(PDF) Finance beyond function: Three causal explanations for financialization

Economic Anthropology, “Financialization” 2018 DOI:10.1002/sea2.12114 Finance beyond function: Three causal explanations for financialization Aaron Z. Pitluck1 , Fabio Mattioli2 , & Daniel Souleles3 1 Department of Sociology and Anthropology, Illinois State University, Normal, IL 61761, USA 2 School of Social and Political Sciences, University of Melbourne, Melbourne, Victoria 3010, Australia 3 Department of Management, Politics, and Philosophy, Copenhagen Business School, DK -2000, Frederiksberg, Denmark Corresponding author: Aaron Z. Pitluck; e-mail:

This article suggests that it is advantageous for social scientists to deliberately depart from functionalist theories seeking to explain the expansion of financial instruments and logics across social life. Rather, we identify three causes of financialization from three extant clusters of scholastic activity: an organic political economy that sees finance expanding as a product or by-product of larger state- and imperial-level political struggles, a relational sociology that sees the ways that finance expands by becoming another medium for expressing and constraining social relationships, and a cultural analysis that observes the increasing redefinition of discursive and material practices as financial. Across this larger discussion, we introduce and situate the contributions to this journal’s special issue on financialization. Keywords Financialization; Functionalism; Political Economy; Performativity; Relational Sociology he social sciences recognize inancialization as a signiicant phenomenon behind much of contemporary daily life—everything from provisioning for the elderly in retirement to delivering an education to children and young adults to accessing housing to alleviating rural poverty. It all seems to increasingly involve some manner of equity investment, interest-bearing debt, and tradable securities. Yet, social scientists, and especially those sociologists and anthropologists who conduct empirical work, struggle to theorize the causes of inancialization and instead focus on its implications. Broadly, inancialization can be understood as a nonlinear and potentially reversible process whereby inancial markets, actors, institutions, and motives increasingly inluence social life (Epstein 2005; also see Krippner 2005). In brief, inancialization is “more inance”: the temporal and spatial expansion of inance. he forms and contexts that more inance can take are wildly varied, as the contributions to this special issue demonstrate. Langley in the United Kingdom, Truitt in India and Vietnam, Badue and Ribeiro in Brazil, and Rethel in Southeast Asia (articles in this issue) show the myriad ways that state-level policy decisions aid and abet the spread of inancialized monetary and accounting measures all the way from low-level conditional cash transfers to housing and urban development policies to the state’s relationship to gold, thereby gilding everyday life with more inancial practices. By contrast, Radhakrishnan in India, Kusimba in Kenya, and Ofstehage in Brazil (articles in this issue) show the ways that inancialized practices both change and reinscribe social relations in locations as widely varied as a soybean farm and across a mobile cellular network. Finally, Polillo in academic America and Baron focused on the Classic Maya (articles in this issue) shit the conventional causal arrow and show the way that social relationships can generate new inancial forms—everything from cacao money to abstract random-walk mathematical functions. Despite this variety, we suggest that the dominant explanations for inancialization are functionalist and that much can be gained by moving beyond this. In fact, signiicant extant scholarship already does so (e.g., Beunza and Stark 2004; Hertz 1998; Miyazaki 2013; Polillo 2013; Preda 2013; Tobin 2016; Zaloom 2006, among others); and yet, © 2018 by the American Anthropological Association. All rights reserved 1 A. Z. Pitluck et al. this same scholarship has not attempted to displace functionalist accounts with a theorization of inancialization (Bear et al. 2015). In this article, we address both the strengths and dangers of functionalist explanations. Such theories tend to view the economy as a mechanistic closed system and to excessively deemphasize agency in favor of structural explanations. We identify three nonexclusive and overlapping lines of argumentation that explain inancialization without making functionalist claims. In the tradition of an organic political economy (OPE), inancialization emerges as the result of political struggle within nation-states or empires. Scholars who situate their work in relational social theory, by contrast, see inancialization as the expanded use of inancial media in social relationships caused by the expansion of inancial relational packages in society. Finally, in a cultural economy approach, inancialization is explained as the discursive and material redeinition of cultural practices as “inancial.” While we believe that future research on inancialization will be strengthened by a sensitivity to these three distinctive social theories, and to their intersections, we do not argue that a synthesis is necessary. We suggest that as a phenomenon with a long history, oten connected to inequality, the expansion of inance is more proitably approached as a nonfunctional, historically contingent, nonlinear, and potentially reversible social process, as exempliied by the three classes of causal arguments that we have identiied. But irst, to the functionalists. Functionalist theories of financialization hroughout the twentieth century, functionalist causal imagery and explanations had a long gestation in the social sciences, initially in anthropology (e.g., Malinowski 1931; Radclife-Brown 1935) and then imported into sociology, most notably by Talcott Parsons (Davis 1959). Although the term is seldom used (except in a pejorative sense) in contemporary anthropology and sociology, it continues to have currency in various ields of economics, thereby shadowing much scholarship on inance. Given this, we argue that this sort of functional explanation continues to be a dominant and inluential implicit explanation