Economic Geography

Section II
Globalization and
contemporary capitalism

---

---

6
Setting the agenda 
The geography of global finance
Gordon L. Clark
Introduction
Economic geography has a long history, with its own historians of thought
(Scott 2000, 2004). At the same time, it is a field constantly evolving seeking to
incorporate the realities of modern capitalism into the scope of its responsibili-
ties (Dicken 2003). One of its advantages over other fields of inquiry is its 
fluidity. On the other hand, one of its disadvantages is its attachment to iconic
theoretical representations of what the world ought to be. So, for example,
graphical and mathematical models of optimal land use and location dominated
the education of one generation of economic geographers to be replaced by
theories of political economy that foretold the crisis of capitalism and, in partic-
ular, the ruinous consequences of global financial markets. From nineteenth
century theories of land use and location came a preoccupation with the 
production of commodities and the distribution of those activities across the
landscape – a preoccupation that remains evident today (given that the bound-
aries containing production have increased in scale from the region to the nation
and now the globe, Swyngedouw 2000).
One of the crucial assumptions made by economic geographers over the 
past two decades is that the nation-state is, and arguably remains, one of just a
few basic building blocks in analysing the economic geography of capitalism. So,
for example, Clark (1980) used the Marxian notion of the reserve army of the
unemployed in conjunction with related arguments about the role of the state 
to develop a model of regional differentiation built upon the social relations 
of production. Labour, capital, and the state were joined together to provide 
a model of industrial capitalism closely related to Galbraith’s (1967) new indus-
trial state. In retrospect, however, these analytical categories were quite narrow;
labour meant the industrial working class and its unions, capital meant corpora-
tions and their productive assets, and the state meant the nation-state as regula-
tor as well as its local representatives. This type of logic has been written out in
economic geography and the social sciences in different ways; see, for example,
Clark (1989), Esping-Anderson (1990) and Storper and Walker (1989). It is
obvious that much has changed over the past 25 years even if, in some quarters,
there is regret for the passing of an era (Jameson 1997).

---

Over the past 25 years, the methods and techniques of economic geography
developed so as to give ‘voice’ to the political economy of landscape evolution.
Ways of writing case studies and ways of portraying the exercise and negotiation
of power between stakeholders have also evolved. If associated with economic
geography, it has proven to be a mode of inquiry that resonates with finance
(Jensen 1993) and with business and management (as exemplified by Wrigley
2000). But there are increasing problems with this kind of research strategy. Its
production-led analytical categories are often misleading about the geographical
scale at which decisions are taken and exaggerate the status of labour, capital, and
the state in relation to new forms of finance capitalism operating at the local and
global levels. To the extent that finance is recognized as an important driver
behind industrial and regional restructuring, it is too often located ‘offstage’
shrouded behind curtains of ignorance of its principal imperatives and modes of
practice. It is arguable that that which happens offstage behind those curtains is
in fact the real stage of modern capitalism and should be, in actuality, the focus
of economic geography.
In this chapter, I try to show how and why the geography of finance is so 
important for the future of economic geography. My goal is to enlist the inter-
est and support of new generations of academics and practitioners concerned 
to better understand the structure and performance of global financial markets.
Remarkably, the field of finance as an academic discipline is beginning to unravel
as the theoretical axioms that held it together are exposed as inadequate in the
light of the heterogeneity of practice. In doing so, I chart the rise of finance 
over the past few decades, the increasing gap between the theory and practice of
finance, and a set of important research themes or problems that should engage
economic geography over the next 25–50 years. Inevitably, my view about the
future is partial: nevertheless, I hope the issues identified are sufficient to engage
the reader in pursuing their own research on the geography of finance.