INFORMATION AND FINANCE CAPITAL

This article was downloaded by: [National Pingtung University of Science andTechnology]On: 19 December 2014, At: 17:03Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH,UK

Information, Communication &SocietyPublication details, including instructions for authorsand subscription information:http://www.tandfonline.com/loi/rics20

INFORMATION AND FINANCECAPITALMicky Lee aa Communication and Journalism , Suffolk University ,41 Temple Street, Boston , MA , 02114 , USAPublished online: 25 Jun 2012.

To cite this article: Micky Lee (2013) INFORMATION AND FINANCE CAPITAL, Information,Communication & Society, 16:7, 1139-1156, DOI: 10.1080/1369118X.2012.695386

To link to this article: http://dx.doi.org/10.1080/1369118X.2012.695386

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all theinformation (the “Content”) contained in the publications on our platform.However, Taylor & Francis, our agents, and our licensors make norepresentations or warranties whatsoever as to the accuracy, completeness, orsuitability for any purpose of the Content. Any opinions and views expressedin this publication are the opinions and views of the authors, and are not theviews of or endorsed by Taylor & Francis. The accuracy of the Content shouldnot be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions,claims, proceedings, demands, costs, expenses, damages, and other liabilitieswhatsoever or howsoever caused arising directly or indirectly in connectionwith, in relation to or arising out of the use of the Content.

This article may be used for research, teaching, and private study purposes.Any substantial or systematic reproduction, redistribution, reselling, loan, sub-licensing, systematic supply, or distribution in any form to anyone is expressly

http://www.tandfonline.com/loi/rics20

http://www.tandfonline.com/action/showCitFormats?doi=10.1080/1369118X.2012.695386

http://dx.doi.org/10.1080/1369118X.2012.695386

forbidden. Terms & Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

http://www.tandfonline.com/page/terms-and-conditions

http://www.tandfonline.com/page/terms-and-conditions

Micky Lee

INFORMATION AND FINANCE

CAPITAL

This article examines the political economy of information in relation to financecapital from the vantage points of commodity, spatiality, and temporality byusing Reuters as an illustrative case. The use and exchange values of financialinformation are examined in productive capital; and the fixed value of financialinformation as capital goods in finance capital is assessed. The value of financialinformation is argued to be both time and space dependent. The circulation offinancial information constitutes a specific historical time in capitalism, whichDavid Harvey characterized as ‘time–space compression’. Financial informationis integral to both spatial fixes and temporal fixes, which have been used to solvethe problem of surplus over-accumulation.

Keywords finance capital; financial information; Reuters; politicaleconomy of information; commodity; spatiality; temporality

(Received 17 September 2011; final version received 1 May 2012)

Information and finance capital

This article offers a political economic critique of information in relation tofinance capital. It examines the political economy of information from thevantage points of commodity, spatiality, and temporality by using Reuters, aleading financial information company, as an illustrative case. Information issaid to be vital to the financial market, yet the relationship between the two isambiguous. In mainstream economic thought, information is a commodity; itis automatically generated in the market; at the same time, money is a carrierof information about value (Babe 1996). The unclear nature of information isparticularly revealing in a financial crisis such as the 2008 stock market crash.The volume of commodified financial information transmitted through compu-terized networks and the speed that the information travels during the crisissharply contrast with the shortage of capital of some financial institutions.This contrast is ironic in two ways: first, in mainstream economic thought,

Information, Communication & Society Vol. 16, No. 7, September 2013, pp. 1139–1156

# 2013 Taylor & Francis

http://dx.doi.org/10.1080/1369118X.2012.695386

Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

perfect information leads to perfect competition in which both the seller and thebuyer in the market have perfect knowledge about each other. Second, the ‘infor-mation economy’ prophesied by economists and politicians is said to bring longand persistent economic growth. The 2008 stock market crash might show thatinformation is not yet perfect and the information economy is not yet mature.But it may also show that a mainstream economic view of information isdeeply flawed (Babe 1995).

Marxist political economists (such as Foster and Magdoff 2009) provide adifferent explanation to the 2008 financial crisis from the one given by mainstreameconomists, summarized as follows: Marx believed that capitalism is an inherentlycontradictory system. The viability of the system depends on the continuous flowof capital. In search for more money, industrial capitalists need to invest surpluscapital in production in order to create more surplus value. The consequence isan over-accumulation of the surplus where commodities are not absorbed bythe market; where a surplus supply of labour leads to mass unemployment; andwhere surplus capital is not re-invested in the production of commodities.There are two solutions to temporarily eliminate the problem of over-accumu-lation: first, to devalue commodities and labour power, as well as to abandoncapital goods such as buildings and machineries; second, to invest the surpluscapital in the financial market where capital circulation is based on a creditsystem. Expanding finance capital and shrinking productive capital leads to anunstable and unsustainable economy because the primary means of surplus cre-ation is through the exploitation of labour power. Since 1970s, unpredictablefinancial market crashes regularly occurred. Simultaneously, slow economicgrowth has been plaguing advanced economies. Long-term economic growthcan only be achieved through planned productive capital investment.

Marx’s understanding of profit creation in the stock market is too rudimen-tary to be applied to today’s financial market, but it forms the basis of contem-porary Marxist political economy. He suggested that the profit in the financialmarket is:

a mere appropriation of the surplus-labour of others, arising from the con-version of means of production into capital, i.e., from their alienation vis-a-vis the actual producer, from their antithesis as another’s property to everyindividual actually at work in production, from manager down to the lastday-labourer. (Marx 1999/1894, p. 303)

The investors absorb the surplus value generated during production. Capi-talists allow this to happen because of their need to rapidly expand capital(Harvey 1982). The money raised by selling stocks, shares, and bonds is injectedinto the production of commodities.