for inancialization throughout the broader social sciences. Hans Joas and Wolfgang Knöbl (2009, 56) deine functionalist arguments as describing and explaining social phenomena by examining the functions that they fulill within a greater whole. Functionalist arguments are potentially attractive to scholars with diverse ideological and theoretical commitments to explain social patterns that are equiinal, that is, wherever we ind “uniformity of the consequences of action but great variety of the behavior causing those consequences” (Stinchcombe 1968, 80). Functionalist explanations of inancialization are oten attractive because empirical research oten inds inancialization to be equiinal. A critique of functionalist explanations is that they tell “‘just-so’ stories that are diicult to falsify, working backwards from what is to why it must be” (Davis 2009, 51, emphasis in the original). Using Stinchcombe’s and Joas and Knöbl’s argumentation as a point of origin, we suggest that functionalist explanations of inancialization must make two simultaneous, circular claims. First, functionalist theories explain inancialization by exploring how it fulills a manifest or latent function for individuals, for classes, and/or for capitalism. In these arguments, inancialization is the prerequisite for (or one of the causes of) the sound functioning of the social system. When pushed further to explain why individuals or groups are compelled to promote inancialization on behalf of the social system, functionalist explanations necessarily make a second claim: here is a homeostatic mechanism that ensures that social forces promote just the right amount of inancialization, thereby maintaining the functional needs of the social system. In this second theoretical claim, inancialization is the consequence of the homeostatic mechanism ensuring the functioning of the social system. We argue that two of the most common explanations of inancialization are both functionalist but that they difer in their homeostatic mechanism: Academic and applied economists theorize that inancialization is caused by a process of isomorphic evolution generated by market competition, whereas Marxist theories argue that inancialization is caused by class interests advanced by class positions. hese two mechanisms are not logically exhaustive; however, they encompass the most widespread functionalist arguments. In what follows, we review 2 Economic Anthropology, Online ISSN: 2330-4847 Finance beyond Function each literature and synthesize a critique of each as a prelude for examining three nonfunctionalist explanations for inancialization. Financialization as an evolutionary functionalist process Economists understand inancialization as an evolutionary functional process driven by diverse actors seeking pragmatic solutions to their immediate problems. Over time, inancial products and institutions that fail to solve problems are abandoned, while inancial processes that satisfy actors’ needs are retained and incrementally improved. Functionalist economists posit that society is becoming increasingly permeated by inance because it provides more eicient solutions to its increasingly complex problems. For example, how will individuals, groups, and nations move money into the future and enable the elderly a healthy and sustainable retirement? How will we optimally move future money into the present and enable entrepreneurship and homeownership? How will public infrastructure be inanced in the face of necessary massive expenditures associated with global warming? In this type of theory, cultural evolution is the homeostatic mechanism that ensures that dysfunctional inancial practices and products are eventually selected out, while superior products persist and difuse to meet societal needs. For example, in “A Functionalist Perspective of Financial Intermediation,” Robert C. Merton (1997 winner of the Nobel Prize in Economics and son of functionalist sociologist Robert K. Merton) observes a “inancial-innovation spiral” (1995, 26) constituting two arms—“inancial engineering” and advances in academic inance theory—that together build numerous new forms of inance, which are pruned through intense competition. Computer and telecommunications technologies that reduce transaction costs, in turn, enhance and improve interinstitutional and intermarket competition. his pressurized evolutionary process “push[es] the inancial system toward an idealized target of full eiciency” (26). Perhaps the most inluential contemporary advocate of this functionalist explanation for inancialization is Robert J. Shiller, a 2013 Nobel laureate who teaches at Yale where students are provided with institutionalized occupational pathways into the inance industry (Shiller 2012, ix–xii, 233–34; see also Ho 2009). In Finance and the Good Society, Shiller (2012) argues that inance and inanciers do not have their own goals; rather, like skilled engineers, “inancial engineers” develop products and markets to meet the functional needs of society: “Finance … is a ‘functional’ science in that it exists to support other goals—those of the society” (6–7). He encourages his students to view all social life as having “a hidden inancial architecture” to support it (Schiller 2012, 135–36). Descriptively, Shiller’s explanation for inancialization is that the diverse products of humanity—including poetry—require inancing and that civilizational development and inancial development are intertwined. Shiller also makes a normative argument that society would beneit from additional inancializations—albeit ones attuned to his normative egalitarian vision of a “democratizing” and “humanizing” inance. Financialization as a class-based functional process A second common framework for explaining inancialization is constituted by theories that describe the growth of inance as a function of structural tensions within capitalism; by relieving the stresses endemic to capitalism, inancialization allows for its historical perpetuation. he speciic mechanisms such critical theories identify, vary, and are generally associated with the proliferation of interest-bearing capital (also known as ictitious capital), that is, monetary credit that does not help consumption or production, but the only aim of which is to produce more