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Derivatives, Market Liquidity, and Infrastructural Finance

Christopher Muellerleile Orcid Logo

Cambridge Global Companion to Financial Infrastructures

Swansea University Author: Christopher Muellerleile Orcid Logo

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Abstract

Since the 1970s global finance has developed a progressively systemic character, which became exceptionally legible following the collapse of Lehman Brothers in September of 2008. 15 years after the financial turned capitalist crisis that followed that system collapse, how are we to make sense of th...

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Published in: Cambridge Global Companion to Financial Infrastructures
Published: Cambridge Cambridge University Press 2024
URI: https://cronfa.swan.ac.uk/Record/cronfa65737
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Abstract: Since the 1970s global finance has developed a progressively systemic character, which became exceptionally legible following the collapse of Lehman Brothers in September of 2008. 15 years after the financial turned capitalist crisis that followed that system collapse, how are we to make sense of the ongoing dependence of society and economy on this network of financial markets? Reflecting mainly on the Anglo-American context, but with an eye on the global scale, this chapter argues that infrastructure is an important way to theorize the inability and unwillingness of capitalist states and civil societies to meaningfully reduce the influence of the financial sector. Focused on financial derivatives, the chapter argues that particularly in their liquid, marketized form, derivatives enable new connections across space and time, Despite considerable political resistance, the maintenance of this liquid form, has become an infrastructural or technical matter, but this technicity obscures derivatives’ political economic contradictions, especially as they relate to socio-economic inequality. Capitalist states have begun to treat derivative markets, and the broader financial market system, as something that must be protected from breakdown, or illiquidity, and immediately repaired in a crisis. Extending the argument on (il)liquidity and building upon the classic argument for infrastructural inversion, I suggest that financial markets are in a constant state of breakdown and thus in need of perpetual maintenance and repair. This perspective offers possibilities for politicizing finance, by exposing the overdetermination of socio-economic inequality in the original design of financial market infrastructure as well as providing analytical opportunities for rethinking the de-financialization of the basic commodities necessary for everyday life.
Keywords: Derivatives, Liquidity, De-financialization, Risk Management, Marketization, Infrastructure
College: Faculty of Science and Engineering