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The following is a transcript of a talk given by Prof. Dick Bryan at the launch of Risking Together: How Finance Is Dominating Everyday Life in Australia by Dick Bryan and Mike Rafferty on 29 June 2018. The cartoons by Amelyn Ng were inspired by Dick and Mike’s paper titled ‘Political Economy and Housing in the Twenty-first Century – from Mobile Homes to Liquid Housing?’ published in Housing, Theory and Society (2014).
Household financialisation cartoon by Amelyn Ng

This is the third book Mike and I have written together. The previous one, Capitalism with Derivatives: A Political Economy of Financial Derivatives, Capital and Class, was a significant turning point for us. It pointed to a politics around finance but we really couldn’t frame how that politics might develop. It was too hard to see. Since then, developing that politics has been our focus.

That earlier book got an interesting response. People in the crypto-token world, I’ve now found out, seem to love it. Our classical Marxist comrades are indifferent to hostile.

What those supposedly orthodox Marxists hate is that we take financial innovation seriously, as the frontier of capitalist development. They want to see finance as either credit for industry (acceptable capitalist finance) or otherwise as ‘fictitious’ and ‘unproductive’: a diversion and detraction from ‘real’ capitalism and ‘real’ class struggle. But financial innovation IS real capitalism, and if we want to understand capitalism and its innovation, we need to understand, and in great detail, the workings of finance.

But if finance is part of real capitalism, how do we explain it in terms of class relations: how do we see a class political agenda? For some, the issue is simply about growing debt and interest payments. But as David Graeber reminds us, debt has a 5,000-year history. Nothing new here.

For others, the issue devolves to income distribution. Research on income distribution points to advocacy of state policies dealing with income redistribution, but it is devoid of a politics of strategy. We have to distinguish between advocacy and strategy. To advocate that a state which has facilitated growing income inequality should suddenly do the opposite ignores the question of what might trigger such a reversal.

We don’t have a simple answer on strategy, and nor should we. Strategy must be more than a good idea for strategy. Our argument is simply that a politics for this era needs to be thought of in terms of strategies, not writing policy manifestos that are really a manifestation of policy irrelevance.

Our derivatives book told us that the issue to focus on for class analysis is risk, and our project here has been to understand how class relations are increasingly being transacted through the framework of risk and risk shifting.

It is not immediately apparent that this is a politically empowering agenda – indeed it is easy to see it as a story of gloom and doom: casualised work, and contractualised subsistence. Everyone knows of casualised work. Contractualised subsistence involves households using a combination of insecure income and debt to invest in housing, child care, education, retirement, take out contracts for gas, electricity, phones – all ‘long’, risk-taking financial positions, and then having to hedge these positions by privately insuring for health, income, car, funeral costs, pets etc.

Household financialisation cartoon by Amelyn Ng

People don’t want to default on their subsistence so they cop the extra risk of insecure income and locked-in contracts. By and large keep meeting the contract payments - if they possibly can – for not meeting them means loss of access to subsistence. All data show that this risk shift leaves a lot of people in financial stress. And big data mean that capital knows exactly each person’s level of financial stress and chance of contract default. So with household contract payments essential to household subsistence and predictable to finance, capital gets a stable and lucrative financial asset. By imposing contractual risks on workers, capital can increase its own profitability.

To work out the meaning of this process took us a lot of thinking and it had to be an empirical exploration, to see if we could put flesh on these risk-shifting propositions. The place we know best is Australia, and so that’s where we have focused. But we think the argument here is pretty generalisable, with specific twists, across the advanced capitalist countries.

We find that financial stress, as a symptom of these financialised class relations, reaches well into the middle class. This is not just empirically interesting but politically significant. The experience of subordination to capital is not just about being poor. It’s about absorbing risks. We know about this process in relation to work and income. Casualisation and the gig economy, and more family members having to work and for more of their lives, is all about being loaded up with risks or with expensive insurance policies to hedge the risk. But when we look at how much income is tied up in contracts, it becomes apparent that family hours worked and family income may go up, but discretionary income does not. This is impacting not just on the poor. It is impacting on the middle class, which is over-leveraged and under-hedged and absorbing increasing levels of risk.

Easing the crisis cartoon by Amelyn Ng

So while our classical Marxists opine a shrinking working class in the advanced capitalist economies, our finance-oriented analysis sees an expanding subordinated class as capitalism develops. How good is that, as a hope for political activism!

But what form can this activism take?

If we go to the conventional wisdom in Marxism, which we are told we don’t understand, things are getting desperater and desperater. The working class is shrinking as people become self-employed. Fewer and fewer people are in workplaces where unions can organise. Fewer and fewer people are joining unions and those who do can’t afford to go on strike, for they will miss so many contract payments.

The trusted answer is capitalism’s supposed propensity to crisis: a sort of diabolus ex machina of politics, where capitalism implodes on its own contradictions. It is a tiresome belief, and just bad politics.

So our call is for the left to take risks: to reach beyond its safe terrain of the industrial working class and beyond mere policy advocacy, and go looking for how, within finance, we can find ways to take on capital: to use leverage and liquidity to RISK TOGETHER: to take stands that say that society must privilege the living standards of ordinary people – what Scott Morrison and Mathias Cormann are calling ‘hard-working Australian families’. It’s not about tax cuts for the poor. It’s about asserting control over securing a decent living standard for all.

And the proposal is that if we don’t get the control or the guarantees of living standards, we won’t pay the contracts.

So what’s the basis of that bold posturing? These subsistence contracts are increasingly being securitised – or sold into financial markets as mortgage-backed and asset-backed securities. Central to these securitisations, we are all having our household balance sheets monitored like never before, to measure our credit score – our risks of default on our contracts. The capital markets know these data, and price their securities accordingly. Yet people in the know in securities markets report to us that if we could get 5 or 6 percent of people to not comply with their credit rating score – to intentionally not pay their health insurance or electricity bill for a month – the value of these securities would start to crash. And if we could get about 12 or 15 percent of people even to threaten even a partial non-payment they would certainly crash. It is an enormous potential political power. This really is ‘RISKING TOGETHER’.

Why would you go on strike at a workplace when you possess this sort of collective financial potency? Not sacrificing the income and not paying the bills surely has an appealing ring about it as a form of activism.

Will that style of activism work? This is the sort of issue we want people to debate: how understanding the workings of finance opens up more possibilities for political empowerment, more ways to assert social agendas over the rule of profit. We hope this book will stimulate thinking about political strategy. And along the way, you might learn things you don’t know about Australian society.

Bedtime financial literacy cartoon by Amelyn Ng

Dick Bryan is professor emeritus of political economy at the University of Sydney.

Amelyn Ng is an Australian architect, writer and cartoonist currently pursuing further research at Columbia GSAPP in New York, at the intersection of urban inequality, media and spatial politics. You can find her work at amelynng.com

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