How Finance Structures Global Value Chains

How Finance Structures Global Value Chains

NB: This post is part of a symposium on law and global value chains co-convened with the Institute for Global Law and Policy’s Law and Global Production Working Group.

Tomaso Ferrando–

The Law-in-Global-Value-Chains perspective adopted in the Research Manifesto and introduced the initial blog of this series is based on the recognition that law is endogenous to the production, circulation, accumulation and destruction of value. Whether we are talking about labor, nature, capital or any of the other ‘cheap things’ that are central to the construction of the global system of production, the Manifesto suggests that law has a lot to do with the way in which that ‘thing’ becomes cheap and value is extracted from it..

Yet, not enough attention has been dedicated – so far – to the role of law as the enabler of financial markets, financial instruments and financial actors as value extracting participants to global networks of production. However, financial practices that prioritize the remuneration of capital holders contribute to redefining forms and spaces of production, along with the geographies of value appropriation and the relationships between people, planet and value chains. In the contemporary economy of atomized production and outsourcing, finance is at the core of how global production is organized. The study of law in global value is woefully incomplete without an understanding of the way in which legal structures define the space of operation of financial actors and financial actors utilize law and legal structures to increase the extraction of rent.

There are many ways into the study of how law and finance structure the operation of global value chains. Perhaps uniquely powerful is a focus on something both essential and increasingly fragile: the global food system.

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When All Social Problems Become Financial Problems

Sarah Quinn –

When it comes to government programs, credit support is often cheaper and less controversial than direct expenditures. Understand this, and you can understand why government officials have an incentive to define all sorts of social problems as financial ones.

Government officials face considerable pressure to promote credit markets. Wall Street firms leverage money, expertise and status to “capture” regulators. It is not only the rich and powerful who make demands on the state for easier access to credit: Farmers in the late 18th century, black activists fighting against redlining in the postwar era, access to credit cards in the 1930s– all have demanded that the governmental help them gain access to credit. When wages are low and welfare state support is stingy, families rely on easy credit to ride out hard times or even meet daily expenses. In the context of neoliberalism, credit access can be a kind of destructive consolation prize for workers with stagnant wages and frayed safety nets, as other scholars have noted.

Demands for easy credit are a crucial part of the story of credit allocation in any political economy, but they do not tell the whole story. That is because lawmakers have their own reasons for turning to credit as tool of statecraft, and those reasons help determine how, when and why government officials move credit and promote financial markets.

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