A unique inside-out look at our financial system HACKING THE UTURE OF MONEY BRETT SCOTT • The Heretic's Guide to Global Finance The Heretic's Guide to Global Finance Hacking the Future of Money Brett Scott First published 2013 by Pluto Press 345 Archway Road, London N6 5AA www.plutobooks.com Distributed in the United States of America exclusively by Palgrave Macmillan, a division of St. Martin's Press LLC, 175 Fifth Avenue, New York, NY 10010 Copyright © Brett Scott 2013 The right of Brett Scott to be identified as the author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN 978 0 7453 3351 9 Hardback ISBN 978 0 7453 3350 2 Paperback ISBN 978 1 8496 4879 0 PDF eBook ISBN 978 1 8496 4881 3 Kindle eBook ISBN 9781 8496 4880 6 EPUB eBook Library of Congress Cataloging in Publication Data applied for This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental standards of the country of origin. 10 9 8 7 6 5 4 3 2 1 Typeset from disk by Stanford DTP Services, Northampton, England Simultaneously printed digitally by CPI Antony Rowe, Chippenham, UK and Edwards Bros in the United States of America Contents Acknowledgements ix Introduction 1 Part 1: Exploring 1 Putting on Financial Goggles 15 2 Getting Technical 42 Part 2: jamming 3 Financial Culture-Hacking 91 4 Economic Circuitbending 128 Part 3: Building 5 Building Trojan Horses 177 6 DIY Finance 211 Conclusion 243 Further Resources 248 Index 250 For Horatio, Teo and Djembe Thanks for all the food and love Acknowledgements Thanks to mum, dad, and my brother Craig for everything. Sorry I haven't been home for so long. Thanks to Uncle Ant and Aunt Penny for political, musical and anthropological insights. Thanks to my grans. Thanks to Charlie, Harry, James, Hawkeye and Peter. I owe you guys a year's worth of beers. Thanks to Ziv, David, Tony and my other old shipmates for great times on the high seas. Thanks to Ilana and Leo for your comments, suggestions and great conversations. Thanks to the angels who lent me money, including Matt, Petia, Clare, Louis, Dom, Kirsty, Teddie, Danni, Richard, Paul and Ed. Thanks to my friend Mr Tuffin, for guaranteeing my rent in uncertain times. Thanks to Adam Staff at Foyles cafe, for the great service. Thanks to Karl, for helping me with the name for the book. Thanks to my friend Craig Bailie, and sorry for missing your wedding. Thanks to the Fellows at the Finance Innovation Lab, for friendship and ideas. Thanks to Prof. Julian Cobbing for setting the initial spark, and to Prof. Ha-Joon Chang for encouragement. Thanks to the crew at MoveYourMoney UK, Joris Luyendijk, Daniel Balint-Kurti, James Marriot, Charlie Kronick, Ian Fraser, Louise Rouse, Seb Paquet, Kyra Maya Phillips, Will Davies, Tan Copsey, Josh Ryan Collins and Eli Gothill for cool ideas and guidance. Thanks to Andy for musings on economics, and to Eve, Jess, Natasha and Chris for kitchen-table philosophy and toleration of my freeform rants. Thanks to Tom Waits and Bob Dylan for keeping me going, and to Tess Riley, Rachel Bruce, Ben Paarman, Tor Krever, Kate Tissington, Cessi Hessler, Jessi Baker, Bethan Lloyd, Lucy O'Keeffe, Miriam Burton, JP Crowe, Mutesa Sithole and Rosee Howell for great conversations. Thanks to Sue Abrahams, for helping with graphics. Thanks to the team at Pluto Press, especially David Castle, for giving me the opportunity. Thanks to my computer, for being so understanding. Thanks to all the good-hearted rogues from the markets, and finally, thanks to Hoare Capital LLP, rest in peace. ix Introduction The financial system interconnects industries, governments and individuals around the globe. It steers money to them, diverts money away from them, intermediates between transactions, redistributes risk, and creates risk. This is a book about personal empowerment in the face of that system, providing a gateway through which a single person may gain access to it, combat the power asymmetries built into it, and use it for positive, heretical, ends. RADICALISING REFORM AND REFORMING RADICALS At any one point, there are always two sets of debates concerning the financial system. Occupying centre stage is the mainstream debate on financial reform. It drones on in the press, with obscure discussions on the capital requirements of banks amid extensive navel-gazing about the causes of the 2008 financial crisis. Politicians, pundits and think-tanks fret over central banking policy, or the problems created by the implicit government guarantees for the banks. These may be highly important discussions, but they are alienating for many people, often merely exclusive talkshops for political elites and economic