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The Social Fictions and Metaphoric Wealth of Financialization

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The Social Fictions and Metaphoric Wealth of Financialization 1 The Reproduction of Fictitious Capital: The Social Fictions and Metaphoric Wealth of Financialization It is no exaggeration to say that, since the 2008 crisis, there has been an explosion of academic interest in the financial sector, its peri- odic crises, and the impacts and implications of both for society at large. I started my own research into finance capital in 2005, and it was my great misfortune to be trying to complete a PhD thesis on the topic as a monumental and historical financial crisis unfolded, in a time when, every week, new analyzes of the very sector I was looking at were emerging from nearly all political and disciplinary quarters. The only option, really, was to continue with the lines of inquiry with which I had begun: how do we account for not only the tremendous power of financial wealth in a moment of neoliberal globalization (see Bryan and Rafferty 2006; Lapavitsas 2013; LiPuma and Lee 2004), but also the fact that what is perhaps the most pow- erful and pervasive economic force in human history is made up of what are, at first glance, imaginary assets? After all, the fabled credit default swaps and collateralized debt obligations at the core of the 2007/2008 meltdown were, essentially, made up. Sure, they referred back to “real” assets in terms of the homes owned by sub- prime borrowers, but, as financiers and the rest of us were to learn as the crisis unfolded, the value ascribed to these assets was dramatically less than the price at which these financial instruments circulated. In other words, there is something profoundly and tantalizingly cul- tural about contemporary finance capital, about the way confidence, belief, identity and rhetoric are rolled into an evolving economic 15 M. Haiven, Cultures of Financialization © Max Haiven 2014 16 Cultures of Financialization landscape dominated by themes of speculation, immateriality and communication. It is tempting here to reach for the postmodern canon, for the work of Jean Baudrillard (1997), for instance, and identify these speculative objects as “fourth-order” simulacra: objects which have abandoned all reference to the real world, which just refer back to an eternal hall of mirrors, an infinite play of signification. There is merit to this approach, and I have used it myself (Haiven 2013b), drawing on Jacques Derrida’s (1974; 2007) theory of metaphor to help explain the character of financial wealth. Derrida’s intervention was to suggest that the line between metaphor and other elements of speech is “always already” blurred. This is in contrast to ana- lytic theories that see metaphor as merely a second-order element of speech, an artificial creative substitution of meaning used for stylis- tic purposes. Derrida argues that a large number of the words we use every day were once metaphors, and that metaphor is a process at the very core of language. Take, for instance, the word invest- ment. It stems from the Latin vestire, from which we also derive the word vest: it means to dress or to cloak oneself. Early-modern Italian merchants used this as a metaphor for the different profitable purposes to which money could be put – they were dressing their money up when they lent it to trading or manufacturing ventures that would bring a favourable return. This metaphor resonated, and the word invest became independent of its original meanings, fold- ing into living language. It began to become what linguists call a dead metaphor, a metaphor whose metaphoric quality has disappeared or goes unremarked or unobserved. Lo and behold, by the late 20th century investment not only named the most profitable activity in a hyper-financialized global capitalist economy, but was increasingly borrowed as a metaphor to explain all manner of activities in our social lives. Education, for instance, is increasingly talked about as an indi- vidualized “investment in the future,” rather than a shared social good (Williams 2006; 2008), and, likewise, we are constantly being told that the fostering of children by parents and society at large is an investment. Books are being published that advise people to learn to invest time and affect in their relationships for later payback (see Martin 2003, 91–107). All these new meanings of investment are now being folded into common parlance: they elicit almost no Reproducing Fictitious Capital 17 response any more. And this is where metaphor gets dangerous: as George Lakoff (2003) and others have noted, metaphors function to hide social violence – they often work to disguise or normal- ize unstated or unacknowledged ideological assumptions. Think, for instance, about the way the term “at risk” has been deployed as a dis- ciplinary metaphor to euphemistically describe certain populations, a discursive slight of hand that at once erases the specificity and ori- gins of poverty or marginalization and at the same time focuses the