Sassen, Saskia - A Savage Sorting of Winners and Losers

7/24/2019 Sassen, Saskia - A Savage Sorting of Winners and Losers

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A Savage Sorting of Winners and Losers:Contemporary Versions of Primitive AccumulationSASKIA SASSENepartment of Sociology and Committee on !lo"al #$oug$t% Colum"ia&niversity% Ne' (or)% &SA

A*S#+AC#,ere I e-plore t$e possi"ility t$at capitalism is today undergoing t$e systemice.uivalent to /ar-0s notion of primitive accumulation% only no' as adeepening of advancedcapitalism predicated on t$e destruction of more traditional forms ofcapitalism1 I focus on t'odiverse instances '$ic$ s$are a common systemic logic: e-pulsing peoplefrom more traditional

capitalist encasements1 2ne instance is t$at of countries devastated "y animposed de"t andde"t3servicing regime '$ic$ too) priority over all ot$er state e-penditures4 atits most e-treme%t$e ensuing devastation of traditional economies and traditional states $asmade t$e land morevalua"le to t$e glo"al mar)et t$an t$e people on it1 #$e ot$er instance% '$ic$I see as a systemice.uivalent to t$e 5rst% is t$e potential for glo"al replication of t$e 5nancial

innovation t$atdestroyed 67 million plus $ouse$olds in t$e &S in t'o years% 'it$ many moreto come4$ouse$old destruction at t$is scale devastates '$ole areas of cities% andleaves vacant land1 ,o't$is rapidly gro'ing e-panse of vacant land 'ill "e reincorporated into glo"alcapital circuits isnot yet clear1 I e-amine t$ese t'o cases t$roug$ a speci5c lens: t$etransformative processest$at e-pand t$e "ase of current advanced capitalism% 'it$ particular attentionto t$eassem"lages of speci5c processes% institutions% and logics t$at ena"led t$issystemic transformation1

Key'ords: post3Keynesian economics% land gra"s% de"t as disciplining regime%su"3prime


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mortgages

#$e geograp$ic e-pansion and systemic deepening of capitalist relations ofproduction over t$elast 89 years $ave led to one of t$e most "rutal sortings of 'inners and losers,ere I e-plore t$epossi"ility t$at capitalism is today undergoing t$e systemic e.uivalent to/ar-0s notion ofprimitive accumulation PA;% only no' as a deepening of advanced capitalismpredicated ont$e destruction of more traditional forms of capitalism Amin% 89694 ,arvey%899


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ated0 middle classes of countries suc$ as India and C$ina1 I use t$e terme-pulsed0 to descri"e adiversity of conditions: t$e gro'ing num"ers of t$e a"?ectly poor% of t$edisplaced '$o are 'are3$oused in formal and informal refugee camps% of t$e minoritiBed andpersecuted 'are$oused inprisons% of 'or)ers '$ose "odies are destroyed on t$e ?o" and rendereduseless at far too youngan age1 /y argument is t$at t$is massive e-pulsion% 'it$ strong elements of'$at ,arvey $ascalled accumulation "y dispossession% is actually signaling a deeper systemictransformation t$at$as "een documented in "its and pieces "ut remains insuciently t$eoriBed1Else'$ere Sassen%

899Da% c$1 6% D% =; I develop a t$eory of c$ange '$ic$ $as as one coredynamic% t$e fact t$atcondition - or capa"ility y can s$ift organiBing logics and t$ere"y actuallyc$ange valenceeven if it may loo) t$e same: t$us% for instance% t$is massive e-pulsion ofpeople is notsimply more of t$e same1 I argue t$at t$e organiBing logic of t$is post3Keynesian period isno' ma)ing legi"le its s$ape: at t$e center of t$is logic is not t$e valuing0 of

people as'or)ers and consumers% "ut t$e e-pulsion of people and t$e destruction oftraditional capitalismsto feed t$e needs of $ig$ 5nance and t$e needs for natural resources1 orinstance% t$e "uying ofvast stretc$es of land in su"3Sa$aran Africa and parts of Latin America to usefor oFs$oreagriculture% e-traction of underground 'ater% and access to metals andminerals is an easieroperation for t$e currently dominant investors and governments if t$ey only$ave to deal 'it$'ea)ened andGor corrupt governments and local elites1,ere I e-amine only some aspects of t$is larger con5guration: t'omec$anisms t$at $ave con3tri"uted to t$e e-panded e-pulsion of people and t$e desta"iliBing of a largenum"er of glo"al


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Sout$ countries1 #$e t'o instances I $ave selected are to some e-tentcounterintuitive as possi"lecases of a contemporary version of PA1 #$ey are easily seen as logics ofe-traction% "ut I 'illargue t$at a"ove all t$ey prepared t$e ground for t$e systemic deepening ofadvanced capitalism12ne of t$ese instances is t$e structural ad?ustment pro?ect implemented "yglo"al regulatoryinstitutions% nota"ly t$e I/% t$e World *an) and W#2% "eginning in t$e 6=D9sand escalatingin t$e 6==9s1 /y argument $ere is t$at "eyond t$e muc$ noted e-traction of"illions of dollarsfrom glo"al Sout$ countries in t$e form of de"t servicing% t$e )ey is t$e 'or)of systemic con3

ditioning t$at too) place4 de"t servicing 'as t$e instrument for t$isdisciplining1 #$e secondinstance is t$e su"3prime mortgage crisis t$at "egan in t$e early 8999s ande-ploded in 899H1/ost of t$e attention $as gone% and rig$tly so% to t$e massive losses for t$eindividuals andfamilies '$o 'ere sold t$ese mortgages% losses '$ic$ 'ill continue t$roug$89661 In t$iscase my argument is% again% t$at "eyond t$e logics of e-traction in t$e form o

mortgage pay3ments and mortgage agents0 fees% also $ere 'e can detect a morefoundational dynamic in t$eform of t$e systemic deepening of advancedGdecaying capitalism and% furt$ert$at t$e instru3ment is one t$at can easily e-pand into t$e glo"al mar)et represented "y ca18 "illion modestmiddle class $ouse$olds in t$e 'orld1

Primitive Accumulation #oday: E-panding t$e 2perational Space of AdvancedCapitalism

#$e /ar-ist category primitive accumulation0 points not only to a logic ofe-traction t$atcan e-propriate and impoveris$% "ut also% and more importantly% to a mode ofincorporating


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non3capitalist economies into capitalist relations of production1 In t$is regardPA is part oft$e $istoric e-pansion of capitalist relations1 #$is 'ould suggest prima faciet$at t$e categoryis not applica"le today since most of t$e 'orld $as "asically "eenincorporated into capitalistrelations of production see Amin% 8969;16or /ar-% PA $inged on earlier modes of production "ecoming factors in t$ema)ing ofcapitalist relations of production1 /ar-0s de5nition of PA in terms of t$e t$eoryof capitalism$as at its center t$e notion of a $istorical process t$at separates people fromt$e means t$atallo' t$em to live and produce18 Amin 8999; mentions t$e idea t$at primitive

accumulationis not somet$ing con5ned to t$e early stage or pre$istory of capitalism1,arvey 899


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open not only to trade '$ic$ could "e $elpful; "ut also to permit capital toinvest in pro5ta"le ven3tures using c$eaper la"our po'er% ra' materials% lo'3cost land% and t$e li)e1

#$e general t$rust ofany capitalist logic of po'er is not t$at territories s$ould "e $eld "ac) fromcapitalist development% "ut t$at t$ey s$ould "e continuously opened up1,arvey% 899


