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Economic Geographies of Financialization

Andy Pike and Jane PollardCentre for Urban and

Regional DevelopmentStudies (CURDS)

Newcastle UniversityNewcastle NE1 7RUUnited [email protected] [email protected]

Key words:financializationpolitical economybrandsbrewing

weatherderivatives

a b s t r a c tThis article argues that financialization—shorthand

for the growing influence of capital markets, their

intermediaries, and processes in contemporary eco-

nomic and political life—generates an analytical

opportunity and political economic imperative to

move finance into the heart of economic geographic

analysis. Drawing upon long-standing concerns

about the relatively marginal location of finance ineconomic geography, we emphasize the integral role

of finance in connecting the entangled geographies of

the economic to the social, the cultural, and the politi-

cal. In the wake of various “turns” in the discipline,

we develop this integrationist approach to finance in

ways that retain political economies of states,

markets, and social power in our interpretations of

geographically uneven development. In this article,

we discuss the plural nature of emergent work on

financialization and develop three analytical themesto shape our discussion of financialization. Next, we

elaborate our analytical approach by warning against

functional, political, and spatial disconnections

traced in the literature on the geographies of money.

We then explore how financialization is broadening

and deepening the array of agents, relations, and sites

that require consideration in economic geography

and is generating tensions between territorial and

relational spatialities of geographic differentiation.Finally, we address the relative dearth of empirical

work by examining the financialization of brands that

have shaped the evolution of the brewing business

and the development of new derivative instruments to

hedge against weather risks. We conclude by arguing

that our analysis of financialization demonstrates how

finance occupies an integral position within eco-

nomic geographies and reveals some of the sociospa-

tial relations, constructions, and reach of existing and

new actors, relations, and sites in shaping theuneven development of financialized contemporary

capitalism.ecge_1057 29..52

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Acknowledgments

An earlier version of thisarticle was presented at the“Spaces of Financialisation”session at the RGS-IBGAnnual Conference 2007,London.Thanks to theparticipants for theircomments, Shaun French andSarah Hall for organizing thesession, the three reviewersfor their comments, andHenry Yeung for his editorial

advice.The usual disclaimersapply.

Financialization—shorthand for the growing influ-ence of capital markets, their intermediaries, and pro-cesses in contemporary economic and politicallife—has attracted growing academic, political, and

popular attention. The crisis of the international finan-cial system since 2007 has unfolded against the back-drop of financial gyrations in the past decade that haveshaken East and Southeast Asian and Latin Americaneconomies, spawned new and highly leveraged hedgeand private equity funds that have acquired long-established national retailers, and produced amortgage-lending boom and bust that has meant thatmillions of householders, borrowers, and savers indifferent parts of the world have now heard about “the

U.S. subprime mortgage market.”The meltdown intensified through 2009 as a creditcrunch became a full-blown recession or even adepression in the eyes of numerous commentators.Recent events have included $100 billion write-downsin corporate accounts; trillion-dollar fluctuations inthe stock market; record bank losses, runs, and fail-ures that have triggered state bailouts, partial and wholesale nationalizations, state-guided mergers,recapitalizations, and “toxic asset” insurance schemesrunning into trillions of dollars; substantial employ-

ment losses—estimated at 40,000 financial services jobs in the United Kingdom alone; and multilateralattempts to reform the regulatory architecture of theinternational financial system (see, e.g., Blackburn2008; Dymski 2008; Turner 2008; Wyly, Moos,Hammel, and Kabahizi 2009). Attempts to analyzewhat has happened lead us into the murky world of financialization, a shadowy “gray capitalism” (Black-

burn 2006) replete with opaque terms, such as “asset- backed securities,” “collateralized debt obligations,”

“collateralized loan obligations,” “NINJA (noincome, no job or assets) loans,” “securitization,”“shareholder value,” “short-selling,” “special purposevehicles,” and “structured finance.”

In this article, we argue that financialization pro-vides a strong impetus to embed finance in the heart of our understanding of economic geographies. As con-ceptions of economy increasingly accept that “circuitsof value reach out across and through multiscalar spaces in which the environmental, material, and

social practices involved in them literally take place”(Lee 2006, 417), financialization requires a better understanding of the machinations of financial actorsand intermediaries that are reshaping the landscapesof contemporary capitalism. Financial intermediaries,

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metrics, and practices are ever-more engrained in the economic geographies of our personal, working, and public lives through our access to and use of bank accounts,mortgages, pensions, and savings; employers’ ownership; access to capital and financing;and public infrastructure and services (O’Neill 2009). Our intention, however, is not

simply to restate any singular or dominant role for finance in determining and explainingeconomic geographies in a crudely economistic or reductionist fashion. Instead, we seek to emphasize the integral role of finance in connecting the entangled subdisciplinarygeographies of the economic to the social, the cultural, and the political. In the wake of various “turns” in the discipline, we develop this integrationist approach to finance inways that retain political economies of states, markets, and social power in our interpre-tations of geographically uneven development (see Goodwin 2004; Jessop and Ooster-lynck 2008; Jones 2008; Perrons 2001). Our argument draws on long-standing concernsabout the relatively marginal location of finance in economic geography (see Courlet and Soulage 1995; Harvey 1982; Leyshon and Thrift 1997; Martin 1999; Pollard 2003) and

suggests that economic geographies of financialization generate both an analytical oppor-tunity and an imperative to move finance from its “offstage” (Clark 2006, 84) location intothe heart of economic geographic analysis.

In what follows, our argument proceeds in three sections. First, rather than provide thekind of systematic review that has been undertaken elsewhere (e.g., Economy and Society2000; French, Leyshon, and Wainwright forthcoming), we highlight the plural nature of emergent work on financialization and some of the different conceptual starting points,foci, and disciplinary contexts and concerns that bedevil considerations of its economicgeographies. As a way forward, we identify and develop three analytical themes that shapeour discussion of financialization: the proliferation of financial intermediaries; the height-ened risk, uncertainty, and volatility of financialized capitalism; and the extending social,

spatial, and political reach of financialization. Second, we elaborate our analyticalapproach by exploring how financialization is broadening and deepening the array of agents, relations, and sites that require consideration in economic geography and isgenerating tensions between territorial and relational spatialities of geographic differen-tiation. In so doing, however, we caution against three analytical habits, emphasizingfinance’s functional, political, and spatial disconnections that have long hindered attempts to interrogate geographies of money. Third, we demonstrate the value of our argument and analytical approach and address the relative dearth of empirical work byexamining the financialization of brands that is shaping the evolution of the brewing

business and the development of new derivative instruments to hedge against weather

risks. In conclusion, we argue that our analysis of financialization demonstrates howfinance holds an integral position within economic geographies and reveals some of thesociospatial relations, constructions, and reach of existing and new actors, relations, and sites in shaping the uneven development of financialized contemporary capitalism. Weclose by reflecting upon the politics of contesting an increasingly complex, uncertain, and volatile financialized capitalism that is seemingly beyond the grasp of social agency and regulatory authority and is narrowly accountable only to its own webs of financialinterests.

