Conference Agenda

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Session Overview
RN06_05: A Critical Political Economy of Finance-led Accumulation
Thursday, 22/Aug/2019:
11:00am - 12:30pm

Session Chair: Yuliya Yurchenko, University of Greenwich
Session Chair: Bernd Bonfert, Roskilde University
Location: GM.332
Manchester Metropolitan University Building: Geoffrey Manton, Third Floor 4 Rosamond Street West Off Oxford Road

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The Good Financial(ised) Citizen? 'Resilience' As A Disciplinary Mechanism In The Financialisation Of The Welfare State

Matthew Donoghue

University of Oxford, United Kingdom

Financialisation has become central to contemporary liberal welfare states. The embedding of asset-based welfare and social investment strategies has emphasised focus on maximising the number of potential consumers, alongside reducing the welfare state’s economic liabilities as much as possible. A central component of this is shifting risk from state to citizen, individualising risk. The efficacy of this process rests on individuals internalising this risk shift, and accepting the premise that they are entirely responsible for their own economic wellbeing, regardless of the social conditions in which they live. In this paper, I argue that the concept of ‘resilience’ facilitates this internalisation, which helps to explain its relatively rapid uptake in the social policy of welfare regimes such as the UK. In particular, I argue that ‘resilience’ can be understood as a disciplinary mechanism that assists with both legitimising and enforcing the financialisation of everyday life through the welfare state. To be a ‘resilient’ citizen presupposes a number of characteristics that centre around self-sufficiency, entrepreneurship and ‘gritty’ citizenship (Donoghue and Edmiston, 2019) that internalises navigating the volatility of late capitalism as a ‘way of being’. Resilience as a social policy agenda can therefore be used to stabilise and legitimise the further financialisation of welfare capitalism, demonstrating the subordination of social policy to economic policy (Dowling, 2018).

This paper draws upon previous research into resilience, social policy and the welfare state, and makes a contribution to the literature through providing the first substantive attempt to demonstrate the role resilience as a social policy strategy may play in maintaining the longevity of financialised welfare capitalism and furthering the financialisation of everyday life.

The Financialisation of Car Dependency

Thomas Haines-Doran

SOAS, United Kingdom

New financial products to aid the purchase of cars have emerged, the aim of which has been to advance credit to consumers, whose falling income has suppressed demand for new cars. Many countries have witnessed the rise to dominance of ‘personal contract plans' (PCPs), by which consumers finance the depreciation of the vehicle without committing to full ownership. This paper argues that the rise of PCPs has important implications for efforts to make transport systems environmentally sustainable.

I use a Systems of Provision approach to understand the ‘material cultures' of car consumption. I argue that a particular culture of consumption has been created around personal car ownership, in part reflecting the economic conditions and contradictions inherit in car manufacturing. Cars are most people's second biggest area of expenditure, and yet, in contrast to housing, their exchange value depreciates rapidly. This is partly because of a car culture that favours novelty and luxury, which maintains demand for new, high specification, vehicles. But cars also provide an 'indispensable' use value to individuals. Consumers' reliance on their car reduces the risk of them reneging on lease agreements, thus aiding securitisation within the financial sector, producing low rates of interest. In short, we are witnessing the rapid financialisation of car culture.

PCPs facilitate cash-strapped individuals to participate in car culture, by allowing them access to vehicles formerly outside of their price range, and more frequently. The result is a greater ownership of new and more luxurious cars, increasing short term profitability for manufacturers and financiers, but also increased financial insecurity for consumers. This seriously mitigates efforts to address car dependency and the social and environmental damage that it brings.

Compact with Africa – the German Contribution to lLberalization of Investment and Financialisation in Africa

Frauke Banse

University of Kassel, Germany

I will discuss the Compact with Africa, the G20 initiative under the German presidency in 2017. In the public debate, the CwA is portrayed as an important contribution for development in Africa. A closer look at the document reveals a harsh approach to investment liberalization and radical suggestions to restructure African financial markets and modes of public finance.

In a first step, I will argue, that the CwA allows the EU to introduce measures through the backdoor that it was so far not able to include in the existing Economic Partnership Agreements (investment, public procurement, services – so called WTOplus issues). Furthermore, the CwA goes beyond the goal of these free trade agreements; it aims to structurally change African financial markets and modes of public finance. The goals of the CwA are rooted in G7 policies, taken up by the G20 after the financial crisis, with the aim of strengthening the ‘resilience’ of global financial markets. Following Daniela Gabor (2018), Germany is playing a key role in these G7 and later G20 policies, especially in seeking to establish local currency bond markets in (semi-)peripheral countries. Therefore, it is not only important to discuss the single policy suggestions contained in the CwA, but to contextualize the CwA in the geopolitical shifts and interests that have been emerging since the global financial crisis. Accordingly, I will discuss the CwA as a WTOplus initiative as well as (and strongly linked to this) an important puzzle piece concerning the question how the G20 aims to strengthen the ‘resilience’ of the global financial markets. A special focus will be on the German role and German interest in theses processes.

Revisiting the M-Pesa ‘market miracle’: a historical materialist analysis of the Financialisation Of Remittances In Kenya

Julia Kristina Maisenbacher

University of Lausanne, Switzerland

Remittances have become a key source of financing for development. During the last decade, many developing countries have witnessed the increasing significance of financial markets in sending and investing remittances – a process also considered as the financialisation of remittances (FOR). In Kenya, one key element of the FOR is the ‘success story’ of the well-known microfinance and mobile payment system M-Pesa. Often praised as a ‘market-miracle’, M-Pesa is the expression of a pure market-driven approach to harness the developmental potential of remittances. Poor people without a bank account can use M-Pesa to send and receive remittances cheaply and to take up microloans which often result in different forms of self-employment. At the same time the finance industry benefits from a growing consumer base. So far, the literature on M-Pesa has often echoed this win-win promise on the basis of a problem-solving approach. This article follows a different route of enquiry. It aims to fully understand the political dimensions of the FOR in Kenya. It draws on a historical materialist theoretical framework to analyse the FOR against the background of conflicting socioeconomic forces and their contradictory interests, which emanate from capitalist production relations. The paper identifies two state-capital alliances which have promoted different approaches of how remittances could be linked to finance in order to promote development. It illustrates how since the introduction of M-Pesa the dominance of the finance capital fraction has become challenged by an alliance of state-business actors that promotes more cooperative forms of remittance investment from which productive capital fractions may benefit. A historical materialist approach helps to understand the political contestation of the FOR, and also allows us to identify alternative approaches.

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