Money’s Unholy Trinity

Last summer I attended a delightful two-day workshop entitled ‘Myth and the Market’ at the picturesque Ghan House on the banks of …

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Originally published at Angus Cameron’s blog

Anti Social Finance*

Senior Lecturer in Finance and Political Economy, David Harvie, suggests the UK’s nascent social investment market is more a matter of imposing market discipline and less a matter of ‘doing well by doing good’.  

David Cameron’s ‘Big Society’ star lit up the post-crisis landscape when it was first introduced in November 2009. As students of Ridley Scott’s Blade Runner will have come to expect, however, it burned too brightly and too quickly, eventually extinguished by a combination of critique, ridicule and protest. The 2010-11 austerity movement taunted the initiative and they were by no means alone.

‘Does my society look big in this?’ Photo Credit: Duncan C.

‘Does my society look big in this?’
Photo Credit: Duncan C.

2012 nevertheless saw the launch — again to much fanfare — of Big Society Capital. According to its website, the group ‘is transforming social investment in the UK to improve people’s lives’. This call for ‘doing well by doing good’ is echoed by progressive think tanks such as the New Economics Foundation.

While it’s hard to argue with people who believe themselves to be on the side of the angels, research I’ve recently published with my co-author Emma Dowling argues that social investment is anything but a progressive counterpoint to rapacious neoliberal capitalism. On the contrary, it plays an absolutely central role in neoliberalism’s extension. Social investment, we demonstrate, is designed to harness community based ethical concerns for the purposes of profit-making. Wealth-creating activities, in this sense, become subjected to measurement, helping bring about a situation what some scholars have called the ‘real subsumption of the social’. This should give us some cause for concern for reasons outlined below.

Social Investment: From State to Market

The principles underlying the social investment state are quite straightforward. Government spending on services such as health, education, social security cannot be understood as consumption spending or as part of a redistributive project. Instead, such expenditure becomes understood as a form of investment that might yield returns such as increased labour-market participation, labour productivity, wages and growth. This has become the dominant paradigm in national and international policy debates over the past few decades. It underpins, for example, World Bank recommendations for Third-World countries’ spending priorities. It also explains, at least partly, how micro-finance has become a favoured policy tool for development economics. And it has informed, and been developed through, a series of OECD reports (e.g. here and here) focusing on the spending of First World states.

We can trace the idea of social investment at least as far back as 1956, when the academic and Labour Party politician Tony Crosland published The Future of Socialism. Crosland argued that ‘as an investment, education yields a generous return: we badly need more of it’. This very idea was taken up by the ‘Third Way’ sociologist Anthony Giddens, whose thinking played an indispensable role in the New Labour project of the 1990s. According to Giddens, in The Third Way and Its Critics, the welfare state ‘need[ed] to be reconstructed as a “social investment state.”’ A key figure in moving UK policy thinking from the social investment state to the social investment market is the venture capitalist and New Labour backer, Sir Ronald Cohen. Other than leading the G8’s Social Impact Investment Task Force and being involved in Social Finance US and Social Finance Israel, Cohen has also:

  • Been appointed chair of the UK Social Investment Task Force, in 2000
  • Co-founded a social investment group called Bridges Ventures, in 2002, with Michele Giddens, Anthony’s daughter
  • Chaired the UK Commission on Unclaimed Assets, between 2005 and 2007
  • Co-founded Social Finance (UK) Ltd., in 2007
  • Chaired Big Society Capital since its launch in 2012
‘Sir Ronald Cohen: social finance mover and shaker’. Photo Credit:

‘Sir Ronald Cohen: social finance mover and shaker’.
Photo Credit:

The message running throughout these various initiatives is that two decades of neoliberal capitalist development have resulted in enormous wealth creation, on the one hand, with widening inequality and increasing poverty, on the other. The redistribution of wealth via the (welfare) state, whether to poor individuals or to poor communities, will never solve such problems, it may even exacerbate them. The poor do not lack entrepreneurial skills, in other words, what they lack is capital. These skills can be encouraged, enabled and harnessed through the creation and embedding of a social investment bank (Big Society Capital), the social impact bond (SIB), and a social investment market. SIBs, then, aren’t really ‘ordinary’ bonds: they are more like a structured product, a financial asset in which cash flows are dependent upon an underlying index or metric. According to Social Finance:

Social Impact Bonds are a form of outcomes-based contract in which public sector commissioners commit to pay for significant improvement in social outcomes (such as a reduction in offending rates, or in the number of people being admitted to hospital) for a defined population.

