A couple of days, ago, over dinner, I had an interesting discussion with some fellow PhD students about why we do historical research and who we think will benefit from our efforts.
It turns out that over the past few months, many of the articles and books I read for my research ended up pointing me to similar questions, in particular about contemporary history. What is the current state of that field? What are the particular challenges of writing contemporary history today? How does (or doesn’?) contemporary history relate to neighbouring disciplines, in particular of the social sciences? Finally, how can we as historians use these scholars’ interpretations of and from the period that we study, and what can we add to their descriptions of past reality?
When working in the archives for days and weeks on end, it is important to stop and think about what one hopes to achieve with one’s work.
Of course, a blog post is hardly the place to stretch out elaborate answers to these fundamental questions. What I will try to do here instead is to explain how one concept that I have grappled with recently provides a good illustration of what contemporary history can add to ongoing cross-disciplinary debates – and more generally what it can and should strive to be in our present age. The concept that I have in mind here is financialisation. In the following, I will first go through the (non-trivial) exercise of defining it, to then illustrate how the current debate could benefit from historians’ increased involvement. Eventually, this will relate back to the question of why (and how) contemporary history is relevant for present societal debates.
Since the early 2000s, the concept of financialisation has been in use widely across the social sciences, in particular in political economy and economic sociology. Indeed, it is now employed across such a range of disciplines and authors that, as it became more popular, it also became harder to define. The most common definition currently seems to be the one brought forward by Gerald A. Epstein in 2005: “(…) financialization means the increasing role of financial motives, financial markets, financial actors and financial institutions in the operation of the domestic and international economies” (Epstein 2005: 3). This and similar definitions stress the economic aspects of the concept. Under the surface, they contain an inherent criticism of finance which is often contrasted to the ‘productive’ economy, and the rise of which is seen as a key factor in understanding the troubles of ‘post-industrial’ economies since about the 1970s (for a detailed discussion of the theoretical assumptions of various definitions of financialisation, see Lapavitsas 2011, and Van der Zwan 2014).
Certainly to nobody’s surprise, the financial crisis of the late 2000s was key in promoting the concept of financialisation across even more disciplines, for instance geography (on Luxembourg, see for instance Dörry 2012 and 2014). The concept was expanded considerably in that scholars tended to focus increasingly on ‘the financialisation of the everyday’ (Van der Zwan 2014: 102), i.e. the way in which finance increasingly impacts the daily lives of ordinary citizens. In a way, this extension of the concept is more accurately thought of as a ‘return to the roots’, given that financialisation in its earliest definition seems to have originated on the (socialist) left of the political spectrum of 1960s US academia, and particularly given that the literature since then has seen strong Marxist participation and even tendencies. This background of the concept is fascinating and continues to be important today, but alas this blog post does not offer the space do discuss it any further. Fortunately, excellent discussions are available (see in particular Lapavitsas 2011, and Van der Zwan 2014).
When looking across the panoply of definitions of financialisation that are scattered across today’s social sciences, one aspect that stands out to the historian is how they all seem to apply only to the past thirty to forty years. Recently, these limitations have been identified by social scientists, who increasingly see the need for a contextualisation through a longer view and across a wider geographical area (see for instance Sawyer 2014). Interestingly, and now I am finally getting to why I wrote this piece in the first place, historians have been all but absent from the debates on financialisation over past few decades – it seems to the point that none of the scholars who now call for contextualisation even seem to think of them! The conspicuous absence of historians is all the more surprising given that the central questions of recent research on financialisation – such as its link to globalisation and neoliberalism, or its implications for states and their power – are major concerns for contemporary history today. It seems implausible that with all the advances of, say, global history, historians sould not be in a position to contribute to the debate.
For many years now, historians have worked on earlier forms of globalisation, for instance through the proliferation of the telegraph.
Rather than explain at length why the debate on financialisation lacks historical depth, I would like to quote a passage from Van der Zwan 2017 (121):
“Throughout the twentieth century, finance has exuded a powerful imaginary of almost unlimited consumption, inclusive citizenship and self-improvement. (…) Only in the most recent years have these economic and political gains been transformed into losses: of homes, of jobs and of a general sense of security.”
Surely, any historian who is vaguely familiar with the economic history of the twentieth century must be surprised at such statements? After all, the twentieth century saw a Great Depression in the 1930s, and then a Bretton Woods world economic and monetary order that restricted finance because it was understood to be a central danger to the rapid reconstruction and continued prosperity of a world devastated by war. Add to this of course the large number of crises, financial ‘bubbles’ and other devastating economic events (such as hyperinflations) that happened the world over. Finally, one cannot help but notice that the very term ‘financialisation’, with the Marxist background and critical connotations that I have alluded to above, is a direct consequence of twentieth-century intellectuals’ critical engagement with finance.
Let me stress that the goal here is not to criticise an individual author, especially one who has written excellent contributions to the financialisation debate, including the thoughtful historical contextualisation of the term itself that I have referenced previously. Moreover, historians should not contend themselves with sneering at the alleged lack of historical awareness of their colleagues from other disciplines. If I have singled out the above citation, it is simply because I think that it provides a concise example of where contemporary historians – experts on the recent past in all its complexity – could contribute to the ongoing debate in financialisation studies. If anything, historians themselves could justifiably be blamed for having kept outside of a debate that touches upon so many of their cherished topics. This is where financialisation can serve as a reminder that the reception of contemporary history is not always as wide as we might like to believe. After all, scores of historians have worked on topics such as (financial) globalisation and on the economic history of the twentieth century. Seeing how many academics seem to be unaware of their publications, one can hardly lay the blame solely at the feet of the non-historians.
