1 Introduction: Infrastructural Liquidity

Whatever one’s theory of, or political stance on the proper role of finance, it is difficult to deny that financial liquidity is crucial to the reproduction of contemporary capitalism. Capitalist states are increasingly preoccupied with maintaining flows of money, credit, and capital investment, and financial markets are crucial to that circulation. Over recent years central banks have gone to great lengths to avoid another market freeze like what happened during the Global Financial Crisis (GFC) of 2008–2009. At the heart of that crisis was a collapse of liquidity (Nesvetailova, Reference Nesvetailova2010), and we can only understand ongoing state support of financial markets by studying the state’s preoccupation with maintaining liquidity (Langley, Reference Langley2015). But what exactly is liquidity, who does it serve, and why? These questions are rarely asked, although some attention has recently been paid to uneven access to liquidity and how this relates to inequality (Adkins, Cooper, and Konings, Reference Adkins, Cooper and Konings2020; Konings and Adkins, Reference Konings and Adkins2022). What is clear is that fifteen years after the GFC, and despite widespread resentment of the financial sector, that sector is more deeply entangled with capitalist economies and states than ever before. This state support is the starting point for my argument that financial markets have become infrastructural.

This state–finance–liquidity entanglement can only be understood in the context of half a century of layered financialization. Innovations in securitization (Leyshon and Thrift, Reference Leyshon and Thrift2007) and assetization (Birch and Ward, Reference Birch and Ward2022), combined with record levels of financial debt (Streeck, Reference Streeck2014), mean that financial stability has become increasingly dependent upon circulation through financial markets. Financial derivative contracts, which did not exist until the early 1970s, now constitute an enormous system of marketized financial risk management that is crucial for coping with uncertainty related to the future value of assets. They are deeply entangled with debt maintenance, portfolio management, currency exchange, and international trade, not to mention their privileged position in energy, raw material, and agricultural markets. The size of the global derivatives market is typically (and crudely) measured at five or more times the size of world gross product.¹ Furthermore, marketized, short-term repurchase (repo) agreements between financial institutions, which are not derivatives but are typically coupled with derivatives trades, are now the main way central banks lend and thus influence macro-financial liquidity on a daily basis (Gabor and Ban, Reference Gabor and Ban2016) and are an important part of central banks’ pivotal role in ‘new’ state capitalism (Sokol, Reference Sokol2023). Together, these developments contribute to the widespread marketization of financial relationships across socio-economic fields. As a result, capitalist states treat financial markets as a crucial underpinning of production, circulation, and consumption, and thus as a system that must be protected from both endogenous and exogenous threats. In other words, liquid financial markets are now treated as a critical infrastructural system.

The concept of liquidity is most recognizable as a defining characteristic of money. Money is considered liquid because it can be exchanged for other things with little friction or cost. As a liquid store of value then, money is a hedge against uncertainty. But in societies where markets are the dominant mode of distributing goods and services, including the basic necessities to sustain life, liquidity can be a matter of life and death. As such, the ‘preference’ for liquidity, as Keynes (Reference Keynes1936) understood it, becomes a driving force of social organization in capitalism (Aglietta, Reference Aglietta2018). This desire for liquidity, which we might think of as the option to exchange later, is institutionalized in the financial sector, and as such is one of the basic organizing principles of post-1970s financialized capitalism (Meister, Reference Meister2021).

In the financial sector derivatives function in a similar way to money liquidity. They allow actors and institutions to put off decisions about their interest in specific commodities or assets. Meister (Reference Meister2021) calls this quality of derivatives ‘optionality’, which is the capacity to delay choices into the future, but at the same time continually calculate the costs of those delayed decisions.

On one hand then, finance capital has internalized optionality and the risk management that goes with it. But like all attempts to profit in capitalism there is an imperative to keep value – or in this case money, financial instruments, and their valuation – in motion. As such, financial market liquidity has become the sine qua non for the reproduction of contemporary capitalism, and the market freeze of the GFC was the exception that proved the rule. This is why, on the other hand, capitalist states and civil societies have developed an ‘infrastructural imaginary’ (Langenohl, Reference Langenohl2020). Because, just as risk management of individual assets has been internalized within the financial market system, the entire risk management system must, in the final instance, be backed up by the state. This chapter interrogates both the market systems that constitutes this financial infrastructure and the politics that are necessary to sustain it. In relation to the latter, the chapter asks how we might rethink politics in the age of financialization, and not least the politics of uneven access to liquidity across socio-economic classes.

The rest of the chapter is organized into four sections. Section 2 sets the scene by defining financial infrastructure in both socio-technical and political economic terms. Section 3 explores the development of financial interconnection since the 1970s, focusing on derivatives and their unique relationship with liquidity and the state. Section 4 dives deeper into the financial, temporal, and spatial functions of derivatives. Section 5 concludes the chapter by employing the concept of infrastructural inversion to rethink liquidity. It then offers an analytical path toward turning that politics of financial infrastructure on its head by questioning whether society really needs to rely so heavily on marketized optionality and liquidity.

2 Solidifying Infrastructural Politics

As this volume demonstrates, there are socio-technical (Pinzur, this volume) and political economic (Coombs, this volume) reasons that contemporary finance appears to be infrastructural. But rather than making a strong ontological argument about the infrastructural nature of financial systems, I am interested in the effects of capitalist states treating finance, and specifically financial markets, as infrastructure. While money, finance, and the state have a long history of entanglement (Muellerleile, Reference Muellerleile, Domosh, Heffernan and Withers2020), since the September 11, 2001 terrorist attacks on the USA and then to a greater extent after the 2008–2009 GFC, capitalist states have cast their infrastructural gaze upon financial markets, not least because they have become more vulnerable to breakdown. In this section I will offer three explanations of how this has happened, related to socio-technical dynamics, securitization, and state infrastructural power.

First are socio-technical dynamics that can be further sub-divided into three categories related to circulation, ordinariness, and capacity. To begin with, infrastructural systems tend to be enabling rather than directly productive, and the things they enable usually relate to movement, connectivity, and circulation through space (Larkin, Reference Larkin2013). Transportation, energy, and water systems are emblematic. Because they are connective, and, further, because they tend to connect to a wide variety of socio-economic sectors, they normally require ‘rights of way’ (O’Neill, Reference O’Neill2013) through public and private space and across territorial or jurisdictional boundaries. Consider for instance the ways railways or oil pipelines criss-cross political territory. Furthermore, even though some infrastructural systems are privatized, they almost always serve both public and private purposes. Consider transport infrastructure, for instance.

Financial markets have many of the same circulatory characteristics. Rather than producing new economic value, they mostly assist in circulation of existing value,² the flows of which frequently cross political borders and produce novel financial geographies. Further, even though financial exchanges are now largely private enterprises (see Petry, Reference Petry2021), they are heavily regulated by the state and endowed with quasi-public purpose, even if the vast majority of the benefits accrue to already existing wealth (Piketty, Reference Piketty2014).

Secondly, for those who have access to them infrastructural systems are often mundane and technical, typically operating in the background. As a result, at least for the everyday user, infrastructural systems tend to blend into everyday life, only drawing serious attention when they break down (Bowker and Star, Reference Bowker and Star2000). Financial systems have a similar quality. Despite the growing integration of things like payment systems into everyday life, most financial operations are obscured from public view. Even when their inner workings are on display, during a financial crisis for instance, most people struggle to make sense of them. Like most infrastructure then, finance is a field of technical expertise.

Thirdly, because infrastructure is circulatory, but also technical, it also tends to have limited capacity. Whether vehicles, people, water, energy, or data, the systems that move these things have limits, and when they are pushed beyond their capacity they lock up or break down. A seemingly sensible solution is to increase the capacity of infrastructural systems. However, in a paradox originally identified by William Stanley Jevons (Alcott, Reference Alcott2005), and what traffic engineers call induced demand, increasing the technological efficiency and thus capacity of a technical system often incentivizes more use, which, rather than enhancing resilience, may just cause more dramatic breakdowns.

Financial markets have a similar finite capacity to process transactions in an orderly or liquid fashion (Langenohl, Reference Langenohl2024). At the same time, digital technologies continue to expand the capacity of the market system to process trades. Regardless, when markets are pushed beyond their capacity, so-called fault lines can form (Campbell-Verduyn, Goguen, and Porter, Reference Campbell-Verduyn, Goguen and Porter2019, pp. 923–926) and markets can break. These socio-technical breakdowns take different form in different historical or geographic contexts. It happened during the infamous 1987 US stock market crash, where telephone lines between New York and Chicago were overloaded and traders and other market actors could not access market prices fast enough (Muellerleile, Reference Muellerleile2018). So-called flash crashes are another instance, although at an accelerated pace (Campbell-Verduyn, Goguen, and Porter, Reference Campbell-Verduyn, Goguen and Porter2019, pp. 923–926). The bottom line is that financial markets are fragile, and technologically driven efforts to speed them up make them more, not less, vulnerable.

To summarize then, the first infrastructural quality of financial markets is that they are socio-technical in nature and this helps us understand their complexity and fragility, but also their relative ordinariness for everyday life. As such, it is perhaps unsurprising that states take an interest in ensuring that they function, and an interest in repairing them when they break down. This state interest has been evident since at least the dawn of capitalism, but the relationship between financial markets and capitalist states has deepened since the early 1970s, and this brings me to the second way that financial markets are infrastructural.

Since the September 11, 2001 attacks on the USA, and intensifying during and after the GFC, financial markets have become securitized, meaning they are treated as crucial for securing socio-economic futures (de Goede, Reference de Goede and Burgess2010; Westermeier, Reference Westermeier2019). Financial security, in other words, is not only important for capitalist accumulation, but also for the basic health and reproduction of capitalist society. As the USA in particular has become more focused on preparedness for emergency and crisis, financial markets are now subject to ‘vital system security’ apparatuses similar to government approaches to other interconnected systems like energy, transportation, and water (see Collier and Lakoff, Reference Collier and Lakoff2015).

Langley (Reference Langley2015), for instance, has demonstrated that the state’s reaction to the GFC was a matter of financialized bio-politics. In the wake of a market breakdown, the state was mainly concerned with securing financialized well-being for the population, which began with rescue and repair of the financial market system. It is important to note, however, that the state chose to rescue banks, brokers, and insurance companies or, in other words, the institutionalized market system, rather than step around the market and provide direct financial assistance to the holders of mortgages who were at risk of losing their homes. The priority was restoration of circulation through the vital infrastructural system rather than direct intervention to assist the end users of that system.

The third way financial markets resemble infrastructure relates to the ways states integrate with financial institutions to exert power over and through their populations. Mann (Reference Mann1984) called this infrastructural power (see Coombs, this volume), in contrast to despotic power, which is more direct, uninhibited, and often enforced through violence. Infrastructural power, which is associated with capitalist and democratic states, explains how states depend upon infrastructural systems for the distribution of power and influence through civil society (Mann, Reference Mann1984). One example of this is the way the USA has intervened in mortgage markets to encourage single-family home ownership since the 1930s. These interventions have taken different forms, including iterative redefinition of mortgages, but with the common goal of (re)constructing a national market for mortgage finance (Ashton and Christophers, Reference Christophers2018). This exertion of state power via financial markets to encourage home ownership is not unique to the USA. While it took different forms, the basic strategy of encouraging middle-class home ownership in an effort to produce social stability was a common strategy among states in the Global North in the twentieth century (Forrest and Hirayama, Reference Forrest and Hirayama2015).

Perhaps a more profound example is the various ways that central banks depend upon private banks and financial markets to implement their policy goals and monetary governance strategies. Not unlike the USA, which began earlier in the 1970s, from the 1990s the EU attempted to develop a single, interconnected capital market system to encourage continent-wide and securitization-led capital investment (Braun, Gabor, and Hubner, Reference Braun, Gabor and Hubner2018). Technocratic reformists within the Italian state, for instance, encouraged derivatives-based arbitrage between Italian and German state debt as a way to ease Italy’s entry into the Economic and Monetary Union (Lagna, 2016). Broader efforts to construct a single capital market stalled in the wake of the GFC, but since then, the European Central Bank (ECB) has actively employed financial markets to achieve its monetary policy goals (Braun, Reference Braun2020). While post-GFC there was initially significant resistance to reintegration of a European repo market and serious proposals to implement a repo transaction tax, the banking industry successfully lobbied against this, and the repo market has rapidly expanded in size (Gabor and Ban, Reference Gabor and Ban2016). The ECB also directly assisted in the expansion of the asset-backed security market in Europe, changing its rules to accept the securities as collateral. As Braun explains (2020), all of this translates into a state–finance nexus of infrastructural power, ‘market-based central banking’, and, generally, the increasing influence of the financial sector over European economic policy.

3 Optional Entanglements

Financial derivatives have only existed since the early 1970s, and yet they now sit at the core of financial market systems. Derivatives create interdependencies between exchanges, asset classes, and national currencies, and thus contribute to the systemic or infrastructural nature of contemporary finance. In Section 4 I will explain this in more theoretical terms, but, first, in this section I offer some background on what financial derivatives are, and how they relate to risk management, marketization, and liquidity.

Derivatives enabled new marketized spaces long before anyone referred to financialization. In the middle of the nineteenth century, the development of agricultural futures markets (the direct ancestors of financial derivatives) in Chicago were co-constitutive with the emergence of telegraphs and railways and new semiotic systems for grading commodities (Carey, Reference Carey1992, pp. 201–230; Pinzur, Reference Pinzur2016, Reference Pinzur2021). These systems converged on the Chicago Board of Trade (CBOT) where, after the US Civil War, the trade in grain futures contracts quickly outpaced the spot trade in physical grain. The futures market allowed the exchange of the potential costs and benefits of uncertainty related to grain before it was harvested from the soil. Whilst insurance contracts had existed for centuries by this time, this was one of the first examples of marketized risk management. In addition to allowing hedging and speculation on either side of the contract, the futures market also improved the quality of the underlying collateral for agricultural credit because it could be risk managed (Levy, Reference Levy2012). Another effect was an increase in liquidity by speeding up of the turnover time of agricultural capital (Henderson, Reference Henderson1999).

All of this led to a significant increase in speculative trading at the CBOT and other formal futures markets, and it was an important part of transforming the city of Chicago, along with its vast agricultural hinterland, into a capitalist commodification engine (Cronon, Reference Cronon1991). Along with the railways and telegraphs, the futures markets became crucial nineteenth-century infrastructure for an increasingly interconnected agro-capitalist national economy.

For the next hundred years formal derivatives trading was isolated within the agricultural, raw material, and energy sectors. But with the delinking of the US dollar from gold in 1971 the various market technologies and state regulatory apparatuses that were originally developed to trade agricultural derivatives were applied to financial instruments (Muellerleile, Reference Muellerleile2015). As the relatively ‘integrated monetary world space’ of Bretton Woods fell apart (Swyngedouw, Reference Swyngedouw, Danies and Lever1996, p. 150), banks and corporations found it more difficult to predict the future value of money. Increasing financial uncertainty then produced new demand for risk management instruments, and new opportunities for innovators who might develop them. During the 1970s and 1980s markets were developed for derivatives trading on foreign currencies, corporate and government debt, and corporate share indexes, to name just a few.

In 1975 the US Congress mandated that that the US stock market regulatory agency, the Securities and Exchange Commission, develop a ‘National Market System’ for the trading of securities. While there were competing motivations for the legislation in Congress and competing visions of the end product, almost everyone involved agreed that the securities markets were crucial for the ongoing development of the US economy, and that a key goal should be widening access to these markets for a broader array of American consumer-investors. Pardo-Guerra (Reference Pardo-Guerra2019, p. 268) characterizes this legislative-turned-socio-technical attempt to develop a national market society as infrastructural. In his telling, it was an attempt to construct a national scale ‘form of financialized kinship that established relations through a common infrastructure of participation’. Crucially though, this infrastructural market-making project was not limited to stock and bond markets, but soon included derivatives.

Derivatives markets differ in several ways from markets for underlying assets. The most obvious is that unlike asset markets, derivatives allow investors to realize gains and losses based on the fluctuating value of an asset without taking ownership of that asset. More importantly for this discussion, derivatives can usually be traded with much higher levels of leverage than the underlying assets. Whereas one is able to buy many financial securities, such as equities or highly rated bonds, with an initial investment of 50%, it is common in derivatives markets to be allowed to hedge or speculate on the same assets by investing only 5% of their value (Muellerleile, Reference Muellerleile2015). This was the case in the 1980s when Chicagoans developed futures markets on corporate share indexes that were mainly traded on New York ‘spot’ markets. There was an extended regulatory struggle over the amount of leverage allowed in these early financial derivatives markets, but the high leverage argument won the day, as it did in most early derivative markets.

In October of 1987 the US equity markets dramatically crashed and much of the blame was directed at the highly leveraged derivatives markets in Chicago. While this was strongly contested by the Chicago derivatives traders, there is not space here to examine this in detail. I have argued elsewhere (Muellerleile, Reference Muellerleile2018), however, that the metaphor of roads and traffic, as an infrastructural system, is a useful way to understand how the highly leveraged Chicago-based derivatives markets built at first slow and clunky telephone connections to the New York securities spot markets in the early 1980s. In the aftermath of the crash – the markets were repaired with expanded capacity for information exchange between the two, in no small part as a result of direct intervention by US government regulators. Where there was once two separate but related markets, the rebuilding of those connections with the aid of much faster ‘info-structures’ (see Campbell-Verduyn, Goguen, and Porter, Reference Campbell-Verduyn, Goguen and Porter2019) created a newly integrated market system with an aggregate higher rate of leverage. As a result, this system become more, rather than less, dependent on maintaining market liquidity. This process of repair after 1987 was heavily influenced by the ongoing attempt to construct the US national market system.

Over the next twenty years, financial innovators developed both bespoke and standardized exchange-traded derivatives contracts on an endless assortment of financial assets. Not all of these developed into highly liquid markets, but what they all have in common is the capacity to draw risk management instruments, which are usually leveraged at a much higher rate, into direct relation with underlying asset markets.

The 2007–2009 GFC can be explained in many ways, but an important part of that explanation is the construction of new financial and informational interconnections based on turning relatively illiquid assets (homes) into liquid securities (Gotham, Reference Gotham2009). Through this came the production of new socio-technical time-spaces highly reliant upon the complicated but nevertheless systematic securitization of mortgages, derivatives on those mortgages, and derivatives of derivatives on those mortgages. The causal chain that led to the breakdown is not easily parsed, but a significant factor was the unsustainable amount of leverage produced in a now deeply interconnected system of layered and marketized optionality, all of which was based on an illusion that money and market liquidity would never run dry (Nesvetailova, Reference Nesvetailova2010).

This is not the place for a deep analysis of the GFC or the many fixes that were implemented in its wake. But it is worth considering that, similar to 1987, much of the discourse that framed the ‘problem’ of the GFC was one of liquidity, its lack, and its restoration (Langley Reference Langley2015). More radical solutions (e.g., prohibitions on derivatives) were pre-selected out because the terms of the debate were designed around restoring the techno-economic order of financial capitalist circulation and risk management. Put differently, the crisis was framed as a ‘socio-technical accident’, the solutions to which contributed to the ‘subordination of political calculation to financial power’ (Engelen et al, Reference Engelen, Ertürk, Froud, Johal, Leaver, Moran, Nilsson and Williams2011, p. 228). As such, the solution to the socio-technical problem was to repair the infrastructural breakdown, rather than ask if the infrastructure was actually serving the purposes it might have in a more equitable and less marketized world.

4 Risky Prices

A deeper understanding of the relationship between liquidity, economic interdependency, and derivatives requires separating the core functionality of derivatives from the process of derivatives trading.³ In the simplest terms, a derivative contract enables the transfer of risk between parties. Futures, options, and swaps set up a contractual obligation, usually to exchange a commodity or asset, or the difference in value of an asset over time, at an agreed date and price in the future.⁴ Buyers and sellers of derivatives may or may not have an interest in the underlying asset, and they may be attempting to hedge an existing risk or speculating by taking on more risk. Whatever the circumstance, in this basic form derivatives contracts have become an important part of risk management processes for both financial and non-financial actors and institutions. But this is only the beginning.

Derivatives have a second, more dynamic function related to their exchange, or when they enter into circulation. Because derivatives are based on the future value of an underlying asset, the prices that derivatives exchange at allow financial modellers to imply the present value of that underlying asset. The exchange of a derivative contract always includes an element of guesswork about an uncertain future. As such, when a derivative price is agreed upon in a trade, this price becomes new information about the value of the underlying asset. In other words, it makes a difference in the future market value of an asset, and thus it also makes a difference in the present (Ayache, Reference Ayache2010). Financiers and economists call this effect price ‘discovery’, and it is often cited as one of the main benefits of derivatives trading. In effect, what derivatives trading does is isolate and codify the uncertainty over the future value of an underlying asset. It formalizes this uncertainty, converts it to quantifiable risk, and enables its exchange independently of the asset itself. The capacity to use derivatives prices to evaluate underlying assets is one of the basic implications of the Black–Scholes derivatives pricing model developed in the early 1970s, and it is no coincidence that the popularity of derivatives expanded rapidly in its wake (MacKenzie, Reference MacKenzie2006).

The formalization and marketization of uncertainty with derivatives is important for several reasons. First, increasingly more assets are held in institutional investment portfolios, and are thus subject to formal and continual evaluation and risk management processes. Derivatives allow portfolio managers to more effectively manage risk, and as such they enable portfolios to hold more risky assets. Secondly, by codifying and pricing risk, derivatives have made collateral (that which secures a loan) more liquid. There is a hierarchy of collateral with cash at the top because it is the most liquid asset. For non-cash collateral further down the hierarchy, a key measurement of quality is the option to sell it quickly at a known price (Krarup, Reference Krarup2019). Assets that have associated derivatives markets thus make for better collateral because liquid derivative contracts both allow for direct risk management through trading, and also continually provide real-time information about the value of the asset.

Mirowski (Reference Mirowski2010) argues that the emergence of marketized financial derivatives has facilitated the construction of a system of market computation. The interconnected system of financial markets reduces the complexity of individual instances of uncertainty into legibly priced and tradable securities and derivatives contracts. The problem is that at the collective level these markets are dissipative systems, meaning that they enhance entropy or create irreversible complexity. Crucially, this is not a problem as long as the markets consistently function as price mechanisms. However, if for any reason the market system overwhelms the computational capacity of any particular market mechanism and that market suddenly loses its capacity to price risk, the entire market system loses its capacity to translate – or compute – the messy complexities of its financialized subjects into prices. In other words, the highly complex system of contemporary financial markets are subject to what Mirowski calls inherent vice, or, like most other infrastructural systems, the inherent tendency to fall apart. Left unrepaired, they leave economic worlds more uncertain and complicated than they were to begin with. This is not to say these worlds could not be made less liquid or de-financialized, but that is rarely considered in any serious way by state technocrats. Rather, the solution to breakdown, or the threat of breakdown, is almost always to increase the capacity of the system, to enable faster circulation, to make it more liquid.

Of course, price is only one kind of information that is crucial to financial markets. Financial modellers constantly seek new information about the qualities of assets and to predict future value. The production, transmission, and consumption of that information is complex, contingent, and reliant on ‘long chains’ of information that are vulnerable to breaking down and in constant need of translation (Campbell-Verduyn, Goguen, and Porter, Reference Campbell-Verduyn, Goguen and Porter2019). Making this more complicated, access to prices and other market-related information, as well as humans and machines that can translate data and information between contexts, is a field of intense capitalist competition (Grote and Zook, Reference Grote and Zook2017; Grindsted, Reference Grindsted2022).

This competition becomes more consequential when we consider that at the same time that financial markets are in a constant state of calculation, price-making, breakdown, and repair, so is financialized time-space itself. Put differently, capitalist competition in the financial sphere both maps onto existing urban, regional, national, and international spaces, and produces new financialized time-space (Pryke, Reference Pryke, Martin and Pollard2017). Financial markets produce these new relational spaces, even though they are difficult to ‘see’. In fact, given the ‘unpredictable, intertwined, and relational’ nature of these space-times (Pryke, Reference Pryke, Martin and Pollard2017, p. 108), they often only become legible when they break down or when financial crisis hits (French, Leyshon, and Thrift, Reference French, Leyshon and Thrift2009). But when the market transactions that are an integral part of this circulation slow down or stop, the interconnections begin to change. In 2007, when US housing prices began to slump, the supply of mortgage-backed securities slowed and the future became more uncertain. The derivatives markets that were entangled with mortgage markets became more volatile, and eventually it became more difficult if not impossible to model the most complex contracts. Market liquidity then dried up. At that point, rather than a global space of capital flows, liquidity, risk management, and accumulation, these connections transformed into relations of localized place, illiquidity, incommensurability, foreclosure, and bankruptcy. This is how a group of small towns in northern Norway, who, under advisement of an Oslo-based firm, had invested (and lost) USD 78 million in a highly complex, New York-based mortgage securitization fund, could suddenly find itself unable to build the school and nursing home it planned because indebted home owners in Florida or Nevada could no longer make their mortgage payments (Aalbers, Reference Aalbers2009).