subject in question under the scrutiny of power (see Martin 2007, 37). Metaphors, in this sense, are elemental to the composition of discourse in the Foucauldian sense of the term: a “regime of truth” or an order of knowing, speaking and understanding that both emerge from social power relations and help reinforce or reproduce those relations. As such, the recent application of the metaphor of investment to all areas of social life is far from innocent. It is both symptomatic and constitutive of a shift towards financialization. That is, the fact that the metaphor of “investment” has become an expedient way for people to articulate their relationships and choices is, from one angle, evi- dence of the saturation of the general consciousness of society with financial ideas. But it is also a key means by which that saturation is advanced, the way financial modes of thinking and understanding are stitched into and throughout the social fabric. This cultural and linguistic shift both reveals and advances a broader socio-economic reality of financialization. Financialization has two overlapping meanings. Political economists tend to use the term to refer to the increased power and influence over the global economy of the so-called FIRE sector, an acronym for high Finance (banking, investments, speculation), Insur- ance and Real Estate) (see Epstein 2006; Foster 2010; Levitt 2013). They point to the massive growth of financial firms, largely thanks to years of neoliberal deregulation which, for instance, in many jurisdic- tions eliminated the distinction between investment and commercial banks, or opened up mortgage markets to new forms of securitiza- tion. Financialization refers, in this sense, to the way multinational corporations, since the so-called “revolution in shareholder value,” have come to be seen less as producers or distributors of goods and services and more as vehicles for speculative capital (Fine 2010; Hudson 2010; Ho 2009). It refers to the profound and corrosive 18 Cultures of Financialization power of financial markets, especially bond and currency markets, over the policy choices of governments around the world – not only the governments of nation-states but also those of cities, provinces and, as we are seeing in Europe, supra-national organizations as well (Albo, Ginden and Panitch 2010; Bello 2013, 43–61; Strange 1997). Financialization in this sense refers to the increased mobility of transnational capital flows, as well as to the way those flows are accel- erating and becoming more and more chaotic thanks to increasingly sophisticated forms of securitization and automated high-frequency trading, a system in which computers are, by some accounts, execut- ing the majority of exchanges (Tiessen 2012). It also refers to the way financial markets are increasingly shaped by almost sublime formu- lae and technologies for managing risk, for creating new, overlapping, interconnected derivative products whose scale and complexity defy the human imagination (Holmes 2010; Stark 2009). But financialization also means something more, as the above example of the metaphor of “investment” indicates. It means deep penetration of financial ideas, tropes, logics and processes into the fabric of everyday life (see Martin 2007). We can return to the exam- ple of education. Not only has it come to be understood as a highly individualized commodity in which students are told they should invest in order to get the payoff of a stable, middle-class life. It has become a key means by which individuals are integrated into the global financial economy (Blacker 2012; Caffentzis 2010; Williams 2006). In the United States, student loan debt has topped $1 trillion, and, as with the sub-prime mortgage market, these loans are broken apart, rebundled and securitized, their spectral presence haunting the global financial architecture, casting its shadow over perhaps the majority of investment portfolios. It is not just student loans, of course. From mortgages to credit-card debt, from retirement sav- ings to amateur stock trading, we are all increasingly involved in a form of everyday financialization that is integrated into a global financial system where individual debts and investment disappear into an interconnective æther of speculation (Martin 2003; 2007). Even the poor are not immune. In North America, of course, we have seen the rise of sub-prime lending, but this is only one aspect of a larger financial poverty industry made up of extremely prof- itable pay-day loans operations, pawn shops and discount financial services aimed at short-term profiteering from social immiseration Reproducing Fictitious Capital 19 (Aitken 2006; Rivlin 2010; Wyly et al. 2009). Likewise, in the last decade world political and economic leaders have been seduced by the lure of micro-finance schemes where small loans are extended to the world’s poorest populations (notably to women) in order to share with them the magic of free-market capitalism and the uplift- ing responsibility of debt (Bateman 2010; Roy 2012; Young 2010).
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