Marxist political economists offer few suggestions about the conceptualiz-ation of information in relation to productive and finance capital. Various

1 1 4 0 I N F O R M A T I O N , C O M M U N I C A T I O N & S O C I E T Y

Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

writings offer glimpses into how they think about (or more accurately, neglect)information. For instance, in Monopoly Capital (Baran and Sweezy 1966), the pro-duction of advertising is deemed to add unnecessary costs to the production anddistribution of goods. Because the costs of advertising are borne by ‘productiveworkers’ (narrowly defined as those who transform natural resources into com-modities), the advertisers are merely parasites on the surplus (see critique inSchiller 2007). In Marx’s thought, accounting, storing, marketing, informationgathering, and advertising are all costs of circulation (Harvey 1982); these infor-mation-intensive activities are an obstacle to the realization of surplus value inproduction.

The political economic approach to communication may fill in the gap left byMarxist political economists by drawing attention to the powers that govern theproduction, distribution, and consumption of information and to how infor-mation serves the interests of the political and economic powerful (a fewnotable volumes are: H. Schiller 1986, Mosco and Wasko 1988, D. Schiller1999, 2007). Financial information and related technologies, however, serveas examples rather than as a focal point of study in existing political economicwork (a few exceptions are: Chakravarity and Schiller 2010, Thompson 2010,Hope 2006, 2009, 2010, 2011). It is not claimed here that financial informationis different from other types of information. Financial information may not beintrinsically different from personal information, meteorological information,sports statistics, etc., for several reasons: first, computerized networks are indif-ferent to content; second, the usefulness and relevance of information depend onthe ones who produce and consume it. However, a political economic analysis offinancial information would acutely reveal the deep-seated class and wealthinequality in the United States, if not in the world. With an overarching interestin social justice issues, the political economy of communication is the mostappropriate approach to study the relation between information and financecapital.

Financial information and Reuters

Information in this article refers to that which is produced, stored, processed,retrieved, and disseminated by and through computerized networks. Credit istraded in the financial market; it encompasses stock and bond markets,foreign currency markets, money markets, commodity markets, derivativesmarkets, and so on. Financial information includes both unprocessed and pro-cessed data that represent prices, describe financial statuses, and inform financialdecisions. It ranges from raw data to polished financial analysis reports.

Widely known as a news agency, Reuters has been in the business of financialinformation since Paul Julius Reuter founded the company in London in 1851.Since 1860s, Reuters functioned increasingly as an institution of the British

I N F O R M A T I O N A N D F I N A N C E C A P I T A L 1 1 4 1

Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

Empire (Read 1992). Not only did Reuters bring news from British colonies tothe UK, it also connected the dispersed colonies of the British Empire. Duringthe two World Wars, Reuters strove to bring accurate and objective news fromthe war zones to the home front. It became a public company in 1984 with itsfinancial services accounts for 90 per cent of the revenue. In 2008, it wasacquired by a Canada-based company Thomson and became part of theThomson Reuters group. Due to space constraint, this article can give neithera critical, comprehensive history of Reuters nor an in-depth analysis of the trans-formation of the company. Examples of Reuters are used to illustrate the argu-ments made about information as commodity, spatiality, and temporality.

Commodity, spatiality, temporality

In Capital, Marx chose commodity as the entry point to understand the dialecticsof capital. One common thing of commodities is that they are all bearers of thehuman labour embodied in their production (Harvey 2010). As embodiments oflabour power, commodities must be produced within a time frame and in a phys-ical location. None of the three concepts – commodity, spatiality, temporality –can be examined without the other two.

Marx’s analysis focused more on time than on place and space (Harvey 1989,Castree 2009). Marx suggested that the exchange value of a commodity dependson ‘socially necessary labour time’, which can be defined as: ‘the labour-timerequired to produce any use value under the prevailing socially normal conditionsof production and with the prevalent socially average degree of skill and intensityof labour’ (Postone 1993, p. 190). Capitalists exploit workers by abstractingtheir labour power into something quantifiable and measurable. The clocktime has become a standard to measure the value of labour power. Marx wasrelatively mute on the relation between labour and space/place.

Labour is central to Marx’s analysis. Labour is the only source of surplus cre-ation because it transforms natural goods into socially useful goods. Because ofthe centralization of labour in Marx’s analysis, applying his concept of usevalue and exchange value uncritically to information goods is problematic inthree ways. First, the financial industry is not labour intensive, yet it accountsfor a large percentage of profits in the United States (Krippner 2011).Second, the financial industry widely adopts information technology (Heertje1988). To Marx, technology does not create surplus value, it only increases pro-ductivity (Postone 1993). Third, the top professionals in the industry (such asinvestment bankers, advisors, brokers) do not get paid based on the amountof time that they work. Therefore, a political economy of information may bemore illuminating if the entry point is not labour, but commodity.

With the above said, it is not suggested here that labour in the financialindustry is negligible. Precisely because labour is hidden from view in the


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

production of financial information and because it is seen as peripheral to the cre-ation of wealth, it should be shown how information goods – as commodity – isassigned an exchange value. Not only is the production of information goodsmore detached from the process of manual production, but the instrumentstraded are also more detached from the production of commodity. Thetrading of commodities (such as gold and coffee) has given ways to the tradingof derivatives (debts and mortgages).

