2016년 2월 15일 월요일

[B. Christophers's Banking Across Boundaries] Introduction (2013)

※ 발췌 (excerpt):


This book investigates the place of finance in general, and banks in particular, vis-a-vis two of Western capitalism's emblematic boundary-forms: the geopolitical boundary separating states from one another, and the representational boundary separating activities and institutions deemed economically productive from those deemed unproductive. With a focus upon banks' crossing of boundaries of one type or the other during the course of the history of capitalism, the book is animated by a number of core questions.
  • To what extent, at different times and in different places, have banks been cross-border as opposed to territorially-bounded entities?
  • Have banks typically been seen as economically productive or unproductive in these different places and times?
  • And what relationship, if any, have banks' respective boundary positionings─the geographical variety and the conceptual variety─borne to each other? 
While a substantial existing literature provides many though not all of the answers to the fist question, the second question has been only minimally considered, and the third not at all.

  Offering a broad historical sweep from the era of merchant capitalism, through that of industrial capitalism, all the way up to and including today's ostensibly "financialized" capitalism, the book makes a series of claims. 
  • First, it argues that finance has been ^made^ productive, not in a literal sense but rather in a perceptual sense: having been considered economically unproductive for most of the long history explored here, banks were increasingly envisioned as productive during the 20th century, particularly by means of the new calculative technology of national accounting. 
  • Further, the book maintains that a relationship between the two forms of boundary negotiation has gradually emerged. The question of whether banks were regarded as productive or unproductive was, for a long time, immaterial to their potential or actual geographical scope, as indeed was this geography, in turn, to the way in which they were envisioned (as productive or not). This is no longer the case. So entangled have the two types of boundary positioning become, it is claimed, that not only does the conceptual actively shape the geopolitical, but also vice versa. Simply stated, being "made" productive has helped enable (Western) banks colonize international markets, while this process of financial internationalization has itself intensified that very perception of productiveness. A virtuous─or some might say, vicious─circle has materialized.
  The rest of this introduction fleshes out what the reader can expect from the book and the various rationales for it looking like it does. 
  • I first explain the impetus to the research and thinking which underpins the book, amongst other reasons because this impetus foregrounds why the arguments herein matter, here and now. 
  • I then outline the theoretical moorings anchoring those arguments, indicating which conceptual perspectives I have found most useful but also where, how and why my approach departs from these. This discussion also contains important signposts as to the book's empirical framing: the categories and classifications it relies upon, the questions it asks and the questions it leaves untouched. 
  • Finally, I provide a fuller rendering of the book's main line of argument, partly by way of explaining and signalling the structure of what follows, and partly to enable the reader to orient herself at any particular point in the narrative─to appreciate how the argument in one part of the book connects up to the larger story of which it is a part.

All Roads Lead to FISIM

Banking Across Boundaries is not about the financial crisis which began in 2007, but it grew directly out of a series of reflections on the crisis: ( ... ... )

  As I witnessed and tried to come to terms intellectually with the unfolding financial crisis and its myriad representations during 2007 and 2008, my thinking increasingly channelled into two distinct streams of active inquiry, and as I pursued these flows downstream both ultimately converged, to my surprise, on a concept and acronym I had never knowingly encountered before: “FISIM.” What was this FISIM? By outlining, now, the nature of these two streams of inquiry and the directions in which they led, I will not only provide a preliminary answer to this question, but more importantly demonstrate why the overall argument developed in this book is a significant one, and why FISIM and related concepts play a central role within it. The first stream of inquiry was into what I tended to think of as "conceptual" response to the crisis, the second into "political" responses (although, as I make clear, there is assuredly no hard-and-fast distinction between them). I will take each in turn.

Productive or unproductive, is that not the question?

It was inevitable that much of the commentary about the financial crisis beginning in 2007 would focus upon the role of the banking sector in fomenting the crisis. What was perhaps less foreseeable was that a good deal of this discussion would be given over to conceptual questions rather than strictly technical or historical ones. What particularly struck me, however, ^was^ the crystallization of a set of arguments, very much prompted by the crisis, about the fundamental "nature" of banks as economic actors. Perhaps most notably of all, critics and supporters of the banking sector came to occupy opposing positions in a conceptual debate (which was also, at the same time, clearly a political debate) about the ^value contributed^ by banks─about, in short, banks' economic ^productiveness^.

