Rethinking Financial Neoliberalism

Session Abstract : ‘Neoliberalism’ is a ubiquitous yet elusive and highly contested concept, which continues to inspire a plethora of critical approaches. Neoliberalism has simultaneously become the defining philosophy of contemporary political economy and culture, while debates continue as to whether it meaningfully exists at all. Historiographical interpretations of neoliberalism have analysed the themes of class struggle and hegemonic power; the ideas emanating from elite transatlantic networks over the longue durée; or, in Foucauldian terms, neoliberal forms of governmentality. Consequently, analysing varieties of neoliberalism represents a vibrant agenda for research.

This panel offers new perspectives on the causes, consequences and legacies of ‘financial neoliberalism’ in Britain. We seek to interrogate and problematise assumptions and shibboleths that have characterised the transformations of the Thatcher years, not least that Thatcher’s Britain saw unequivocal financial liberalisation and deregulation, or that the financial services revolution was an unambiguous, watershed, ‘Big Bang’ moment.

Finance was profoundly transformed during the years of radical Thatcherism, but this was simultaneously balanced by forms of institutional inertia – a theme elaborated by the papers’ focus on vested interests and individual deference to experts, culturally embedded norms and values. Similarly, the tension between myth and reality is developed in the discussion of how ‘economies of risk’ have come to be eulogised and deplored in contemporary fiction, culture, memory and political economy. Therefore, these papers explore how ‘financial neoliberalism’ was both perpetuated and contested through networks and regimes of knowledge.

Collectively, we argue that ‘financial neoliberalism’ was a process engaged with, and achieved through, political channels, but that its cultural and institutional significance is more complex than many historical accounts appreciate. By ‘rethinking financial neoliberalism’, we intervene in historiographical debates concerning both the relationship between neoliberalism and Thatcherism and the significance of radical transformations in finance.

Session Chair: Ben Jackson

Paper 1 Abstract : The Long Goodbye: The Endurance of Gentlemanly Capitalism

Emma Barrett, University of Birmingham

The Big Bang brought cultural change to the City of London, marking the end of ‘gentlemanly capitalism’. New foreign entrants to financial markets were impervious to the Governor of the Bank of England’s eyebrows and other traditional means by which moral suasion was exercised. A new form of self-regulation by the financial services industry, under a statutory framework, was instituted with the 1986 Financial Services Act. And yet, using two case studies, I argue that change was slower and far more nuanced than this traditional narrative allows.

First, Lloyd’s of London under the Thatcher Government was granted its own private Act of Parliament in 1982 and exempted from the 1986 Financial Services Act. These privileges, in spite of scandals which undermined the principle of self-regulation, obscured ongoing subtle but systematic oversight of Lloyd’s by the Bank and Whitehall. Primary sources, including oral testimony, confirm measures placing ‘political bankers’ on Lloyd’s council and reliable actors to oversee reforms into the 1990s.

Second, in the context of frenetic merger and acquisition activity in the City, a study of Cazenove and Co. shows how this ‘blue-blooded’ stockbroker retained its independence with some ingenious planning and key institutional support. Cazenove files, code-named ‘Venice’, provide new insights into strategic commercial considerations, the firm’s priorities, and its reactions to opportunities and threats. ‘[W]as the “Venice” code name chosen as an image of a sinking City and the partnership in its gondola will sail off into the sunrise’ mused one partner. Cazenove used its skills, reputation and connections to retain its independence, recapitalise and enter the underwriting market. Following its restructuring, its multitude of congratulatory letters from elite actors and institutions, included the ‘heartiest congratulations on keeping your virginity, whilst increasing your powers of seduction’.

Despite the culture shock of 1986, these case studies show the persistence of old fashioned moral suasion and the enduring importance of networked relationships. ‘The Tale of Two Cities’ ended rather less abruptly than is generally understood.

Paper 2 Abstract : Embodied Economics: Figuring Neoliberal Finance in Contemporary Fiction

Christopher Vardy, University of Manchester

Critics who analyse cultural responses to neoliberal finance often focus on the ‘knowledge problem’ (Marsh, 2007; Shaw, 2015). How do texts represent increasingly complex, immaterial and abstract financial systems that are in such a state of rapid flux that human actors find them almost impossible to conceptualise?

Through a reading of Alan Hollinghurst’s Booker Prize-winning historical fiction The Line of Beauty (2004), this paper will argue that contemporary fictions often figure historical processes such as financialisation and the proliferation of hyper-consumption through metaphors of bodily systems and sensations. The Line of Beauty, set between 1983 and 1987, traces the middle-class, queer aesthete Nick Guest’s movement through the gilded world of the Fedden and Kessler families, who occupy elite positions in the Thatcher government, aristocracy and City.

This novel interrogates the mythologised, neatly ‘watershed’ account of Thatcherite economics, from creative destruction in the early 1980s, onto Big Bang and Black Monday. It draws parallels between late-nineteenth and late-twentieth-century financialisation to complicate accounts of the singularity of the neoliberal ‘revolution’. And, by offering a perceptual history of the decade, it suggests that the new financial dispensation was something affective and atmospheric as well as institutional and political. Finance increasingly shapes the cultural imaginary of Nick and those around him: it contours their experience of time, their pleasures and their increasingly manic consumption, notably of cocaine and sex.

Finally, I will turn to the novel’s metaphorical elision of two different risk economies: neoliberal finance and the deepening AIDS crisis. I argue that in figuring the future of financial neoliberalism through non-reproductive queer male bodies which are unable to consume due to the ravages of HIV, the novel demonstrates a profound ambivalence about the sustainability of the neoliberal settlement, years before the 2008 crisis.

Paper 3 Abstract : The British Insurance Industry and Financial Neoliberalism: The Individual, the Expert and the Regulator

Thomas Gould, University of Bristol

Twenty years ago, Susan Strange argued that ‘most widely read academic journals in social science, whether in economics or politics, pay little or no attention to the political economy of the insurance business as it is conducted in the real world’. This neglect has endured; and, consequently, important insights into the development of neoliberalism’s relationship with modern capitalism have also eluded historians. This paper interrogates the 1970s and 1980s insurance industry to show how financial neoliberalism emerged as a distinct force that re-engineered the insurance practices which managed financial uncertainty.

Vast concentrations of personal wealth accumulated in institutional funds. Conduct and behaviour of firms became more diverse and complex. The intellectual machinery of insurance experts evolved as the management of financial uncertainty was revolutionised. First, financial uncertainty became managed increasingly through more variegated and individualised, rather than collectivised and uniform, methods. Second, financial security became more reliant on uncertainty being managed through more interdependent, volatile, and myopic market mechanisms. Finally, regulation became more comprehensive and influential. The bureaucratic links between the insurance industry and successive governments hardened, culminating in the establishment of the Securities and Investment Board in 1988.

A case study of the insurance industry shows how financial neoliberalism changed the relationships between experts, individuals, and the regulator within an increasingly sophisticated, competitive financial environment. Risk-taking financial behaviour became an exigency. The presumption that financial uncertainty could, and should, be managed by the market gained saliency. The complexity of the nascent financial world, and its future, was increasingly understood through the lens of advanced computing, mathematics and statistics, which reorganised the marketplace for expertise. Thus, financial neoliberalism dramatically changed the ways in which the financial industry and government engaged with uncertainty; and it influenced the increasingly risk-based techniques, and forms of knowledge, through which they sought to manage and control that future.