capital. Broadly, Marxist arguments maintain that class interests and solidarity constitute a crucial reason to expand inance. Rudolf Hilferding’s ([1910] 1981, 367) Finance Capital understands inancial capitalism as the situation in which “control over social production [is] increasingly [put] into the hands of a small number of large capitalist associations” that “separate the management of production from ownership” (see also Magdof and Foster 2014). Economic Anthropology, Online ISSN: 2330-4847 3 A. Z. Pitluck et al. his speciic stage of capitalist development took place ater the crises inherent to industrial or factory-based capitalism reduced the rate of proit of productive investments (Marx 1867). Financial capital is constituted by the emergence of a compound of industrial and banking monopolies that rely on the circulation of money, interest, and debt to accumulate capital—a process that, historically, has resulted in imperialist expansions. Key here is that Hilferding explains the emergence of inance capital as a functional response to class struggle (Marx and Engels [1848] 1967). Financialization needs to happen, because this is how the owners of capital maintain their class position. In turn, opposition to this oligarchy will be the role of the proletariat and bring about the end of history. To this point, Hilferding (1910, 367) predicts that the tendency of inance capital is to establish social control of production, but it is an antagonistic form of socialization, since the control of social production remains vested in an oligarchy. he struggle to dispossess this oligarchy constitutes the ultimate phase of the class struggle between bourgeoisie and proletariat. In Hilferding’s view, inance capital constitutes a developmental stage of capitalism where the new coniguration of production, distribution, and consumption promoted by an alliance between inanciers and state elites produces a proliferation of interest-bearing capital. Building on Hilferding, Arrighi (1994) describes inancialization as cyclical, caused by the dialectic of compe- tition between capitalist states that embrace diferent forms of capitalist production to achieve political hegemony. In Arrighi’s perspective, inancialization intensiies when a speciic system of accumulation is losing competi- tiveness, and inance appears to generate enough proits to maintain hegemony. In this scenario, inance is not a twentieth-century phenomenon. Financialization occurred when Italian city-states lost political power to the Netherlands and when the latter was outcompeted by the British Empire, and again when the British system was supplanted by US hegemony ater 1945. he current period of inancialization, which began in the 1970s, corre- sponds to the decline of North American global hegemony and the rise of a new systemic cycle of accumulation based on Asian-led outsourcing and lexible accumulation. Financialization, however, does not only designate the autumn of hegemony. Echoing Magdof and Sweezy (1987), Harvey (2003, 2005) suggests that inancialization emerges as a consequence of the excess of money and the lack of proitable production that plagues contemporary capitalism. Productive capital is generally hard and costly to move about the globe, and even when it can be moved, it risks shiting power relations or generating economic crises. Finance, instead, can allow unlimited accumulation. Investing in inance solves the spatial limits to capitalist accumulation, allowing the capitalist class to place their liquid money in space-less products, which can be proliferated, exchanged, and controlled with increasing returns and with virtually no geographical boundaries (Aalbers 2008). The limits of functionalist theories of financialization he systemic descriptions provided by functionalist theories of inancialization, while productive in describing some of the large-scale shits connected with inancialization, incur two theoretical limitations. First, functionalist theories conceive of the economy as a closed social system animated by political economic mechanisms. In this mechanistic theory, the economy is conceived of “as a machine of quantities and relations between categories … whose enduring logic is discovered and operates independently of analysis” (Erturk et al. 2008, 34). Numerous schools of social science ind this distinction between the economy and economists untenable. In contrast to mechanical engineering, the “laws” of inance are not ahistorical and universal; how inance operates is contingent on social structures, such as the legal, regulatory, and political environments (cf. Hart and Ortiz 2014). Even on a metaphoric level, inance is dissimilar to a technology that can be optimally applied to solve similar social problems in diferent societies. Academic inance is dissimilar to engineering; it is a social science, like economic anthropology. 4 Economic Anthropology, Online ISSN: 2330-4847 Finance beyond Function Second, functionalist theories tend to downplay agency in favor of structural explanations. True, strong functionalist theories must identify agents with interests in expanding or maintaining inancialization and can potentially identify agents with interests contrary to inancialization. However, all such agency is ultimately selected by the social system itself, even in class-based functionalist theories, where individual creativity and laws of capitalism are constantly portrayed as in tension but historical and global forces carry a decisive weight. In their most extreme versions, such functionalist approaches reduce agents to “cultural dupes” following the social system’s scripts or the imperative of monetary self-interest (Granovetter 1985). here is a certain beauty, and oten political usefulness, to the synthetic way in which functionalist theories explain how a great variety of behaviors result in the equiinal phenomenon of inance’s expansion. Nevertheless, we identify three promising explanations for inancialization that eschew functionalist argumentation. he irst approach draws on OPE, as exempliied by the work of David Graeber, to argue that inancialization emerges as the result of political struggle within nation-states or empires. he second explanation draws sustenance from the relational turn in the social