  On one side of this argument were lobby groups such as the British Bankers' Association (BBA) (the UK's self-proclaimed "voice of banking and financial services") and American Bankers Association. These bodies essentially peddled the line advanced by Goldman Sachs chief executive Lloyed Blankfein, who described workers at banks (well at least, at his own) as "among the most productive in the world."[n.2]  Such views from within the industry were recirculated by supportive voices in the media. The British libertarian economist Tim Congdon, writing in the influential ^Prospect^ magazine, described the UK's financial sector as "fantastically productive." Nobel laureate and America's self-styled "liberal conscience" Paul Krugman, arguing against calls for "narrow banking" (whereby banks would be required to hold all deposits in liquid, short-term assets), insisted that by allowing individuals ready to access to their money "while at the same time allowing most of that money to be invested in illiquid assets," banks performed "a productive activity, because it allows the economy to have its cake and eat it too." Others offered similarly forthright claims.[n.3]

  On the other side of the argument were voices such as those of Karel William and his colleagues at the UK's Centre for Research on Socio Cultural Change. In their "alternative report" on UK banking reform, Williams and co-authors challenged the image of a "productive" financial sector head-on, arguing that when one considered empirically the sector's ^net^ contribution to the economy─factoring in costs as well as benefits─the notion of productiveness simply did not stack up.[n.4]  Will Hutton agreed, echoing the comments of the UK Financial Services Authority's chairman Adair Turner by castigating banks for engaging in "economically and socially useless activity"; and so too, apparently, did even the ^Financial Times^ columnist Martin Wolf. "A large part of the activity of the financial sector," Wolf stated, "seems to be a machine to transfer income and wealth from outsiders to insiders."[n.5]  This, of course, was the very opposite of a depiction of productiveness.

  Reading further into this stand-off and thinking about the terms of its engagement prompted two observations. The first was that the protagonists on either side seemed to be talking at cross purposes not just politically but conceptually: using different metrics, different systems of calculative representation, and even, in some senses, different languages. The second observation stemmed from the first. Given the different ways in which "productiveness" could be and was being defined and delimited, fighting fire (banks are productive!) with fire (no they are not!) seemed a powerful yet also ^limiting^ approach to formulating a radical critique of the economy and "finance's" place within it.

  Believing, therefore, that a different way of approach things might be useful, I began to wonder instead not about whether banks are genuinely productive, but about where and how representations of productiveness─indeed, the very concept ^of^ economic productiveness─come into being.
-Through what socio-technical apparatuses are the most potent and pervasive representations manufactured, and what power relations are implicated in the process?
-How, moreover, have such technical and social relations of production changed over time: were hegemonic understandings of productiveness created by the same means 50, 100, or 200 years ago as today?

Much of this book is ultimately concerned with answering these questions in a historical context; but my immediate interest was, and is, in the mechanisms of manufacture of productiveness specifically in the present.

  Two separate experiences led me to what I argue in this book is a─and perhaps even ^the^─principal forum for the modern-day "making" of economic productiveness, by which I mean ^the making of accepted representations thereof^: the practice of national accounting. One was returning to Helen Boss's ^Theories of Surplus and Transfer^. There she shows that the idea of a distinction between productive and unproductive activities is a longstanding one in economic history, and that while there ^may^ be good reasons for avoiding such a distinction intellectually, it cannot be avoided practically, for it is still with us today─not least in national accounts, which, at once both ^depended upon and reproduce^ the distinction in question, then releasing it to circulate and do its work amongst, inter alia, "journalists, politicians and voters."[n.6]  The other experience was reading, in the midst of the crisis (June 2009), the then-UK Chancellor Alistair Darling's annual Mansion House Speech to the City. Darling struck what was, given the timing, an extraordinarily conciliatory tone.[n.7]  Having read Boss, however, it was the metric Darling used to justify this tone that I found most arresting. "The City of London─and other financial centres such as Edinburgh and Leeds─remain an immense asset to our country. The financial sector makes up makes up 8% of our national economy.: He used, as Boss observed politicians so often do, national accounting data─and he did so expressly to substantiate the financial sector's value.