I am quickly skimming over the surface of highly complex relationships. Perhaps the town councils of northern Norway were defrauded. Perhaps they should have known better. The point I am making is that these global connections were enabled by the search for profit in the financial sector as well as the capacity of an integrated market system to simplify highly contingent and complicated economic relationships into relatively simple matters of prices, profits – and, eventually, losses. Making sense of this infrastructural system of finance, and ultimately developing alternative ways of organizing a post-financial capitalist economy, requires that we look closely at the socio-technical details of these systems, but it also requires a critical political economic lens, because what is increasingly apparent is that the ‘politics of liquidity is … at the core of how capitalist finance works’ (Konings and Adkins, Reference Konings and Adkins2022, p. 52).

5 Inverting Liquidity

So far I have explained how the circulation of financial derivatives has engendered interconnection in the financial market system, and how this has contributed to capitalist states turning their infrastructural gaze towards the financial sector, especially at times of breakdown. In this final section I turn to a more radical way to understand liquidity, and its absence, in financial markets and socio-economic relations more broadly. This begins by turning liquidity on its head. It begins with the assumption that financial markets are always in a state of disrepair, or put differently, always in a state of illiquidity. In other words, it begins by appreciating that the interconnection both within the financial market system, and between it and the broader capitalist economy, is perpetually wavering. If this is the starting point, it is easier to see that the socio-technical maintenance of the financial market system is not the exception, but the rule.

While not specifically concerned with finance, Bowker and Star (Reference Bowker and Star2000, pp. 33–50) referred to this kind of approach as ‘infrastructural inversion’. To invert infrastructure is to attend to the politics or economics of the opacity and technicity of infrastructure. It is to ask how the technical operation or mundanity of an infrastructural system is itself consequential. It is to take seriously the flaws of the infrastructural imaginary, or the assumption that infrastructural systems are by nature functionally neutral and fully operable for all of society, which, as many have pointed out, is rarely the case. The inversion foregrounds how infrastructure capitalizes on ‘porousness, incompleteness, and uneven accessibility’ (Langenohl, Reference Langenohl2020, p. 15), and in the process obscures inequality built into the infrastructure from the start.

Returning to liquidity in finance, to invert is to appreciate that financial markets mainly benefit the financial sector and the investor class, even if the credit the financial system distributes is crucial for social reproduction across class divides. It is to invert the idea that liquidity is the normal, stability-producing, ‘functional’ state of a financial market system, that liquidity is a technical prerequisite for the functioning of markets, and finally that illiquidity is a state of disrepair that should always be corrected by the state. In the words of Meister, it is to ‘transform the concept of financial market liquidity from an assumed precondition of capitalism to an object of political contestation’ (2021, p. x).

In a financial market, one key measure of liquidity or ‘market depth’ is the relationship between offers to buy and sell. This is the spread between the bid and ask prices. The most liquid or ‘deepest’ markets have the smallest spreads, the most pending orders awaiting execution, and the smallest price changes in the face of (large) buy or sell orders. In other words, liquid and deep markets are relatively orderly and stable in the face of changes to supply or demand, while illiquid and shallow markets are more volatile. But while liquidity implies relative stability, dealers, market makers, and other market intermediaries benefit from spreads because they constitute opportunities for arbitrage (buying at one price and simultaneously selling at another, and taking the difference as profit), or opportunities to appropriate a bit of the spread by facilitating an exchange between two other parties. As such, who benefits from the spread in various markets is an object of intense competition in finance.

Put differently, the spread represents the very necessity of the market to begin with. If there was no spread, supply and demand would be in equilibrium, there would be no need for negotiation, and no need for market makers. A condition of absolute liquidity is nonsensical in capitalism, as, amongst other things, it would mean that prices do not change over time or space, which implies zero market volatility and thus zero uncertainty. In this abstract condition there would be no need for derivatives because there would be no uncertainty regarding volatility or changing prices in the future.⁵

The more practical point is that liquidity is relative and relational, or in other words, market liquidity only matters in relation to market illiquidity. Market liquidity only matters in relation to what is exchanged, by whom, and at what speed. In terms of access to money, liquidity only matters in relation to a future where money can be exchanged for something less liquid.

Algorithmic and high-frequency trading (HFT) offer an extreme, but nevertheless helpful, example of this symbiosis of (il)liquidity. HFT is basically a method of high-speed arbitrage. Algorithms search for tiny spreads both within and between markets (e.g., a derivative and its underlying asset) and trade both sides to profit on the difference (see Grindsted, Reference Grindsted2022). Space is an important dynamic in HFT strategies. Trading firms invest capital to position their hardware at optimal locations in proximity to market order-book computers to gain nanosecond advantages. One result is that HFT deepens markets by adding a large number of bid and ask orders, and it increases liquidity by narrowing spreads through constant arbitrage. At the same time, HFT is so fast that it can jump the queue by reading the order book of waiting trades and executing in advance of slower traders (perhaps everyday investors) who then suffer a higher or lower price than expected (Grindsted, Reference Grindsted2022).

As such, HFT puts pressure on the capacity of the market system to process trades, which in the mundane can result in higher volatility and larger spreads, and in the extreme can result in a ‘flash crash’ like what happened in May of 2010 when the New York securities markets experienced about a 9% drop and recovery in value over a period of thirty minutes. Campbell-Verduyn, Goguen, and Porter (Reference Campbell-Verduyn, Goguen and Porter2019) explain this and other related crashes in terms of pressure on the capacity, and subsequent breakdown, of chains of information transmission, which is undoubtedly true. But we must also consider that the informational interconnection of financial actors, firms, and markets exemplified by HFT is part of a broader set of ‘relational spatial strategies’ that ‘convert distance and speed into trading advantage’ (Grindsted, Reference Grindsted2022, pp. 1391, 1393). In other words, there are incentives and rewards in the financial market system for interrupting market liquidity and/or producing relative illiquidity. This was true in the age of face-to-face trading, the age of telegraphs, and now in the digital age.

The point of discussing HFT is to demonstrate that access to liquidity is itself subject to the competitive dynamics of capital. Another way to think about this is that the dominant mode of managing uncertainty in contemporary capitalism is by accessing money liquidity and derivative risk management, but access to this ‘service’ is itself a profit-seeking dynamic of financialized capitalism (Konings and Adkins, Reference Konings and Adkins2022). The highly technical system of interconnected markets that is necessary to reproduce both risk management services as well as financial sector profitability, is, as the capitalist state sees it, infrastructure. And when the state repairs this vital system, it necessarily repairs marketized finance capital, including its capacity to reproduce socio-economic inequality.

This helps explain ongoing efforts to develop global-scale market infrastructures to manage climate-related uncertainty by converting it to financial risk (Bracking, Reference Bracking2019). The effects of climate change translate into a kind of radical uncertainty that modern institutions, including states, struggle to cope with. Within the bounds of capitalist ideology, the existing financial infrastructure is perhaps the only system capable of converting this climate-related uncertainty into both manageable risk as well as a profit-making opportunity. But again, for financial calculation to function as an effective climate-risk coping mechanism will rely on maintaining (il)liquidity, which is unlikely to succeed without significant state support for finance capital writ large.

Despite what may appear as an argument of inevitability, it does not need to be this way. And it is worth examining by way of a brief conclusion what would be necessary to disentangle state support for truly vital systems from state support for finance capital. The more precise question in my view is what would be necessary for a situation where the state could allow the financial markets to crash and some significant portion of financial capital to be destroyed without also destroying the lives of millions if not billions of common people?

The answer is implied in the first question – disentanglement – or more precisely de-financialization. Specifically, it would require removing or separating the crucial commodities of basic, everyday life from finance capital. The most obvious example is houses, but similar arguments could be made for health care, education fees, not to mention many of the objects of more conventional infrastructure like the provision of water and public transportation. Currently, at least in the USA and UK, many of these things are only available to most people via massive quantities of private and public debt. Servicing of this debt requires access to liquidity, which has become, in the words of Minsky, a basic ‘survival constraint’ (see Konings and Adkins, Reference Konings and Adkins2022). But if we learned anything from the GFC, capitalist states are rarely inclined to rescue indebted homeowners even when they are subject to predatory lending by finance capital. Rather than offering a liquidity rescue to individual borrowers, the state preferred to repair the financial infrastructure, perhaps in the flawed hope that the infrastructure would serve everyone equally.

Other than the accumulation of financial profit, what, after all, is the purpose of creating a market infrastructure of derivative optionality for homes? These are big questions, and there are no easy answers. Certainly, the politics of de-financialization will be messy to say the least. But if a larger proportion of homes, welfare services, and ‘real’ infrastructural systems like energy provision were ‘de-assetized’ and publicly owned, not only would there be less need for the perpetual option to convert them into cash, the financial sector would also shrink dramatically, making it less powerful and less dependent upon the state. Democratic society ought to have the power to provide some level of certainty for itself – a different kind of optionality – without relying on a financial sector that is both technically flawed and (infra)structurally dependent upon the state.

Acknowledgements

I want to thank the British Academy/Leverhulme Trust and the Geography Department at Swansea University for funding the research included in this chapter. Thank you also to Andreas Langenohl for helpful suggestions on an earlier draft, and last but not least, Barbara Brandl, Malcolm Campbell-Verduyn, and Carola Westermeier for helpful suggestions, editorial guidance, and for organising several conference sessions where earlier drafts of this paper were presented. Any mistakes or omissions are my responsibility.

Since at least the pioneering work of Michel Callon in the 1990s, social scientists have attempted to understand markets as emerging from hybrid, socio-material processes. A vast body of work, using concepts such as actor-networks, socio-material assemblages, market devices, and market agencements has utilized a Callonian framework. Recently, another term with roots in science and technology studies (though not only in STS – see Coombs’ chapter, this volume) has found favour in the study of markets: infrastructure. Scholars use the term to refer to socio-technical ‘systems through which basic but crucial enabling functions are carried out, but that tend to be taken for granted and assumed’ (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019, p. 776). The concept has been applied to an array of elements – evidenced in the breadth of this volume – from barcode scanners and warehouses, to electronic order books and clearinghouses, payment systems and accounting schemes (Genito, Reference Genito2019; Kjellberg, Hagberg, and Cochoy, Reference Kjellberg, Hagberg, Cochoy, Kornberger, Bowker, Elyachar, Mennicken, Miller, Nucho and Pollock2019; Pardo-Guerra, Reference Pardo-Guerra2019; Banoub and Martin, Reference Banoub and Martin2020; Martinez, Pflueger, and Palermo, Reference Martinez, Pflueger and Palermo2022; Brandl and Dieterich, Reference Brandl and Dieterich2023).

Given their common roots in STS it is unsurprising to see similarities between the market infrastructure perspective and the Callonian view. Infrastructures, like devices and agencements, are held to be socio-materially hybrid assemblages or ecologies, featuring both ‘hardware’ and ‘software’: not just physical technologies, but organizational protocols, regulatory standards, and cultural ideas (Edwards, Reference Edwards, Misa, Brey and Feenberg2003). Also, they are similarly understood to ‘emerge’ or ‘occur’ through ongoing practice rather than to simply ‘exist’ as simple objects (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019). Finally, like agencements, infrastructures format the character and agency of the people and things that they encounter in the market (Pardo-Guerra, Reference Pardo-Guerra2019; Çalışkan, Reference Çalışkan2020). In the STS-inflected view, infrastructure, like agencement, is socio-material, performative, and locates ontology in a hybrid network.

These points of commonality have usefully allowed Callonian and infrastructural perspectives to develop in concert. But they have also made it possible to delay engagement with their differences. Beginning this engagement is the aim of this chapter. The chapter asks: Where does infrastructure sit in the Callonian framework on markets? How does scholarship on infrastructures prompt us to re-evaluate actor-network theory (ANT)-inspired work on market agencements? Does the Callonian perspective encompass market infrastructures and, if so, what is gained from an approach that pulls them out for special attention?

I argue that the focus on infrastructure highlights a pragmatically and phenomenologically important boundary elided in the Callonian perspective between components of an agencement that are physically and cognitively present to actors and those which – though critical to action – are not. This boundary in terms of presence is occasionally recognized, but never explicitly theorized, in Callon’s framework. Incorporating this boundary into a theoretical perspective on markets has two major benefits. First, it helps us to see a distinct form of ‘infrastructural power’ (Pinzur, Reference Pinzur2021) at work within market agencements. This power stems from the asymmetric relations of dependency and discretion that exist between the operators of infrastructures and their users. This asymmetry produces unequal dynamics around the alignment of framings in a market agencement that remain unspecified in Callon’s flat perspective. Secondly, this division draws attention to the unique features of the ‘boundary objects’ (Star and Griesemer, Reference Star and Griesemer1989) that flexibly connect components of agencements. These boundary objects, being vaguely structured at a general level yet adaptable to the particularities of local settings, help to resolve the ongoing struggle of holding together market agencements whose components are pulled in different directions. This concept, I argue, handles the problem of ‘multi-framing’ (Callon, Reference Callon2021) better than the established duality of framing and overflowing (Callon, Reference Callon1998a). By recognizing the boundary between infrastructures and other elements of agencements we thus become aware of underexplored dynamics within Callon’s perspective and gain tools with which to conceptualize these.

1 Callon and the Sociomaterial Turn in the Sociology of Markets

Use of actor-network theory to study markets heralded a sea change in economic sociology. Prior sociological work had conceptualized markets as institutionalized spaces featuring actors ‘embedded’ within, shaped, and constrained by a social context of laws and regulations, organizational rules, relationally enforced norms, and status hierarchies. By contrast, Callon, inspired by work on distributed cognition and action (Hutchins, Reference Hutchins1995), asked not how markets and economic actors were constrained, but how they were composed. The goal of his analysis was not ‘giving a soul back’ to Homo economicus (Callon, Reference Callon1998b, p. 51) by situating economic behaviour within a social context, but rather de-naturalizing the individual and the market, tracing how both took form through coordinated, distributed, materially mediated practices.

Key to this analysis have been the concepts of market devices and market agencements. The language of devices, defined as ‘material and discursive assemblages that intervene in the construction of markets’ (Muniesa, Millo, and Callon, Reference Muniesa, Millo and Callon2007, p. 2), featured in the earliest ANT-style economic analyses. The concept enabled scholars to look at the impact of distributed physical technologies and economic representations on market actors’ day-to-day work. More recently Callon and others have favoured the closely related term agencement (Çalışkan and Callon, Reference Çalışkan and Callon2010; Callon, Reference Callon2021). The move is more about emphasis than conceptual divergence. As opposed to the notion of a device with its suggestion of a thing to be picked up and used by a person, each distinct and whole, agencement emphasizes the ways that humans and material objects form unique, agentic networks. This highlights what Callon and others see as the ontological character of distributed action and cognition: distinct agencements do not just equip actors differently, they create hybrids with different loci and degrees of agency. It is in this sense that we can meaningfully talk about market actors that are individual, collective (‘the firm’s employees’), or even anonymous (‘market forces’), which operate with different forms of calculativeness (Callon, Reference Callon, Pinch and Swedberg2008).

Critically, market agencements do not form simply by accident: they are formulated with the precise goal of orienting collective action towards bilateral transactions (Callon, Reference Callon2021). Agencements organize five different ‘framings’ – producing active agencies, producing passive objects, arranging encounters between buyers and sellers, establishing prices, and maintaining the market – which together structure and coordinate economic action (Çalışkan and Callon, Reference Çalışkan and Callon2010; Callon, Reference Callon2021). These framings are themselves performative outcomes of materially mediated, distributed procedures variously described as qualification, singularization, pacification, and activization (Callon, Méadel, and Rabeharisoa, Reference Callon, Méadel and Rabeharisoa2002; Callon and Muniesa, Reference Callon and Muniesa2005). They are the constitutive, socio-material processes by which markets and economic actors are built up across networked environments.

A market agencement thus consists of networked humans and non-humans enacting the five framings that underpin bilateral transactions. While these framings in pursuit of a strategic goal allow us to define and delimit agencements conceptually, doing so empirically is more challenging. The breadth of individuals, technologies, and texts involved in these five framings is extraordinary. Just consider how many are involved in a single piece of any one framing, for example, the creation of advertisements that attach consumers to goods, the construction of industry standards that establish a legible price, the regulation of consumer safety by the state, and so on. But, more significantly for the topic at hand, agencements have depth. Çalışkan and Callon (Reference Çalışkan and Callon2010, p. 9) claim that ‘agencements denote socio-technical arrangements from the point view of their capacity to act’. But any given socio-technical arrangement’s ‘capacity to act’ is wrapped up in and dependent on further socio-technical arrangements: a trading desk in an investment bank, for example, operates in conjunction with organizational rules and processes, international law, undersea cables, and so on. Any single actor (human or non-human) making a trade is designated and empowered to act by virtue of their position within a agencement that includes screens displaying prices, analyses drafted and circulated within an organization, computer programs that synthesize massive amounts of data, statistical networks that produce this data in the first place, and so on. It is in this sense, quite true that ‘nothing is left outside agencements’ (Çalışkan and Callon, Reference Çalışkan and Callon2010, p. 9).

This capaciousness helpfully demonstrates the massive effort behind every market transaction. But it also tends to efface an important pragmatic and phenomenological boundary between those actors, devices, and representations actively invoked, referenced, or manipulated in the everyday conduct of market action and those that – while crucial to the success of the agencement – remain hidden, inaccessible, and unmanipulated. This distinction and boundary, though unnamed and unspecified, is clear in prior ANT-inspired work. On one hand we see devices that gain value precisely through their components materially intervening in the strategy, calculation, and perception of transacting parties. Such devices are often appended with the particular actions they enhance or contribute to: they are ‘optical devices’ or ‘evaluative devices’ (Beunza and Stark, Reference Beunza and Stark2004), ‘calculative device[s]’ (Callon and Muniesa, Reference Callon and Muniesa2005). They are actively and creatively engaged by individuals as aids in the market (Knorr Cetina, Reference Knorr Cetina2003; Preda, Reference Preda2006). On the other hand are devices that support or prepare the ground for these: not the FICO (Fair Isaac Corporation) score, but the ‘scorecard’ that brings together the relevant data points; not the marketing materials, but the focus group that generates knowledge of consumers; not the derivative instrument, but the regulatory distinctions and accounting techniques that permit its construction (Muniesa, Millo, and Callon, Reference Muniesa, Millo and Callon2007). These devices (which some scholars might later call infrastructures) come to matter in their ability to produce a taken-for-granted baseline from which actors can use another ready-to-hand set of objects to calculate, act, and trade. While Callon would certainly recognize that market actors relate to these objects and processes in different ways – some with intense focus, others as a taken-for-granted background – the notion of agencement offers no way to theorize the importance of this difference. Conversely, this distinction is precisely what infrastructure makes visible and theorizes.

2 Infrastructure as Absence

I describe the distinction between the infrastructural and non-infrastructural components of an agencement as a difference in ‘presence’. Viewed phenomenologically from the angle of a transaction, infrastructures matter in a different way than ready-to-hand devices like screens, reports, or analytics: they are neither present nor accessible, cannot be manipulated, are not active and lively intervening components. Rather than remaining at the surface of action, they become deeply embedded in organizational routines and bureaucracies. Functioning infrastructures tend towards invisibility; they ‘seamlessly fade into the background as if natural elements of our human environments’ (Pardo-Guerra, Reference Pardo-Guerra2019, p. 7). This backgroundedness – the possibility of forgetting that these technologies, organized practices, and rules even exist at all – is precisely what makes market infrastructures useful (Guseva and Rona-Tas, Reference Guseva and Rona-Tas2014). They allow actors to marshal ready-to-hand devices in pursuit of profit on the assumption that most, if not all, of the other components of a market agencement are properly aligned. Infrastructure’s cognitive absence to market actors is a crucial ingredient in producing a calculable and actionable environment.

The cognitive presence or absence of devices is often accompanied by their physical presence or absence as well. Those devices that are actively manipulated for calculation tend to be more contained in space and time, assembled by an organization for its own distinct purposes, affording market actors a greater plasticity. For instance, new market analyses are produced daily using proprietary software and trading algorithms are tweaked constantly over the course of their short lives to reflect and accommodate changing market circumstances (Beunza and Stark, Reference Beunza and Stark2012; Borch and Lange, Reference Borch and Lange2017). Similarly, the customizability of trading desks – with more or fewer screens, displaying different types of information – demonstrates the value of this device as a physical aid to local, embodied calculation and action (Beunza and Stark, Reference Beunza and Stark2004; Beunza, Hardie, and MacKenzie, Reference Beunza, Hardie and MacKenzie2006). The aim is precisely for these devices to differ from those being used by competitors, so as to manufacture unique profit-making opportunities (Erturk et al., Reference Erturk, Froud, Johal, Leaver and Williams2013; Hardin and Rottinghaus, Reference Hardin and Rottinghaus2015).

By contrast, infrastructures tend to span multiple sites or events (Edwards, Reference Edwards, Misa, Brey and Feenberg2003; Silvast and Virtanen, Reference Silvast and Virtanen2019). This can be a physical spanning of distance via information and communication technologies (e.g., sub-marine cables or satellite networks) or an administrative harmonization via standards, classifications, and protocols (Bowker and Star, Reference Bowker and Star2000; Guseva and Rona-Tas, Reference Guseva and Rona-Tas2014; Pinzur, Reference Pinzur2016). This broader scope coordinates action across distant settings, creating a situation where ‘local practices are afforded by a larger-scale technology’ (Star and Ruhleder, Reference Star and Ruhleder1996, p. 114). The politics and uneven impacts of this relation between the global and local is why payment, settlement, and clearing systems have attracted so much attention from infrastructural scholars. Infrastructures including the European interbank payment system (Jeffs, Reference Jeffs2008), the European Union’s Target 2 securities settlement infrastructure (Krarup, this volume), and the SWIFT (Society for Worldwide Interbank Financial Telecommunications) financial messaging system (Robinson, Dörry, and Derudder, this volume) all show the tricky questions and tough relationships that characterize infrastructures that span these scales.

3 Issues at the Boundary

Summing up the previous section, we see that scholarship on market infrastructures distinguishes within market agencements between elements that are physically and cognitively present to actors and those that – while critical to action – are not. This distinction is elided in Callon’s presentation of market agencements. But why does this boundary matter? What does it help us to see or understand more clearly?

The following sections argue that this boundary helps us to recognize and theorize two important, understudied dynamics within agencements. First, this boundary aligns with an asymmetry in market agencements: local, ready-to-hand devices depend on the smooth operation of broader infrastructures, but the opposite is not true. That is, the impact of infrastructures in (mis)aligning the components of an agencement far exceeds that of local devices. This asymmetry translates into a distinct form of ‘infrastructural power’ (Pinzur, Reference Pinzur2021) accruing to actors with discretion to enable or disrupt everyday routines for a wide swathe of the market. Secondly, this boundary draws attention to a different view of how to maintain cohesive agencements despite the inevitably multiple ways in which objects and activities are framed by distinct actors. Where Callon sees this ‘multi-framing’ as an ever-present source of overflowing to be contained and reframed, infrastructural scholarship suggests a more flexible approach. The concept of ‘boundary objects’ (Star and Griesemer, Reference Star and Griesemer1989) – artefacts, concepts, or methods that simultaneously retain a general, shared form and can be adapted to divergent particular applications – offers a tool with which to rethink the nature of alignment and misalignment, making ubiquitous multi-framing less of a threat to market action.

4 Asymmetry, Discretion, and Infrastructural Power

As discussed, Callon argues that market agencements are held together through the alignment of framings across actors and environments, collectively organizing action towards the single goal of bilateral transactions. In treating these myriad framings at the level of the collective (i.e., what matters is that the whole agencement stays aligned) Callon does not discuss the differential roles that individual acts of framing might play. But, in fact, when we consider the divide between local devices and global infrastructures – the components that are cognitively and physically ready to hand in everyday action versus those that support action, but are not present in the same way – it becomes clear that not all framings performed by every component of an agencement are equal. In fact, the framings accomplished by infrastructures are asymmetrically more important.

