The politics of assetization: from devices of calculation to devices of obligation

ABSTRACT

This article develops a new theoretical perspective on the politics of financialization with housing as its specific case. The argument uses the recent debate on assets and assetization in the Social Studies of Finance as a starting point. In this debate, the asset is introduced vis-à-vis the commodity as a fruitful analytical category. The article argues that the suggested shift from the commodity to the asset allows for a novel understanding of the politics of financialization if it is accompanied by a parallel shift from ‘devices of calculation’ to what is here termed ‘devices of obligation’. Devices of obligation address the politics that produce the durability that the asset requires. Accounting for such politics of obligation offers a nuanced comprehension of the material, infrastructural, legal, and moral forms of binding time that are crucial for financialized revenues. In order to develop this theoretical framework, the article links insights from the Social Studies of Finance to the classical sociological theory of obligation in the work of Marcel Mauss. This allows a more granular understanding of the political dimension of financialization beyond the state. The analytical viability of this theoretical perspective is demonstrated through a case-study of the processes of the financialization of housing in Spain shortly before the financial crisis of 2008.

KEYWORDS:

• Financialization
• housing
• Marcel Mauss
• collateral
• materiality
• ghost estates

On can detect a renewed interest on the part of the Social Studies of Finance in understanding ‘the operations of capitalization’ (Leyshon and Thrift 2007; Ouma 2016; Muniesa et al. 2017). Material and immaterial entities and practices – from data to seeds, from music-streaming to rent – are currently turned into future revenue streams in novel ways and to a novel extent. A new analytical category is championed in this context: the asset. The focus on the asset directs attention away from speculation, abstraction, fictitious values and trade to the creation of capital revenue at the ‘frontiers of financialization’ (Langley 2020; see also Ouma 2016; Adkins, Cooper, and Konings 2019; Birch and Muniesa 2020a). Instead of concentrating on how commodification organizes mobility and commensuration, studying assetization requires engaging with the ways in which ongoing streams of payment through time are organized (Langley 2020). The temporal perspective shifts from the volatile and uncertain dimension of speculation to the duration of revenue structures into the future (ibid.).

Studying assetization thus generates a temporal question: how is the duration of revenue structures into the future created? How do assets bind time (Abourahme and Jabary-Salamanca 2016; Pistor 2019; Tellmann 2020)? In this article, I argue that the analytical capacity to understand assetization depends on a broadened theoretical toolbox for studying mechanisms of binding time. I seek to show that the turn from commodities to assets requires a parallel turn from ‘devices of calculation’ to what I refer to as ‘devices of obligation’. Thus far, scholars in the Social Studies of Finance and Cultural Economy have studied the ‘calculative devices’ that mobilize, quantify, commensurate, and discount commodities and investments (Callon 2007). But we need an equally strong emphasis on the politics of obligation that mobilizes material, infrastructural, political, legal, and moral forms of binding time. Instead of studying how entities become ‘mobile’ and transferable, I seek to examine in a complementary fashion how a politics of obligation creates the specific devices that link finance to matter by shaping which bindings count, which are heavy, and which are disposable. Numbers and calculations matter, but more attention must be devoted to which modes of valuation become part of legally enforceable, politically sanctioned, emotionally fortified obligations to act or to pay – and most importantly, how these modes of ‘obliging’ coalesce, diverge, and are (unequally) distributed. The study of devices of obligation concerns the variegated, specific mechanisms of securing revenues that act by forging temporal bindings in ‘chains of securitization’ (de Goede 2017).

In order to clarify the politics of relations that consists of selectively binding or unbinding, guaranteeing or exposing, risking or ‘de-risking’ associations into the future and to others, I aim to link the debates in Cultural Economy that are largely inspired by STS back to the classical sociological theory from which they originally departed: the sociology of the Durkheim School, and notably the work of Marcel Mauss. Without adhering to either Mauss’ or Durkheim's theories per se, one can view their fundamental concerns with the creation of obligations as an important inspiration. I seek to revitalize Mauss’ ‘theory of obligation’, strengthening the concerns that motivated Mauss writing about the obligations of exchange in the context of the first European debt crisis after World War I, the contentious issue of colonialism, and the remaking of international relations in the first decades of the twentieth century (Mallard 2011, 2019). Specifically, I will draw on Mauss’ understanding of collateral and the nexum in Roman law in order to develop a politics of obligation for a financialized society. Adapting this theory of obligation to the technical and pragmatist accounts of finance opens up broader venues for understanding the material politics of financialization, and it offers a frame for unpacking the politics that creates the ‘durability of the revenue’ (Mitchell in Abourahme and Jabary-Salamanca 2016, 740ff.)

In the following analysis, I will focus on one particular device of obligation that is specifically dominant in the context of financialization and assetization: namely, collateral. Collateral is a technical device of obligation that is ubiquitous in finance today (Riles 2011); its systemic importance has long been recognized by regulators and central banks (Mehrling 2011; Gabor 2016; Boy and Gabor 2019). However, collateral is also an archaic term with an extensive history of serving as the ‘means to assure the binding character of relations’ (Boy and Gabor 2019, 298). Collateral will function here as a key example for an exploration of the linkage between the general theory of obligation and the contemporary devices of financial security.

The article makes this conceptual argument through the empirical case of housing. As the financial crisis of 2008 demonstrated, housing has become an important nodal point of processes of financialization. We witness a ‘shift to housing as a major asset’ (Guyer 2015). Immediately after the crisis, ‘ghost estates’ (O’Callaghan et al. 2015; Aitken 2020), emptied neighbourhoods, and the tents of the homeless have offered ‘poignant portraits of the ruthless vicissitudes of built territory operating primarily as an asset category’ (Soules 2014, 691). Historical and macroeconomic evidence buttresses the impression that housing has become a particularly revealing aspect of the current processes of financialization and assetization. As Thomas Piketty has amply demonstrated, over the last four decades, ‘investments […] in real estate and financial instruments’ increasingly ‘account for the bulk of private wealth’ (Piketty 2014, 209). Although housing has long been a politically, emotionally, and financially charged item of security and value, ‘housing as capital’ appears to have entered a new, specific episode in its lengthy history (Guyer 2015). It mingles the making of class, issues of financial stability, monetary policies, and accumulation strategies all at once (Langley 2008; Bryan, Rafferty, and Tinel 2016; Aalbers 2017; Fields 2018; Adkins, Cooper, and Konings 2019). How should ‘housing as capital’ (Guyer 2015, 498) be understood?

