The recent economic and financial crisis seems to give an easy answer to the question whether markets can be truly global. How is it possible that German municipalities go bankrupt because they bought American mortgage papers other than by the force of a truly global market? The world is flat (Friedman, 2007) – so markets can not be anything but global. However, as we will try to show in this essay, bold statements as well as seemingly bold questions such as ‘Can a market be truly global’ need to be treated with caution. What does it mean to be ‘truly global’? What after all is a ‘market’? It is those issues that need to be addressed first. The paper will afterwards demonstrate the case of two examples of markets, namely fashion and finance. Analysing the globality of those very different types, we will try to show that it is firstly important to be attentive in regards to different parts of markets: for example, does the consumption side in the particular fashion market analysed seem to be much less global than the production side. It is secondly important to consider non-economic parts of the market when judging the degree of globalness: the seemingly global foreign exchange market in finance for instance is indeed very much ‘embedded’ into both social and material contexts which makes it what is called a ‘global hybrid’ below. It is nationally grounded but trades globally. The exemplary discussion of fashion and finance will afterwards be contextualised with a more general critical section illuminating the arguments of Marxists and sceptical school thinking before we come to a conclusion.
II Definitive Remarks: Markets and Global Markets
A huge variety of definitions for the notion of ’market’ are to be found in the literature (see Fligstein & Dauter, 2007; Lie, 1997). The core of them however, can still be traced back to Weber (1922/1978: 635):
A market may be said to exist wherever there is competition, even if only
unilateral, for opportunities of exchange among a plurality of potential parties.
Their physical assemblage on one place … only constitutes the most consistent
kind of market formation.
Markets are describing physical and non-material exchanges of ‘stuff’ between buyer and seller (Callon, 1998). The nature of the exchanged is arbitrary. The acts of exchange are not normally bound to a place and don’t exactly resemble each other (Baker, 1984). Referring to the Structure-Conduct-Performance paradigm of the Industrial Organization School (see Swedberg, 2007: 114) markets are often equated with ‘industry’ (as we now understand it widely). As will also be presented in the analysis, different kinds of markets are distinguishable, such as production versus trade markets implying different kinds of ‘market behaviour’ in turn.
It seems crucial to qualify this rather economic account with more recent examinations of markets that added several dimensions. Markets are not purely economic constructs but always interwoven in cultural practices, knowledge and political and legal networks (Slater & Tonkiss, 2001: 101; Zukin & DiMaggio, 1990). They are, as Polanyi (Polanyi, 2002) called it, ‘embedded’. As will be analysed in more depth below, this embeddedness may play a crucial part in ‘grounding’ markets in particular places or vice versa expands its global reach.
It is similarly not straightforward to come up with a clear-cut notion of a ‘global market’. Starting with the opposite, a ‘truly national’ market might be defined as exchanges taking place in one particular national territory – from production to consumption without intermediate cross-border trade. In such a market the state is often a major influence in terms of regulation and infrastructure and companies are limited to state boundaries. Today, such markets rarely seem to exist.
How is a ‘truly global’ market on the other end of the continuum defined? Hirst et al. (Dicken, 2010; Hirst, Thompson, & Bromley, 2009) distinguish between international and global. International markets are still based on nation states, which are growingly interconnected – but always remain separated and linked only through strategic relations (Hirst et al, 2009: 8). Global markets on the other hand are autonomized systems in which economic actors are independent of national boundaries. But how many nations need to be under the umbrella of the abstract construct of a market to call it global? Is a market only global if it is all-encompassing? These questions can not be answered unambiguously and one task of this essay is to come closer to the concept of a global market. However, two important categories seem to emerge. A market is global if the influence of a state is minimal and flows (of trade, people or goods) within this market dominate over place. The following two examples of markets will try to pay attention to those uncertainties while at the same time trying to address the question raised above: Can markets be truly global?
III Fashion and Finance – Global Markets?
Example one is the fashion market, the market for clothing that is to be presented in section A. We will not illuminate the apparel industry as such but rather focus on branded garment retailers (BGRs) following the example of Aspers (Aspers, 2010). As part of this, we will address the two sides of this high-street fashion market – production and consumption – separately before merging them again in the conclusion.
Afterwards in section B, our attention will shift to the financial sphere that is of particular interest at the moment with regards to the 2008 crisis. Similar to the fashion market, the economic construct of ‘global finance’ (Sassen, 2006) is not a unitary being. We will therefore focus firstly on the possibly most global financial market, the one of foreign exchange. This market is part of investment banking’s ‘market operations’ (Davis, 2009: 102/122) and an example for what Knorr Cetina (Knorr Cetina, 2006) calls a ‘trade market’. Secondly, we will shed light on the ‘flexible globality’ of the corporate finance world of M&A and LevFin, drawing on Ho’s (Ho, 2009) and Davis’ (Davis, 2009) work. The following graph tries to illustrate the approach.
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Illustration: Structure of Examples
The first example mainly draws on the arguments that Aspers (2010) presented in his seminal work Orderly Fashion. We will analyse the clothing market in two steps splitting it into two aspects analysing consumption first and subsequently looking at the production side of the BGRs. This split seems to be crucial in order to detect the degree of ‘globality’ in the market as a whole as will be argued.