sciences (Emirbayer 1997) to argue that inancialization is the expansion of inancial media in social relationships caused by the expansion of inancial relational packages in society. he third explanation dissects these relational packages by following the cultural turn, associated with the work of Michel Callon and Marieke de Goede, to argue that inancialization is the discursive and material redeinition of cultural practices as “inancial.” Financialization from political struggle Politics is not just an expression of class positions, nor does it simply follow the needs and whims of capitalism (Hall 2016; cf. Grossberg 1986, 62). Inspired by Gramsci’s interpretation of politics as praxis, we identify organic political economy as a heterogeneous intellectual tradition that focuses on political action rather than function. OPE produces structural analyses that, unlike functionalist approaches, treat the economy as a historical, contextualized, open-ended process animated by tensions rather than dialectical equilibriums (Bear et al. 2015; Tsing 2000). While some OPE scholars subscribe to a dominant–subordinate class paradigm, most pay attention to the diversity of tensions and struggles that inancialization generates between and within social classes. In this perspective, inancialization is not a prerequisite for the proper functioning of the social system. Instead, inancialization emerges from an open-ended process of political struggle within empires and nation-states. Financialization results from attempts to impose, gain, or contest control over the resources a society sees as valuable—a fact encouraged by the increasingly large, oten heterogeneous composition of human societies. In contrast to many functionalist theories of inancialization, OPE rejects historical determinism and does not associate inancialization with a speciic stage of development of capitalism or as a solution to certain problems of capitalism. For OPE, inancialization is not caused by capital’s intrinsic need to “escap[e] low proits in the sphere of production” (Lapavitsas 2013, 798), but by a new set of relations and institutions that emerge in the wake of political struggle. OPE’s indings can be interpreted as reinforcing the varieties of capitalism literature by emphasizing that the paths toward inancialization difer considerably across nation-states (Becker et al. 2010; Bohle 2018). OPE sees inancialization as the product of political struggle between, against, and among state and inancial elites. Baron (2018) demonstrates that the expansion of inancial logics can very well happen in noncapitalist societies. he monetization of cacao beans and cotton textiles in the Classic Maya empire (250–900 CE), for instance, was directly connected to struggles for political power and imperial expansion. Once cacao and textiles became accepted as money, their cultivation and exchanges accelerated, and the work people could and should do, who would proit from that work, and what was accounted as valuable were transformed. A similar theory is advanced by Graeber (2011). In his historical and comparative cultural analysis of debt, inancialization appears as a shit from delayed reciprocity (i.e., debt on a human scale) to abstract debt dynamics Economic Anthropology, Online ISSN: 2330-4847 5 A. Z. Pitluck et al. (i.e., inancial debt). his commodiication of debt is made possible by a violent association between groups of inancial elites and state (or imperial) apparatuses. Despite its pernicious character, however, inancial debt maintains its halo of human morality—hence the contradiction, whereby moral norms force the necessity of paying one’s debt, even when such morality results in immoral and dubious political gains. OPE scholars provide ample historical and ethnographic data that support Graeber’s perspective and correlate the emergence of strong state hierarchies with the development of inancialization. Kalb and Visser (2012), for instance, show that inancial elites have gained tremendous power and inluence in advanced democracies and within the European Union (EU). Scholars who examine EU policies and practices ind that its bureaucratic structure relies on revolving doors with inancial institutions (Tsingou 2015). Sharing the same milieu as Eurocrats, inanciers can shape macropolitical decisions (Kalaitzake 2017) and can beneit from benevolent oversight on crucial issues such as mergers and acquisitions (Wigger 2012) or taxation (Fernandez and Wigger 2016). Unlike Graeber, however, most OPE scholars see inancialization as a result of an additional layer of struggles—that is, as a weapon for political ights among dominant classes rather than only as a source of power utilized to control the 99%. Rethel (2010, 2018) and Rudnyckyj (2013) demonstrate how Malaysia’s state-driven inancialization was motivated by an attempt to gain international power and legitimacy and attract capital lows. Mattioli (2018) suggests that, in Macedonia, inancialization is a constitutive part of an authoritarian statecrat project whereby new political elites are able to supplant older oligarchs by expanding credit relations and monopo- lizing the money supply. In the atermath of the global inancial crisis, increasingly indebted businesses and oligarchs became reliant on the government’s access to international debt—a result of its geopolitical importance for the EU. Similar indings are advanced for the cases of Hungary (Johnson and Barnes 2015) and Russia (Dawisha 2015), where illiberal leaders utilized the expansion of inance as a tool to bribe, ight, or subdue political rivals. Consequently, inancialization does not always result in more liquidity, faster monetary circulation, or abstracted debt dynamics (Bonizzi 2013; MacKenzie et al. 2012; Pitluck 2011). For example, Truitt (2018) demon- strates that inancialization can generate both demonetization and monetization of gold. Faced with the continuing importance of gold as a vernacular means for storing value and exchanging goods, the Vietnamese and Indian states tried to variously control and restrict its use. By making it a reserve asset for national banks, the (de)monetization of gold signals the attempt by state elites to manipulate not only their citizens’ wealth, but also their nation’s position in global