  Now, I do not mean to suggest that national accounting metrics, including most prominently the closely-linked gross domestic product (GDP) and gross value-added (GVA) measures, are the only figures mobilized politically to demonstrate the economic value of an activity─or even the only important ones. The BBA, as just one example, often also cites employment or tax figures to prove the bank sector's worth. (Consider the particularly suasive statement that "The corporation tax paid by our financial institutions would pay annually for the building of some 36 hospitals."[n.8]) I ^do^ want to argue, however, that there is something singularly important and influential about claims that banking or finance contribute such-and-such a share of national product or value-added. The reason is that they bespeak, precisely, ^productiveness^. The very term "value-^added^" asserts augmentation: it conjures a quantum of value that if not generated by the financial sector ^would not exist^. The significance of this implication of accretion cannot, in my view, be overstated. For a parasitical industry could equally well employ millions of people and pay millions in tax on its (leeched) profit─but it could not claim to be adding to the national economy; to be ^producing^, as opposed to redistributing, wealth. Perhaps, indeed, this unique quality of national accounting data serves in part to explain how and why the have become quite so widely influential, to the degree that "GDP," in particular, in Dirk Philipsen's words now "arguably shapes people's thinking and actions more than any other ideology," and has thus become "the world's key benchmark."[n.9]

  Pondering these issues in the middle of 2009, I decided to look at the only national accounts with which, at the time, I had any familiarity (the UK's), to see what I could learn about how they created and calculated economic productiveness, and especially the productiveness of banks. The most recent release was the accounts for the fourth quarter of 2008. This, I thought to myself, should be interesting, given the recent turmoil in the banking sector. Imagine the shock, then, when I read that while UK nonfinancial corporations' operating surplus had declined by 3.4% in Q4, financial corporations' surplus had ^risen^─and by 36%![n.10]  Surely this could not be right: Q4 2008 had seen, in the face of enormous losses and write-downs, the state bail-out of the UK banking sector. Searching for an explanation, I turned to the accompanying briefing note, where I immediately found an answer. In relation to the previous quarter (Q3 2008), the operating surplus of financial institutions had been positively impacted in Q4 to the tune of £6.1bn thanks to an increase in the supply of a particular type of service: not a service category I recognized, however, but "FISIM services."[n.11]  What on earth, I wondered, was FISIM? The last two words of the five─"indirectly measured"─were what caught my eye: this baffling increase in financial sector surplus was concentrated in services ^defined, at least in part, by their method of measurement^.

Taming the monster in whose midst?

In parallel with these inquiries into the economic contribution of banking and how it was represented, the financial crisis also prompted me to begin thinking about what I presumed was another set of issues altogether: the geographies of finance and banking. In certain respects this was inevitable─I am a geographer by disposition as well as training; and in ways that were obvious and not so obvious, this was "a very geographical crisis."[n.12]  My own particular thinking around these geographies, however, had quite a specific reference point, in the sense that it crystallized explicitly around the nature of the ^political^ reaction to what was happening. And although this reaction initially took the form of a "something must be done" clamor from across the political spectrum, it soon cohered in a more tangible sense as a remarkable ^absence^ of action at any discernible level in any of the major Western nations most impacted by the crisis. As such, the question rapidly became: how, given the depth and breadth of popular support for meaningful reform of the financial sector, do we explain this comprehensive inaction?

  I had, and have, a great deal of time for the argument, presented by people like David Harvey, that the limp political response to the crisis can be understood within the broader historical context of the reconstitution of class power under neoliberalism, led by an increasingly consolidated state-finance nexus knitting together, in the case of the US, Wall Street, and Washington.[n. 13] Yet at least two other factors seemed to me to be in play.
  • One was the investment of the state in precisely the envisioning of the financial sector I have just been discussing. Ideas matter, ^particularly^, for better or for worse, economic ideas, and the idea that banks are economically productive institutions─an idea rendered palpable in the "8% of our national economy" figure brandished by Chancellor Darling─clearly mattered greatly in the political aftermath of the crisis in the global banking sector. Had banks continued to be seen as economically unproductive in the way that they have, as this book shows, for most of their history, perhaps we could have expected a different political response.
  • The other factor was the geography of it all. It became increasingly clear that one could not understand the political response, such as it was, unless one took geography seriously. This geography had a number of dimensions, one of which was and is frequently commented upon: the fact that the global banking business highly concentrated in a relatively small number of global cities such as London, New York, and Hong Kong. Banks and their supporters were only to quick to warn American and British political leaders of the risks of so-called "regulatory arbitrage"─a fancy way of saying that if the US and UK regulators clamped down on banks, then those banks would move their operations to somewhere with lighter, and hence for the banks less costly, regulation, and the US and UK economies would suffer losses in economic output, tax revenues, and employment accordingly. Whether the threat of banks taking business from London or New York and handing it to Frankfurt or Paris was real or not, the ^perception^ of such a threat almost certainly was.
      Thus, I do not want to discount this particular issue. I had a strong sense, however, that there were other, less visible and less discussed geographical factors which needed to be understood. What these were became clear when those nominally in favor of reform began talking, as they increasingly did, of a master-and-servant relationship in the economy.  The problem, they said, was that "finance" had become the master of the wider economy; reform should be directed towards making finance the ^servant^ of that economy.[n.14]  This sounded reasonable enough, but it immediately begged numerous questions, not least of which was how one might distinguish between the financial and nonfinancial economies in the first place, and indeed what sort of work exercises in such boundary-drawing perform─questions closely related, as we will see, to those I ask in this book about the drawing of boundaries between economic productiveness and unproductiveness. The question I began to think about in terms of the evident political inaction, however, was not ^what^ this wider "nonfinancial" economy was, but ^where^ it was.