Information as commodity

Commodity, spatiality, and temporality are dialectic outcomes of capital circula-tion. The outcomes are neither fixed nor final; they change as capital circulates.The notion of information as commodity has been widely explored in the politi-cal economy of communication. The following discussion adds to the existing lit-erature by focusing on the use and exchange values of financial information inproductive capital and on the fixed value of information as a capital good infinance capital. Because the value of information goods is mostly devoid oflabour power, the spatiality and temporality of information have to beconsidered.

Information as commodity in productive capital

Information being a commodity reflects that capitalists are desperate to searchfor profits by putting an economic value on things that are historically notseen as economic goods. This process is commodification. Marx conceptualizeda commodity as a material object and the acts of production being material(Harvey 1982). Information, being immaterial, does not fit Marx’s definition.The political economy of communication thus expands Marx’s notion of com-modity by including immaterial goods such as information, media content,and audience (Mosco 2009). However, applying Marx’s concepts to understandimmaterial goods is not without problem.

Schiller (2007) differentiates information as resources – non-economic,public goods – from information as commodities – economic goods. Whilethis distinction appears to be clear, it becomes less so when the process of trans-formation is taken into account. The process of commodification often (but notnecessarily) involves the transformation of nature into human-made goods. Forexample, cotton becomes cloth; crude oil becomes petroleum. Non-digitizedinformation (such as old financial information on paper, or face to face communi-cation) needs to be digitized to become marketable. However, other resourcesthat are already digital do not go through a transformation; the commodificationprocess only makes the information more convenient for users. For example,


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

raw data mean very little to investors, so it must be processed for analysis anddisplay.

The use value and exchange value of immaterial goods are problematic. Usevalue has two features: first it satisfies human needs and wants. For example,water satisfies thirst, food satisfies hunger. Second, the use value of commoditiesis of a definite quantity. For example, a gallon of water and a pound of potatoeswould sustain an adult for a day. Consider the first feature of use value of financialinformation: it satisfies neither the biological needs nor the psychological needs(such as love and safety) of humans. The use value of financial information lies insocial beings’ perception of its usefulness to make money and maximize profits.This use value is historical because the needs for financial information and theneeds for money do not exist in all kinds of society. A hunter-gatherersociety, for instance, does not need financial information. The need for financialinformation arose once there was a market with competition. If only one selleroffers one type of commodity in the market, the buyer does not need to compareprices. The need for financial information further increased when trading tookplace in dispersed locations, and when money became a form of exchange anda means to store value. The use value of financial information arises whenthere is a geographical differentiation (to be explained later) and when profitsare measured by standardized time.

The second feature of use value is that it has a definite quantity. Unlikematerial goods, the use value of financial information is independent of its quan-tity. A human may find a piece of bread insufficient for a day’s sustenance, but aloaf of bread could be satisfactory. The quantity of financial information is lessimportant than the quality of it. Useful financial information is accurate, objec-tive, and fast. An exorbitant amount of information that is inaccurate and slowhas no use value. Once again, temporality is related to use value.

Given the peculiar use value of information – that it does not satisfy basichuman needs and wants, and that it is independent of quantity – the exchangevalue of financial information is of a peculiar nature as well. Exchange value, toMarx, is ‘determined by the socially necessary labour time taken up in its pro-duction’ (Harvey 1982, p. 11; emphasis author’s own). As Gandy (1993)suggested, it is difficult to estimate the values used up in the production of infor-mation. He whimsically asked if the coffee and alcohol consumed during aperiod of ‘writer’s block’ should be counted as costs in production. Sociallynecessary labour time is different in material production from that in infor-mation production: making ten loaves of bread takes roughly ten times morelabour power than making one loaf of bread. But the labour power requiredin the production of financial information stays constant regardless of thenumber of copies of information produced. A financial analyst may take acertain amount of time to produce a copy of a report, but the amount oflabour power is roughly the same even if the report is digitally duplicated fora million times.


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

In addition, some financial information is produced by computers with aminimal input of labour power (Bartram 2003). If labour power is at a constantor at a minimum in the production of information, its exchange value shoulddecrease if the information is in high demand. This is not always the case withfinancial information. Customers often have to pay a hefty price to subscribeto services. For example, Bloomberg, the main rival of Reuters, has a fixedprice for its proprietary terminal: $1500 per month per user (Austen 2008).

Financial information does not fit into the notion of commodity defined byMarx: it does not transform nature into human-made goods; its use value is his-torical, and it does not fulfil basic human needs; its exchange value is mostlyindependent of the socially necessary labour power required. The rather arbi-trary exchange value of financial information illustrates that the only valuethat matters is the price that customers are willing to pay. This accords withthe neoclassical economic assumption that the exchange value should be privi-leged over the use value (Gandy 1993). As a former Bloomberg executivesaid: to most customers, price is not the issue (Austen 2008). The price thatthe customers are willing to pay is space and time dependent.