markets. Finally, OPE suggests that inancialization can become a tool for protest against the state–inance nexus. Mann (2017; cf. Ferguson 2009), for instance, shows that inancial language, symbols, and resources are appropriated by resistance movements. His analysis of the bombing of the Montreal stock exchange reveals how the Canadian Anglo-Saxon federal government relied on inancial mechanisms, such as raising bond yields and inducing capital light from the Francophone regions, to tame Quebec’s independence movement. Independentists, however, appropriated other inancial tools, such as developing a cooperative credit system, which reduced the region’s inancial dependency on Toronto. Similarly, Appel (2014) suggests that inancialization generates its own discontent and resistance and can be acted on to create alternative political and economic systems. For the women and nonheterosexual males Appel interviewed, the experience of working within inancial irms constituted a powerful motivation for their newfound political activism and engagement in alternative banking activities. Not all organic political economists agree, however, on the intentionality of inancialization. Souleles (2017) identiies among American private equity investors a certain ambivalence about the causes and efects of the mergers and acquisitions over which they preside. And although most see inancialization as the result of deliberate political actions taken amid ights over state or imperial power, a few scholars who focus on regulation tend to understand inancialization as an unintended consequence of political struggles or pragmatic expediency. Fligstein (1990), for instance, shows that attempts to impose US federal control over corporations through antitrust regulation and enforcement had the unanticipated consequence of motivating corporations and elites to inancialize. Similarly, 6 Economic Anthropology, Online ISSN: 2330-4847 Finance beyond Function Krippner’s (2011) archival research inds that three key US policy shits that are widely acknowledged to have contributed to inancialization were enacted with a very diferent motivation—to expediently, temporarily, and partially address three interrelated political and economic crises from the late 1960s and 1970s (for a similar process in the EU, see Nolke 2016; Stockhammer 2011). Financialization as the expansion of finance in relational work Finance is noteworthy for manifesting itself in the minutiae of the social world, as theories of the inancialization of “everyday” life demonstrate (cf. Davis 2009, 191–234; Langley 2008; Martin 2002; van der Zwan 2014, 111–14). Much of this literature examines the consequences of inancialization as a new cultural frame that corrupts sociality, or at least inserts it into a new capitalist framework (Bear et al. 2015). In contrast, this section draws on Viviana Zelizer’s (2005, 2012) theory of relational work to explain how changes in everyday sociality can be a causal explanation for inancialization. Speciically, we argue that inancialization is the expanded use of inancial media in social relationships caused by the expansion of inancial relational packages in society. Initially, our thesis might sound counterintuitive to readers who see inance as a “ictitious commodity,” an argument that gained currency through the work of Karl Polanyi (1957). Polanyi views inance and society as “separate spheres and hostile worlds” in which the expansion of inance leads to “inevitable contamination and disorder … when the two spheres [come] into contact with each other” (Zelizer 2005, 20, in another context). In anthropology, the “hostile worlds” perspective has gained signiicant traction, as many anthropologists detail the corrosive impact of inance and debt (e.g., Graeber 2011) on social and communal relations, now regulated by “ictive” inancial packages rather than the “real” values of production. For example, consider the impact of inance on food production. Lawrence (2014, 421) suggests that agricultural commodity derivatives and other food-based inancial instruments “lose their connection with physical products.” For investors, food is an opportunity for trade and speculation rather than a symphony of taste that cements social intimacy (Russi 2013). Similar arguments have been made for medical research when investor mechanisms and inancial abstractions are utilized to cope with natural disasters (Erikson 2015a, 2015b; Glabau 2016), bureaucratic and audit practices (Shore and Wright 2015), and urban development (Aalbers 2008; Brash 2011). In contrast to Polanyi’s (1957) thesis, other studies suggest that “inance” and “society” are poorly described as “separate spheres,” much less hostile ones. Finance is no less embedded in society than any other social tie—a point vividly demonstrated by Viviana Zelizer’s (2005, 2012) theory of the economy and intimate relations as “connected worlds.” For Zelizer, social actors infuse all social relationships—including economic, intimate, and intimately economic relationships—with meaning. Individuals express their self-identity and demarcate their relationships by choosing appropriate media. For example, “persons X and Y call each other ‘sweetheart,’ engage in transfers of information, advice, gits, inancial aid, and occasional sex, using the telephone, Internet, and money as their media” (Zelizer 2005, 56). Money and other forms of inance are merely one such “medium” people use in social relationships. Malleable cultural templates (“relational packages”) such as the concept of “sweetheart” structure such agency, which determines the media appropriate for that relationship. Zelizer deines this agency constrained by relational packages as “relational work”: the eforts individuals exert to create, maintain, diferentiate, or terminate their social relationships with one another (Bandelj 2012; Bandelj, Wherry, and Zelizer 2017; Block 2012; Zelizer 2005, 2012). he sociality of inlows and outlows of “inancial” and “noninancial” media in people’s lives is vividly illustrated in Figures 1 and 2 in Kusimba’s (2018, 250, 252) study of Kenyan social ties. Moreover, in ethnographic work, it can be analytically challenging to attempt to distinguish “inancial” from “noninancial” media. For example, for the migrant farmers who