In order to ponder these questions, the article uses the Spanish ‘securitization machine’ and its landscapes of financialization (Santos 2014) as its prime example. Spain was the ‘second largest European securitization market after the UK’ in the decade before the crisis (Santos 2014, 32). The construction activities in Spain were unprecedented and resulted in huge areas of unusable buildings once the crisis hit. While the Spanish market appears as an exemplary case of securitization before the crisis, it also featured locally specific circumstances that make it an interesting example for ‘variegated’ financialization (Aalbers 2017). As described in further detail below, the Spanish ‘securitization machine’ interweaves the global and the local, the political and the economic, public and private, land and finance in particularly telling ways. It functions here as a test case for demonstrating how a focus on devices of obligation offers a fruitful account of the politics of financialization.

Housing matters: commodities, debts, and assets?

Walter Benjamin once suggested that we study the ruins of modernity as allegories of economic forms. He argued that ruined things exhibit the instable nature of fetishized economic forms in their decay. As such they offer us the opportunity to step back and recognize ‘the transitoriness and fragility of capitalist culture’ (Buck-Morss 1991, 164). The ruins left behind by the financial crisis of 2008 display this eerie transitoriness. Particularly in Spain, the ‘massive investment in the creation of built environments’ (Harvey 2016, 17) resulted in countless empty or unfinished buildings and produced specific landscapes of financialization (Concheiro 2012; Soules 2015). The spectacular ruins of ‘cities that never were’ (Marcinkoski 2015) are neither imperial debris (Steinmetz 2008; Stoler 2013) nor industrial ruins of high modernity (DeSilvey and Edensor 2013); rather, they are ruins of finance characterized by an ‘abandoned future’ (Kitchin, O’Callaghan, and Gleeson 2014).

Most scholarly accounts of ‘ghost estates’ specifically and the financialization of housing in general implicitly or explicitly apply a critique of the commodity form in order to make sense of issues of home and shelter under conditions of financialization. That is, they regard financialization as an extreme manifestation of the of forceful abstraction, quantification, and mobilization of what is most immobile, chunky, and place-based (Aalbers 2019). The story of these ruins and ghost estates, of housing and financialization becomes a tale of violent mobilization and quick discharge after the bouts of speculation waned. What is left are buildings constructed not in terms of livability but on the basis of an abstract exchange value compared on global scales.

But what is remarkable about these ruins and landscapes of financialization is not merely the fact that they dramatize the difference between use and exchange value, between abstract value and concrete matter for use. They also dramatize the world-making capacities of capital: the power to begin the creation of worlds and to maintain them – now exhibited in its ruined shape. The ruins speak to the unequal powers to begin and the unequal and hierarchized powers to maintain. Is this properly addressed through the commodity form? If we understand financialization as an ‘ontological reconfiguration’ takes place ‘through which different qualities … are translated into a financial value form’ (Ouma, Johnson, and Bigger 2018, 501), which form are we talking about?

The ‘ghost estates’ invites us to ponder the limits of the commodity form and help thinking about the asset as a particular economic form (Birch and Muniesa 2020b, 2). Unlike the commodity, the asset situates the temporal expectation and organization of future returns for a given investment or entity on centre stage (Ouma 2016; Adkins, Cooper, and Konings 2019; Langley 2020). As Birch and Muniesa (among others) argue, ‘an emerging “asset form” […] has come to replace the commodity as the primary basis of contemporary capitalism’ (Birch and Muniesa 2020b, 2). The ‘concept of “assetization” points to the complex and contingent processes that constitute financial investment as a more-or-less distinct and distinctive form of economization’ (Langley 2020, 3). Muniesa and Birch refer to the International Accounting Standards Board (IASB) for a pragmatic and technical definition of ‘asset’: It is defined as ‘a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity’ (Birch and Muniesa 2020b, 3).

The emphasis here lies not on trade, prices, and exchange, but on property, exclusive claims, and the organization of future income. By juxtaposing the asset with the commodity or capital respectively, no clear-cut substitution or opposition is implied (V. Braun 2020). The qualities of the commodity form that turns an object into a saleable, standardized, priced, and measured entity remain significant. It seems advisable to understand commodities and assets as intermingled types of economization (ibid.). Having said this, it is important to retain the emphasis of the asset on the question of durable and ongoing revenues and the entitlement to them. Durability is then understood not in the crude material sense, but in terms of a codified, secured, or otherwise manifest material revenue structure (Pistor 2019; Tellmann 2020).

The term ‘asset’ has a very close relation to the term ‘capital’ but seems ‘less loaded’ with theoretical presuppositions (Birch and Muniesa 2020b, 4). The asset is used to comprehend the contemporary configurations of class and inequality in financialized capitalism of which labour is one but not the sole determinator (Adkins, Cooper, and Konings 2020). Although they are discrete concepts, assetization and capitalization are nevertheless closely related. Both manifest a claim – through ownership or equivalent codifications – to receive revenues over time (Pistor 2019). They both involve investment and return, legal codes and the channelling of revenues to the holders of these rights. But whereas capital connotes a profit-oriented undertaking on the basis of an open and uncertain future (materialized into fixed forms, labour relations, and political support), the asset signals a shift in contemporary capital logics.

The rise of the asset as a practical and theoretical category is not independent of financialization and its key technical instruments of securitization and derivation. Securitization and derivation are debt-like insofar as they organize legal claims on payment – saleable claims, but claims nevertheless. In this sense, debt and financialization are deeply linked (Janoschka et al. 2020, 127). Assets become important in this context because they provide legal claims of payment with something that ‘backs’ such claims into the future. As its very etymology indicates, an asset is defined in relation to the ability to discharge debt. In its original meaning, the asset is a 'singular, sufficient property to pay debts and legacies'. It stems 'from Anglo-French assetz, from asez enough' (Merriam-Webster Dictionary). Today, it is defined without reference to debt; rather, it is a ‘property that yields an income stream’ (Birch 2017, 468). However, the origins of the term point us to its contemporary relevance. The expected income stream operates under conditions of financialization set against a multiplicity of claims, including promised and obligated returns – not an open future per se (Opitz and Tellmann 2015; Tellmann 2016). The asset belongs to a world of an already financialized future. There is a politics related to such ‘claimed’ futures, which I seek to address through the notion of obligation.