This, of course, is not to say that changes or struggles over smaller components of an agencement are necessarily inconsequential. Any set of framings that breaks out of line – whether related to a focus group, a stock index, a computer screen, or any other market device – initiates a struggle to re-establish alignment. The result may be bringing the offending framing back in line or it may lead other components of an agencement to change themselves. Donald MacKenzie’s analysis of high-frequency trading offers a fascinating version of just such an analysis. MacKenzie traces the back-and-forth development across the fields of trading, exchange, regulation, and politics, where alterations of the market agencement in one area (e.g., new rules around Nasdaq’s Small Order Execution System) provoke responses in another (e.g., development of ATD’s (Automated Trading Desk’s) trading algorithms or Island’s open order book), which redound on yet another (e.g., moving from fixed role to all-to-all markets), and so on (MacKenzie et al., Reference MacKenzie, Beunza, Millo and Pardo-Guerra2012; MacKenzie and Pardo-Guerra, Reference MacKenzie and Pardo-Guerra2014; MacKenzie, Reference MacKenzie2018, Reference MacKenzie2021). This is a history of local instances of bricolage, innovation, and opportunism: a large-scale shift in agencement built up from successive breakdowns and realignments of framings.

But the case of HFT also shows us the limits of this symmetrical analysis. MacKenzie (Reference MacKenzie2018) notes that the most important ongoing relation in this case is the mutuality established between exchanges and trading firms. Today the most important alterations in framing involve exchanges developing HFT-friendly infrastructures – for example, co-location, ultrafast matching engines, rebates for market makers – in an effort to attract liquidity. There is a feedback effect: exchanges that offer the most enticing infrastructures attract more trading, which makes them more liquid, which makes them even more appealing sites for trading. The competition among exchanges to provide infrastructure has become the core of their business, extending beyond HFT to the provision of indexes, clearing services, trading platforms, and more (Petry, this volume). Critically, while exchanges and firms both rely on each other, this dynamic is not symmetrical. As access to top-notch infrastructure becomes a necessity for firms – both for the liquidity and the competitive advantage it provides – global exchange groups grow larger, wealthier, and more influential.

Drawing a distinction between infrastructures and ready-to-hand devices highlights an important divide in how alignment translates into power and influence. There is an asymmetry in dependency – devices need infrastructures to work, but not the other way around – which translates into an imbalance in the scale of disruption that would result from any changes to framings or stoppages of work. How many devices, or components of an agencement, would become inoperable – and thus quite radically ‘unaligned’ – if a particular infrastructure was not working as usual? How many things would become impossible to do or think as a result? Because of their global scope, their general invisibility, and their efficient handling of basic functions, infrastructures become enmeshed in and critical to vast numbers of market processes. A change in or breakdown of infrastructure thus means an immediate and profound misalignment across myriad market actors. This asymmetric interdependency offers a mechanism by which infrastructural actors, through their discretion to upset alignments of many framings at once, can exert outsized power and influence.

Elsewhere (Pinzur, Reference Pinzur2021) I have referred to this as ‘infrastructural power’ (drawing out its connections to, but possibly also confusing with, the tradition from political economy, see Coombs, this volume). This outsized power is held by actors with discretion to disturb the smooth functioning of a market infrastructure, in the process provoking leveraged misalignments with a large number of local, device-mediated calculations and actions. For instance, nineteenth-century American commodity exchanges used their positions within key infrastructural processes to exert influence over the form of crop-statistic and price-quotation networks – core aspects of the five framings (Pinzur, Reference Pinzur2021). In other instances, we see that power comes from the discretion to control access to an infrastructure. This is the power of the global exchange group wielding exclusive control over a set of goods and services whose absence would cause a crisis of misalignment for traders (Petry, this volume). It is also the power, exceptionally applied, of saboteurs (e.g., protesters clogging the streets of Frankfurt to keep bank employees from reaching their desks) or natural disasters (e.g., Hurricane Sandy knocking out elements of global financial infrastructure) (Folkers, Reference Folkers2017).

As discussed, though Callon recognizes the diversity of relations between market actors and the various components of market agencements – for example, that focus groups are core work for marketers but simply one bit of information for executives planning a branding campaign – he does not theorize these distinct types of relations. This leaves his view of an undifferentiated, flat agencement ill-equipped to account for shifting scales of alignment and the imbalances of power these asymmetries create. By contrast, recognizing the boundary between hidden infrastructures and ready-to-hand devices highlights the unique form of ‘infrastructural power’ and leveraged misalignment that exist within a single market agencement.

5 Alignment, Multi-framing, and Boundary Objects

The previous section considered the issue of how to align multiple components – objects, practices, discourses, people – within a single agencement. But Callon also notes the additional challenge that any single component may become entangled in several, distinct framings or agencements at once: Callon calls this being ‘multi-framed’ (Callon, Reference Callon2021, p. 366). This multi-framing creates a local tension – keeping an agencement aligned even when many of its components are pulled in several directions at once – for which Callon, admittedly, has no general solution. I argue that an infrastructural perspective using the concept of ‘boundary objects’ (Star and Griesemer, Reference Star and Griesemer1989) offers traction on this issue.

Multi-framing occurs in settings where multiple agencements overlap. Take, for example, a university’s scientific research laboratories. In such an environment components may simultaneously be framed with a market agencement (e.g., making genetic material patentable intellectual property that can be bought and sold), a scientific agencement (e.g., making genetic material a resource to be made widely available for basic research through collaborative networks), or even a religious agencement (e.g., making genetic material a divine substance that ought not be manipulated). The economic challenge of a multi-framed object is ensuring that it is not pulled so far out of its framing within a market agencement that it becomes untradeable or disorders collective action in the market. For example, regulators can influence the format and framing of credit scores (e.g., banning the use of particular types of personal information), but only if they do not disturb the score’s role within the market agencement that promotes and sustains lending. This produces conflicts over framing that must be resolved locally.

Callon cautions against thinking that such conflicts are rare. Given the inherent openness of agencements and their components, multi-framing is, in fact, widespread. While we can certainly associate components to a market agencement by their participation in the five framings, ‘we should not forget that each site and activity is also caught up, at the same time, in other collective actions, in other types of agencements’ (Callon, Reference Callon2021, p. 366). In each of their components and sites, market agencements grapple with other modes of agencement. In fact, multi-framing is so pervasive that the work of ensuring objects, people, and activities maintain their roles in markets despite being caught up in various non-market agencements is the core of market maintenance. And yet, despite the near ubiquity of this phenomenon, how this resolution occurs is a mystery. In response to the question of how these opposed tendencies are made compatible, Callon admits that ‘there is, as far as I know, no satisfying answer to this question’ (Callon, Reference Callon2021, p. 368, emphasis added).

I suggest that Callon and other economic sociologists can find one ‘satisfying answer’ in the literature on infrastructure, particularly in the concept of ‘boundary objects’ (Bowker et al., Reference Bowker, Timmermans, Clarke and Balka2016). In contrast to Star’s concept of infrastructures, which has been eagerly adopted in the study of markets, this popular and closely related notion has not yet been taken up. The key feature of a boundary object is that it spans multiple groups and environments, both enabling collaboration and coordination across these and being adaptable to dissimilar uses in their various settings. Their defining feature is their ‘interpretive flexibility’, the ability to toggle between being vaguely structured at the general level and precisely structured in particular settings (Star, Reference Star2010). Boundary objects ‘are both plastic enough to adapt to local needs and the constraints of the several parties employing them, yet robust enough to maintain a common identity across sites. … They have different meanings in different social worlds but their structure is common enough to more than one world to make them recognizable, a means of translation’ (Star and Griesemer, Reference Star and Griesemer1989, p. 393). They can take multiple forms: artefacts (e.g., repositories, indexes), concepts (e.g., ideal types, classes), or methods (e.g., standardized forms) (Star, Reference Star2010). For instance, Star and Griesemer (Reference Star and Griesemer1989) show that animal and plant specimens, field notes, and maps served as boundary objects in the scientific practice of a natural history museum, allowing collaboration among academics, volunteer trackers, animal trappers, and donors despite their divergent concerns, practices, and conceptions.

While research on markets has not invoked boundary objects explicitly (Millo and MacKenzie, Reference Millo and MacKenzie2009, is an exception), I would argue that prior research has used the concept implicitly. Consider, for example, work on derivative-trading investment banks and clearinghouses, two organizations whose actions must be aligned so as to promote transactions, yet which frame these transactions’ elements in starkly different ways. Scholars have identified several boundary objects at work in this coordination. The first of these is the derivative itself. While the derivative maintains a single, general identity in both environments (i.e., actors can agree on its identity, differentiate it from other derivatives), at the level of practice banks and clearinghouses decompose the same complex derivative transaction differently to suit their own local needs and purposes (Millo et al., Reference Millo, Muniesa, Panourgias and Scott2005; Genito, Reference Genito2019). Financial risk-management techniques are another boundary object, enabling communication and coordination among trading firms, clearinghouses, and regulatory bodies, yet being differentially incorporated into their particular workings. Financial theories operate as ‘a “plastic” medium … able to accommodate different practices while allowing awareness about the common elements of the practices to evolve and strengthen the connections among the actors’ (Millo and MacKenzie, Reference Millo and MacKenzie2009, p. 651). This sort of relation between infrastructures, devices, and boundary objects can even be seen within investment banks. Front-office and back-office divisions may treat a given security as a single, general object in their communication with one another, yet handle it in dissimilar and sometimes incompatible ways in their day-to-day work (Muniesa et al., Reference Muniesa, Chabert, Ducrocq-Grondin and Scott2011). These boundary objects, sitting at the interface of different components within an agencement, enable distinct groups pursuing divergent concerns to nonetheless collaborate in pursuit of an overarching goal.

Boundary objects thus offer a way of understanding how cohesively aligned market agencements can be maintained despite the (possibly conflicting) multi-framings of their various components. Notably, the concept also offers greater flexibility than the pairing of framing and overflowing, the current means by which Callon attempts to understand components’ entanglement in different agencements. Framing and overflowing are metaphors of containment, struggle, and rigidity: one must ensure that one’s own framings are not overflowed, prevent key elements of one’s environment from being co-opted into other frames, and force alignment across the multiple components of a market agencement (Callon, Reference Callon1998a). Boundary objects, by contrast, suggest a dynamic of flexible cooperation, where important elements are able not only to exist simultaneously within multiple framings but to be simultaneously aligned with multiple framings. Boundary objects thus are not only multi-framed, but can be ‘multi-aligned’.

This discussion highlights the likely multitude of boundary objects mediating between local devices and infrastructures. An infrastructure is only an infrastructure when it seamlessly supports the use of more local tools: alignment is a requirement. But, given the physical and cognitive distance between actions in each setting, it is almost unavoidable that common objects and activities will be framed differently (e.g., as they are in investment banks and clearinghouses). In this case, the operation of market infrastructures would hinge on the mass mobilization of boundary objects. Identifying these, how they are used, the extent of their flexibility, and how they contribute to crises or breakdowns could be fruitful areas of future study. In fact, they are already the subject of some concern. Scholars warn that clearinghouses are increasingly becoming too tightly aligned with their clients, with key boundary objects losing some of their flexibility and thus increasing the potential for systemic crisis (Millo et al., Reference Millo, Muniesa, Panourgias and Scott2005; Genito, Reference Genito2019; Thiemann, Reference Thiemann, Braun and Koddenbrock2022).

6 Conclusion

Where does this leave us on the central questions of this chapter? It is clear that the notion of infrastructure is broadly compatible with the Callonian framework on market agencements. The concepts share several core principles. Additionally, infrastructure does not posit an empirical object that is outside of or in conflict with agencements, but rather posits a distinction and boundary in presence – between components that are physically and cognitively present to market actors and those that, while critical to action, are not – within it.

This boundary is useful for helping us to recognize and theorize dynamics that escape notice when our attention is on whole market agencements or even when we break them down according to the various framings they organize. First among these dynamics are the asymmetries attending alignment. Callon argues that the requirement to align framings within an agencement creates an environment of constant struggle as actors innovate and compete precisely by altering dominant framings. An infrastructural perspective does not dispute this point, but simply notes that this is not an even fight. Changes to the framings accomplished by infrastructures exert a far greater impact, causing ‘leveraged misalignment’ that disturbs the routines of myriad actors. The implications of this and the ‘infrastructural power’ it produces for how markets evolve, and their competitive and innovative dynamics, is a topic for further study. Secondly, Callon sees the multi-framed components of market agencements as a threat to the strategic goal of bilateral transaction; actors must constantly seek to keep these components aligned within a market framing in the face of unavoidable overflows. An infrastructural approach, drawing on the notion of ‘boundary objects’, offers a different view, one of flexibility rather than rigidity. Boundary objects, able to toggle between vaguely and precisely structured, accommodate these differently aligned components, permitting global coordination despite local differences. In fact, the notion of boundary objects suggests that Callon’s strict binary between alignment and misalignment may be too blunt and that, perhaps, alignment and misalignment co-exist in complex ways that require greater attention. In these ways, infrastructure as a concept and empirically identifiable object enriches Callon’s framework on market agencements and opens new areas for research.

1 Widening the Infrastructural Gaze (Yet Further)

As Westermeier, Campbell-Verduyn, and Brandl (Chapter 1) propose in the introduction to this volume, social scientific studies of financial infrastructure come in two varieties. The common form of ‘infrastructural gazing’ locates agency within socio-technical relations. Orientated towards the technical details of markets and their materiality, this line of thought has its provenance in the social studies of finance and science and technology studies (Preda, Reference Preda2001). Such infrastructural gazing keeps the big picture in sight when addressing power, authority, and legitimacy; but it does so by attending to the invisible background work performed by cables, market devices, and mathematical pricing models (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019).

The other form of infrastructural gazing Westermeier, Campbell-Verduyn, and Brandl identify, and which this chapter focuses on, begins from the macro-political context. Rather than tracing innovations bottom-up, studies adhering to this approach start with questions such as: How is state authority transmitted throughout society? What are the implications of the increasing centrality of financial markets in economic life? How do transformations in money and taxation challenge assumptions about the boundaries between public and private spheres? Standard fare for political economists and economic sociologists one might think. But it was not until historical sociologist Michael Mann’s (Reference Mann1984, Reference Mann1993) concept of infrastructural power was introduced to interdisciplinary finance studies that a conceptual tool was available to bring financial infrastructure into the field’s engagements with these questions. Mann’s concept is now regularly invoked by scholars seeking to marry their interest in the fine details of financial infrastructure with macro-political debates about financialization (Walter and Wansleben, Reference Walter and Wansleben2020; Wansleben, Reference Wansleben2023), monetary hybridity (Braun, Reference Braun2020), dollar hegemony (Schwartz, Reference Schwartz2019), and central bank power (Coombs, Reference Coombs2022; Coombs and Thiemann, Reference Coombs and Thiemann2022; Wansleben, Reference Wansleben2023).

This chapter contributes to the macro-political vein of scholarship on financial infrastructure by seeking to widen its gaze (yet further). Section 2 presents Mann’s argument that infrastructural power underpins the state’s capacity to penetrate civil society. Section 3 surveys applications of the infrastructural power concept within interdisciplinary finance studies. Section 4 seeks to increase the analytical precision of work on infrastructural power by developing ideal types of its instrumental-, communicative-, and network-forming varieties, illustrated with historical and contemporary examples. The conclusion indicates limitations of the concept for evaluating whether public or private actors hold greater power in financial governance.

2 The Meaning of Infrastructural Power

The idea of infrastructural power will be intuitive for scholars who place financial infrastructure at the centre of their analyses. Infrastructure is not agency-free background matter, but critical for how financial relations are constituted and reproduced. However, to understand what Mann means by infrastructural power requires attending to his analysis of how states exercise political power. This section begins by outlining Mann’s concept, before returning to the question of how Mann’s concept aligns with the science and technology studies-inspired view of financial infrastructure.

Mann first proposed his concept of infrastructural power in response to the ‘Marxified Weberianism’ of scholars such as Theda Skopcol, which views state organization as determined by class and international state relations (Mann, Reference Mann1984). Mann rejects this understanding as reductionist. Concerned with accounting for processes of change rather than developing a universal state theory, the question motivating Mann’s theorization of infrastructural power is: How did modern states come to exercise such extraordinary power over populations within their territories compared to the despotic power wielded by rulers in the Middle Ages?

Mann observes that absolutist sovereigns had almost unlimited executive authority. Despotic power does not require ‘routine negotiation with civil society groups’ (Mann, Reference Mann1993, p. 59). And yet, despotic power is limited in scope – ancient and medieval sovereigns could do little to influence their subjects’ day-to-day behaviour. Vice versa, while modern states have a much greater ‘capacity to actually penetrate civil society and to implement logistically political decisions’ (Mann, Reference Mann1986, p. 170), the autonomy of their executives is circumscribed. Liberal democratic states routinely intrude into the everyday lives of their citizens but are mostly impotent to change the rules of the game, relying on civil society to validate and implement their decisions. The state has always had some degree of infrastructural power, Mann argues, but it was decisively supplemented by the Industrial Revolution of the nineteenth century and the world wars of the early twentieth century (Mann, Reference Mann2008).

While Mann considers infrastructural power an exclusive modality of state political power, it is important to recognize that Mann’s categories are ideal types – analytical constructs meant to assist comparative work and the discernment of historical patterns, not to carve up the social world into metaphysical essences (Mann, Reference Mann1986, p. 4). As such, his distinction between despotic and infrastructural power is not in most historical situations a question of either/or. The two types of power co-exist in dialectical tension, and increasing infrastructural power ‘does not necessarily increase or reduce … despotic power’ (Mann, Reference Mann1993, p. 59).

Another implication of Mann’s Weberian methodology is that it requires situating the concept of infrastructural power within the ‘promiscuous’ architecture of power types developed in the Sources of Social Power quadrilogy (Mann, Reference Mann1986, Reference Mann1993), which intermingle, bisect, and fuse at historical junctures (Mann, Reference Mann1986, p. 17). Social power has, Mann argues, four main sources: Ideological, Economic, Military, and Political (the IEMP model):

• Ideological power. Ideological power is the control of ‘ultimate meanings, values, norms, aesthetics and rituals’ achieved by religious and secular ideologies (Mann, Reference Mann1993, p. 7). An example is the development of ‘infrastructures of discursive communication’ (Mann, Reference Mann1993, p. 105) which gave rise to class and nation in the eighteenth century, first under the influence of organized religion and then with the development of printing presses in commercial capitalism. A more contemporary example would be the emergence of the ‘neoliberal thought collective’ in the twentieth century, which utilized think tanks and transnational networks of economists to spread their ideas (Mirowski and Plehwe, Reference Mirowski and Plehwe2015).

• Economic power. Mann identifies economic power with an overall increase in ‘collective’ (positive-sum) capacities for organization as well as ‘distributive’ (zero-sum) power. While spreading in a diffuse fashion, economic power can augment the infrastructural power of states by increasing national production capacities and accentuating hegemonic structural advantages. Examples include when the British pound served as a global reserve currency under the nineteenth-century gold standard or when international currencies were pegged to the US dollar under the Breton Woods system in the twentieth century.

• Military power. Military power is ‘concentrated-coercive’ (Mann, Reference Mann1986, p. 26, original emphasis) power. It refers not only to the ability to fight and win wars against adversaries, but also to coerce labour for agriculture, mining, and the building of physical infrastructure and city fortifications. Given the challenges involved in projecting military force over long distances, military power is fundamentally logistical: it resides in the organization required to sustain armies relying on long supply chains.

• Political power. Political power is the control exerted by states spatially over national territory. Infrastructural power is a key resource for political power in the modern era. It derives from emergent developments in civil society which allow states to communicate their decisions and mobilize social and material resources to achieve their goals.

As should be clear, Mann’s notion of infrastructural power, though defined in contradistinction to despotic power and reserved for describing the logistical capacities of states to impose their political will (Mann, Reference Mann2008, p. 358), is imbricated with the wider array of power types proposed by his IEMP model.¹

Stepping back from Mann’s theorization of infrastructural power, a relevant question for placing Mann’s analysis in dialogue with work on financial infrastructure (particularly Westermeier, Campbell-Verduyn, and Brandl’s micro-oriented ‘infrastructural gaze’) is: What does Mann mean by ‘infrastructure’ and how does it align with the use of the term in science and technology studies? These questions are surprisingly difficult to answer. Mann uses the term ‘infrastructure’ loosely. It is not obvious if what Mann means by infrastructure differs substantially from his understanding of a power network. For example, when referring to the weak infrastructural power of ancient empires, Mann identifies their infrastructure with the aristocratic classes (Mann, Reference Mann1986, p. 170). Mann’s rare definitions of ‘infrastructure’, such as ‘routinised media through which information and commands are transmitted’ (Mann, Reference Mann2008, p. 358), are suggestive but rather unsatisfactory. A contemporary reader expecting the agency of organizations and networks to be clearly delineated from the invisible background work of infrastructure might feel they are conflated in Mann’s work. Certainly, Pinzur’s (Chapter 3, this volume) distinction between institutions and infrastructures would be frustrated if applied to Mann’s comparatively indiscriminate use of the term.

The unclear alignment between Mann’s understanding of infrastructure and science and technology studies-inspired approaches does not mean that Mann’s concept of infrastructural power cannot shed light on financial infrastructure.² Indeed, Mann’s identification of markets as an infrastructure which states take advantage of to increase their power has been productively put to work by scholars to grapple with state–market hybridity and financialization processes. It is to this literature we now turn.

3 The Applications of Infrastructural Power

Mann’s concept initially had little impact on the studies of financial markets which emerged with the new economic sociology and international political economy of the 1980s and 1990s; and it has only recently become a fixture of the conceptual landscape of the field of interdisciplinary finance studies (for an overview see Samman et al., Reference Samman, Boy, Coombs, Hager, Hayes, Rosamond, Wansleben and Westermeier2022). In this section, I trace the imprint left by Mann’s concept, noting how its reception within the field of interdisciplinary finance studies often treats infrastructural power as a synonym for financialized state action. This work is insightful but, if taken as definitional, risks excluding deeper historical dynamics and other modalities of infrastructural power in financial governance.

To this author’s knowledge, Bruce Carruthers’ City of Capital (1996) is the first example of Mann’s notion of infrastructural power being put to work in scholarship on financial markets. Carruthers cites Mann when seeking to explain how the weak early modern English state was transformed between 1672 and 1712 into a political and war-making powerhouse (Carruthers, Reference Carruthers1996, p. 37). The historical situation addressed by Carruthers tracks closely to Mann’s distinction between ‘despotic’ and ‘infrastructural’ power. Carruthers observes that England’s enemy at the time, absolutist France under Louis XIV, enjoyed almost four times the population and a strong centralized bureaucracy. England, on the other hand, remained a weak state throughout this period because the monarchy shared power with a fragmented set of institutions such as courts of law, Parliament, and local government (Carruthers, Reference Carruthers1996, p. 15).

In an ironic twist, it was the difficulties Charles II encountered funding the Nine Years’ War (1688–1697) against the French which encouraged innovations in public finances which increased the English state’s infrastructural power. A shift to direct tax collection and the development of capital markets for long-term public debt allowed England (and, after the political union with Scotland in 1707, Britain) to emerge as a formidable rival to France. The development of joint-stock companies, such as the Bank of England, East India Company, and the South Sea Company, all heavily invested in government debt, allowed the construction of a powerful ‘fiscal-military state’ (Carruthers, Reference Carruthers1996, p. 83) because these companies’ shares could be easily traded in liquid, public markets. As a result, the English-cum-British state was able to increase its spending from £1.6 million per annum in 1662 to £7.9 million in 1712, funded at dramatically lower interest rates (Carruthers, Reference Carruthers1996, p. 80). This is one reason why Adam Smith in The Wealth of Nations memorably described the Bank of England as a ‘great engine of state’ (Smith, Reference Smith1970 [1776], p. 419). The role of the Bank in early modern English state formation did not lie just with printing the symbol of Britannia on its banknotes (Helleiner, Reference Helleiner2003); financial markets and political power were intertwined in the development of new fiscal infrastructures which the English state successfully leveraged in its war efforts.

Moving forward a decade and a half, Martijn Konings’ (Reference Konings2010) reflections on the ‘pragmatic sources of modern power’ was the first text situated within the new interdisciplinary field of finance studies to draw on Mann’s concept of infrastructural power when addressing contemporary concerns. Konings asks why, despite repeated prophecies by political economists of the decline of US state power due to economic globalization, the power of the USA has proven so durable. He credits this to processes of institutionalization which unfold outside the boundaries of the formal state at the state–market nexus. Konings cautions that we should avoid a ‘residual economism’ (Konings, Reference Konings2010, p. 83) predicated on the belief that the forces unleashed by liberalized markets will eventually tame the exceptionalism of US state power. Konings notes that the financial crises of the neoliberal era have led to an unprecedented growth in the organizational reach of American regulatory agencies as they sought to manage the instabilities provoked by liberalized markets. In the process, the USA became regularly involved in the management of the financial system, from the bailouts of banks to the backstopping of stock markets to the emergence of the Fed as market maker of last resort during the 2008 crisis. The USA saw its infrastructural power blossom not wither in the face of market turmoil.