moved from the United States to Brazil who Ofstehage (2018) analyzes, raising money from international investors and purchasing farms in Brazil were means to an end: reproducing their farming identity Economic Anthropology, Online ISSN: 2330-4847 7 A. Z. Pitluck et al. and relations. Instead of being passive subjects of global inance, “farmers themselves have inserted inance into farming practices, values, and social organization” (275), a fact that nonetheless transformed their work practices and understanding. To those who can manipulate its lows, the relational work of inancialization provides opportunities. On the other hand, to those pressured or coerced to use inancial media, the relational work of inancialization can be disciplining and potentially disempowering. For example, in Radhakrishnan’s (2018) study, relatively privileged Indian women promote inancialization by forcing other less well-of members of their community to enter lending groups and become indebted, even when they do not need credit, to gain prestige, inluence, and perhaps occasionally an illicit income. In Kusimba’s (2018) study of digital microcredit, women do not necessarily use these new sources of loans for individual empowerment and gaining independence. Rather, they borrow and lend to express themselves as (variously) “a Kenyan woman” with digital connections who “knows what’s happening” and is worthy of “prestige and recognition.” In both studies, women in social networks are engaging in potentially risky debt relations, occasionally with little or no economic incentive to proit, as a by-product of the relational work of others in their community. Existing scholarship demonstrates that inancialization is a by-product of the expanded use of inancial media in people’s relationships with one another. Speciically, inancial media are used to create identities, boundaries, and signiiers of the meanings of one’s social ties. At the same time, inancial media are legal contracts that potentially alter the qualities of these social ties by creating new obligations and revenue streams. For example, in their analysis of mortgages in Hungary, Pellandini-Simányi, Hammer, and Vargha (2015) show that couples use mortgages as media to understand their marriages and their relationships with one another, even as the debt contracts’ inancial obligations may impose new strains on the relationships (see also Halawa 2015; Palomera 2014). Similarly, Wilkis (2015) reports that in the slums of Buenos Aires, formal credit relations become crucial media in social, afective, and family relations. Individual credit cards are lent to friends and family, and individual debt becomes an item of discussion and strategy for the entire family (see also Müller [2014] for the case of Brazil and Guérin [2014] for the case of India). Lainer-Vos (2013) describes how nationalist social movements and governments in Ireland and Israel launched diaspora bonds not only as a fund-raising mechanism, but also to organize political support and “attachment” between the diaspora and these nascent nations. Lainer-Vos inds that bonds become important media for organizing (or failing to organize) the relationship between a national diaspora and its imagined community. In each of these studies, inancialization is a by-product of the expanded use of inancial media in people’s relationships with one another, and at the same time, the inancial instruments are legal contracts that reshape the tenor of these relationships. Financialization as the expanded use of financial relational packages Together, these cases strongly suggest that inancialization—the expansion of inance—can be partly explained by diverse parties choosing to use inancial media in their relational work. Yet, as Radhakrishnan (2018) also emphasizes, people’s agency to choose inancial instruments is shaped by a constellation of very speciic cultural templates (what Zelizer terms relational packages), which, for instance, require that one out of every ive microcredit group members live in a rented home. Where do these relational packages come from? What explains their temporal and spatial expansion? One source, self-evident in Radhakrishnan’s study, is complex organizations. Another, as the OPE perspective identiies, is that national and international political institutions generate them. Both sources are well illustrated in Badue and Ribeiro’s (2018) research. hey demonstrate that a cash transfer program promoted by the Brazilian state and called Bolsa Familia is appropriated and manipulated by the beneiciaries for diferent relational goals. Yet this inancial agency comes with a traditionally gendered relational package. he program was explicitly available only to women, thereby making family welfare a female duty and allowing men to escape completely the (few) 8 Economic Anthropology, Online ISSN: 2330-4847 Finance beyond Function responsibilities that they had toward the household. Because this cultural assumption was already present among local women, this case of inancialization exacerbates preexisting relational cleavages. As Bolsa Familia funds are insuicient to completely support a family’s expenses, women ind themselves entangled in further debt with both formal and informal creditors—becoming the vessel for inancial market expansions. Guérin (2014) inds a similar ambiguity in the domain of inancial inclusion projects, where inancial tools fail to empower local populations, instead reinforcing preexisting gender boundaries. As Schuster (2014) notes for the case of Paraguay, the relational package that permeates microcredit lending forces women to assume collective risks and repay debts as a single social unit. We interpret these studies as demonstrating that inancialization can be understood as the expansion of inancial relational packages in society. hese cultural templates enable and constrain people to use inancial media in their social relationships to demarcate their identities and to create, maintain, diferentiate, or terminate their social relationships with one another. Financialization as the expanding redefinition of cultural practices as “financial” here are other sources of relational packages in addition to complex organizations and state or imperial politics. A third strategy for breaking with