Risk Societies and Cultures of Volatility

Networking Session

Friday 28th August 15:15 – 16:15

Chair: Emily Rosamond

Franziska Cooiman – The Political Origins of the Venturization of Europe’s (digital) economy

This article explores the political origins of the venture capital market in Europe and discusses its structural implications. I argue that, historically, the growth of the venture capital market in Europe since 2000 was linked to the creation of the European Investment Fund (EIF) and its role in supporting and de-risking equity investments. I extend the notion of ‘governing through financial markets’ (Braun, Gabor, and Hübner 2018; Krippner 2007) to a new policy field and show how the ‘distance’ at which policymakers govern increases after crises. Over the last two decades the EIF has created more layers, in the form of funds-of-funds, thus lengthening the investment chain. I develop the notion of venturization to grasp and problematize three structural effects of the EIF’s strategy: 1) de-risking of private investments 2) oligopolistic winner-takes-it-all business models at the expense of socioecological transformation 3) precarious jobs.

Andrei Guter-Sandu – Dangerous Liaisons: Nurturing Solidarity through Social Impact Bonds?

Despite having been around for a decade now, Social Impact Bonds (SIBs) – payment by result contracts funding social programmes – are still a niche instrument. Constituting but a fraction of the overall impact investment sector, they were expected to grow much faster and augur a new model of pursuing social policy objectives. Whilst this has not yet occurred, they nevertheless continue to benefit from a great degree of political support and academic interest. But outside of the practitioner-focused literature, the scholarship investigating SIBs has largely focused on the exogenous determinants of their emergence and identified financialisation and the erosion of social solidarity as the main dynamic underpinning this development. This article argues that it is important to also attend to SIBs as expressions of endogenous transformations occurring within the design and pursuit of social policy objectives. By looking at SIBs as a form of governance of social risks, the article argues that SIBs nurture their own forms of social solidarity. Based on the main tenets of SIBs, three in particular are emphasised: inter-temporal, cross-sectoral and risk-insurance solidarities. Whilst these can spur social inclusion, innovation and collaboration, the article discusses how they can also be spurious and can come undone.

Jesse Cunningham and Huon Curtis – Noise as Information: Finance Economics as Second-Order Observation

In noise we hear the possibility of a signal, indeed different signals, and in the multiplicity of signals we hear noise. With variation and selection comes dynamic evolution, a contingent state, one that could be otherwise. The term ‘polemogenous’ (from the French, polémogène) means that which generates polemics. And polemics are creative. If everyone, every system, were to reason in the same way, there would be silence. Every remark would be redundant, having no informational value. Thus noise is not bad. The essence of finance economics, like all that is social in nature, is a forming of meaning. Whatever cannot be formed meaningfully is not available to the system. This unavailability, as ‘noise’, is the dynamic difference (noise/information) that scintillates the system. Information, like morality, is polemogenous – it stirs contention. Without noise and the possibility of its conversion to information there would be no opportunities to exploit. This paper applies a systems theoretical understanding of observation to conceive of finance economics as the economy’s means of observing its noise and capitalising on that polemic. Niklas Luhmann’s method is utilised to explicate some ideas on noise by financial economist Fischer Black, who suggests the incomprehensible is computable. This is finance. The fact that logical grounds, absolute deductions, and clear calculations are claimed to be rare in finance is no barrier to understanding it. Rather, this polyphonic and polemogenous information-selection is the ‘ground’ of finance, not as totalising logic, but as different difference production for the sake of deriving economic opportunity.