What and Where Is Financialization?Financialization is a neologism that has stimulated a diverse and rapidly expandingliterature marked by different theoretical and disciplinary traditions, points of departure,and foci. French, Leyshon, and Wainwright (forthcoming) identified three significantschools of thought on financialization: regulation theory, critical social accountancy, and

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sociocultural approaches. To this list, we would add institutionalist and heterodoxeconomic variants. Indeed, as Engelen (2008, 117) argued, drawing on Collins’s(1994) review of post-1945 social theory, the literatures on financialization demonstratefour major research traditions that are differentiated by their choice of explanatory

mechanism: function (Marxism, systems theory, and modernization theory), power (political sciences and conflict sociology), interest (microeconomics and rationalchoice theory), and legitimacy (theoretical approaches stressing the force of “ideationalobjects” like principles, narratives, and discourses). Notably, the theoretical traditions and kinds of studies of financialization reflect much of the theoretical and epistemologicaldiversity that has shaped a range of debates in economic geography since the 1970s(Barnes, Peck, Sheppard, and Tickell 2003). Our aim here is not to review these literaturesor to resolve their conceptual debates but, rather, to outline some of the differences indefinition among the various schools of financialization and to develop some keyanalytical themes that shape our analysis of financialization and its economic

geographies.So, briefly, what is financialization? Regulation theorists interpret financialization as amacroeconomic phenomenon, representing a systemic shift in capitalism and marking theemergence of a new finance-driven regime of accumulation (Boyer 2000). For Duméniland Lévy (2001, 578), financialization is part of a global neoliberal project that marks “thereturn to hegemony of the financial fraction of ruling classes,” echoing Arrighi’s (1994)identification of previous historical financializations of capital that extended Braudel’s(1984, 246) characterization of financial expansion as “a sign of autumn,” a symbol of thematurity of a particular phase of capitalist development. By contrast, critical accounting

perspectives place greater emphasis on meso- and microeconomic analytics and definefinancialization as “the growing influence of capital markets (their products, actors, and

processes) on firm and household behaviours” (Erturk et al. 2007, 556). Julie Froud, KarelWilliams, and their colleagues have interpreted financialization as a new form of financialcompetition in which “every quoted firm must compete as an investment to meet the samestandard of financial performance” (Williams 2000, 6; see Froud, Haslam, Johal, and Williams 2000; Froud, Johal, Leaver, and Williams 2006). As such, financialization“reworks the hierarchy of management objectives” (Williams 2000, 6) as firms struggleto meet the increasingly assertive demands of shareholders, fund managers, and capitalmarkets vis-à-vis those of other stakeholders (Froud, Haslam, Johal, and Williams 2000).Sociocultural accounts, such as that of Martin (2002, 76), focus on the financialization of everyday life and describe financialization as “commercially inspired selfhood” that

conditions individuals to take on greater financial responsibilities and risks as personal pensions, private insurance, and investments have gradually replaced socialized, state- provided welfare benefits. This strand focuses on the construction of individual identitiesand subjectivities and the dynamics of people’s enrollment in the “everyday life of globalfinance” (Langley 2006, 2007).An institutionalist take on financialization emphasizes theextent and nature of the relative growth in the power of financial interests and actorswithin the broader institutional webs that constitute predominantly national “varieties of capitalism” (Hall and Soskice 2001; Pauly and Reich 1997). Lazonick and O’Sullivan(1996), for example, demonstrated the increasingly central role of capital markets and financial intermediaries in transmitting competitive norms and in prompting and shaping

the nature of corporate change. Finally, heterodox economic research on financializationis strongly wedded to political economy traditions, as well as to post-Keynesian perspec-tives. Blackburn (2006, 39), for example, viewed financialization as “the growingsystemic power of finance and financial engineering” that permeates corporationsand households alike and encourages an individual “to think of himself or herself as a

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two-legged cost and profit centre.” This definition encapsulates the breadth of literaturesthat describe both systemic and performative aspects of financialization.

In the context of such differences in definition, conceptualization, and focus, we candistill three themes to develop our analysis of the stimulus that financialization is

generating to situate financial concerns more centrally within analyses of economicgeographies. First, the literatures on financialization have drawn attention to the growth ina range of financial intermediaries and other actors alongside the growing size, visibility,and influence of financial markets. Existing and new institutions are increasingly becom-ing drawn into formerly disintermediated financial markets through their investments inequity, debt, pensions, mortgages, infrastructure, investment funds, and insurance. Thesheer extent and weight of financial trading activities and attendant practices of calcula-tion and “financial engineering” have surged through the activities of these institutions,growing exponentially in their geographic scale and scope and dwarfing output growth,especially in strongly market-led economies like the United States and the United

Kingdom. Various indicators of the growing prevalence of financial calculation include pressures to manage corporations to deliver “shareholder value” in the form of dividend streams and asset appreciation that privilege financial ownership over other agents(Folkman, Froud, Sukhdev, and Williams 2006; Williams 2000); marked growth in thelong-term market capitalization of firms (Gibbon and Ponte 2005); increased churn and turnover in short-term share ownership; the proliferation of fee-earning intermediaries(e.g., hedge funds, private equity fund partners, corporate lawyers, and fund managers;see Froud and Williams 2007); the trend for nonfinancial corporations to buy up assetsand financial subsidiaries (Blackburn 2002; Martin 2002); and the deeper and wider enrollment of individuals in the realm of financialized capitalism—by 2000, for example,some 40 percent of U.S. and U.K. households had some of their savings invested in stock

markets (Williams 2000). Different literatures on financialization can thus agree that it isassociated with widening and deepening the reach of financial interests in ways that

pervade the agency, spaces, and places of existing and new actors and sites. In a morecomplex and shifting context, capital markets and intermediaries have become relativelymore powerful in shaping the sociospatial relations of corporate, household, and indi-vidual agency, rendering finance ever-more central to understanding their economicgeographies.