Obligation and assetization

The word ‘obligation’ stems from the Latin word ligare, which means ‘to bind’. It indicates a nexus that propels, secures, and makes reliable. Obligations denote that which makes a social bond binding, or ‘what makes a promise heavy’.¹ The classical sociology of Emile Durkheim elaborates on the whole range of mechanisms that affect this binding nature: from ridicule to law, from morality to mere impracticality (Durkheim 1982, 50ff.). This range of meaning is welcome in this context. Obligation does not necessarily entail the warm and fuzzy world of the social, as opposed to pure legality or economic calculation. Quite on the contrary, in the classical sociological accounts provided by Durkheim and Mauss, the notion of obligation undoes these divisions: Following their theoretical inspiration, it becomes possible to interlace financial debt instruments, taxes and generational commitments, work ethics, and human rights of housing in order to explore a ‘total social fact’ (Mauss 2016, 192ff.).

The debates in Cultural Economy and Social Studies of Finance have thus far maintained a critical distance from the classical sociological approaches that centre on obligations, bindings, and morality. Following the works of Bruno Latour and Michel Callon, the field of Science and Technology Studies in general has positioned itself in opposition to Emile Durkheim because of his totalizing, purifying, vertical, and normative account of the social bond (Latour 2005; Vargas et al. 2008); however, this habitual opposition might produce blind spots with regard to the surprising actuality of the Durkheim School. Today, the question of what binds is more relevant than ever, and it emanates from the most unexpected sites: the financial world of trades and crises, which has produced claims that require bailouts and debts that cannot be paid. Durkheim's insights regarding the binding nature of contracts resonates with the current debate over debt, foreclosure, and bailouts. He writes:

“The role of society can under no circumstance be reduced to passively executing contracts; society's role is also to decide under which condition they have the force of law [… I]n particular circumstances, the debtor can be given more time, regardless of the contractually determined dates; or, the debtor can be forced to give the entity borrowed back before the agreed point in time”, since “contracts contain obligations that have not been stated within the contract”. (Durkheim 1992, 272 and 269 own translation)

Indeed, the creation of capital through legal-societal ‘codes’ that can claim to be binding and durable has a long history that seems particularly insightful in modern times (Pistor 2019). These Durkheimian insights into contracts, debts and obligations, are developed further by the collaborator and nephew of Durkheim, Marcel Mauss. It is often forgotten that Mauss’ theory of obligation was written in view of the first sovereign debt crisis after World War I and in the context of movements of decolonization. As Gregoire Mallard has demonstrated in great detail, Mauss pursued a ‘dialogue with legal theorists’ to foster an understanding of the political meaning of trade and commerce in colonial modernity through his analysis of archaic practices of exchange (Mallard 2019, 1).

Mobilizing this often-neglected aspect of Mauss’ work, this article argues the work of Marcel Mauss helps understanding the temporal, material, and practical enactments of assetization. He allows asking: How are collectivity, materiality and temporality interlaced in the enactments of the obligation to pay? How are certain bindings made heavy, risky, or guaranteed to different degrees and for different actors? Birch and Muniesa have already hinted at this possibility of using Mauss for framing the asset as a particular economic form: ‘The asset […] as the gift (anthropologically understood)’ is characterized ‘by its capacity to maintain attachments between investor and investee so as to secure a future yield, rent, or return’ (Birch and Muniesa 2020b, 28). But what does it mean to utilize Mauss’ theory of obligation to understand the asset? The following theoretical and conceptual argument hopes to retrieve account of a politics of obligation befitting financialized societies from Mauss (Appadurai 2016, 7 and 37; Mallard 2019).

Undoubtedly, it is not an easy task to transpose Mauss’ theory of obligation into the financial realm. A double conceptual move is necessary. First, one needs to uncouple Mauss’ exploration of obligation from the deeply entrenched conceptual opposition between the social and the economic, between entanglement and disentanglement. Second, it is necessary to tackle in detail Mauss’ account of debt, temporality, and financial security. Mauss writings about the nexum and the collateral provide the point of entry for a suggested re-reading of Mauss. Both of these conceptual turns are explored below.

Obligation, collateral, nexum, and security: being disentangled and entangled, archaic and modern

In contrast to Emile Durkheim, who explains obligation by a hierarchical reference to the social as an entity sui generis his collaborator Marcel Mauss offers a different take on what makes social bonds binding. He provides a more relational account of obligation, emphasizing its temporal, material, and practical enactments. Mauss assumes that obligations to give, receive, and give again are established in the matter of the thing itself: ‘There is certainly a bond inherent in things’ (Mauss 2016, 149). The ‘most ancient rule of law’ is that ‘there has to be a thing or service before there can be a gift, and the thing or service has to create obligation’ (Mauss 2016, 152). Things establish bonds because they are ‘not the inert beings’ that ‘our own law consider them to be’ (Mauss 2016, 149). Persons and things exist in ‘symmetrical acts of taking possession’ (Mauss 2016, 155).

Entanglement exists as a rhythm of giving, receiving, and giving again. It is a temporal order. Things do not truly belong to any individual person, because they are part of this rhythm; property is thus always on its way towards someone else in this ‘obligatory’ exchange. Giving and receiving therefore results in what Latour has called ‘never being quit’. The entanglement, in other words, never ceases. ‘You should not calculate’ (Latour and Callon 1997), as the transaction remains incomplete: ‘[Y]ou will never discharge your debt’ and will ‘never escape entanglement’ (Thomas 1991, cited in Latour and Callon 1997, 11). Obligation is enacted through the circulation of things and persons that are never disentangled from one another.

Very often Mauss’ relational and horizontal account of obligation is solely understood in terms of an alternative to or critique of modern economies. It is seen as paving the way for a more moral economy of generosity and recognition entailing an alternative sociality to economic exchange that goes beyond statist and central government planning (Hénaff 2010; Adloff 2016). Mauss himself takes part in establishing such division between archaic entanglement, obligation, and sociality on one side and narrow modern economies of calculation, interest and property on the other side. In his account, economization consists of abstracting, cutting, disentangling, or mobilizing. In Mauss view, modern and ‘cold’ economies emerge through cutting and disentanglement. It is important to note that this conceptual framing of entangled sociality and disentangled economization is not specific to Mauss, but firmly rooted in the history of social thought: Karl Marx's account of the commodity in terms of abstract value (1993), Karl Polanyi's notion of the ‘disembedding’ that creates a self-regulating market (2001), and Michel Callon's rendering of economization through the devices of calculation that frame, disentangle, and conjoin mobilize this conceptual opposition (Çalışkan and Callon 2009). They all link modern capitalist economies with the powers of abstraction, understood as an operation that renders things and persons movable and displaceable, scalable, and quantifiable.