Konings’ article was an important trailblazer, but Benjamin Braun’s (Reference Braun2020) study of the European Central Bank’s (ECB’s) promotion of market-based banking in the aftermath of the 2008 crisis has done the most to popularize Mann’s notion of infrastructural power in interdisciplinary finance studies. Whereas Konings seeks to show how state power is bolstered by liberalized financial markets, Braun highlights an ambivalent dynamic where state power becomes dependent on financial infrastructures, impeding public interest reforms.

Braun finds support for this dynamic not in the idea of regulatory capture, financial sector lobbying, or in the structural power of finance, but in Mann’s depiction of the hybridity of state–society relations, where the extension of state power through private sector infrastructures is a ‘two-way street’ (Mann, Reference Mann1993, p. 59) which allows private sector interests to exert power over the state. Taking seriously the bilateral nature of infrastructural power helps Braun to explain the opposition of the ECB to the European Commission’s post-crisis financial reform projects, such as the ill-fated proposal for a financial transactions tax on run-prone repurchase agreement transactions (repos). Because monetary policy in the Eurozone relies upon shadow banking for its transmission, the ECB was defending its interests by opposing reforms which would impact the liquidity of repo markets. Braun and Gabor (Reference Braun, Gabor, 47van der Zwan, Mader and Mertens2020) extend the analysis transatlantically to the role played by the Federal Reserve in promoting shadow money in the late 1990s.

A final major study drawing on Mann’s concept of infrastructural power is by Walter and Wansleben (Reference Walter and Wansleben2020). These authors close the loop between Greta Krippner’s (Reference Krippner2011) work on the origins of financialization and Braun’s (Reference Braun2020) analysis of the entanglements between monetary policymaking and shadow banking. Walter and Wansleben credit Krippner as correctly pointing out that early 1980s monetarist experiments in targeting monetary aggregates led the Federal Reserve to realize that deregulated financial markets worked to their advantage. The Fed’s decisions regarding interest rates were transmitted more quickly and with less friction through liberalized markets. Where Walter and Wansleben part ways with Krippner is in finding this not simply a fortuitous discovery by the Fed when it was using monetarism as a rhetorical shield for pursuing unpopular interest rate hikes. Instead, Walter and Wansleben detail how changing practices ‘altered the very architecture of finance and redefined the sources of “infrastructural power”’ (Walter and Wansleben, Reference Walter and Wansleben2020, p. 627).

Walter and Wansleben identify central banks’ infrastructural power with the new operational alignments central banks forged with market structures in the 1980s. This repositioned central banks’ discount rate as an anchor for long-term refinancing costs, allowing central banks to target non-borrowed reserves in their open market operations. The change, however, came at the price of ceding control over credit growth in the economy. Citing Bourdieu’s turn of phrase, Walter and Wansleben thus describe the Federal Reserve’s and Bank of England’s growing infrastructural power as in ‘ontological complicity’ with financialized capitalism (Walter and Wansleben, Reference Walter and Wansleben2020, p. 629).

Other studies also draw on Mann’s concept (e.g., Schwartz, Reference Schwartz2019), but I focus on the Konings–Braun–Walter and Wansleben line of thought because it provides the common reference point for how infrastructural power is today understood within interdisciplinary finance studies. To summarize, ‘infrastructure’ for these authors is the complex of deregulated money markets central banks work through to transmit policy decisions. The ‘power’ being exercised is a two-way relation of influence between market actors and the state (with central banks understood as extensions of the state despite their ostensibly independent status). These studies explain why financialization should not be seen as a progressive erosion of state power by market forces but as increasing the state’s infrastructural power. These thinkers also effectively utilize the bidirectional dynamics highlighted by Mann’s concept of infrastructural power when accounting for governing authorities’ increasing dependency on financial markets, which constrains the potential for public interest reforms.

These are significant accomplishments. Nevertheless, I want to argue that an exclusive focus on post-1970s financialization processes risks transforming Mann’s concept into a mere synonym for financialized state power. I consider this problematic because, first, there is no reason why infrastructural power in financial governance should be uniquely associated with developments in recent history. As noted, Carruthers’ (Reference Carruthers1996) study demonstrates that infrastructural power dynamics stretch back at least as far as the late seventeenth century with the formation of the English state’s fiscal apparatus.³ A second reason why it is problematic to associate infrastructural power exclusively with financialized state action is that this significantly narrows the range of applications of Mann’s concept. As I shall show in Section 4, the idea of infrastructural power can be used to theorize diverse devices, governance techniques, and markets.

To better engage these diverse sources of infrastructural power in financial governance, in Section 4 I develop a typology inspired by Mann’s Weberian IEMP model. For scholars engaged with the intricacies of technical practices, the typology is intended to help link the ‘macro’ to the ‘micro’ without loss of resolution. My examples are admittedly quite state-centric, in that they concern the power of public authorities over financial markets. However, in the cases I examine, because they rely on public authorities enlisting private sector actors in governance processes, they also grant private sector actors power over these processes and limit the potential for reform.

4 The Varieties of Infrastructural Power

5 Conclusion

This chapter has taken a macro-political perspective on financial infrastructure, examining the meaning, applications, and varieties of Michael Mann’s concept of infrastructural power. Unlike the micro-oriented ‘infrastructural gaze’ inspired by science and technology studies, Mann’s notion of infrastructural power foregrounds state–society relations. In interdisciplinary finance studies, the concept has been productively applied to make sense of state–market hybridity, providing an alternative to zero-sum perspectives which see state power as diminished by the increasing centrality of financial markets in economy and society.

At the same time, I have argued that in this literature Mann’s concept is at risk of being treated as a synonym for financialized state action. This should be avoided as it unnecessarily narrows the concept’s potential scope. By instead situating the idea of infrastructural power within Mann’s broader body of work on the evolution of social power, I have made the case for the infrastructural power concept having deeper historical applicability (back to early modern state formation) and for its relevance for theorizing the implications of diverse financial governance instruments and techniques for state–society relations (from the development of capital markets to OMOs to stress testing of banking). The instrumental-, communicative-, and network-forming varieties of infrastructural power proposed by this chapter are intended to assist in categorizing and differentiating between the infrastructural media through which state power is exercised.

That said, despite this chapter advocating the analytical benefits of the infrastructural power concept, it is worth concluding by briefly acknowledging the concept’s analytical limitations. Precisely because the idea of infrastructural power breaks down the assumption of a zero-sum power balance between state and financial markets – instead emphasizing hybridity, interdependencies, and the state-governing capacities enabled by working through markets and private sector infrastructures – it has the potential to obfuscate hard questions concerning who has more power and agency. On the one hand, this could lead to an overemphasis on the power finance exerts over public authorities; on the other, it could lead to a view which overstates the power of states vis-à-vis the financial markets they work through (Coombs, Reference Coombs2024).

Another matter unresolved by this chapter concerns the relationship between Mann’s understanding of infrastructure and science and technology studies theorizations. To be sure, these two infrastructural gazes are not mutually exclusive. They address different ‘scales’ of reality and ask different questions but share a common interest in the pragmatic and logistical technologies of modern governance, whether exercised bureaucratically or through markets. Is a ‘unified theory’ necessary? Perhaps not. Mann’s Weberian methodology would treat these gazes not as falling on discrete aspects of reality but as alternative analytical constructs. A synoptical view may be unnecessary for making sense of a world where socio-technical constructions and state power are interwoven materially and organizationally but evolve somewhat autonomously. A stereoscopic view, which holds the ‘micro’ and the ‘macro’ in productive tension, might yield greater theoretical depth.

Financial platforms are generally depicted as the basic infrastructure of the “digital platform economy” (Kenney and Zysman, Reference Kenney and Zysman2016) or “platform capitalism” (Srnicek, Reference Srnicek2016; Langley and Leyshon, Reference Langley and Leyshon2017). However, as recent scholarship has shown, we gain conceptual rigor by specifying the distinction between digital platforms, on the one hand, and infrastructure, on the other (Plantin et al., Reference Plantin, Lagoze, Edwards and Sandvig2018; Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019; Plantin and Punathambekar, Reference Plantin and Punathambekar2019). A good example is the contrast between an app like Google Maps, which is a programmable platform, and the Google search engine, which is infrastructural (Plantin et al., Reference Plantin, Lagoze, Edwards and Sandvig2018, p. 294). As Bernards and Campbell-Verduyn (Reference Bernards and Campbell-Verduyn2019) maintain, infrastructures are defined by their centrality, durability, and ubiquity while platforms are relatively closed systems that rely on and contribute to digital infrastructures. It is therefore worth considering how financial platforms are distinct from and yet constitutive of infrastructures.¹ This chapter illustrates the ways that specific platforms generate the conditions for the institutionalization of financial infrastructures. This chapter also indicates that, with the “platformization of financial transactions” (Westermeier, Reference Westermeier2020), it is perhaps less important to focus on definitional distinctions (Is this a platform or an infrastructure?) than on the pragmatic practices that arise from the conjoined processes of computational power, data storage, data analytics, and application programming interfaces (APIs).

Why is this pragmatic focus important? Financial platforms are analyzed as instantiations of “infrastructural power” (Rethel, Reference Rethel2010; Hardie, Reference Hardie2012; Braun, Reference Braun2020; Braun and Gabor, Reference Braun, Gabor, Mader, Mertens and van der Zwan2020; Pinzur, Reference Pinzur2021; Coombs, this volume), which participate in processes of politico-economic subordination, or the creation and reproduction of structural inequalities. This research clearly demonstrates the propagation of hierarchies that constitute the “global political economy,” as reviewed later in this chapter. But assumptions that subtend this approach to financial infrastructures likewise reduce some practices to residual categories in that global hierarchy. For instance, financial platforms are taken to be vectors of financial subordination because processes of financialization are depicted in terms of a prevailing global logic and directionality: from the Global North to Global South. Thus, while financial platforms are apprehended as vectors of financialization globally, they are reduced to processes of financial inclusion when referencing the so-called Global South. What we miss are the pragmatic practices of financial platforms, or how they function as sites of value production and conversion, and what is at stake for diverse actors. By focusing on the latter, we can better appreciate processes of both value subjugation and autonomization, evidence that the fault lines of value production generated by financial platforms are obscured by the Global North versus Global South frame.

This chapter reviews the pitfalls of this approach to financialization and illustrates an alternative view. It does so through a presentation of mobile money platforms, which are central to the elaboration of a specific financial infrastructure in sub-Saharan Africa. These financial infrastructures are constituted by a nexus of mobile telecommunications operators, mobile money issuers, remittance and payment services providers, and commercial banks. To date, mobile money platforms have been either celebrated as a means of financial inclusion or denounced as a cause of financialization. This chapter presents those two views and joins analyses that consider the variability, the limits, and responses to financialization (Christophers, Reference Christophers2015; Davis and Walsh, Reference Davis and Walsh2017; Bernards, Reference Bernards2022).

What follows is an illustration of how financial value is generated by the consolidation of a new financial infrastructure based on digital platforms in sub-Saharan Africa. With an eye to value creation, as opposed to another demonstration of subordination, I focus on a primary value form generated by the nexus of mobile money, remittance, and payment service provider platforms: the float. The float is the e-money/fiat money interface and a liquidity pool generated by these platforms: It contributes to the consolidation of existing financial relations and institutions, and yet it is the basis for new, contending financial relations and institutions.

The focus on value creation is important analytically: It makes visible the effective consequences of these financial platforms, or the ways that they generate both financial subordination and autonomization. This work thus documents emerging financial infrastructure, but it also underscores the need to problematize the notion of infrastructure. As Langenohl argues (this volume), a focus on “infrastructural reason” generates functionalist analyses that tend to reproduce a hegemonic “globalist view” of political economy. That view obscures, for instance, the financial platforms and associated infrastructures that are a distinct source of value production which did not originate in the halls of Euro-American finance.² Indeed, in depicting the Global North as the primary realm of high finance, which is disseminated to the Global South, the realm of “fringe finance,” we neglect the infrastructures of finance that are devised and developed in places outside of Euro-America.

1 Financial Platforms and the Failures of Financialization

Financial platforms pose a challenge to researchers because they are constituted by disparate digital and nondigital elements: data sets, algorithms, APIs, programming languages, networked computational systems, business models, and distributed storage facilities, as well as diverse stakeholders and participants. These digital arrangements include various computational forms (algorithms, APIs, data sets) and modalities for the production of value (multisided markets, monetary and nonmonetary units of value, governance rules). Financial platforms have been described as “market infrastructures” (Omarova, Reference Omarova2019; Beauvisage and Mellet, Reference Beauvisage and Mellet2020) or “calculative infrastructures” (Aitken, Reference Aitken2017), which provide helpful correctives to the use of metaphors (“the cloud” or “algorithmic logic”) that obscure the materialization of operations and practices.³ This work also contributes to our understanding of the consequences of technological applications in global finance (Bernards and Campbell-Verduyn, 2019; MacKenzie, Reference MacKenzie2017; Clarke, Reference Clarke2019; Haberly et al., Reference Haberly, MacDonald-Korth, Urban and Wójcik2019; Langevin, Reference Langevin2019; Pardo-Guerra, Reference Pardo-Guerra2019; Petry, Reference Petry2020) and purports to make visible the power relations that inhere in seemingly technical operations.

Financial platforms are said to instantiate and enact “infrastructural power,”⁴ which accounts for the rise of state agents’ increasing dependence on financial markets (Braun, Reference Braun2020; Braun and Gabor, Reference Braun, Gabor, Mader, Mertens and van der Zwan2020), isomorphism toward Anglo-American finance capitalism (Rethel, Reference Rethel2010; Hardie, Reference Hardie2012), and the subordination of some national economies to others due to the structure of global monetary regimes (Bonizzi, Kaltenbrunner, and Powell, Reference Bonizzi, Kaltenbrunner, Powell, Mader, Mertens and van der Zwan2020). A general conclusion is that, through these forms of power, platforms are the basis for a new phase of capitalism (“platform capitalism”) that entails the financialization of both state agencies and citizens across the globe. But others have shown how this globalist view, which partakes in a teleological interpretation of financial capitalism, dissipates into a spectrum of myriad trajectories (Engelen, Konings, and Fernandez, Reference Engelen, Konings and Fernandez2010; Pitluck, Mattioli, and Souleles, Reference Pitluck, Mattioli and Souleles2018; Karwowski, Shabani, and Stockhammer, Reference Karwowski, Shabani and Stockhammer2019; Petry, Koddenbrock, and Nölke, Reference Petry, Koddenbrock and Nölke2023). Indeed, it’s worth noting that different assumptions are made about the workings and effects of financial platforms depending on where you sit, geographically speaking. From the globalist, functionalist view, those residing on the African continent are deemed the endpoints of a teleology – the passive recipients of the technological innovations and infrastructural forces of financial platforms. Thus, for example, even though digital mobile money was developed in East Africa, the African continent is depicted as the endpoint of platform economization most often understood in terms of financialization. In sum, digital platforms are approached as inherent to processes of financialization in what is shorthanded as “the Global South,” where financialization is invariably referred to as financial inclusion.

Generalizing, we can say that there are three ways of approaching – or explaining – financial inclusion, all of which are examples of financialization.⁵

1. 1. Financial inclusion involves the more widespread use of formal financial services by local people. This is referred to as “banking the unbanked.” It entails the uptake of deposit accounts, savings accounts, and the extension of consumer credit (Rahman, Reference Rahman1999; Moodie, Reference Moodie2008; Roy, Reference Roy2010; Karim, Reference Karim2011; Guérin, Morvant-Roux and Villarreal, 2013; Schuster, Reference Schuster2014; James, Reference James2015; Mader, Reference Mader2015; Hayes, Reference Hayes2017).

2. 2. Financial inclusion involves the “financialization of everyday life.” This also entails “banking the unbanked”; but even where people do not open commercial bank accounts, the claim is that they are subject to processes like credit scoring, which renders their unbanked lives legible to financial markets. In other words, their daily practices are structured by the entailments of financial logics (Aitken, Reference Aitken2013; Guérin, Reference Guérin2014; Kusimba, Yang, and Chawla, Reference Kusimba, Yang and Chawla2015; Wilkis, Reference Wilkis2015; Pitluck, Mattioli, and Souleles, Reference Pitluck, Mattioli and Souleles2018; Radhakrishnan, Reference Radhakrishnan2018; Guermond, Reference Guermond2020a; Donovan and Park, Reference Donovan and Park2022).

3. 3. Financial inclusion involves incorporation into global capital markets. This approach focuses on the commercial banking sector, development banks, global development agencies, and private capital (institutional investors, private equity, venture capital). It illustrates the expansion of certain financial markets and practices into the national realm – typically from institutions of the “Global North” into those of the “Global South” (Rethel, Reference Rethel2010; Gabor, Reference Gabor2011; Powell, Reference Powell2013; Bonizzi, Laskaridis, and Toporowski, Reference Bonizzi, Laskaridis and Toporowski2019; and see Bonizzi, Reference Bonizzi2013).

These respective approaches obviously map onto one another (see Langley and Leyshon, Reference Langley and Leyshon2022). They also all posit implicit vectors – from the West to the East and from the North to the South – and the efficacy of those vectors.

On a global scale, financialization is indexed as a process of financial inclusion, as documented by the World Bank Global Findex Database Report, which represents financial inclusion in terms of bank account ownership at regulated institutions (e.g., commercial banks, microfinance institutions). By this accounting, somewhat surprisingly, Kenya figures higher on the scale than Turkey, Colombia, Argentina, and Saudi Arabia and is almost equivalent to India. Here, financial inclusion is attributed to the expansion of the microfinance sector. While there are many vectors for the extension of financial inclusion globally, including microfinance institutions (Elyachar, Reference Elyachar2005), the extension of digital platforms as a feature of financial practice has led to what Daniela Gabor and Sally Brooks (Reference Gabor and Brooks2017) call the “fintech-philanthro-development” nexus, which has determinate effects:

• The extraction of rents from low-income populations in the Global South.

• Increasingly indebted populations in the Global South.

• The enforced subordination of financial institutions and national economies in the Global South to financial institutions located elsewhere.

• The extension of colonial relations; or, more aptly, neocolonial relations.

These effects are extremely well documented and substantiated.

However, financial inclusion has not been as effective as is claimed. There are limits to financialization (Engelen, Reference Engelen2008; Christophers, Reference Christophers2015; Davis and Walsh, Reference Davis and Walsh2017; Mader, Reference Mader2018, Bernards, Reference Bernards2019a, Reference Bernards2019b, Reference Bernards2022; Aalbers, Reference Aalbers2020). In most sub-Saharan countries, this is the case for the goal to “bank the unbanked.” Despite the focus on Kenya, most countries fall in the middle to low range on the World Bank Findex graph. This reflects their use of mobile money digital wallets, which don’t require bank accounts, as well as the fact that mass adoption varies across the continent – being quite limited in Nigeria, for example (Lepoutre and Oguntoye, Reference Lepoutre and Oguntoye2018). At base, these are predominantly cash economies (Frost, Reference Frost2020). Moreover, despite claims that the increasing use of mobile wallets are bringing people into the fold of finance, those working in digital payment industries in Africa see this as an immense challenge, mostly due to nonstandardized data and consequent problems sharing data across institutions (banks, credit bureaus, money transfer operators). Likewise, there are extremely variable reporting practices and requirements, not to mention problems with enforcing those reporting requirements.⁶ Therefore, on the one hand, we see the extension of consumer credit, or unsecured short-term credit, that has led to cycles of indebtedness, as Donovan and Park (Reference Donovan and Park2022) have shown with reference to M-Shwari, a digital wallet microcredit service in Kenya. And, on the other hand, in these same contexts of mostly unbanked low-income communities we don’t see instances of financialization that take the form of accumulation of assets and potential associated revenue streams – for example, in the form of property, like housing, as noted by certain African scholars (Boamah, Reference Boamah2009, Reference Boamah2010; Teye, Teye, and Asiedu, Reference Teye, Teye and Asiedu2015).

Most commentary on the financialization of the Global South concludes that formal credit products are now part of people’s everyday lives. However, as noted, fintech platforms have not resolved very significant problems of data standardization and interoperability, an issue that is compounded by limited data collection and the nature of the data collected. Industry people in West Africa complain that, to quote, “The banks only register defaults, not overall payment history.”⁷ In this context, banks are only required to report negative information, which means that the credit bureaus have databases of defaulters. To complicate things, while microcredit institutions are required to issue reports to the credit bureaus, mobile money and money transfer operators don’t necessarily issue those reports. Furthermore, the high levels of debt incurred by local populations have led to blacklisting. This is absolutely not a good thing: debt, blacklisting. But it’s also not a demonstration of the seamless integration of people into the commercial banking system since these people are excluded (hopefully, their debts are written off).

This point is underscored when we examine contestation amongst and between private and public institutions, which leads to effective financialization (Jain and Gabor, Reference Jain and Gabor2020) as well as its failure (Breckenridge, Reference Breckenridge2019). As Breckenridge shows, the Kenyan National Digital Registry System, announced in 2014, was never enacted due to conflict between two corporate entities: the Kenyan commercial banks, on the one hand, and, on the other, Safaricom, the telecommunications monopoly that created M-Pesa, a digital mobile money service. These two institutions clearly welcome and work toward financial inclusion and financialization. But conflict arose from their commitments to two different types of credit market. The banks aimed to develop credit scoring and a new kind of asset register (nonfixed asset classes, such as livestock or vehicles) to generate new forms of collateral. The telecom aimed to deliver unsecured high-interest microloans with no collateral registers. Safaricom prevailed, with government backing; hence the telecom infrastructure and modes of monetization became the prevailing gateway to financialization for local populations. On the other hand, financialization via the commercial banking sector failed, as did the establishment of an integrated digital identity system, which the national government was banking on as a means to generate tax revenue.⁸ Breckenridge’s point is that there is “no single source of truth”: no one model for the extension of credit, no predetermined pathway.

Depictions of financialization mostly assume a prevailing logic and a one-way vector: Global North to Global South. To continue with the example of compulsory biometric identity schemes, these registers are an effective means of incorporating populations into financial systems, such as commercial banks, microfinance institutions, and tax registers. They have been utilized for that purpose in India and Ghana, with great success in the former and checkered results in the latter. And while these schemes are in place in those two countries, they don’t exist in Canada or Italy; the vector of origination and adoption is not North to South. Moreover, in depicting financialization as a great big wave washing over the Global South, we drown the heterogeneity of local institutions, the indeterminacy borne of contention, and instances of failure. We assume that particular categories of people or institutions have predefined sets of interests, which they pursue to great effect. Worse, we posit denizens of the Global South as passive receptacles, devoid of agency.⁹

2 Value Creation

Concentrating on that great wave of financialization distracts us from the operational aspects of financial infrastructures, which illustrate how value creation is achieved and how it fails. Most studies of financial platforms focus on rents and value extraction. But an important question is value creation, or the materialization of diverse forms of value. Often assumptions about the value of data – that data is intrinsically valuable – are not necessarily demonstrated. This leads to facile claims, such as the assertion that value is extracted from data sets and the products of machine learning. If the anthropological insight that no object or relationship has intrinsic value holds, then there is no a priori value to extract: Data must be made into a value form. This is important because financial platforms don’t hold physical assets (Constantinides, Henfridsson, and Parker, Reference Constantinides, Henfridsson and Parker2018, p. 381), nor do they necessarily generate value through commodity production. Thus, although we frequently hear that “data is capital,” this an erroneous statement that neglects the specific operations of what Birch and Muniesa (Reference Birch and Muniesa2020) call assetization, or the ways that asset classes are generated and how they figure in balance sheet accounting (Birch, Cochrane, and Ward, Reference Birch, Cochrane and Ward2021). The data-is-capital claim leaps over these operations, or how data becomes “capital” and how data figures in processes of capitalization, as distinct from monetization.

What follows is an illustration of how data is turned into capital for mobile telecommunications operators (telecoms) and money service providers (mobile money) through what is known as the float. The float is a site of value production, translation, and conversion; and it is a site where there is something at stake for multiple actors (Callon, Millo, and Muniesa, Reference Muniesa, Millo and Callon2007).¹⁰ Studying financial platforms in terms of the “how” of value production – or how the float is generated and figures as a form of value – is important not only because it documents a process, but also because it elucidates the effective consequences and political stakes of financial platforms. In other words, a singular focus on the float might be seen as a reductionist view of finance that abstracts from politics. But, to the contrary, far from being an apolitical approach, the analytics of the production of value forms through digital platforms accounts for distributed agency, coordinated forms of agency, asymmetries, and the dynamics of domination and exclusion – all of which can be shorthanded as the contingencies and fault lines of power (Callon, Reference Callon1984, Reference Callon2005; Latour, Reference Latour1984). Those fault lines run through financial platforms, resulting in effective financialization and failures in financialization. The float is a lens into those processes. In this instance, it is produced as a fundamental element of financial platforms through both remittance transfers and mobile money, as is explained in Section 3, and is a constituent element of financial infrastructure that emerged with digital financial technologies.