This is where my reading of the literature on financialisation connects with the theoretical debates about the state and mission of contemporary history that have been ongoing for many years now – perhaps most prominently in the German speaking historical community but also elsewhere (for reference, see Lagrou 2013, Graf/Priemel 2011). Most of these authors have identified a certain crisis of a discipline that is increasingly moving away from the era of the World Wars that was its original raison d’être and onto the decade of the 1970s and beyond. In doing so, historians find their interpretations questioned by the social sciences, which developed in leaps and bounds during those decades and whose theories and concepts shape historians’ own worldview to an extent that they continue to discover and that is often to their discomfort. As a consequence, most of the aforementioned authors have called for a critical renewal of contemporary history that problematizes the present by questioning how we perceive the recent past – often neatly subsumed in reference to Hans Günter Hockerts’ concept of a Problemgeschichte der Gegenwart (which actually dates back to the 1990s, see Hockerts 1993). Interestingly, this line of argument is echoed by Francesco Boldizzoni in his The Poverty of Clio (2011), which is a much more targeted critique of what he perceives to be a wrong turn taken by economic history starting with the new economic history in post-war America and then evolving into what we nowadays call cliometrics – application of modern economic theory to the recent past, based on sophisticated quantitative methods. When reading his controversial book, one of the passages he quotes stood out to me in particular:
“The mirror, if that is what history is, distorts as much after revision as it did before. The aim of revision is to get the distortions to match the mood of the present times… When we look closely at the construction of past time, we find the process has very little to do with the past at all and everything to do with the present” (Mary Douglas , quoted in Boldizzoni 2011: 8).
Read in the light of the financialisation debate, this thirty-year-old passage seems to talk directly to Pieter Lagrou’s 2013 article ‘De l’histoire du temps présent à l’histoire des autres: comment une discipline critique devient complaisante.’ Here, Lagrou called for une histoire conceptuelle, transnationale et éclatée, which in his view contemporary history needs to strive towards if it is to reaffirm its relevance to a large audience in the twenty-first century. One does not have to share the full extent of Lagrou’s criticism of his academic field to assume that economic and in particular financial history is an area where the type of analysis that he has in mind promises to find a large audience. Moreover, and here one only needs to read Boldizzoni for an overview, historiography has a long tradition of economic and social analysis – the French Ecole des Annales certainly being the most well-known example. If renewed and adapted to today’s research interests and societal questions, scholarship of this kind would certainly contribute to showing the relevance of contemporary history as an academic discipline.
The consequences of the recent financial crisis were more than just economic. Phenomena such as bank runs, which we thought belonged firmly to the past, left a strong impression on our imaginations.
Specifically in relation to financialisation studies, historians would be well placed to look critically at the decades of the 1970s and 1980s, which is the period when financialisation is often thought to have begun, and where its academic study also emerged. In doing so, historians can contribute to the contextualisation effort, which many in financialisation studies have recently called for (Sawyer 2014). It stands to reason that a such historical perspective will question the validity of the consensus in that seems to confine financialisation to the past thirty of forty years (this outcome has also been suggested by Sawyer 2014). In the current literature on financialisation, the ‘restricted’ global financial flows of the Bretton-Woods era often seem to be considered the ‘normal’ state from which finance then broke free to attain the allegedly unprecedented (and unhealthy) economic weight it has today. By taking a step back and looking at longer periods, historians can for instance show how finance had achieved a high level of globalisation before the 1930s and even before World War One. Seen in this long-term perspective, it is the period of restricted finance from the 1930s to the early 1970s that becomes the explicandum, rather than the more recent decades. To be clear, this line of argument is overly simplified, and I certainly do not wish to suggest that the degree of global integration of today’s world economy is not of a different degree than what had been reached in the past. My point was merely to show how the relatively short-term perspective adopted by many other academic disciplines inherently limits their outlook on the phenomena that they wish to study. The development of finance in the latter third of the twentieth century is perhaps much better understood in the light of a long-term history of capitalism, rather than in constant and exclusive comparison to the few decades that came before.
Ben Zenner, University of Luxembourg
Boldizzoni, Francesco. The Poverty of Clio: Resurrecting Economic History. Princeton/Woodstock: Princeton University Press, 2011.
Epstein, Gerald A. Financialization and the World Economy. Cheltenham: Edward Elgar Publishing, 2005.
Graf, Rüdiger, and Kim Christian Priemel. “Zeitgeschichte in der Welt der Sozialwissenschaften: Legitimität und Originalität einer Disziplin.” Vierteljahrshefte für Zeitgeschichte Das zentrale Forum der Zeitgeschichtsforschung 59, no. 4 (2011): 479–508. https://doi.org/10.1524/vfzg.2011.0026.
Hockerts, Hans Günter. “Zeitgeschichte in Deutschland: Begriff, Methoden, Themenfelder.” In: Historisches Jahrbuch 113 (1993): 98-127.
Lagrou, Pieter. “De l’histoire du temps présent à l’histoire des autres.” Vingtième Siècle. Revue d’histoire, no. 118 (April 10, 2013): 101–19.
Lapavitsas, Costas. “Theorizing Financialization.” Work, Employment and Society 25, no. 4 (December 1, 2011): 611–26. https://doi.org/10.1177/0950017011419708.
Zwan, Natascha van der. “Making Sense of Financialization.” Socio-Economic Review 12, no. 1 (January 2014): 99–129.