What is lacking in in juxtaposition of social entanglement and economic disentanglement is a more thorough account of the role of entanglement and temporal binding that is crucial for creating financial ties. The asset is a case in point. As elaborated above, the asset is an entity and property title that, like capital, organizes a return through time. It requires entanglement, as much as disentanglement. Addressing the asset as an economic form disrupts therefore the neat division between disentangled economies and entangled socialities. It requires to search within Mauss text those passages which address the simultaneity of dis/entanglement in gift giving. Over and against his own divisions between disentangled economies and entangled socialities, Mauss himself helps exploring this ‘in-between’. He does so when engaging with the question of collateral or the nexum. The account of the nexum functions here as a connecting piece for linking Mauss’ theory of obligation to the question of the politics of financialization.

The nexum belongs to Roman law. It is a security given for a debt. For Mauss, the nexum sits in between the archaic and the modern; it functions as a ‘hinge between modern European law and the archaic legality of the gift’ (Pottage 2020, 174). In Roman law, ‘nexum was originally the form taken by a loan made by patrician to plebeian [… I]t created a bond under which the borrower effectively pledges himself as security for the loan’ (Pottage 2020, 172). The debtor himself became the nexus – that is, subjected to the creditors. If the debt could not be restored, ‘he might be sold into slavery’ or ‘have his body divided between his creditors’ (Pottage 2020, 178). To avoid such consequences, the debtor would subject himself to his creditor by means of a ‘self-mancipation’, by giving himself into servitude (Pottage 2020, 178). The nexum is a type of collateral: something given to provide security for a promise. It combines persons and things, for a person becomes a thing and the thing owned acquires a personal bondage. The person itself was the security, ‘treated as a thing’ (de Zulueta, cited in Pottage 2020, 180).

Mauss tackles the nexum as a paradigmatic case for the mixing between persons and things. Roman legal institution of the nexum, which is ‘mixed together with all sorts of considerations that are alien to our purely legal, purely economic, modern conceptions’ (Mauss 2016, 149). Yet, this mixing and hybridization is a violent one. In the context of the nexum, the person offered as security or collateral for an obligation becomes an object that is owned; being a security entails the potential sacrifice of time, work, and personhood. It is difficult to imagine a more hierarchical, power-laden, and asymmetrical relationship of mixing things and persons, subjects, and objects. The mixing of persons and things does not result in generosity, but in the violence of obligation.

How does Mauss account of the specific type of entanglement? Mauss finds Roman law not just an example of the mixing of persons and things, but also a quintessential case of a quasi-modern disentanglement and division between subject and object. Roman law produces a type of ownership by hierarchizing and distributing the powers of action in asymmetrical ways:

For it is precisely the Romans and the Greeks who, perhaps following the northern and western Semites, invented the distinction between personal rights and real rights, separated sale from gift and exchange, isolated moral obligation from contract and above all conceived the difference between rites, laws and interests. (Mauss 2016, 157)

The archaic Roman law is thus modern in how it enacts the disentanglement and division between subject and object, person and thing.

The nexum and Roman law become an interesting liminal case for Mauss theory of obligation (Pottage 2020). It is one the one hand about debt, economy and contract; on the other hand, it is about a particular mingling of persons and things. The nexum signifies entanglement without generosity. It produces a specific entanglement that befits the logics of debt contracts, economy and credit in a quasi-modern sense. Mauss hints at but never explores in greater detail this paradoxical and simultaneous disentanglement and entanglement.

Instead, Mauss takes pains to unburden the nexum from this extreme and sacrificial rendering of a debt security. Give that ‘Mauss proposed a most optimistic vision of the power of gift exchanges to restore European cooperation, financial solidarity and sustainable peace after the traumatic experience of the Great War’ (Mallard 2019, 9), it seems as if for Mauss, collateral cannot be allowed to have the violent, sacrificial implication of debt service that the nexum signifies. The fact that Mauss quickly shifts his case in order to provide a more friendly account of the securities given for a promise and for credit seems to be a case in point. Mauss turns to the Germanic Wadium in order to further explore the security of a promise. How is it different? Both nexum and Wadium are instances of collateral or pledge – that is, of giving something in order to secure a temporal promise and entanglement. But in the Wadium, Mauss finds the more benign version of debt entanglement. Key to him is the lack of value in the Wadium: The Germanic Wadium is ‘generally of little value’, such as ‘a glove, a coin, a blade, given back upon payment for the thing being handed over’. Even though it is a thing of force, ‘fully imbued with the individuality of the giver’ it has no significant or sacrificial value. The person as a thing is not a body to be enslaved, but a token to be returned (Mauss 2016, 172–73). The ‘pledge was often cut into two with one half being kept by each of the two parties’ (Mauss 2016, 172). Collateral in this context is closely related to the ‘symbolon’ used in Ancient Greece, a broken piece of clay that provided material documentation of an unfinished relationship: ‘[I]t secures an agreement between two parties through a physical relationship between the items that renders them meaningful as one’ (Gauthier 1972, cited in Boy and Gabor 2019, 299). By defining the collateral as a ‘symbolon’ and by shielding it from any material value, Marcel Mauss downplays the range of what the entanglements of collateral as a security and obligation might imply: turning something or someone into nothing but a transferable, isolated object while maintaining the bonds that bind. Collateral is disentangled and transferable, entangled and obliged at the same time.

Even if Mauss himself only touched upon, but did not explore the full range of hierarchical forms of entanglement and disentanglement in collateral, he can nevertheless function here as an important inspiration: his work helps us to situate and understand the political-cultural meaning of financial security today in terms of a specific combination of being forcefully entangled and disentangled at the same time. In a next conceptual step, I will use Annelise Riles’ widely acclaimed ethnographic account collateralization in derivative trading in order use this insight for re-interpreting the contemporary legal technique of collateralization in finance. Riles provides the empirical description of collateral as a current legal-financial device. She explores the technicalities of obligation through the particular device of collateral. Mauss account of obligation helps to understand the politics involved as a selective and hierarchical distribution of entanglement and disentanglement in financial relations.

Collateral as an obligation device: on technical politics as a politics of obligation

In today's world of finance and financialization, security provided as collateral is a ubiquitous and technical aspect of trading. Obviously and contrary to Mauss’ reading of the term, it is not a thing without value: ‘The essential mechanism by which collateralization works is to provide an asset of value’ that ‘in the event of default on the primary transactions the collateral receiver has recourse to the collateral asset and can thus indirectly make good any loss suffered’ (ISDA, cited in Riles 2011, 38). Collateral is a type of property right ‘assigned to secure contractual obligations’ (Hughes 2012, 212), a security given for a temporally defined entanglement. After the crisis of 2008, collateral as a mundane and legal technique suddenly became the centre of attention, as Nina Boy and Daniela Gabor describe:

Before Lehman, collateral – as befitting its definition of subordinate, secondary –sat on the sidelines of the financial stage. This is no longer the case. The financial crisis has brought collateral to the forefront of theoretical and policy concerns in modern finance, expanding a conversation hitherto consigned to the global regulatory community. (2019, 295)

Financialization is a type of ‘collateral-based finance’ in which monetary policy, institutional investors, and mechanisms of shadow-banking converge in their search for ‘safe collateral’ for the purpose of generating revenues or stabilizing liquidity (Boy and Gabor 2019, 296–97). Collateral creates weight and bears political weight in today's financial practices. In which way does this legal technique and device signal a politics of obligation?