experts. They are heavily weighted towards older men, and leave many deeper assumptions about finance unchallenged. Against this backdrop, there is the radical debate within social, environmental and economic justice circles. These include a wide variety of civil society groups, direct action groups, humanitarian NGOs, student campaigners, human rights activists, trade unions, socialist movements, environmental­ ists, critical academics and journalists. Strains of radical debate are heard in many marginal 'speakeasies', from seminar-room discussions on critical theory, to literature found in anarcho­ syndicalist squats, to informal pub conversations about 'the 2 The Heretic's Guide to Global Finance banks screwing the common people'. They are often strongly influenced by alternative schools of thought, such as Marxist and heterodox (non-mainstream) economics, deep ecology envi­ ronmentalism, underdog identity politics, spiritual philosophies, anarchist and socialist theories, and even forms of defensive localism. Radical movements often perceive themselves as contesting neoliberalism, a term referring to political positions loosely based on a collection of neoclassical economic theories, favouring privatisation and deregulated global markets. Within this framework, financial intermediaries - such as banks - are targeted for financing unproductive speculation, a culture of disconnected treadmill consumerism, and corporations with atrocious environmental and labour standards. I've always held a strong affinity for the radical debate. It's fiery and demanding, in contrast to the bland and technocratic mainstream discussions which often ignore the deeply unequal power relations within society. At many radical campaign events, the spirit is high, the ideas are exciting, and a captivating sense of community exists. The Occupy movements, for example, provided a forum for many individuals with insightful macro-level critiques of the structural flaws in our economic and social systems. The centrality of the financial sector, as a powerful repository for capital, is readily recognised by such activists. Many feel an intuitive concern that more and more aspects of society are becoming rapidly 'financialised', or dominated by the interests of financial intermediaries. London and New York are the world's two largest financial centres, hosting a dense conglomeration of financial intermediaries. They are also two of the largest global hubs for social, environmental and economic justice movements, and for internationally focused NGOs, providing a perfect opportunity for such organisations to affect global capital movements. And yet radical access to major financial intermediaries remains very limited. This, in part, is due to radical groups being hugely underfunded, leaving them long on passion, but frequently short on technical expertise and staff. In the UK, there are an inadequate number of dedicated campaigns targeting the financial system, often consisting of only a handful of people. Introduction 3 Examples include the Robin Hood Tax campaign's efforts to implement a tax on financial speculation, the World Development Movement's campaign on food speculation, the Tax Justice Network's campaign on tax havens, and Platform London's campaigns against fossil fuel finance. MoveYourMoneyUK promotes bank consumer boycotts and FairPensions promotes shareholder activism. Watchdogs like Global Witness, Sandbag and Finance Watch undertake various financial investigations and policy campaigns, and larger NGOs like Oxfam, ActionAid and Greenpeace have small teams focused on financial issues too. Other financial campaign groups operate in Europe, the USA and in other major financial centres across the world. Nevertheless, while such groups have opened important channels for radical perspectives on finance to be more widely heard, they tend to be subsumed within a broader justice movement that remains very much on the outside of the financial sector. Many activists still attempt to impact financial intermediaries indirectly, utilising media outlets, celebrity champions, petitions and demonstrations to create political pressure. In technical finance matters they often remain reliant on intellectual support from scattered critical academics, many of whom provide high-level analyses rather than more nitty-gritty practical information. Thus, when pushed, many activists struggle to articulate what the ground-level processes of financialisation entail, or what goes on within a bank. Indeed, for most people, just looking at the websites of investment banks can be confusing. Goldman Sachs touts