This paper revisits Baker's historical work on moral hazard, which argues that Pauly's 1968 intervention represents a clear break in an otherwise linear history of the term. For Baker, Pauly ...redefined moral hazard fundamentally, shifting the term from an insurance industry definition which centred on character and temptation to an economics definition that emphasized maximizing agents and incentives. This paper takes issue with that assessment and instead presents a revisionist genealogy of the term. The paper makes two critical observations of Baker. First, it questions the linearity of Baker's history by demonstrating empirically that Pauly's influence only took hold in the late 1980s and early 1990s. This finding suggests that the history of the term should be understood as a process of perpetual discovery and reordering, rather than as a linear, forward progression towards greater clarity and rationality. Second, drawing on archival material, it questions the idea that the meaning of moral hazard was ever clear and unitary either before or after Pauly. The paper argues that moral hazard, in contrast to other forms of economic knowledge, is 'fuzzy', not 'precise'. Finally, in an attempt to theorize this 'fuzziness', the paper argues that moral hazard is both mutable and mobile, characterized by constancy and variance. It concludes that this mutability in part explains the ubiquitous appeal of the term across the political spectrum.
Over the last decade, Greater Manchester's city-regional centre has become an important site for build to rent (BTR) housing development in the UK. The growth of this new tenure raises important ...empirical and conceptual questions about how far and through what means BTR has extended in post-industrial cities like Manchester, as well as how to theorise the global–local relations involved in BTR development. Drawing on a self-built database of 155 development projects incorporating 45,069 new housing units, we show that new-build BTR units have outpaced ‘build to sell’ (BTS) units almost two to one in Manchester's city-regional centre since 2012. We also found stronger international investment in BTR relative to BTS, illustrating BTR's more globalised and financialised form. Our paper understands BTR growth in Manchester as the outcome of a transcalar territorial network – an assemblage of national policy objectives, local state actors’ urban regeneration activity and heterogenous global investor groups with different priorities all seeking a return. We highlight the important role of national and local state subsidies and local authority joint ventures in constructing a territory conducive for BTR investment in Manchester. We also show how the fungibility of BTR assets as a ‘networked product’ widens the investment appeal of the tenure type, broadening and deepening housing financialization.
For many cities, the entry of financial actors into housing opens new geopolitical relations with overseas entities, including state‐backed investors such as sovereign wealth funds. These ...transformations raise the question of the extent to which real estate enables the urbanisation of state capitalism, understood as the expansion of the state's role as promoter, supervisor, and owner of capital. Our paper answers this question through an analysis of Manchester Life, a residential real estate joint venture between Manchester City Council and the Abu Dhabi United Group, an investment firm linked to the Abu Dhabi royal family. In doing so it explores state capitalism as a form of extended urbanisation, with oil revenues from the Persian Gulf used to extract urban land rents in the Global North. It further highlights urban geopolitical implications, theorising Manchester Life as an organisational fix that reworks the geographies of value extraction while eroding democratic accountability.
During the 2010s, collateralized loan obligations rapidly became a trillion-dollar industry, mirroring the growth profile and peak value of its cousin—collateralized debt obligations—in the 2000s. ...Yet, despite similarities in product form and growth trajectory, surprisingly little is known about how these markets evolved spatially and relationally. This paper fills that knowledge gap by asking two questions: how did each network adapt to achieve scale at speed across different jurisdictions; and to what extent does the spatial and relational organization of today's collateralized loan obligation structuration network, mirror that of collateralized debt obligations pre-crisis? To answer those questions, we draw on the global financial networks approach, developing our own concept of the networked product to explore the agentic qualities of collateralized debt obligations and collateralized loan obligations—specifically how their technical and regulatory “needs” shape the roles and jurisdictions enrolled in a global financial network. We use social network analysis to map and analyze the evolving spatial and relational organization that nurtured this growth, drawing on data harvested from offering circulars. We find that collateralized debt obligations spread from the US to Europe through a process of transduplication—that similar role-based network relations were reproduced from one regulatory regime to another. We also find a strong correlation between pre-crisis collateralized debt obligation- and post-crisis collateralized loan obligation-global financial networks in both US$- and €-denominations, with often the same network participants involved in each. We conclude by reflecting on the prosaic way financial markets for ostensibly complex products reproduce and the capacity for network stabilities to produce market instabilities.
