Shadow Money and the Shadow Workforce: Rethinking Labor and Liquidity

Abstract

In recent years, theoretical inquiries into the changing forms of labor and money have proceeded alongside each other but have rarely entered into dialogue, much less investigated the evolving relationship between the two terms. This is a curious omission given that contemporary processes of financialization involve an ever-tighter entanglement between the fortunes of high finance and the everyday life of consumer borrowing and indebtedness. This article focuses on the phenomenon of shadow money—money issued outside the traditional boundaries of the New Deal banking system—to illuminate the ways money and labor have coevolved. It argues that the migration of money creation from the depository institution to the shadow bank and the changing form of money—from insured deposit to uninsured repo—represents an ongoing response to the evolving risk profile of labor itself. Shadow money creation has grown in concert with the expansion of the shadow workforce—the sector of the post-Fordist workforce engaged in contingent, nonstandard, and uninsured labor—and, until recently, has offered a solution of sorts to the social insecurity of labor. It is this solution that broke down in the recent financial crisis.

Subprime Empire

“…This financing structure is at the very center of the subprime mortgage crisis. As Melinda Cooper (2015) explains, "The income flows that travel through an asset-backed security or collateralized debt obligation are interest payments extracted from the volatile, unpredictable wages of post-Fordist workers" (417; see Schuster 2019); this is what she characterizes as the link between "shadow money" and a "shadow workforce." Securitization is profitable only if the poor can be coerced into keeping on payment.…”

October! To Commemorate the Future

“…In such fields, private property (e.g., of genomic information or of data produced through social or digital interaction) operates as a governmentality device, directing the conducts of subjects through heterogeneous platforms, disassembling individual identity and reassembling it through the creation of multiple profiles, or reframing the meaning of the very notions of health and well-being. In the circuits of finance, the meaning of notions previously key to the definition of private property, such as commodity and money, is profoundly altered by technical innovations such as derivatives and by the emergence of so-called shadow banking (see, e.g., Martin 2013;Cooper 2015). Finance continues, of course, to be dominated by private property.…”

Everyday Leverage, or Leveraging the Everyday

“…Both leaders targeted unionized labour and working conditions, restructuring the workforce around flexible labour and the forms of temporary, contingent and short-term contract work that would become a permanent feature of the employment landscape in the following decades (Hatton 2011, Cooper 2015. In addition, alongside their concerted campaign to erode formal work entitlements, both Reagan and Thatcher embraced privatization and the reorganization of welfare and social insurance, promoting the involvement of ordinary people in the ownership of property and stocks, and encouraging employee shareholding and personal equity plans as an alternative to traditional forms of welfare and social security provision.…”

“…But it also, unexpectedly, provided a way of responding to the pressure from the civil rights movement and its demands for antidiscriminatory lending practices in consumer credit markets, a transformation that eventually enabled the extension of credit to groups most often employed in irregular, nonstandard and primarily low-wage work: African-Americans, Latinos and women (Cooper 2015).…”