9th Conference European Sociological Association

RN09 Economic Sociology

2009-09-05 13:30:00 2009-09-05 15:00:00 Saturday, 5 September 13:30 - 15:00 The Financial Crisis, Risk and Trust Building AA, AA.229

Leveraging Time: Money, Credit and the Crisis of Value

The paper explores the 2007-9 financial crisis as a crisis of value which has significant implications for our understanding of the relationship between money, credit and time. After agreeing with the characterization by Blackburn and others of the crisis as an outcome of the process of financialization which has been responsible for the emergence of the ?New Wall Street System? (Gowan) since the early 1990s, the empirical focus of the paper is on the development of the so-called parallel (or shadow) banking system. This system operates on the (unregulated) margins of the mainstream (regulated) system of commercial and investment banks. Within the parallel banking system, ?value? is engineered through the construction of synthetic monetary instruments. The logic according to which value expands in this system represents a departure from finance capitalism (M-C-M?). Rather, it is a system in which monetary instruments are used to raise more money, or in which money begets money (M-M?). This is a logic in which time becomes the key asset, the vehicle for a leveraging process that (following Hyman Minsky) eventually resembles an inherently unstable pyramid of time, similar to a Ponzi scheme. When the pyramid collapses as deleveraging takes place and monetary instruments unravel, the absence of what are perceived to be ?real? underlying assets is revealed ? and yet holders of monetary instruments seek refuge in money. Using Kojin Karatani?s ?parallax? conception of capitalist accumulation in terms of two distinct spheres of value (M-C and C-M), I examine this absence as a crisis of value in which fundamental ideas about the relationship between money, credit and time come to the fore.