Second, research on financialization has demonstrated how risk, uncertainty, and volatility are now more thoroughly embedded within the economic geographies of thefinancial system. This is a product of the voracious appetite of existing and new market

actors for the rapid realization of supranormal profits and a technocratic belief in their capacity to engineer ever-more sophisticated methodologies and instruments throughwhich to conceive and calculate value and profit from the management of risk (Blackburn2006). Such rationales and practices have led to the recognized impact of hedge funds’ useof similar software models to accentuate the swings between peaks and troughs infinancial markets, generating and reinforcing the volatility from which they seek to

benefit (Knorr Cetina, Karin, and Preda 2004). In addition, more sophisticated short-selling practices have allowed market intermediaries to profit from falls in prices of

borrowed equities as long as the magnitude of declines and their timing matches their predictions. The wider social and spatial reach of the financial intermediaries and

practices just identified has, in turn, extended the transmission, temporally and spatially,of such risk, uncertainty, and volatility into myriad private and social worlds that areconnected through financial markets.

Third, although the orthodox literatures have asserted the benefits of the growing power of investor principals vis-à-vis agent managers (pace Jensen and Meckling 1976) and

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popular analyses have lauded the innovative ingenuity of financial actors (e.g., “The NewKings of Capitalism” 2007), many accounts of financialization have raised significantconcerns about its material, social, and political repercussions. For those who are suffi-ciently affluent to participate, financialized capitalism could be a more “democratized

finance” (Erturk et al. 2007), opening up capital markets for moderate-income house-holds and individuals to express choice, take ownership, and potentially prosper fromasset price inflation. In this way, connecting people’s livelihoods more closely to financialmarkets has “naturalized” finance in the every day (Langley 2007).Yet Erturk et al. (2007)also questioned the financial literacy and “calculative competences” of different individu-als and socioeconomic groups to weigh financial risks and rewards and to invest wisely infinancialized capitalism. For Lazonick and O’Sullivan (1996, 32), the long stock market

boom encouraged U.S. households “to live off the past” and, at the same time, encouraged corporations to “downsize and distribute” profits to shareholders, rather than to reinvestthem in their firms. As such, financialization has been characterized as redistributing

surpluses to elite financial intermediaries (Savage and Williams 2008; Folkman, Froud,Sukhdev, and Williams 2006) and rewarding asset-stripping actors who prey on firms thatare weighed down by large pension and, in the United States, medical liabilities (Black-

burn 2002). Financialization, then, clearly has the potential to exacerbate unevennessacross individuals, social groups, and organizations in space and place.

Toward Economic Geographies of FinancializationOur three analytical themes—the extended and deepened social and spatial reach

of financial intermediaries and practices; the generation and transmission of risk,uncertainty, and volatility; and the production of material, social, and politicalunevenness—enable us to demonstrate the integral position of finance within economicgeographies. Here, we further develop how our analytical themes can address the diverseways in which financialization is reinforcing the central position of finance withineconomic geographies, first, by explaining how financialization broadens and deepens thearray of agents, relations, and sites in our analytical focus and, second, by exploring thetensions between territorial and relational spatialities of geographic differentiation and uneven development. Connected to readings of economy that emphasize its sociospatialrelations and constructions, a more supple interpretation of the spatialities of finance canenable its closer integration with the traditionally dominant concerns of economicgeography in production; the firm, labor, and the state; and, more recently, consumption

and culture (Barnes, Peck, Sheppard, and Tickell 2003). More broadly, such a reading canmake connections and linkages from the economic to the social, cultural, and politicalsubdisciplinary subdivisions within geography by illuminating hitherto hidden or rela-tively obscured concerns.

In so doing, however, it is important that analyses of financialization avoid beingdazzled by the apparent speed, complexity, and scale of finance that can generate threeinterrelated, analytical temptations that have commonly afflicted writings on the role of finance in the economy and polity. The first temptation is to argue that there is a functionaldisconnection between finance and something called the “real economy.” Comaroff and Comaroff (2002, 784), for example, argued:

Above all else, the explosion of new monetary instruments and markets, aided by ever-more-sophisticated means of planetary coordination and time-space compression, have allowed thefinancial order to achieve a degree of autonomy from “real production” unmatched in the annalsof modern political economy.

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Such accounts tend to treat finance and production as increasingly dissociated spheres,replacing the productionism of Marxian political economy with a “financialism” thatinvariably understates the inescapably geographic, material rootedness of financial con-nections. Montgomerie (2007) saw such views in international political economy, but it is

not universally held across other approaches to financialization, where such actors mayseek such detachment but fail to achieve it in practice (Blackburn 2006). The scope and magnitude of changes heralded by financialization may, at some times and in some places,reinforce the capacity of the financial system to reproduce itself solely through the circuitsof finance capital. Yet it is more questionable, especially in empirical terms, whether thisconstitutes a wholesale transformation and shift in the ability of the system to create valueonly through the (re)circulation of finance, somehow disconnected or one step removed from the material substance of the “real economy.” Although commodity extraction and

production may periodically be deemed unfashionable or “old economy” relative toalternative possibilities in the investment landscape, such activities remain integral even

to an increasingly financialized capitalism that is compelled systematically to enhancerelative returns on capital employed. Evidence reveals a proliferation of new financinginstruments and practices that intertwine “almost as much financial engineering as heavyengineering” (Finch 2006b), often in opportunistic and short-term attempts to capturevolatile but potentially highly lucrative spikes in asset and commodity prices. As invest-ment guru Jim Rogers, of the Quantum Hedge Fund, argued amid the dot-com boom of the late 1990s, “the next big thing is things” (quoted in Finch 2006a). The dynamism and vitality of financial networks and, above all, the pragmatism that is integral to the restlessdrive for accumulation mean that, even in the context of financialization, the material

basis of the “real economy” is inescapable in its framing and calculation of investmentopportunities (Leyshon and Thrift 2007). As Pryke (2006, 7) put it:

“Flow” and “circulation” do not quite capture the entanglement of time-spaces that accompanythe motion of finance and the traffic in financial instruments. As analytical concepts, they jointhe story half way through as it were; they miss out the formative stages, the processes and

practices that shape and generate the flows and the circulation. [emphasis in original]

If the advent of financialization is to be used to illustrate the place of finance withineconomic geographies, then it is important to avoid the dichotomy of finance and the “realeconomy.” It is only through their integration that the social relations of finance and theways in which its forms of calculation affect economic processes can be understood (see

Mirowski 1999).The second temptation is to reproduce a political disconnection that describes how a

globally encompassing, more pervasive, and integrated financial system can appear ingenious, omnipotent, even “carnivorous” (Williams 2000, 1), and constantly beyond

political authority and regulation. The rise of “scientific finance” from the 1960s delib-erately sought technical and purportedly objective metrics of liquidity, rate of return,shareholder value, and so on to render the financialized economy the realm of technocracyand experts (de Goede 2005; Mitchell 2002; Pryke 2006) and distant from the scrutiny of democratic and regulatory institutions and processes (Buck-Morss 1995). Language and discursive devices and practices have been used to obscure and deflect political questions

of emergent financialized space, despite evidence of regressive excesses, including“vulture funds” that sue heavily indebted countries to recover loans, inflated remunera-tions and bonuses for executives that encourage excessive risk taking, and fraud.

