Financial Derivatives and the Globalization of Risk

Financial Derivatives and the Globalization of Risk

Public Planet Books

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Book Pages: 224 Illustrations: Published: September 2004

Anthropology > Cultural Anthropology, Globalization and Neoliberalism, Sociology > Social Theory

The market for financial derivatives is far and away the largest and most powerful market in the world, and it is growing exponentially. In 1970 the yearly valuation of financial derivatives was only a few million dollars. By 1980 the sum had swollen to nearly one hundred million dollars. By 1990 it had climbed to almost one hundred billion dollars, and in 2000 it approached one hundred trillion. Created and sustained by a small number of European and American banks, corporations, and hedge funds, the derivatives market has an enormous impact on the economies of nations—particularly poorer nations—because it controls the price of money. Derivatives bought and sold by means of computer keystrokes in London and New York affect the price of food, clothing, and housing in Johannesburg, Kuala Lumpur, and Buenos Aires. Arguing that social theorists concerned with globalization must familiarize themselves with the mechanisms of a world economy based on the rapid circulation of capital, Edward LiPuma and Benjamin Lee offer a concise introduction to financial derivatives.

LiPuma and Lee explain how derivatives are essentially wagers—often on the fluctuations of national currencies—based on models that aggregate and price risk. They describe how these financial instruments are changing the face of capitalism, undermining the power of nations and perpetrating a new and less visible form of domination on postcolonial societies. As they ask: How does one know about, let alone demonstrate against, an unlisted, virtual, offshore corporation that operates in an unregulated electronic space using a secret proprietary trading strategy to buy and sell arcane financial instruments? LiPuma and Lee provide a necessary look at the obscure but consequential role of financial derivatives in the global economy.


“I am certain that Financial Derivatives and the Globalization of Risk will appeal to all those in fields such as political economy, globalization, cultural studies, social and political studies, as well as financial and business communities.” — Zabedia Nazim , Canadian Review of Sociology

“The book consists of seven chapters, including a very readable layman’s introduction to the financial instruments in question, and nice treatment of the history of global financialization, the institutions through which finance operates, an important chapter on the calculation of risk, and a chapter on
the uneven global impact of those calculations. It also has a handy glossary. I appreciated its easy style as well as its theoretical flourishes. If it contains some of the breeziness of the business publications it treats as parts of the culture of finance, it also by doing so has the potential to reach wider readerships as well as reasonably well-informed students. The most important contribution here, to my mind, is the argument about the new public imaginaries set in motion by the circulations the book opens up, and the vivisection of liberal forms of sovereignty that wagers on risk perform.” — Bill Maurer , Comparative Studies in Society and History

“The perspectives of LiPuma and Lee on derivatives markets are iconoclastic. As a result, this book provides readers with some fresh ideas on possible endogenous and exogenous causes and effects of international financial market development. . . . [T]here are many interesting and thoughtful insights in this book.” — John E. Marthinsen , American Journal of Economics and Sociology

“The prominence of a new kind of speculative finance capital in organizing global order and disorder is a topic of vital contemporary importance. By addressing this topic, this short, clear account advances the somewhat muddled debates over economic globalization.” — Craig Calhoun, president of the Social Science Research Council


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Author/Editor Bios Back to Top

Edward LiPuma is Professor of Anthropology at the University of Miami. He is the author of Encompassing Others: The Magic of Modernity in Melanesia and coeditor of Bourdieu: Critical Perspectives.

Benjamin Lee is Professor of Anthropology and Philosophy at New School University and Dean of its Graduate Faculty of Political and Social Science. He is the author of Talking Heads: Language, Metalanguage, and the Semiotics of Subjectivity (published by Duke University Press) and coeditor of Semiotics, Self, and Society.

Table of Contents Back to Top
Preface ix

1. Global Flows and the Politics of Circulation 1

2. Derivatives, Risk, and Speculative Capital 33

3. Historical Conjunctures 67

4. The Institutional Basis of Derivatives 85

5. Deriving the Derivative 107

6. The World of Risk 141

7. Derivatives and the Stability of the State 161

Glossary 191

Notes 195

Bibliography 201

Index 207
Sales/Territorial Rights: World

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Additional InformationBack to Top
Paper ISBN: 978-0-8223-3418-7 / Cloth ISBN: 978-0-8223-3407-1
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