functionalism is taken by scholars who oten self-identify with the ields of social studies of inance (Knorr Cetina and Preda 2012; MacKenzie 2008; Preda 2009) and cultural economy (Pryke and du Gay 2007) and understand inance as material cultural practices. We argue that one implication of these theories is that rather than conceiving of inancialization as the expansion of “inance” throughout society, inancialization is the expanding redeinition of material cultural practices as “inancial.” Drawing on the theory and methodology of Foucault, Marieke de Goede (2005) argues that what we now call “inance” was not originally distinguished from what we now call “gambling” and that this controversial distinction did not begin to stabilize until the early twentieth century. For example, in the Lloyd’s of London’s eighteenth-century insurance oices, one could wager on a wide range of uncertain events. In addition to speculating on one’s own life or property, one could wager against strangers’ lives or property or “place bets on the outcome of battles, the longevity of celebrities, the succession of Louis XV’s mistresses, and the outcome of trials” (de Goede 2005, 52). De Goede argues that the distinction between inancial speculation and its “discursive double” of gambling is not an inherently economic distinction, but rather a political outcome played out in sermons, pamphlets, newspapers, and novels, and sometimes institutionalized in court cases and regulations. She traces out, irst, how gambling was morally problematized and, second, how inance was cleaved from gambling by valorizing inancial work. Such valorization continues to this day, as explored by Rethel’s (2018) analysis of state-orchestrated spectacles in Southeast Asia and in Polillo’s (2018) examination of the discourse on inancial market eiciency, what became a key foundation in the valorization of inancial markets. De Goede’s genealogy suggests that inancialization is as old as inance and should be seen as a material discursive practice. Financialization should not, then, be conceptualized as the expansion of inance in society, but rather as the expanding redeinition of cultural practices as “inancial.” he historical record emphasizes that this contested reconiguration may be stabilized in technological infras- tructure, legal courts, regulatory practices, and legislation, but the division between inance and noninance is oten protracted, unsettled, and reversible (Mitchell 2007; Preda 2009). Consider, for example, the distinction between odious and salubrious debt and corollary debates on the circumstances under which one may legitimately proit from lending. From the mid-fourteenth through the seventeenth centuries, the Catholic Scholastics of Salamanca reconceptualized and narrowed their understanding of illicit usury and distinguished, valorized, and legitimized what became a range of licit inancial practices entailing proiting from interest payments (Persky 2007, 229; cf. Economic Anthropology, Online ISSN: 2330-4847 9 A. Z. Pitluck et al. Wennerlind 2003). Controversies about how to distinguish lenders’ interest from lenders’ fees, inance from gam- bling, and legitimate debt from odious debt are frequently reopened by social movements. For example, in the 1980s, the distinction resurfaced by social movements addressing the unpayable debt accrued by the Global South (Bonizzi 2013). Dating from the same time period and extending to the present, these debates have become proliic in diverse Muslim-majority countries, particularly in the Islamic inance industry (Maurer 2005; Pitluck 2008, 2013; Rethel 2011; Rudnyckyj 2013) among pious Muslim entrepreneurs (Sloane-White 2017) and among Muslim consumers (Fischer 2011; Maurer 2006). he social studies of inance scholarship oten draws on two social theories, both of which can be used to understand inancialization as a material discursive practice in which the noninancial becomes inancial. he irst is that agency is distributed among humans and material artifacts (see Enield and Kockelman 2017). As Callon (1998) emphasizes, people and their organizations are not by nature homo economicus, acting calculatedly with purely instrumental, economic, or political motives. Rather, such calculative agency must be assembled (see Langley 2008, 2018). his assemblage in which economic action takes place is infused with (oten material) cultural practices—norms, conventions, regulations, wires, screens, and the built environment (Knorr Cetina and Bruegger 2002; Knorr Cetina and Grimpe 2008; Lépinay 2011; MacKenzie 2006). If we understand inancialization as the redeinition of cultural practices as “inancial,” then we can interpret many changes in distributed agency as inancialization. For example, Kusimba (2018) inds that the expansion of digital lending was caused in part by the redeinition of middle-class Kenyan femininity as borrowing and lending. As one informant explained, “what kind of Kenyan woman is not a member of many [savings and lending] groups on her phone” (252)? Similarly, Radhakrisnan (2018) inds that signiicant causal agency for the expansion of microinance into poor and working-class urban neighborhoods is found not in the inancial irms’ employees, but among unpaid volunteers putting social pressure on their neighbors to take out loans. In both cases, we ind what were previously noninancial practices (behaving feminine and behaving neighborly) becoming redeined as inancial practices—and in both cases, also generating “more debt” and the spatial and temporal expansion of inance. he second tool is performativity theory, in which markets and homo economicus do not ontologically exist, waiting to be discovered. Instead, social scientists and businesspeople enact the economy by interpreting it and reacting to their collective interpretations (Callon 1998; MacKenzie 2006; MacKenzie, Muniesa, and Siu 2007; Mitchell 2007; Muniesa 2014). For example, Polillo (2018) demonstrates that the eicient market hypothesis did not impose itself because of its superior “adequacy of data and tests in adjudicating truthfulness” (207). Rather, the eicient market hypothesis became successful because it permitted researchers to produce a career-generating stream of research results—so much so that the hypothesis has become a