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Africa and good parts of Latin America count more t$an t$e people on t$oselands count as con3sumers and as 'or)ers1 I see t$is as part of t$is systemic deepening ofadvanced capitalistrelations of production1 We $ave left "e$ind t$e Keynesian period '$ic$t$rived on t$eaccelerated e-pansion of prosperous 'or)ing and middle classes1 /a-imiBingconsumption"y $ouse$olds 'as a critical dynamic in t$at period4 and it is today in t$e so3called emergenteconomies of t$e 'orld1 Keynesianism 'as mar)ed "y a valuing of people as'or)ers andconsumers"ot$ of '$ic$ mattered for t$e deepening of capitalism1 In myreading 'e $ave

entered a ne' p$ase '$ic$ is mar)ed "y a dou"le $eli- dynamic1 2n t$e one$and% t$ere isan increasingly degraded use of peopleas se- 'or)ers% as 'or)ers t$at areused and disposedof% as providers of "ody organs1 2n t$e ot$er% t$ere is a rapidly gro'ingsurplus of peoplein t$eform of distinctive populations: t$e displaced "y proliferating civil 'ars in su"3Sa$aran Africa%prisoners in t$e &S and a gro'ing num"er of ot$er glo"al Nort$ countries%

displaced people ofall sorts assem"led in refugee camps managed "y t$e international$umanitarian system at "est;5nanced "y t$e ta-payers of t$e 'orld1 #erritory is systemically repositioned igro'ing partsof t$e glo"al Sout$ as representing not nation states "ut needed0 resources1Else'$ereSassen% 899D"; I e-tend t$is argument also to a range of territorial sites alsoin t$e glo"alNort$% particularly t$e &S e1g1 neig$"or$oods devastated "y $omeforeclosures% central etroitdevastated "y t$e disassem"ling of manufacturing production% etc;1>I emp$asiBe a pragmatic interpretation: t$e ma)ing of t$ese capitalistrelations of production%'$et$er t$ose of early or of advanced capitalism1 In t$is paper% and in t$elarger pro?ects on


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'$ic$ t$ese cases are "ased% I focus on t'o cases t$at are easily descri"ed aslogics of e-traction1E-traction is indeed a ma?or feature% and I descri"e t$is1 *ut I t$in) it is criticato go "eyondlogics of e-traction to recover t$e systemic transformation$o' moretraditional capitalisteconomies are "eing destroyed to e-pand t$e operational space of advancedcapitalism17 In"rief% t$e t'o cases I descri"e are% "eyond e-traction% system3c$angingpractices% and pro?ects1MW$en Logics of E-traction E-pand t$e #errain for Advanced Capitalism

#$e e-traction of value from t$e glo"al Sout$ and% in particular% t$eimplementation ofrestructuring programs at t$e $ands of t$e I/ and t$e World *an)% $ave $ad

t$e eFect ofreconditioning0 t$e terrain represented "y t$ese countries for an e-pansion oadvancedcapitalism% including its e-plicitly criminal forms1 #$e aspect of primitiveaccumulation int$e contemporary 'orld t$at concerns me $ere is a"ove all systemicdeepening more so t$ane-traction1/ore concretely% many of t$e poor countries su"?ected to t$is regime no'

$ave larger s$aresof t$eir populations in desperate poverty and are less li)ely to enter t$ecapitalist circuit via con3sumption t$an t$ey did even 89 years ago1 /any of t$e su"3Sa$aran countrie$ad functioning$ealt$ and education systems and economies% and less destitution t$an todaySystemically gov3ernments $ave "een 'ea)ened and corrupted4 even resource3ric$ countries$ave $ad e-pandeds$ares of t$eir people "ecome destitute% 'it$ Nigeria t$e most noted case1

#$e dominantdynamic at 'or) for t$ese populations is% to a good e-tent% t$e opposite of t$eKeynesianperiod0s valuing of people as 'or)ers and as consumers1 #$is e-pelling $asgiven e-panded


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space to criminal net'or)s% greater access to land and underground 'aterresources to foreign"uyers% '$et$er 5rms or governments1 Systemically% t$e role of ric$ donorcountries $as alsos$ifted: overall t$ey give less in foreign aid for development t$an


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#$ese countries $ad to use a signi5cant s$are of t$eir total revenues toservice t$ese de"ts1or instance% Africa0s payments reac$ed O7 "illion in 6==D% '$ic$ means t$atfor every O6in aid% African countries paid O61>9 in de"t service in 6==D1 e"t to !rossNational Product!NP; ratios 'ere especially $ig$ in Africa% '$ere t$ey stood at 68


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t$e earlier Structural Ad?ustment Programs SAPs;1 P+SPs descri"e t$emacroeconomic%structural% and social policies and programs0 t$at a country is re.uired topursue in order to"e eligi"le for de"t relief I/% 899=a;1 As of 6 Quly 899= 8M countries $adcompleted,IPC%69 and = $ad passed t$e decision point0 I/% 899=";1 inally% t$e/ultilateral e"t+elief Initiative /+I; 'ent into full force in Quly 899M166 It 'as intended toaddress manyof t$e criti.ues of t$e ,IPC initiative168 /+I promised cancellation of de"tsto t$e World *an)incurred "efore 899; for t$e countries t$at completed t$e ,IPC initiative1 According toone estimate%t$e ma?or cancellation sc$emes including ,IPC and /+I initiatives% and t$eParis Clu";$ave 'ritten oF ODD "illion so far Qu"ilee e"t Campaign &K% 899=";1

#$e de"t "urden t$at "uilt up in t$e 6=D9s% and especially t$e 6==9s% $as $adsu"stantialrepercussions on state spending composition1 am"ia% !$ana and &ganda%t$ree countries t$at

glo"al regulators nota"ly t$e World *an) and t$e I/; sa' as cooperative%responsi"le andsuccessful at implementing SAPs illustrate some of t$e issues even '$en $eldin $ig$ esteem"y glo"al regulators1 A fe' e-amples of e-penditure levels paint a trou"lingpicture a"out $o't$ey ac$ieved t$is $ig$ esteem1 At t$e $eig$t of t$ese programs in t$e earlyto mid36==9s%am"ia0s government paid O61< "illion in de"t "ut only O alone% t$eset$ree countries remittedO81H "illion to "an)ers in t$e Nort$1 W$en t$e ne' programs "ecame anoption% t$ese t$ree


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countries "ene5ted from ,IPC and /+I programs and conceded to t$eattendant P+SPre.uirements1 #$us% '$ile in 6==H am"ia spent 6D1


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e-tension% often for t$eir $ouse$olds1 or instance% '$en t$ere is a s$ortage o"asic $ealt$care'omen usually ta)e on t$e e-tra "urden of caring for t$e sic)1 W$en sc$oolfees are introducedor spending is cut sons0 education is prioritiBed over daug$ters01 WaterprivatiBation can reduceaccess to 'ater and increase t$e 'ater3gat$ering "urden placed on 'omen1W$en families gro'cas$ crops for e-port 'omen0s 'or) produces money% '$ic$ men usuallycontrol% rat$er t$anfood Qu"ilee e"t Campaign &K% 899H;12ne .uestion concerns t$e option of not "ecoming part of t$e I/ de"tservicing discipliningregime and foregoing t$e $elp it is meant to provide1 #$e so3called ad?ustmen

programs of t$e6=D9s and 6==9s destroyed many traditional economies% leaving manycountries only 'it$ ma?orde"ts1 At t$at point% "ecoming part of t$e de"t cancellation program launc$edin 899M $aspro"a"ly "een prefera"le1 #$e evidence suggests t$at once a country $as"een pus$ed into de"t%cancellation can% in principle% $elp a country allocate more governmentrevenue for general

social and development .uestions1 #$is $as "een t$e case 'it$ !$ana%&ganda and a fe' ot$ers'$ic$ $ave seen t$e gro't$ of middle classesalong 'it$ continuing a"?ectpoverty1 2n t$e ot$er$and% Angola '$ic$ 'as not accepted for de"t cancellation% spent M1D of!P on de"t servicepayments and only 617 of !P on $ealt$ in 89974 it continues to spenda"out O818 "illioneac$ year on e-ternal de"t payments Qu"ilee e"t Campaign &K% 899D;1*ut t$e Angola case also points to anot$er com"ination of elements1 Its elites$ave "ecome'ealt$y on t$e vast mining resources% mostly for e-port% and t$is arrangemencan no' continueto do so 'it$out muc$ interference1 #$e vast poverty continues and so doest$e mining for


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e-port1 2ne cannot $elp "ut as)% '$o are t$e ot$er "ene5ciaries of t$issituation

