Financial Derivatives and the Globalization of Risk (Public Planet Books) - Hardcover

Lee, Benjamin; LiPuma, Edward

Hardcover

ISBN 10: 0822334070 ISBN 13: 9780822334071

Verlag: Duke University Press, 2004

Inhaltsangabe

The market for financial derivatives is far and away the largest and most powerful market in the world, and it is growing exponentially. In 1970 the yearly valuation of financial derivatives was only a few million dollars. By 1980 the sum had swollen to nearly one hundred million dollars. By 1990 it had climbed to almost one hundred billion dollars, and in 2000 it approached one hundred trillion. Created and sustained by a small number of European and American banks, corporations, and hedge funds, the derivatives market has an enormous impact on the economies of nations--particularly poorer nations--because it controls the price of money. Derivatives bought and sold by means of computer keystrokes in London and New York affect the price of food, clothing, and housing in Johannesburg, Kuala Lumpur, and Buenos Aires. Arguing that social theorists concerned with globalization must familiarize themselves with the mechanisms of a world economy based on the rapid circulation of capital, Edward LiPuma and Benjamin Lee offer a concise introduction to financial derivatives.

LiPuma and Lee explain how derivatives are essentially wagers--often on the fluctuations of national currencies--based on models that aggregate and price risk. They describe how these financial instruments are changing the face of capitalism, undermining the power of nations and perpetrating a new and less visible form of domination on postcolonial societies. As they ask: How does one know about, let alone demonstrate against, an unlisted, virtual, offshore corporation that operates in an unregulated electronic space using a secret proprietary trading strategy to buy and sell arcane financial instruments? LiPuma and Lee provide a necessary look at the obscure but consequential role of financial derivatives in the global economy.

Über diesen Titel

Über die Autorin bzw. den Autor

Edward LiPuma is Professor of Anthropology at the University of Miami. He is the author of Encompassing Others: The Magic of Modernity in Melanesia and coeditor of Bourdieu: Critical Perspectives.

Benjamin Lee is Professor of Anthropology and Philosophy at New School University and Dean of its Graduate Faculty of Political and Social Science. He is the author of Talking Heads: Language, Metalanguage, and the Semiotics of Subjectivity (published by Duke University Press) and coeditor of Semiotics, Self, and Society.

Von der hinteren Coverseite

"The prominence of a new kind of speculative finance capital in organizing global order and disorder is a topic of vital contemporary importance. By addressing this topic, this short, clear account advances the somewhat muddled debates over economic globalization."--Craig Calhoun, president of the Social Science Research Council

Auszug. © Genehmigter Nachdruck. Alle Rechte vorbehalten.

Financial Derivatives and the Globalization of Risk

By Edward Lipuma

Duke University Press

Copyright © 2004 Edward Lipuma
All right reserved.
ISBN: 9780822334071

Chapter One

Global Flows and the Politics of Circulation

There is a rising tide of discontent about the implications of globalization, a disturbance audible to anyone willing to listen. Among even the most moderate moderates in places such as China, India, Russia, Indonesia, Brazil, and southern Africa there is a growing, gnawing, and amorphous feeling of unease that there is something out there, something happening that is robbing people of a genuine semblance of control over their own destinies. They can see and feel the gyrations of their national currencies, the uncontrollable oscillations in the prices of commodities and capital, and the apparent powerlessness of their governments to influence the course of economic life-or even to understand the jet stream of circulatory forces unleashed by globalizing processes. More and more, frustration contorts the faces of those who reside outside the metropole, people who, however much they may appreciate, sometimes emulate, and frequently enjoy things Western, from technology and music to concepts of freedomand human rights, also realize that there is an unnamed force that is undermining the relations between the economy, civil society, and the state. There is something profoundly disturbing about people's escalating disenchantment with the results-or at least the aftermath-of all the introductions and returns to democracy that they have only recently won. So much is this the case that there is sometimes a nostalgia, at once genuine and insincere-not, as is sometimes mistakenly thought, for ousted and discredited authoritarian regimes, but for the certainties that they brought to everyday life. Not the least of these certainties was a foundational logic that once seemed to bind work to wealth, virtue to value, and production to place.