The world’s first SIB was launched in 2010 to finance a probation scheme in Peterborough, a small city 120 kilometres north of London. It was structured so that bondholders would receive a return on their investment if reoffending rates fell by 10% or more. The Peterborough SIB was successful to the extent that all the issued bonds were purchased, thus making the £5 million scheme viable. At the end of the scheme’s first phase, however, reoffending rates had fallen by only 8.4%, short of the targeted rate of reduction, so pay-outs were not made. A second phase will proceed in 2016, granting investors another opportunity to get their money back, while the originally planned third phase has been cancelled by the Ministry of Justice. (See, e.g., reports here and here.)

Despite such setbacks, Big Society Capital, Social Finance, Bridges Ventures, as well as a variety of so-called Social Investment Financial Intermediaries (SIFIs) continue to launch innovative social investment instruments. The British government, for its part, remains supportive. The Department for Work and Pensions, for example, has launched ten SIBs through its ‘Innovation Fund’, mostly designed to support youth employability projects, focusing on so-called NEETs. Elsewhere, Goldman Sachs has established some social investment departments while Forbes magazine has recently declared: ‘social impact bonds are going mainstream’.

Where does the appeal of such instruments lie, given the failure of the Peterborough project to address its primary goal? In the above-mentioned paper we analyse the three crises which social investment’s advocates seek to address:

  1. The crisis of social reproduction: social investment will ‘unleash up to $1 trillion of new investment to tackle social problems more innovatively and effectively’.
  2. The fiscal crisis of the state: during times of austerity there is political appeal in getting private investors to finance projects formerly funded by the public purse.
  3. The crisis of capital accumulation: capitalism needs new drivers of growth and sources of profitability, the yet to be commodified social sphere becomes understood as a possible avenue.

The Social Costs of Finance

Social investment promises — or rather threatens — more than the mere unleashing of private wealth for social good, however. This is not just a situation within which community and household activities become productive parts of the economy. It is also a situation where a social investment market is created, the consequence of which is that financial-market discipline will be imposed on such activities. While capital is unleashed, that is to say, the social will be harnessed, with potentially devastating consequences.

‘Market discipline and punish’ (Peterborough prison). Photo Credit:

‘Market discipline and punish’ (Peterborough prison).
Photo Credit:

What I have in mind here are the processes outlined by the late Randy Martin’s ‘financialisation of daily life’, and by Dick Bryan and Michael Rafferty’s, Capitalism with Derivatives. For such critics, financial markets, including ‘derivatives’, are to be understood as processes which measure the production of value and the rate of accumulation. Finance, they argue, enables all the different ‘bits’ of capital to be measured, compared, and priced. This creates an imperative for each ‘bit’ of capital, including workers and community members, to achieve a competitive rate of return. Financial investors, speculators — call them what you will — do not care whether they trade in cocoa futures, the Argentinian peso or some index linked to the FTSE100. What they seek is the greatest rate of return with the lowest level of risk. In this sense, qualitatively divergent bits of the economy and society are rendered quantitatively comparable: FTSE100 workers are pitted against international currency flows and agricultural conditions, for the potential gain of the financier.

Social investment means much more than ‘doing well by doing good’, therefore. Big Society Capital expects that many social investors will seek not only ‘a clearly articulated and reported social impact’, but also a ‘competitive’ rate of return. So probation workers, along with their ex-prisoner ‘clients’, in Peterborough, UK, will — if the social investment market develops — be required to compete with probation workers in Liverpool, the waged workers and unwaged volunteers running a youth employment skills project in East London, the workers employed by FTSE100 companies, Argentinian citizens, global agricultural labourers, and so on, as well as each other. It almost makes you pine for the Big Society.




*An earlier version of this post was first published on the Progress in Political Economy blog, on 7 January 2015.

Originally published at

We should be paying more Tax, Not Less!

