Financialization - Session 3 - Nitesh

Session 3 – Nitesh S Anchan

FINANCIALIZATION

Papers discussed:

Appadurai, Arjun. 2011. ‘The Ghost in the Financial Machine’. Public Culture. Vol. 23. No. 3:517-539.

Besky, Sarah. ‘THE FUTURE OF PRICE: Communicative Infrastructures and the Financialization of Indian Tea’. CULTURAL ANTHROPOLOGY. Vol. 31. Issue 1:4-29.

Davis, Gerald F. and Suntae Kim. 2015. ‘Financialization of the Economy’. Annual Review of Sociology. 41:203-221.

Kalb, Don. 2013. ‘Financialization and the capitalist moment: Max versus Weber in the anthropology of global systems’. American Ethnologist. Vol. 40. No. 2:258-266.

Summary and Analysis:

Davis refers to financialization in the context of the importance of finance to the economy. He also points out the way in which theory, technology and ideology are combined in the process of financialization to make it a potent force in the changing social institutions. Kalb works with the Weber’s idea of capital and Marxist idea of capital to point to the important distinction between the two, and also argues that Marx’s idea of capitalism, with the emphasis on class struggle, explains financialization better than the Weber’s idea of ‘absolute capital’. Besky consider a case study, i.e., financialization of tea trading in India and the context in which the tea traders in Kolkata reacted to it. Her understanding of financialization captures how financial markets tend to create ‘neo liberal market subjects’, by focusing on the individual knowledge and by neglecting the historical, collective, social and local epistemic systems. Appadurai focuses on some of the key ideas  of financialization by trying to understand them through classical sociological ideas and then to discuss those ideas with the current scenario. Appadurai connects the concept of financialization with the process of not measuring and mapping of risk, but exploiting the risk which is present in the financial markets.

Appadurai and Besky point the ‘numerical process’ as one of key feature of the process of financialization. Kim and Davis also note how assigning monetary values to social, ethical and environmental values is a crucial part in the process and working of financial market. The idea is that anything that can be valued in monetary terms, can then be traded in the financial market. Besky and Davis seems to suggest in their respective papers that financialization demands an individual to be able to take care of herself or himself by indulging in financial market activity, and not resort to a collective rationality, that would bring more participant to the market and thus ensuring more trade. The idea of securitization of debt, insurances, and any other thing which can be commodified, and the emphasis on shift to fianancialization of tea trade, both represent an impersonal relationship in trade, where personal relationship and personal interaction do not matter, or should not matter in trade. Besky’s account of how the tea association wanted to create some form of uncertainity for the traditional brokers by creating a standard price and quality for the tea, reflects on how Appadurai talks about ‘uncertainity’, and not risk, as the fundamental feature of financialization. Besky also notes how the ‘standardization’ of value is processed through ‘enumeration’ and dispenses with other processes which attributes values to ‘commodities’. This leads to the transcendence of local ideas of assigning values, but at the same time as Appadurai points out, financialization allows those people who can ‘deal’ with uncertainity, to manipulate and set values and prices. The Marxian idea of ‘value’ finds itself to be incapable to address the issue of value in financial markets, dealing with financial commodities. How else does financial commodities, including derivatives, get their value? 

The effect of financialization on the different part of the population is emphasized by both Kalb and Davis and Kim. While Davis and Kim focuses on the effects like income inequality, adverse effect on culture, the transformation of market and finance, etc., Kalb emphasizes on how financialization had directly and adversely effected the local and transforms it, by deviating from the Weber’s notion of capital and by considering Marxist approach. Kalb looks at financialization through power structures and not just as an inevitable stage in the capital accumulation.   

The idea of profit, which is so important for the capitalism, in today’s financialized world, is concerned greatly with the managing and investing the financial devices. Is this notion of profit completely different from the notion of profit that Marx talked about which is concerned primarily with the exploitation of labor? In this sense, what kind of ‘commodity’ is traded in the financial market, i.e., can we look at things that are traded in the financial market as ‘commodities’ in the Marxian sense or do we need to have a new definition of ‘commodity’? Can we say that the peculiar nature of financial ‘commodities’ is that it has the capacity to constantly modify its ‘value’, that is the more hands a financial commodity exchanges, the ‘risk’ it carries also changes and which modifies its value?

Davis and Kim, and Kalb argue on how capitalism is changing or effecting the local in many ways, but does the local effect and change capitalism in fundamental ways? I am not referring to ‘effect and change’ in a very shallow sense but in a sense that ‘transforms’ or ‘changes’ the fundamental functioning of the ‘global’ capitalism and financialization – shaped and determined by the global systems? How do we even conceptualize the local and the global, when we consider what we call as global today had its roots in the very local.