#$ere is a larger $istory in t$e ma)ing1 In my reading it includes as one )eyelement a repo3sitioning of muc$ of Africa and good parts of Latin America and Central Asia ina ne' massivelyrestructured glo"al economy1 Wea)ened governments and t$e destruction oftraditional econom3ies $ave launc$ed a ne' p$ase of survival economies1 ,ere I focus "rie@y ont'o of t$eseaspects for a more detailed analysis see Sassen% 899Da;1 2ne is t$at t$isrestructuring $asrepositioned territory0 in vast regions of t$e 'orld as a site for resourcesrat$er t$an as a

nation0s space1 #$e ot$er is t$e emergence of an e-panded range of survivaleconomies4some of t$ese are old "ut no' operate at a glo"al scale1

#$e +epositioning of #erritory in t$e !lo"al ivision of unctions#$e e-tent of land ac.uisitions in t$e glo"al Sout$ "y multinationalcorporations /NCs; andgovernments of ric$ countries over t$e last fe' years mar)s a ne' p$ase1 It isnot t$e 5rst

time in modern times: t$is is a recurrent dynamic '$ic$ tends to "e part ofimperial realign3ments1 C$ina0s ac.uiring of mines in Africa is lin)ed to its rise as a glo"alpo'er1 *ritain%rance% t$e &S% and ot$ers all did t$is in t$eir early imperial p$ases% and inmany cases $aveo'ned vast stretc$es of land in foreign countries for $undreds of years1 *uteac$ p$ase $asits particularities1 2ne )ey feature of t$e current period is t$at unli)e pastempires% today0s'orld consists largely of nation states recogniBed as sovereign% no matter $o'fee"le t$issovereign po'er is in many cases1 +at$er t$an imperial gra"% t$e mec$anismis foreign directinvestment among ot$ers;1


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#$e International ood Policy +esearc$ Institute IP+I4 von *raun and/einBen3ic)% 899=;5nds t$at "et'een 67 and 89 million $ectares of farmland in poor countries$ave "een su"?ect totransactions or tal)s involving foreigners since 899M16< #$at is t$e e.uivalentof a 5ft$ of all t$efarmland of t$e European &nion1 Putting a conservative 5gure on t$e land0svalue% IP+I calcu3lates t$at t$ese deals are 'ort$ &SO89 C$ina secured t$e rig$t to gro' palm oil for"iofuels on81D million $ectares in Congo% '$ic$ 'ould "e t$e 'orld0s largest palm3oilplantation1 It isnegotiating to gro' "iofuels on 8 million $ectares in am"ia1 Per$aps less)no'n t$an t$eAfrican case is t$e fact t$at privatiBed land in t$e territories of t$e formerSoviet &nion%especially in +ussia and &)raine% is also "ecoming t$e o"?ect of muc$ foreignac.uisition1 In899D alone% t$ese ac.uisitions included t$e follo'ing: a S'edis$ company%Alpcot Agro% "oug$t


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68D%999 $ectares in +ussia4 Sout$ Korea0s ,yundai ,eavy Industries paid OM17million for ama?ority sta)e in K$orol erno% a company t$at o'ns 69%999 $ectares ineastern Si"eria4/organ Stanley "oug$t >9%999 $ectares in &)raine4 !ulf investors areplanning to ac.uirePava% t$e 5rst +ussian grain processor to "e @oated on t$e 5nancial mar)ets tsell >9 of itslando'ning division% giving t$em access to 799%999 $ectares1 Also less noticet$an t$eAfrican case is t$at Pa)istan is oFering $alf a million $ectares of land to !ulfinvestors 'it$t$e promise of a security force of 699%999 to protect t$e land1

#$ese developments are part of a larger com"ination of trends1 irst% t$ere is

t$e immediatefact of $o' t$e glo"al demand for food% partly fed "y t$e $alf million strongne' middle classesof Asia% $as meant t$at t$ere are pro5ts to "e $ad in food and land167 We no'$ave a glo"almar)et for land and food controlled "y large 5rms and some governments%and it $as "een agro't$ sector t$roug$out t$e 5nancial crisis1 &nder t$ese conditions pricing isa controlled

aFair1 Secondly% t$ere is t$e ongoing demand for metals and minerals of allsorts and a '$olene' demand for metals and minerals $it$erto not muc$ e-ploited as t$eirdemand comesfrom t$e more recent developments in t$e electronics sector1 Africa% muc$ lesdensely popu3lated and "uilt up t$an ot$er parts of t$e 'orld% $as "ecome a )ey destinationfor investmentsin mining1 #$irdly% t$ere is t$e gro'ing demand for 'ater and t$e e-$austionof underground'ater ta"les in several areas of t$e 'orld1 ourt$% and least noted per$aps% ist$e s$arpdecline in foreign direct investment I; in manufacturing in Africa% alsosignaling t$e repo3sitioning of territory1 In Sout$ Africa and Nigeria% Africa0s top t'o I recipientaccounting


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for


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ary for t$eir operation1 #$is contrasts 'it$ processes t$at are "y t$eir verynature glo"al% suc$ ast$e net'or) of 5nancial centers underlying t$e formation of a glo"al capitalmar)et1 inally% t$ispattern also points to a diFerent tra?ectory from t$at of t$e old industrialcountries1 Instead ofgoing t$e 'ay of unions and political 5g$ts to move from t$e predatory stateto t$e regulatorystate% in t$e glo"al Sout$ it is t$e a-is of criminality and e-treme sacri5ce ont$e part of poor andimpoveris$ed $ouse$olds1It is in t$is conte-t t$at alternative survival circuits emerge1 #$e conte-t can"e speci5ed as asystemic condition comprising a set of particular interactions including $ig$

unemployment%poverty% 'idespread "an)ruptcies and s$rin)ing state resource allocation forpeople3orienteddevelopment1 We see t$e formation of pro5t3ma)ing and governmentrevenue3ma)ing possi"i3lities "uilt on t$e "ac)s of migrants% and 'omen migrants in particular1 Assuc$% e-amining t$e.uestion of immigrant remittances oFers valua"le insig$ts into t$e "roadersu"?ect of t$e for3

mation of alternative political economies and $o' t$ese unsettle older notionof an internationaldivision of la"or1Immigrants enter t$e macro level of development strategies t$roug$ t$eremittances t$ey send"ac) $ome16D #$ese represent a ma?or source of foreign e-c$ange reservesfor t$e governmentin a good num"er of countries1 Alt$oug$ t$e @o's of remittances may "eminor compared'it$ t$e massive daily capital @o's in glo"al 5nancial mar)ets% t$ey canmatter enormouslyto developing or struggling economies1 #$e World *an) estimates t$atremittances 'orld'idereac$ed O


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amount% O8>9 "illion 'ent to developing countries up from O6MD "illion in8997% and up H


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largest recipients of remittances% 'it$ C$ina and India leading% t'o countriesmar)ed "y anincreasingly "i3modal emigration$ig$ly paid professionals and lo'3'age'or)ers1 /oregenerally% it s$o's clearly t$at if 'e ran) countries "y total value ofremittances% t$epicture c$anges s$arply1 #$e top remittance recipient countries include ric$countries suc$as rance% Spain% !ermany and t$e &nited Kingdom% pointing to t$e fact of atransnationalprofessional class Sassen% 899H% c$1 M;1In s$ort% t$e gro'ing immiseration of governments and economies in t$eglo"al Sout$launc$es a ne' p$ase of glo"al migration and people trac)ing% strategies

'$ic$ function"ot$ as survival mec$anisms and pro5t3ma)ing activities1 #o some e-tent%t$ese are olderprocesses '$ic$ used to "e national or regional and today operate on glo"alscales1 #$esame infrastructure t$at facilitates cross3"order @o's of capital% informationand trade isalso ma)ing possi"le a range of cross3"order @o's not intended "y t$eframers and designers

of t$e current corporate glo"aliBation of economies1 !ro'ing num"ers oftrac)ers andsmugglers are ma)ing money oF t$e "ac)s of men% 'omen and c$ildren% andmany govern3ments are increasingly dependent on t$eir remittances1 A )ey aspect $ere ist$at% t$roug$t$eir 'or) and remittances% migrants en$ance t$e government revenue ofdeeply inde"tedcountries1 #$e need for trac)ers to $elp in t$e migration eFort also oFersne' pro5t3ma)ing possi"ilities to entrepreneurs0 '$o $ave seen ot$er opportunitiesvanis$ as glo"al5rms and mar)ets enter t$eir countries% as 'ell as aiding criminals a"le tooperate t$eirillegal trade glo"ally1 #$ese survival circuits are often comple-% involvingmultiple locations


