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Crédits : Agenda Publishing

1Sabine Dörry’s book seeks to offer an original perspective on the contemporary financial system and its limitations, at the intersection of economic geography and socio-legal studies. The current configuration of finance, dominated by asset managers, together with the challenge posed by climate change, would indeed justify adopting an interdisciplinary approach, attentive to the spatial and legal dimensions that shape the financial system. Throughout the book, Dörry alternates between several argumentative registers—observations on the state of finance and the world economy, conceptual innovations, broad characterizations of the financial industry, research agenda—to such an extent that the overall structure does not emerge easily. Following a conceptual chapter on the transformations of the financial system since the 1980s, the book successively discusses the rise of asset managers (Chapter II), the role of international financial centers (III), the importance of the various professions operating within them, from accountants to lawyers (IV), the use of law by and beyond states (V), and the integration of ecological issues into the financial system (VI).

2From the very first chapter, the book advances ambitious conceptual claims through broad characterizations of ongoing transformations: “Under financialization, uncertainty itself has become a source of value, while price—no longer a proxy for productive worth—has emerged as the defining measure of economic reality” (vii). One such transformation is thus the disconnection between financial valuations and the growth of real economic resources. To account for this, Dörry mobilizes the pragmatist concept of assetization, which refers to the process through which objects are formatted so as to become financial assets (for example, a residential building transformed into an asset suitable for inclusion in a real-estate fund). This dynamic of assetization leads to a valuation based on the expected revenues generated by the object (for instance, anticipated rents), such that value is no longer constrained by current economic activity. The author then draws on another conceptualization, that of “fictitious capital”, in order to develop a more critical perspective on the disconnection of the financial system. Stocks, bonds, and derivatives, unlike “industrial capital,” would derive their value only from anticipations and other “narratives,” which allows for a radical decoupling between the valuation of these two forms of capital. These conceptual discussions can be stimulating, but they would probably have benefited from a discussion of the tensions involved in bringing together a constructivist notion derived from pragmatism and an objectivist one rooted in Marxism.

3Extending Minsky’s typology of capitalisms, the author then diagnoses a new stage, “the asset economy”, which is examined in the second chapter. This second chapter provides an overview of the pharaonic amounts accumulated by fund managers, focusing in particular on private equity funds (i.e. funds composed of shares in non-listed companies, which are generally acquired in order to take control and restructure management). While this identification of the leaders of asset management and the main financial flows allows the reader to “land” after the highly conceptual first chapter, the overview remains very general—sometimes even imprecise—and therefore somewhat frustrating. A financial geography approach could have brought us closer to the actors themselves, offering a more fine-grained understanding of the issues at stake. For example, the geographical distribution of assets managed through investment funds is only briefly presented—“these assets are distributed as follows: $28.6 trillion in the US, $19.1 trillion in Europe, $9.1 trillion in Asia-Pacific and $3.4 trillion in other regions (Investment Company Institute)” (30)—without clarifying whether this refers to the origin of the managed savings, the financial center where the money is managed, the domicile nationality of the fund (which is in fact the case for the Investment Company Institute figures), or the location of the companies financed. The geographical approach therefore remains at the level of a helicopter view.

4In the third chapter, the rise of asset managers is connected to the financial centers in which the industry develops. Drawing on the cases of London, Dublin and Luxembourg, the author recalls the geographical embedding of investment funds (typically domiciled in Luxembourg or Dublin and managed in London), as well as the strategies deployed by public authorities to attract and retain these financial actors. She notably points to Luxembourg’s proactive transposition into national law of the European directive standardizing the form of conventional investment funds (UCITS), together with the tax incentives introduced. This geographical approach to investment funds draws on several concepts from economic geography discussed by Dörry (including analyses of global value chains, global commodity chains and global financial networks). She invites further conceptual enrichment through a critical reflection on value, which leads her to question the distribution of value through a mapping of the multiple actors involved in the investment fund industry (advisor, custodian, administrator, manager, promoter, legal advisor, etc.). These actors are held together and embedded in space through a legal “bricolage” that grants this assemblage a legal personality.

5This role of law is further developed in the following two chapters, which first examine the professions that shape legal frameworks and extend their legitimacy—essential to the functioning of the financial system—before turning to the strategic uses of law both by states and against states by private actors. Thus, in Chapter IV (“Expanding epistemologies”), Dörry highlights those professionals of the financial sector whose “function is primarily one of sustaining and legitimizing the financial order, providing essential expertise that reinforces existing corporate structures” (72), namely (among others) accountants, legal advisors and consultants. Drawing on several “empirical vignettes” and interview excerpts, she emphasizes the institutionalization and expansion of the forms of private expertise produced by these professions. Often in place of the state—and sometimes encouraged by the state to take over its functions—these accountants and legal advisors thus succeed in defining standards and bodies of knowledge that ultimately structure the financial system itself (accounting standards, collateral eligibility criteria, etc.). Dörry then discusses various strategic uses of law that shape the organization of contemporary financial centers, such as tax arbitrage or the legal personality that allows a fund to be domiciled in a country different from that of its management company. These discussions nevertheless remain fragmented and punctuated by sweeping statements about the state of financial system: “international financial centers have become both powerful enablers and beneficiaries of legal and financial engineering, shaping a global economic geography that privileges capital accumulation and fosters regulatory asymmetries” (115).

6Finally, in the last chapter, the author addresses more directly the relationship between finance and climate change. Once again, she advances a rather grandiose diagnosis: we are allegedly witnessing the “financialization of sustainability itself”, namely the growing delegation of the financing of the ecological transition to private financial actors (particularly private equity funds). This approach is not promising, she argues, because it is driven by “synthetic communities,” that is, collectives structured by financial logics and metrics, such as international financial centers. It condemns us to an insufficient consideration of ecological issues and to the concentration of wealth and power. By contrast, Dörry advocates grounding ecological concerns within “organic communities”, based on social cohesion and cooperative models. At the level of the financial system, this appears to translate into a model of local investment: “When capital is reinvested locally, it generates a virtuous cycle: economic growth, improved social services, further investment and communal wellbeing. But when this cycle is disrupted—when profits are extracted rather than reinvested—the result is not renewal, but decline” (139).

7Sabine Dörry’s book addresses crucial issues that indeed deserve an interdisciplinary approach. One can therefore only endorse her repeated invitations to combine the insights of political economy, socio-legal studies and geography. That said, these crucial issues also deserve careful, nuanced treatment marked by a certain degree of modesty. On this second point, however, the book may disappoint. It consistently privileges the striking, sweeping statement about the state of financialized capitalism over localized and precise analysis. One might have appreciated, at times, a more genuinely geographical approach in place of certain conceptual innovations diagnosing the condition of the financial system—an approach willing to take the time, more modestly, to unpack the mechanisms of this “asset economy”. For it is also within the interstices of these mechanisms that the potential for transforming the financial system resides.