Information as capital goods in finance capital

In finance capital, information plays at least two roles: as capital goods (Schiller2007) and as a representation of price. As capital goods, it contributes to theprofit of firms. Capital goods are productions of all past labour and are necessaryfor the production of commodities. The information commodity becomes acapital good for exploitation. For example, applying scientific and technologicalknowledge betters products; applying social scientific knowledge generated fromsurvey and focus group interviews deepens an understanding of consumers’opinion. The types of financial information as capital goods consist of aggregateddata such as historical prices. Unlike scientific, technological, and social scientificknowledge, financial information is not static, it changes the moment when thereis an update. For example, the display of stock prices contains the ‘real time’price as well as the price ranges of the previous day and the previous fiveyears. It is difficult to draw a line between information as capital goods and infor-mation as commodity. Time is seamless and continuous for information goods; itexpires once it is generated.

Information as spatiality

The use value of financial information is historical, it only exists because of geo-graphical differentiations, that is different prices in different locations. If there isno such differentiation, then there is no need for financial information. This poses


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

a challenge for a company like Reuters because on one hand, it has to stress thatits technology is conquering (if not has conquered) space. On the other hand, theuse value of its goods lies in geographical differentiation. This challenge is illus-trated by a contradiction of information and space as detailed below.

Two assumptions about information and space

In the popular imagination, information and space are related in two contradic-tory ways. In the first way, digital information takes up no or minimal physicalspace. In the second way, information and its associated technologies are ima-gined to create a new kind of immaterial space, and many names have beenassigned to it: cyberspace, the network, and simply, the web. This space isusually visualized as ‘soaring corporate towers that are lit up like Christmastrees, slowly moving rivers of headlights’ (Leyshon and Thrift 1997, p. 317).Coded in neon green, ‘information’ is beamed through nodes from whichmore beams were emitted. In fact, Reuters boasted that it has ‘the world’slargest private network of communications to beam real-time information’(Reuters 1999, p. 3). Both ways de-materialize information, which in turnobscures the physical location where information is produced and distributed.

In mainstream economic thought, the market generates information (Babe1996), and technology is a tool that harnesses the volume and speed of infor-mation. Reuters promises that it is at ‘the cutting edge of innovative technologi-cal solutions’ (Reuters 1999, p. 1), even though it did not specify what theproblems may be. In 2010, 89 per cent of capital expenditures went to technol-ogy (Thomson Reuters 2011). Huge technological spending is believed to reflectthe company’s commitment to fast and accurate information. Critics of Reuterssuggested that if the company fails to harness technology, it will lose its competi-tiveness in the market. For example, Matloff (2003), a former Reuters staffmember, wrote that Reuters lost market share to Bloomberg because of itslate adoption of technology, such as the Instant Messaging service incorporatedin the Bloomberg terminal. In addition, Bartram (2003), also a former Reutersstaff member, suggested that Bloomberg gained market share by combining textand analytics in its reports. Both implied that technological devices lead to moreinformation exchange; more information leads to more consumption; and moreconsumption leads to a bigger market share. Information is seen to exist indepen-dently of technology (i.e. information already exists, technology only makes thetransmission possible), and technology is believed to transmit information to apre-existing space (i.e. the market already exists, and technology simplyreaches out to it).

This approach does not explain, for example, why the market for financialinformation is larger and more profitable than the market for news information,or why Reuters set up different kinds of offices and employ different kinds of


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

staff in different locations. If the assumptions about the relation between infor-mation and space hold (i.e. information takes up no space; and informationcreates a new kind of space), then both financial and news informationshould reach the same points in equal abundance. Clearly this is not the case.Although Reuters is still widely known for and well respected as a newsagency, the revenue, number of employees, and profit margin of the news infor-mation department cannot rival those of the financial information departments.1

In 2007, the revenue of financial information departments was £2430 millionwhile that of news information department was £172 million. The numberof employees in financial information was 3816 while that in news informationwas 220. The profit margin in the former was 15 per cent while the latter wasnine per cent (Reuters 2008).

Information as temporality

As suggested in the section on commodity, the use value of financial informationis dependent upon time: slow and outdated information has no use value. Ascapital goods, information is not static, but is updated continuously. Accord-ingly, the annual reports of Reuters are sprinkled with references to timeand speed. Terms such as ‘real-time information’, ‘split-second timing’,‘with all speed’, and ‘fast forward phase’ are placed side by side with imagesfrom the Winter Olympics of sports associated with speed: luge, speedskating, and ski jumping. The 2010 annual report listed the four priorities ofthe company, all of which are time related: ‘maximize the growth of our corebusinesses’; ‘accelerate our investment in faster growing international markets,with a particular emphasis on rapidly developing economies’; ‘reallocate invest-ment to faster growing segments of our business’; and ‘accelerate the sharing ofinformation across the corporation’ (Thomson Reuters 2011, p. 4; emphasisauthor’s own). Faster moving information is deemed essential to fastergrowth and faster profit realization. But how fast? So fast that it has to beinstant. Hope (2006, 2009, 2010, 2011) has effectively argued that real timeis empirically impossible, but it remains a promise for the future. Hence, tech-nological spending is still desired to reduce the friction of time. In effect, ‘thereferent spaces and associated terminologies of real time both illuminate andobscure the distinguishing features of contemporary global capitalism’ (Hope2006, p. 276). He added that:

Materially, real time results from the interactions between globalizing capit-alism and digital technologies. Ideologically, the language and imagery of realtime obscure the socio-historical circumstances of its own emergence andproliferation. This precludes reflection upon the agencies, interests, andclasses who benefit from real-time formations. (Hope 2006, p. 276)


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

The historical materialism of time must be attended to in order to under-stand the ideological construct of time under capitalism. Marx saw time as‘socially constituted (not simply given in nature) and acts as a regulatory forcewithin capitalism’ (Castree 2009, p. 30). Workers sell their labour to capitalistsin exchange for wages. Labour power is objectively measured by the time thatworkers spend at the production site.