3 Remittances, Mobile Money, and the Float

A constituent factor of the float are remittances, which are a significant financial transfer to sub-Saharan Africa, the international hub of mobile money. Remittances to sub-Saharan Africa have increased over the past decade and, when accounted as part of foreign inflows, they are as significant as overseas development aid and more significant than foreign direct investment. Remittances are a source of external financing and foreign exchange reserve accounting – everywhere. If one excludes China, remittance flows have been the largest source of external finance for low- and middle-income countries since 2015. According to 2022 World Bank reporting, the African continent received $49 billion in 2021. But most significant are remittances as a percentage of gross domestic product (GDP). For South Sudan, these represent 35% of GDP; for Senegal, a vibrant West African economy, they represent 11%, and for Liberia, 10%. Remittances are now the second-largest source of foreign inflows on the continent. And in Nigeria, remittances are second only to oil exports as a source of foreign exchange.

We should note that, when they transmit through legacy systems like Western Union, remittances to Africa are the most expensive in world (for $200, 7.8%). Therefore, many transfers avoid those channels. The World Bank figures thus underestimate total amounts received for all sub-Saharan countries, since they are based on official data. And, importantly, these figures don’t account for intra-African remittances, which are transfers between different states and are thus international operations involving international currency exchanges. Intra-African transfers are very substantial and mostly transpire via mobile money and fintech platforms.

International remittances have come into focus as an aspect of financial inclusion, as noted by the extensive literature on the remittance–development nexus, which maintains that remittances fuel domestic consumption, incite investment, and hence contribute to economic development. This is the guiding theme of World Bank KNOMAD (Knowledge Partnership on Migration and Development) Project, aptly dubbed the “remittance–financial inclusion nexus” by Vincent Guermond (Reference Guermond2020b, Reference Guermond2022). Beyond the trope of inclusion, inward remittance transfers are also conceptualized as a financial revenue stream, or a future-flow receivable that is potentially significant for financial securitization (Ketkar and Ratha, Reference Ketkar and Ratha2009; Mohapatra and Ratha, Reference Mohapatra and Ratha2011; and see Bakker, Reference Bakker2015; Roitman, Reference Roitman, Hurl and Vogelpohl2021). But there is another angle on remittances. This relates to international transfers, intra-African transfers, digital wallets, and especially the float.

To view things from that other angle, we should consider the specificity of the African context, or the central role of telecoms (not banks, not big tech) in the realm of digital finance. Mobile network operators (telecoms) create subsidiaries that provide money transfer services, like mobile money and digital wallets. Mobile money is a financial service provided by the mobile network operators/mobile money issuers. It’s important to note that mobile money is not fiat e-money. It’s not a digital form of a national currency; it’s not issued by the central bank. Mobile money is a money transfer tool. E-money is best thought of as a payment instrument, or specifically: “a payment instrument whereby monetary value is electronically stored on a physical device or remotely at a server which represents a claim on the issuer” (Shirono et al., Reference Shirono, Chhabra, Das, Fan and Carcel Villanova2021, p. 400).¹¹ Examples include prepaid cards, mobile wallets, web-based e-money, and mobile money. Because telecoms don’t have banking licenses, they create subsidiaries, which are licensed nonbank entities. For instance, the telecom MTN Nigeria has a subsidiary called MoMo Payment Service (MoMo signifies mobile money). Through these nonbank subsidiaries, the telecoms establish a “float” with the bank that corresponds to its customer-base digital wallets.

In order to answer the question posed earlier – How is value created by the nexus of telecoms, nonbank subsidiaries, and digital payment services? – we can examine the revenue streams within the value chain. We can start with a (grossly simplified) glimpse into a generic model presented in a handbook, Mobile Service Innovation and Business Models (Bouwman, de Vos, and Haaker, 2008):

1. 1. The remittance center – where incoming funds are received – earns a percentage of the transfer or a fee.

2. 2. The mobile operator (telecom) benefits from increased SMS traffic, a reduced churn rate due to the link between customer cell numbers and e-money numbers, and charges per transaction. Telecoms also offer adjacent financial products.

3. 3. The bank theoretically generates revenues by banking the unbanked, as consumers are brought into the sector via financial products offered to telecom customers, such as small consumer loans. But to quote, “If enough money is captured from remittances, the float and interest provide an additional benefit to the financial institutions” (Bouwman and Sandy, Reference Bouwman, Sandy, Bouwman, de Vos and Haaker2008, p. 239, emphasis added).

This is not necessarily “banking the unbanked” or financial inclusion – it’s about generating the float. Mobile wallet transactions, which include both international and intra-African remittances, create a significant cash float for the associated bank.

One thing to consider is the custodianship of the digital wallet. This is complicated because the digital wallet is a product of the mobile network operator and its nonbank subsidiary. Electronic value equivalents of digital wallets are kept in a custodian account, which sits with the partner bank. But mobile money customer funds are pooled into a single account; there is no individual corresponding deposit account per digital wallet. And the telecom is the depositor. Because value held in digital wallets doesn’t involve bank deposits in the strict sense, they are not necessarily protected by deposit insurance systems. In most cases, the custodian account is subject to deposit protection, but the e-money account holder (individual digital wallet) is not. However, this varies by jurisdiction due to the emergent nature of value creation and regulation of these platforms.

Those working in the mobile money and fintech industry say that banks “love the float.” Technically speaking, the float represents money in the banking system that is briefly counted twice due to processing time for deposits and withdrawals. Commercial banks utilize the float as overnight investable funds to manage aggregate reserves. While digitization and instant settlement would seem to eliminate the float, float management is in fact central to fintech business models, in Africa and elsewhere. Essentially, “float control” entails regulatory arbitrage, or the arbitrage of interest rate differentials. This practice is ubiquitous and involves: “taking control of as much customer money up front as possible, and managing it in the style of a bank, albeit without the regulatory oversight” (Kaminska, Reference Kaminska2019).¹² Fintech and big tech firms throughout the world have been paying customers zero interest and yet collecting interest on the float held by banks (cf. Carstens, Reference Carstens2019). But in sub-Saharan Africa there have been an array of responses to increasing float values, which, in April 2023, totaled over $1 billion in Ghana alone. These include provisions by mobile network operators for “profit sharing” through interest payments to e-wallet holders (Tanzania), the funding of “corporate social responsibility” projects (hospitals, schools) using interest earned on custodian accounts (Kenya), and guidelines for e-money issuers mandating pass-through of interest earned to e-wallet holders (Ghana). In the latter case, there has been ongoing strife between the telecoms and the banks over float-generated interest. Telecoms and their subsidiaries (e-money issuers) do not hold banking licenses. Hence the e-wallet cannot act as an interest-earning savings account. Likewise, regulations stipulate that floats be held as liquid assets, or in accounts that are classified as current accounts, typically earning 0% interest. Contending parties challenge practices of lending float funds to third parties, dispute the rightful beneficiaries of interest earned, and debate legitimate percentage payouts. The status of custodial float accounts is also at issue.

This is an emerging realm of digital finance and regulation. The management of e-money and its associated revenue streams varies and is evolving. Moreover, as noted earlier in this chapter, these practices don’t neatly confirm obvious vectors of financial inclusion and financialization. Ultimately, we have two scenarios. On one hand, telecom digital wallets and fintech platforms enroll low-income residents into microcredit products, which furthers financialization. This is predatory because they aim to bring the unbanked into the consumer loan market. On the other hand, telecom digital wallets and fintech platforms generate the float, which is an ambiguous financial object. We can think of the float as the mobile money/fiat money interface that generates a liquidity pool: It is the means to go from one type of asset to another. It’s important to remember that liquidity doesn’t refer to cash per se; it refers to the ability to convert between two different asset classes – for example, to convert an asset or a security to cash, or to convert from e-money to Nigerian naira. In order to appreciate the scale of this potential liquidity pool, we need to appreciate the scale of mobile money in Africa.

In 2021, sub-Saharan Africa had by far the largest number of active mobile money accounts, the largest volume of transactions, and the largest transaction value – a whopping $490 billion of the global $767 billion. On the continent, this involves $84 billion in peer-to-peer remittances, but it also includes significant intra-African trade (business-to-business). The main problem for transactors is the cost of settlement and foreign exchange loss. Intra-African remittances and payments are international currency operations; settlement between African currencies involves buying and selling dollars because they are nonconvertible currencies (or “soft currencies”). An African currency must first be exchanged for dollars, pounds, or euros, and then swapped a second time for a different African currency, which adds an estimated $5 billion a year to the cost of intra-African currency transactions (Wellisz, Reference Wellisz2022). As of 2017, only about 12% of intra-African payments were cleared within the continent. The rest were routed through overseas banks in Europe and North America.

4 Emergent Financial Infrastructure: Real-Time Pan-African Settlement

However, increasingly, money transfer operators can access money markets through digital finance platforms or digital payments gateways. For example, MFS Africa is a pan-African real-time payments network operating in more than 30 African markets and connecting over 320 million mobile wallets. MFS Africa claims to “render borders insignificant,” which should be read as a strong political claim.

ABC Finance is another payments gateway and currency exchange platform.¹³ Their services include international payments and settlements, forex, and treasury management. ABC Finance ensures connectivity between commercial banks and mobile payment channels through APIs and, increasingly, blockchain ledgers. They claim to be the first digital exchange to do digital currency/African currency conversions and digital currency/mobile money conversions. The ABC pitch is that they bring traditional finance to counterparties. But note that they are not bringing traditional finance to consumers or to the unbanked; they are bringing traditional finance to the counterparties, which are remittance operators and money transfer operators.

At an industry conference, the CEO of ABC Finance underscored a central problem: No one will hold African currency in Africa’s various national banking systems. Because the vast majority of government and corporate bonds are denominated in dollars, African central banks are mandated to support the value of their respective currencies, which means rationing dollars and other hard currencies, leading to difficulties in balancing flows of African currencies. ABC’s response is to become the largest nonbank foreign exchange broker in Africa. It buys and sells currencies using its own balance sheet. In other words, it sells balance sheet liquidity and offers wholesale foreign exchange, sometimes using cryptocurrency stablecoins. Hence the CEO’s presentation of the ABC financial platform as a means to “deconnect Africa from the US dollar.”¹⁴ She elaborated on this somewhat wild aspiration by noting that President’s Day in the United States is a “dollar holiday” – and added, “What if it’s not a holiday for the rest of the world? Why shouldn’t they be able to transact and settle?” In response, her platform has developed a means of wholesale settlement, which aims to solve the conversion and liquidity constraints faced by people wishing to merely exchange and transact on the African continent.

This is not just one CEO’s concern; others working in the digital payments, fintech, and financial sectors in Africa share her view.¹⁵ They generally see the float, which is here produced through the nonbank/bank interface, as a primary site of value production and potentially a device for market-making. Additionally, as many people working in Africa note, and as ABC Finance believes, it also provides a means to circumvent the very conservative national banking system, which generally serves the commodities sector and top-tier corporates. In the past, the national commercial banks served traditional colonial-era sectors – summed up by a local expression, “cement, beer, and banks” (which, today, would be rendered “cement, ports, mining, oil”). Ultimately, the digital finance platforms are in the business of intermediation that potentially circumvents the commercial bank/commodities sector alliance.

Alongside these private platforms, formal public initiatives are being forged, such as the Pan-African Payment and Settlement System (PAPSS). Launched in 2021, PAPSS is a cross-border, financial market infrastructure that enables payment transactions between various African states and currencies. It provides real-time gross settlement through participating central banks, which provide prefunding for African currencies. The aim is to decrease the time and cost of settlement, and to reduce the need for banks to source hard currencies to support transactions between two African parties. Most importantly, this is a response to soft-currency subjugation. PAPSS aims to eliminate overseas (non-African) intermediaries, such as the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system. And it is devised to generate the conditions for local currency lending instead of dollar financing, which entails the extension of local currency bond markets.

We can critique all of this. We can critique MFS Africa, ABC Finance, and PAPSS as instances of marketization, or the extension of private, market-based solutions to political-economy problems. That is true. But for many African communities, this represents relief from the costs of hard-currency subjugation. Of course, we can’t draw big conclusions about the future of dollar hegemony from these developments. Dollar hegemony endures on a global scale – for all of us (Mehrling, Reference Mehrling2022; and see Bonizzi, Kaltenbrunner, and Powell, Reference Bonizzi, Kaltenbrunner, Powell, Mader, Mertens and van der Zwan2020; Gabor, Reference Gabor2021). The point is that, before jumping to conclusions about financialization, it seems important to consider local actors’ concerns about the undoing of imperial institutions – banking and monetary institutions being a bastion of neocolonial relations – no matter how belated and no matter how effective (for an example that relates specifically to financial technologies, see Pollio and Cirolia, Reference Pollio and Cirolia2022).¹⁶

Ultimately, as everywhere, we find competing interests and controversy, debt and wealth, realization and failure. This complex yet mundane landscape is made visible by those in Africa who articulate the ways they both resist and co-opt the constraints and affordances of financial platforms and competing regimes of value – the ways that financial platforms are apprehended as problems of both subjugation and autonomization.

5 Beyond the Global North versus the Global South

How does all this relate to the Global North versus the Global South divide? Today, we hear strong calls to decolonize knowledge. In reference to Africa, that’s said to be a matter of “recentering the margins” (Breckenridge and James, Reference Breckenridge and James2021; and cf. Langley and Rodima-Taylor, Reference Langley and Rodima-Taylor2022; Zeleza, 2007). This is an important commitment. And that commitment is compromised when decentering amounts to the displacement of one Euro-American theoretical debate with another Euro-American theoretical debate – both are anchored in Euro-American debates. Efforts to displace the center so as to reposition the margins as foundational, and not residual, must first consider the terms themselves: center/margin, core/periphery, Global North/Global South.

We should remember that the Global North/Global South distinction comes from the Brandt Line of 1980. The rich North, the poor South. In the early 1990s, postcolonial studies scholars and activists revised that distinction, noting that the “Global South” is a metaphor, not a geographical location: We can put New York, Johannesburg, Mumbai, Lagos, London, Sao Paulo, Istanbul, Jakarta, Cairo, Dubai, Athens, Sydney, and Shanghai on the same plane – they all include global norths and global souths. But we ignore that important point when we refer to emerging markets, the frontiers of financialization, and developing countries in our references to the Global South – and thereby participate in a developmentalist paradigm.

When we refer to the Global North/Global South distinction, we start with a power differential and then show how that differential is performed. And that’s a problem. In doing so, we constantly reinstantiate and reconfirm “marginal” spaces and residual categories as just that – marginal and residual. We continually remap developmentalist (modernization) theory and perpetuate the reinscription of “people of the South” into the logics of capitalist dependency, where they figure as endpoints. The Global South, as a signifier and as a concept, partakes in a hierarchy of difference (cf. Sabzalieva, Martinez, and Sá, Reference Sabzalieva, Martinez and Sá2020; Sud and Sánchez-Ancochea, Reference Sud and Sánchez-Ancochea2022).

In response – and as a thought experiment – we could make a list. We could put three things on that list: (1) microfinance loans (e.g., MShwari, Kenya); (2) buy-now-pay later services (e.g., Afterpay, Australia); and (3) payday loans (e.g., Advance America, USA). All of these involve unsecured short-term credit. They all reflect the fact that banking is expensive for low-income populations everywhere – in Africa and in the United States of America. Instead of starting with a power differential between the Global North and the Global South, it would be constructive to study these credit markets in one frame – for instance, through the productive artifacts of digital platforms and financial infrastructures, like the float. The point in doing this is to account for power differentials – or the fault lines of value production.

Acknowledgments

Thanks to the Platform Economies Research Network, Amin Samman, Anush Kapadia, and Adam Sargent for feedback on this research, which is supported by a US National Science Foundation Grant.

1 Introduction: Why Do We Talk about Financial Infrastructures?

This chapter turns a critical eye on the recent and current tendency to frame finance in terms of infrastructures. This tendency can be depicted across the transdisciplinary fields of international political economy (IPE), international relations (IR), and the social studies of finance. At the intersection of IPE and IR, the role of financial infrastructures in geopolitical reconfigurations – often referred to as “geoeconomics” (Sparke, Reference Sparke2007; Cowen and Smith, Reference Cowen and Smith2009; Scholvin and Wigell, Reference Scholvin and Wigell2018) – has supplanted earlier, political-economic takes on international hegemonies, for instance, the dollar hegemony, unequal terms of trade, austerity programs, or governing through debt (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019). Nowadays, scholars rather tend to address the significance for changes in international hegemonies of information, payment, and trading infrastructures (Krarup, Reference Krarup2019; de Goede and Westermeier, Reference de Goede and Westermeier2022; Brandl and Dieterich, Reference Brandl and Dieterich2023), including the recent interest in blockchain technologies in general and cryptocurrencies in particular (DuPont and Maurer, Reference DuPont and Maurer2015; Campbell-Verduyn, Reference Campbell-Verduyn and Campbell-Verduyn2018; Caliskan, Reference Caliskan2020). Undoubtedly, this trend, as it takes up “new materialist” perspectives on the IPE and the role of finance in it, addresses an important research lacuna, as the technological, cognitive, or other basic structures, processes, and facilities that enable the circulation (and the storing) of financial value are not politically neutral (de Goede, Reference de Goede2021). Yet at the same time, the notion of infrastructure conveys some assumptions and connotations that might turn out to be problematic for a critical assessment of the current role of finance in worldwide, yet differentiated, developments in which global inequalities become locally entangled (see the contributions in Gutiérrez Rodríguez and Reddock, 2021).

This chapter aims at raising a sense of reflectiveness regarding the use of infrastructural reason in the analysis of finance – a point that is increasingly gaining the attention of research into infrastructures more broadly, and also, in some instances, with a view to finance. It encompasses four sections and a conclusion that each address different, if interconnected, problematizations of financial infrastructural reason. First, infrastructures will be problematized as a modernist social imaginary that reproduces functionalist reasoning about society, thereby systematically effacing asymmetries and exclusions enabled by infrastructures. Second, infrastructural thinking is tightly coupled to conceptions of sovereignty and governability of populations, territories, and resources, thus inviting security thinking. Third and related, infrastructural reason in finance reproduces a globalist view on the IPE together with a realist imaginary of IR, modeled after a zero-sum game. Fourth, infrastructural reason in finance sidelines important political-economic critiques of the global financial economy, effectively putting the imagery of the relationship between production base and financial economy from its feet to its head. In conclusion, when using infrastructural reason to diagnose the present condition of the financial economy, it seems worthwhile to view infrastructures not so much as fungible, smoothly operating, only in exceptional cases failing systems, but rather as leaky networks through which shocks, disruptions, and exclusions are disseminated.

2 The Western Modernist Imaginary of Fully Functional Infrastructures

The notion of infrastructure emerged in the context of nation-state consolidation in Europe under the thorough impact of industrialization in the nineteenth century. To the ambition of sovereign political rule over the state’s territory was added the ambition of engineering economic, social, and cultural processes as demanded by the industrial mode of production (Gellner, Reference Gellner1983). The emergence of the notion of “infrastructure,” first documented in 1875, was historically contextualized by the rise of industrial modernity and the generalization of grand-scale technologies to a central cultural imaginary in modern Western societies (van Laak, Reference Van Laak2004, p. 53; Richter, Reference Richter2018, pp. 14–16). Just as industrial plants must ideally be operating 24/7 and without failures in order to achieve the planned output, so infrastructures – transportation networks for people, goods and materials, telecommunications, energy, water provision and sewage, and so on – are expected to operate universally and flawlessly (Star, Reference Star1999; van Laak, Reference Van Laak2001; see, for a critique, Langenohl, Reference Langenohl2020).

However, the fungibility assumption regarding infrastructures was flawed and biased from the start (Anand, Appel, and Gupta, Reference Anand, Appel, Gupta, Anand, Gupta and Appel2018). European colonization was the historical process that ushered in a, if mostly denied in Europe, totally different notion of infrastructure: namely, what one could call incomplete or partial infrastructures. Thus, while historian Dirk van Laak (Reference Van Laak2004, p. 62) argues that grand-scale technological infrastructures “were pushed into colonized countries like ‘Trojan horses’ to spell the gospel of modernity,” one must add that the expansion of the modernist infrastructural imaginary rather rarely was meant to create on-par relationships between colonized and colonizing societies. For instance, transportation infrastructures in the colonized territories were mostly devised to enable the transportation of raw materials from the hinterlands to the ports to be shipped to Europe, or else to carry troops to fight colonial “wars” (i.e., mass slaughters of the indigenous populations). South Africa is the country where the colonial legacy of colonial infrastructures, not only in the area of transportation, can be most blatantly seen up until the present day. Township residents have not remotely the same infrastructural services at their disposal as suburban or inner-city residents (von Schnitzler, Reference von Schnitzler2016). Hence, the historical legacies and “sedimentations” (de Goede and Westermeier, Reference de Goede and Westermeier2022) of colonial – that is, partial and incomplete – infrastructuration might outweigh its modernist imaginary surplus of functionality and perfection.

With respect to financial infrastructures, their (post)colonial entanglements can be analyzed from two distinct directions. First, it has been argued that the relationship between imperial colonialism and modern finance, including its infrastructural aspects, has been one of co-constitution and cross-enablement. As summarized by Marieke de Goede (Reference de Goede2021), this pertains, for instance, to the role of financial transfer infrastructures in enabling the economic extraction of colonies and the organization of the transatlantic slave trade, as well as, conversely, to the political and military guarantees extended by the colonial empires for finance to expand into new markets and business models. Early on, colonial companies epitomized this nexus of financial and colonial expansion, acting in the name of the colonial state, showing that “the history of trading, financial markets and imperial violence have gone hand-in-hand” (de Goede, Reference de Goede2021, p. 356).

Yet, second, it can be argued that the coloniality of modern financial infrastructures lies also in their partiality and strategic incompleteness. One of the main origins of the modern financial economy and of modern capitalism was the insurance business since the thirteenth century (Lobo-Guerrero, Reference Lobo-Guerrero2011, pp. 13–33). In early imperial colonialism, the extension of high-risk loans to colonial ventures was a precondition for early colonial extraction-based trade to take place. While in Europe the system of extending and ensuring loans was based on existing and multiple fungible financial infrastructures of networks among banks and ruling dynasties, in the colonies it merely crystallized in the scattered presence of trading companies’ posts, whose function was solely to enable the insurance of sea transport. In the wake of that initial phase, imperial colonialism never managed, nor was it interested in, extending the density of European financial infrastructures to the colonies. The German colonies, with Germany being an imperial latecomer, testify that financial infrastructures were at no point planned to be extended to them. Banks shied away from getting structurally too much involved in the financing of imperial state ventures and the infrastructural support of economic extraction. The overall “logic” of (not only) German colonialism ought to be explained not so much by capital interests but by a competition for geopolitical influence among European nation-states (von Trotha, Reference von Trotha2004, p. 58) – a competition in which the extension of an infrastructural financial capitalism to the colonies played hardly any role. Financial infrastructures remained concentrated in the Atlantic North, enabling a more or less random exploitation by settlers and investors privileged through the system of colonial administration, rather than forming a structural component of the colonial administration:

In the case of the German colonies, even the buildup of an effective system of taxation – under conditions of colonialism usually serving to pressure the population into accepting miserably salaried labor – was for decades left to commercial companies, themselves highly reluctant to build up any sort of infrastructure (Bade, Reference Bade and Bade1984, pp. 4–7), and nowhere came near to state capacity in Europe. In these colonial ventures, the point was precisely not to create a flat political ontology, as in modernist infrastructural reason, but to infrastructurally create points of entry into domains to be colonized by noninfrastructural means, namely by – often occasional and random, but always violent – extraction of resources and labor.