On the day of 2014’s Autumn Statement, Richard Courtney, Lecturer in Employment Studies at the School, opposes the ideology of minimum taxation

I used to get excited by budget statements. Listening to and subsequently dissecting how the government’s representatives say they are ‘balancing the books’ still reminds me of why I initially became a sociologist. During the past few years, however, I’ve found myself slowly succumbing to a sense of weariness. I still believe, as I always have, that tax and spending narratives largely serve to obscure underlying economic realities. Since 2010, however, with government finances disingenuously described as if they were like individual, household, or corporate finances, I cannot help but crying foul, for anybody that cares to listen.

National economies are not at all like individual households yet they are – in a situation which Mary Mellor has called ‘handbag economics’ – regularly referred to as if they were, with clear political intent. I’m pretty much sick of it. The habitual reinforcement of this analogy largely serves to conceal alternatives to neo-liberal fiscal policy. Because the government apparently seeks to balance the books, much like you and I might seek to balance our checking accounts, the idea that the public sector must be subjected to austerity/privatisation while economic and social life must become increasingly financialised, gets naturalised. Even if the analogy did hold, which, as any serious economist will tell you, it doesn’t, it also fails on its own terms. The low tax ideology filling statements like todays demonstrably results in the removal of choice and the prevention of prosperity. How has such a perverse situation come about?

Until relatively recently, the state regularly sought to protect its members from the vagaries of the market, not out of pity or benevolence but for reasons of enlightened collective interest: better to have productive citizens than impoverished ones. These protections included: unemployment benefits, disability allowances, family tax credits, and student grants. A process which begun in the 1970s, however, saw the UK money supply become largely privatised, leading to a situation where banks played a larger role in determining the volume of money in the economy through the provision of credit, making such a protectionist position increasingly difficult to sustain.

Case in point: the March 2014 budget, deceptively billed as ‘A Budget for Hard-working People’, made concessions to drinkers and gamblers for the sake of distracting attention away from massive cuts in public provision. This process continued today. The announced £15Bn for transport infrastructure, £2bn for the NHS, and further reductions to income tax thresholds, only serves to draw attention away from an alternative way of thinking about fiscal policy: Keynesianism. Infrastructural investments used to be thought about as means of generating productive work and widening social benefits – the classic example is the New Deal in the United States, but in the UK even the Arts Council was used to keep people in employment when the economy took a downturn. Not anymore.

Concurrent with the liberalisation of the money supply, Keynesianism fell out of favour in the 1970s largely on account of macro-economic stagflation. Politically and philosophically, it also fell out of ideological favour to the extent that it was seen to excessively constrain the individual’s unimpeachable right to choice and self-determination. Individuals, this libertarian argument went, should be allowed to choose whether they personally want to borrow in order to go into higher education, or not, for example. The state should have nothing to do with this decision. Boozers and gamblers, likewise, should be set free onto their hearts desires, into the gutter if they so chose: far be it for the state to interfere. Individuals, not societies, should foot the bill for what they individually prefer, in other words. Such was the libertarian creed. Such was its promise of freedom.

It doesn’t work out this way in practice, however. Lowering the cost of alcohol and gambling, for example, only requires cuts to be made, or revenues to be raised, elsewhere. In freeing the gambler to gamble more, therefore, the government is also deciding to constrain the liberties of other citizens. So despite the rhetoric of choice, individual freedom and responsibility, there is always a social cost hidden behind tax cuts: the burden has to be moved elsewhere, usually clandestinely. Seen in this light, cuts to public goods such as education healthcare and childcare seem especially wrong-headed: nobody benefits from their withdrawal while everybody seems to lose. Surely the obligation to provide a basic standard of living outweighs the obligation to balance the books? It used to, though not any more, certainly not if what George Osborne announced today is anything to go by.

Social goods have always been expensive to provide. This means that all societies need to deliberate, democratically, as to whether the burden should fall more on the side of the individual or more on the side of the collective. This fundamental decision is made twice annually, through the systematic adjustment of the tax system. It may not often feel like it, especially during a period of austerity, but paying tax effectively amounts to a public good, however inconvenient it might often seem. Tax receipts enable the state to bulk buy the services its citizens require and deserve. Rather than being a burden on society, well-funded public services are the very basis for collective life. However counter-intuitive it might sound, tax cuts are the real burden on society. I can’t be the only one who realises how obvious this is.