If time has a regulatory function in production and in the creation of surplusvalue, time also has a regulatory function in finance capital. Drawing on Marx’sconcept of ‘socially necessary labour time’, Harvey (1989) coined the term‘socially necessary turnover time’ to emphasize capitalists’ efforts to shortenthe time for profit return. The credit system is one tactic to reduce the turnovertime. Harvey (1982) calls the use of credit in production a ‘temporal fix’ becausecapitalists are using future money to pay for present expenses. Capitalists have toattract investors to buy stock in their companies by promising a higher rate ofreturn than the stock of other companies. The role of a financial informationcompany like Reuters is then to supply information to advise investors whichstocks to buy.

However, because information is non-exhaustive and non-rivalrous, andbecause the financial market does not function like the commodity market, aparadox arises for the financial information company: (1) information commod-ity is not scarce; information can be sold to a large number of investors withoutthe commodity being exhausted or deteriorated; (2) stocks are not scarce either,since their prices are not related to its scarcity; (3) the company needs to sell toas many investors as possible for profit maximization; however, (4) if morepeople heed the advice and act on the information, the financial market willbe more volatile, hence the profit of the investors will decrease. As a result,they may not trust the information provided by the company (Thompson 2009).

Consider this situation: if a financial information company promotes a stock(priced at $1) and predicts it will be priced at $4 after a certain period of time,investors who buy on the first day will make three times the profit at the end ofthe period. Stock value rises if more investors buy the stocks early. Investors whobuy late will make less profit. This poses a problem to a financial informationcompany: on one hand, it needs to sell the information commodity. On theother hand, the information commodity has to be exclusive and sold to a fewbecause investors can buy cheap and sell dear. A financial informationcompany displaces this contradiction somewhere else by creating a false senseof scarcity of time: that the investors compete against time, not for the infor-mation commodity. In the section on commodity, it is asserted that the infor-mation commodity is capital goods, it is not static and is continuouslyrenewed. Further, it may not have a direct bearing on profit creation in the cir-culation of finance capital. By falsely creating a scarcity of time, a financial infor-mation company creates a sense of urgency for investors. The use value of theinformation commodity is determined by a perceived usefulness to make


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

more money; but this use value is contingent upon the instant delivery ofinformation.

Information and time–space compression

It has been established in the above that the value of financial information com-modity is dependent on spatiality and temporality. In this section, it is shown howthe circulation of financial information constitutes a specific historical time incapitalism. Historical time is ‘intrinsic to a large-scale, but specific socialprocess, namely the historical trajectory of capitalism as a whole’ (Heydebrand2003, p. 148). The 1970s economic crisis in western economies was commonlyidentified as a moment of the non-sustaining nature of capitalism. Arrighi (1994)stated that the 1970s crisis was the third and the last moment of ‘a single histori-cal process defined by the rise, full expansion, and demise of the US system ofcapital accumulation on a world scale’ (p. ix). Harvey (2005) added that a neweconomic configuration emerged in the 1970s, which often subsumed under theterm ‘globalization’. Harvey (1989) preferred the term ‘time–space com-pression’ to ‘globalization’ because the former underscores that ‘objective con-ception of time and space are necessarily created through material practices andprocesses which serve to reproduce social life’ (p. 204) and it denotes ‘thedimensions of space and time have there been subject to the persistent pressureof capital circulation and accumulation’ (p. 327). To overcome the problem ofcapital over-accumulation, both ‘spatial fix’ and ‘temporal fix’ are employed.

Information and ‘spatial fix’

A political economic critique of information is grounded in a historical materi-alist understanding of the construction of space; in particular, the role thatspace plays in the dynamics of capital accumulation (Castree 2009). From thisperspective, space is not immaterial. To reiterate, capitalism is a contradictorysystem in which stagnation occurs when there is an over-accumulation ofcapital. Capitalists, with the help of politicians, employ a ‘spatial fix’ to solvethe over-accumulation problem (Harvey 1982). Because capitalism is geographi-cally expansionary, it always seeks new markets, and it needs information tech-nologies to connect the markets (Castree 2009). An uneven geographicaldevelopment is integral to capitalism because not all geographical locations areequally endowed with natural resources and homogeneous labour supply(Harvey 1982). The search for cheaper resources, cheaper labour, and alarger market create new geographical differentiations (Castree 2009). Geo-graphical locations need to be connected by communication and transportationsystems. The building of infrastructure requires a large sum of capital; banks


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

and other lending institutions then advance credit to the construction ofinfrastructure.

However, at present, the circulation of finance capital is more autonomousof the circulation of productive capital. Some finance capital does not leave thefinancial market at all because the time for profit realization is shorter. ‘Spatialfix’ is also used to seek new financial markets. As Leyshon and Thrift (1997)stated, it is possible to use anything as a platform for more speculative financialactivity. Mortgage and debt, both are remotely related to production, are pack-aged to be sold as credits. The financial market has expanded exponentially since1970s after the US government allowed banks more freedom to create credit(Strange 1988). To illustrate this, the daily volume of stock shares traded inthe New York Stock Exchange (NYSE) doubled from 1982 to 1992, from 100million to 200 million. In less than a decade, in 2001, the volume tradedincreased tenfold, to a staggering two billion. The growth may not mean Amer-icans were getting tenfold richer. In 1952, 3.8 per cent of Americans ownedstocks; in 1990, 20.4 per cent did. But from 1950s to 1990s, the volume ofstock shares traded daily increased from 0.9 million to 100 million, morethan a hundred times.2 Further, the Clinton Administration passed the FinancialServices Modernization Act of 1999, which allowed banks, brokerages, andinsurance companies to enter into each other’s markets. Deregulation is seenas a solution to expand the markets. After commercial banks became investmentbanks, they traded in the financial market, which led to an increase of tradingactivities.