The spatial arrangements of global finance have changed significantly over the last 30 years, entangling new actors, relations and sites. Infrastructures have developed to stabilize change and ...complexity. The collection advocates for a broader understanding of infrastructures that includes – but moves beyond – supporting technologies of Bloomberg terminals, telephony, and high-speed cabling. In particular, it highlights other infrastructural forms: financial institutions which govern and steer market action, social networks which organize financial practices and reproduce status-based power asymmetries and legal treatments which work across jurisdictions to open up opportunities for actors to innovate or avoid costs. This theme issue highlights how these different infrastructural forms support both changes and continuities in the global financial system and thus contributes to the literature on financialization, global financial networks and global wealth chains.
For thirty years, the British economy has repeated the same old experiment of subjecting everything to competition and market because that is what works in the imagination of central government. This ...book demonstrates the repeated failure of that experiment by detailed examination of three sectors: broadband, food supply and retail banking. The book argues for a new experiment in social licensing whereby the right to trade in foundational activities would be dependent on the discharge of social obligations in the form of sourcing, training and living wages. Written by a team of researchers and policy advocates based at the Centre for Research on Socio Cultural Change, this book combines rigour and readability, and will be relevant to practitioners, policy makers, academics and engaged citizens.
Research on housing financialization argues that property assets are important stores of value that collateralise global systems of financial accumulation. Yet remarkably little is known about how ...those assets are constructed, valued and generate returns. This paper draws on the assetization literature to unpack how investment properties are constructed as ‘assets’, applying an accounting lens to locate their growing importance within the move towards a fair value accounting regime. We argue that property investors benefit from a generous 'distributional apparatus' - that is, a collection of rules, norms, reporting technologies and market-orienting devices that act as both a resource and an incentive to engage in practices of valuation that maximise potential distributions. In the case of property assets, accounting rule IAS40 determines how housing assets should be recognised in an annual statement; the RICS Red Book acts as a market device which articulates with IAS40, providing rules and principles on the techniques of valuation and revaluation; and the ICAEW provides guidance on whether revaluations amount to a ‘realised profit’ which can be distributed to shareholders legally. Together these three features underpin the assetization process in investment property. We use two case studies to show that this apparatus acts as a flexible resource as companies build different valuation and distribution strategies around the RICS Red Book revaluation process, with different risk implications. Our findings contribute to financialization, assetization and accounting scholarship.
Markets and finance have long attracted ethnographic interest but the nature of their activity – opaque, secretive and increasingly placeless – precludes traditional ethnographic fieldwork. In this ...article, we propose documents as an alternative access point to these organisations as an ethnographic object of enquiry. Documents do not only present a written record, but they also enact relationships and encode tacit understandings. We develop Geertz’s work on the bazaar by taking an indirect route to access the field site – collateralised debt obligation – through documents. In reading these documents, we assume the position of investors who, in the absence of alternative publicly available information, are dependent on the documentary accounts made available to them by the sellers. These media act in ways that are similar to tourist guidebooks, a comparison we use to reframe the exchange as one that builds upon sociocultural relations rather than the abstract market relationships described by mainstream economists. We propose that these documents are not merely representational artefacts of the organisation but serve to establish and maintain social relationships between buyers and sellers through the management, standardisation and ritualisation of information disclosed to the investor.
► Using the British case we reveal that the standard measure of GDP is a misleading indicator of success and failure. ► The national accounting aggregate of GDP abstracts from specific economic ...context(s) and challenges facing the British economy and limits policy options. ► Policy makers should engage in national specifics and a more sophisticated deconstructed reading of measures such as GDP. ► What is needed is a progressive kind of bricolage where financial and physical numbers generated by socially minded accountants are deployed to inform a new political arithmetic in the aftermath of the financial crisis.
This article presents some basic political arithmetic on UK economic performance, including empirics on the sources of new job creation and regional differences. These empirics support an argument about the need for new measures and concepts of national success and failure. This is so because, as we show in the UK case, the standard post 1940 economic measures of GDP and unemployment give a seriously misleading picture of national success. This is an opportunity for accountants to join with others in devising new measures and concepts.
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