s own connections to the city. It led to an article in The Conversation, ‘How the shadow of slavery still hangs over global finance’. In July 2020, I was invited to address an audience of US policymakers and regulators, alongside Commissioner Rostin Benham of the US Commodity Futures Trading Commission, to discuss a possible exchange for recyclable materials, and I talk more about this possibility features in the final episode.
The podcast has been downloaded twelve and a half thousand times and the transcriptions accessed a further ten thousand times. The Guardian’s Aditya Chakrabortty described the podcast as ‘brilliant and searching’, while others said ‘beautifully told, fascinating, and very important’ (Dr Paul Segal, Kings College London), ‘an absolutely wonderful way of disseminating research’ (Dr Kristian Bondo Hansen, Copenhagen Business School), and – my favourite – ‘overwhelmed at how good this podcast is’ (Guppi Kaur Bola, activist and writer, Chair JCWI).
I listened to this a few days ago. It is brilliant and searching and says a lot about how slavery has left its imprint on our finance sectors and our societies. Listen to the end: Philip Roscoe does not lack for self-knowledge. https://t.co/qszCUio2hB
Perfect for my morning bike ride to work. Drove a little slower to get the full episode. This is, in my opinion, an absolutely wonderful way of disseminating research. Well done, @Philip_Roscoe!
Its @DecolonisingE Reading Week this week+Im having such a blast. Can't wait to share all the excellent pieces we're getting through. Beginning with a deep dive into the colonial history of the financial system + so overwhelmed at how good this podcast is https://t.co/6u1VFR3PZ7
A couple of years ago I jotted down a step-by-step guide to help my son get started on his university essays. That’s always the most difficult bit of writing – starting – and it never gets any easier. I thought some other might find it useful as well, so I’ve put it on a short video. Have fun! Beware, last minuters: the first step is ‘start early’.
I hope this helps avoid a few essay crises. If you like it, pass it on! PS: you don’t have to go to the bar in step 12 if you don’t want to.
When the infamous Zong trial began in 1783, it laid bare the toxic relationship between finance and slavery. It was an unusual and distressing insurance claim – concerning a massacre of 133 captives, thrown overboard the Zong slave ship.
The slave trade pioneered a new kind of finance, secured on the bodies of the powerless. Today, the arcane products of high finance, targeting the poor and troubled as profit opportunities for the already-rich, still bear that deep unfairness.
The Gregsons, claimants in the Zong trial, were merchant princes of 18th century Liverpool, a city that had quickly grown to be one of the world’s leading commercial capitals. The grandiose Liverpool Exchange building, opened in 1754, boasted of the city’s commercial success and the source of its money, its friezes decorated with carvings of African heads.
But Liverpool’s wealth also stemmed from its innovations in finance. The great slave merchants were also bankers and insurers, pioneers in what we today call financialisation – they transformed human lives into profit-bearing opportunities.
From the point of view of merchants, the Atlantic trade was slow, unreliable and risky. Ships were threatened by disease, by poor weather, and by the constant threat of insurrection. To speed up the flow of money, merchants began to issue credit notes that could travel swiftly and safely across the ocean.
Slaves would be purchased in Britain’s African colonies and transported to the Americas where they were sold at auction. The merchant’s agent would take the money received and rather than investing it in commodities like sugar or cotton to be sent back to Liverpool, they would send a bill of exchange – a credit note for the sum plus interest – across the Atlantic.
The bill of exchange could be cashed at a discount at one of the many banking houses in the city, or replaced by another, again at a discount, to be dispatched to Africa in payment for more human chattels. Credit flowed swiftly, cleanly and profitably.
The obscene novelty of the slavers’ banking system was that this financial value was secured on human bodies. The same practices continued on the plantations, where the bodies of slaves were used as collateral on loans allowing the expansion of estates and the acquisition of yet more productive bodies. The slaves were exploited twice: their freedom and labour stolen from them, their captured “economic value” leveraged by cutting edge financial instruments.
The Liverpool merchants also pioneered the use of insurance as a means of guaranteeing the financial value of the their commodities. The slavers had long recognised that the only way to survive the occasional total losses that expeditions incurred was to gather together in syndicates and share the risk.