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and types of actors% and constituting increasingly glo"al c$ains of traders%trac)ers% victims%and 'or)ers1

#$e ot$er side of t$ese dynamics is t$e proliferation of sites t$at concentratea gro'ingdemand for particular types of la"or supplies for a full ela"oration seeSassen% 899Dc;1Strategic among t$ese are glo"al cities% 'it$ t$eir s$arp demand for top3leveltransnationalprofessionals and for lo'3'age 'or)ers% often 'omen from t$e glo"al Sout$1

#$ese areplaces t$at concentrate some of t$e )ey functions and resources for t$emanagement andcoordination of glo"al economic processes1 #$e gro't$ of t$ese activities $as

in turn% pro3duced a s$arp gro't$ in t$e demand for $ig$ly paid professionals% "ot$t$roug$ t$e sp$ereof production t$e 5nancial sector% specialiBed corporate services% and so on;and t$e sp$ereof social reproduction "ot$ of t$e $ig$3income professionals and t$e lo'3'age 'or)force

#a"le 61 #op recipients of migrant remittances as of !P% 899M899=

Wor)ers0 remittances% compensation ofemployees% and migrant transfers% de"it&SO million; 899M 899H 899D 899=e+emittances as a s$areof !P% 899D ;

#a?i)istan 6%96= 6%M=6 8%7>> 6%D67 >=1M#onga H8 699 699 =M =D 6%D=H 6%>=6 KyrgyB +epu"lic >D6 H67 6%8< >>< >=M 8H1


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,aiti 6%9M< 6%888 6%> 8%6D9 6%=86 6>17Nicaragua M=D H>9 D6D HD> 681>Al"ania 6%MD 6%>=7 6%>=7 6818!uatemala %8%>76 >%9M7 661>*anglades$ 7%>8D M%7M8 D%==7 69%>P$ilippines 67%876 6M%< 6=%>66 6618Source: +at$a et al1 899=% p1 66 68%=86 6%Saudi Ara"ia 6>%HD< 67> 6%=HMSpain 7%6>9 M%=HH D%6%


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CBec$ +epu"lic 6%698 6%>


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range of economic and 5nancial operations1 #$e strengt$ening% and in some ot$ese cases% t$eformation of ne' glo"al la"or circuits% is em"edded in t$e glo"al economicsystem and itsassociated development of various institutional supports for cross3"ordermar)ets andmoney @o's1 #$ese circuits are dynamic and c$anging in terms of t$eirlocation1 Some oft$ese circuits are part of t$e s$ado' economy% "ut t$ey use some of t$einstitutional infrastruc3ture of t$e regular economy1 /ost of t$ese circuits are part of t$e formaleconomy and t$eyservice leading economic sectors and places 'orld'ide1 #$is mi- of la"orsupply and

demand circuits is dynamic and multi3locational12f all t$e $ig$ly developed countries% it is t$e &S '$ere t$ese deep structuraltrends aremost legi"le1 National level data for t$e &S s$o' a s$arp gro't$ in ine.uality1or instance%economic gro't$ from 8996 to 8997 'as $ig$ "ut very une.ually distri"uted1/ost of it 'entto t$e upper 69 and% especially% t$e upper 6 of $ouse$olds1 #$e rest% t$atis =9 of $ouse3

$olds% sa' a >18 decline in t$eir mar)et3"ased incomes /is$el% 899H;1 If 'edisaggregate t$at =9% t$e siBe of t$e loss gro's as 'e descend t$e incomeladder1 Sincet$e "eginning of t$e so3called economic recovery in 8996% t$e income s$are ot$e top 6gre' percentage pointsto 6M in 8997% amounting to a loss of O8H8 "illion in income since 89961igure 6 traces alonger term pattern from 6=6H '$ic$ s$o's clearly t$e return to e-tremeine.uality aftert$e decades of t$e Keynesian period1

igure 61 &S national income s$are of t$e top 69 of earners% 6=6H89971


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Note: Income is de5ned as mar)et income "ut e-cludes capital gains1Source: /is$el 899>;1

Su"3prime /ortgages: A Ne' !lo"al rontier for inance#$e 6=D9s opened a ne' 5nancial p$ase t$at "ecame yet anot$er discipliningmec$anism188,ere it 'as not structural ad?ustment programs "ut 5nancial ad?ustmentcrises1 Since t$e6=D9s t$ere $ave "een several 5nancial crises% some famous% suc$ as t$e6=DH Ne' (or)stoc) mar)et crisis and t$e 6==H Asian crisis1 And some o"scure% suc$ as t$eindividualcountry 5nancial crises t$at $appened in over H9 countries in t$e 6=D9s and6==9s as t$ey

deregulated t$eir 5nancial systems% mostly under pressure from glo"alregulators aiming at facil3itating t$e glo"aliBing of 5nancial mar)ets1Conventional data s$o' t$e post36==H 5nancial crisis period to "e a fairlysta"le one%until t$e current crisis1 2ne element in t$is picture is t$at after a country goest$roug$ anad?ustment0 crisis% sta"ility0 and prosperityT; follo'1 #$is t$en produces arepresentation

of considera"le 5nancial sta"ility% e-cept for a fe' ma?or glo"al crises% suc$ at$e dot3com crisis1 A muc$ mentioned fact regarding t$e current 899H899D crisisintended tos$o' t$at t$e system is 5ne% is t$at in 899M and 899H% 68> countries $ad a!P gro't$rate of > a year or more% '$ic$ is muc$ $ig$er t$an t$at of previousdecades1 #$e sugges3tion is t$en t$at t$e 899H899D crisis is precisely t$atan acute momentaryevent% "ut t$att$e system is 5ne1*ut "e$ind t$is sta"ility lies a savage sorting of 'inners and losers% and t$efact t$at it is easierto trac) 'inners t$an to trac) t$e slo' sin)ing into poverty of $ouse$olds%small 5rms% and


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government agencies suc$ as $ealt$ and education; t$at are not part of t$ene' glamoursectors 5nance and trade;1 #$e miseries t$ese ad?ustment crises "roug$t tot$e middle sectorsin eac$ country and t$e destruction of often 'ell3functioning economic sectoris largely aninvisi"le $istory to t$e glo"al eye1 #$ese individual country ad?ustment crisesonly intersected'it$ glo"al concerns and interests '$en t$ere 'ere strong 5nancial lin)s% as'as t$e case'it$ t$e 6==> /e-ico crisis and t$e 8996 Argentine crisis1 urt$er% '$en t$esemiseries"ecame visi"le% as '$en mem"ers of t$e traditional middle class in Argentina'ent on food

riots in *uenos Aires and else'$ere; in t$e mid 6==9safter ad?ustmentTsomet$ingun$eard of in Argentina% and '$ic$ too) many "y surprise1*esides t$e very partial c$aracter of post3ad?ustment sta"ility and t$e ne'prosperity0 muc$praised "y glo"al regulators and glo"al media% t$ere is t$e deeper fact t$atcrisis0 is a structuralfeature of deregulated% interconnected% and electronic 5nancial mar)ets1

#$ese same features

also fed t$e s$arp gro't$ of 5nance% partly "ased on t$e 5nancialiBing of non35nancial economicsectors% leading to overall e-tremely $ig$ 5nancial deepening1 #$us% if crisis isa structuralfeature of current 5nancial mar)ets% t$en crisis "ecomes a feature of non35nancial economicsectors t$roug$ t$eir 5nancialiBing% a su"?ect I $ave developed else'$ereSassen% 899D"%899Da% pp1