Politically disabling representations of finance are not new or uncontested. The radicalcritiques and alternative economic strategies of the early 1980s in the United Kingdom

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explicitly recognized the politicized nature of the financial system and its potentiallydamaging implications for uneven development. As Richard Minns (1982, 48) argued inTake Over the City, “profitability is not a technical, objective term but is specificallyrelated to the structure of British capitalism, the role of financial institutions, and their

ability to concentrate on short-term returns. Profitability is political.”We acknowledge that the task of regulating the financial system has become much more

complex in the post–Bretton Woods era in the context of financialization and periodiccrises (Clark and Tickell 2005). It remains crucial, however, to interrogate the unevennessin the constructed sociality and spatiality of financial markets to reconnect and revealtheir political-economic context. Despite the often-heroic claims of financialinterests—echoing Tom Wolfe’s (1988) “Masters of the Universe” sobriquet—persistentgaps remain between what is being expected and delivered in terms of shareholder value

because of the uneven pressures of financialization and the circumscribed scope and potential agency of different managerial responses (Froud, Haslam, Johal, and Williams

2000). A more social treatment of the economic geographies of financialization can avoid any sense of the disconnection of a more sophisticated and technocratic financial systemfrom its political and regulatory context.

Third, while the crudest forms of O’Brien’s (1992) “end of geography” and Friedman’s(2005) “flat world” theses have been rebutted within economic geography (Martin 1999;Rodríguez-Pose and Crescenzi 2008), the dynamism, rapidity, and magnitude of changeand innovation that are conjured up by financialization can appear, at least at first glance,to have generated economic activities that are disconnected from their geographicentanglements in space and place. The sheer scale and sometimes radical nature of changes in financial practices can seem constantly to race ahead of any ability to ground or spatialize our understandings of them in concrete ways. The danger is not the “end of

geography” or the “flattening” of spatial differentiation but in the temptation to accept adiminution of geography’s substance and importance in the emergent “spaces of finan-cialization.” The increasingly abstract nature of financial practices and discourses rein-forces this sense of geographic detachment. The recent resurgence of forms of privateequity, in particular, has raised questions about the nature of apparently spacelessfinancialized capitalism and its intentions for businesses and people in places. Tradeunions, for example, have voiced concerns that such private financial entities are “like aglobal vacuum cleaner hoovering up assets any place, anywhere, any time. . . . The

philosophy is buy it, strip it and flip it. . . . It’s all about value extraction and not valuecreation” (Phillip Jennings, general secretary, UNI global union, quoted in Elliot 2007).

Recognizing the historical parallels with the highly leveraged wave of buy-outs in theUnited States in the late 1980s, Froud and Williams (2007) argued that private equity doesnot represent a new or superior kind of institutionalized capitalism but normalizes a“culture of value extraction” by elite principals that interprets businesses as abstracted

bundles of financial assets and liabilities to be traded for higher economic returns thantheir existing configurations are able to deliver. However, such accounts underplay thenecessarily social and spatial nature of finance, long established within economic geog-raphies (see, e.g., Harvey 1982, 1989), especially the ways in which the geographies of assets and liabilities impinge upon their value and tradable potential (Lee 2006; Pollard 2003, 2007; Pike 2006).

Some accounts of financialization have recognized geographic specificity but haveframed it in the national context of Hall and Soskice’s (2001) “varieties of capitalism”with distinctive institutional and regulatory systems of share ownership, the centrality of capital markets, private institutional investors, and credit- and bond-rating agencies (seeWilliams 2000; Lazonick and O’Sullivan 1996; Gibbon and Ponte 2005). Thus, debates

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about financialization have had most purchase in the United States and the United Kingdom as exemplars of liberal market-based capitalisms in contrast to the coordinated market-based models in France and Germany (Engelen 2008; Morin 2000; Jürgens,

Naumann, and Rupp 2000). Countries in the global south (Singh et al. 2007) and central

and Eastern Europe (Stenning, Smith, Rochovská, and Świątek forthcoming) havereceived much less attention at least partly because of the inability of mainstream theoriesto interpret postcolonial economic geographies (Bagchi 2007; Pollard and Samers 2007;Pollard, Laurie, McEwan, and Stenning 2009).

Guarding against the issues of functional, political, and spatial disconnection, we cannow elaborate our analytical approach, first, to demonstrate how financialization haswidened and deepened the range of agents, relations, and sites and, second, to detail howthe economic geographies of financialization are crosscut by ongoing tensions betweenterritorial and relational spatialities of geographic differentiation and uneven develop-ment. First, the growing social and geographic scope and extent of financialization has

drawn existing and new agents and sites into often reconfigured roles and relationshipswithin the financial system, broadening and deepening the reach of finance capital.Financialization, then, provides an opportunity to confront the often-undersocialized nature of contemporary financial geographies. Following calls for more holistic views of the circuits of capital across different sites and spatial scales (Courlet and Soulage 1995;Hudson 2005; Pollard 2003; Smith et al. 2002; Clark 2005), our reading of financializa-tion connects hitherto relatively discrete and separate spatial circuits of finance,especially in linking the domestic realm of people, families, and households with theinternational financial system (French, Leyshon, and Wainwright forthcoming; Langley2007). Indeed, as Corbridge, Martin, and Thrift (1994, 15) argued, “in most industrialized countries, struggles over practices and meanings of money have usually been most

visible when they have been connected to everyday life, and especially to the builtenvironment.”