First of all, collateral is a device of entanglement. Riles characterizes collateral by its ‘relational quality of obligation’: Within a temporally limited period, it manifests the ‘relational quality of obligations – of entangled not delineated rights’ (Riles 2011, 166). Interestingly, Riles refers to Roman law in order to make this point. In Roman law, collateral is ‘a species of ius in re aliena’, meaning ‘rights in others’ property, which “imposes restrictions on the exercise of the rights of ownership by the owner”’ (Berger and Pound cited in Riles 2008, 610, Fn 16; Riles 2011, 165). Collateral seems to be a case of ‘cash entanglement’, as Keynes termed it when writing that ‘entangling alliances or entangling leagues are nothing to the entanglements of cash owing’ (Keynes 1920, 262). Emphasizing the quality of entanglement in the collateral, Riles goes so far as to assert that collateral is akin to a ‘temporally delineated commons’ (Riles 2011, 165); however, this ‘commons’ entails no warm sociality or public accessibility. For this reason, collateral is to Riles at the same time an ‘anti-commons’: its type of entanglement is simultaneously a hierarchy and a disentanglement. Collateral thus works by enacting divisions and hierarchies at the same time.

Annelise Riles account of collateral helps us to understand the hierarchical ordering of entanglement that is key to this type of financial security. Collateral does not establish any absolute ‘safety’ for a promise, but rather a hierarchical order of security vis-à-vis other payment obligations – a differential safety. Collateral can be understood as a legally channelled payment claim that is more secure in relation to others. It is linked to agreements to specific jurisdictions, ensuring that the national law that sorts other creditors’ claims in cases of default will be superseded; collateral thus puts one ‘ahead of the queue’ when debts are paid. Indeed, ‘[c]ollateral is fundamentally a hierarchical relationship’ (Riles 2011, 165).

Collateral not only binds objects or claims and persons and orders these bindings in a hierarchy, but it also delinks – just as Mauss’ account of the nexum would lead us to expect. The double movement of binding through unbinding is crucial. Collateral is defined as security for a contract, only because it is itself distinct and clearly demarcated. It is a ‘separate obligation’ based on a transferable value (Riles 2011, 1). Hence, collateral mobilizes and makes transferable; it is a type of property right that establishes clear divisions between subjects and objects, between contracts and securities. Should the debt remain unpaid, collateral becomes the distinct third: a valuable asset that must make good the promise. It is the movable and absolutely claimable security once the entanglement fails. David Graeber once wondered why and how the morality of debt repayment exhibits no limits, asking service, payment, and goods up to the point of utter exhaustion; in answer, one might turn to the logic of collateral: A relation is either backed by a distinct third or becomes one in order to make good the loss of trust and value suffered (Boy and Gabor 2019).

Interestingly, the unbinding that collateral entails does not merely pertain to the delivery and movability of a clearly demarcated property of value. Unbinding also describes how devices of calculation and forms of knowledge are shaped by this type of relation. The type of hierarchical binding and unbinding has effects on what type of calculative care is applied. As Riles points out, collateral limits the urge to know: because one has collateral, the specific creditworthiness or circumstance of the other can be bracketed; ‘one does not need to know since one has collateral’; in this sense, collateral is a tool ‘for placing limits on mutual entanglements’ (Riles 2011, 164). The entanglement that is fashioned through collateral involves wilful blindness. In a similar argument, Beng Holmstrom from the Bank of International Settlement suggests that any sufficiently ‘over-collateralized debt’ will engender a particular ignorance regarding its exact value (2015). There is a ‘purposeful opacity’ regarding collateralized debt: ‘The beauty lies in the fact that collateralized lending obviates the need to discover the exact price of the collateral’, for as long as there is a sufficiently high probability that one can make good the loss, regardless of the exact values, the deal is optimal for those involved (Holmstrom 2015, 3 and 15). Collateral organizes a liquidity of debt that is not based on a ‘precise evaluation of values’ (Holmstrom 2015, 15).

Riles defines collateral as a technique through the way in which it combines procedural knowledge practices in terms of ‘problem-solving’, ‘conceptual and communicative routines’, and documentary tools that produce scripted routines of collaboration (Riles 2011, 64ff.). Collateral agreements are ‘often meant not to be read, but to be completed’ (Riles 2011, 50). Standardized documents compel a ‘very specific kind of activity, form-filling’, offering a ‘script for a particular kind of collaboration’ that is distinguished from a shared background of norms or customs (Riles 2008, 620).

According to Riles, the perspective of collateralization in terms of a legal technique opens up our understanding of market politics. In her account of the technical and technocratic politics that may be private or public, she contends that ‘the differences between public and private regulation are far more subtle than usually assumed. Both are working the same machine’ (Riles 2011, 73). Her aim is to broaden the concept of regulation and politics befitting financial markets: ‘Legal technique’ is considered here the ‘social institutional and intellectual hinge of public and private’ (Riles 2011, 109). It is distinguished from norms and customs, values and morals. Viewed from a Maussian and Durkheimian angle, the point is not to mobilize an opposition or an alternative to the practical, technical, legal or social, customary or moral – all define or express types of obligation. The question is rather how a hybrid mixture of ‘devices’ – moral, technical, calculative (both public and private) – creates bindings in hierarchical and disentangling ways. This perspective pushes the study of economization outside the domains of calculation and follows the links that explain how finance ‘comes to matter’ outside the trading floor and its back offices – borrowing here an expression from Karan Barad's rethinking of materiality and meaning as materialization (2007). We should investigate the multiplicity of agencies and assemblages that account for the chain of securitization (de Goede 2017), understood here as a temporal as much as spatial and material act of binding time.