This conspicuous asymmetry, selectivity, or even outright denial regarding the extension of (not only) financial infrastructures from the Atlantic North to the (post)colonies is still felt today. Didac Queralt (Reference Queralt2022) argues that the sophistication of the system of global finance in the long nineteenth century, while bringing about unprecedented and ever after hardly achieved depth and integration of capital markets for the North, was an obstacle for the building up of effective domestic financial infrastructures (crucially including taxation) in Southern countries and colonies, as political leaders found it more comfortable to rely on international lending instead of building up an expensive tax administration that would have restrained their power. The international, but selective, expansion of the infrastructural reach of infrastructural finance thus turned out to be an obstacle in the way of devising and constructing effective domestic taxation infrastructures in many former colonies. A similar argument pertains to the level of making everyday payments within a postcolonial international division of labor, where remittances keep being expensive due to payment infrastructural selectivities (Rella, Reference Rella2019). As Brandl and Dieterich (Reference Brandl and Dieterich2023) argue, the selectivities and asymmetries built into international financial payments systems survive even institutional and technological innovations, as long as there is no political institution in place that will guarantee access to those marginalized along the terms of social structure and IPE.

In infrastructural reason, instrumental rationality trumps value rationality – including the tendency of instrumental rationality, as highlighted by Max Weber, to preclude any normative consideration regarding its ends. Hence, the functions that infrastructures perform and enable do not always manifest in terms of societal integration, cohesion, or coevalness. Rather, infrastructures may perform the function of enabling and reinforcing inaccessibility, exclusion, and marginalization. The imaginary of infrastructures as fully functional and universal effaces their, oftentimes systematic, partiality (Langenohl, Reference Langenohl2020; see also Muellerleile, this volume).

3 Governance, Governability, Sovereignty, Hegemony

Infrastructures are devised to make a given territory governable and to standardize the parameters of its governability. In nineteenth-century Belgium, the dense network of inexpensive commuter trains that connected the big industrial centers with the countryside was seen as flattening the divide between urban and rural spaces of political-economic governance (Vandervelde, Reference Vandervelde, Barcelloni Corte and Viganò2022 [1903]). This notion of using infrastructures to create a flat political ontology returns in the ambition of many European nation-states, and currently the European Union (EU), to harmonize living conditions and the population’s access to services (Folkers, Reference Folkers2017). At the same time, as the current discussion in Europe on energy infrastructures and energy provision in the face of Russia’s war against Ukraine shows, as well as more generally within a recent sensitivity that the EU might be in dire need to create a “geoeconomic” network of international allies that would help to “build more resilient connections with the world” (Ursula von der Leyen, as quoted in Forough, Reference Forough2022), the idiom of living conditions and services can easily morph into one of (in this case, European) security. Infrastructures are held to be effective not only with respect to increasing connectivity, but also in regard to demarcating zones of security, safety, and sovereign governance. Thus, the notion of infrastructure was historically not only bound up with industrialization and an imaginary of grand technicality in isolation (see Section 2). Rather, this imaginary displayed elective affinities with an understanding of modern political sovereignty as depending both on industrial and military “mobilization,” as Ernst Jünger opined, and for which infrastructures were seen as a precondition (Richter, Reference Richter2018, pp. 23–24; cf. Folkers, Reference Folkers2017).

This invites a new turn within the research literature on the nexus of security and finance logics. This literature investigates political and epistemological overlaps between concerns about financial stability and the guaranteeing of financial value on the one hand, and the safeguarding of political security, stability, and ultimately sovereignty on the other hand (de Goede, Reference de Goede and Burgess2010; Boy, Morris, and Santos, Reference Boy, Morris and Santos2017). With respect to financial infrastructures, it has classically pointed to the role of banks and payment services in the fight against terrorism and financial practices associated with it, like terrorist financing through “suspicious” transactions and money laundering, and to the ways financial institutions have been cooperating with political authorities in these respects (Amicelle, Reference Amicelle2017; de Goede, 2018). In contrast to this literature, present concerns regarding the role of financial infrastructures in the safeguarding of political security and stability enlarge their vision to IR and geopolitics grosso modo. This tendency is reflected in the recent interest in “geoeconomic” approaches to the role of the financial economy in the shaping of geopolitical hegemonies and in their challenging. While the notion of “geoeconomics” was once used to describe a new stage of IR post-1991, where political-economic relationships (as opposed to military power) would play the central role in shaping international hegemonies (Luttwak, Reference Luttwak1990; Scholvin and Wigell, Reference Scholvin and Wigell2018), current research looks in a more detailed way into the genuine role of financial infrastructures (most prominently, the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network) to secure international hegemony through infrastructural power (Dörry, Robinson, and Derudder, Reference Dörry, Robinson and Derudder2018; Farrell and Newman, Reference Farrell and Newman2019; de Goede and Westermeier, Reference de Goede and Westermeier2022). In line with these general shifts, it is currently pointed out that Russia’s war in Ukraine and the Western governments’ financial sanctions against Russian institutions and individuals have accelerated a change of perceptions among political and financial elites worldwide that financial infrastructures – in particular, international payment infrastructures – must be secured against the consequences of such sanctions. This lesson regarding looming financial sanctions (economic sanctions were termed “economic weapons” early on, see Mulder, Reference Mulder2022) is currently being adopted not only by the Russian and the Chinese governments (Ahari et al., Reference Ahari, Duong, Hanzl, Lichtenegger, Lobnik and Timel2022; Nölke, Reference Nölke, Braun and Koddenbrock2023) but, notably, also by the EU and the European Central Bank (Swartz and Westermeier, Reference Swartz and Westermeier2023; Westermeier, Reference Westermeier2024), where central bank digital currencies (CBDCs) are discussed as protective shields against potential future exclusions from existing international payment systems.

In light of these developments, financial infrastructures cannot just be analyzed as enabling flows and financial services, as might seem natural given the locus classicus of finance as a “flow world” (Knorr Cetina, Reference Knorr Cetina2007). They must as well be theorized as enacting effective delinkages and blockages (a point that was made early on with respect to the financial economy’s “structural holes,” see Castells, Reference Castells1996), as they are, conversely, debated regarding their preparedness for withstanding and deflecting such attacks. Taking the European infrastructural policies in the areas of energy and finance together, we see how infrastructural reason references the dual nature of the classical Western notion of political sovereignty. Infrastructures are supposed to be able to create security and a monopoly of legitimate violence in a given territory, which crucially includes effective barriers to outside forces regarding infrastructural power, and at the same time to be able to wield international force against other, noncooperating or adversarial polities.

4 Infrastructures, Market Thinking, and Fragmentation

To describe global finance in terms of infrastructures carries the misunderstanding that infrastructures can be truly global. The metaphor of the “flow world” of global financial markets, which Karin Knorr Cetina (Reference Knorr Cetina2007) devised in order to account for the seemingly ceaseless and uninterrupted flows of financial items and values across all the world’s time zones, seems to align easily with an infrastructural view on finance. Is it not information and communication technologies – nowadays often subsumed under the empty signifier of digitalization – that make this global world of flows possible in the first place? And were financial shocks and breakdowns in the past not associated with infrastructural bottlenecks, inhibiting those flows, as occurred on Black Friday 1987 when crucial financial markets got out of sync because of information jams (Muellerleile, Reference Muellerleile2018)?

Yet, a more cautious look reveals that those flows depend on highly localized hubs, both in technological and social terms, as described and theorized early on by Saskia Sassen (Reference Sassen1991). Financial pricing, for instance, is first and foremost a networked but localized calculative procedure, depending on hubs of calculative power and software, and not depending on the physical moving around of any financial items that would justify the financial flow metaphor (Langenohl, Reference Langenohl, Hein-Kircher and Distler2023). In addition to these doubts regarding the imaginary of finance as being always about movement and flux, the seeming globality of financial markets has been denounced as “globalism” (Beck, Reference Beck2002, pp. 39–40), that is, as a particular viewpoint of Western (financial, political) elites on planetary processes that favor the ontologies and interests of those elites while paying no attention to the – in turn, often equally quite “localized,” namely locally devastating – effects of “global” markets. Seen from this angle, the infra- in infrastructures, which is usually held to denote an irreducible basis for social, economic, or other processes (Larkin, Reference Larkin2013), effaces the factual subordination of another, “deeper” ontological level effected by these infrastructures – like when habitats become bulldozed for the sake of a new highway. This ontological layer, a sub-infra-, of “global” financial infrastructures escapes infrastructural reason, which can only always ask “what for,” never “at what cost.”

Recently, researchers are becoming aware of the nonglobality of financial infrastructures (Brandl and Dieterich, Reference Brandl and Dieterich2023). Within a general analysis of a shifting geoeconomic configuration through payments institutions and procedures (for instance, alternatives to SWIFT but also the development of non-US-based transaction systems based on CBDCs, see earlier in this chapter), it is expected that the end of US-dominated global financial infrastructures will soon move into sight (de Goede and Westermeier, Reference de Goede and Westermeier2022; Nölke, Reference Nölke, Braun and Koddenbrock2023). In particular, various governments and central banks are engaged in devising CBDCs in a bid to challenge the hegemony of the dollar as a global currency (Swartz and Westermeier, Reference Swartz and Westermeier2023). Cryptocurrencies and crypto exchanges openly challenge, in turn, what they perceive as the hegemony of a politicized financial economy (Golumbia, Reference Golumbia, Lovink, Tkacz and de Vries2015; Rella, Reference Rella2019; Beaumier and Kalomeni, Reference Beaumier and Kalomeni2022). Thus, understandably, analyses that diagnose a coming fragmentation of the global financial economy and of a competition among different currencies and payment systems abound.

These diagnoses betray the imaginary of “global” financial infrastructures, while at the same time confirming the saliency of the genealogy of the notion of infrastructures in nation-states’ dual attempt at achieving internal integration and power positions within the international system. Seen from this angle, precisely as the notion of infrastructure is rooted in the nineteenth century, which was the century of European nation-states engaging in a “scramble” for colonies and through that in an international competition for hegemony, it lends itself very well, maybe too well, for diagnosing the present situation. However, it is questionable whether infrastructural reason will help us transcending, and critiquing, the idea, hegemonic in turn, of the inescapability of international zero-sum games.

In the heyday of the globalization literature in the 1990s and 2000s, finance was often seen as heralding a world in which nation-state borders and capacities were quickly eroding, giving view to a “global” world. This literature was obviously oblivious of Karl Polanyi’s (Reference Polanyi1944) historical reconstruction, according to which the first financial globalization at the turn of the twentieth century effectively came along with an ever stronger demarcation of political-economic protectionism (most notably, trade tariffs) and ensuing international confrontation, and ushered in an IPE in which only financial circulation, of all economic circulation, remained by and large “global.” So, “global” finance was never the vanguard of postnationalism, but rather accompanied national zero-sum scrambles in the IPE. While according to Polanyi’s (Reference Polanyi1944) argument at the end of the long nineteenth century this was the scramble for finding selling markets, since the 1990s, and according to the contemporary literature, it was the scramble for attracting foreign direct investment (Castells, Reference Castells1996).

Analyzing the 2020s political-economic situation in terms of financial infrastructural fragmentation might thus induce some helpful analytical realism regarding the (in)capacities of finance to act as a force of global political-economic integration. But, this lesson could have been learned much earlier through suggestions in world systems theory, unequal exchange, dependency theory, to name only some of the most prominent strands of critical IPE. Moreover, through anchoring the diagnosis in the materiality of financial infrastructures (payment systems, most often) and thus putting a particular emphasis on the techno-socio-political substrate of financial transactions, the infrastructural fragmentation approach runs the risk of naturalizing a transactional logic of finance, thus effacing the increasing role of (not-exchanged, not-transacted) financial assets in the social-structural polarization of the political economy (Adkins, Cooper, and Konings, Reference Adkins, Cooper and Konings2020).

5 Infrastructural versus Political-Economic Reason

Since the 1980s, a political-economic critique of finance and financialization has gained ground in response to the rollout of neoliberal policies, in particular regarding the deregulation of the financial economy, which came along with a weakening of state institutions, a shift toward austerity politics in case of state budget problems, and an insistence on property at the expense of top to bottom redistribution (Krippner, Reference Krippner2005; Blyth, Reference Blyth2015; Piketty, Reference Piketty2020). This critique has been sidelined by infrastructural reason, which sees financial infrastructures – especially infrastructures enabling trading and thus pricing of financial assets and risks – as the base for the entire economy (Muellerleile, Reference Muellerleile2018). This is reflected in the fact that financial infrastructures belong to the most securitized infrastructures, and virtually everywhere count among so-called critical infrastructures that require especial protection by the state (Langenohl, Reference Langenohl2020). It also surfaces in recent warnings regarding cybercriminal assaults on stock exchanges, which highlight imminent dangers to the calculative technical infrastructure that is supposed to guarantee a smooth operation of transactions (Langenohl, Reference Langenohl, Hein-Kircher and Distler2023). If trading and pricing are regarded as the base of the economy, it is these that need protection under all circumstances. A consequence of this infrastructural optics on financial processes may be seen in the ways that the British and the US government – and, with some delay, the EU as well – shifted their perception of the global financial crisis from that of an out-of-control speculative dynamism to that of a crisis of liquidity in financial markets (Langley, Reference Langley2015). This undermined earlier positions calling for a stricter regulation of financial markets, and notably a reduction in opaque trading practices (FCIC, 2011; Bieling, Reference Bieling2014).

At stake is thus the question if and how issues of social inequality caused and exacerbated by the financial economy can be thought of in terms of infrastructures. Earlier in this chapter, I discussed the problems regarding access to infrastructural financial services as a matter of concern pointing in this direction. These considerations sit well with current suggestions, articulated with a view to Europe and especially to Britain, to rethink social inequality in terms of the weakening of state-funded infrastructural services, from housing to transportation to public health (Foundational Economy Collective, 2018). In terms of finance, one might think here of demands to solve the problem of the underbankedness of certain population segments, or of easing access to loans and credit for poor people. Yet upon closer inspection, it is questionable whether (legitimate) calls for a broader public service can be applied to financial infrastructures. An uncritically affirmative answer would sideline the question whether an “inclusion” of more population segments into more financial services is unconditionally desirable – especially as financial agency is becoming increasingly connected with surveillance technologies (Amicelle, Reference Amicelle2017; de Goede, Reference de Goede2018). Such broader and deeper inclusion into finance might just be the flip side of what has been critically discussed as the “financialization of daily life” (Martin, Reference Martin2002, p. i; see also Langley, Reference Langley2008), as it might be another instance of securitization of the everyday.

Again, a look toward South Africa helps further elucidating the problem. In his monograph on Credit and Debt in an Unequal Society, Jürgen Schraten (Reference Schraten2020) demonstrates the consequences, especially for poor people, to get access to small short-term loans. These are aggressively advertised, mostly by commercial banks and nonbanks, whose prohibitive yet mostly intransparent conditions, in the absence of a law regulating private insolvencies, drive loan-takers into unacceptable spirals of indebtedness. To my mind, there are only gradual differences between these practices and other financial practices in many societies the world over, from commercial (mostly Western) banks shifting the currency exchange risks to private borrowers in Eastern Europe, to the use of microcredit loans in India and Pakistan, whose “security” is based often on self-exploitation of the loan-takers, as collateral for global financial investments – to say nothing about the causes for the latest financial crisis in private mortgages whose risks were not made transparent either to the customers or to the regulation agencies (Langenohl, Reference Langenohl, Gutiérrez Rodríguez and Reddock2021; see also Roitman, this volume). So, the scandalization of absent access to financial services is no proper substitute for a political-economic critique, displaced as it may seem through the eyes of infrastructural reason.

6 Conclusion: Disruption as Paradigm of Infrastructural Reason

In this chapter, I highlighted pitfalls of infrastructural reason so prominent in today’s IPE, IR, and social studies of finance. For critical and engaged social science, a pressing issue to address is how to turn the notion of infrastructure into one that articulates effective critiques of problematic developments that abound in finance, as well as of the imaginary of competition for global hegemony that the notion of infrastructure historically carries.

It is perhaps no exaggeration to say that infrastructural reason in contemporary finance is as much about financial disruption as it claims to be (or has so until recently, at least) about financial integration. The advent of blockchain technologies and decentralized finance was more or less openly announced as a libertarian disruption of traditional finance (Golumbia, Reference Golumbia, Lovink, Tkacz and de Vries2015). The example of international lending to Southern states and colonies in the nineteenth century, referred to earlier in the chapter (Queralt, Reference Queralt2022), effectively channeled international money flows into a decapacitation of state-building in former colonies. The most recent global financial crisis was effected by a mushrooming of transactions in derivative instruments whose sheer numbers and complexity undermined regulatory capacities (FCIC, 2011). And the current politicization of international payment infrastructures, resulting in uses of infrastructural sanctions as “economic weapons” (Mulder, Reference Mulder2022), was metaphorized as financial services’ “atomic bomb.” These examples of financial infrastructural irritation cast into doubt any attempt to align infrastructural reason with the smooth engineering of flows and financial integration. Instead, they call for another paradigm: that of infrastructural disruption, shock, and disintegration.

In such a context, an ambitious discursive endeavor will be to disentangle the notion of infrastructure from the modernist assumption of full functionality and full service coverage (see, for related suggestions, the chapters by Pinzur and Coombs, this volume). Sociologist Philipp Staab (Reference Staab2023), who has investigatedof the life conduct of staff working in “critical sectors” during the corona pandemic in Germany – care workers, doctors, police staff, and so on – argues that we might be witnessing a turn toward a “society of adaptation” (Anpassung). In such a society, life projects and subjectivities will be based on the understanding that infrastructural services are crucial not because of their functionality and perfection, but because of what they achieve amidst overall chaotic conditions. Because infrastructures cannot be but vulnerable given the sheer size and amount of contemporary macro-risks and threats – Staab mentions climate change, wars, pandemics, to which we might easily add disruptions in the international financial system currently underway – their resilience, partial operability, and adaptive capacities to a sudden worsening of circumstances lends them much more significance than any dream of perfection. At the present turn, it is as difficult as it is important to imagine “adaptive” financial infrastructures that would attain their political, economic, and societal meaning and significance from their ability to cope with their imperfections – that is, from the minimal possible service core they would still be able to deliver in case of outright havoc.

1 Introduction

From investment banking to trading and portfolio management, virtually all financial market activity is in one way or another related to assets. However, assets have until recently remained a “blind spot” in political economy scholarship and social studies of finance (Langley, Reference Langley2020). Although this is rapidly changing as assets, assetization, and asset management are attracting considerable, cross-disciplinary research interest (Adkins, Cooper, and Konings, Reference Adkins, Cooper and Konings2020; Birch and Muniesa, Reference Birch and Muniesa2020; Braun, Reference Braun2020), assets have not yet seen much attention from scholars of financial infrastructures. One reason for this may be the fact that assets are highly heterogeneous objects that have sparked a yet-to-be-resolved scholarly debate over their definition (Birch and Ward, Reference Birch and Ward2022; Chiapello, Reference Chiapello2023). This makes studying the link between assets and infrastructures more challenging compared to rather clearly demarcated sites such as trading desks or stock exchanges. And yet, assets are of particular importance for scholars of financial infrastructures because, as I argue in this chapter, they mediate between financial activity and infrastructures and have some infrastructural properties themselves.

The main argument in this chapter is that assets are boundary objects between financial actors and financial infrastructures. Boundary objects inhabit various social worlds in which they have different meanings but nevertheless have a structure that is common enough to facilitate interaction between various groups (Star and Griesemer, Reference Star and Griesemer1989). Assets are boundary objects in the sense that they enable interactions – and structure social relations – between a myriad of actors, ranging from smallholder farmers in the Global South to financial traders in New York. Transformed into assets, all kinds of things – from farmland to industrial firms and public goods – become actionable by financial markets, and financial infrastructures play an important role in this process. At the same time, financial activity geared at particular assets can also affect the development of financial infrastructures. These interconnections are schematized in Figure 7.1.

Figure 7.1 Assets as boundary objects between financial infrastructures and financial activity.

Source: Author

The second argument made in this chapter is that the mediating role of assets differs along their lifecycle. Three different stages in the lifecycle of assets can be distinguished. Assetization is the first one and denotes the sociolegal transformation that restructures social relations in such a way that things become assets (Birch and Muniesa, Reference Birch and Muniesa2020; Tellmann, Reference Tellmann2022). The goal of assetization processes is to dissect cash flows from the objects that generate them and/or to attract financial capital. Assetization has important infrastructural characteristics for the operation of financial markets (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019, p. 777): It facilitates the trade of these objects – as assets – on financial markets. When qualified according to particular asset classes, it standardizes core features and makes them durable. Assetization shows centrality, as assets structure much financial activity, and obscurity, as it produces a taken-for-granted reality – the asset form and the expected returns that come with it – that hides other aspects such as the struggles over return extraction (Golka, Reference Golka2023). Once traded on financial markets, assets undergo a translation into their second stage in the lifecycle: asset management. Here, two other practices, accompanied by different actors and infrastructures, take the stage: the management of and activities related to volatile asset prices, as well as the creation of new assets from assets (Leyshon and Thrift, Reference Leyshon and Thrift2007). The final step in the lifecycle of assets is their planned, forced, or accidental breakdown: deassetization. As deassetization often frees up the financial resources previously bound in the asset form, it is of constitutive importance for financial markets. However, as the case of “stranded” carbon assets shows, forced deassetization lays bare the power relations that constitute the asset form. Surprisingly, deassetization has received relatively little scholarly attention, which is why this chapter describes how an “infrastructural gaze” would guide and inform future scholarship (Westermeier, Campbell-Verduyn, and Brandl, this volume).

In Section 2, I briefly discuss the recent scholarly debate over the definition of assets and show how it can be resolved by understanding assets as boundary objects. The next three sections discuss the role of assets as boundary objects in between various forms of financial activity and financial infrastructures. Each section follows the travel of assets along three key stages of their lifecycle: assetization, asset management, and deassetization. This chapter ends with a conclusion.

2 What Is An Asset?

According to Merriam-Webster, the term asset derives from the French word assez (sufficient) and has historically meant “sufficient estate.” One important function of assets is thus to act as a collateral to cover corresponding liabilities. This can be seen in corporate balance sheets, where assets are usually ordered by their liquidity, ranging from cash and marketable securities to illiquid assets such as inventory. But assets are more than just collateral. The Financial Accounting Standards Board (FASB) understands assets as rights to economic benefit (FASB, 2021, E16–36). These may derive from property ownership but there are also other legal and contractual instruments that grant such rights (Pistor, Reference Pistor2019). While scholarship agrees that assets are relational, sociolegal constructs, there is less unity as to whether or not assets are necessarily return-bearing (Birch and Ward, Reference Birch and Ward2022; Chiapello, Reference Chiapello2023). This is an important question because return-bearing assets rest on a particular relational structure that enables the extraction of financial returns (Birch and Muniesa, Reference Birch and Muniesa2020; Tellmann, Reference Tellmann2022), whereas other assets such as currency – despite also being sociolegal constructs that grant rights to economic benefits, such as their exchange value – show entirely different relational configurations.

To circumvent these ontological questions, this chapter proposes to understand assets as boundary objects (Star and Griesemer, Reference Star and Griesemer1989). Originating in science and technology studies, boundary objects are objects, such as repositories, that facilitate interaction between social groups because their “interpretive flexibility” allows the maintenance of plural meanings that get stabilized in use without requiring consensus across groups (Star, Reference Star2010). Assets are boundary objects as they cater for the plural meanings that arise from the heterogeneous “information needs” of various social worlds (Star and Griesemer, Reference Star and Griesemer1989): Accountants may see assets on corporate balance sheets as “resources available for business operation” whereas portfolio managers may view them from their risk-return profile (Chiapello, Reference Chiapello2023, p. 1). However, these meanings need not be consensual, as exemplified by the case of cryptocurrencies that are labeled “crypto assets” by their proponents and Ponzi schemes by their opponents.

As boundary objects, assets also enable interaction between these diverse groups. If we follow an asset as it travels from, say, the exploration of an oil field via the balance sheet of a fossil fuel company into the portfolio of an asset manager that is later sold off in response to a divestment campaign, we see that assets travel along complex “chains of translation” (Latour, Reference Latour1999), understood as structured situations in which different actors act with and upon assets in different ways. In the following sections, I will discuss three of such situations – assetization, asset management, and deassetization – in more detail. In each of these situations, assets serve as important mediators between various actors and financial infrastructures and even carry several important characteristics of infrastructures themselves. Importantly, the infrastructures that enable the creation and trade of assets along their lifecycle are financial in the sense that they are related to the financial dimension of assets – whether or not they are related to financial markets. Investigating the lifecycle of assets thus helps in understanding financial infrastructures even where they precede financial market exchange.