Everyday financial practices within the entangled geographies of the “ordinaryeconomy” (Lee 2006) have become a key strand of recent work on the differentiated formsand sites of connection and negotiation among people, places, and “globalfinance”—what Dymski (2005) called the “micro-globalisation of finance”—mediated bya host of axes of differentiation, including sector, class, gender, ethnicity, and faith (see,e.g., Erturk et al. 2007; Pollard 2007; Stenning, Smith, Rochovská, and Świątek forth-coming). Our reading develops beyond the mechanistic divisions or hierarchies betweenthe discrete macro-, meso-, and microlevels that are evident in some accounts of finan-

cialization and emphasizes their nested interrelations.Financialization is reconfiguring people’s positions, financial practices, and articula-

tion within the financial system. Often through the selective withdrawal of the state,individuals have been encouraged and/or compelled to become increasingly reliant uponfinancial markets and instruments for their economic welfare (Clark 2000). Individualsare being drawn into and having their existing sociospatial relations and identitiesreworked and realigned in highly unequal and uneven ways. This focus brings a welcomeemphasis upon the welfare of people in places and begins to remedy the undersocialized views of actors’ motivations in the literatures on money and finance (Pollard 2003).Crucially, though, it also opens up to closer scrutiny the divided, complex, and often

ambiguous situations that result. Individuals, for example, may find themselves enrolled in the financial system through social relations of employment and ownership and withdual identities as both “worker-shareholders” and “shareholder-workers,” each withdifferent linkages and articulations to their employer and the capital markets (seeTable 1). In the wake of restructuring and rationalization, for instance, jobs are lost, and

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individuals, households, and communities are acutely affected but in ambiguous ways because “what worker/shareholders lose through wage cuts could be compensated by thegains of shareholder/workers in asset price appreciation” (Williams 2000, 9).

Second, the wider and deeper social and spatial reach of existing and new actors

resulting from financialization underpins the role of finance as a prism through which tounderstand the tensions in economic geographies between territorial and relationalspatialities of geographic differentiation and uneven development. In common withPryke’s (2006, 15; emphasis in the original) call for a conceptualization of the “ tempo-ralities and spatialities of finance” as a means of undermining the idea of space as an“inactive backdrop” to financial time-spaces, we argue for the inescapable geographicconstruction, context, and rootedness of financial networks and practices. Reflectingrecent debates about space, place, and scale (see, e.g., Allen and Cochrane 2007; Amin2004; Hudson 2007; Pike 2007), central to this analytical view is a focus on the tensions

between territorial, topographical, and scalar readings of “bounded” entities—such asregulatory institutions with spatial jurisdictions at specific scales like the nation-state—and the relational, topological views of “unbounded” flows and circulations—suchas international trading networks in monetary instruments. We see this approach as afruitful, if challenging, way forward for interpreting the diversity and variety of theeconomic geographies of financialization: tackling the “missing geographies of finan-cialisation” by “seeking to move beyond a scalar geographical imaginary toward a moremonetary network approach” (French, Leyshon, and Wainwright forthcoming), whileretaining a sense of the tensions between territorial and relational conceptions of spaceand place.

Taking this approach affords a means of interpreting the social relations and identitiesof financialization when they are stretched over time and space to reveal connections

across and between sociospatial scales, often with uneven and contradictory conse-quences. Robert Reich (2000), for example, commenting on the California public sector

pension fund CalPERS’s decision to sell Alcatel stock that led indirectly to job losses inFrance, acerbically noted the “cognitive dissonance” that means:

Mild-mannered folk like California’s public retirees—tens of thousands of people who spenttheir careers working for the state . . . are also quietly undermining what remains of Europeansocial democracy. They are not alone in doing so, of course, but given the extensive holdings of their retirement funds in European-based companies, their influence should not beunderestimated.

Clark (2005) also suggested that people’s lives are being made global and that their finances are being shaped by transnational flows through the international financialsystem. If we use financialization as a stimulus to locate finance more centrally ineconomic geographic research, then we can also challenge the existing literatures’ focus

Table 1

Social Relations and Social Identities

Social Relations Social Identities Linkage/Articulation

Employment-ownership Worker-shareholder Firm-capital market

Ownership-employment Shareholder-worker Capital market-firm

Source: Based on Boyer (2000).

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on “national” spaces and their tendency to reduce the diversity and variety of theeconomic geographies of financialization to ideal-typical constructs, rather than to a morefinely grained and nuanced variegation of capitalism across time and space (Peck and Theodore 2007). Although critical to establishing the “investment rules,” norms, and

regulatory standards that frame economic activities in meaningful ways (see, e.g., Chris-topherson 2002; Gertler 2004), the “national” is not the only geographic entanglement of importance to finance. Wray (2008), for example, recently illustrated the significance of regionally differentiated venture capital networks, financial knowledges, intermediaries,and business support that characterize the uneven geographic take-up and availability of

business finance in the East Midlands and in northeast England. Deploying our analyticalapproach to the wider and deeper social and spatial reach of existing and new actors and territorial and relational tensions, we want to use financialization as a way to understand the social agency of actors who are connected and articulated across and betweenspace and place. The following sections draw upon empirical work to examine the

financialization of brands in restructuring the brewing business and the financialization of hedging risk in weather derivatives. Each case demonstrates how financializationlinks different articulations of agents, spaces, and places to uneven development and reinforces the integral position of finance in explaining their unfolding economicgeographies.

The Financialization of Brands and the Geographiesof Brewing

The archetypal “real economy” business of brewing has felt the effects of financial-ization acutely, exemplifying strong functional connections between financial interests

and the reshaping of its structure, organization, and geographies. With institutionalinvestors rendered more powerful and vociferous through the primacy of the capitalmarkets as part of financialization, narratives demanding enhanced shareholder valuehave forced brewing companies away from capital-hungry production and packagingtoward the sales and marketing of brands. The intensification of competition has squeezed

profit margins and shifted the focus of the brewing business toward the differentiation of products through high levels of advertising expenditures and the national, if not global, promotion and internationalization of brands in emerging markets, particularly in Brazil,China, and Russia. Brewing groups have segmented markets and encouraged consumers’tastes to shift toward relatively higher margin volume lager brands and fragmented niche

markets that are capable of supporting premium-priced brands (such as extrastrength, “exotic” imports; “alcopops”; and speciality drinks). Investors’ demands for increased shareholder value have been at the forefront of brewing companies’attempts to disentangle themselves from the capital-intensive, low-margin, and

pedestrian returns on investment delivered by producing standardized volumes of ale, beer, and lager.

The increased technological sophistication of brewing has meant that the former geographic attachments to particular breweries, raw materials, water sources, and so onthat have traditionally characterized specific brands can be technically re-created inhigh-technology “brew factories,” affording brewers a hitherto unprecedented degree of

spatial flexibility. This is not a simple tale of spatial disconnection and disembedding,however. Geographies unavoidably enter into assessments of shareholder value throughthe differences they make to corporate financial performance, for example, through thelocation of firms and assets, workforces, markets, and tax and regulatory contexts (Pike2006). Rather than simple functional and spatial disconnections, then, the strategic shift

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toward the sales and marketing of brands has opened up space for contract brewing and packaging to serve the main brand owners. Such changes have created difficult issues for brewers in trying to balance increasingly international economic integration in the searchfor scale economies with the actual and, crucially, the perceived provenance of often-local

ties that are sometimes evident or constructed to establish, create, and suggest quality and authenticity in the value and meaning of brands.