How can we now understand the asset as a particular economic form? I have approached assetization through the technical device of obligation that creates the durability of the revenue. The collateral, here framed as one devices of obligation that links assets to a promise of security, helps understanding what the politics of assetization is about: simultaneously distributing what is binding and what is cut. Collateral entangles while dividing and divides while entangling; it generates access to values but shields them from scrutiny; it creates commons and anti-commons through hierarchies. In sum, collateral hierarchically binds because it unbinds – that is, because it can be isolated from intimate entanglements with places, information, and persons at the same time as it connects to them.

Shakespeare's Merchant of Venice dramatizes this simultaneous binding and unbinding in the most vivid and vital terms (2006). The collateral in this play is a ‘pound of flesh’, offered as a guarantee for a promise, a separate obligation intended to secure an original obligation. When the original obligation fails, the collateral becomes due, the ‘pound of flesh’ has to be cut. As the story goes, the collateral is deemed to be illegitimate. The illegitimacy does not stem from the prospect of violence and death that the collateral involves, but from the problem that the collateral cannot be extracted in the exact measure prescribed. The living entanglement of the flesh makes its disentanglement in the proper proportion – without taking too much – impossible. The disentanglement is undone by too much entanglement, the impossibility of a perfect cut. Security fails because the nexus between binding and unbinding is reshuffled.

This drama over the legitimacy of collateral is not far removed from the political conundrums presented by collateral, obligation, and money today. Even though no ‘pound of flesh’ is demanded, one's habitat as a collateral asset is nonetheless existential. The material politics at stake becomes evident when we address the technicality of collateral from within a theory of obligation, a method that allows us to broaden our notion of politics. To sum up, viewing the ‘legal technique’ of collateralization from the perspective of Mauss’ theory of obligation not only exemplifies the paradoxical dis/entanglinng of the collateral; it also addresses the material politics that bind finance to matter. Collateral is a device of ‘chaining’ in the ‘chains of securitization’ (de Goede 2017).

Politics of assetization: housing as a collateral asset

Above, I have used Mauss’ theory of obligation in order to reframe Riles’ technical politics, and Riles’ account of collateral as a legal technique in order to enliven, actualize, and concretize Mauss’ account of obligation. What I have developed in conceptual terms can now be demonstrated as a versatile analytic that facilitates the understanding of a specific case: namely, the assetization of housing and development in Spain before the financial crisis of 2008. Collateral has been deemed central to the financialization of housing:

Housing […] acts as a highly valued form of collateral. Like precious works of art, real estate is considered to have a secure fixed value. But unlike art, mortgage debt and housing rental income offer the advantages of scale, standardization, well-established calculative systems, fixed income (interest-cum-instalments and rent respectively) and a highly standardized institutional framework to collect future income streams. (Aalbers 2017, 544)

An attempt to explain the role of housing and the habitat in general – including land and infrastructure – in the context of financialization through its function as collateral might raise the following questions: If collateral offers security for these investment strategies and debt relations, what is it exactly that produces this security? As Annelise Riles wonders, if one ‘writes only of the security of private transactional bolstered by collateral’, what is it that ‘magically makes’ collateral so secure? (Riles 2011, 162). If houses function as collateral, have they not always done so? What is new or radically significant about this? If collateral is simply about fixing securities for capital, is it just a variation of David Harvey's account of ‘spatial fixes’? And what is doing the fixing? (Ouma, Johnson, and Bigger 2018, 501).

In this section, I will grapple with these questions, using Spain as an exemplary instance of assetization, now re-read and interpreted through the theoretical lenses of devices of obligation. Spain is a compelling case for this purpose. An ‘exceptional’ and ‘spectacular’ rise of securitization activity characterized the country in the decade preceding the recent financial crisis (Carbó-Valverde, Marqués-Ibáñez, and Fernández 2011). Spanish home construction accounted for two-thirds of the housing units built in Europe between 1997 and 2007 (Marcinkoski 2015, 81). The country was ‘building more housing units per year than Germany, France, and the United Kingdom combined, despite having only 20 per cent of the total population of those three countries’ (Marcinkoski 2015, 73). On average, 570,000 new houses per year were built between 2001 and 2007 (Linde 2017, 4).

But Spain is not merely an interesting case due to the ‘depth and breadth of what occurred’ (Marcinkoski 2015, 58); one must also examine the extremes of local specificities and global patterns involved. Spain was the ‘European epicentre of global real estate speculation during the early years of the twenty-first century’ (Marcinkoski 2015, 90), but the epicentre of the epicentre of the crisis was the ‘cajas sector, the notorious private savings and loans’ which ‘at the peak comprised 50% of the Spanish credit market’ (Santos 2014, 1). The cajas are technically commercial banks linked to non-profit foundations, untraded in the stock market, mutually owned and essentially managed by local and regional governments, which fund cultural activities and social assistance programmes (Ramos-Tallada 2010, 59f.; Santos 2014, 14ff.). They were subject to auditing by the Bank of Spain and its ‘innovative macroprudential tools’ (Santos 2014, 22; Linde 2017). In sum, Spain's ‘securitization machine’ (Santos 2014) was unlike any other.

Many accounts of the Spanish case in political economy, geography, and urban studies pick one or the other side of this ‘securitization machine’ in order to identify the causes of the economic drama in Spain: Emphasis is placed either on the deregulated market and liberalized planning process or on the local banks that were managed by local politicians and regional elites with vested interests, a lack of professional expertise and a institutional framing that shielded the banks from market discipline (Santos 2014; Portas 2017). As will be seen below, it is much more enlightening to dispense with these oppositions of too much state or too much market. Searching for the politics and devices of obligation demonstrates just how much financialization and assetization confounds the divisions between public and private, market and state, local and global, and the financial and legal infrastructural modes of power that produce the ‘chains of securitization’ (de Goede 2017; B. Braun 2020).

Making collateral through unbinding

During the 1990s, both land and finance were subject to novel regulations in Spain, and both of these regulations feature in many accounts of the Spanish crisis. Together, they produced (among other factors) the physical-financial and social morphology of Spain's post-crisis landscape. Land and finance became linked. In this first section, I emphasize the hierarchy, division, and standardization that transform land and houses into a possible security: a movable ‘third’, that secures a contractual relation, in the second section I focus on the ‘chaining’ that links finance to land and vice versa. I move from devices of disentangling to devices of entangling.

In 1998, a new Land Act (the Land Regime and Valuation Act) was approved in Spain (Jefatura del Estado 1998). The novel law was initiated by a constitutional court ruling (Tribunal Constitucional 1997) that maintained that land use law should be the sole responsibility of regional governments. The role of the national law was to determine ‘the basic statute of the right of ownership’ and the ‘system of valuations, thus assuring a homogeneous economic quantification of the right of ownership through the country’ (Cladera and Burns 2000, 550). However, the apparently constrained role of the national law was not restrictive regarding its effects. In fact, the new model for the classification of land enshrined in the Land Act from 1998 has turned out to be its ‘most far-reaching […] innovation’ (Cladera and Burns 2000, 550).