The contrast with the contemporary globalization of finance capital could not be more striking. Technologically driven derivatives detach the value, cost, and price of money -manifest in exchange and interest rates-from the fundamentals of the economy, particularly the state of production, the social welfare of the producers, and the political needs of citizens for self-determination, dignity, and the creation of identities. The economic power of the capital markets also threatens the right of popular dissent against those who govern the economy. Although this right, helped immeasurably by advances in communication, only reached its maturity in the twentieth century, its contemporary roots now run deep and worldwide. But the forces of circulation offer up no address or even an identifiable object. How does one know about, or demonstrate against, an unlisted, virtual, offshore corporation that operates in an unregulated electronic space using a secret proprietary trading strategy to buy and sell arcane financial instruments? The mass media can disseminate the visions and voices of dissent, almost instantaneously and worldwide (and usually at a profit); but without a recognizable object, such as that provided by the national state or a corporate headquarters, the dissent seems meaningless, impotent, or worse, some entertaining spectacle. The question that is both concealed and that matters concerns the economic powers and global reach of financial derivatives.

One way of posing the question is to collect the news headlines and to ask what the collapse of Argentina and the Enron Corporation, the demise of hedge funds such as Long Term Capital Management, and the accounting scandals at Arthur Andersen have to do with high and rising interest rates in Johannesburg, Kuala Lumpur, Istanbul, and other locations on a multipolar periphery. Are these phenomena also connected to the sudden and severe devaluation of currencies and then the ascension of interest rates, to levels of cross-currency volatility that confound any possibility of economic planning, to the concomitant escalation in global impoverishment, and to the increasingly intense and pervasive forms of indigenous unrest and regional disquiet, and the decline in the capacity of national states to provide social welfare? The short answer is that they are all tethered to the umbilical cord of circulation. They are directly defined by global streams of capital and critically configured by the buying and selling of the financial instruments called derivatives. So though financial derivatives are cloistered and complex, their character matters because they inform the course of capital that informs the course of people's lives worldwide. The singular result is that globally, government officials, the academic community, and the news media are beginning to appreciate the extraordinary power and reach of these flows of capital. To assume, as some commentators have apparently done, that derivatives cannot be influential because they exist in virtual space and therefore do not produce anything material or real is as unsound as assuming that religion must be historically inconsequential because, after all, God doesn't really exist.

Derivatives have episodically captured the world's attention because of a number of spectacular failures and crises that threaten entire economies and regions. These examples of catastrophe matter in themselves and because they identify the fault lines along which key transformations are taking place. Catastrophes also open an unexpected window into the inner clockwork of financial transactions that would otherwise be closed to public scrutiny. On this accounting, the Asian currency crisis of 1997, the collapse of firms such as Long Term Capital Management and local governments such as Orange County (California), the introduction of financial risks so systemic that they threaten a global implosion of the banking system, and the accelerated and economically disabling devaluation of currencies such as the Turkish lira and Argentine peso all confirm that electronically amplified flows of capital have become instrumental in compromising the sovereignty of national economies, and thus the extent to which politics, democratic or otherwise, can regulate circulatory capitalism. There is a growing concern that the international order is disintegrating because the global economy is on the edge of crises whose shape and symptoms are different from past and more familiar ups and downs.

Though it is the regional crises and spectacular corporate failures that periodically put derivatives on the front pages and internet banners, their social and economic effects are more pervasive and difficult to determine. They infiltrate the economies of weak and developing nations through their effects on the price of money, which in turn greatly affects its availability for housing, education, and the other social goods whose provision is necessary to advance the economy. At least as important is that financial derivatives not only are designed specifically to deal with short-term fluctuations in the price of money but also tend to exaggerate the oscillations in exchange and interest rates. For manufacturers this makes it extremely difficult to synchronize on the one hand the time horizon of commodity production, which to be successful must be measured in years, and on the other hand short-term fluctuations in the cost of the money necessary to purchase their plant and equipment and guarantee them a profit on the goods they export. The impact of the fluctuations is hitting developing nations particularly hard, causing business failures that have little to do with the...

Details zur Ausgabe

• Verlag: Duke University Press
• Erscheinungsdatum: 2004
• Sprache: Englisch
• ISBN 10: 0822334070
• ISBN 13: 9780822334071
• Einband: Gebundene Ausgabe
• Anzahl der Seiten: 224
• Kontakt zum Hersteller: Nicht verfügbar
• Verantwortliche Person: Nicht verfügbar