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t$e eFect of securing t$e conditions for glo"ally lin)ed 5nancial mar)ets andt$e ascendance ofa 5nancial logic organiBing larger and larger sectors of t$e economy in t$eglo"al Nort$1 Int$is process large components of t$e non35nancial economy in t$ese countrie'ere ruined18>Against t$is "ac)ground% t$e current 5nancial crisis is yet anot$er step in t$istra?ectory1 2ne.uestion is '$et$er it spells t$e e-$austion of t$is tra?ectory% or rat$er t$e"eginning of its decay1In '$at follo's I argue t$at t$e speci5c 'ay of using t$e su"3prime mortgagein t$e 8996899Hperiod ma)es it a dangerous instrument t$at is li)ely to "e used 'orld'ideover t$e ne-t decade1 It

is a mista)e to see t$is instrument as $aving to do 'it$ providing modestincome $ouse$olds 'it$$ousing1 It $as rat$er to do 'it$ a structural condition of $ig$ 5nance mar)ed"y t$e com"inationof a gro'ing demand for asset3"ac)ed securities given e-tremely $ig$ levelsof speculativeinvestments1 #$is structural condition is at t$e $eart of t$e actual event t$atmomentarily"roug$t t$e system to a partial; standstillt$e credit3default s'ap crisis of

Septem"er 899D'$ic$ in turn suggests an even )eener interest in asset3"ac)ed securities% and$ence in t$e specu3lative use of su"3primemortgages1 I see t$is as one of t$e ne' glo"al frontiersfor 5nance% speci53cally% t$e 8 "illion modest3income $ouse$olds 'orld'ide1 #$e eFect could "eyet anot$er "rutalsorting% 'it$ e-pulsions from more traditional economies% not unli)e t$econse.uences of t$estructural ad?ustment crises in t$e glo"al Sout$ discussed in t$e 5rst $alf oft$is paper1I "egin 'it$ a .uic) comparison of t$e ma?or glo"al crises since t$e currentp$ase "egan in t$e6=D9s to underline t$e e-tent to '$ic$ 5nancial leveraging $as caused t$egreater acuteness of


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t$e current crisis compared 'it$ t$e ot$er < ma?or glo"al crises since t$e6=D9s1 igure 8 s$o'st$at 5nancial leveraging added anot$er 89 to t$e underlying "an)ing crisis%t$ere"y "ringingt$e current 5nancial crisis up to an e.uivalent of >9 of glo"al !P%compared to earlier crises%'$ic$ rarely 'ent "eyond 891

#$e I/ data also s$o' t$e e-tent to '$ic$ Asia is in a very diFerent positiont$an t$e &S andEurope1 Its emergent crisis is economic rat$er t$an 5nancial1 *ut giveninterlin)ed glo"almar)ets% a crisis made largely in t$e &S and to a lesser e-tent in t$e E&% isarriving in Asia1/uc$ $as "een made% especially in t$e &S media% of t$e su"3prime mortgage

crisis as asource of t$e larger crisis1 #$ese modest3income families una"le to pay t$eirmortgage'ere often represented as irresponsi"le for $aving ta)en on t$ese mortgages1*ut t$e factss$o' anot$er pattern1 #$e overall value of t$e su"3prime mortgage losses 'atoo small to"ring t$is po'erful 5nancial system do'n see igure


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crisis 'as evident1 #$e &K% Qapan% t$e Net$erlands% all $ad a similar ratio/cKinsey RCompany% 899D% p1 66;187 rom 8997 to 899M t$e total value of t$e 'orld0s5nancial assetsgre' "y 6H in nominal terms% 6 trillion in 8999and O6>8trillion in 899718M

#$is is t$e conte-t 'it$in '$ic$ t$e demand for asset3"ac)ed securities

"ecame acute1 #oaddress t$is demand% even su"3prime mortgage de"t could "e used as anasset1 Sellers oft$ese mortgages needed vast .uantities of t$em to ma)e it 'or) for $ig$35nance: 799 suc$su"3prime mortgages 'as a minimum1 As t$e demand for asset3"ac)edsecurities gre'% so didt$e pus$ "y su"3prime mortgage sellers to $ave "uyers sign on% regardless ofcapacity to pay

t$e mortgage1 #$is com"ination of demand and increasingly lo'3.uality assetmeant mi-ingslices of mortgage 'it$ $ig$ de"t1 2ut came an enormously comple-instrument t$at 'as alsoenormously opa.ue: no"ody could trace '$at all 'as t$ere1 W$en t$e millionsof foreclosurescame in 899H% investors $ad a crisis of con5dence: it 'as impossi"le to tell'$at 'as t$e to-iccomponent in t$eir investments1Su"3prime mortgages can "e valua"le instruments to ena"le modest3income$ouse$olds to"uy a $ouse1 *ut '$at $appened in t$e &S over t$e last fe' years 'as ana"use of t$econcept1 #$e small savings or future earnings of modest3income $ouse$olds'ere used to


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develop a 5nancial instrument t$at could ma)e pro5ts for investors even ift$ose $ouse$oldsin t$e end could not pay t$e mortgages and t$ere"y lost "ot$ t$eir $ome and'$atever

igure also s$o'st$at allgroups% regardless of incidence% $ad $ig$ gro't$ rates in su"3prime lending

from 8998 to899M1 If 'e consider t$e most acute period% 899< to 8997% it more t$andou"led for '$ites% it"asically tripled for Asians and ,ispanics and .uadrupled for "lac)s1

#$ere 'ere% t$en% t'o very separate crises: t$e crisis of t$e people '$o $adgotten t$ese mort3gages and t$e crisis of con5dence in t$e investor community1 #$e millions of$ome foreclosures'ere a signal t$at somet$ing 'as 'rong% "ut in itself% it could not $ave"roug$t do'n t$e 5nan3cial system1 #$ere is a profound irony in t$is crisis of con5dence: t$e "rillianceof t$ose '$oma)e t$ese 5nancial instruments "ecame t$e undoing of a large num"er ofinvestors "esidest$e undoing of t$e modest3income families '$o $ad "een sold t$esemortgages;1 #$e to-ic


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lin) 'as t$at for t$ese mortgages to 'or) as assets for investors% vastnum"ers of mortgages'ere sold regardless of '$et$er t$ese $ome3"uyers could pay t$eir mont$lyfee1 #$e fastert$ese mortgages could "e sold% t$e faster t$ey could "e "undled intoinvestment instrumentsand sold oF to investors1 2verall% su"3prime mortgages more t$an tripled from8999 to 899M%and accounted for 89 of all mortgages in t$e &S in 899M1 #$is premium onspeed alsosecured t$e fees for t$e su"3prime mortgage sellers and reduced t$e eFectsof mortgagedefault on t$e pro5ts of t$e su"3prime sellers1 In fact% t$ose su"3prime sellerst$at did not sell

oF t$ese mortgages as part of investment instruments 'ent "an)rupteventually% "ut not"efore $aving secured fees1In "rief% t$e 5nancial sector invented some of its most complicated 5nancialinstruments toe-tract t$e meager savings of modest $ouse$olds in order to produce anasset0t$e mortgageon a $ouse1 #$e comple-ity of t$e 5nancial innovation 'as a series of productt$at de3lin)ed

su"3prime sellers and investors0 pro5ts from t$e credit'ort$iness of consume$ome mort3gage3"uyers1 W$et$er t$e mortgage is paid matters less t$an securing acertain num"er ofloans t$at can "e "undled up into investment products01 #$e crisis of $ome3"uyers 'as not acrisis for 5nancial investors% even t$oug$ millions of middle and 'or)ing classfamilies no'live in tents in t$e &S1 or 5nance it 'as a crisis of con5dence1 *ut it s$o'edt$e importanceof t$e systems of trust t$at ma)e possi"le t$e speed and orders of magnitudeof t$is 5nancialsystem1 #$e crisis of $ome3o'ners valued at a fe' $undred "illion dollars;'as t$e little tailt$at dented t$e enormous dog of trust in t$e 5nancial system1 In ot$er 'ords%t$is type of


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#a"le >1 +ate of conventional su"3prime lending "y race% Ne' (or) City 8998899M8998 899< 899> 8997 899MW$ite >1M M18 H18 6618 =16*lac) 6 8917 H16 >91H,ispanic 661= 6D16 8H1M 6D1


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gage securities: once again% Soros is t$e em"lematic actor in t$is parallelcircuit% ma)ing 'ellover O< "illion on t$e su"3prime mortgage crisis% ?ust as $e did on t$e *ritis$pound0s falloutfrom t$e European E-c$ange +ate /ec$anism E+/;1