3 Assetization

The transformation of all sorts of things into assets is called assetization and is the first step in the asset lifecycle (Birch and Muniesa, Reference Birch and Muniesa2020). Redirecting scholarly attention to the social process of creating assets, assetization scholarship has studied a remarkable breadth of objects, including data (Geiger and Gross, Reference Geiger and Gross2021), plant seedlings (V. Braun, Reference Braun2021), farmland (Ouma, Reference Ouma2020), or real estate (Fields, Reference Fields2018). Assetization, then, is a relational transformation by which these objects are detached from their initial context or claimants and “rebundled” into an asset (Tellmann, Reference Tellmann2022). This process of “narrative transformation” brings together various professions such as accountants, investors, business developers, or certifiers (Birch and Muniesa, Reference Birch and Muniesa2020).

Scholars of assetization have thus far focused on the creation of return-bearing assets.¹ Here, the creation of durable economic rents is the key goal of assetization processes, which entails that many of these assets are made to keep rather than to be sold on financial markets (Birch and Muniesa, Reference Birch and Muniesa2020; Birch and Ward, Reference Birch and Ward2022). The asset form, then, can be understood as a boundary object in the contested social process called capitalization that entrenches the valuation of objects from the perspective of financial investors (Muniesa et al., Reference Muniesa, Doganova, Ortiz, Pina-Stranger, Paterson, Bourgoin and Yon2017). While various social groups interact in the valuation of objects, the asset form helps investors to “colonize” the valuation process by centering valuation on expected future cash flows (Chiapello, Reference Chiapello2015). Aiding in this process are financial valuation tools (such as business plans), through which expected future cash flows are constructed and discounted to the present moment (Doganova, Reference Doganova, Beckert and Bronk2018). In many cases, the valuation of “intangible” asset components such as property rights or market share plays an important role as their ascribed value often exceeds that of the tangible asset components such as buildings or machinery (Birch, Reference Birch2017; Bryan, Rafferty, and Wigan, Reference Bryan, Rafferty and Wigan2017; Chiapello and Engels, Reference Chiapello and Engels2021).

Strengthening the perspective of investors and enabling the extraction of rents, assetization is a fundamentally political process. The politics of assetization surfaces not only in struggles over various questions of valuation (Williams, Reference Williams, Birch and Muniesa2020), but also in resistances – even nonhuman ones – to the creation of relations of control (Ouma, Reference Ouma2020; V. Braun, Reference Braun2021). To overcome such resistances, proponents of assetization often call for the help of governments (Gabor, Reference Gabor2021; Golka, Reference Golka2023). A case in point is the assetization of public goods whereby private investors gain ownership of and control over previously public infrastructures (such as water or transport networks) and use their power to “sweat” these assets by extracting monopoly rents and underinvesting in maintenance (Allen and Pryke, Reference Allen and Pryke2013; Langley, Reference Langley2020; Christophers, Reference Christophers2023b). Governments also play a vital role by creating the wider sociolegal infrastructures that enable assetization in the first place and protect the extraction of rents (Pistor, Reference Pistor2019). Governments are furthermore turning to assetization as a form of developmental or industrial policy, subsidizing (“derisking”) private investments instead of financing projects directly (Gabor, Reference Gabor2021). This entails that assetization requires supportive political coalitions: As the attempt to create a market for so-called social impact investments in the UK has shown, assetization needs to be perceived as a credible and salient policy option and may quickly unravel with a change of political contexts (Golka, Reference Golka2023).

Assetization is an important case for scholars of financial infrastructures for two reasons. First, there are manifold, often bidirectional linkages between assetization and financial infrastructures that have thus far only rarely been made explicit. Informing pricing, risk assessment, and payment, financial infrastructures affect virtually all aspects of assetization (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019). A case in point is the role of digital infrastructures in creating assets such as cryptocurrencies that attract speculative capital even without granting access to future cash flows (Campbell-Verduyn, 2017), or that transform monetary flows into traceable digital stocks (Westermeier, Reference Westermeier2023). Other examples include financial infrastructures surrounding credit ratings or remittances that mediate processes of abstraction necessary for rent extraction (Kunz, Reference Kunz2011; Bernards, Reference Bernards2019). Complex information infrastructures, or “infostructures” (Campbell-Verduyn, Goguen, and Porter, Reference Campbell-Verduyn, Goguen and Porter2019), play a vital role in qualifying less tangible things such as windy sites (Nadaï and Cointe, Reference Nadaï, Cointe, Birch and Muniesa2020) or carbon credits (Langley et al., Reference Langley, Bridge, Bulkeley and van Veelen2021) into assets. Another important case is that of the digital infrastructures developed by real estate firms that gather data and automate key functions of the management of geographically dispersed property portfolios, such as rent collection and maintenance (Fields, Reference Fields2018, Reference Fields2022). These infrastructures are crucial enablers of assetization processes because they perform essential scale work that turns lower-tier real estate into an attractive investment opportunity. But the reverse may also be true as financial infrastructures can themselves be assetized. For example, Petry (Reference Petry2021) has studied how marketization, internationalization, and digitalization have turned exchanges into providers of infrastructures such as market data or indices. But this leaves open the question whether and how these infrastructures have themselves been turned into return-bearing assets by global exchange groups, and how this process of assetization has affected their operation and development.

Second, an “infrastructural gaze” could also help understand how and under what conditions assetization is bound up with infrastructural characteristics that enable and shape financial market activity, and what role financial infrastructures play in enabling these characteristics in the first place (Westermeier, Campbell-Verduyn, and Brandl, this volume). One important aspect here is that assetization allows separating ownership from control whereby even things that cannot be owned (such as consumers) can still be assetized (Birch and Muniesa, Reference Birch and Muniesa2020). Through sociolegal operations such as copyrights, assetization allows controlling things even after they are sold – which distinguishes assets from commodities where control relations end in the moment of exchange. Of even greater importance, however, is that assetization results in a “separation of rights from the thing involved” (Birch and Muniesa, Reference Birch and Muniesa2020, pp. 5–6), for example by separating the (legal and financial) corporation from the (material and operational) firm (Robé, Reference Robé2011). Shares, for example, grant rights to a corporation’s future cash flows rather than to, say, a piece of physical equipment. Viewed from an infrastructural perspective (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019, p. 777), this separation not only facilitates the translation of real assets into financial products but also creates obscurity in the sense that the real and ongoing struggles over the extraction of financial returns become invisible to financial market actors. Likewise, the laws and regulations regarding assets, such as information requirements for stock market listings, or ratings and quality conventions, form part of the infrastructural work that enables financial activity through standardization and compartmentalization (Chiapello and Godefroy, Reference Chiapello and Godefroy2017). However, more research is needed to understand how assetization performs such infrastructural characteristics and what role(s) financial infrastructures play in this process. Viewing assets as boundary objects can provide a useful lens in these research endeavors, not least because it also allows making the connection to financial market exchange, to which this chapter turns to next.

4 Asset Management

The translation of assets into the second stage of their lifecycle is marked by their sale on financial markets. Importantly, not all assets will undergo this translation, or won’t do so immediately, as assets are often made to keep (Birch and Muniesa, Reference Birch and Muniesa2020). If they do, however, assets become financial assets, and are marked by two crucial operations during which the actors and infrastructures related to them change significantly. The first operation is the exchange or trading of assets, which introduces a more or less volatile market price. This means that assets also become commodities that can be speculated with (i.e., asset commodities). The trading of these asset commodities does not necessarily affect the asset form, even though asset prices may feed back into the sociomaterial structure that underpins the respective asset (such as the corporation whose shares are speculated with). Scholars of financial infrastructures have paid considerable attention to the ways in which infrastructures enable, shape, and transform the various sites and practices of asset trading. The second operation, however, has thus far received less systematic attention from an infrastructural perspective. This operation is what I call layering, that is, the production of new assets from assets (Golka, Reference Golka2021). After a short overview of research on trading and infrastructures, this section will turn to layering.

The manifold interconnections between asset trading and financial infrastructures have received considerable scholarly attention, particularly in the social studies of finance (see chapters by Handel, Muellerleile, Petry, as well as Tong and Preda, in this volume). The introduction and historical transformation of stock exchanges are a paradigmatic case, showcasing the bidirectional connections between financial activity and infrastructures. For example, the introduction of the stock ticker had a profound effect on the operation of financial markets through standardization and the creation of shared temporal structures (Preda, Reference Preda2006). More recently, Pardo-Guerra (Reference Pardo-Guerra2019) has shown how the infrastructure of automated stock exchanges has informed the division of professional roles and practices in financial markets. Another example is the development of high-frequency trading, which is, regarding physical proximity or trading algorithms, often tailored to specific stock exchanges but also drives the development of underlying sociotechnical infrastructures (MacKenzie et al., Reference MacKenzie, Beunza, Millo and Pardo-Guerra2012; MacKenzie, Reference MacKenzie2018). This is also an important insight for political economy scholarship as these infrastructural dependencies inform new inequalities and power relations (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019).

What does attention to the asset form add to such scholarship? This is an important question not least because many characteristics of today’s trading infrastructures can be traced to their role in facilitating commodity – rather than asset – trading (Pinzur, Reference Pinzur2021). One important way to address this question is by understanding how, with the rise of asset management (B. Braun, Reference Braun2021), trading and layering are increasingly entangled, and how this entanglement transforms financial infrastructures. Tracing the development of financial exchanges, Petry (Reference Petry2021; see also this volume) has shown how they have increasingly broadened their scope from mere trading sites to what he calls “global providers of financial infrastructures.” However, these infrastructures, market data, indices, and financial products may not only become assets for the exchange groups themselves, but are indeed often geared at facilitating layering by asset management companies or the exchanges themselves. Enabling new forms of layering may thus have become a key factor driving the development of financial infrastructures.

So what exactly, then, is asset layering? By asset layering, I mean the construction of new financial assets from existing financial assets. Two of the most important forms of layering are the construction of portfolios as well as the issuance of derivatives. The fact that the same asset (e.g., a listed share) can undergo both of these layering processes at once points again to the importance and utility of understanding assets as boundary objects. Layering is an important part of financial market activity because it can absorb significant volumes of capital, generate fees for financial intermediaries, and cater for the needs of institutional investors. The rise of the “Big 3” asset managers (BlackRock, Vanguard, and State Street) exemplifies one important approach to layering as these actors construct large-scale, index-tracking, fully diversified portfolios (Braun, Reference Braun2016; Fichtner, Heemskerk, and Garcia-Bernardo, Reference Fichtner, Heemskerk and Garcia-Bernardo2017; Petry, Fichtner, and Heemskerk, Reference Petry, Fichtner and Heemskerk2021). This new, “passive” approach to asset layering has significantly altered global flows of capital and is poised to overtake the traditional layering approach of curated, actively managed portfolios within the next few years (Bloomberg, 2021). It has been enabled by the development of financial infrastructures surrounding exchange-traded funds (ETFs) that allowed tracking indices even for frequent financial transactions (Braun, Reference Braun2016), and has since led to a fundamental transformation of power relations within the financial sector by giving index providers and large asset managers considerable infrastructural power (B. Braun, Reference Braun2021; Petry, Fichtner, and Heemskerk, Reference Petry, Fichtner and Heemskerk2021).

Asset layering also shapes how the financial sector affects the economic governance of the respective portfolio firms and thus translates changes in the realm of financial infrastructures back into the real economy. Passive investing combines full diversification, that is, the inability to “exit,” with performance-independent fees that give little incentives to “voice” (Fichtner, Heemskerk, and Garcia-Bernardo, Reference Fichtner, Heemskerk and Garcia-Bernardo2017; Braun, Reference Braun2022). As indices often weigh firms on market capitalization, passive investing may fuel superstar stocks such as Big Tech or fossil fuel shares that become an important source of asset manager profits (Petry, Fichtner, and Heemskerk, Reference Petry, Fichtner and Heemskerk2021; Baines and Hager, Reference Baines and Hager2023). This means that demand from passive investors affects firms’ share prices more than their dividend payments – that is, the expected cash flows that constitute the asset form. New forms of asset layering may therefore, seemingly paradoxically, shield superstar firms from assetization pressures regarding the extraction of returns. Indeed, this matches the observation that many Big Tech firms pay only little to no dividends (Klinge et al., Reference Klinge, Hendrikse, Fernandez and Adriaans2023). However, other approaches to asset layering may lead to different outcomes, as evidenced by private equity and venture capital funds. These funds invest in only a small number of firms, over which they gain considerable control, and earn fees based on their financial performance. These investors are known to exert significant pressure on their portfolio firms, using their position to “sweat” assets, force them to aggressively increase market share to drive up initial public offering (IPO) valuation, or burden them with considerable debt (Froud and Williams, Reference Froud and Williams2007; Robertson, Reference Robertson2009; Birch, Reference Birch2017).

The creation of derivatives is another vitally important strategy of asset layering. If measured by notational amount, derivatives have, with over $600 trillion, by far the largest volume of any financial product, and far exceed global US dollar supply. However, their gross market value is considerably lower. Moreover, the vast majority of derivatives is not based on return-bearing assets, such as equity or bonds, but on interest rates and foreign exchange (BIS, 2022). The development of foreign exchange and interest rate derivatives has been linked to the emergence of new financial infrastructures within governments (Lagna, Reference Lagna2016; Schwan, Trampusch, and Fastenrath, Reference Schwan, Trampusch and Fastenrath2021). Historically, derivatives have emerged as an insurance on markets for agricultural commodities (Muellerleile, Reference Muellerleile2015), whereas asset derivatives such as stock options have long been seen as (illegitimate) gambling. This only changed with the development of the Black–Scholes formula for option pricing in the mid-1970s, which played an important role in legitimating option trading and structured option pricing and the development of respective financial infrastructures (MacKenzie and Millo, Reference MacKenzie and Millo2003; MacKenzie, Reference MacKenzie2008). The introduction of the Black–Scholes formula also changed option trading as it allowed pricing the volatility of stocks, thus creating a market for risk (Millo and MacKenzie, Reference Millo and MacKenzie2007). Stock options are an important case for the power of financial infrastructures as exchanges and clearing houses such as the Options Clearing Corporation shape virtually all aspects of issuance, trade, and post-trade on option markets (Genito, Reference Genito2019). However, as Petry (Reference Petry2021) notes, their role beyond the provision of marketplaces has received only little scholarly attention (but see Genito and Lagna, this volume). Hedge funds are the most important actors in derivatives trading, using the latter to increase their market exposure (Holmes, Reference Holmes2009). Hedge funds also create important connections between financial trading centers in the USA and offshore destinations such as the Cayman Islands (Fichtner, Reference Fichtner2016). This may partially explain the secrecy and the significant research gap surrounding hedge funds and thus the use of derivatives more generally. As recent market data suggest, equity options are increasingly losing market share relative to ETF and index options that have seen double-digit growth rates (OCC, 2023). This poses the question of how transformations in one area of asset layering may inform changes in another, and how these dynamics are enabled or mediated by financial infrastructures.

While scholarship has begun to understand the bidirectional relationships between financial infrastructures and asset layering (MacKenzie, Reference MacKenzie2008; Braun, Reference Braun2016), more research is needed to address at least four other sets of questions. The first one is how changes in the link between financial infrastructures and asset management can become self-reinforcing. This may include transformations in the epistemic realm whereby growing dependencies on financial markets strengthen financial experts and crowd out other forms of expertise (Golka and van der Zwan, Reference Golka and van der Zwan2022). This points to the second question: unintended consequences resulting from changes in the link between asset layering and financial infrastructures. This is exemplified by the “clearing mandate” introduced to derivatives settling that, contrary to policymakers’ intents, strengthened private authority and created new financial stability risks (Genito, Reference Genito2019). A third set of questions is whether and how constrained access to infrastructures may spark reactivity. An example is special-purpose acquisition companies (SPACs) – listed vehicles that acquire private companies that then become publicly traded. SPACs remunerate their sponsors with total fees beyond 20–25%, which are called “ridiculous” even within the financial industry (Citywire, 2021). As SPACs are designed specifically to circumvent formal IPO requirements, it is access to otherwise inaccessible financial infrastructures that may make them attractive to some actors despite their hefty fees. A fourth set of questions revolves around how asset layering interacts with infrastructural developments across domains. For example, as described, the development of digital infrastructures was a key enabler for the assetization of housing (Fields, Reference Fields2018, Reference Fields2022). This development coincided with the rise of real estate investment trusts (REITs), relatively diversified commercial or residential real estate portfolios listed on stock exchanges. REITs have gained prominence following the collapse of mortgage-backed securities markets during the 2008 financial crisis and play an increasingly important role in funneling institutional capital to real estate (Waldron, Reference Waldron2018; Fuller, Reference Fuller2021). While REITs have been found to create opportunities and incentives for asset managers to increase rent extraction from real estate (Yrigoy, Reference Yrigoy2021), less is known about the interaction between these various infrastructural developments. More research that explores the manifold linkages between financial infrastructures, asset layering, and financial actors is therefore needed.

5 Deassetization

The third and final stage in the asset lifecycle is deassetization, that is, the dissolution of the asset form or one of its layers. For the majority of financial assets, deassetization is a planned feature: Stock options cease to exist once the option right is used, as do bonds and loans once they are fully repaid. Layered assets such as fixed-term funds that are common in private equity and venture capital are unbundled after a predefined duration, releasing cash to investors and performance fees to asset managers, while the portfolio items themselves continue to exist as assets with different owners (Cooiman, Reference Cooiman2023). Writing off assets that cannot be sold – such as Russian holdings following the Russian invasion of Ukraine (Phillips, Reference Phillips2022) – may also be seen as a particular form of deassetization. As deassetization has, to date, received only little scholarly attention, its interconnections with financial infrastructures remain rather unclear. This raises questions regarding how infrastructural actors such as clearing houses inform the terms and processes of deassetization, and what consequences this has for financial activity more generally. Another fruitful avenue could be to explore further the role of (planned) deassetization for the infrastructural characteristics resulting from assetization processes. For example, Brett Christophers argued in a recent Financial Times op-ed (2023a) that private investors investing in public infrastructures (such as roads) have incentives to underinvest into maintenance and improvement as they will not reap potential profits from such investments due to the lifespan of the fund. An infrastructural gaze on assets and their planned deassetization could thus help address recent calls for a sociology that understands societal futures as shaped by the temporal logics of assets (Adkins, Bryant, and Konings, Reference Adkins, Bryant and Konings2023).

When unplanned, however, deassetization makes visible the inequalities and power relations that are often obscured by the asset form. A case in point here is “stranded” assets, that is, financial assets that are expected to face significant devaluation (Caldecott, Reference Caldecott2017). In the context of an escalating climate crisis, fossil fuel assets are increasingly seen as stranded as many carbon reservoirs must not be burned in order to achieve the Paris climate goals. Here, an infrastructural gaze could help unpack how, much like infrastructures that become visible upon collapse (Star and Ruhleder, Reference Star, Ruhleder, Bowker, Timmermans, Clarke and Balka2015 [1996]), the threat of deassetization lays bare the ways in which inequalities and relations of expropriation have been made durable and obscured in a layered asset economy (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019; de Goede, Reference de Goede2020). Not surprisingly, owners of carbon assets leverage their legal affordances to address the threat of devaluation (Caldecott et al., Reference Caldecott, Clark, Koskelo, Mulholland and Hickey2021), or use their power resources to mobilize significant compensation from governments (Furnaro, Reference Furnaro2023). However, an infrastructural perspective would go even further and investigate how infrastructural dependencies – and thus investors’ ability to leverage infrastructural power – shape the struggles over carbon deassetization. An infrastructural perspective could also investigate how looming threats of deassetization are translated into risks, and how these and wider climate risks are managed by financial actors, informed by and informing new financial infrastructures (Taylor, Reference Taylor2023). As many carbon assets and sinks are located in the Global South but owned in the Global North (Semieniuk et al., Reference Semieniuk, Holden, Mercure, Salas, Pollitt, Jobson and Viñuales2022), an infrastructural perspective may also help understand the colonial aspects of such deassetization struggles as it allows bridging between the micro-level of individual carbon assets and the macro-level of global finance (Bernards and Campbell-Verduyn, Reference Bernards and Campbell-Verduyn2019; de Goede, Reference de Goede2020).

6 Conclusion

In this chapter, I made the case for assets as important research objects for scholars of financial infrastructures. My argument was that assets are boundary objects that enable interaction across social groups and, depending on the stage in their lifecycle, serve as important hinges between financial infrastructures and various forms of financial activity. Being the focal point of much of global financial activity, assets – and the various approaches to asset layering – play an important role in the development of new financial infrastructures. However, at the same time, assets are critically shaped by financial infrastructures and carry important infrastructural characteristics that enable financial activity in the first place. To unpack these bidirectional interlinkages, this chapter has focused on three key stages in the lifecycle of assets – assetization, asset management, and deassetization – that differ in these interlinkages.

This chapter thus contributes to making renewed research interest in assets and assetization accessible to scholars of financial infrastructures, and to pointing out the importance of financial infrastructures to scholars of assetization. Tracing assets along their various steps of translation, this chapter also takes seriously the reminder from Leyshon and Thrift (Reference Leyshon and Thrift2007, p. 109) that financial capitalism is “not all smoke and mirrors” and that “there has to be something there to begin with” – that is, assets. However, taking the asset form – and its manifold interrelations with financial actors and infrastructures – seriously matters not only for scholars of finance. Sociologists and political economists have shown the fundamental importance of assets in structuring new class boundaries (Adkins, Cooper, and Konings, Reference Adkins, Cooper and Konings2020) and global wealth inequalities (Pfeffer and Waitkus, Reference Pfeffer and Waitkus2021). Bridging the inside and outside of financial markets, the micro and the macro, and unpacking the making and transformation of power relations (Westermeier, Campbell-Verduyn, and Brandl, this volume), a shared perspective of assets and infrastructures could help uncover important mechanisms for the entrenchment and perpetuation of such asset-related inequalities.

1 Introduction: Colonial Payment Infrastructure

Historically, payment, especially if it was to reach across geographical boundaries and long distances, was complex, cumbersome, and materially heavy. Consider the British practice of countermarking coin at the time of its appropriation and exploitation of the Caribbean during the seventeenth and eighteenth centuries. A tool of British imperial rule was the imposition of currency to facilitate local economies and enable (inter-)national trade in plantation economy goods. Issuing new coins was costly and complex, which spurred the practice of ‘countermarking coins’. With small incisions, stamps, or clippings in existing coinage – for instance, coins previously issued by the Spanish Crown – the bullion was authorized for payment in imperial Britain. For example, coinage originally from Peru was countermarked for use in Jamaica or Tobago by the British colonizers with stamps superimposed on the original coinage seals and with clippings to bring the coin in line with British weights and valuation practices (Parsons, Reference Parsons2023). As such, the metal helped facilitate the transatlantic triangular trade, whereby enslaved people were shipped and put to work on Caribbean plantations, while plantation goods like sugar were shipped to Europe. At the same time, the countermarked coin signifies the reach and authority of British imperial power, whereby bullion backed by London’s Bank of England and imperial weights and valuations upheld and expanded the imperial economy – at great human cost.

In 2022, the Bank of England Museum placed on display the material examples of the countermarked coin in its ‘Slavery and the Bank’ exhibition (see Figures 8.1 and 8.2). This display emphasized the imperial authority behind the countermarked coin, with the Bank of England and the British East India Companies as the centres of authority enabling the circulation of coin from, for example, Peru to Jamaica, St Lucia, and Tobago. As curator Kirsty Parsons concludes: ‘These coins help reveal the relationship between transatlantic slavery, colonialism, and the British economy’ (Parsons, Reference Parsons2023). The countermarked coin both inscribed and was inscribed by British imperial authority. As such, this payment infrastructure encodes particular hierarchies of power and cross-border territorial authority with extensive geographical reach. Those power structures may endure sedimented inside the material form, even when the power of the underlying authorities is challenged, as was the case for the Spaniards in this example.

Figure 8.1 St Lucia coin.

Countermarked coin for use in St Lucia, about 1813.

Source: Bank of England Museum: T536.

Figure 8.2 Martinique coin.

Countermarked coin for use in Martinique, about 1719.

Source: Bank of England Museum: T535.

In this chapter, we theorize payment infrastructures as crucial material sites of hegemonic power. The account of the countermarked coin illustrates three points that are at the heart of this chapter. First, the material form of payment technologies and the unequal routes of circulation produced by them are integral parts of the ways in which modern money and finance exercise power. Payment technology is not a neutral infrastructure, but a carrier of hegemonic power and a potential site of hegemonic contestation. The material remarking of bullion whereby the British Empire literally stamped over the insignia of the Spanish Crown shows how this payment technology is profoundly political and a site of power. Secondly, payment infrastructure is inextricably connected to state security and sovereignty. The countermarked coin both was enabled by the authority of the British Crown and helped further circulate the British Empire’s authority and economic power. State security and sovereignty were enabled and made durable with and through the payment infrastructure. Thirdly, infrastructures are historically durable, though they may be rerouted or reinscribed. As Susan Leigh Star has put it: ‘Infrastructure does not grow de novo. It wrestles with the inertia of the installed base and inherits strengths and limitations from that base’ (1999, p. 382). New uses or purposes can be grafted onto existing material technologies, reorienting them to new practices of power. In our example, the power of Spanish imperialism remains sedimented inside the repurposed coin, even if it was overridden and reoriented through British rule.

