Efficient markets, free investors and guarantor states: Political threads of professional financial practice

By Horacio Ortiz

During the last thirty years, financial regulation has been reoriented within a political project aiming at establishing “efficient markets” where “investors” could contribute to an “optimal allocation” of resources, backed by a “minimal state” limited to the role of guarantor of the functioning of the system. Yet, the financial industry set up according to these concepts has progressively led to the obliteration of the political genealogy from which they proceed: nowadays they appear to be mere technical tools in the hands of professionals handling them in practical contexts. An analysis of the daily practices of fund managers investing in credit derivatives before the crisis, in 2004 in Paris, corroborates that observation, but also shows that this technicization is not total: in situations of change and conflict, the same concepts are likely to revert to moral and political justifications along the lines of the liberal philosophies they stem from. This reveals that while the financial system is a framework in which the unequal distribution of credit is believed to be just a technical question and thus cannot be discussed as a political issue, i.e. as a matter of a relation of forces, the technicization can only be understood as being itself political and thus as being part of the relation of forces: the tension between the technical and the political appears then as an internal component of the political project framing contemporary finance.


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