In the context of financialized consumer capitalism and amid a lack of consensusamong competing accounting methodologies, brewing brands—in common with other consumer goods—are now interpreted as a financial asset class:

[I]n the boardroom and in the City . . . brands are financial assets, every bit as much as plant,machinery and stock. . . . [B]rands are arguably the most valuable assets of all in that, in theory,they do not have a finite life and therefore will not depreciate. (Hart 1998, 206)

The ability of brands and branding to provide meaning and “add value” to supportrevenue, cash flows, and a growth in profits has meant that they have becomeincorporated—albeit unevenly and selectively—into processes of financialization

because it is “widely accepted that brands do create wealth. Maximising brand value issimply a part of maximising shareholder value—a goal that effective managers of allquoted companies recognize” (Batchelor 1998, 98).

The greater recognition and valuation of brands has meant that brands have become financialized (Willmott 2007) and, like other financial asset classes,have been brought into the calculative frame and scrutiny of the existing and new actorsof financialization: corporate strategists, financial analysts, investors, and others.This financialization of brands has encouraged financial institutions and analysts toharden their sentiment against brewing as an “old” economy, mature sector with a largeappetite for capital, tied up in assets creating sunk costs and barriers to exit, that typicallystruggles to deliver sufficient shareholder value relative to alternative investment oppor-tunities. Increasingly large, integrated groups with a sales and marketing focus and strong global brands supported by substantial advertising expenditures have becomethe financial analysts’ preferred business model and financial narrative (see O’Neill2001).

Financialized brands, particularly their relative market strengths, potential growth,investment returns, and value, are stimulating rivalry and consolidation within the

brewing business on an international scale. The geographies of the brewing business are

increasingly focused upon the acquisition and management of brand portfolios in aconsolidating and internationalizing industry that is dominated by InBev/Anheuser-Busch, SABMiller, and Heineken (see Table 2). Financialized brands are viewed in aninstrumental manner as part of such strategies:

Even though I come from a marketing background, I view brands as vehicles for driving growthand value—no more and no less. . . . What we’re looking at is very unemotional. We can talk about the beauties of brands and all that sort of stuff, but at the end of the day investors just wantto know what they are going to get in terms of returns. (Tony Froggat, Scottish and Newcastle’sformer chief executive, quoted in Bowers 2005, 30)

Given their growing size, market power, tax contributions, and spatial reach, theeconomic geographies of the brewing business have been unable to disconnect their activities from the political economic context and continue to be shaped by territorial and institutional regulatory structures. National competition authorities still shape the strate-

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gic valuations and outcomes of consolidations among the brewing giants. Scottish and Newcastle’s (S&N) recent acquisition and breakup, for example, failed to attract regula-tory intervention in the United Kingdom by the Competition Commission only becauseHeineken gained S&N’s U.K. operations, where it hitherto had no presence, and Carls-

berg acquired control of S&N’s overseas interests, especially its former joint ventureBBH in Russia and the former states of the Soviet Union.

Financialization, then, is generating powerful forces for the strategic change and reorganization of the geographies of the brewing business—encouraging new

business models, defining new strategies and targets, prioritizing the cultivation and management of brands, shifting the balance of power in its industrial organization,and reshaping the uneven development of the extent and nature of its spatial entangle-ments. This brief vignette demonstrates the central dimensions of our arguments. First,the ascendancy of financialization in reshaping the business of brewing reveals theimportance of situating finance at the heart of understanding its changing economicgeographies. In contrast to traditional economic geographic approaches that emphasized industry, firm, and location (e.g., Watts 1991), our analysis emphasizes the growing social

and spatial reach of existing (e.g., brand owners and major shareholders) and new (e.g., brand valuation consultancies, advertising agencies, and packaging subcontractors)actors who are compelled and involved in reorganized business models that areattempting to deliver enhanced relative returns on investment in the context of internationalized competition and consumers’ shifting tastes. Second, rather than anysimple and determining role for finance in reshaping the economic geographies of

brewing, our interpretation demonstrates tensions between territorial and relational spa-tialities of geographic differentiation and uneven development. In the wake of financial-ization, increasingly brand-conscious international brewing groups have sought to

balance the need for fluid economic expansion and continued growth and sales on a global

basis with the culturally and socially sticky, place-based geographic attachments of brand provenance, especially the territorially shaped character of brand preferences and tastes in particular, often national, markets and the geographic-political economiesof the institutional and jurisdictional spatialities of market access and the regulation of competition.

Table 2

International Brewing Groups Ranked by Output, 2005

Company Volume (M/HL) Sales €m Headquarters Ownership Structure

InBev 200 13,308 Leuven, Belgium Public/family control

Anheuser-Buscha 143 13,034 St. Louis, Missouri, United States Public

SABMiller 109 11,802 London, United Kingdom Public

Heineken 103 11,829 Amsterdam, the Netherlands Public/family control

Molson Coors 60 4,232 Denver, Colorado, United States Public/family control

Carlsberg 51 5,518 Copenhagen, Denmark Public/foundation control

Scottish and Newcastleb 48 4,889 Edinburgh, United Kingdom Public

Grupo Modelo 40 3,743 Mexico City, Mexico Public/family control

Asahi Breweries Group 34 6,195 Tokyo, Japan Public

Tsingtao 22 27 Qingdao, China Public/government

Source: Calculated from annual reports; Swinburn (2005, 2).

a Acquired by InBev in late 2008.b Acquired by Carlsberg and Heineken in 2008.

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Financializing the Weather: The Advent of WeatherDerivatives

I think it’s a perfect market. You can’t spook it, you can’t manipulate it. You can’t make peoplethink it’s going to be 110 degrees in London next week. (Peter Brewer, Cumulus Weather Fund,quoted in Ishmael 2007)

If one analytical strategy is to explore how financialization is reshaping the economicgeographies of particular businesses, another is to explore the often-opportunistic devel-opment and use of new financial tools and to assess their uneven impact. Although neither derivative contracts nor attempts to “domesticate” the weather are new (Rayner 2003), therecent development of markets in weather derivatives, premised on a complex articulationof financial mathematics, meteorology, and the identification and calculation of “weather risk,” marks “a significant step up in the game of domesticating ‘mother nature’” (Pryke

2007, 585).Weather derivatives are a relatively new form of derivative contract, first used in the