dominant cultural practice throughout the inance industry, ultimately becoming a reiied “thing.” From the perspective of performativity theory, scholars and businesspeople are important agents in “provoking” (Muniesa 2014) new cultural practices into being as economic or inancial. A classic study demonstrating this argument is MacKenzie and Millo’s (2003) historical sociology of the 1973 founding of the Chicago Board Options Exchange (CBOE) (see also MacKenzie 2006). Proponents for creating the CBOE faced considerable opposition. Some derivatives were interpreted as illegal gambling under Illinois state law (see de Goede 2005). Advisors in the Securities and Exchange Commission associated options trading with market manipulation, and the SEC chair unfavorably compared options to “marijuana and thalidomide” (MacKenzie and Millo 2003, 114). MacKenzie and Millo document how academic economists and their inancial theories were crucial voices in undermining these arguments by changing the opinion of key regulatory and political gatekeepers. Consequently, these inanciers’ cultural practices, which were previously interpreted as illicit market manipulation and gambling, were reinterpreted as licit and economically beneicial. MacKenzie and Millo’s case demonstrates that 10 Economic Anthropology, Online ISSN: 2330-4847 Finance beyond Function the advocacy by economists (broadly deined) in concert with market proponents was a necessary precondition for redeining these cultural practices as inancial. Another cultural practice that is widely interpreted as “performing” corporate behavior is the academic theory and normative ideology of “shareholder value.” his idea was irst popularized in the 1980s and advocates that a corporation’s principal purpose is to increase its share price (Davis 2009; Ho 2009). As shareholder value ideology was institutionalized, it displaced a wide variety of “economic” practices as “inancial” practices. For example, corporate managers’ and aspiring CEOs’ previous benchmarks for success (such as corporate size, employee satisfaction, or community engagement) were displaced by the inancial benchmark of stock market performance. To achieve this, managers made corporations more “liquid” and asset light (Davis 2009; Ho 2009). Over time, employees and customers altered their expectations and eventually adopted inancial frames: Life experiences became understood as human capital, friendships became social capital, and one’s home became an asset class (Davis 2009). In sum, diverse corporate and employee cultural practices became reconigured as homogeneous “inancial” practices. Early research on the origins of this ideology was compatible with Callon’s (1998) argument that economists perform the economy; speciically, Lazonick and O’Sullivan (2000) argued that shareholder value ideology was derived from the academic research of inancial economists like Jensen and Meckling (1976). However, content analysis of elite media by Heilbron, Verheul, and Quak (2014) has found that the role of academia was relatively marginal. Instead, they found that it was wealthy outsiders who initially deployed shareholder value ideology to mobilize political support for their hostile takeover battles. he origination and difusion of shareholder value as a cultural frame demonstrates that agents’ performances may be conlictual and their capacities to perform the economy unequal. his research underscores de Goede’s (2005) larger point that interpreting inancialization as a cultural practice is compatible with interpreting it as a ield of political contestation (see also Holmes 2013). For example, Rethel (2018) draws on Guy Debord’s dictum that state power is “at the root of the spectacle” and then explores the role of such state-orchestrated spectacles in Southeast Asian inancial institutions. She dissects state power by examining how legitimacy is assembled in government capital market masterplans, in the architecture of state inancial institutions, and in the ritualized performances of state and elite inancial actors in capital market conferences. Similarly, Langley (2018) argues that controversial UK government policies for inancing urban infrastructure cannot be explained by the objective existence of a “inance gap”; rather, one must examine the contested cultural practices that rendered the problem and shaped alternative courses of government action. Langley does so by carefully analyzing the National Infrastructure Plan documents to reveal how agency was both strategically and experimentally assembled. Conclusion Despite the intuitive appeal and explanatory power of functionalist theories that explain the rise and spread of inance to so many facets of human social life, we have suggested that we can produce a better accounting of the spread of “more inance” when we abandon just-so theories. In turn, we have described three scholarly clusters already moving beyond functionalism. In organic political economy, inancialization emerges from the messy lives of states and empires as one more part of general political struggles. In relational sociology, inance becomes another means of mediating social relationships, thereby pulling and compelling and cajoling entire social networks into inancial relationships. And inally, following the cultural turn, inance expands when material cultural practices are redeined as “inance.” We have argued that these three explanations of inancialization and schools of thought beneit from a common distance from the homeostatic mechanisms in functionalist theories of social life and, Economic Anthropology, Online ISSN: 2330-4847 11 A. Z. Pitluck et al. consequently, more accurately account for what inance actually looks like, how inance functions, and what expands the spatial and temporal edges of inance. here are fascinating intersections and plausible causal conigurations between these three theories for future researchers to explore. For example, it is plausible that as cultural practices become understood as “inance,” they become relational packages; in turn, these relational packages may shape not only the norms of how inancial media are used in relational work, but also the ield in which power struggles mobilizing inance take place. 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