This chapter analyses how hegemony is embodied within payment infrastructures, thus linking political power to social-political materialities. As this edited volume shows, global financial architecture builds on human and non-human infrastructures, including institutions, currencies, and payment routes that determine global flows of liquidity and money. While semantically close, we seek to distinguish our approach from the notion of infrastructural power developed by Michael Mann (Reference Mann1984). As Coombs (Chapter 4) discusses, Mann employs ‘infrastructure’ loosely, and it is unclear whether his understanding significantly differs from that of a network. There is no well-defined distinction between the agency of organizations/networks and the background work of infrastructure in Mann’s work.

In contrast, we propose that infrastructures themselves are important material actors and sites of agentic capacity. Keller Easterling (Reference Easterling2014, p. 15) emphasizes in her study of statecraft why we need to pay attention to the capacities encoded in infrastructures themselves:

Building on the work of Easterling and others, we propose the notion of ‘hegemony as infrastructure’ (de Goede and Westermeier, Reference Westermeier2022, p. 4). This notion helps shift focus towards the technical specifications, economic motivations, and physical pathways embedded within infrastructures and then unpack how they inherently involve complex political dynamics. In this perspective, infrastructures are not mere instruments for facilitating hegemonic power, but are conceptualized as both obstacles and arenas where hegemonic power is not only exercised but also influenced, impeded, and directed in distinct manners.

Drawing on existing literature that has focused on non-financial types of infrastructure, including railways and waterworks (Star, Reference Star1999; Mukerji, Reference Mukerji2010; Lancione and McFarlane, Reference Lancione, McFarlane, Blok and Farias2016), we distil three elements that typify the hegemonic power of infrastructure and that can be used when taking ‘infrastructure’ as the starting point for analysis. These elements are: (1) sedimentation; (2) reach; and (3) disposition. First, the notion of sedimentation helps unpack the temporalities ‘frozen’ inside infrastructural technologies and routes (Folkers, Reference Folkers2017; de Goede and Westermeier, Reference Westermeier2022). This refers to both past power hierarchies that have become sedimented in the technology and future orientations that are thus made possible. Secondly, the notion of reach helps unpack the ways in which geographical space is (dis)connected through infrastructures – as with the example of the clipped coin. Thirdly, the term disposition refers to the particular choices, directions, and (im)possibilities encoded into infrastructure. This is the concept that Easterling (Reference Easterling2014, p. 21) uses to theorize ‘the unfolding potentials or inherent agency’ in a material structure like a river, a piece of fabric, or a game piece. The disposition of an infrastructure is the agency encoded into its material and technological propensities.

We develop the notion of infrastructure as hegemony further in Section 2. Then we illustrate the arguments empirically by referring to the so-called financial war on terror, where financial infrastructures became a major but highly depoliticized site of security power. Empirically, this chapter focuses on a contemporary parallel to the countermarked coin: the way in which the payment technology SWIFT (Society for Worldwide Interbank Financial Telecommunication) is being appropriated for security purposes. Since the terrorist attacks in the United States that occurred on 11 September 2001 (the events now known as 9/11), the financial payment infrastructure SWIFT has become a site of political contestation and hegemonic struggle. This contestation has (re)made visible how the aims and routes of the (post-Bretton Woods) liberal world order have been encoded into the seemingly technical communications infrastructure of SWIFT. By adopting the lens of infrastructure-as-hegemony, it becomes evident that infrastructures hold significance beyond being mere tools. They possess the capacity to shape the trajectory of hegemonic power through their intrinsic attributes and interactions. Rather than solely serving as vehicles for the exertion of hegemonic influence, infrastructures can also become stumbling blocks that challenge or redirect political practice. Infrastructural configurations essentially are pivotal points where political forces converge, diverge, and evolve, contributing to the shaping of hegemonic power in diverse and intricate ways.

2 Finance/Security Infrastructure

Financial infrastructure acts as a site of hegemonic expansion, consolidation, strengthening, and contestation. This chapter’s point of departure is that financial infrastructures are not simply (‘neutral’) lifelines of international trade, directing the flow of funds and enabling access to them. They also produce and enhance global (inter-)dependencies via interconnectivities and disconnections, and transform international security and the international political economy through new (economic) technologies.

Yet, the concrete infrastructures that enable the currency to be transferred and monitor its usage have received relatively little attention in analyses of financial and political hegemonies (but see, e.g., Maurer, Reference Maurer2015; Lauer, Reference Lauer2020). Questions of power in finance are often discussed in terms of quantities of financial flows and the dominance of certain currencies that are reflected in the quantities of their usage. The history of payment itself is often analysed in terms of increasing speed, diminishing weight, and extending reach. Research in the social studies of finance and international political economy has focused on the increasing abstraction, fictitiousness, and ephemerality of money and financial transactions (Martin, Reference Martin2007; LiPuma and Lee, 2015; O’Dwyer, Reference O’Dwyer2019). Contemporary card and mobile payment technologies are indeed a far cry from the heft of early modern bullion and from the complexity and fallibility of clipping and countermarking coin.

However important the narrative of the power of ‘frictionless finance’, it risks underplaying the material complexity and geographical unevenness of finance and payment infrastructures and how these have historically evolved. This chapter understands infrastructure as socio-technical relations and more concretely as ‘an articulation of materialities with institutional actors, legal regimes, policies, and knowledge practices that is constantly in formation across space and time’ (Anand, Gupta, and Appel, Reference Anand, Appel, Gupta, Anand, Gupta and Appel2018, p. 12; see Chapter 1 in this volume). This perspective views infrastructure as inherently both material and socio-political, serving as a gateway to understanding the political economy of technology. Infrastructure is more than matter; it encompasses not only physical substance but also extends beyond matter to include scientific observations, plans, and apparent intangibles, such as political imagination and future planning. Therefore, any examination of the materiality of infrastructure must address both the foundational and evolving composition of infrastructure and the ostensibly immaterial aspects (Barry, Reference Barry, Maasen, Dickel and Schneider2020, p. 93). As argued by Anand, Gupta, and Appel, drawing on Edwards et al. (Reference Edwards, Bowker, Jackson and William2009, p. 12), infrastructures possess ‘histories and “grow” incrementally in a dynamic temporal, spatial, and political environment […]. They are formed with the moralities and materials of the time and political moment in which they are situated.’

As the coin countermarking example shows, moreover, financial infrastructures have long been a focal point of states’ and empires’ security strategies. Notions and understanding of security change over time, ranging from traditional military security to cold war and nuclear security, to widened notions of cyber and public health security. Infrastructures play a central role for security practitioners, as they enable the fixation and control of the flow of vital goods and people. This was starkly illustrated during the COVID pandemic that took off in 2020, when movements of people were interrupted and stopped by limiting access to infrastructures of mobility. At the same time, financial infrastructure served to keep economic processes of production, distribution, and consumption going (Langenohl and Westermeier, Reference Langenohl and Westermeier2021). Security politics not only uses the steering capacity of infrastructures, but the politics of security is built into them. Critical security studies have drawn attention to security infrastructures, such as CCTV (closed circuit television), algorithms, scoring and ranking practices, and the securitization of infrastructures, often via the notion of critical infrastructure (Aradau, Reference Aradau2010; Langenohl, Reference Langenohl2020). Recent analysis also points to the concept of ‘infrastructural insecurity’ as a deliberate strategy to render (telecommunications) infrastructure susceptible to becoming ‘a venue for geopolitical interests’ (Ten Oever and Becker, Reference Ten Oever and Becker2024, p. 1).

With regard to financial infrastructures, the term ‘finance/security infrastructure’ foregrounds the intrinsic relations of the two notions and draws analytical attention to payment infrastructure and its political, technical, and colonial histories (de Goede, Reference de Goede2020). The term also emphasizes the ways in which financial infrastructure and state security practices are historically interlinked. The post-9/11 ‘war’ on terrorism financing provides a crucial current example that will be explored in the remainder of this chapter. Anti-terrorism financing measures seek to direct and reroute financial flows and to make them traceable (Westermeier, Reference Westermeier2022). These financial security measures are simply not feasible without financial infrastructures as modes of control that include a variety of diverse elements, such as banks and financial networks, security practitioners, risk registers and sanctions lists, to name only a few (Amicelle and Jacobsen, Reference Amicelle and Jacobsen2016). Sanctions, currently among the most prevalent security measures, are inconceivable without infrastructural control. Infrastructural reach enables and limits the imposition of sanctions, as discussed later in this chapter. Although financial transactions have transitioned to digital formats and circulate as data, they still rely on concrete channels and platforms. Money does not simply ‘flow’ from one account to another; it is actively directed and accounted for. Particularly, international transactions pass through several infrastructural actors and institutions (Robinson, Dörry, and Derudder, this volume).

The remainder of this chapter discusses the three elements of sedimentation, reach, and disposition as tools to track how political hegemonies endure in financial infrastructures and become challenged. Our approach puts a focus on past and present notions of security politics and how these are built into financial infrastructures.

3 Temporalities of Infrastructure: Sedimentation

There is a long tradition in the social sciences that has emphasized the temporal politics of infrastructure (Star, Reference Star1999; Mukerji, Reference Mukerji2010). Studies on dams, roads, railways, and waterways, for example, have foregrounded how these are intrinsically linked to notions of modernity and their role in furthering modern states’ political ambitions (see Langenohl’s chapter, this volume). Far from technological determinism, studies into the politics of technology show how technology is inherently political. In developing and adopting certain technologies, political actors opt for more than appears at first sight. Technologies enable or disable certain options, and some are more aligned with certain political actions than others, although they do not necessarily require or determine them. In other words, not only can the design features of a technology be political, but the technology is political (see also MacKenzie and Wajcman, 1999; Easterling, Reference Easterling2014). Following this line of research, infrastructure is fundamentally both material and political, forming a point of entry into the political economy of technology.

The first element that the study of infrastructures brings into view is that of temporality: infrastructure is about ‘the long-term rhythms of the community’ (Star Reference Star1999, p. 381). Infrastructure connects the past with the present and gestures towards anticipated futures. Infrastructures sediment past power relations, making them viable in the present even though the political regime that established them may seem far gone. Infrastructures are linked to political rationalities: the material structure of infrastructure makes them somewhat resistant to sudden change and constrains political ambitions that run counter to how the infrastructure is set up (Collier, Reference Collier2008; Opitz and Tellmann, Reference Opitz and Tellmann2015). While digital infrastructures may seem readily adaptable to change, underlying protocols and standards set limits to the updates of platforms and applications. Recent contributions to the field of financial subordination have foregrounded the violent practices that are built into financial infrastructure which still endure today (de Goede, Reference de Goede2020; Alami et al., Reference Alami, Alves, Bonizzi, Kaltenbrunner, Koddenbrock, Kvangraven and Powell2022). The introductory example of the colonial coins provides a striking image of how colonial legacies are forced onto the colonized (Koddenbrock, Reference Koddenbrock2020).

Thinking about infrastructures as sedimented hegemony allows a perspective that brings to the fore the political character of these material connections that is often forgotten when they are described as background or invisible. Infrastructures are materializations of hegemonic projects, such as globalization or mobility, that are present and largely consensual at a specific time and place. As infrastructure endures over years and decades, the hegemonies that were present at the time of fixation pertain to a certain moment in time as well as to this moment’s vision of the future: if the hegemonic order changes, if common wisdom alters, the infrastructure and its rooting may itself become a matter of contestation again. Still, contestation does not necessarily entail change within the infrastructure in question, but might instead take alternative courses, as we will discuss in the following.

In the example of the financial war on terror after 9/11, it became starkly visible that payment infrastructure entails sedimented rationalities and hegemonic order. Everyday international payment transactions are rendered possible through SWIFT, a relatively invisible global network set up in the 1970s to facilitate global trade. As part of the post-9/11 security regime, the United States Treasury, in collaboration with the Central Intelligence Agency (CIA), successfully obtained access to SWIFT data under the auspices of the Terrorist Finance Tracking Program in October 2001 (de Goede, Reference de Goede2012b). This initiative formed an integral component of the broader post-9/11 shift towards a risk-based utilization of commercial data for security objectives, emanating from the George W. Bush administration’s aspiration to harness technological tools for the prevention of future terrorist incidents (de Goede Reference de Goede2012a). The analysis of SWIFT data was directed towards the identification of financial transactions, interconnections, and networks associated not only with the 9/11 perpetrators but also encompassing investigations into other suspected terrorists and designated entities (Amicelle, Reference Amicelle2011). SWIFT has now become, as one observer calls it, ‘a centerpiece of the West’s economic arsenal’, because it has not only delivered transactions data to the CIA in the continuing combat against terrorism financing but also disconnected Iran from its global services (Lipsky and Kumar, Reference Lipsky and Kumar2023). Discussions on the potential disconnection of Russia from the SWIFT infrastructures surged after the Ukraine invasion in February 2022.

This ‘weaponization’ of SWIFT is more than the political abuse of an otherwise neutral payment technology. On the contrary, it shows that SWIFT was a political technology from the beginning, offering particular routes and connecting some places better than others. SWIFT emerged in the post-Bretton Woods financial world order to facilitate frictionless global finance and thus encodes the hegemonic ambitions of the time (Scott and Zachariadis, Reference Scott and Zachariadis2014). Yet SWIFT’s connectivity was always partial and incomplete, as, for example, former colonies are still often connected through their past colonial capitals. As Leigh Star has pointed out, infrastructure’s politics are rendered visible through the ‘situations of those who are not served by a particular infrastructure’ (1999, p. 380).

In the same vein, as past infrastructures continue to have an effect in the present, current infrastructural planning, especially public infrastructure projects, entails a certain vision of the future. For example, the ways in which contemporary infrastructures are designed make certain means of circulation more likely than others. As the chapters on digital financial infrastructures (Part III of this volume) show, they embody the cultural, political, and societal conceptions that are dominant at the time of their planning and creation, and they also carry specific notions about anticipated future developments. Collier (Reference Collier2008) emphasizes the possible failure of ‘programming’ and reprogramming – a political attempt to use existing socio-technical and political formations for a new political agenda. Notably, several digital financial technologies are designed as ways to reshape the existing financial architecture (see chapters by Ehlke and Salzer, this volume). While some financial technologies, especially in Europe, build on existing financial infrastructures to enhance financial activities (Westermeier, Reference Westermeier2020), many non-Western countries tend to leapfrog these interactions between old and new financial infrastructures. In many cases, political change entails infrastructural visioning that seeks to challenge old and enhance emerging hegemonies.

4 Infrastructural Reach

The second element that a focus on infrastructure brings into view is that of spatiality. The term ‘infrastructure’ originated in 1875, coinciding with the period when European states aspired to extend logistical control beyond their national territories and over their overseas colonial ‘possessions’ (Schouten and Bachmann, Reference Schouten and Bachmann2022; referring to Mitchell, Reference Mitchell2014; Carse, Reference Carse, Harvey, Jensen and Morita2016). However, this was rarely meant to create equal relationships between colonized and colonizing societies, as Langenohl’s chapter discusses (this volume). John Allen (Reference Allen2016, pp. 36–37) uses the concept of ‘reach’ to analyse the ways in which space is ‘folded and stretched’ to produce ‘proximity, presence and distance’. Such presence and proximity cannot fully be captured with traditional measures of distance, thus reach is about the ways in which ‘powerful actors make their presence felt’ (Allen, Reference Allen2016, p. 11). While infrastructures are often described as enabling the governance of a (state’s) territory, a focus on reach shows how infrastructural power extends well beyond its borders and may be experienced as very proximate in everyday life, for example, through the circulation of coin with stamped authority figures. At the same time, vast areas within a country might also escape the reach of state infrastructure – for example, poorer and neglected areas that are badly connected to public transport or public services (Nolte, Reference Nolte2016). This can be due to formidable engineering challenges or because such endeavours are deemed excessively expensive for states to include in their infrastructure networks. Furthermore, states may intentionally avoid constructing infrastructure in designated frontier regions to avoid integrating specific populations (Schouten and Bachmann, Reference Schouten and Bachmann2022).

Thus, infrastructures, especially financial infrastructures, entail uneven geographies that are best conceptualized through the notion of reach, which draws attention to exclusions and divisions. This is also the case with SWIFT, which is itself is a product of the expansion of international financial trade and globalization in a particular historical era. From the outset, European and US banks propelled the network, transforming it into an essential hub of the international payment system (Robinson, Dörry, and Derudder, this volume). The above mentioned mobilization of SWIFT for security purposes began after the 9/11 terrorist attacks on major US landmarks, including the World Trade Center, in 2001. As part of the ‘war against terror’, the USA secured access to transaction data transmitted through the SWIFT system. This practice came to public attention only in 2006 when it was revealed that European bank data was also being shared with US intelligence agencies in a complex arrangement whereby SWIFT had agreed to share data from its US-based server with the US Treasury and the CIA. In this manner, the SWIFT infrastructure made it possible for US security services to extend their reach by giving them access to global financial transactions data that would otherwise have had to be subpoenaed in complex juridical procedures. European countries were taken aback, not least because SWIFT, headquartered in Brussels, is subject to European Union law. That SWIFT affair points to how finance and security are imbedded in infrastructures aiming to collect, surveil, and control transactional data, going beyond the territoriality of a specific country.

The concept of infrastructural reach thus enables us to capture how certain actors expand political reach via infrastructures. As the example of SWIFT and the post-9/11 activity shows, the United States leverage their dominant position within the financial system to expand their reach within financial infrastructures although these infrastructures do not fall under their jurisdiction and are not physically based on their territory. The infrastructural reach of the United States thus rests on several pillars that often reflect past power relations that persist in infrastructures and are thus still effective today. As the central actor in the post-Bretton Woods financial order, the United States gained a pivotal role in the international financial architecture. The dominance of Western financial politics, integrated with post-colonial dynamics, has solidified within the SWIFT infrastructure, consequently positioning the company as an indispensable gateway (Dörry, Robinson, and Derudder, Reference Dörry, Robinson and Derudder2018; de Goede, Reference de Goede2020). These effects are still felt today, as several countries in Africa and South America remain poorly connected to the network. Banks also report problems with transactions between African countries and China due to differing alphabetical and numerical systems.

Along with SWIFT, the infrastructural reach of the United States is extended via so-called correspondent banks. The decline in the number of correspondent banks by 22% between 2011 and 2020 has given US-based correspondent banks renewed importance (Nance and Tsingou, this volume). Their role is closely linked to the role of the US dollar as the international reserve currency. The majority of international trade is conducted using the reserve currency, controlled by the US Federal Reserve. In the past, the USA has made the claim that all transactions in US dollars fall under US jurisdiction, thus expanding their infrastructural reach via the currency that circulates. Correspondent banks process international payments for other banks, thus serving as further nodes for payment flows. With their decline in numbers, the remaining correspondent banks have become pivotal for security politics, such as sanctions. In February 2022, the Russian Sberbank had its role as a correspondent bank with the US financial system revoked in the context of US sanctions against Russia following its invasion of Ukraine. Sberbank is the largest state-owned Russian bank, holding nearly a third of all Russian bank deposits. As a consequence of the infrastructural disconnection, it is unable to trade using US dollars.

5 Disposition of Payment Infrastructure

Within infrastructures, past political choices are materially sedimented and enable an infrastructural reach which might go beyond a specific territory. The third element in our approach comprises the ways in which past choices materialize in so-called dispositions, which at the same time enable or constrain material possibilities (Easterling, Reference Easterling2014). ‘Disposition’ helps to capture how sedimented politics shape the active form of infrastructure and thus facilitate or limit (political) agency. Keller Easterling (Reference Easterling2014, p. 73) theorizes disposition as a ‘stubborn [form] of power …hiding in the folds’. Further:

Thus, disposition refers to the sedimented politics and material propensities of an infrastructural arrangement.

What is the disposition of a financial infrastructure in the examples discussed in this chapter? Surely, there are several dispositions in each example that work to enable and disable certain flows of information, money, or other financial assets. With regard to the example of the colonial coin, we can say that its disposition entailed the way in which the Crown’s insignia circulated through it. The coin was authorized by the British Crown as visible through the stamps and clippings depicted at the beginning of this chapter. But the coin also helped fortify the Crown’s authority through its circulation. Thus, the material form of colonial coin helped strengthen the Crown’s authority; it was disposed towards the British Crown.

With regard to the contemporary nexus of financial infrastructure and security, a key disposition of SWIFT’s digital infrastructures is the traceability of money and financial transactions. This traceability is now regarded as a crucial avenue to detect illicit financial flows and halt unwanted financial transactions. Traceability is enabled by the active form of payment infrastructure: their way of storing and enabling transactions enables the traceability of money (Westermeier, Reference Westermeier2022). Money relies on infrastructures to preserve attributes like ownership, which are not inherently contained within the amount of money transferred. Money – meaning the amount of a certain currency – does not provide information about its origins and destination; it is notoriously fungible and anonymous. Yet information is attributed by the systems of money transfer and transaction. Confirming one’s identity is thus closely linked to the attribution of ownership of money. As banks are required to ‘know their costumers’, financial technologies often seek to link to databases that store identity information (see Jafri, this volume). These infrastructural technologies are redeployed for social policy and security practices.

The disposition of digital payment infrastructure entails the traceability of transactions. Monetary movements leave data traces when they travel from one financial node, such as banks or payment service providers, to another. This crucially includes cryptocurrencies that often generate the value of a coin as the result of their transaction history. These imprints left by money in its ‘flows’ are not generated by the money, but by the infrastructures that enable its circulation, such as bank accounts or credit card networks. When money is stored in digitized data repositories – a scenario applicable to the majority of non-cash funds – it takes on qualities akin to other digital data types. Hence, the manner in which money is in circulation, whether as physical currency, through credit card transactions, or in digital currency form, holds significance. Each of these tangible bases conveys distinct varieties of information which may potentially be shared with payment processors and other financial entities when a transaction is routed through their services. Only cash leaves no data trace. The prominent call to ‘follow the money’ essentially means to follow the traces that money leaves when it moves infrastructurally.

The disposition of traceability enables the current regime of anti-money laundering (AML) and counter-terrorism financing (CTF) regulation which was significantly shaped by the USA in its ‘war on terror’. While AML regulation had already been implemented before, the post-9/11 security regime follows the assumption that money trails reveal activities outside the financial realm. Financial events like payments, transactions, and withdrawals generate identifiable traces, implying that specific actions are recorded as data, such as time markers for payments or codes that indicate the initiator or recipient of a transaction, as well as the payment method employed (such as a credit card or a payment app). The data from financial transactions harbours substantial potential for inferring details about an individual’s undertakings, acquisitions, geographical movements, and even personal characteristics like sexual orientation and health condition, as well as religious and political inclinations (Ferrari, Reference Ferrari2020). The efficacy of financial surveillance is perceived to be maximized when the actions of targeted individuals are comprehensively documented within financial records, encompassing events that might otherwise be considered outside the financial domain. The shared belief that ‘money trails don’t lie’ has enabled a considerable regime of financial surveillance that provides the material basis for court cases on terrorism financing and other illicit behaviour (Anwar, Reference Anwar2022).

Infrastructural dispositions of payments also encompass electronic and increasingly automated systems that monitor financial flows, such as AML and CTF software (Bosma, Reference Bosma2022). The categorizations and risk assessments for these technologies are based on international regulatory standards. Within their infrastructural reach, the USA played a prominent role in establishing AML as a policy priority in international finance and in establishing the international standard setter, the Financial Action Task Force, which has implemented a coercive blacklisting strategy with little opposition from other ‘rich countries’ (Sharman, Reference Sharman2008). Instead, most of those countries supported these moves and shared a certain consensus that AML and CTF measures would increase financial security, largely overlooking or ignoring the exclusionary effects (see chapter by Nance and Tsingou on de-risking, this volume).

6 Conclusion

This chapter has foregrounded the critical role of payment infrastructures as significant sites of hegemonic power. Payment technologies – ranging from coins to bullions, electronic networks, and digital currencies – are imbued with hegemonic power relations. As infrastructures have historically enabled and sustained state power, payment infrastructures are crucially connected to practices of security and sovereignty. The chapter introduces three elements – sedimentation, reach, and disposition – to typify the hegemonic power of infrastructure, providing a framework for analysing infrastructural dynamics. Through empirical analysis centred on the financial war on terror, particularly the role of SWIFT and the traceability of money, the chapter illustrates how financial infrastructures have become central sites of security.