Capturing finance : arbitrage and social domination

"Arbitrage is a trading practice that involves buying the same or similar items where they are priced low, and selling them where they are priced high, to gain a profit simply from the disparity in prices. It is fundamental both to the practice of financial trading and to economic understandings of how financial markets function. In Capturing Finance, Carolyn Hardin offers a new way of understanding arbitrage, as a means for capturing value in financial capitalism. Hardin addresses the contextual factors that allow such value capture to take place, arguing that every form of capture is reliant upon a system of abstract domination built around a principle that makes participation in capture seem necessary. For industrial capitalism, that principle is labor. In financial capitalism, that principle is risk. The idea that we must take on risky debt to afford everyday life, or invest in risky financial markets to secure future goals like saving for college or retirement, appears to be common sense. But it also sets up the conditions for arbitrage to thrive. Indeed, subprime mortgage borrowing facilitated the arbitrage in mortgage-backed securities in the run up to the financial crisis. In this book, Hardin argues that our taken-for-granted understandings of how risk works in financial markets allows arbitrage capture to take place even when it leads to crises and long-term ills. It is thus risk that must be addressed as a political issue, if any challenge to the current impacts of financial capitalism is to be mounted."