Review of The Social Life of Financial Derivatives: Markets, Risk, and Time by Edward LiPuma (Duke University Press)

Courtesy of Environmental Molecular Sciences Laboratory, Department of Energy (CC BY NC-SA 2.0).

Edward LiPuma outlines a sociohistorical theory of the market that positions derivatives trading as initiating a new form of capitalism. The book also confronts the narratives that the financial sector tells itself about the causes and aftermath of the financial crisis, revealing the social relations that underpin the entire enterprise. LiPuma exposes the wild-seeming speculation of hedge fund managers and traders as a rationale that disappears the social aspect of its own ritual induction and relational mode of production and reproduction. An understanding of the social underpinning of financial markets, LiPuma hopes, can lead to a politics of “just optionality” where the same methods for betting on securitized commodities (assets made liquid) like housing mortgages can be transferred into wagers that further the collective good. For Marxists, LiPuma has an urgent message: existing theories of the market are incomplete without an understanding of how financial capital, led by derivatives trading, has transformed the means by which capital reproduces itself.