Colonization, international trade, and globalization are spatial fixes that havebeen used to overcome the problem of over-accumulation by expanding toforeign territories and to foreign markets. To connect the geographical differen-tiations, specific technology and information are needed. Many instances inReuters’ history show the technologies that it adopted and invented were devel-oped under the condition of uneven geographical development. Financial infor-mation is not needed if prices are the same everywhere and if trade only occurs ina closed area. Paul Reuter launched his company outside his country Germanybecause the market was already saturated in the continent. It is not accidentalthat Reuter chose London, rather than any other city in England, as the locationof his business. At the height of British colonization, London was the inter-national financial centre, the city of overflowing capital, and the Europeancentre of communication. In 1851, an undersea cable was laid between Doverand Calais. That year, Reuters set up an office close to the main telegraphoffices and then earned a contract with the London Stock Exchange to providestock quotes from the continent (Read 1992).

Fast forward to the 1970s, which was deemed to be a decisive decade forReuters to solidify its dominant position as a financial information company. In1973, Reuters launched Monitor, a price display terminal. Monitor was hailedas a major innovation because it centralized information from the markets of


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

commodities, bonds, and foreign currencies. At one end, terminals were installedat commodity houses, financial services houses, and banks. At the other end,dealers received information from a computer terminal. In 1981, Monitorblurred the distinction between information provision and trading. The interactivefeature of Monitor allowed dealers to trade through Reuters’screens, via Reuters-designed terminals and software, and Reuters-leased private telecommunicationscables from British Telecom (Tunstall and Palmer 1991).

The question is then why the early 1970s was the era when Monitorappeared in the market. Technological advancement alone could not explainthe specific time frame. Many have tied the invention of Monitor to the increasedvolume of foreign currency trading after the Smithsonian Agreement in 1971(Tunstall and Palmer 1991, Read 1992, Bartram 2003, Matloff 2003). TheAgreement stipulated that the US dollar would no longer be tied to the valueof gold, that the currencies of Bretton Woods member-states would no longerbe tied to the US dollar, and that the printing of money would no longer betied to national reserves. This signified the de-materialization of wealth. TheSmithsonian Agreement was a ‘spatial fix’ that the US government used tocombat inflation. According to Magdoff and Sweezy (1977), the United Statessevered the tie between the US dollar and gold standard to devalue the USdollar in the hope of increasing US exports to Europe. The US governmenthoped this would solve the deficit problem caused by excessive governmentspending abroad in war-torn capitalist countries. Certainly, the history can befurther traced back to the Bretton Woods Agreement, which was anotherspatial fix to ensure the re-building of the European markets after World WarII. The two World Wars, once again, were fights over territories and resources.

The point that needs to be emphasized is that a technology like Monitor wasdeveloped and implemented under a specific spatial configuration. At the sametime, technology masks this spatial configuration by de-materializing and de-his-toricizing information. When the financial market is displayed on the computerscreen, different kinds of prices collapse into one. The computer screen givesthe illusion that trading commodities is no different from trading foreign curren-cies because both are nothing more than prices. This technology obscures the linksbetween productive and finance capital, and masks real social relations that areanchored in physical space. The moving of capital, for instance, brings thefarmers who produce crops into a social relation. On the computer screen, thissocial relation is neither shown nor known; what is shown is how the prices ofcrops are compared to those of company stocks, foreign currencies, and so on.

Conflicts between temporalities

The globalization of financial markets is often seen as an issue of space. In fact, itcan also be considered an issue of time. The temporality of the financial market


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

creates conflicts with those of the corporation and nation-state. Sassen (2000)asserted that: ‘[the] temporal features of finance capital empower it to subjectother forms of capital to its rhythm’ (p. 222). Growth is the only virtue in capit-alism; growth is faster in finance capital than in productive capital because it takesa shorter time for profit realization. A public company represents the interests ofshareholders, its performance is closely watched by investors. As Hope (2006)stated, a company not only has to grow its profit margin, but also has togrow above the average rate in order to avoid being acquired by competitors.As Reuters (1999) promised its shareholders, the company sacrifices marketshare for profitability because market share means nothing if it is not translatedinto profit. To increase profit margins, Reuters outsourced auxiliary servicessuch as telecommunications and network services, IT support and back officeadministration (Reuters 2008). It also sought cheaper labour such as moving soft-ware development to Beijing and Bangkok, and reduced overhead cost by con-solidating data centres from 250 to 10 (Reuters 2008). Labour is not seen asa creation of surplus value, but an obstacle to profit realization. Spatially,these changes create new geographical differentiations because technologiesare needed to connect the Headquarters to other locations.

