WB/IMF reconstructing capitalism yet again

["Ian Murray" <seamus2001@xxxxxxxx>]

Forget Locke? From Proprietor to Risk-Bearer in New Logics of Finance

Bill Maurer

Recent debates on globalization are frequently thin with details of
the mechanisms that facilitate the flow of capital across borders.
What on-the-ground, back-office practices constitute and expedite
those flows? What cultural logics are embedded in those practices? How
can examining the shop floors, as it were, of global capital movement
point toward new analyses of globalization? Such questions require a
consideration of the practices of securitization and securities
clearance.

Given the globalization of U.S. techniques for the handling of
securities, a shift in the discourse and practice of securities
clearance and settlement in the United States has meant a tandem shift
in the markets of the world. To describe this watershed in its most
schematic and legal-jargon-laden form, a discourse of property rights
and a practice of negotiability has in the late twentieth century
shifted to a discourse of risk and practices of insurance and private
justice.

It is salient that securities lawyers today seem to echo
late-nineteenth-century laissez-faire advocates who sought to define
property as not physical objects but bundles of rights based on market
value. The similarity, however, extends only up to a point: Whereas
late-nineteenth-century lawyers challenged physicalist definitions of
property by asserting the rights of individual or corporate owners,
late-twentieth-century lawyers, first, seek the abandonment of the
property construct itself because they believe it places needless
restrictions on securities transfer and capitalist expansion and,
second, redefine the subject of property not as the bearer of rights
but as a risk profile subject to the disciplinary practice of
insurance. At stake is not merely a new definition of property but a
new definition of personhood and a new form of governmentality. Rights
and property give way to risk and insurance. This shift, I believe,
has profound implications.

To understand the shift from rights to risk, it is useful to examine
oscillations in the history of property, such as those between the
canonical notions of property elaborated by Locke's Second Treatise
and Hegel's Philosophy of Right; the nineteenth-century rejection of
physicalist notions of property; the early-twentieth-century "realist"
conceptions of property that undermined the nineteenth-century
critique and set the stage for the modern system of securities trading
based on paper shares; and the late-twentieth-century calls for the
abandonment of the property construct altogether. Corresponding to
these oscillations are shifts in governmentality, regimes of rule, and
definitions of political subjecthood. Something is indeed new in
contemporary capitalism, but it does not concern only the speed or
volume of capital flows. At stake is redefinition of the core
constructs of capitalism itself.

Securitization and securities clearance allow the convertibility of
objects of property into objects of capital and back again. Such
convertibility is integral to capital mobility. Briefly,
securitization and securities clearance involve a set of technical and
procedural norms that make possible equivalencies among objects of
property by rendering these objects into the same kind of
thing-abstractions of value embodied in imaginary shares. Although the
extrapolation of shares from physical or intangible objects may not
seem like a big deal, the technical and procedural norms involved in
securitization are not simple matters. For example, the World Bank
reports that a main difficulty of financing businesses in so-called
transitioning economies stems from international lenders'
unwillingness to accept certain kinds of collateral from potential
borrowers-specifically, "movable" property held by the prospective
borrower (things like factory machinery or inventories). "Rather," the
Bank writes, "lenders require that the moveable property be placed
under their direct control-as if they were valuables in a bank vault
or goods in a bonded warehouse," as if a farmer would give a bank his
cows as collateral, and the bank would put the cows in its own corral
somewhere. The World Bank asks, "Why is real estate or merchandise in
a vault acceptable as collateral, but not livestock, machinery, and
inventories?" To solve the problem, the Bank proposes the development
of legal regimes that permit the "creation of security interests for
any person over any thing," so that lenders could simply hold
securitized interests in movable property against borrowers' loans
instead of warehousing the property itself. Securitization, thus, is
not obvious or self-evident; it often must be imposed.

What is securities clearance? Briefly, securities clearance is the
process by which orders for stocks are matched to issuing parties.
Assume a person wishes to purchase 1,000 shares of IBM stock and that
another has 1,000 shares to sell. The first person's broker places an
order for the shares through a national clearing system, which locates
the seller and matches the order to the seller's account with her
broker. Essentially, securities clearance is the process that ensures
that buyers and sellers can "meet" each other, make promises to trade
securities, and, finally, carry out those promises. Securities
clearance is the space of "the market," the imaginary meeting ground
of contemporary capitalism. Securities settlement is the process by
which property interests in a set of securities are transferred from
one legal person to another. As a securities lawyer puts it,
"Clearance and settlement comprise the process whereby securities
market participants consummate their agreements to buy and sell
securities. . . . The buyer pays the seller, and the seller 'delivers'
(transfers a property interest in) the securities."

Contemporary securities clearance hinges on the principle of
"negotiability" of paper shares. The fact that shares have been pieces
of paper leads to troubling distinctions in the law of negotiability
between the symbolic and the real, distinctions contemporary
securities lawyers seek to move beyond. A negotiable instrument is any
instrument that can be transferred to another party by "endorsement"
or "delivery": by either signing it over (a "symbolic" transfer) or
actually moving it (a "physical" transfer) to the other party. Because
of the reliance on negotiability as a means of transferring property
rights in securities, and in spite of new technologies that seem to
render paper securities obsolete, a reification of the security has
come about: The security has become an "it" to be transferred or
endorsed, and securities clearance has henceforth come to imply a
physical thing, the paper stock certificate. Contemporary securities
lawyers decry this reification and argue for a system of totally
paperless trading. But to understand the reification of the security
and current arguments to deconstruct it, we must go back to
conceptualizations of property that set the stage for the legal
apparatus that securities lawyers now seek to undo.

The complete essay appears in Public Culture 11.2

Bill Maurer teaches anthropology at the University of California,
Irvine. His recent publications include Recharting the Caribbean:
Land, Law and Citizenship in the British Virgin Islands (University of
Michigan Press, 1997).