United States by Enron, Aquila Energy, and Koch Industries in 1996–1997 (see Randalls2005). In contrast with weather insurance, which has long been used to manage the risksof high-risk, low-probability events like hurricanes or floods, weather derivatives are used

by firms to hedge against low-risk, high-probability events, such as dry or wet periods or cold or warm seasons in a place that can affect the demand for their goods and servicesand hence their revenues, costs, and income (Thornes and Randalls 2007). Wine bars,restaurants, and theme parks, for example, can use weather derivatives to hedge theeconomic impact of a wetter-than-average summer, while energy companies may pur-

chase weather derivative contracts as a “winter hedge” to compensate for a warmer-than-average winter in which they sell less gas or electricity (see Table 3). Using the standard structures of derivatives contracts (puts, calls, collars, and so forth), firms can identify

particular periods for the derivative, a “strike” (the point—average temperature, rainfall,and so forth—at which the contract will pay out), a “tick” (the payout-per-unit increment

beyond the strike), and a maximum payout. Weather derivatives allow some flexibility for

Table 3

An Example of a Weather Derivative Contract

A chain of U.K. wine bars typically sells more wine in warm summer months when consumerscan sit outside at their outlets.The chain could protect itself from losses associated with acold summer by using the following option:

Weather stations London Heathrow

Risk period From 1 May to 31 August

Weather index Average temperature for London Heathrow during the risk period

Strike 20°C

Tick £20,000 per 0.01°C

Maximum payout £2,000,000

Contract If Weather Index < Put Strike, buyer receives: (Strike – Weather Index) x Tick, up to the

value of the maximum payout

Premium Paid upfront by the company

Source: Adapted from the Actuarial Profession’s European Weather Derivatives Working Party, n.d., available online:

http://www.actuaries.org.uk/__data/assets/pdf_file/0020/18722/Ross.pdf

Note: If the weather index = 19.7°C, then the buyer receives (20- 19.7) ¥ 2,000,000 = £600,000. If the weather

index = 20.1°C, there is no payout.

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firms in that they can increase or decrease their cover in line with changing weather forecasts and, depending on their meteorological and financial expertise, trade contractsin a speculative fashion. Between 2003 and 2004, $4.3 billion in weather derivativescontracts were traded; by 2005 to 2006, the figure had increased more than tenfold to $45

billion (Weather Risk Management Association 2008).What may weather derivatives illustrate about the processes and geographies of finan-

cialization? First, weather derivatives are clearly products of a North American and, to amuch lesser extent, a Western European financial and regulatory imagination (Pollard,Oldfield, Randalls, and Thornes 2008; Pryke 2007) and a particular articulation of sectoral context, regulatory, and conjunctural conditions. While the specter of anthropo-genic climate change, mounting insurance losses from extreme weather-related events,and the growing mediation of weather experiences (Rayner 2003) have all played a partin the development of these markets, it was the deregulation of the U.S. energy sector and U.S. market conditions in the late 1990s that were key stimuli for the development of

weather derivatives contracts. The energy sector has always been highly weather sensitive, but regulatory shifts exposed U.S. energy producers to a world of fluctuating prices, whilethe El Niño winter of 1997–1998 also reduced the demand for gas. Weather derivativesallowed U.S. energy producers to hedge their volume risk in the same way that they had traditionally hedged price risk. In the United States, governmental regulation madeweather data freely available to weather companies and consumers (National ResearchCouncil 2003), which significantly boosted the market for constructing various weather indices. In the financialized capital market-centric financial cultures of the United Statesand United Kingdom, there has been the most interest in quantifying the economicimpacts of weather, not just its extreme variants that are usually managed by the insuranceindustry. Thus, in the United States, the National Research Council estimated that 25

percent to 42 percent of the U.S. gross domestic product (more than $2.7 trillion) isweather sensitive (National Research Council 2003), while in the United Kingdom, theMeteorological Office estimated that 70 percent of firms may be affected by the weather (Pollard, Oldfield, Randalls, and Thornes 2008). Bruce (2008) estimated that 90 to 95

percent of weather derivative activity is generated in the United States, with the United Kingdom providing most of the rest of the market. Japan, Australia, and India have alsogenerated some weather derivative trades.

Second, the financialization of weather risk signals the ability of capital markets togenerate and reshape connections between diverse sites and agents who hitherto may havehad little or no interaction with derivatives markets. Given that weather, in the form of

rain, sun, and temperature, cannot be traded, weather derivative contracts derive their value from selected meteorological indices (e.g., average temperature) that are computed from meteorological data that correlate closely with “real” weather. The production of such indices is the task of various meteorological intermediaries who measure, forecast,and render, in appropriate commodity form, their knowledge of different atmosphericcomponents. The financialization of weather and the creation of weather derivativesmarkets are thus “re-valuing information about the atmosphere, creating a tradablecommodity in terms of weather indices and also re-valuing aspects of forecasting and expertise” (Thornes and Randalls 2007, 282).

The immense economic significance of meteorological data and forecasting expertise

is thus becoming ever clearer for both providers and users of such data. Along with the production of meteorological data, Thornes and Randalls (2007) argued that the atmosphere’s material properties (e.g., oxygen and nitrogen) and physical dynamics that produce weather are ripe for different forms of commodification because ownership rightsare not clearly established.

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Third, the financialization of weather risk is generating new possibilities, pressures, and targets for firms across a wide range of sectors and places to transform and displace thetemporality and spatiality of their weather-related risk. As Bryan and Rafferty (2006, 52)contended, “the central, universal characteristic of derivatives is their capacity to ‘dis-

mantle’ or ‘unbundle’ any asset into constituent attributes and trade those attributeswithout trading the asset itself.”

This “unbundling” allows attributes of different assets to become generic, universallyrecognizable, and tradable. While stock markets put values on corporate entities, deriva-tives have the effect of socializing the calculation and commensuration of attributes of assets within and between firms, in essence extending and deepening competition acrosstime and space for the attributes of different assets (Bryan and Rafferty 2006). Thevagaries of the weather may once have been viewed as a “natural” hazard, but infinancialized capitalism, they can be read differently; weather is being “denaturalised”and its patterns “recoded and re-territorialized so that its threats or risks can be circulated

objectively in financial form” (Pryke 2007, 585, emphasis in original). New intermedi-aries, like the Weather Risk Management Association, formed in 1999, have emerged toliaise with firms, shareholders, and bond-rating agencies to create a cultural and financialenvironment that is increasingly aware—and less tolerant—of weather-related losses (seeRandalls 2005). For corporations, small and large firms alike, the story is that climatechange and the growing variability in weather are here to stay and that inclement weather is a form of “risk” that businesses can, and should, “manage” through appropriatefinancial instruments. The significance of weather derivatives thus extends beyond thevalue of their immediate use; they mark the penetration of financializing logics ever deeper into everyday geographies and a naturalizing of a financial logic that pressurescapitalist firms to reassess how they conceive of and respond to the variability of weather.