So when the captain of the Zong realised he was unlikely to land his cargo of sickening and malnourished slaves, he ordered 133 souls to be thrown overboard. The perverse legal logic was that if part of the cargo had to be jettisoned to save the ship, it would be covered by the insurance.
These bodies-as-financial-commodities had only speculative value. Insurance made it real and bankable. This was true in 18th century Liverpool and it remains so in 21st century Wall Street.
The Slave Ship by JMW Turner depicts the Zong massacre. Wikimedia
Financialisation today
Financialisation has since taken many forms, but basic elements remain the same. It is based on uneven power relations that capture future individual obligations and make them saleable. The contracts underlying the 2008 credit crisis, for example, turned future mortgage payments into tradeable financial securities with actual present value.
For those issuing the bonds, the profit was risk free. The risk was borne by predominantly poor Americans, whose adverse credit ratings and lack of financial skills made them easy prey for the issuers of mortgages so constructed as to lock them into economic bondage. These people were disproportionately black, Latino or migrant.
Insurance played a part here, solidifying the speculative value of investments to the benefit of traders. And when the bubble finally burst governments stepped in to maintain this system, the US Federal Reserve supporting giant insurer AIG to the tune of US$182 billion (£139 billion) while many people lost their homes.
The credit crisis bailout is eerily reminiscent of another. By the time of abolition slave ownership was so embedded in British society that the government was forced to compensate individual owners for the loss of their capital – it required an enormous loan that taxpayers only finished paying off in 2015.
I’m not saying that bankers today are like slave traders. But I am saying that contemporary finance is still riddled with regimes of dominance and exploitation at work.
Take contemporary philanthrocapitalism, where finance seeks to do good while also benefiting investors. Novel financial instruments position social problems as an opportunity for profit. The bodies of prisoners, for example, become implicated in schemes to prevent recidivism with personal character reform the trigger for investment payouts.
Schemes such as this make social problems the responsibility of individuals and ignore the structural relations of austerity that lie behind them. Finance wins twice, praised for solving the very same problems that it has benefited from creating.
Beware financiers bearing gifts. Student loans, mortgage bonds, social impact bonds, even biodiversity investing – all earning rents from the captured future activities of relatively powerless individuals – bear the shadow of the Atlantic trade.
I was recently invited to participate in a virtual seminar, ‘Building a market for exchange traded derivatives for recyclables’ (29 July 2020). That’s a fine idea, a financial market inspired solution to many practical problems facing global recycling. The recycling market is dogged by informational problems, with oversupply in some areas and undersupply in the areas where there is meaningful demand. It is dysfunctional, in the words of Rowan University’s Professor Jordan Howell, who organised the seminar. Finance theory tells us that a derivative market might be the answer, offering producers and buyers the possibility to gain some surety as to future prices and plan accordingly. Howell’s colleagues Professors Jordan Moore and Daniel Folkinshteyn shared research showing that derivatives markets tend to improve trading conditions in the underlying commodity market as well. Industry experts shared their stories about starting financial markets and managing risk through derivatives while the audience comprised industry representatives, regulators, and academics from across the United States. I was honoured to speak alongside Commissioner Rostin Behnam of the US Commodity Futures Trading Commission, who set a regulatory vision of innovative markets serving the economy through a robust and fair process of price discovery.
The event was organized by Professor Howell and his colleagues, academics from the Rowan University School of Business in New Jersey, and sponsored by the New Jersey Recycling Enhancement Act Grant Program and the Rowan Centre for Responsible Leadership. Despite the usual technological gremlins, it was a fascinating session.
My talk was titled ‘What makes a market? Understanding the social connections that underpin markets’. I was delighted to be able to say that that many of the findings of my research had already been echoed by earlier speakers, especially Stein Ole Larsen, a Norwegian entrepreneur who has founded NOREXECO, an exchange for pulp and paper.