Another strategy to grow is to detach the company symbolically from anation and from the company history. In order to be more economically efficient,Reuters revamped its organizational structure ‘from a horizontal structuremanaged by areas and country units to become a vertical organization drivenby our main businesses and measured by their profitability’ (Reuters 1999,p. 8). The world is no longer visualized as being occupied by nation-states indifferent regions, but by types of businesses (financial information, news infor-mation). This reinforces the myth that technology has created a new spacewhere information can flow without boundaries. Technology is believed to re-draw the map of how business can be managed without regarding wherepeople and buildings are physically located. Although Reuters was once theBritish news agency, it strives to re-brand itself as a global company that isnot attached to a nation. It is noted that the nationalities of its directors andsenior managers are omitted in its publications.

Reuters’ detachment from a nation-state is not surprising given that neo-lib-eralism has been assaulting and questioning the power, authority, and indeedlegitimacy of nation-states since the late 1970s. To proponents of economic glo-balization and free trade, nation-states are foes rather than accomplices. Nation-states are seen as roadblocks to an integrated global economy because theyimpose taxes and tariffs, immigration regulations, and local laws on corpor-ations. In short, the nation-state is seen as passe, a relic of the past. As Sassen(2000) suggested, ‘the national is a time that looks to the past’ (p. 223). Ascapital is always forward-looking and as capitalism pretends it does not have ahistory, a company that is tied to a nation, even symbolically, may suggest itsreluctance to grow.


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

The 2008 financial crash shall provide an anecdote to conclude this section.The aftermath of the financial meltdown has been closely and nervouslyobserved by government officials and the media. How well the nationaleconomy fares is measured monthly by unemployment rates, job creationrates, home sales, consumer confidence indices, etc. A working adult sharesthe temporality of the national economy. This temporality is measured againstthat of the financial market – a volatile market with a large and quick turnover.In this temporality, prices are instantly updated 24 hours a day from the threemajor stock exchanges in New York, London, and Tokyo. In addition to financialprofessionals who live in this temporality, the super rich around the globe sharethis temporality as well. Their wealth is measured by how the financial marketfares, not by the number of hours that they work nor by the surplus value thatthey create. Incidentally, the super rich are also those who have the least restric-tion of movement in space. On the other hand, the temporality of the unem-ployed, the homeless, the illegal immigrants, and the general non-salariedpopulations is under-reported, if not neglected. They are not even counted aspart of the national economy. Spatially, they are also locked in a physicallocale. Hope (2006) wrote:

Within lifeworlds of impoverishment, [....] time is experienced as an impo-sition. [....] From within local conditions of imposed temporality, it is diffi-cult to comprehend the historical processes of structural power. And, theexercises of such power are remote from those subjects who experiencethe consequences. (p. 283)

Conclusion

This article offers a political economic critique of information in relation tofinance capital from three vantage points: commodity, spatiality, and temporality.Each of the three concepts has been debated among scholars in communication,sociology, geography, anthropology, and literary criticism. In the field of com-munication, political economists pay more attention to commodity than to spa-tiality and temporality. When space is discussed, it is usually in the guise ofglobalization. Globalization is as much a temporal issue as a spatial one. Byattending to the historical materialism of space and time, political economistsmay be able to further problematize the question of commodity. As Strange(1988) succinctly put it, the basic questions to understand the politicaleconomy of immaterial goods are the same: Who gets the benefits? Whopays? Who gets the opportunities to acquire wealth and power?

This article focuses on financial information because the power relationshipthat controls its production and distribution, and its use in the financial marketacutely reflects class inequality in the United States, if not in the world. Despite


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

the social, economic, and political significance of financial information, politicaleconomists have not adequately studied it. It may not be surprising given that thestock market was still in its infancy when Marx wrote Capital; that Marxists focuson the impact of international finance, production, and trade on local politicaland social systems (Strange 1997); and that Marxist political economists tendto ignore the role of information in the economy. However, in recent years,there has been a surge of critical work in the area of money and society thatpays attention to information and technology (some examples are Leyshon andThrift 1997, Zaloom 2003, Preda 2009), it is time for political economists incommunication to join in the conversation.

Notes

1 Financial information products include those produced in the divisionsof sales and trading, research and asset management, and enterprise.News information products are produced in the media division.

2 Timeline. NYSE Euronext. http://www.nyse.com/about/history/timeline_chronology_index.html

References

Arrighi, G. (1994) The Long Twentieth Century: Money, Power, and the Origins of OurTimes, Verso, New York.

Austen, I. (2008) ‘The new fight for financial news’, New York Times, 23 June,[Online] Available at: http://www.nytimes.com/2008/06/23/business/media/23thomson.html?pagewanted=print (20 June 2011).

Babe, R. E. (1995) Communication and the Transformation of Economics: Essays in Infor-mation, Public Policy, and Political Economy, Westview Press, Boulder, CO.

Babe, R. E. (1996) ‘Economics and information: toward a new (and more sustain-able) worldview’, Canadian Journal of Communication, vol. 21, no. 2,pp. 161–178.

Baran, P. & Sweezy, P. (1966) Monopoly Capital, Monthly Review Press, New York.Bartram, J. (2003) ‘News agency wars: the battle between Reuters and Bloomberg’,

Journalism Studies, vol. 4, no. 3, pp. 387–399.Castree, N. (2009) ‘The spatio-temporality of capitalism’, Time and Society, vol. 18,

no. 1, pp. 26–61.Chakravarity, P. & Schiller, D. (2010) ‘Neoliberal newspeak and digital capitalism in

crisis’, International Journal of Communication, vol. 4, pp. 670–692.Foster, B. J. & Magdoff, F. (2009) The Great Financial Crisis: Causes and Consequences,

Monthly Review Press, New York.