This brief foray into weather derivatives markets illustrates, as is true of the business of brewing, that financialization is reshaping definitions of assets and expectations and generating a demand for new financial intermediaries with specific expertise. In thisexample, the production of meteorological data and expertise is of increasing economicsignificance as growing environmental and financial concerns around weather-variabilityand weather-related losses are used to reconceptualize the vagaries of the weather as aform of financial risk that can be displaced through derivative markets. The politicallinkages and resonance of the entangled economic geographies of these financializationscan explore and connect the producers, circulators, and consumers of such financialinnovations; the changing financial, social, and political networks that produce meteoro-

logical sciences; and a host of issues concerning access, rights, and exploitation thataccompany the ongoing commodification of the atmosphere (see Thornes and Randalls2007). Finally, beyond the geographic variability of weather, this analysis demonstratessome of the geographically rooted origins of these financial innovations—in the particular regulatory and financial context of the United States—and their uneven spread and usethrough international corporate and other financial networks. From its beginnings in theUnited States, processes of financializing the risks of weather are now generating possi-

bilities for hedging, as well as new sets of expectations and pressures for firms around theglobe exposed to these risks. So, for example, India is now viewed as an economy that isripe for weather derivatives, given the concentration of its weather risk (in the form of

precipitation) in the summer monsoon season and the sheer size of its agricultural population who are dependent on crop yields. Although exchange-traded weather deriva-tives are currently illegal, legislative changes are expected to make them available soon(Bruce 2008). The spread of weather derivatives is being channeled around the globe notonly through financial institutions like Swiss Re but also through international agencies

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like the World Bank and the International Finance Corporation, which have used weather derivatives in parts of Africa (see Pryke 2007).

ConclusionsIn drawing attention to the growing social and spatial extension of finance in the livesof businesses, governments, households, and individuals, financialization has stimulated vibrant activity and debates across a range of social science disciplines. Such endeavorshave only intensified because of the integral place of finance geographies in the unfoldingcrisis of 2007–2009. We have sought to engage the impetus that financialization createsto situate finance at the center of our economic geographies. Interpreting the inescapablysociospatial relations and constructions of economy, financialization emphasizes thevalue of refreshing and widening our analytical frame to capture the range of existing and new actors who are reshaping the landscapes of contemporary capitalism. In addressing

the relationships, meanings, and implications of the to-date largely “missing geographies” of financialization (French, Leyshon, and Wainwright forthcoming), we havesought to underline the integral role of finance in better connecting and linking economicgeographies with social, cultural, and political concerns. We eschew any singularlydeterministic role for the economic through the agency of financial interests but seek toretain the integrative traditions of political economy in making sense of the geographiesof uneven development. Rediscovering and renewing the place of finance in economicgeographies in this way opens up fresh and new research foci and addresses any lingeringconcerns about its “offstage” (Clark 2006, 84) location in economic geography.

Our argument was organized in the following parts. First, moving beyond the wide-ranging reviews already completed, we outlined some key definitional differences in the

financialization literatures and identified three analytical themes and concerns that areintegral to our central argument, namely, the growth and extended and deepened socialand spatial reach of existing and new actors; heightened risk, uncertainty, and volatility inan increasingly financialized capitalism; and the highly uneven material, social, and

political ramifications for people and places. We then developed our analytical approachto the economic geographies of financialization through, first, demonstrating how finan-cialization contributes to constructing a more socialized account of finance geographies

by widening and deepening the range of agents, relations, and sites that require attentionand, second, showing how an understanding of the tensions between territorial and relational spatialities provides a fruitful means of interpreting the diversity and variety of

geographic differentiation and uneven development. In so doing, however, we stressed theneed to avoid three interrelated analytical temptations to reproduce functional, political,and spatial disconnections that have commonly afflicted analyses of the geographies of money and finance.

In contributing to the limited empirical work on the economic geographies of finan-cialization, we deployed our analytical approach briefly to consider the financialization of

brands in restructuring the brewing business and the financialization of weather risk.Underlining the value of our analytical concerns distilled from the broader financializa-tion literature, each case revealed the growing power and influence of existing and newagents that are actively compelled by systematizing financial logics; the attempts of

agents to cope with, and even profit from, the enhanced risks, uncertainty, and volatilitygenerated and transmitted by financialization; and the uneasy tensions between theterritorial and relational geographies of the widened and deepened social and spatial reachof existing and new actors that are reshaping uneven development in often highlydifferentiated and unequal ways for people and places.

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The economic geographies of financialization provide an important route to consider-ing the politics of its uneven development. The political disconnection that we cautioned against has sometimes led to a depoliticized financial debate. This is problematic, asPryke (2006, 10) noted: “To accept the world according to such technical (supposedly)

apolitical finance is to be shielded from the very geopolitics of financial markets and theassociated power to spatialize which matter to geographers.”

Although some processes of financialization, such as securitization, may be familiar,they are now creating and remaking uneven geographies of assets, profitability, and exclusion (Dymski 2006). The pervasive reach and sometimes pernicious effects of financialization have been writ large in the crisis of 2007–2009 and its—as yet onlyemerging—geographic ramifications. The systemic nature of this crisis affords the oppor-tunity to challenge technocratic constructions of financial markets as somehow outside or above political economy. Indeed, the politics of the current crisis have heralded a returnto a heightened role for the state in many countries and a reworking of Keynesianism for

the changed context of the twenty-first century (see, e.g., Hutton and Schneider 2008).The damaging and pervasive effects of financialization and its crisis of accumulation and regulation have now had the effect of reopening questions about state ownership, regu-lation, democratic control, and alternatives that seek to contest the “one-best-way,”technical universalism of financialized capitalism (see, e.g., Lee, Leyshon, and Williams2003) and shape its process and outcomes in potentially more progressive ways. Steppingout of the political margins and into the mainstream are ideas, such as the recognition of the need for at least some state ownership and more robust and transparent regulation of the banking infrastructure. These ideas are surfacing not only because banks are integralto the economy for individuals and businesses but also because they may provide stateswith greater leverage over financial institutions that have contributed to the current crisis

by constructing and reproducing financialization through their practices of short-term,risk-focused reward and bonus structures, short selling, and so forth. Although it is tooearly to discern how the crisis of 2007–2009 will play out—between the poles of meaningful change in a more tightly regulated system or the state-assisted reconstructionof financialized capitalism—what has become clear is the urgency of interrogating thematerial, social, political, and cultural consequences of financialization at the center of our economic geographies.

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