The classificatory system consisted of a simple binary: Land not yet urbanized was categorized either as developable or non-developable land (Ponce 2004; Coq-Huelva 2013). Of these two, only the category of ‘non-developable’ required justification: ‘All land as yet unincorporated into the urban process is considered eligible for development, when no objective reasons for its preservation arises’ (Act 6/1998, Exposition of Motives, cited in Cladera and Burns 2000, 548). Once designated as developable, private developers – together with or at times even acting against owners (Coq-Huelva 2013, 1221f.) – became the ‘absolute protagonist in urban development’ (De La Encarnación Valcárcel 2013, 74). Profitable coalitions between local politics and private developers were bolstered by the fact that the regime of land classification also promised rising values. As the law states, the value of land was to be ascertained based on the expectation of its market value in its developed state. This meant that mere ‘expectations regarding building rights have been taken into account in ascertaining the value of land’ (Gómez Cid 2010). The classification of land as ‘developable’ immediately impacted its ‘legal-financial valuation’ (Gómez Cid 2010).

The devices of calculation that made these expectations of rising values quantifiable for investors, developers, and municipal governments alike certainly played an important role in the securitization machine (Ouma 2016). However, the pervasive importance of calculation should not entice us to overlook the specific legal form that it took. The Land Act does not determine market prices, nor does it inform investment decisions; it pertains to specific legal events, such as compulsory purchases/sales and, most importantly for this context, the act of collateralization for securitization. To this end, valuation is required to allow ‘mortgage loans to be assembled into pools backing mortgage securities issued by entities, developers and constructures’ (Gómez Cid 2010). In this way, the asset is defined as part of a ‘collateral system’ in which ‘the lender requires certainty that the asset being taken as a guarantee for a housing loan is of a sufficient value to cover the outstanding debt should the loan default’ (European Mortgage Federation (EMF) and European Covered Bond Council (ECBC) 2017, 4).

In other words, land as a (collateral) asset is not simply bought and sold like a commodity, and it is not merely invested in for future profit like a stock; rather, it is turned into a collateral asset in order to secure a revenue against dangers of default or non-performance. The rules of valuation determined in the law ‘have significant implications not only for mortgage and covered bond markets, but also the valuation of property for lending purposes, which plays a fundamental role in the mortgage lending and funding value chain’ (European Mortgage Federation (EMF) and European Covered Bond Council (ECBC) 2017, 4).

The act of valuation of land and real estate for the purpose of collateralization is shaped by this legal format, which compels the practices of ‘form-filling’ that Riles described. The legal scholar Heather Hughes explains the standardization effects that collateralization processes can have on architectural forms:

Once highly evolved form documentation for a particular structure exists, parties tend to repeat the structure. […] We might say that mezzanine financing itself escalates certain types of development because it expands access to capital for developers using standardized transactional forms in which financers take a security interest in standardized types of collateral. [… I]nvestors may have already reviewed and approved of form documentation for loans to developers secured by certain types of housing development. [… T]here can be a kind of queue of funding for projects fitting the preapproved formula. (Hughes 2011, 405–06)

In the case of Spain, these preapproved forms were ‘large isolated developments’, which ‘bear no relation to the context in which they are located’ (Concheiro 2012, 2–3): ‘Post-Metropolitan Islands, Foreign Investment Enclaves, and Urban Ensanches’ (Soules 2015, 426).

The legal-financial form of land classification and valuation in the context of assetization sets up the conditions for the double process of unbinding and binding specific to collateralization. In the first place, it declares land to be a certain and exclusive domain for privately initiated and privately determined development projects. The Land Act ‘configures the planning powers of the right of ownership with maximum guarantees, that is to say, by granting it the fullest legal security’ (Cladera and Burns 2000, 552). By removing all uncertainty about possible obligations that this land could also be subjected to – other authorities, claims, publics, uses that must be heard or specifically addressed – it was transformed into an object that could provide security within a value chain. By means of a legal-political device, land was turned into a transferable, certain, demarcated, and wholly usable entity. But this story of disentanglement and legal valuation is only one part of the story.

Chains of obligations: binding as an act of collateralization

In the making of collateral assets, the key is not solely the unbinding of the collateral, but also its binding into a ‘chain of securitization as Marieke de Goede has already pointed out (de Goede 2017)’. In order to map the creation of this chain through devices of obligation, one must inquire into the specific instruments of securitization that were predominantly used. In the case of Spain, these were simple and heavily regulated products such as covered bonds (since 1981) and traditional securitized mortgage loans (since 1992) (Garcia-Herrero and Fernández de Lis 2008, 4f.). Covered bonds, mostly offered by regional and local saving banks, are commonly described as ‘vanilla bonds’: unsophisticated, conservatively regulated instruments mediated by commercial banks and savings banks without the typical investment banking culture or the extensive use of derivative markets (Ramos-Tallada 2010, 59). It produces ‘plain sight’ within the murky waters of shadow banking (Santos 2014). Unlike the US model of securitization, which was based on the ‘originate to distribute’ model, the Spanish model depended on ‘originate to hold’: The originators retained exposure, meaning they could not remove the risk from their balance sheet and remained responsible for risk management and absorption (Garcia-Herrero and Fernández de Lis 2008, 2). Given the strict regulations governing the conditions of removing such securities from one's balance sheet, the dominant type of securitization used the simple format of the ‘transparent’ covered bond (Holmstrom 2015).

Notably, this did not impede the dynamics of securitization; on the contrary, there has been an increasing trend of covered bond securitization since the early 2000s. The securitization boom took off between 2001 and 2005 with a total volume of 429 billion Euros, of which almost 71% were backed by mortgage assets (Garcia-Herrero and Fernández de Lis 2008, 3 and 6; Ramos-Tallada 2010, 64). Foreign investors held almost 60% of this amount; they ‘gulped Spanish securitization issue’ (Santos 2014, 33). Moreover, the majority of these mortgages went to developers. Developer debt in Spain rose ‘sixfold between 2000 and the beginning of the GFC [Global Financial Crisis]’ (Chui, Illes, and Upper 2018, 98). Ultimately, 40% of all loans to the construction sector became non-performing, compared to 6% of mortgages (Chui, Illes, and Upper 2018, 99). Thus, the new role of the developer and the increased discretion of private actors in development defined in the Land Act is financially expressed in the predominance of these loans, backed by ‘developable land’ as their collateral assets. Due to the specific and conservative regulations regarding capital requirements and loan-to value ratios, all of these counted as ‘high-quality collateral’ in the standardized formats outlined above.