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

http://www.nyse.com/about/history/timeline_chronology_index.html

http://www.nyse.com/about/history/timeline_chronology_index.html

http://www.nytimes.com/2008/06/23/business/media/23thomson.html?pagewanted=print

http://www.nytimes.com/2008/06/23/business/media/23thomson.html?pagewanted=print

Gandy, O. H., Jr. (1993) ‘Toward a political economy of personal information’,Critical Studies in Mass Communication, vol. 10, no. 1, pp. 70–97.

Harvey, D. (1982) The Limits to Capital, University of Chicago Press, Chicago, IL.Harvey, D. (1989) The Condition of Postmodernity: An Enquiry into the Origins of Cultural

Change, Blackwell, Cambridge, MA.Harvey, D. (2005) A Brief History of Neoliberalism, Oxford University Press, Oxford.Harvey, D. (2010) A Companion to Marx’s Capital, Verso, New York.Heertje, A. (1988) ‘Technical and financial innovation’, in Innovation, Technology, and

Finance, ed. A. Heertje, Basil Blackwell and the European Investment Bank,Oxford, pp. 1–13.

Heydebrand, W. (2003) ‘The time dimension in Marxian social theory’, Time andSociety, vol. 12, nos. 2/3, pp. 147–188.

Hope, W. (2006) ‘Global capitalism and the critique of real time’, Time and Society,vol. 15, nos. 2/3, pp. 275–302.

Hope, W. (2009) ‘Conflicting temporalities: state, nation, economy and democracyunder global capitalism’, Time and Society, vol. 18, no. 1, pp. 62–85.

Hope, W. (2010) ‘Time, communication, and financial collapse’, International Journalof Communication, vol. 4, pp. 649–669.

Hope, W. (2011) ‘Crisis of temporalities: global capitalism after the 2007–08 finan-cial collapse’, Time and Society, vol. 20, no. 1, pp. 94–118.

Krippner, G. R. (2011) Capitalizing on Crisis: The Political Origins of the Rise of Finance,Harvard University Press, Cambridge, MA.

Leyshon, A. & Thrift, N. (1997) Money/Space: Geographies of Monetary Transformation,Routledge, New York.

Magdoff, H. & Sweezy, P. M. (1977) The End of Prosperity: The American Economy in the1970s, Monthly Review Press, New York.

Matloff, J. (July/August 2003) ‘Can Reuters recover? The venerable agency needs anew strategy for success’, Columbia Journalism Review, pp. 49–51.

Marx, K. (1999/1894) Capital Vol. III, [Online] Available at: http://www.marxists.org/archive/marx/works/1894-c3/ (1 June 2012).

Mosco, V. (2009) The Political Economy of Communication (2nd ed), Sage, London.Mosco, V. & Wasko, J. (1988) The Political Economy of Information, University of

Wisconsin Press, Madison, WI.Postone, M. (1993) Time, Labor, and Social Domination: A Reinterpretation of Marx’s

Critical Theory, Cambridge University Press, Cambridge, MA.Preda, A. (2009) Framing Finance: The Boundaries of Markets and Modern Capitalism,

University of Chicago Press, Chicago, IL.Read, D. (1992) The Power of News: The History of Reuters 1849–1989, Oxford

University Press, Oxford.Reuters (1999) Annual Report 1998, Reuters, London.Reuters (2008) Annual Report 2007, Reuters, London.Sassen, S. (2000) ‘Spatialities and temporalities of the global: elements for a theo-

rization’, Public Culture, vol. 12, no. 1, pp. 215–232.


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

Schiller, D. (1999) Digital Capitalism: Networking and the Global Market System, MITPress, Cambridge, MA.

Schiller, D. (2007) How to Think About Information? University of Illinois Press,Urbana, IL.

Schiller, H. I. (1986) Information and the Crisis Economy, Oxford University Press,New York.

Strange, S. (1988) States and Markets: An Introduction to International Political Economy,Basil Blackwell, New York.

Strange, S. (1997) Casino Capitalism, Manchester University Press, Manchester.Thompson, P. A. (2009) ‘Market manipulation? Applying the propaganda model

in financial media reporting’, Westminster Paper in Communication and Culture,vol. 6, no. 2, pp. 73–96.

Thompson, P. A. (2010) ‘Sold short: new communication technologies and the“democratization” of financial markets’, in Digital Dynamics: Engagements andDisconnections, eds G. Murdock & P. Golding, Hampton Press, Cresskill,NJ, pp. 23–44.

Thomson Reuters (2011) Annual Report 2010, Thomson Reuters, New York.Tunstall, J. & Palmer, M. (1991) Media Moguls, Routledge, New York.Zaloom, C. (2003) ‘Ambiguous numbers: trading technologies and interpretation of

financial markets’, American Ethnologist, vol. 30, no. 2, pp. 258–272.

Micky Lee (PhD Oregon) is an Associate Professor of Media Studies at Suffolk

University, Boston. She has published a dozen journal articles on feminist

political economy, telecommunications, new information and communication

technologies, and media, information, and finance. Address: Communication

and Journalism, Suffolk University, 41 Temple Street, Boston, MA 02114, USA.

[email: [email protected]]


Dow

nloa

ded

by [

Nat

iona

l Pin

gtun

g U

nive

rsity

of

Scie

nce

and

Tec

hnol

ogy]

at 1

7:03

19

Dec

embe

r 20

14

Documents

INFORMATION AND FINANCE CAPITAL