Originally published at

Max Haiven – Ficticious Capital

Max Haiven, assistant professor in the Division of Art History and Critical Studies at the Nova Scotia College of Art and Design, gave a talk at the CPPE on the 17th of March on fictitious capital and metaphoric wealth. Max is author of Crises of Imagination, Crises of Power: Capitalism, Creativity and the Commons, the forthcoming The Radical Imagination (with Alex Khasnabish) and Cultures of Financialization: Fictitious Capital in Popular Culture and Everyday Life. You can listen to Max’s talk on the CPPE’s soundcloud stream.

Updated Reading Group Details

Hello all,

I can confirm that the reading group will meet in Attenborough Seminar Block Second Floor TR 215 for all sessions for the period 9th October 2013 to 11th December 2013 inclusive.

The meeting on the 2nd October 2013 will take place in Attenborough Room 104.

I look forward to seeing you there!


Journal of Critical Globalisation Studies

I’ve just been asked to become one of the editors of the Journal Of Critical Globalisation Studies.  It’s been around for five years, one issue a year, and has been chiefly aimed at/drawing from the IR/IPE community.  The aim now is to increase the regularity (initially to two a year) and to diversify the disciplinary content to include such glories as, yes, you guessed it, critical management theory.

So, I will be pestering you all for articles, essays and, in particular, special issues on exciting globalisation-related themes.  I hope the journal will develop into an obvious place for CPPE types to publish.

JCGS is properly peer-reviewed, and is fully open access.  None of this ‘green/gold’ crapola: it’s open, free and online for anyone to download. One of the aims of the editorial team, in fact, is to propmote the journal as a model of what ‘real’ open access looks like while the publishers flail about trying to protect their paywalls and profits.

Looking forward to hearing from you…….


As if the Euro-crisis were not bonkers enough, it turns out that the main debtor nations are also major creditors….to each other.  So, in theory at least, the debts could simply be cleared against one another as happens in banking clearing houses, for example.  And it has been calculated that this would massively reduce Europe’s debt burden at a stroke.  For details go here:

Shadow Banking Conference

This might be of interest to list-members:


Shadow Banking: A European Perspective
1-2 February 2013, City University London


Conference Details

This two-day conference investigates the phenomenon of Shadow Banking, one of the most complex challenges brought up by the global financial crisis. The event brings together leading academics, regulators and practitioners working on the issues, processes and impact of financial innovation today.


Speakers include:
Antoine Bouveret (European Securities and Markets Authority)
Ben Cohen (Bank for International Settlements)
Gary Dymski (Leeds Business School)
Brooke Masters (Financial Times)
Perry Mehrling (Barnard College)
Thorvald Grung Moe (Norges Bank)
Anastasia Nesvetailova (City University London)
Zoltan Pozsar (Senior Adviser, US Treasury)


Details of the conference can be found in the conference programme. Further information, including abstracts, is also available on the conference website:

 Conference attendance

 Delegate attendance: £100 + VAT
Student delegate attendance: £50 + VAT
Conference dinner (optional): £30 + VAT

For press inquiries, please contact Dr Anastasia Nesvetailova directly.

Hard Cash update

The edited book project, Hard Cash, that Stephen Dunne and myself are organizing is entering a new phase.  We’ve got promises (some a little vague so far, but that’s what thumbscrews were invented for) from 18 authors (including several members of CPPE).  Topics range widely as expected, including the strongly empirical, the purely theoretical, the historical, the psychoanalytic and the downright strange.  It’s looking very good.  Any tardy CPPE-ers out there who still want to chip something in can do so, but you better be quick.

The project will be the subject of a two-day workshop on 6th and 7th December this year hosted by ULSM, at which we hope to bring together as many of the authors as possible for a pre-writing exchange of ideas and general party.  Attendance contingent on the promise of a chapter….

Beyond that, the first submission deadline for chapters will be the end of May 2013.  In the intervening period, as well as writing our own sparkling contributions, Stephen and I will be hassling publishers of various stripes in the hope that they will not only publish it, but even give us money – hard cash, of course – to do so.