#$ese credit3default s'aps are part of '$at $as come to "e referred to as t$es$ado' "an)ingsystem1 According to some analysts t$is s$ado' "an)ing system accountedfor H9 of "an)ingat t$e time t$at t$e crisis e-plodes1 #$e s$ado' "an)ing system is notinformal% illegal% orclandestine1 Not at all: it is in t$e open% "ut it $as t$rived on t$e opa.uenessof t$e investmentinstruments1 #$e comple-ity of many 5nancial instruments is suc$ t$at

no"ody can actually trace

igure >1 Value of credit default s'aps outstanding according to ISA data1Source: Varc$aver and *enner 899D;

'$at all is "undled up in some of t$ese 5nancial instruments1 Eventually t$ismeant t$at no"ody)ne' e-actly or could understand t$e composition of t$eir investments% noteven t$ose '$o sold

t$e instruments1#$is s$ado' "an)ing system $as t$rived on t$e recoding of instruments%'$ic$% at t$e limit%allo'ed illegal practices to t$rive1 or instance% it is no' clear t$at credit3default s'aps 'eresold as a type of insurance1 *ut rat$er t$ey 'ere actually derivatives1 If t$ey'ould $ave"een sold as insurance t$e la' re.uires t$ey "e "ac)ed "y capital reservesand "e su"?ect to con3sidera"le regulation1 /a)ing t$em into derivatives 'as a de facto deregulatioand eliminatedt$e capital reserves re.uirement1 Credit3default s'aps could not $ave gro'nso fast andreac$ed suc$ e-treme values if t$ey $ad "een sold as insurance% '$ic$ 'ould$ave "een t$e


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la'ful 'ay1 None of t$e 5nancial 5rms $ad t$e capital reserves t$ey 'ould$ave needed to"ac) OM9 trillion in insurance1 *ecause t$ey 'ere recoded as derivatives% t$eycould $ave analmost vertical gro't$ curve "eginning as recently as 89961It is important to emp$asiBe t$at t$e viral infection of su"3prime mortgagesoriginated in t$e&nited States "ut spread to ot$er countries via t$e glo"aliBation of 5nancialmar)ets1 #$is spread'as $elped "y t$e fact t$at non3national investors are% as a group% t$e singlelargest "uyers ofsome of t$e 'ea)est types of mortgage instruments1 #oget$er 'it$ "an)s%non3national mortgage"uyers are over a t$ird of all su"3prime mortgage $olders1 oreign o'ners$ip

strengt$ens t$epotential for spill3over eFects 'ell "eyond t$e &nited States1A comparison of t$e value of all residential mortgage de"t from $ig$ to lo'3.ualitymortgages; as a ratio of national !P across developed countries s$o's s$arpvariations18H

#o some e-tent% t$e variation in t$is value is a function of timing1 In t$e &S%t$e &K andAustralia% t$e $ousing mar)et $as long "een private and% importantly% t$e

5nancial system is$ig$ly developed on a "road range of fronts1 #$us t$e incidence of mortgagesis "ot$ $ig$and 'idespread in terms of t$e variety of 5nancial circuits it encompasses1Central to t$isstory is t$e diFerence "et'een t$e value of $ousing loans as a ratio to !Pand t$e gro't$rate of suc$ loans1 #$us% t$e former is very lo' in countries 'it$ young$ousing mar)ets%suc$ as India and C$ina% '$ere it stands at 6918D In contrast% in moremature mar)ets inAsia% t$is value can "e muc$ $ig$erstanding at M9 in Singapore% and >9in ,ong Kongand #ai'an"ut t$e gro't$ rate is muc$ lo'er1 *et'een 6=== and 899M% t$eaverage


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annual gro't$ of $ousing loans in India and C$ina 'as e-tremely $ig$%certainly a"ove t$egro't$ of ot$er types of loans1 *ot$ countries $ave rapidly gro'ing $ousingmar)ets andare% t$erefore% at t$e "eginning of a ne' p$ase of economic development1W$ile most ot$erAsian countries $ave not e-perienced compara"le gro't$ rates to India andC$ina in t$emortgage mar)et% t$ey $ave seen a dou"ling in suc$ loans during t$is period1If 'e considert$e particular 5nancial innovations of concern in t$is papermoderate andlo'3income$ouse$olds0 mortgages and su"3prime mortgagest$en 'e can see $o'attractive t$e Indian

and C$inese residential mortgage mar)et "ecomes 'it$ t$eir millions of lo'3income$ouse$olds1

#$e ne-t t'o ta"les #a"les 7 and M; provide comparative data on t$eincidence of residentialloans to total loans in several $ig$ly developed and so3called emerging mar)ecountries1 #$eset'o ta"les also $elp situate t$e residential mortgage mar)et in t$e rapidlygro'ing and diversi3

fying 5nancial 'orld of loans1 eveloped countries 'it$ multiple 5nancialcircuits% suc$ as t$e&S and t$e &K% clearly s$o' t$at compared to ot$er types of loans% mortgageare a relativelysmall s$are of all loans% even if most $ouse$olds $ave mortgages1 It isimportant to note t$at t$esame lo' level of mortgage loans to total loans in economies mar)ed "y asmall elite of superric$ individuals $as a diFerent meaning in t$e &S and &K: $ence% +ussia0se-tremely lo'incidence of residential to total loans in t$e economy is an indication of anarro' mortgagemar)et mostly for t$e ric$ and very ric$; and t$e fact t$at t$ere are vast5nancial circuitscentered on ot$er resources1


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W$ile residential mortgage capital is gro'ing% it needs to "e situated in alarger 5nancial land3scape1 #$us% even t$oug$ mortgage 5nance measured as a ratio to !P is$ig$ in countries suc$as t$e &S and t$e &K% t$e total value of 5nancial assets is far $ig$er1 Asindicated earlier% t$e

#a"le M1 +esidential real estate loans to total loans% emergingmar)etsCountry +esidential real estate loans to total loans ;Sout$ Africa 6=1=8+ussian ederation =167Poland 681=6Latvia 6D1D6

Croatia 6H1>HSout$ Africa 6=1=8+ussian ederation =167Poland 681=6Average 6>16MSource: International /onetary und 8997;1

#a"le 71 S$are of residential real estate loans to total loans% developedmar)ets

Country +esidential real estate loans to total loans ;Australia 7M1>MAustria 6inland


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&nited States MAverage


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of t$ese countries% muc$ of t$is de"t is foreign3o'nedan indication of anemerging glo"al5nancial mar)et1inally% '$en 'e compare t$e ratio of $ousing mortgage de"t to !P indiFerent regions oft$e 'orld 'e can infer t$e potential for gro't$ in t$ose countries '$ere it isstill a minor s$areigures M and H;1 W$at points to t$e massive potential for gro't$ of t$isinnovation is t$e lo'incidence of mortgage capital in most countries around t$e 'orld1 2verall t$eratio of

#a"le H1 +atio of $ouse$old credit to personal disposa"le income ;8999 8996 8998 899< 899> 8997

Emerging mar)etsCBec$ +epu"lic D17 6916 681= 6M1> 861< 8H16,ungary 6618 6>1> 891= 8=17 M1> H1> =1H 1 1 1Korea 1M 717 717 71M 1 1 1

#ai'an H716 H81H HM19 D18 M=18!ermany H91> H916 M=16 H91< H917 H919Italy 8719 871D 8H19 8D1H =D1D 6681H&nited States 69>19 69716 6691D 66D18 68M19 6


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for Italy and Austria4 closer to 9 for inland%S'eden and!ermany4 M9 for Spain% Portugal and Ireland4 D9 for t$e &K and t$eNet$erlands and soon see igure M;18=

#$e types of su"3prime mortgages 'idely sold from 8998 to 899H could only"e systemicallymo"iliBed as assets t$roug$ t$e delin)ing "et'een $ig$ 5nance and t$especi5cs of t$e $ouse% t$e"orro'er% t$e neig$"or$ood1 #$is delin)ing 'as constructed t$roug$enormously comple-instruments% '$ic$ in turn furt$er raised t$e level of speculation in t$esystem% rat$er t$an

igure 71 S$are of foreign currency denominated $ouse$old credit% end38997in of total $ouse$old credit;1Source: International /onetary und 899M% p1 7>;1

igure M1 +atio of outstanding residential mortgage de"t to !P selectcountriesGend 899M;1Source: /iles R Pillonca 899H;1

taming it 'it$ notional; asset3"ac)ed securities1 *e$ind t$ese enormously

comple- 5nancialinstruments created "y "rilliant 5nanciers and soft'are engineers lies anelementary form ofviolence and e-traction of a speci5c narro' utility% and a "rutal disregard forall else t$at'as involved1