However, ‘high-quality collateral’ is not a characteristic of property in isolation; it is made through differential devices of obligation that produce credit enhancement by establishing priority and the guarantee of being served. Bonds were backed by the entire portfolio of an asset class and the ‘whole income’ of the bank. In the ‘event of the issuer's default, investors are priority claimants against the ring-fenced assets’ (Ramos-Tallada 2010, 54). As the working group on securitization of the European Financial Markets Lawyers Group defines, ‘Ring fencing assets that are the subject of a securitization’ implies ‘the removal of these assets from the legal reach of the originator, its creditors and its insolvency or administration offers, thus making them available for the sole benefit of the parties of the securitization’ (2007, 33–34). Through these preferential treatments, a direct channel of claims is established, from those buying the securities to those obliged to deliver their value. The ‘high-quality’ collateral is thus an instrument-effect of ‘chains of securitization’.

Crucial to this ‘chain of securitization’ is its possibility of extension. The covered bonds were themselves prioritized, since they were accepted as eligible for the European Central Banks: ‘Called cédulas hipotecarias, the Spanish CBs are […] in compliance with the European Council directive 88/220/EEC, art. 22-4 (known as “UCITS directive”)’ (Ramos-Tallada 2010, 65). That is, the collateralized bond could function itself as collateral in a monetary operation with the European Central Bank allowing the generation of liquidity, given their ‘eligibility as collateral for the ECB Repos’ (Ramos-Tallada 2010, 65). Within a collateral assemblage of land disentangled from diverging claims and thus entangled through a legal-financial valuation combined with priority payment and eligibility, a chain was established. Ironically, this chain was made by a banking regulation that was considered ‘tough’, ahead of its time in terms of the macroprudential regulations that it applied, transparent, and tightly governed by regulatory oversight.

In this mapping of an example chain of securitization, one can only catch a glimpse of the devices of obligation that structure collateral assets. What is evident is how techniques and patterns of (un)making obligations are combined in the making of high-quality collateral for processes of generating collateral assets. These techniques and patterns of ‘obliging’ or unbinding obligations cross the division between public and private. Looking through the lenses of the devices of obligation, one can begin to analyze how ‘housing connects local geographies of home, community and indebtedness to national and global geographies of mortgage funding, securitization and interlinked crises’ (Aalbers 2019, 376). In addition, one can address how securitization is shaped by the state – without assuming a unitary actor. Instead, one can list the devices of obligation that have played a role in assembling a strategic dispositive: municipalities that earned non-recurring taxes through land development, local governors priding themselves on initiating yet another infrastructure venture, tax deductions for owners of second homes, European tourists flocking to the Costa Blanca, family members who provided guarantees for one another, bankruptcy and insolvency laws, and a tradition of modernization through large construction projects. The aim has not been to reduce everything to this single, rough outline of a collateral chain, but to demonstrate what needs to be mapped in more detail to understand the politics of assetization.

Conclusion: toxic assets and novel political problematizations

The security provided by collateral is not magical. Collateral might well transform into an insecurity, as the crisis of 2008 demonstrated: unfinished buildings, senseless urban morphologies, overdue payments. When the ‘securitization machine’ came to a momentary halt, the collateral assets turned ‘toxic’, and the banks owned ghost estates which were unwanted and devalued. All the measures enacted to rescue the banks with more guarantees from the Bank of Spain fell short, and the European Stability Mechanism had to be called in to assist. Under the directive of the European Union, SAREB, a ‘bad bank’, was established with the task of turning toxic assets into assets again. It was given 15 years to complete its work, aimed at making good the losses of unfulfilled obligations. The houses needed to be sold quickly, mostly in bulk in order to generate the largest amount of money possible with the lowest transformation costs. Large amounts of foreclosed and empty homes have been acquired by private equity firms such as Blackstone (Janoschka et al. 2020). The assets that back processes of securitizations today are rental incomes – fittingly, laws strengthening the enforceability of rental contracts have accompanied this shift. Toxic assets have thus metamorphosed into rental securities, and thereby into collateral assets again.

In many ways, this history of the politics of obligations and their partial and selective guarantees, enforcements, or qualifications does not end with the ‘toxic asset’, but begins its most obvious manifestation: It is exactly at such moments when the collateral is called that the question of legitimacy and illegitimacy becomes a public issue. When people had to leave their houses, the taxpayers’ money was used for bailouts, and public-private institutions sold public housing to private equity firms to make up for their losses. A moral economy of questioning and shifting obligations emerged amongst indebted private owners, who started using the language of ‘priorities’ and ‘obligations’ to debate and argue about debt, mortgages, and politics (Sabaté 2016). But the political applicability of these terms goes beyond such moments of contestation; it is ingrained within the chains of securitization themselves. That is, obligations and moralities are not merely applied to issues of financialization in moments of crisis and politicization but govern them right from the start.

In this paper, I have focused on less obvious ways in which devices of obligation and the politics of obligation define assets and their economies. This makes financialization and assetization a ‘matter of concern’, as Latour phrased it: Each time a particular type of obligation is rendered visible or invisible, is prioritized or made riskier, each time the making of a common habitat is at stake; each time financial speculation results in nothing but unusable buildings instead of democratic luxury, the constructive powers of speculation have been secured or made risky in one way or another. At the peak of the financial crisis, The Economist published a cover story entitled ‘The Beauty of Bubbles’, pointing out that ‘the bubble metaphor does not do full justice to the consequences of a financial boom and bust. After all, a bubble is evanescent. Once it has popped it leaves nothing behind [… T]is patently not the case’ (The Economist 2008). The ‘beauty of bubbles’ refers to world-making, powered by financial capacities. Today, this capacity of world-makinng is only visible in the ruins of unuseability.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

The research was funded by the Deutsche Forschungsgemeinschaft (DFG, German Research Foundation) -SFB TRR 294/1-424638267.

Notes on contributors

Ute Tellmann

Ute Tellmann is professor for sociological theory at the Technical University of Darmstadt. She has done research on the genealogy of the division between politics and economy in liberalism, the temporality and spatiality of finance, and the technical politics of debt and infrastructure.

Notes

1 Conversation with Tanja Aalberts at the interdisciplinary Workshop ‘Pledge- Interdisciplinary workshop on the history and politics of a persistent security device’ 2019 in Marburg/Germany, convened by Nina Boy and Christian Wenzel.