      This seemed a particularly important issue, since another thing made very clear by the crisis was not just the heavy concentration of banking institutions in a small number of globally-important financial centres, but international ^connectivity^─of financial flows, and of and within the financial institutions that initiate, coordinate and profit from them. The debate around regulatory arbitrage gave the impression that if banks (as institution) moved offshore from London  or New York, the business they did would move them. What was crucially missing from the debate was recognition that much of this business was ^already^ offshore; had it not been, it is hard to imagine that the crisis would have spread quite rapidly and powerful as it did. The extent to which notionally "US banks" or "UK banks" were frequently in fact transnational entities to the very core would later be brought home forcefully to observers in the UK when, in February 2011, it was reported that the UK corporation tax paid by UK-headquartered Barclays Bank in 2009 represented just 1% of its global profits for that year.[n.15]  

      The pertinent point here is that while the "master and servant" metaphor invoked inter-sectorial relations of power and a desire to rebalance these in favor of the nonfinancial economy, it occluded geographical considerations and thus also ^inter-territorial^ relations of power. If regulatory action were to be taken in the US or UK to inhibit the self-evident power of the domestic financial sector, who would stand to benefit, and ^where^? Would it be French or German consumers and "nonfinancial" companies as well as French or German banking institutions; and with what impact upon precarious Anglo-American balance of payments ledgers? With finance and financial institutions now being ^so^ transnational, it was hard to believe that such questions were not, in some level, part of the complex political calculus around financial (non)reform.

      In view of this particular conjuncture of geography and politics, to understand the regulatory torpor it seemed vital to understand how and when Western banks had ^become^ so transnationalized, and what the enabling factors in this internationalization had been. ( ... ... ) net exports by UK banks of £31.1bn for 2008 as a whole; the national accounts, to put this into some sort of context, had reported a total annual operating surplus of £62.0bn for ^all^ UK financial corporations (including insurance companies).[n.17]  Again, however, it was an apparently technical detail that stood out: comfortably the largest individual bank product or service export category, accounting alone for just under half of all bank net export value, at £15.4bn─FISIM.

      There was, then, or at least there ^appeared^ to be, a link of some sort between my two strands of thinking in relation to the financial crisis. Something evidently central to banks' international reach was also clearly a critical factor in the measurement of their productiveness in the national accounts. I thus began research in and around this nexus─the nexus where the geography of banking encounters ideas about the productiveness of banking and the expression of those ideas in quantitative measures─and this book is the result.

      The first thing I discovered was what FISIM actually is, and the answer, as it often is in matters financial, was considerably simpler than the acronym intimated.[n.18]  It is the name given in today's national accounts to the valuation of the output of what most of see as banks' core business, namely market-making in cash (i.e. the taking of deposits and the provision of loans) and in other financial assets: "financial intermediation services, indirectly measured." Yet I rapidly learned that if the concept is nominally simple, national accountants had seemingly spent the best part of eight decades making it as complicated as it could possibly be. FISIM, and related concepts which preceded it, has long provoked great controversy in national accounting circles, giving rise, as the influential French practitioner-cum-historian Andre Vanoli once put it, "to perplexity, stress, reversals and memorable rows."[n.19]  In 2010, when people outside of the national accounting community began noticing the disjuncture highlighted above between a practically insolvent UK banking sector and accounts which showed the sector generating more surplus than ever, this controversy seeped out into the wider political arena.

      ( ... ... ) The bulk of the book, however, is about situating FISIM as an outcome not just of a perennial debate on banking and banks' intermediation services within 20th-centur national accounting, but of a centuries-long debate on the economic nature or role of banks within Western economic and social discourse more broadly; indeedn, FISIM does not make its appearance until Part III, which covers the past four decades.  ( ... ... ) It shows, in sum, that how society places banks conceptually and how banks are able to place themselves geographically have become ever more tightly entangled affairs.

    The Accumulation of Effective Determinants  (p. 9)

    ( ... ... )

    The Argument and Structure of the Book  (p. 16)

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