Conclusion: #$e E-pulsion of People and t$e Incorporation of #errain#$e potential for glo"al replication of t$e 5nancial innovation t$at destroyed67 million plus$ouse$olds in t$e &S% t$ere'it$ devastating '$ole neig$"or$oods is t$esystemic e.uivalent%al"eit on a muc$ smaller scale% of t$e glo"al Sout$ countries devastated "y animposed de"tand de"t servicing regime '$ic$ too) priority over all ot$er statee-penditures1 #$ese are t'o


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manifestations of a systemic deepening of advanced capitalism% one mar)ed"y its potentialto spread glo"ally and t$e ot$er mar)ed "y its full enactment in t$e glo"alSout$1*ot$ cases can "e seen as part of a muc$ larger process of 5nancialdeepening% one of today0sma?or dynamics c$aracteriBing advanced capitalist economies1 inancialdeepening re.uiresspeci5c mec$anisms% '$ic$ can "e e-tremely comple-% as in t$e case of t$etype of su"3prime mortgage e-amined in t$is article% or t$ey can "e .uite elementary% asin t$e de"t servicingregime t$at too) oF in t$e 6==9s1 I e-amine t$ese t'o cases t$roug$ aspeci5c lens: t$e trans3

formative processes t$at e-pand t$e "ase of current advanced capitalism1Particular attention'ent to t$e assem"lages of speci5c processes% institutions% and logics t$at gemo"iliBed int$is systemic transformationGe-pansionGconsolidation12ne 'ay of t$in)ing of t$is systemic deepening is as t$e e-pansion of t$eoperational spacefor advanced capitalismit e-pels people "ot$ in t$e glo"al Sout$ and in t$eNort$ even as it

incorporates spaces1 #$e devastated economies of t$e glo"al Sout$ su"?ectedto a full decade ort'o of de"t servicing% are no' "eing incorporated into t$e circuits of advancecapitalismt$roug$ t$e accelerated ac.uisition of millions of $ectares of land "y foreigninvestorstogro' food and e-tract 'ater and minerals% all for t$e capital investingcountries1 #$is also$olds for suc$ a radically diFerent instance as t$e su"3prime mortgage crisis%a largely glo"alNort$ dynamic1 I see t$e su"3prime mortgage as e-tending t$e domain for$ig$ 5nance "ut ina 'ay t$at delin)s t$e 5nancial circuit from t$e actual material entity t$at ist$e $ouse% and$ence from t$e neig$"or$ood% and from t$e people '$o got t$e mortgage1 Allof t$ese


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igure H1 +atio residential mortgage de"t to !P: emerging Asia average%89968997;1Source: Warnoc) R Warnoc) 899D% p1 8M;1

materialities are e-cluded from t$is type of articulation 'it$ $ig$35nance'$ic$ means t$at t$edevastated neig$"or$oods are e-pelled from '$at are% strictly spea)ing% alsotraditional circuitsof capital1 It is a)in to 'anting only t$e $orns of t$e r$ino% and t$ro'ing a'ayt$e rest of t$eanimal% devaluing it% no matter its multiple utilities1 2r using t$e $uman "odyto $arvestsome organs% and seeing no value in all t$e ot$er organs% let alone t$e full

$uman "eingitcan all "e discarded1 *ut unli)e t$e clear realignments 'e see in vaststretc$es of t$e glo"alSout$% it is not clear $o' t$ese devastated ur"an spaces in t$e glo"al Nort$'ill "e incorporatedinto t$e circuits of advanced capitalism1

#$is systemic s$ift signals t$at t$e s$arp increase in displaced peoples% inpoverty% in deat$sfrom cura"le illnesses% are part of t$is ne' p$ase1 Key features of primitive

accumulation are at'or)% "ut to see t$is it is critical to go "eyond logics of e-traction and torecogniBe t$e fact ofsystemic transformation% 'it$ its system3c$anging practices and pro?ectst$ee-pulsion ofpeople t$at transforms space "ac) to territory% 'it$ its diverse potentials1

Notes6 #$is is particularly so if 'e ta)e a simple and direct de5nition suc$ as 1 1 1aprimitive accumulation precedingcapitalistic accumulation4 an accumulation not t$e result of t$e capitalisticmode of production% "ut its startingpoint0 /ar-% 6==8% p1 DH


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'$ic$ t$ey can realiBe t$eir la"our1 As soon as capitalist production is once onits o'n legs% it not onlymaintains t$is separation% "ut reproduces it on a continually e-tending scale1

#$e process% t$erefore% t$at clearst$e 'ay for t$e capitalist system% can "e none ot$er t$an t$e process '$ic$ta)es a'ay from t$e la"ourer t$epossession of $is means of production4 a process t$at transforms% on t$e one$and% t$e social means ofsu"sistence and of production into capital% on t$e ot$er% t$e immediateproducers into 'age3la"ourers1 #$e so3called primitive accumulation% t$erefore% is not$ing else t$an t$e $istoricalprocess of divorcing t$e producerfrom t$e means of production1 It appears as primitive% "ecause it forms t$epre3$istoric stage of capital and of

t$e mode of production corresponding 'it$ it0 /ar-% 6==8% pp1 DH>DH7;1< I $ave long "een interested in e-panding t$e analytic terrain 'it$in '$ic$'e understand some classical categories%from citiBens$ip to primitive accumulation% as a 'ay to a; ma)e t$ese oldercategories 'or) to elucidate novelconditions% and "; to identify% potentially% t$e limits of t$ese older categoriesto e-plain current conditions%$ence ma)ing visi"le t$e need for ne' categories Sassen% 899Da;1> In my earlier researc$ e1g1 Sassen% 6=DD% 6==6% 899M; I conceptualiBed

t$ese types of operations in t$e glo"alNort$a mi- of organiBational comple-ity and destitutionGdisempo'ermentas perip$eraliBation at t$e core01In many 'ays t$is concept captures t$e particularity of t$e s$ort and "rutal$istory of t$is particular type ofsu"3prime mortgage17 or instance% t$e gro'ing informaliBation of 'or) in ma?or glo"al cities of t$eNort$ "eginning in t$e 6=D9s is oftendescri"ed as a mec$anism to lo'er costs of production1 It is t$at% "ut it is alsoa more comple- dynamic t$atcontri"utes to t$e deepening of advanced capitalism1 In my researc$ I 5ndt$at some not all; of t$e componentsof t$is informaliBing of 'or) are t$e systemic e.uivalent of t$e deregulation oma?or advanced economic sectors%nota"ly 5nance and telecommunications1 It adds particular forms of@e-i"ility%0 i1e1 needed components of


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production and 'or) for t$e advanced sectors t$at could not functionGsurviveformally Sassen% 899M% c$1 7 and M;1M Else'$ere Sassen% 899D"% 899Dc; I e-amine t$ese t'o cases t$roug$ aspeci5c lens: t$e assem"lages of speci5cprocesses% institutions% and logics t$at get mo"iliBed in t$is systemictransformationGe-pansionGconsolidation1Comparing t$e current assem"lage of elements t$at ena"les t$e operations oPA0 as systemic deepening 'it$t$ose of t$e original in /ar- also is a 'ay of esta"lis$ing t$e diFerencest$especi5c $istorical and systemicdiFerences1 ocusing on assem"lages of elements involved in t$ese s$ifts%rat$er t$an positing moredeterministic dynamics% also ena"les factoring in contingency1 And $ere is'$ere a strict application of /ar-0s

concept of PA cannot 'or)% '$ic$ can t$en lead some to o"?ect to t$e use oft$e category to capture somespeci5c current transformations1H See Sassen 899Da% c$1 6% D and =; for a development of t$e t$eoretical%met$odological% and $istorical aspects1D #$is section is "ased on a larger researc$ pro?ect Sassen% 899D"; t$at see)to s$o' $o' t$e struggles "yindividuals% $ouse$olds% entrepreneurs% and even governments are micro3leveenactments of larger processes of

economic restructuring in developing countries launc$ed "y t$e I/ and Worl*an) Programs% as 'ell as in W#2la' implementation during t$e 6==9s and on'ards1= In many of t$e ,IPCs% de"t service ratios to gross national product !NP;$ave long e-ceeded sustaina"le limits4many are far more e-treme t$an '$at 'ere considered unmanagea"le levelsin t$e Latin American de"t crisis of t$e6=D9s 2-fam International% 6===;1 #$irty3t$ree of t$e >6 ,IPC countries paidO< in de"t service payments to t$eNort$ for every O6 in development assistance1 #$e I/ as)ed ,IPCs to pay89 to 87 of t$eir e-port earningsto'ard de"t service1 In 8997% "efore t$e de"t cancellations of early 899M%t$ese de"t servicing levels remained $ig$as a s$are of gross domestic product !P; for most of t$ese countries4 "y t$eend of 899M% de"t servicing levels $addeclined "ut 'ere still signi5cantly $ig$er t$an net foreign direct investment1