Academics are on strike, again. The marketization of universities, with the accompanying metrification of academic labour, has come in for plenty of scrutiny both from colleagues and commentators. We can see clearly that the whole package of market relations degrades our working conditions, our security, and constitutes an assault on our profession. That’s what the action is about. But these finer points still appear to be tricky for some to comprehend. Yesterday The Guardian reported that Universities are likely to be the next in line for Dominic Cummings’ special treatment, explaining that:
‘A recent report by the rightwing Policy Exchange thinktank, founded by Michael Gove and seen as close to government thinking, said the higher education sector was seen as “out of touch” and “a sitting duck” for the new government. It claimed universities had lost “the faith of the nation in some critical areas” and flagged familiar ministerial concerns about failures to protect freedom of speech on campus, so-called “low quality” degrees that offered poor economic returns for students, excessive vice-chancellor pay and degree grade inflation.’
The irony! Michael Gove’s own right wing think tank complaining about universities acting exactly as instructed by a decade of government diktats! For as surely as night follows day, these very concerns – grade inflation, overpaid VC’s, and lightweight courses – follow from the very market structures that have been imposed on the sector.
My book, Creating economy: Enterprise, intellectual property, and the valuation of goods, with Barbara Townley and Nicola Searle receives favourable reviews in Journal of Cultural Economy and The Law Teacher. Rimi Kahn’s review essay in JCE calls the book ‘a timely and lucid analysis of the social and institutional processes through which the translations from text to product take place…an astute and empirically grounded study’. Kahn concludes that the book is ‘vital reading for those interested in the complexities of neoliberal cultural economy’, and that ‘it offers a generative new approach for examining questions of cultural production ownership and value.’ Ruth Soetendorp, writing in The Law Teacher, praises the book’s interest in theorizing intellectual property beyond the confines of the law school, and calls it a source of ‘invaluable insights’ for those interested in using the book as a pedagogic resource.
I wrote this in December 2019, facing a general election bogged down in Brexit, anti-Semitism, and dog-whistle politics; worn out by helplessness at the end of a year of political despair. The gains hard-won through our last industrial action seemed to be slipping away, our employers refusing to budge and the trustees of our pension funds treating us with contempt. We were furious. We took strike action for eight days and things changed. Talks restarted. We saw an apparent willingness to listen and heard sympathetic noises on matters that won’t cost too much or be easily tested. In the end, however, we have met with intransigence from our employers. We have made some progress, but not enough, and we are out on the pickets again. This time feels different: less anger, more quiet determination. It is difficult for all involved. I am genuinely distressed on the part of my students, who are suffering a severe interruption to their studies. I’m also persuaded by the argument that civility makes friends (thank you Dr Fergus Neville!) and we are standing on the picket lines with new comrades.
I took this post down for a while to reflect. But I see the very tactics that so provoked me played out on grander stages. In politics, for example, our Prime Minister urges us to be friends and unite Britian as he forces through the most divisive and hard-right political agenda in living memory. Be nice too easily means be quiet; civility remains a potent mechanism of control. We Brits are just too damn polite, overburdened by our bourgois heritage.
So here it is again in (nearly) all its intemperate rage…
It’s Monday, noon. The morning has gone well: big turnouts on the picket lines, much solidarity from colleagues and students. In east Fife we stood in the fog and the dreich, and the bagpipes played; Stephen Gethins, our MP, turned up and wished us well and fussed my dogs, who are now staunch SNP hounds; our twitter is flooded with pictures of pickets and placards. The Second Great University Strike is underway. And now I’m home. It’s quiet, the dogs are sleeping off their exertions, and I am at my keyboard; I have things that I am trying to think through and, academic that I am, I do not know how else to do so. Strike writing.
The topic in hand is civility. Specifically, the repeated injunction from the institutions for which we work that we should approach this dispute in a ‘civil’ manner. At the risk of boring the reader, let’s recap for a moment why we are striking: a sustained assault upon our pension scheme, a significant real term drop in our salaries, inequalities of race and gender, casualization, temporary contracts, general workload and the accompanying audit practices. These are just the headline-grabbers that the union put on the ballot paper. Our profession is in tatters, with stress and overwork rife. Everywhere I hear that enough is enough, that something has snapped, that the social contract around higher education is not so much broken as in smithereens. Our employers’ refusal to negotiate has driven us to industrial action where we stand to lose eight days of salary in the run-up to Christmas. I am sure I am not alone in feeling pretty uncivil about this whole affair.
Protests in Hong Kong have captured the world’s attention in recent weeks, with demonstrators closing streets and the airport, and Chinese forces amassing near the border with a none too subtle threat of violent reprisal. The protests began in response to a new extradition law, but have spilled over into a general unease about the future of Hong Kong’s special administrative status.