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69 #$e 8M countries t$at $ave passed t$e completion point are: *enin%!uyana% Niger% *olivia% ,aiti% +'anda% *ur)inaaso% ,onduras% Sao #ome R PrXncipe% *urundi% /adagascar% Senegal%Cameroon% /ala'i% Sierra Leone% CentralAfrican +epu"lic% /ali% #anBania% Et$iopia% /auritania% &ganda% #$e !am"ia%/oBam"i.ue% am"ia% !$ana%Nicaragua166 /+I promised cancellation of de"ts to t$e World *an) incurred "efore899; for t$e countries t$atcompleted t$e ,IPC initiative1 It s$ould "enoted t$at many glo"al Sout$ countries $ave not completed t$e ,IPC initiativand $ave not received /+I de"trelief1

68 Still% de"t relief does not al'ays function as intended1 or e-ample% recentde"t restructuring in !uyana caused t$ecountry to "e O7 million 'orse oF1 #$e ma?ority of !uyana0s de"t is to t$eInter3American evelopment *an)IA*;1 In early 899H a deal 'as made to cancel !uyana0s de"ts "ut t$is onlycanceled old de"ts at t$e e-pense of aid16< It is 'ort$ noting t$at t$is $appens at a time of s$arp increases in foodprices #$e Economist% 899=;1 *eyondprice% trade "ans and crises pose a ris) even to ric$ countries t$at rely on foo

imports1 See also note 6716> 2n t$e ot$er side% t$e World ood Programme spends O66M million toprovide 8


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6M #$e s$are of t$e primary sector '$ic$ includes prominently mining andagriculture; in in'ard I stoc) increasedto >6 in 899M% up from 7 in 6==M4 in contrast% t$e s$are of t$emanufacturing sector almost $alved to 8H from>9 over t$at period &NC#A% 899D;16H or compre$ensive data see t$e &nited Nations Conference on #rade andevelopment0s World Investmentirectory Volume Y Africa &NC#A% 899D;16D #$e "asic source for remittances comes from t$e Central *an) of eac$receiving country1 #$ese 5gures e-cludeinformal transfers1 #$e sc$olars$ip on t$ese su"?ects is vast1 As suc$% it is notpossi"le to reference fully eac$ oft$e ma?or propositions organiBing t$is discussion16= Wall Street 5rms can also "ene5t1 #$e Inter3American evelopment *an)

IA*; produced a series of detailedstudies '$ic$ s$o' t$at% in 899


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87 #$e 5nancial deepening of economies $as "ecome one of t$e ma?ordynamics c$aracteriBing advanced economies1

#$e ratio of glo"al 5nancial assets to glo"al gross domestic product 'as nearl; I e-amined $o' t$is generateda series of innovationsne' types of mortgage instruments% of '$ic$ t$ecurrent generation of so3calledstructured3investment instruments is "ut t$e latest1 #$e overall eFect 'as a

vast e-pansion of credit in t$emortgage sector18M #$e trends in 5nancial glo"aliBation point to geopolitical s$ifts1 #$e &S isstill t$e largest 5nancial po'er 'it$O7M16 trillion assets% almost a t$ird of t$e 'orld0s 5nancial assets1 Europe0sEuroBone 5nancial mar)ets 'erealmost O>9 trillion% and including t$e &K0s O69 trillion and Eastern Europe0sO61> trillion puts Europe close tot$e &S1 #$e Euro is "ecoming a strong alternative glo"al currency to t$edollar% 'it$ t$e value of euro currencyin circulation surpassing t$e latter in mid3899H4 it is also t$e top currency fort$e issuing of international "onds1

Qapan% C$ina% India% and several ot$er Asian countries are a fast gro'ing t$ird5nancial "loc)1 #$e compositionof 5nancial assets in t$ese ma?or national and regional 5nancial mar)etsvaries s$arply1 #$e largest components


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in t$e &S are e.uity securities and private de"t securities% '$ic$ toget$eraccount for H9 of t$e 5nancialmar)et1 In contrast% in C$ina% "an) deposits account for 77 of 5nancialassets18H #$e I/% '$ic$ reports t$ese measures% "ases t$em on several sources:I/ national accounts data4 European/ortgage ederation4 ,ypostat Statistical #a"les4 t$e &S ederal +eserve4 t$e2EC Analytical ata"ase4Statistics Canada4 and I/ staF calculations see I/% 8997% 899M;18D In C$ina% t$e total value of mortgage 5nance is $ig$er t$an suggested "yresidential mortgage lending data alone"ecause loans to developers are not 'ell recorded and could "e rat$er large18= See I/ 899H% c$1


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$ttp:GGfurmancenter1orgG5lesGurmanCenter,/AAnalysisZ9991pdf,arvey% 1 899


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Qu"ilee e"t Campaign &K 899="; ,asn0t All t$e e"t "een Cancelled%$ttp:GG'''1?u"ileede"tcampaign1org1u)G>89,asn8Ht89all89t$e89de"t89"een89cancelled


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s$ip to evelopment in Latin America and t$e Cari""ean Was$ington% C:!eorgeto'n &niversity% Institute for t$eStudy of International /igration;12-fam International 6===; 2-fam International Su"mission to t$e ,eavilyInde"ted Poor Country ,IPC; e"t +evie'%$ttp:GG'''1o-fam1org1u)GresourcesGpolicyGde"tZaidGinde-1$tml+a$man% A1 6===; /icro3credit initiatives for e.uita"le and sustaina"ledevelopment: '$o pays World evelopment%8H6;% pp1 MHD81+at$a% 1% /o$apatra% S1 R Sil'al% A1 899=; /igration and evelopment *rief66: /igration and +emittance

#rends 899=: A *etter3t$an3e-pected 2utcome for /igration and +emittancelo's in 899=% "ut Signi5cant+is)s A$ead% < Novem"er% Was$ington% C: World *an)% /igration and

+emittances #eam% evelopmentProspects !roup;%$ttp:GGsiteresources1'orld"an)1orgGIN#P+2SPEC#SG+esourcesG


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#in)er% I1 ed1; 6==9; Persistent Ine.ualities: Women and World evelopmentNe' (or): 2-ford &niversity Press;1&nited Nations Conference on #rade and evelopment &NC#A; 899D; WorldInvestment irectory Volume Y:Africa1 Ne' (or): &nited Nations;1&nited Nations evelopment Programme &NP; 8997; A #ime for *oldAm"ition: #oget$er 'e can Cut Poverty in,alf% &NP Annual +eport Ne' (or): &NP;1&nited Nations evelopment Programme &NP; 899D; ,uman evelopment+eport 899H899D% &NP Annual+eport Ne' (or): &NP;1&S epartment of State 899>; #rac)ing in Persons +eport Was$ington% C:2ce to /onitor and Com"at #rac)ingin Persons;1

Varc$aver% N1 R *enner% K1 899D; #$e O77 trillion .uestion: special reportissue 6: America0s money crisis%CNN/oney1com1$ttp:GGmoney1cnn1comG899DG9=G


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EY#ECGEY#ECP+2SPEC#SG9%%content/K:866M7>96ZpiPK:M>6M798MZt$eSitePK:>HMDD

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Sassen, Saskia - A Savage Sorting of Winners and Losers