This special status sets Hong Kong apart from mainland China in a number of ways. As well as enjoying various social and political freedoms, it has a free market economy and is one of the world’s biggest financial centres. Global finance has attracted a number of Chinese elites but has not benefited a large chunk of Hong Kong society.
But if Hong Kong’s protesters succeed in pushing back against the oversight of Beijing, it would serve to reinforce the benefits the elites already enjoy from Hong Kong’s economic arrangements. This parallels the situation in the UK, where financial elites could soon embrace a low-tax, low-regulation future following a no-deal Brexit driven by populist concerns about immigration and inequality.
Longstanding financial centres
Hong Kong and London share a common history and since the 1960s have flourished as offshore financial centres, acting in many ways as secrecy jurisdictions or tax havens.
Hong Kong’s financial sector was a creation of the British, who used it as a route into Chinese markets. It boomed following the opening of the Chinese economy. When, in 1997, Hong Kong returned to China, it preserved some of this offshore status as a special administrative zone. The beneficiaries this time were Chinese.
Hong Kong stores great reserves of capital in comparative secrecy, channels global investment into China – also in secrecy – and is a crucial part of China’s long-term plan to establish the Renminbi as a global reserve currency through offshore markets. The local “dim sum bond market”, issuing RMB denominated debt, has been a remarkable success, with the equivalent of more than US$100 billion of capital circulating.
Hong Kong has been implicated in shadier dealing. Investigative journalist Nicholas Shaxton puts it bluntly: “Hong Kong is where most of the corruption in China is accomplished.” Other scholars see Hong Kong as an amalgam of onshore and offshore finance, with a strong legal system, tax treaties, and a robust financial market.
London’s success as a global financial centre has also been driven by its status as a hub for offshore financial services, a position greatly supported by its strong connections throughout Britain’s former empire. In the 1960s and 1970s, for example, London became home for the “eurodollar” markets. These were lending markets operating in US dollars, located in London but considered to be beyond the purview of the UK’s legislation.
London-based lenders could charge higher rates than the national currency controls of the time allowed. The United States benefited as the depth and liquidity of eurodollar markets supported the dollar’s reserve currency status; international banks arrived in droves and the City, London’s financial district, thrived. Regulators on both side of the Atlantic turned a blind eye, quietly admitting the economic benefits the markets bestowed. Even the Soviets invested.
Masters of reinvention
Both London and Hong Kong are centres of perpetual reinvention. Following the financial crisis, the City’s innovations have included managing the wealth of the global super-rich and an arrangement with the Chinese government to develop the offshore trading of the RMB.
In the same way that Hong Kong’s protesters fear Chinese control, a number of Brexiters claim the EU comes with too much red tape. Interviewing financiers for research into London-based markets, I found overwhelming support for Brexit, largely driven by a distaste for increasing layers of regulation.
It is certainly the case that Europe has never been comfortable with London’s activities as a conduit for international funds. No one expects the EU to maintain the City’s “passporting rights” which allow firms based in the UK to trade freely across the EU. And the mundane but profitable business of settling euro transactions is likely to be pulled within the bloc.
But there is much more to financial markets than regulation. The City’s remarkable talent for reinvention flows from the nature of financial markets themselves.
History shows they are fluid entities constantly reshaping in response to political happenstance and technological or economic advances. Markets put down roots in the shape of dense social networks shaped by bonds of trust and expertise, and in the material infrastructures – from wires, phones and screens to upscale offices, restaurants and hotels – without which they cannot function. Advantages of status and connection become embedded. When new financial frontiers open up it’s those well-placed who benefit.
Here’s the irony. Hong Kong’s protesters seek political freedom, but whatever happens in politics, it is likely that the economic advantages of the elite will be preserved through the social and material architectures of its markets.
Brexit, meanwhile, has been driven by concerns over immigration and inequality, but the no-deal on the horizon offers something else. If the new prime minister’s rhetoric of “boosterism” and “freeports” is to be believed, the City will be entirely unencumbered by regulation, free to roam the high seas of international currency flows. Here too, only the financial elites will benefit.
Philip Roscoe 
